A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Wednesday, June 30, 2010

How jobs are created

Iain Dale rather sneeringly says in a recent post "for any lefty economists reading this, you might like to remember that it's not budgets which create jobs, it's private sector risk taking entrepreneurs. Think on that." (http://iaindale.blogspot.com/2010/06/guardian-economics-editor-cant-count.html).

I've thought on it. And it isn't quite true. One of the learning processes I've had in ten years working for a public affairs consultancy is to sit in on and sometimes contribute to the thought processes of various private sector businesses as they decide whether to create jobs in the UK and where to put them. If they didn't think government and local government policy and budgets were important to these decisions they wouldn't bother hiring people who know about government policy and politics to advise them.

"Budgets" do create - or destroy - private sector jobs as well as public sector ones in the sense that:
  • There are a whole bunch of FTSE 250 companies that provide outsourced services to national and local government - from accountancy to IT to running prisons to cleaning public toilets and government offices. They might gain from government judging it can cut costs by outsourcing, or they might lose by cuts going deeper than that and just axing outsourced services.
  • There are another bunch of companies that provide goods to government - everything from printing school textbooks to making medicines and medical instruments to building aircraft carriers.
  • Then there are another bunch who build public infrastructure - roads, rail lines, housing, schools, hospitals, and for whom the government's capital spend determines their profitability.
  • Then there are people like Rolls-Royce and Airbus and their supply chain who make civil aircraft but whose R&D and capital investment costs are so high that they need repayable government loans - Launch Aid - to persuade them to go to Derby, Broughton or Filton rather than Toulouse, or Hamburg or Madrid.
  • And there are car manufacturers (all with massive supply chains) making choices about whether to build in Luton, Ellesmere Port or Sunderland rather than Portugal, Poland or China. They will make very hard-headed business decisions about the government-created environment here for them - the labour costs and skills, the infrastructure investment in ports, roads and rail, the loans, grants and incentives, all of which are affected by government budgets.

Take the above out of the equation and that's almost all the UK's remaining manufacturing industry gone - our wealth creators. It doesn't leave much beyond the City (which ain't in great shape), farming (also keen on state aid) and "hospitality" - often low paid jobs in tourism and catering.

The problem with Iain and Vince Cable's laissez faire approach to government intervention and support for business is that it isn't start up entrepreneurs (vital though they are), it's only the big multinational companies that can really have a strategic impact and turn round a city or region by creating 5,000 or 10,000 skilled manufacturing jobs in one place and all the many more supply chain jobs and wider boost to the local economy that having all those skilled workers creates. And they are not in the business of philantrophy. If the UK doesn't incentivise them to site factories here, the rest of the world won't play fair and offer them nothing. China or Germany or France or any of the individual US states will offer them the loans or grants that we won't (or in the case of China a very cheap workforce), and they'll go there instead. Similarly if you chop government infrastructure spending or procurement programmes be they defence ones or the Hitachi high-speed trains contract, those companies will just scale-down their UK operations and target other markets.

It's also about where any jobs created go. Maybe there are loads of entrepreneurs just waiting for the Coalition to create a free market paradise. But left to their own devices they'll mainly locate in the south east, along the M4 and round the M25, in areas that are overheated, overcrowded and don't have a huge unemployment problem. It won't cross their minds to create jobs in the regions where they are most needed. That's why the RDAs were created. Very imperfect and perhaps not needed everywhere but they were at least an attempt to lure investment into depressed areas with incentives, grants, loans and infrastructural help. It worked as well - I've been in meetings where RDA funding determined where companies decided to create jobs. I worry that the economically weakest English regions will now be at a huge competitive disadvantage to Wales and Scotland which still have national/regional authorities trying to attract investment.

Anyway Iain (and Vince) if you want the private sector to grow its role in the economy at the expense of the public sector - which is a fair enough policy objective - it won't happen by magic just by cutting the public sector. Your government will actually need to do things to encourage the private sector to take risks and invest in the UK. I don't see much evidence that you get the centrality of government to that process.

Back to the '30s?

This is worth a read: http://www.nytimes.com/2010/06/18/opinion/18krugman.html?partner=rssnyt&emc=rss

Thanks to Joe Goldberg for spotting it.

Nobel prize winning economist Paul Krugman warns that premature deficit-cutting risks repeating the same mistakes made in the 1937 when the US economy double-dipped. He highlights German austerity measures but could as easily been looking at Osborne's Emergency Budget.

He concludes:

"How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day."

Saturday, June 26, 2010

Paying the price

Public servants, public service users and the poor are going to pay most of the price for the slash and burn Emergency Budget.

But at least there is some justice as the Lib Dems are paying a heavy price politically for abandoning what might either have been their previous principles, or their previous cynical attempt to steal Labour votes by masquerading as being on the left, depending on which way you look at it.

Tonight's ICM poll says:

Con 41% (up 4% from the election)
Lab 35% (up 5%)
LD 16% (down 7.5%)

The good news is this is basically a return to a two-party system with the LDs projected to lose two thirds of their MPs.

The bad news is the Tories are not being damaged - in fact the opposite. We are winning the economic and cuts argument with the wing of the LDs' supporters who should always have been Labour anyway. We have yet to win it with the swing voters who actually decide the outcome of elections - there is not going to be some easy bounce back into a poll lead for Labour however gross and repugnant we may find the Coalition's actions.

UK public spending

The Guardian website has published some interesting Treasury data on UK public spending since 1963. (http://www.guardian.co.uk/news/datablog/2010/apr/25/uk-public-spending-1963). Sorry that the table hasn't quite come out as it should below but it is worth a careful read of the % of GDP figures - the second number after each year.

They show that public spending as a GDP % actually went up under Thatcher from 1980 to 1983 presumably because of the cost of unemployment benefits and reduced overall size of the economy. Then the % was squeezed slowly down until 1989 before rising again as the economy contracted, then falling again in the 1990s recovery to a low point of 36.4% in 1999 when Labour was sticking to Tory spending plans. Labour's public services investment after this seems to be the only time that the % has gone up outside a recession - to 41.3% in 2005. But then far from going on a structural splurge we stabilised it for a few years at levels way lower than the '70s and '80s. The % only goes up again into the high 40s once the recession kicks in i.e. as the wider economy contracts and Labour goes for a fiscal stimulus - not because of some longer-term Labour profligacy. The projected figures for the Coalition's plans basically take us back to 2003 levels over 5 years wiping out not just the fiscal stimulus deficit funding of the last few years but also the policy-driven investment made by Labour in the middle part of the decade. There's also a similar table about tax receipts - http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963.

% of GDP

Friday, June 25, 2010

Council by-elections

Three yesterday:

Kempston North Ward, Bedford UA. Lab hold. Lab 715 (52.2%, +9), Con 384 (28.0%, -13.6), LD 272 (19.8%, +4.7). Swing of 11.3% from Con to Lab since 2009.

Braintree South Ward, Braintree DC. Con hold. Con 351 (33.0%, +8.7), Lab 316 (29.7%, +6.3), LD 216 (20.3%, -9.6), Ind 138 (13.0%, +13.0), Green 44 (4.1%, -18.4). Swing of 1.2% from Lab to Con since 2007.

Mostyn Ward, Conwy CBC. Lab hold. Lab 348 (40.7%, +7.6), Con 310 (36.2%, +4.7), Ind 198 (23.1%, +3.8). Swing of 1.5% from Con to Lab since 2008.

NEC Nominations

Constituency Labour Parties up and down the country have started nominating not just for the leadership but also for the National Executive Committee and National Policy Forum.

I'm pleasantly surprised by how many nominations I'm picking up for the NEC.

Ones I'm aware of so far:

Bethnal Green & Bow
Brighton Kemptown
Bromley & Chislehurst
Cambourne & Redruth
Chelsea & Fulham
Croydon South
Doncaster North
Hackney North & Stoke Newington
Hackney South & Shoreditch
Hornsey & Wood Green
Hull North
Leeds North East
Leeds West
Liverpool Riverside
Poplar & Limehouse
Salford & Eccles

Wednesday, June 23, 2010


Thanks to Liberal Demolition for this:

"During yesterday’s budget George Osborne continued to peddle the myth that the UK economy is in an extraordinary mess with an extraordinary level of debt.

Today he told the Evening Standard that “having inherited from Labour the largest budget deficit in Europe bar Ireland, the new Conservative-Liberal Democrat coalition has been forced to take drastic action”.


The reality is that as a result of the prudent early decisions of Tony Blair and Gordon Brown we entered the recession with the second lowest level of debt of any of the G7 countries. One of Labour’s key decisions was to use the £20 billion plus windfall from the G3 auction (the mobile phone spectrum) for debt repayments.

The OECD figures for 2010 show that the UK’s general government net financial liabilities as a percentage of GDP was 53.5%. Lower than the Euro zone average of 59.5%.

Other EU countries which have higher levels of debt are:

Italy – 104.1%
Greece – 97.8%
Belgium – 83.3%
Portugal – 64.3%
Hungary – 60.1%
France – 57.2%


Labour put the country on a steady footing to weather the recession. Because of this the budget deficit could have been reduced at a steady pace, without the risk to future growth and without the raid on the most vulnerable in our society. Instead the Coalition has opted to slash public services and hike up taxes in a direct attack on hard working families in this country."

Tuesday, June 22, 2010

The Tory VAT bombshell

As warned about just two months ago by the people who then built the government which dropped it:

Budget "fairness"

If I've read this graph from the Treasury budget book correctly, the bottom 10% of the population by income are more negatively affected by the Budget as a percentage of their net income than any of the successive seven income deciles:

I expect redistribution away from the poorest from the Tories. It's why they exist. How the Lib Dems can vote for this after years of lecturing us that they were to our left is beyond me.

Even if you believe that it makes economic sense to cut the deficit this fast - which clearly I don't as I still think we need to be pump-priming our way to growth for another year - the combination of tax and spending changes could have been adjusted to put more of the burden of deficit reduction on the better off and less on the poorest - particularly by raising other taxes rather than VAT.

Monday, June 21, 2010

Worth looking at

Peter Kenyon on the components of the Grassroots Alliance disagreeing on their NEC slate:
Get your act together comrades or you might end up accidentally helping me get elected...

Michael Dugher MP on Labour and defence:

Maps and ward results of this year's London local election results: http://data.london.gov.uk/visualisations/atlas/local-election-2010/atlas.html

Friday, June 18, 2010

Council by-election results

Back by popular demand - the weekly council by-election results service.

Last night there were three:

North Holme Ward, East Lindsey DC. Lab gain from LD. Lab 142 (27.6%, +27.6), Con 111 (21.6%, +21.6), BNP 102 (19.8%, -4.9), LD 88 (17.1%, -58.2), Ind 72 (14.0%, +14). Swing of 3% from Con to Lab since 2007. This is safe Tory Louth parliamentary constituency.

Ore Ward, Hastings BC. Lab gain from Con. Lab 608 (47.7%, +13.3), Con 475 (37.3%, -13.4), LD 158 (12.4%, -2.5), BNP 33 (2.6%, +2.6). Swing of 13.4% from Con to Lab since 2008. This is in a parliamentary seat the Tories narrowly gained in May.

Earls Barton Ward, Wellingborough BC. Con gain from Ind. Con 639 (48.0%, +18.1), Lab 425 (31.9%, -6.3), LD 229 (17.2%, +17.2), Green 38 (2.9%, +2.9). Swing of 12.2% from Lab to Con since 2007.

Labour took control of Hastings DC from NOC thanks to last night's by-election gain (technically a postponed poll that couldn't be held in May because a candidate died).

Thursday, June 17, 2010

Byrne on Alexander

Liam Byrne to Danny Alexander today:

"Both the country and the Liberal Democrat party beyond will be aghast this afternoon at your attack on jobs, your attack on construction workers, your attack on the industries of the future and the cancellation of a hospital.

Let me ask you: what could be more front line than this? In five minutes this afternoon you have reversed three years of Liberal Democratic policy of which you were the principal author. What a moment of abject humiliation."

In defence of "tribalism"

You would have thought that after his disastrous political misjudgement in calling for tactical voting, thus boosting the Lib Dems who went on to form a government with the Tories, Neal Lawson would be keeping his head down.

But no, he's at it again with a piece in the New Statesman attacking "tribalism" and advocating "pluralism": http://www.newstatesman.com/uk-politics/2010/06/pluralist-party-labour

Actually this is a thinly veiled attack on putting the Labour Party first and being loyal to it.

Like Neal I'm in favour of proportional representation and I accept that because Labour does not command a majority of votes in most places and certainly not in the UK as a whole, if we have a more proportional voting system we'll have to work with other parties. I don't think Labour has a monopoly of good ideas or the best people. Within the Party I don't think my strand of opinion has a monopoly on good people or ideas.

But I am a "tribalist" as Neal presumably intends to pejoratively put it in that I want Labour to maximise its vote at the expense of other parties, to maximise its power relative to them in any government and to maximise the number of public offices we hold and the number of our policies we get implemented.

This is surely the position of any rational member of any political party in any democracy whether the model is a pluralistic European one or a majoritarian Anglo-American tradition one.

Because if you didn't think your party was better than the others and deserved more power, more of its policies implemented and more of its people holding office on merit, why would you be a member and activist in that party?

Neal's starting position seems to be one of being ashamed of Labour, embarrassed by our record and apologetic that we exist. He seems almost neutral about whether we are a better party than the Lib Dems or the Greens, presenting them as somehow morally equivalent to Labour or in the case of the Greens morally superior.

I don't understand why anyone would stay in the Labour Party if they didn't feel it either had the best (not necessarily the only good) ideology and policies, the best people and the best claim to be in government; or at least the potential in a strand within it to have and be those things.

My starting point is that I love my Party. I'm not blind to it's faults or mistakes or flaws but at the end of the day I am loyal to Labour and want it to grow and thrive. I love the people in it, the people who vote for it and the values and history and hope for the future it represents.

I worked with Neal for years in the LCC (Labour Co-ordinating Committee). That organisation suffered from some of the up-itself-ness of Compass but was working to make Labour electorally successful again.

I no longer know if Neal has any residual affection for Labour or just grudgingly accepts it exists and isn't going away. I don't get any impression he sees our success as a worthy objective in itself. He seems ashamed of the Party he is a member of and the people who loyally vote for it.

The deepest flaw in Neal's attack on "tribalism" is that the pluralism he wants to see is great in theory but requires political partners on the left to be plural with - and the largest possible partner - the LDs - just decided it was part of a rightwing government. Who does Neal envisage we should be pluralist with?

I am sure Neal intends "tribalist" as an insult to a culture within Labour of loyalty and amongst millions of voters of voting for Labour come what may. I wear it as a badge of honour. Without the loyalty of the people Neal disparages as "tribalist" Labour would have died many years ago. Because of them it lives to fight another day.

Wednesday, June 16, 2010

The unions and the leadership election

There's some very informative stuff on the union role in Labour's electoral college in a piece by Patrick Wintour today: http://www.guardian.co.uk/politics/wintour-and-watt/2010/jun/16/jon-cruddas-harrietharman

The scary bit is that only 8% of union levy-payers actually voted in the 2007 deputy leader race.

The whole point of the unions having 33% of the electoral college is that this provides an opportunity for millions of ordinary working people to have a say in choosing Labour's leader. If that right isn't used we lose the democratic mandate and mass input balloting union members should provide.

The Party, the union leaderships and the five candidates' campaigns need to do some serious planning for how that 8% turnout is turned into a 50%+ one.

This means the unions using all the comms tools they have at their disposal to encourage turnout, not just posting out ballots and hoping they come back. It means the candidates using the mass media to reach this mass potential electorate, not just traditional internal Labour channels of communication, and creating campaign teams to get out the vote union-by-union, particularly within major unionised workplaces. And it means the unions thinking about how they can balance a desire to promote the one candidate they want their members to back with creating opportunities for all five to communicate with members so that trade unionists get to make an informed choice, which is more likely to increase turnout than just being bombarded with General Secretary endorsements of the favoured one.

The ballot process is also a one-off chance to get a large number of union members to become full individual members of the Party. This is critically important. The current surge in Party membership is great news - my CLP has grown 30% - nearly 200 extra members - but as CLP Membership Secretary I can see that the addresses of the new members are overwhelmingly in middle class streets and that virtually none of them say they are union members. We need a Party membership that is diverse and includes the voices of ordinary working people. Part of the problem is that our membership fees are far too high for many people to afford but at least this ballot process gives us the chance to ask four million people to join.

Tuesday, June 15, 2010

Labour's economic legacy

I am grateful to Tory journalist Fraser Nelson (http://www.telegraph.co.uk/news/newstopics/politics/7827761/This-Budget-is-George-Osbornes-moment-to-be-radical.html) for summarising yesterday's Budd report:

  • "Sir Alan said yesterday that Alistair Darling was being too pessimistic: on almost every measure, the public finances look like being in better shape. Unemployment, he said, will be almost 200,000 lower than had been feared. Economic growth will not be quite as strong but the tax revenues – which are far more important – will come in much more strongly than Mr Darling gloomily forecast. Something is going badly right."
  • "In many areas that were not included in Sir Alan's report, the British economy is doing remarkably well. Manufacturing is bouncing back – helped, of course, by the weak pound. The Bank of England is no longer buying British government debt, but demand remains strong – keeping bond yields low. Banks are lending, and money supply is increasing. Just as the economy sprang a volley of nasty surprises as we entered the crash, it's yielding pleasant surprises now."
  • " The so-called structural deficit (the amount of overspend that will not be eliminated by an economic recovery) is a little bigger than had been estimated. But crucially, Mr Osborne's election goal – to abolish "the bulk" of the structural deficit by 2014 – would have been easily achieved had Mr Darling remained in place. No more taxes need to be raised, or budgets cut, to honour this Tory manifesto pledge."
  • "British house prices, which have recovered faster than anywhere in the world and should grow by 10 per cent both this year and next."

So Mr Nelson concludes that as he doesn't need to make savage cuts to sort out the deficit, George Osborne should instead have to make "the moral case for cuts".

I would be interested to hear what the "moral case" is for lower spending on benefits, schools, hospitals, social services, transport, police, defence or indeed any other service provided by national or local government. I can see a "moral case" for better or wiser spending - eliminating waste and diverting the money released to frontline services. I can see a "moral case" for seeking to reduce the tax burden on the least well-off. But an approach whose starting point is that smaller government is intrinsically morally better is just the same old Thatcherite prejudice that Cameron claims to have abandoned and the Lib Dems are supposed to oppose.

The UK actually has an economic model which thanks to the previous dose of Thatcherism means that compared to most of the rest of Western Europe we already have low taxes, a small state, a weak welfare system, low redistribution, low industrial intervention, and high inequality. Labour managed in 13 years to ratchet that back a bit and start to re-humanise and re-social democratise British society so that it might work for all citizens, not just the rich few. Nelson and Tories who share his prejudices want to redeploy the economics and morality of the jungle where the market rules and the state does the bare minimum. After the Budd report they no longer have an economic excuse and are reliant on dogma to justify trashing all the services and structures that create a society worth living in.

Sunday, June 13, 2010

Where the axe has fallen

The details of the Coalition's cuts to local government are here: http://www.communities.gov.uk/documents/localgovernment/xls/1611273.xls

The geography of where the axe has fallen is interesting. The cuts were capped at a maximum 2%.

The 20 local authorities suffering the deepest cuts are:

Ashfield 2%
Barrow 2%
Bolsover 2%
Burnley 2%
Great Yarmouth 2%
Hastings 2%
Hyndburn 2%
Norwich 2%
Pendle 2%
Blackburn 1.7%
NE Lincs 1.5%
S Tyneside 1.4%
Blackpool 1.4%
Chesterfield 1.4%
Thanet 1.4%
St Helens 1.3%
Middlesbrough 1.3%
Woking 1.3%
Knowsley 1.3%

So with the exception of Woking, mainly places that are already under great economic pressure getting an even worse hit.

Whilst the lowest cuts were felt in a set of hmmm, rather more diverse authorities:

Gosport 0.2%
Dartford 0.2%
Worthing 0.2%
Wyre Forest 0.2%
Ashford 0.2%
Mendip 0.2%
Gravesham 0.2%
Tendring 0.2%
Basildon 0.2%
Erewash 0.2%
Amber Valley 0.2%
Havant 0.2%
Sedgemoor 0.2%
South Kesteven 0.2%
Carlisle 0.2%
Mansfield 0.2%
Lincoln 0.2%
Cherwell 0.2%
Newcastle-under-Lyme 0.2%
South Somerset 0.2%
Bassetlaw 0.2%
Waveney 0.1%
City of London 0.1%
Scarborough 0.1%
Huntingdonshire 0.1%
Lancaster 0.1%
Canterbury 0.1%
Ipswich 0.1%
Exeter 0.1%

Regionalism in the PLP?

I thought I'd take a look at the nominations for Leader made by the PLP to see if it threw up any regional patterns. Obviously the Abbott figures carry the health warning that some of them were "tactical" nominations to get her on the ballot who won't vote for her.

London: Ed M 11, Abbott 10, David M 10, Burnham 3, Balls 2
South outside London: Abbott 3, Ed M 3, Balls 2, David M 1, Burnham 0
East Midlands: Ed M 6, David M 4, Abbott 2, Balls 2, Burnham 0
West Midlands: Balls 8, David M 6, Ed M 4, Burnham 3, Abbott 0
Yorkshire & Humberside: David M 8, Burnham 7, Balls 6, Abbott 5, Ed M 5
North West: David M 15, Burnham 13, Ed M 8, Balls 4, Abbott 4
North East: David M 10, Balls 5, Ed M 5, Abbott 3, Burnham 1
Scotland: David M 18, Ed M 11, Burnham 5, Abbott 3, Balls 1
Wales: Ed M 10, David M 9, Abbott 3, Burnham 1, Balls 1

The results were more interesting than I expected:
  • despite his overall lead in nominations David Miliband only came top amongst MPs in Scotland and the 3 northern regions.
  • perhaps unsurprisingly David M was in the lead in the North East where he is an MP, Andy Burnham did very well amongst fellow NW MPs and Diane Abbott did well in London
  • less explicable is that the two Eds, both Yorkshire MPs, don't seem to have a particular support base there
  • Ed M's support in London, like Abbott's, may reflect a different politics amongst the London Labour MPs or a different perception of what will appeal to the capital's voters
  • Ed M's Welsh support is presumably partly thanks to Peter Hain being on his team. I don't have a theory to explain his East Midlands support.
  • smilarly Ed Balls' West Midlands support may be connected to Tom Watson backing him

Aside from telling us about regional clusters of similar-minded MPs in the PLP, and regional loyalties, they may be a pointer to the members' section of the leadership electoral college as some MPs are able to secure votes for candidates from their CLPs through endorsing them. If this is the case then the figures above for London and the North West are the ones to watch as these regions have by far the biggest numbers of individual Labour members.

Of the 20 largest membership CLPs in the country, the MPs for 6 have nominated Abbott, 4 each David and Ed Miliband, 1 Burnham and none Balls. 4 of the 20 no longer have Labour MPs and the final one is held by Glenda Jackson, one of 15 Labour MPs not to make a nomination.

Thursday, June 10, 2010


An exercise to see if my predictive powers are up to scratch - can someone check this when the Labour leadership results are announced:

1st round overall order:
1 - D Miliband
2 - E Miliband (second in all 3 sections of electoral college)
3 - Abbott (a poor 5th among MPs but narrowly top among members and possibly TU section too )
4 - Balls
5 - Burnham

My caveat would be that the top 4 are going to end up bunched quite close together so the order could change.

Burnham eliminated first and his transfers will benefit David M the most.

Balls eliminated second and his transfers strongly benefit Ed M at which point Ed M takes the lead.

Abbott last to be eliminated, her transfers overwhelmingly benefit Ed M at which point he wins 55-45.

Wednesday, June 09, 2010

The wrong fifth candidate

The Labour leadership race did need more ideological diversity and candidates of more diverse backgrounds.

But much as I get on with Diane personally I would have preferred a BME and/or woman candidate on the ballot who was not Hard Left, or a hard left candidate who hadn't sent their kid to private school.

As it is I expect those MPs from other wings of the party who nominated her to help her get on the ballot to get a nasty surprise when she polls very well because of higher name recognition than the other 4.

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