James Forsyth is former political editor of The Spectator.
From our UK edition
I wrote yesterday about how the Treasury Select Committee must call back Lord Myners and Sir Tom McKillop to ascertain whether the Committee had been misled over what the government knew and when it knew about Sir Fred Goodwin’s pension. Today comes news that John McFall, the chairman of the Committee, has asked McKillop to supply written evidence on this point. This is a welcome first step to getting to the bottom of this important matter.
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You go off to get a sandwich and you come back to find your colleague advocating scrapping Trident, not a good day. Those who advocate getting rid of Trident are, in effect, declaring that they can foresee every strategic threat to this country in the next generation and do not believe that Trident would be of any use in any of these circumstances. Well, I for one am not prepared to take that bet—and I do not believe that any responsible British government should either. Pete says the geopolitical landscape is favourable to scrapping Trident. I find this statement bizarre in the extreme. Yes, we’re not in the Cold War with Soviet nukes aimed at British cities.
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Tony McNulty has been badly damaged by the row over his second home claims. This is a huge blow to the government’s media strategy for the recession. Of all the government’s economic team, McNulty has done the best job of acknowledging the severity of the situation while still defending the government. But if McNulty becomes a poster-child for how the political class work the system, then he’ll become a liability to Labour. As Minister for Employment, or - as the Yes Minister joke would have it - unemployment, McNulty does the rounds of the TV studios every time the unemployment figures come out. They are, sadly, going to go up and up over the next year or so.
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A Minister misleading the House is one of the most serious offences they can commit. If any Minister does so anything other than completely unintentionally, they should--and must--resign. So, when an accusation emerges that a Minister has done so it must be cleared up one way or the other. On Saturday, The Times reported that Sir Tom McKillop, the former chairman of RBS, had written to the chairman of the Treasury Select Committee, John McFall, alleging that Lord Myners had been ‘told exactly how much’ Sir Fred Goodwin’s pension was worth. This, if true, contradict Miners’ statements (as recorded in the uncorrected transcript) to the Committee: Now, I have no idea whether McKillop or Myners' recollection is more accurate here.
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William F. Buckley’s 1955 editorial declaring that the Nation Review “stands athwart history, yelling Stop” is one of the defining texts in modern conservatism. But as David Frum argues, the changes that have happened since 1955 have, on balance, been overwhelmingly for the better: “But think how much worse a place the world would be if Bill Buckley had actually succeeded in calling a stop to history in 1955. Vienna would still be occupied by Soviet troops. The federal government would still regulate prices on everything from natural gas to brokers commissions. Racial segregation would remain American practice. People would continue to die unnecessarily of cigarette smoking or in unseatbelted automobile accidents.
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The most important story of the day might not be the bank rescue plan in the US or any of the British domestic political stories, but this news from China: “China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund. The goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies,” Zhou Xiaochuan, governor of the People’s Bank of China, said in an essay posted in Chinese and English on the central bank’s website.
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I suspect the phrase decontaminating the brand makes most Coffee Housers want to decontaminate their screens. But I do think the Cameron strategist who told Conservative Home that ‘Only when the party has decontaminated itself as the party of the rich will we have the authority to attack the size of the state’ is right. Fairly or unfairly, the Tory party--as the party’s own focus group show--is seen as the party of privilege by many swing voters. Two-thirds of the shadow cabinet are millionaires and to compound this perception problem, both the leader and the shadow chancellor come from moneyed backgrounds.
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The supposed Tory split on inheritance tax is big news this morning, making both the front pages of the Mail and the Telegraph and the 8.10 slot on the Today Programme. But as split stories go this one really doesn’t have much going for it. It requires a stretch of even the journalistic imagination to believe that Ken Clarke’s comments revealed some fundamental disagreement between him and George Osborne. Indeed, if Clarke was guilty of anything it was revealing what Tory high command is fretting about in public. Given the state of the public finances, it is hard to believe that raising the inheritance tax threshold should be a priority. The Tories will do it because it is one of the few concrete pledges they’ve made.
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Iain Duncan-Smith has an op-ed in the Sunday Telegraph previewing the Centre for Social Justice’s paper on prison reform. Setting aside the moral case, one sentence in it makes a compelling pragmatic case for it: “Two thirds of all prisoners are re-convicted within two years and half are re-convicted within a staggering 12 months” Purely on a cost basis, reducing recidivism has to be one of the many priorities of the prison system. On those grounds alone, the current system is clearly failing and in urgent need of reform.
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My old friend Carlos Lozada has an interesting interview with David Kilcullen, one of the men behind the successful shift in counter-insurgency strategy in Iraq. His remarks about Pakistan rather concentrate the mind: “Pakistan is 173 million people, 100 nuclear weapons, an army bigger than the U.S. Army, and al-Qaeda headquarters sitting right there in the two-thirds of the country that the government doesn't control. The Pakistani military and police and intelligence service don't follow the civilian government; they are essentially a rogue state within a state. We're now reaching the point where within one to six months we could see the collapse of the Pakistani state, also because of the global financial crisis, which just exacerbates all these problems. . . .
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Andrew Rawnsley’s column today contains this great little scoop: “A comprehensive spending review was due this summer. Gordon Brown has quietly told Alistair Darling to scrap it.” Rawnsley reports that the review is being postponed because it would reveal that the state of the public finances dictates that there will have to be huge spending cuts whoever wins the next election. If the government has to admit this, Brown’s Tory cuts attacks will lose its force. At the moment when Labour politicians appear on TV and radio they keep asking what the Tories would cut. The media should respond by asking them what they would cut. Indeed, Darling has already said that 80 percent of the fiscal tightening will come through spending cuts.
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The 45p tax rate for those earning over £150,000 is a political measure not a fiscal one; calculations by the Institute for Fiscal Studies show that it will raise virtually no revenue. Labour desperately wanted to create a dividing line with the Tories over the issue: Labour want to raise taxes on the wealthiest few, the Tories want to cut services for the many. At the time of the PBR, the Tories sensibly avoided this elephant trap. Now, George Osborne’s remarks that the 45p rate will be “difficult to avoid” have caused a storm. Tim Montgomerie has declared that “George Osborne needs to get a grip” and warned, “Tax rises must be the last resort, not, as it appears, the first resort.
From our UK edition
Last week it was David Brooks and William Galston, this week it is Peggy Noonan. In her column today Noonan, becomes the latest figure sympathetic to Obama to worry that he is getting it seriously wrong. Here’s how she ends her piece: “These are the two great issues, the economic crisis and our safety. In the face of them, what strikes one is the weightlessness of the Obama administration, the jumping from issue to issue and venue to venue from day to day. Isaiah Berlin famously suggested a leader is a fox or a hedgehog. The fox knows many things but the hedgehog knows one big thing. In political leadership the hedgehog has certain significant advantages, focus and clarity of vision among them. Most presidents are one or the other. So far Mr. Obama seems neither.
From our UK edition
Over at Conservative Home, Jonathan Isaby has the scoop that Lynton Crosby—who managed both the Tory 2005 general election campaign and Boris’s mayoral run—will run the Libertas campaign in the European elections. This puts him in direct opposition to the Conservative party. Many in Westminster expected that Crosby would return in 2010 to perform the same service for the Tories that he had in 2005. Some Tory insiders felt that Crosby’s experience was just what the party would need for the campaign. But after he worked directly against it, it is very hard to see how he could return to the fold.
From our UK edition
As this recession drags on, I suspect that three groups—apart from the finance figures who behaved so recklessly—will bear the brunt of public anger: corporations and individuals who avoid tax, those who abuse the welfare state and those public servants who take advantage of their position to unfairly enrich themselves and their families. The politician who can learn how to harness this anger would show the electorate that they are on the voters’ side. The way to make this message cut through would be to go against type. So, for example, Cameron should emphasise that he’ll clamp down on tax avoidance rather than majoring on welfare abuse.
From our UK edition
Robert Chote, the director of the IFS, has a piece in today’s Times detailing just how bad the state of the public finances is. As Chote puts is, ‘public spending will have to be squeezed and taxes will have to rise’ whoever wins the next election. The real worry, though, is that Gordon Brown trashes the public finances so comprehensively in the next PBR before going to the polls that it becomes more expensive for this country to borrow: “The Pre-Budget Report assumed that the Government would continue to pay an average interest rate of only a little over 4 per cent on its debt.
From our UK edition
The argument raging in America over the AIG bonuses is basically the same as the one in Britain over Fred Goodwin’s pension. Those responsible for dragging their companies down and forcing the taxpayer to bail them out are receiving huge sums of money. To add insult to injury, the government could—and should—have done something to stop it. There are two schools of thought on where we go from here. One is that these case are a distraction from bigger, more important issues. The other holds that if public support is to be maintained for the unpalatable steps that are necessary to restore the economy to health, then the wrongdoers must be punished. In the case of AIG, Greg Mankiw of Harvard and James Surowiecki of the New Yorker put these respective cases best.
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The latest set of polls has created some grumblings among Tories, and CoffeeHousers, about the party not being further ahead. Personally, I’m highly sceptical of polls at the moment. British politics has, for obvious reasons, been too unusual in the past few weeks to make a snapshot of opinion that useful. But it is worth pointing that the Tories are ahead by the exactly the same amount in the ICM poll - whose numbers are comparable - as Labour were in August 1996. The similarities don’t end there: The Guardian also presented its August 1996 poll as good news for the government that was 12 points behind. Here are extracts from its report on that August 1996 poll: POLL PILES PRESSURE ON LABOUR. By Martin Kettle.
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Virginia Postrel’s column in The Atlantic this month makes for fascinating reading. In it, she highlight academic research that shows that the so-called ‘great moderation’ was not down purely to central banks or government policies, as central bankers and politicians wanted to think, but “changes in business practices that occurred for competitive reasons having nothing to do with macroeconomic goals.” As Postrel puts it, “The Great Moderation looks a lot like the staid 1950s, with better inventory management and more-flexible employment contracts.” The Federal Reserve then became a huge part of the problem with its aggressive cutting of interest rates in 2001.
From our UK edition
Rachel Sylvester’s column this morning contains this revealing statistical nugget: “As Lord Ashcroft told the Shadow Cabinet in a presentation about his private polling some months ago, there are more discontented potential Tory voters who have switched to the Liberal Democrats than the BNP.” This suggests that we are unlikely to see the Tories adopting a shrill, populist tone on immigration and other BNP issues. However it does make one think that the Tories missed a trick in not appointing Nick Herbert to DCLG with a brief to be bold on localism. Localism is a good Tory issue is that it makes public servants more accountable and will, over time, shrink the state. But it is also an issue that appeals to Lib Dem inclined voters.