Who the hell is Sean Rushforth?

I have just posted a blog entry on swine flu. Within minutes of the post, I received a response from Sean Rushforth with a link taking me to the NHS swine flu web page. So who is Sean Rushforth? Well click on his name and you are taken to the NHS swine flu web page. Spooky. The NHS Swine Flu campaign is clearly monitoring political blogs. But why post the comments from Sean Rushforth? Who the hell is he?

UPDATE: Sean Rushforth is from a company selling flu drugs – I foolishly mistook the website for the NHS site – which I accept is not very bright of me. Note to self: don’t write about health issues again. For those that are interested in purchasing Tamiflu, I recommend Flubay.

Swine flu strategy called into question

I caught the tail end of an interview on the Radio 4 Today Programme on Wednesday with a London Doctor on the Health Service response to swine flu. He made three very pertinent points:

1. For the vast majority of people, swine flu is a mild version of ordinary winter flu. Far more people will die from general flu than from swine flu.

2. Tamiflu, the drug given to those that have illness, has little impact – it may cut the duration of the illness from five days to four. The Doc said he wouldn’t take it.

3. Most of the Hospital’s time is spent in monitoring the illness than on treating it. He receives about 8 emails a day from the Department of Health and other health bodies asking for information relating to swine flu.

So we have an illness that is relatively harmless, with no effective way of treating it and processes that are more focused on administrative niceties. Now I’m no Doctor, and perhaps this chap is a bit of a maverick who underestimates the danger of swine flu and the effectiveness of the medicine. But if true, it certainly calls into question the way the Government are dealing with the outbreak.

The Government keep telling us that we should not panic, but then take out double page adverts in national newspapers that create the opposite effect. It would be fascinating to know what advice the Chief Medical Officer and other health officials gave to Ministers on how to deal with this. Have Government Ministers deliberately over-egged the illness for some politically inspired reason? Maybe time to submit a few Freedom of Information requests.

So much for localism

One of the few policy areas where the Tory Party has issued quite a lot of detail is the idea of localism. Under the Tory plans, local councils will be empowered to make decisions on planning and all the national levers which put pressure on councils to support development will be abolished.

The development industry is understandably terrified. The recession may have brought construction to a halt, but there is little chance of it getting going again if it’s reliant on local councillors giving planning approval. Anyone who has been to a Council Planning Committee will know that Councillors refuse the smallest of schemes (porch extensions or roof conversions) on the flimsiest of excuses. Localism will be a charter for NIMBYism – the opportunity to say ‘NO’ to anything and everything.

So there may be some smiles in the development industry with today’s announcement that Tory Central Office is not allowing local parties to choose the next batch of Tory candidates. Eric Pickles, the Tory Chairman who did so much to develop the Tory Localism plans when he was Local Government spokesperson, has ruled that Central Office will decide which candidates will be shortlisted.

My guess is the Tories will do the same in Government. There will be a Localist Bill in the new Government's first Queen Speech but by the end of the Parliament they will be centralising powers in the same way that Government’s always do.

You have to respect Fox News...

...diligently covering the Obama administrations efforts to create peace in the Middle East. Though it seems something is not quite right in this picture... hmmm. A wry smile for those who can see it.

Political campaigning takes a dive

How many times have the Tories accused the Lib Dems of dragging politics into the gutter? I have to say, there are times when I agree with them.

But Tory candidate, Leah Fraser, has taken negative campaigning to a new level by taking out a full page advert on the expense claims of her opponent, Labour MP Angela Eagle.

Is this the start of a wider Tory campaign? I fear the next election could be one of the nastiest elections ever fought. I don’t think we’ve seen the last of this and I’m sure there are Lib Dem candidates probably planning similar stunts.

Lembit pulls a cracker

Lembit Opik is back in the headlines, this time for pulling the wonderbra bird, 21 year old Katie Green. I have to say good on you boy. But, I just don’t get it. Can someone explain it to me?

Yours, a very jealous Cobden

Privatise the road network

The Tories are thinking of introducing tolls on new roads as a way of funding desperately needed infrastructure in this age of austerity.

I think is a wholly sensible idea. Indeed, it rather begs the question, why don’t they go further? If tolls are right for new roads, why not introduce them on existing ones?

Indeed, why not privatise the primary road network altogether and allow the new private sector owners to toll users? This way, the state could release value from this huge asset helping to pay off public sector debt and providing a funding stream for new infrastructure. It would also reduce the state’s liabilities on long term and on-going road maintenance costs. And, it would help tackle congestion with a market system that would make the most efficient use of the road network by giving financial incentives for people to travel at non-peak times.

I can’t think of any reason against the idea, apart from the fact that it may not be that popular with the electorate given that they’ve enjoyed free, state funded roads for generations.

Councils killing off local newspapers

As a general rule, I disagree with Andrew Gilligan, but every so often he comes up with some wonderful investigative journalism that uncovers public sector waste.

In tonight’s Evening Standard, for example, he has written a great piece about how local councils are putting local newspapers out of business through their own publicly funded newspapers.

My initial reaction was surprise – if you see the marketing crap that comes from Surrey County Council, you would have to conclude the Surrey Advertiser has very little to worry about.

But by all accounts, some Council’s actually prepare very well written weekly newspapers complete with TV listings and Sudoku, and ‘at little or no cost to the taxpayer’. What Gilligan does very effectively is delve into the finances in more detail and what he uncovers is that they are funded in the main by adverts taking out by public sector bodies, which in return, are guaranteed positive editorial coverage. Tower Hamlets secures over £1 million of advertorial funding from public sector bodies.

As a consequence, many local newspapers that have an independent editorial position, are losing advertorial spend from the public sector. Yet, the biggest worry about this trend is not just the abuse of public money, but the loss of a local free media and the role they play in holding our local politicians to account.

At a presentation in Sheffield last year, a copy of which was obtained by the Standard, Tower Hamlets' head of commercial operations, Chris Payne, set out the philosophy behind this behaviour.

Many independent local papers, he said, "churn out a negative diet of crime and grime, often attacking their local council and generally creating a negative impression". Council papers, by contrast, "help create a positive place-shaping agenda, talking up an area and its residents' achievements, celebrating diversity and opportunity for all".

This is a strategy that the greatest propagandist of the lot, Joseph Goebbels, would be proud.

Labour heading for electoral meltdown

This blog has been predicting a Tory landslide at the next election now for a very long time. I say this not because Cameron’s Tories are particularly popular – they are not – but because Gordon Brown is universally despised. The result in Norwich North confirms this. If Brown remains Labour Leader, we are looking at a Tory majority at the next election of at least 100 and possibly up to 200.

For the last few months, polls have shown Labour’s vote in the 23-27% region. The last time Labour polled this poorly at a General Election was in 1983, when they won just over 200 seats. As in 1983, the Tories will be the main beneficiaries taking the bulk of suburban England. But Labour’s woes will be worse next year – seats that were totally safe in 1983 will no longer be in 2010. The Lib Dems have demonstrated they can now beat Labour in the cities, while in Scotland and Wales, the SNP and Plaid can win in what were Labour heartlands. If Labour poll in the 20’s in 2010, we could be looking at a Labour meltdown of 1931 proportions.

The more realistic folk in Labour circles hope that if they can push their vote up to the low 30’s, they could possibly force a hung parliament. Usually, you would expect the Government of the day to galvanise support as you approach the election. But this time, if there is any shift, I feel it will move against the Government for the following reasons:

1. The economic conditions will deteriorate between now and the election. While we may be seeing the first green shoots of recovery – with the FTSE 100 rallying - the factors that matter to ordinary people will only get worse. Unemployment will continue to rise for most of the year and will be at the 3 million mark at the time of the election. Inflation will also start to re-appear (partly prompted the fuel levy increase in September and the VAT reversal on 1 January 2010).

2. Cameron will destroy Brown in the presidential style elections we now have in the UK. Brown has no positive attributes to promote to the people. Cameron, on the other hand, has a strong, slick team around him that will be totally prepared for the coming election.

3. The Tory key seats strategy is very well organised and resourced – Labour’s grassroots organisation, on the other hand, is in most areas non-existent. This could be even more important at the next election when there is a huge opportunity through local campaigning to exploit local anger against the MPs expense scandal.

Some Lib Dem blogs have been despondent about the Lib Dems poor showing in Norwich. This is irrelevant. By-elections are all about a party establishing themselves as the main challenger – this was always going to be the Tories in Norwich.

The problem for the Lib Dems at the next election, however, is that many Lib Dem MPs were elected in 1997 as the more acceptable face of the anti-Tory coalition. This time, the voters will be voting against Labour and its policy agenda. The Party desperately needs to shed itself of its left leaning social democratic image. It seems that the Party leadership is beginning to recognise this. This week, Clegg announced plans to drop spending commitments on tuition fees and free care for the elderly. Let’s hope that Clegg can drag the Party in a rightward direction. If he can’t, the Lib Dems will go the same way as Labour at the election.

A Government success story at long last - 50 pubs close each week

The British Beer and Pub Association have warned that a staggering 50 pubs are closing each week. They put it down to the recession with hard up punters drinking at home as it’s cheaper. Rural pubs are said to be the worst affected.

I love pubs. There are few things in life more enjoyable than going down the local for a few pints of real ale. Yet, in many ways, I’m one of those people responsible for their decline as I spend more time drinking at home now than I did a few years ago – although in my defence this is as much to do with the arrival of two young children in the household rather than just financial considerations. I will certainly be quoting the BBPA’s report to Mrs Cobden as evidence that my trips to the pub have an important community benefit and that my quota of nights out therefore needs to be significantly increased.

While I am sure pubs are feeling the pinch of the recession like the rest of us, I can’t help feel that the Government’s anti-alcohol campaigns over the years are beginning to take their toll on the industry. Increased taxes, more stringent regulations and health marketing campaigns all have one objective – to get us to drink less. So it’s hardly surprising then that pubs are closing – it is an inevitable consequence of Government policy and sadly, their policy seems to be working.

Will victory over Australia at Lords lead to European War?

Congratulations to Freddie Flintoff and England for their fantastic victory yesterday. After last week’s performance in Cardiff, I feared the worse, particularly as England hadn’t beaten Australia at Lords in 75 years.

Now Tory MP, the Sven Goran Eriksson lookalike Peter Bone, has hailed the victory as evidence that the Tories are on course for election success next year, saying "history repeats itself". He told MPs:

"In 1934 there was a Labour government in deep trouble in the midst of an economic recession. The only bright spot that year was the England cricket team beating the Australians at Lord's. The following year Labour was turfed out and a Conservative government elected, leading the country out of recession."

Bone failed to mention that Tory Government also went on to pursue the disastrous policy of appeasement that led to World War II.

Don’t worry too much though, Bone’s history is not very impressive. By 1934, we didn’t have a Labour Government but a National Government, the bulk of whom came from the Conservative benches.

Lib Dem MPs read the Metro in the week and nothing on a Sunday!

I’ve just been sent a poll from ComRes about the reading habits of MP’s and Peers.

Asked which daily newspapers do you read at least twice a week, the figures for the Lib Dems are as follows:

Liberal Democrats MPs’ Top 5 Most Read Newspapers

1 The Times 72%
2 Evening Standard 71%
3 The Guardian 61%
4 The Independent 48%
5 Metro 32%

Slightly surprising to see The Evening Standard and (freebie) Metro score so high when you consider most Lib Dem MPs come from the far flung parts of the country.

Hardly surprising, the most read newspaper among Tory MPs is the Telegraph (80%) and for Labour, it's the Guardian (78%).

And on Sunday, the figures for Lib Dems is as follows:

Liberal Democrats MPs’ Top 5 Most Read Sunday Newspapers

1 The Observer 48%
2 The Sunday Times 32%
3 Sunday Telegraph 21%
4 None 18%
5 Independent on Sunday 11%

18% of them don’t read a single newspaper on Sunday! That seems a staggeringly high figure. By contrast, just 4% of Tories and 7% of Labour MPs admit to not reading a newspaper on Sunday.

The challenge for the Lib Dems

For the first time in many months, there is an air of optimism among Liberal Democrats, fuelled by Labour’s continued dismal opinion poll ratings and the Tories inability to seal the deal. If the Tories are unable to get above the 40% level, Liberal Democrat MPs defending seats from the Tory challenge will feel competitive, while candidates like Ed Fordham in Hampstead will be growing in confidence that Labour seats are there for the taking.

Despite this, I remain pessimistic about the Party’s prospects, although I accept the Party’s fortunes have improved since the MPs expense row. Although Cameron has failed to convince the voters in the same way that Blair did in the mid 1990’s, I still sense that the mood of the country is for change, and the Tories are best positioned to benefit from this.

For the Lib Dems, there are still some significant challenges and obstacles to electoral success:

1. The major beneficiaries of the MPs expense scandal have been the ‘Other Parties’. It is unlikely that these fringe parties will be able to hold onto this support as we move towards the General Election, and I guess that this protest vote will move predominantly to the Party best placed to beat the Government – the Tories.

2. The Tories are getting their campaigning act together at a local level. Community campaigning has traditionally been the strength of the Lib Dems. Tories, backed by Lord Ashcroft’s funding and support, are now matching, if not trumping the Lib Dems in the quantity and quality of local activism. If voters want a hard working social worker as their MP, there is no reason anymore to choose the Lib Dem over the Tory candidate.

3. Despite his obvious political frailties, Gordon Brown is an effective political strategist who will be want to focus the debate on Labour good vs Tory bad. His intention will be to squeeze the third party/ies out of the debate, in exactly the same way he successfully did in the last Scottish Parliament elections.

4. If the election is close, how will the Lib Dems handle the issue of which party to support in the event of a hung parliament? Back the Tories, and send Labour waverers back to Labour. Do the opposite and scare off the Tory/Liberal voters. And by evading the question altogether, you risk alienating both groups of voters.

The Lib Dem success at the last three elections has been built on an effective key seats and targeting strategy. I fear this may have clouded the judgement of the Party’s professional campaign team who are focused too much on organisational issues rather than the power of the message. For the first time since 1992, the Party’s national narrative may be the most important issue in determining success or failure. In my humble opinion, the Lib Dems are still some way off a convincing case that can be put to the voters.

Reach for the champagne?

Not yet, but more signs of those green shoots today with the news that investment banks are returning to profit and paying big bonuses again. The quicker city bankers start buying booze, strippers, fast cars and real estate, the quicker we return to growth.

And for all those whinging lefties, remember bank profits mean hundreds of millions in tax for the government and those pet projects. Everyone's a winner!

Time to bring the troops home

Afghanistan is becoming the Vietnam of our generation, only this time British troops are dying. We are getting sucked into an unwinnable war, with no clear military objective and with no exit route bar national humiliation. Yet there is one big difference – where are all the protesters?

It is not as though protesting against wars is out of vogue and something that was exclusive to the 1960’s. People marched in their millions against the Iraq war. Cabinet ministers resigned and there was great political theatre and debate in Parliament. The Iraq war dominated the media headlines for months, if not years. With Afghanistan, we’ve had none of that. I’m beginning to think the protesters picked the wrong war.

This weekend, as the war in Afghanistan deteriorates, Gordon Brown and David Miliband have taken to the airwaves to try and convince us of the mission. This is ‘a battle for Britain’ we are told and that failure to act in Afghanistan will bring terror back onto the streets of Britain. Bollocks.

How on earth is arm to arm conflict with some religious nuts in Afghanistan going to make a difference here? That argument may have had some merit when al Qaeda operated from the country but the Mullahs and the Taliban (disagreeable as they may be) do not pose a threat to mainland Britain. If national security is our motive, why aren’t we bombing Pakistan (where al Qaeda now reside), or for that matter, Saudi Arabia and Iran, two countries that have effectively exported Islamic terrorism around the globe?

There may be merit in the strategic bombing of parts of Afghanistan and in Special Forces operations where there are clear military objectives that undermine the capacity of organisations like al Qaeda but the idea of building a democratic and progressive liberal nation in this vast and lawless land has always been naive.

Over the weekend, I have been struck by the number of TV interviews that have inadvertently highlighted the confusion of the West’s position. A typical one has gone along these lines:

TV presenter: How long do you think it will take to win the war in Afghanistan?
Afghan expert: Well it depends on how you define success.

Answers like that should send out alarm bells. If you don’t have easily definable objectives, military operations are always likely run into trouble. Liberate Poland. Re-occupy the Falklands. Topple Saddam. You may agree or disagree with these objectives, but you know exactly what the objectives are. I can’t tell you what the military objectives are in Afghanistan and I guess if you asked 10 cabinet ministers you wouldn’t get a consistent response either.

Following his election, President Obama had the opportunity to strike out in a new direction in Afghanistan and provide the West with a face saving route out of the quagmire. He failed to take it. Now, Obama doesn’t know whether he is fighting a war or spearheading an NGO development initiative.

As the muddle in political and military thinking persists, British troops continue to needlessly die. There is an urgent need to develop an exit strategy. The longer we leave it, the more humiliating will be the ultimate departure.

Dampening the ashes

Why has it taken so long for test cricket to reach Wales? England's only hope in the first test now is the legendary welsh weather. Let's hope for more rain tomorrow.

In fact, why not hold the remaining four tests in the principality. The hills of Plynlimon in the Cambrian Mountains would be an ideal location. It could be the only hope for drawing the series.

An enlightening tale on the stupidity of Government intervention

The history of Government is paved with good intentions, only for its actions in the most part to have unforeseen and harmful consequences. There’s a wonderful story in today’s Telegraph about the implementation of the Carbon Emissions Reduction Target. It has all the hallmarks of a Thick of It or Yes Minister script.

Hundreds of millions of old-fashioned low energy lightbulbs have been mailed to British families that often cannot use them, official documents show.

The Department of Energy and Climate Change admits that it is "concerned" at the mailings – described yesterday by campaigners as a waste – and has agreed to ban them.

But it has decided not so do so for another six months to allow even more of the bulbs to be sent out - even though every home in the country has already, on average, received at least eight of them.

Experts believe that vast numbers of the compact fluorescent lamp (CFL) bulb are stored away, never to be used, and thrown out to end up in landfill, where they pose a potential pollution problem.

Light manufacturers retailers are worried that potential customers will be discouraged from buying their products.

The bulbs have been distributed by gas and electricity companies as a cheap way of meeting a Government obligation to help their customers save energy, under an official scheme called the Carbon Emissions Reduction Target.

The idea was that the companies would subsidize households - especially "low-income, vulnerable or elderly" ones – to save energy by measures like installing loft and cavity wall insulation.

But the Department admits that about a third of the companies efforts have instead bought up and sent out the cheap bulbs, in the hope that householders might use them.

But it adds that these have overwhelmingly been the most old fashioned and ugly "stick-type" CFLs, hated by many people, and that they have often had screw fittings that cannot be used in the bayonet sockets found in most British homes.

It reports that "around 200 million" of the "unsolicited" bulbs have so far been sent out under the scheme.

There is a lesson here. We have a very effective system of distributing goods in the most efficient and sustainable way. It’s called the market. We shouldn’t tamper with it.

Time to leave Afghanistan

How many more troops will need to die in the futile war in Afghanistan? I have never supported it. I say this not as an anti-war activist – I supported and continue to support the war effort in Iraq. But unlike Iraq, which has seen the toppling of Saddam and the first tentative steps towards a more democratic and prosperous society, I can’t see how any long term, sustainable improvements can be secured in Afghanistan.

This is what I wrote over a year ago. It seems more pertinent today following the news that another British soldier has died, taking the death toll up to the same number that died in Iraq. How much longer before Afghanistan becomes the more deadly conflict? I give it 24 hours.

This week, the media reported the death of the 100th UK soldier killed in action in Afghanistan and Gordon Brown’s plans to increase troop numbers in the country to 8,000 by next spring.

The numbers of UK troops killed in Iraq is 176, even though there was almost four times as many involved at the height of the Iraq war than are now deployed in Afghanistan.

Despite all the problems since its invasion or liberation (depending on your point of view), there are now signs that Iraq has turned a corner. The number of deaths of both Iraqi and foreign troops has fallen significantly, particularly since the American surge. It is now possible to envisage a post-Saddam Iraq that is more democratic, free and prosperous. Opinion polls show Iraqi’s growing in confidence about the future. With its vast oil reserves and strategic geo-political location, one can begin to see the merits that a democratic, pro Western Iraq could play in regional and global politics over the coming years. The period following the collapse of Saddam’s regime may have been botched by the allies, but it is still possible that the Neo-cons will be vindicated in the longer term.

It is difficult to be so positive about Afghanistan. The removal of the Taliban regime is to be welcomed but there is little sign that NATO’s presence has undermined al Qaeda or the country’s ability to grow and export heroin. History shows that it is very difficult for outside occupiers to establish order across this vast terrain, as both the British and Russians can testify. The military now talk about being in Afghanistan for thirty years. We are being sucked into an un-winnable war for a land that has little strategic value either politically or economically.

Gordon Brown has made a fundamental mistake by redeploying British troops from Iraq to Afghanistan. He did it to satisfy domestic public opinion (that was opposed to the Iraq war) whilst simultaneously trying to appease the Americans (through the offer of more support in Afghanistan). How many more British servicemen and women will have to sacrifice their lives until the nation wakes up to this?

Has Andrew Lansley been watching the news for the last 18 months?

Tory Health Spokesperson, Andrew Lansley, has this week called for a real terms increase in spending in the NHS after 2011 and is urging the Labour Government to match his commitment?

Has Andrew Lansley been watching the news? Does he not realise that we are facing the worst public debt levels in our history? Hasn’t he read the warnings from organisation like the Institute of Fiscal Studies that we face the biggest sustained cuts in public spending since the 1970’s?

And why can’t savings and efficiencies be made to the NHS budget? End the gold plated NHS pensions. Scrap the disastrous NHS IT project.

It really is quite worrying when a spokesperson for what is likely to be the next Government is proposing even higher spending than this current profligate one.

I won’t be raising my glass to Teather

Just been watching BBC Question Time, and see that Sarah Teather is very articulate about the liberties of suspected terrorists but a complete authoritarian killjoy when it comes to my freedom to enjoy a glass of wine at home.

Why are so many Liberal Democrats passionate about the rights of terrorists, criminals and asylum seekers but complete f***wits when it comes to the rights of the majority of us to make our own choices about the way we lead our lives?

On the issue of whether we can enjoy an alcoholic drink, Andy Burnham, the Health Secretary, was the most liberal. Hardly inspires much confidence in the Lib Dems as a liberal party.

Something’s been bugging me

There’s been something on my mind for a while now. How is it that the Tories announce a policy one day, only for the Government to come out with the same, identical initiative the next? It’s as though the Tories have a mole on the inside stealing Government policy announcements as they are being conceived. And how is it that the Tories seemed to know about James Purnell’s resignation before the Government? It continues to bug me……

Local Government and the squishy fish

Mrs Cobden has spent much of the week in Harrogate, trying to lobby Councillors at the LGA Conference. She arrived back on Thursday evening with bagfuls of goodies for the kids – we’ll probably be spending the weekend throwing out some of the old toys to make way for the new.

We’ve got squishy morph like creatures, boxes of sweets and a ‘Finding Nero’ style, squishy orange fish with the words “Peterborough City Council: Business Transformation” on the side. By all accounts, there were loads of bespoke exhibition stands where local authorities were promoting themselves to the thousands of Councillors and Council Officers that attend this event.

You do wonder what it’s all for. I get cross enough when my Council waste money on sending me marketing crap about themselves. Why a local council should be paying to give a Councillor from another council a squishy fish seems utterly incomprehensible.

Mrs Cobden was perplexed by this too so asked the question to one of those people manning the stands. She was told that ‘we get a budget from Government, because we are a beacon council, to promote good practice to other local authorities.’ So the squishy fish are part of the Government’s strategy to improve public services across the country.

I can’t complain too much. Mrs Cobden also brought home some golf balls and a nice leather score card from Cheshire East Council. Inside the score card are lots of facts about the Council such as its population and that it has 81 councillors and 14,000 staff. It also tells me that it has a budget of £235 million. Not suffice with wasting taxpayers’ money, they want to rub in the scale of what they squander.

No doubt, Gordon Brown sees all this as part of his fiscal stimulus package. I say it’s time to strangle the squishy fish and take an axe to these practices.

Public incompetence: private entrepreneurship

A story arrives from the Bristol Evening Post:

Outside Bristol Zoo is the car park, with spaces for 150 cars and 8 coaches. It has been manned 6 days a week for 23 years by the same charming and very polite car park attendant with the ticket machine. The charges are £1. per car and £5. per coach.

On Monday 1 June, he did not turn up for work. Bristol Zoo management phoned Bristol City Council to ask them to send a replacement parking attendant.

The Council said "That car park is your responsibility." The Zoo said "The attendant was employed by the City Council... wasn't he?" The Council said "What attendant?"

Gone missing from his home is a man who has been taking daily the car park fees amounting to about £400. per day for the last 23 years...!

That's £125k per year...not taxed. Genius!

Tories to kill off private equity funds

There is an interesting (and well briefed) article in today’s Daily Mail, on Tory plans for ‘the most far reaching changes to the economy in a generation.’

One of the ideas being floated by the Tories is to slash corporation tax, which will be paid for by preventing companies from off-setting corporate tax against debt interest. It is precisely this ‘tax loophole’ that private equity funds use to dodge this business tax.

Private equity funds use borrowing to acquire very profitable businesses (that were paying high levels of corporation tax.) But as the new owners are able to offset these profits against that borrowing, they can structure the business so they don’t pay any corporation tax at all.

It gives private equity companies a competitive advantage over other business models that are more prudent and not as reliant on borrowing and debt. The Tories are now talking to the City about their ideas.

Many Labour politicians, driven by their hatred of private capital, would love to kill off private equity funds. Wouldn’t it be ironic if the Tories ended up killing off the private equity fund model as part of their legitimate drive to reduce corporate debt levels?

Recession will widen north south divide

Eighteen months ago, we were being told that the credit crunch was a southern phenomenon, something which will hit the investment bankers in London but not necessarily the rest of the country. Not anymore.

According to the Centre for Cities think tank, the north is being hardest hit with what they call the marginal cities (such as Sunderland and Hull) suffering far more than the core cities (like Manchester and Leeds). Monthly unemployment figures seem to be confirming this trend.

This is one of the most bizarre and unexplainable trends of this recession.

So far, almost all the pain has been in the private sector – the public sector has been relatively insulated from the downturn. Yet, the public sector accounts for around two-thirds of economic activity in regions such as Wales and the North East. So logic would suggest that those areas should have suffered least. But this does not seem to be the case. The only explanation for this is that privately run companies in the marginal cities of the north are failing at much higher rates and laying off staff in much greater numbers than their counterparts in the south.

Over the next few years, the north will face another hammering – the inevitable squeeze in public spending – which will hit northern areas disproportionately more than the south. So the north faces a double whammy of private and public sector contraction.

In reality, the situation is far more complicated than a simple north south analysis. As the Centre for Cities allude, cities such as Manchester and Leeds have prospered in recent years and there is no reason why they will not continue to grow as the UK emerges from recession. Yet, it is difficult to see places like Grimsby or Merthyr Tydfil prospering.

Over the last sixty years, Governments of both parties have spent a huge amount of money on ‘regional policy’ – of encouraging and subsidising businesses to relocate to places like Grimsby and Merthyr. It has been a dismal and costly failure. One of the good things that could emerge from this recession is the realisation that such policies are in vain and provide no sustainable futures for such areas.

Instead, we could adopt a new approach where it is recognised that London, the corridors into London such as the M11 and the Thames Valley, and the core cities such as Manchester, Birmingham, Cardiff and Leeds are the UK’s economic powerhouses of the future. These need the capacity to grow with more homes, business space, bigger airports and improved transport infrastructure.

And what of those ‘marginal’ and fringe areas? They could become places where people go to get away from the hustle and bustle of modern life – to take a weekend break, buy a second home, drop out and live alternative lifestyles or retire. It doesn’t seem to have done Cornwall too much harm.

Strange by-election timings

The writ for the Norwich North by-election has been moved – and the by-election will be held on Thursday 23 July.

Interestingly, the writ for the Glasgow North East by-election has not been moved and if it is not moved today, that by-election will not take place on the 23 July. Given that it is unlikely that the by-election can be held later in the summer break, it looks increasingly likely that the Glasgow by-election will now take place in September.

This seems a bizarre strategy on Labour’s part. You would have thought that they’d want to get the bad news out of the way on the same day before the summer break. Instead, Labour faces a double whammy of bad news – as MPs leave for the summer break and again when they come back. Very odd.