Economy

Your three-point guide to today’s Ed Balls files

Less soap opera, and more policy grit, in today’s batch of Ed Balls files. There is, for instance, a lot on Gordon Brown’s proposed Bill of Rights (here, here, here and here), which is as ambrosia for future political historians, but is fairly turgid reading even for today’s political anoraks. Likewise the charts and doodlings related to the structure of Brown’s Downing Street. Yet some things do stand out. Here are a few of them: i) What the Treasury says, Brown didn’t do. You’ve got to admire the Treasury’s attempt to inject some realism into the fiscal calculus back in 2006. “Flat real” spending — i.e. public spending that rises

The welfare revolution will require much time and effort

Forget Balls, today brings one of the most significant moments in the life of the coalition so far: the launch of its Work Programme. The name may be commonplace but, as Fraser suggested earlier, the policy is revolutionary. Over the next year, around one million unemployed people will be enrolled on work schemes run by private companies and charities. Those companies will then be paid between £4,000 and £13,700 for every person they return to proper, long-term work. It is, evidence suggests, an effective and cost-effective way of getting benefit claimants back into the labour market — and it reaches those claimants that the state-run JobCentres can scarcely be bothered

Fraser Nelson

How the coalition hopes to fix Britain’s economic dysfunction

The largest welfare-to-work programme on the planet is launched today by Chris Grayling and Iain Duncan Smith. It’s not much of an exaggeration to say that the future of this country — and, perhaps, David Cameron – depends on its success. The lead article of this week’s Spectator looks at it, and we used various metrics — some of which puzzled David Smith of the Sunday Times. He understandably challenged our claim that 81 per cent of the new jobs created are accounted for by immigration. We had a Twitter “conversation” about it earlier this morning, but some things you can’t explain in 140 characters. So here is my argument:

Blair is still a believer

To an extent, British politics is still determined by whether or not you agree with Tony Blair. For more than a year, the coalition and the opposition have been debating whether to continue Blair’s public service reforms; this is a testament to his failure as Prime Minister as much as it to his success. Today, has given an interview to the Times (£), coinciding with the release of his memoirs in paperback. He uses it to question the Labour party’s current journey back into “nostalgia”. He says: “The attraction of a concept like Blue Labour is it allows you to say that there’s a group of voters out there we

The mystery of modern Turkey

What does Turkey actually think? That’s an issue that has been occupying many Europeans, as the vital NATO ally heads to the polls. On the one hand Turkey has in the last 10 years become more like the West: globalised, economically liberal and democratic. Turkey’s economy is now the world’s 16thlargest, the sixth largest in Europe. But, at the same time, questions arise about its recent policies: will it consolidate its democratic achievements, or is it threatened by a populist tyranny or even authoritarian rule? Certainly, many fear that Prime Minister Recyp Erdogan’s behaviour is moving Turkey away from the West, both in terms of internal policy and external alignmen.

Alex Massie

Politicians Are Not the Answer

Three cheers for Megan McArdle: I think Pawlenty’s claims are crazy–though not specially crazy.  They’re crazy the way that all political speeches on the economy are insane: they claim far more power over economic growth than any politician actually has. It is entirely possible that the economy will, for some period in the next few years, grow at 5%.  But if it does so, this will not be because Tim Pawlenty–or Barack Obama–have done something to cause it.  We don’t know how to lift real GDP growth much above its trend level, and we certainly can’t do so for [years o end]…  A really bad president can lower growth from

Paxman trips up Balls

Ed Balls walked into two traps on Newsnight yesterday evening. First, he seemed stumped when Jeremy Paxman asked him if he was praying that George Osborne was right. Paxman’s ‘gotcha point’ was that if Osborne isn’t right the country is in deep trouble and Balls wouldn’t want that. But Balls’ more serious slip was to say, “My view, though, is that the central outcome isn’t that we see a resumption of growth.” This, as coalition sources have been pointing out today, allows them to present any growth as a vindication of their strategy. For all the talk about the NHS today, the economy still remains the central battleground in politics.

Valuing the natural world

Today, the government launched its Natural Environment White Paper. This document is a vision for how we value and use nature, now and in the future. The public was heavily involved in the White Paper’s creation. Thousands of suggestions came from individuals and small local naturalist groups, right up to large national NGOs and bodies like the National Trust. This shows that concern for nature is alive and well in Britain. The paper was launched by Caroline Spelman; but, crucially, it received input from Greg Clark from Communities and Local Government and Norman Baker from Transport. The Treasury have also been close partners. The proposals seek to reconnect people with

The IMF delivers its verdict

While Dominque Strauss-Kahn was in a New York court room, pleading not guilty to charges of sexual assault, his former IMF colleagues were delivering their verdict on the UK economy at the Treasury. The IMF are very polite guests and their report has provided some timely support for the coalition’s fiscal approach by declaring that there is currently no need for a Plan B. The Osborne operation has been quick to point out that even in various alternative scenarios the IMF set out in their report, they don’t call for more spending or smaller cuts. But there are things which the IMF says that won’t be music to Osborne’s ears.

Ed Balls opens a new front in the same old way

There are plenty of pressing issues at the moment, but two in particular stand out: the cost of living and youth unemployment. Ed Balls lost no time in latching onto the first issue. On becoming shadow chancellor, he immediately attacked the government’s VAT rise and benefits changes, which he judged to be the main contributors to rising inflation. It has been a  successful tactic, sustained by rising inflation and determined political pressure. Now Balls seems to be turning his full gaze at youth unemployment. In article for the News of the World, Balls launches his campaign to save “Britain Lost Talent”. At the root of this is a plan to

The green consensus in action

A couple of days ago, I wrote about the deleterious effects of political consensus on energy policy. A good example of this has emerged today. According to Politics Home, Luciana Berger and Caroline Lucas are seeking an amendment to the Green Deal to impose a target for domestic carbon reduction. A number of salient points emerge from this. First, it’s a fine instance of the obsession with targets; itself an indication that this area of policy is largely a top down initiative – driven by targets, taxes and penalties. The Green Deal, as it currently stands, is one of the few areas that put incentive before directive. The idea was

The Euro’s uncertain future

Martin Wolf’s column on the eurozone today does a superb job of summing up its troubles. As Wolf says, “The Eurozone, as designed, has failed.” Keeping its current arrangements is simply not an option for the eurozone. Wolf concludes that: “The eurozone confronts a choice between two intolerable options: either default and partial dissolution or open-ended official support. The existence of this choice proves that an enduring union will at the very least need deeper financial integration and greater fiscal support than was originally envisaged.” The question now is essentially whether Germany and other prosperous eurozone countries are prepared to embark on further integration and a programme of fiscal transfers

The inflation battle heats up

He left with a warning. “I think that there is a big risk emerging to the credibility of the Bank,” said Andrew Sentance last night, on his final day as a member of the Monetary Policy Committee. And he continued, “If inflation does not come down in the way that the Bank is suggesting — and I think there is a big risk that is the case — then that is going to have a big knock on effect on the credibility of the bank’s commitment to its inflation target.” Sentance’s views are unsurprising. He has, after all, been pushing for an interest rate hike for some time, and for

Does the trouble at FIFA really matter?

The news that the votes which ended up with Russia and Qatar winning the rights to host the 2018 and 2022 World Cups might not have been model, clean elections is about as surprising as the news that the faeces discovered in the woods are believed to be of ursine origin. In the Independent today, Dominic Lawson cuts through the seemingly continuous media coverage of the matter to the question of whether it actually matters: “More to the point, given that there are no objective economic benefits to the nations holding such competitions (whatever the kudos to local political dignitaries such as Boris Johnson) shouldn’t we as taxpayers feel grateful

Britain’s other, bigger debt problem

And what about the other sort of debt? We spend so much time harrumphing about the national debt that an important point is obscured: personal debt, the amount owed by individuals, is even higher. I wrote an article on the subject for a recent issue of The Spectator, as well as the Thunderer column (£) for last Saturday’s Times. But, really, a piece in the latest Spectator (subscribers here) by Helen Wood — the former prostitute who transacted with Wayne Rooney, as well as with a “married actor” who has slapped her with a superinjunction — puts voice to the problem in blunter fashion. “My mistake,” she writes, “was to

In England’s green and pleasant land

What do the TUC, heavy industry and the European Commission have in common? This is not the start of a bad joke; the answer is that they all oppose the government’s energy policy. Ten days ago, Tata (formerly British Steel) announced that it was to cut more than 1,500 jobs at plants in Scunthorpe and on Teeside. The directors later confirmed that their decision was influenced, in part, by the introduction of a costly carbon floor price at the last Budget. The floor price, which exists on top of levies imposed by the EU, has increased the burden of taxation on energy consumption to subsidise renewable energy research. In last week’s

Meeting Christine Lagarde

The FT has been speaking to Christine Lagarde, the French finance minister tipped to become managing director of the IMF. A few salient points emerge from it. First, she has more than a dash of hard-nosed Gallic defiance. Responding to the charge of a lack of a qualification in economics, she reiterated the comments she made to the Today programme earlier in the years: “From what I know of the job, I think I can do it. One of the qualities that people recognise in me is my ability to reach out, to try to build a consensus, to bring people to the common interest while still being a very firm

Cable’s punditry could come unstuck

“It’s not imminent. But you can see this happening.” So sayeth Vince Cable about the prospect of another global financial crisis, in interview with the New Statesman today. To be fair, you can see his point: there is a pervasive sense that the contradictions of the banking sector still haven’t been fixed, and — as I have written recently — our economy, and economies worldwide, are still afflicted by debt of all varieties. But that’s not going to calm those Tories who regard Cable as a combustive liability. In the weeks since the Lib Dems’  annihilation at the polls, the Business Secretary has increasingly reverted to his pre-coalition form: a

Grading Obama’s visit

It was a good state visit. Actually, it has been an excellent visit. Much better than George W Bush’s and even Barack Obama’s 2009 trip to London. The US president got his photo with Wills ‘n’ Kate. The Prime Minister got his presidential high-fives. There were some odd points. The personal chemistry between David Cameron and Barack Obama made the ping-pong match better than it would naturally have been. For, let’s be honest, table tennis is not a natural US-UK sport. There were policy differences between the two leaders too, for example on Libya and deficit reduction. In the end, though, the way to judge visits is not to think

Obama re-affirms the special relationship

The speech was not a classic but Barack Obama’s address to both Houses of Parliament covered the bases today. He started with a winning line, remarking that the previous three speakers in Westminster Hall had been the Pope, the Queen and Nelson Mandela which is either “a very high bar or the beginning of a very funny joke.”   As is traditional in these kinds of speeches, Obama paid tribute to the special relationship, lauding it as the embodiment of the values and beliefs of the English-speaking tradition. He went on to say that both the British and the Americans knew that the “longing for human dignity is universal.” Indeed,