Friday, 5 December 2008

Queen's Speech 2008 Part III - schizophrenia

Our government is chronically schizophrenic. We have seen this most vividly in recent weeks in its approach to banks and economic policy generally. It vilified the banks for getting themselves into trouble by lending too much money to people who were a bad risk then insisted they continue lending at 2007 levels - levels which can only be reached if you lend to bad risks. It told us that its ownership or part-ownership of banks would be at arms' length, then at the first sign of the banks doing something the government didn't like it said they must come to heel because they are beholden to the government for bailing them out. It said we must all save more money then sought to dampen the recession by encouraging us all to spend. And that particular piece of double-think turned into triple-think because their main measure to encourage spending was something which would not generally reduce prices.

In the Queen's Speech were three measures showing just how deep and dangerous governmental schizophrenia has become. They cover business, the role of Parliament and (the real corker) welfare.

"My Government is committed to helping ... businesses through difficult times." Fine words, so what is it that the government proposes to help businesses. You have to search for this but there is a plan to help the cash flow of construction companies. The details do not seem to have been published yet, so it is impossible to say whether it might work. As far as I can tell that is the only thing in all the proposed new legislation aimed at making life easier for businesses. And to show how much they understand business, they propose to allow local authorities to raise supplementary taxes on businesses. Brilliant. Helping businesses through difficult times by taxing them more. Why didn't we all think of that?

"My Government will continue to take forward proposals on constitutional renewal, including strengthening the role of Parliament ..." I sometimes think the Queen must be embarrassed by having to use meaningless terms like "constitutional renewal", she knows better than anyone that the constitution does not need renewal because it is not about to expire, it's not like a parking permit. Or is it? Many of us believe that the current government has done more damage to the flexible and pragmatic British constitution than any in modern times. Perhaps that is why they made her say "renewal", perhaps they realise the damage they have done by supplanting cabinet government and parliamentary scrutiny in favour of a small coterie of insiders who answer to no one. Somehow I doubt it.

At a time when the Prime Minister refuses to answer questions in the House of Commons, the Home Secretary knows nothing and wants to know even less, national business strategy is in the hands of a sleazy spindoctor with little on his CV other than two forced resignations for being unfit to hold office, the impending closure of much of our capacity to generate electricity is answered with the pixie dust of windmills, the government stands four-square behind a partisan and incompetent Speaker of the House and the Opposition cannot oppose without fear of arrest, are we really expected to believe that the role of Parliament will be strengthened? How can they make the Queen say these things and still sleep at night?

And then there is welfare. Their proposals here are so contradictory it is almost laughable. On the one hand they say they are going to impose sanctions against those drawing benefits who refuse to try to find work. On the other hand they are going to make it the law of the land that so-called "child poverty" will be abolished by 2020. Let's cut through the weasel words. "Child poverty" means children growing up in families whose income is less than 60% of median earnings. Median earnings are currently around £26,000 a year before income tax, so 60% is about £15,600, equivalent to something around £300 a week. So they say no child will be in a family with a weekly income of less than about £300. A fine sentiment, I support it entirely as a jolly nice thing - if it can be achieved. So everyone is to be guaranteed an income of £300 a week from work or benefits or a combination of both? Ah, no, because those who don't want to work will have their current income reduced, in many cases to well below £300 a week. You simply cannot have a minimum guaranteed income (so as to meet the poverty target) if you also have a system of financial punishment for the indolent and feckless. You can't. You might want to, but you can't do it, the two cannot exist together.

I hear you say: "don't be such a silly fat bigot, Mr FatBigot, of course it can be achieved by imposing financial penalties only on benefit income above £300 a week", but that is not their policy and nor could it be because current benefit payments are well below that level in many instances. And then I hear you say: "or they could preside over a massive recession/depression so that median income falls far below current levels". Let's hope that is not what they expect and it certainly is not their policy. For all that I complain about their incompetence and their fiscal incontinence, I have no doubt that the government genuinely wants the people of this country to get richer. It's just that they show no sign at all of knowing how to achieve that. In any event, if incomes do fall substantially so will rents which, in turn will mean the amount paid in housing benefit will fall thereby making it even more difficult for those on welfare to hit the £300 a week mark.

There are other aspects of the measure in the Queen's Speech which can also be criticised as the product of governmental schizophrenia. These three caught my eye in particular. On a more general point, the biggest problem hitting much of the economy at the moment is a lack of confidence. A government with a clear plan and an unambiguous strategy to ease and then overcome recession can do a lot to restore confidence. That is one reason the country recovered so well from the recession in the early 1990s. After the disaster of the Exchange Rate Mechanism there was a significant change of approach, presented in a clear and consistent way by a plain speaking Prime Minister and even plainer speaking Chancellor of the Exchequer. There was no double-talk, no muddle of policies pulling in all directions at once. At the moment no one can tell what the government really wants or how it aims to achieve it.

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