The need for discretion in law enforcement

There was a time when substance had precedent over form. The best examples I ever saw of this were in my early appearances in Magistrates' Courts as a fledgling barrister. While waiting for my tiny and inconsequential hearing to come around I would witness how things actually happened, not what a textbook said, not what an Act of Parliament said, not what might be portrayed in a television drama, but what actually happened.

Take this, for example. Mr Bloggins has been summoned to court because his car was seen on a public road without a current tax disc visible in the window. For the benefit of anyone who does not know, in the UK we have to pay an annual tax, known as vehicle excise duty, if we keep or use a car on a public road. The receipt given for this tax is a paper disc showing the registration number of our vehicle, the amount paid and the period for which we have paid. Mr Bloggins turns up with the tax disc which clearly shows it was issued prior to the date of the alleged offence. The Act of Parliament made it an offence to have a motor vehicle on the road without displaying a vehicle excise licence (tax disc). The offence was not failure to pay the tax of failure to be in possession of a tax disc, but failure to display a tax disc. If he turned up with a little circular piece of paper with perforated edges showing he had paid his road tax for the relevant period, the summons would be withdrawn. The prosecutor would explain to the court that Mr Bloggins had in fact paid the relevant tax and has the disc as evidence of that, and the magistrates would agree to the case against him being withdrawn. In almost all instances Mr Bloggins would not be required to pay any costs and would not receive an admonition for his error.

You see, anyone with any common sense will understand that failing to display a receipt for a tax is a purely technical default. Of itself it does no harm to anyone or anything. The substance of the offence lay in a failure to pay the tax even though the way the Act was worded it was failure to display the receipt which was the actual offence. Any prosecutor daft enough to seek to continue a prosecution once shown irrefutable evidence that the tax had been paid would have faced an immediate question from the bench: "what's the point of this prosecution when Mr Bloggins has paid the tax?" On being reminded of the wording of the relevant part of whatever Road Traffic Act it was, he would have been reminded that the court was interested in the substance of the thing.

The modern way is to promote form over substance, especially when it comes to many of the minor infringements of the law punishable by fixed penalty notices rather than criminal prosecution. Drop a bit of litter and there is no one to turn to when you are slapped with a £50 ticket on the spot. A court, on being satisfied by your evidence that the littering was entirely accidental and happened when you pulled your handkerchief from your pocket and unintentionally dislodged the business card of Chantelle (the quick relief therapist at Madam Fifi's Sauna and Hanky Panky Parlour), might well clear you of the accusation completely. Or, if satisfied that you were careless but not intentional in your conduct, impose a far lower penalty than £50. None of that comes into it now. No sooner have the words "let Chantelle French polish your helmet" hit the tarmac than you are down £50 and that is that.

I was thinking of this (discretion I mean, not Chantelle) a few months ago after running into an old chum who sits occasionally as an adjudicator hearing appeals against parking tickets and other fixed penalty notices issued for car-related wickednesses. He explained to me that his role is limited to looking into the strict legality of the matter and that he has no discretion. No matter how much sympathy he might have with the plight of the appellant and no matter how minor or technical the infringement was, if there was an infringement of the strict letter of the law he must uphold the penalty notice. He can only quash a notice if, for example, the signs denoting the restriction on parking did not comply with the relevant regulations or were ambiguous or misleading.

Law enforcement is an important part of setting the atmosphere in a country. There are two extreme positions which are guaranteed to lead to discontent - arbitrariness and inflexibility. Random enforcement subject to the whim of the enforcer can lead to corruption and increased lawbreaking but its greatest fault is that the people never know where they stand. Inflexibility is guaranteed to lead to seething resentment among those who believe they were treated unfairly when genuine mitigating circumstances were ignored.

A degree of arbitrariness is inevitable because those who decide how and against whom to enforce laws are human beings and exercise their own judgment. It is impractical to expect these decisions to be uniform, nonetheless the risk of wild variation can be tempered by guidelines, training and discussion between those making the decisions. Similarly a degree of inflexibility is inevitable because a standard has to be set and sometimes that means a minimum sentence for a particular offence. The task of government is to reach a sensible balance.

We are not particularly beset by arbitrary law enforcement in this country but inflexibility is becoming systemic as more and more new offences are created and made enforceable by fixed penalty tickets. Often enforcement is in the hands of low-grade employees of local councils who either are not given discretion or do not have the ability to exercise it. The risk of cash-strapped councils looking to fixed penalties as a means to raise money is a further problem. Whether they set formal targets or not, once they are reliant on receiving a certain income from that source the appearance will arise of law enforcement being a revenue-raising issue and not one concerned primarily with justice.

You can label it a loss of liberty or the erosion of freedoms, but I would suggest that the real vice behind inflexible law enforcement is that people feel they are being treated unfairly. The fixed penalties for dropping litter or breaching any of the hundreds of other regulatory offences subject to such penalties are often greater than those for minor thefts and assaults. How many people think dropping a toffee wrapper is more serious than stealing a packet of toffees? Yet it's fifty quid for the former and a written warning for the latter. The balance is wrong, and when the balance is wrong resentment builds, a sense of being put upon builds, a sense of government (local or national) bullying the essentially law abiding builds. A sense also builds of law enforcement being guided by money, targets and statistics rather than by the need to maintain the peace and protect people and property.

And this all comes from removing discretion from the process and replacing it with the soft option of strict liability.

No protection from poor Gordon

Poor Gordon has found a new topic to talk about, protectionism. As we know, it is necessary to be very careful when reading anything coming from our Prime Minister and to put it in context. So first we must ask whether he was talking sense about other things before we look at his main theme.

The report of his latest offering tells us he spoke about the recession first and gave us this pearl of wisdom: "I have utter confidence in our ability to come through this." I'm just a simple fellow so I have probably missed something here, nonetheless it seems to me that there are only three possibilities: (1) the UK slips into a permanent economic coma, (2) the country ceases to exist and (3) at some stage the recession will end. The first option is impossible in practice. The second can only occur in the event of a massive nuclear strike or the physical destruction of the land by even more fanciful means. So that leaves us with only a sure-fire, odds-on certainty: at some time and after a degree of pain not yet known the UK economy will stop shrinking. I suppose we should be reassured that our incompetent and mentally unstable political leader is not so completely detached from reality that he has failed to grasp this simple fact. More troubling is that his language suggests one or both of the other theoretical possibilities might occur. If he really does think that, his continued presence in Downing Street is even more worrying than we have previously realised.

So, we know his comments on protectionism are made against the background of him appearing to believe the UK economy might shrink to nothing or we might all be blown to smithereens in the not too distant. I shouldn't be too cruel. Poor Gordon has absolutely no ability at all to speak off the cuff and make himself clear. His brain just doesn't work like that. One might think it a vital skill for every Prime Minister but we are way beyond the stage of having to wonder whether he is up to the job, for a long time now the only question has been how much more damage he can do.

What is it, then, that he fears from protectionism. Fortunately he has not yet explained his views, so I'll see if I can help him.

As always, we must start by defining our terms. To me, protectionism means closing or restricting our domestic markets to imports in order to prevent domestic producers from losing out to more efficient foreign businesses. There are three main reasons why protectionism is usually a bad thing.

First, isolating any business from competition removes incentive to be efficient. Why improve what you are doing when there is no one else to woo your customers? This point cannot be taken too far because removing or limiting foreign competition will not remove domestic competition among rival businesses. However, a dramatic change in the level of competition by removing all but domestic businesses from the game can lead to informal cartels between the remaining players who know they can all do very nicely without risking their future by trying to knock the others out of business.

Secondly, protectionism stifles innovation. Why is it that you rarely see a big fat television in the shops these days when just two or three years ago flat-panel versions were the exception rather than the rule? It's obvious, our oriental friends developed flat-panel technology and customers like them. Just as the tiny tellies of the 1960s gave way to 26 inch screens by the 1980s, so cathode ray tubes have had to give way. And it only happened because innovations in one country were sold to customers in another.

Thirdly, closing markets to imports hits the poorest countries hardest. Kenyan farmers don't grow runner beans for the fun of it, they do so to earn money from wealthier countries whose citizens are prepared to pay for out-of-season produce. It helps us because we get the vegetables we want when we want them and it helps them to earn a living far higher than they could achieve from supplying their home market only. We won't pay our own farmers a premium price for winter cabbage because it is not a premium product in winter, but we will pay a premium price for fresh runner beans in January.

These three reasons illustrate two fundamental truths. Competition improves the goods available to us and, therefore, improves our quality of life. And, just as importantly, money makes the world go around. Protectionism acts against both those truths.

Yet we engage in protectionism in some fields because it is necessary to do so to avoid risk. I mentioned this subject three weeks ago. Some things are so important that we must ensure a domestic supply simply so that we cannot be blackmailed or bullied by overseas suppliers. Perhaps we could get electricity more cheaply if we bought it from France rather than generating it ourselves, but we would then be dependent on the goodwill of others and a regular supply of electricity is too important to rest on something so flimsy. Not many products fall into this category, it might be that electricity is the only one. It doesn't matter for the purposes of this missive whether it is one or fifty, where a product or commodity it sufficiently important we must engage in protectionism even if it results in somewhat higher prices and somewhat stifled innovation.

And then there is practical politics. Government is not all about long-term economic systems, it is also about acting (if you can) to deal with the short-term predicaments of real people. Principle sometimes has to give way temporarily in order to avoid the appearance of a government acting deliberately against the interests of the people it is meant to serve.

At the moment strikes are taking place at oil refineries because cheap labour is being imported from overseas, most notably Italy and Portugal. Were we ever to have a Prime Minister foolish enough to call for "British jobs for British workers", he might find egg on his face when British workers face losing their jobs and demonstrate holding placards quoting his words back at him. Had such a hypothetical moron of a Prime Minister kept his mouth shut, the same British workers would probably have been on strike for the very same reason and he would not get as much of the blame. Thank goodness no Prime Minister would be so stupid.

The substance lying behind such actions as these strikes is, I think, slightly different than just "British jobs for British workers". I believe the substance is "times are hard, why can't we be protected?" Protection comes in the form of British jobs for British workers, but they are arguing for protection now rather than for a long-term policy of excluding willing and skilled immigrants from earning a living in this country. Of course this issue is complicated by EU laws on the free movement of worker and by the intransigence of trade unions who would rather see their members out of work than taking a short-term cut in income. No government could be blamed for submitting to practical political pressures and introducing protective measures for the benefit of its citizens during harsh economic times. Any such move must be limited both in scope and time in order to avoid long-term damage to business, but there is more to keeping a country settled and content than just the interests of business.

We will see a degree of protectionism in the labour market in countries all over the world as the current recession really bites. Only the EU countries will be unable to make this important political move. The likely result is unrest across the EU to an even greater extent than at present - wholly unnecessary unrest and resentment that each national government has not looked after its own people. How much blame will be directed at the EU remains to be seen, I suspect national governments will get most of it. One can only hope it will cause many to ask whether it is sensible to hamper the ability of national governments to protect their citizens during a crisis. Any such protectionist measures will necessarily be short-term because the harm of long-term protectionism is so great. Nonetheless, some short-term protectionist measures can be appropriate in order to contain a risk of civil unrest.

My fear is that poor Gordon will argue against protectionism for the wrong reasons and will argue for yet further power to be transferred from national governments to supra-national bodies. The decisions that affect our lives will then be made with less reference to the practical needs and desires of we little people and more reference to the abstract aims of the unaccountable internationalist elites.

I hope I am wrong. Experience tells us he will be.

The political truth of the Bearded Wonder

A true legend died today, Bill Frindall, the cricket scorer and statistician who turned the recording of sporting feats on paper into an art form. Perhaps there is something inherent in the game of cricket that makes its followers get excited about statistics. The same is seen across the pond in relation to cricket's distant relative, baseball, so it might well be something in the game itself rather than just a nerdy streak in those who watch and/or play. You see it at every test match and frequently when county cricket is played, people of all ages sit in the stands with their own scorebook marking dots and symbols in little boxes in the time-honoured fashion. Frindall developed his own method of scoring so that he had a record not just of whether runs were scored or a wicket taken but of who scored them and how, and many further details besides. His skill and knowledge enhanced the summer for more than forty years because they enhanced radio coverage of cricket in his capacity as resident scorer on Test Match Special. He was only 69 and contracted Legionnaire's disease.

Hearing of his death made me think about cricket scoring. It is a necessary aspect of the game and I learned to score as a small boy because you were only allowed to play if you also had a session on the scorebook. For me it was usually a bit of a chore but others really loved it. Indeed some enjoyed scoring but not playing - every school team wanted one of those on board so that the players could sneak behind the pavilion for a cigarette while awaiting their turn to bat. I discovered later in life, on joining an adult cricket club, that some enjoy scoring so much that then fulfill that role week in and week out. At my own club there is an old boy who has been doing it for donkey's years. He has his own table on which sits a vast array of coloured pens and pencils and in the winter he compiles detailed statistics about the previous season's games. Such work helps to make a good club and allows us all a permanent record of those rare days when we played really well (ok, really well according to our pitiful standard).

The position of scorer gives the lie to one of the sacred cows of the contemporary left. I have waffled on before about their apparent belief that inequality is a bad thing (except when they are on the up-side of the deal). This is just one aspect of the wider evil of uniformity. It is hard to tell whether they seek uniformity because they think it will reduce inequality or whether they seek uniformity for its own sake. Some will argue that it is all part of a desire to control, imposing a requirement of uniformity is itself to seek control over people and the more uniform everyone is in behaviour and tastes the easier it is to maintain control over them. There might well be something in that but I am not sure those who impose uniformity would ever think of it in those terms. What I can be sure of is that imposing uniformity ignores human nature by stifling the individual spirit in a way that will eventually backfire on those who want us all to think and act in the same way.

We do not all hold the same opinions and we do not all value everything in life the same way. That is an inevitable consequence of the plain and simple fact that we all live our own lives and are subjected to different influences and experiences. We have our own minds, so we evaluate those influences and experiences and reach our own judgments about what we enjoy and don't enjoy and about we consider beneficial and what detrimental. And that is where we get back to Bill Frindall, the bearded wonder.

Not everyone enjoys cricket. Not everyone who enjoys cricket enjoys scoring. Not everyone who enjoys scoring seeks to improve the system of scoring. Not everyone who seeks to improve the system of scoring is prepared to devote years to the task. Not everyone who is prepared to devote years to the task is willing to make it their career. His life was proof that uniformity is impossible.

An electric shock

I have mentioned before that the south wing of FatBigot Towers was turned into a separate dwelling not long ago. Something very irritating happened during the course of the works and the irritation has now turned into a festering sore. I am sure both my regular readers will enjoy my discomfort, so here goes.

Because a new dwelling was being created it was necessary to have a new electricity supply. What an extraordinary example of inefficiency it proved to be. A team arrived early one morning to dig up the pavement, expose the existing supply cable and erect barriers to prevent passing drunks falling into the hole. The next day the electrician arrived to do what he had to do, but the hole was not deep enough. FatBigot Towers was teeming with builders at the time and he could have borrowed a spade or asked one of them to dig out a couple more inches of London clay, but no. He phoned his office and sat in his car for a couple of hours while another digging team was dispatched to expand the hole to the required dimensions. Then he fitted the new supply cable and went home. Two days later a filling-in team attended to shovel the clay and earth back into the hole. But they were a hole filling team not a paving team, so the paving slabs remained stacked by the hedge. A few days later the pavers arrived to restore the pavement to its former glory. But they were pavers not barrier removers, so the barriers previously protecting the hole from damage by passing drunks replaced the paving slabs and formed a new pile by the hedge. The next day the barriers were removed. Altogether six visits (hole diggers, electrician, hole diggers again, hole fillers, pavers, barrier collectors) to replace a four foot length of old cable with a four foot length of new cable suitably arranged to supply an additional meter.

Mains supplies are administered by one company. They run cables up to a fixed point but they do not fit meters. Meters are the responsibility of the company from which one actually buys electricity. It had been arranged for that company to attend on the same day the electrician fitted the new supply cables, but attendance was there none. A few phone calls elicited the information that no appointment appeared on their computer. This came as a tiny weeny little surprise to me because I have telephoned them to confirm the appointment the previous day. It was a grim portent of things to come. "So they will be here tomorrow then?" I asked, more in hope than expectation. The earliest available appointment was more than a month later. In fact this was no great problem because no one was in residence while the building works were taking place and the builders themselves did not need a mains supply. True to their word, a fellow turned up on the new date and took all of ten minutes to fit the new meters.

My direct debit was already in place for the existing supply and a new one created for the new supply to the new property. I was informed that my existing direct debit facility would be used to pay for the new supply to the part of FatBigot Towers I was retaining and money was duly sucked from my bank account with the usual alarming regularity. Then some strange letters started arriving demanding settlement of my outstanding electricity bill. I did the sensible thing and ignored the first few, but they persisted so I resorted to the telephone. Things were sorted out very quickly and the obvious had happened, the payments they received had been allocated to the old account attached to the old meter rather than being allocated to the new account attached to the new meter. Oh well, these things happen, at least it was sorted out quickly.

Then more threatening letters arrived informing me of the company's right to apply to the local Magistrates' Court for a warrant to break into FatBigot Towers and disconnect the supply. Leaving aside that, as per current regulations, the meters are housed in a separate purpose built shelter outside the house so forcing entry would be pretty pointless, the fact remained that they have had every penny they have ever asked for. Back to the telephone: "so sorry Mr FatBigot, our mistake, the computer record has been amended, you won't get any more letters", all said with the undertone in the operatives voice: "please don't make a formal complaint". That was early last October. A week later the matter had been referred to a firm of debt collectors and bailiffs, as appeared from the next threatening letter.

Before resuming the sorry tale, a word of advice in case you ever find yourself being chased by debt collectors for money you do not owe. The debt collection firm knows only what it is told. It has no independent record of your dealings with its client, so write to them and set out the full story. Fax the letter and keep a copy of the transmission slip, also send the hard copy by recorded delivery. Do not rant and rage in your letter, just state the facts and be absolutely truthful. Inform them that every word you have written is true and invite them (do not tell them, invite them) to check those facts with their client. Many debt collection businesses are also certificated bailiffs, inform them that failure to check the facts with their client or taking any further step against you will result in you reporting their conduct to the Court. It scares the hot willies out of them. Do not expect a reply, they are not interested in debating with you. On checking things with their client they will either be told you are correct or that you are incorrect; if the former they will disappear from your life, if the latter they will just plough on with their usual procedures.

Anyway, I followed my own sage advice. A week later the debt collectors sent another standard-form threatening letter. Three more telephone calls to the electricity company resulted in them saying the matter can be resolved once and for all by one of their people coming round, noting down the meter numbers and seeing that the old meter is no longer in situ. He arrived, as arranged, at the end of November on the very day I received yet another threatening letter from the debt collectors. Meter numbers were noted, the absence of the old meter was noted, all would be well. Ho hum. The Christmas Eve post contained formal notice of the debt collectors' intention to apply for a warrant. More telephone calls between Christmas and New Year did not abate the flow of threats but did result in a second appointment for someone to attend and inspect the meters. They are due next Wednesday.

Then I received calls from the electricity company asking for a meter reading. Three calls on successive days, two of which were made by the same person. They don't need me to give them a reading, they attend and take them regularly, but I am a friendly and cooperative chap so the first call resulted in me waddling out to the bus-shelter type structure and telling them what the meter recorded. The other two requests resulted in a suggestion that they refer to the reading I gave them the first time they called.

Things were quiet for ten days or so. This morning two letters arrived, purportedly from the electricity supply company itself not its hired thugs. One informing me that they have applied to the Magistrates' Court for a warrant and the other informing me that they have the right to enter and cut-off my supply under the Electricity Act 1989. What fun it is for a lawyer to receive such contradictory letters. The first tells me they need a warrant, they have applied for one and I will be informed of the date of the Court hearing, thereby making clear they do not currently have a warrant and, therefore, they do not have the right to enter; and the second informing me that an Act of Parliament gives them the right to enter. Such foolishness is grist to an ancient litigator's mill. A letter has already been dispatched.

The problem, of course, is that despite all the assurances they have given in the past that the matter has been resolved, it has not been resolved. It was time to telephone their "Complaints Department". Within thirty seconds it became clear that the Complaints Department is where they keep the sensible people. The fellow I spoke to called up the records of all my previous telephone calls, saw what the situation is and expressed appropriate disgust on seeing that the things his junior colleagues had said they would do had not been done. He gave me a degree of reassurance, but I still expect to be plunged into darkness any minute just as the coldest days of winter are about to arrive.

If I am not here tomorrow, you will know why.

Pub plight

I have just returned to FatBigot Towers after yet another splendid curry at my local subcontinental restaurant of choice. It is about three-quarters of a mile away, a very pleasant walk past a number of pubs. My beady piggy eyes are always drawn to a pub window and, on my trip to the spiced trough, through every window I saw a modest number of patrons. One shouldn't expect them to be packed like sardines on a cold and wet Wednesday evening, but seeing two or three people in an establishment that can hold more than a hundred is a sad sight. Even at the quietest times of early evening at least ten to fifteen people were to be seen in those very same pubs just a year or two ago. On the stroll home, comfortably before closing time, numbers had increased very little. A couple had thirty or so customers, none of the rest had more than about a dozen.

It made me think (always a dangerous exercise in the hands of an amateur).

People used to go to those pubs. That was my thought. Just that. People used to go to those pubs.

It begs a question favoured by watchers of has-been small-time celebrities. Where are they now? Leaving aside the fanciful possibility that they are thousands of underground "smoke-easies", the answer is that they are at home. Perhaps their own homes, perhaps friends' or relatives' homes, but they have not disappeared off the face of the planet simply by reason of no longer being in licensed premised. And what are they doing at home? The answer, of course, is that they are doing all sorts of things, but what are they doing booze-wise? Have they taken The Pledge or are they still keen on a small sweet sherry or a half of of milk stout? I would hazard a guess that many of those driven from pubs by not being able to enjoy two vices at the same time have taken to drinking at home in front of the telly or while chewing the cud with other former pub-goers.

If my guess is correct, the happy souls involved will have discovered that a pint of bitter bought in the supermarket or offy costs them roughly a third of what it costs in a pub. Now they have a new establishment in which to consume the demon alcohol. It's not the same as before, but they can't do what they did before because they or their friends are smokers, so they have to make the most of it. How many, I wonder, of those driven from pubs drink the same amount at 80p a pint as they drank at £2.40 a pint? Would you?

By definition the people involved like a drink. Many only want two or three pints. Fair enough, that's what they will drink. Others would have had more at the pub if they could have afforded it. Their choice in days of yore was between buying nine pints at the supermarket and drinking at home while their friends were in the pub, or going to the pub and having a nice chat while downing three pints. Many chose the latter option because the additional cost of the booze was outweighed by the social experience of having their friends around them. Now that they and their friends are excluded from the pub the most obvious consequence is that they will drink more because it is cheaper.

How ironic. A measure brought in on the grounds of improving health will, for many but not all, result in no reduction in smoking but an increase in drinking.

More opinion to tax us on

I read today of the latest British Social Attitudes survey and wondered what possible use such a survey can be. As I understand it the survey is a massive opinion poll in which people are asked their views on a range of issues. I have no reason to doubt that the company undertaking the survey tries to be as objective as possible in its questioning, but there seem to me to be fundamental flaws in seeking to draw firm conclusions from the results of any opinion poll. Not only is it bound to include the views of people who have never thought about the subject on which they are asked to express an opinion but, perhaps more importantly, the questions can never avoid ambiguity or incompleteness.

Two of the reported conclusions struck me as particularly interesting, one on the NHS and one on the cost of aeroplane travel.

It is said that 51% of people are either very satisfied or quite satisfied with the National Health Service compared to 30% who are dissatisfied. What does it mean to say you are "very satisfied", "quite satisfied" or "dissatisfied" and how, I wonder, can one be expected to hold a single view about the NHS when it has so many facets? No doubt the full report helps to explain my concerns (I am not going to pay for a copy in order to find out) but I doubt it answers them entirely. My own views on the NHS cannot be expressed as a single opinion. I have a high opinion of the knowledge and skill of both my GP and my cardiac consultant, I was looked after very well following a heart attack and was particularly impressed by how the ward sister organised her troops. But the ward was not very clean and the food was a disgrace. On the basis of the treatment given to me I would be somewhere between quite satisfied and very satisfied. However, I am appalled at the extent to which so much of the NHS's budget is wasted on pointless administration and trying to keep the government supplied with politically helpful statistics. As an overall provider of value for money in health care I am very dissatisfied. So what should my overall opinion be? How should I balance the very good bits against the shockingly offensive bits? And how do other people do it?

Does a 51% satisfaction mark mean only 51% are satisfied with the care they receive? If so there is something very wrong with the service being provided. On the face of it, it must include an element of dissatisfaction with the cost and/or the bureaucratic structure and/or the political interference and/or some other non-care related factors. And the element that relates to satisfaction with care means nothing unless one knows what standard people expect to receive. Are expectations unreasonably high or are they practically attainable? In the former, a satisfaction rating of 51% might be very impressive. Without being able to these things against a standard, the conclusion that 51% are satisfied doesn't really seem to tell us anything.

The other area of interest to me shows that 49% believe air fares should reflect the environmental damage done by aeroplanes and a staggering 40% believe people should be allowed to travel by air as much as they want. The first of these figures is as meaningless as the NHS satisfaction statistic. Does it mean there should simply be a financial punishment for polluting the air and/or creating noise and/or exuding carbon dioxide? If so, which? And how many would agree to it if the money were then spent on political consultants for the government rather than, say, planting trees in Patagonia or providing vegan ready-meals for polar bears? Is it just a bandwagon figure reflecting successful brainwashing by the greenies?

As for the second figure, even a drink-enfeebled mind like mine boggles. Is there really support among 40% the population for the limitless availability of flights to anywhere in the world regardless of how economic that is? Is there really that level of support for a limitless number of airports and runways? The question must have been interpreted as having something other than its literal meaning. If that is so, it is likely to have been interpreted in different ways by different people which would suggest that the answers are of no practical use to anyone.

There is a wider point about this sort of survey. It is, in my view, absurd to expect respondents to tell the truth, the whole truth and nothing but the truth. The margin for error must be enormous. None of this is a criticism of the company carrying out the survey and producing the report. They offer a product and sell it to those who might think it useful. I hope that doesn't include any element of central or local government. Sadly, something tells me the opposite is likely to be the case and that various aspects of this report will be cited by the government in the coming year as a justification for increasing tax.

The latest Mandelson madness

Today we witnessed a quite bizarre policy announcement by Lord Mandelson. It was leaked to the BBC as a major initiative in the battle against recession and reported as such by Robert Peston, the government's leakee-in-chief. In his blog he painted a picture of the government giving massive guarantees for bank lending to car manufacturers, something he had to qualify with an addition to his blog after the announcement was actually made. Lord Mandelson's plan is to seek to support research into and development of motor vehicles powered by non-oil based fuels and to pay grants to assist in the cost of retraining some employees of motor manufacturers who are expected to lose their jobs. It was all dressed-up in, the now customary, green guff. I have been wracking my so-called brain to see what this measure can do to help ease the enormous problems motor manufacturers are bound to face over the next few years. The most persuasive answer is: virtually nothing.

No one should be in any doubt that the pincer movement of recession and eco-fascism will hit motor manufacturing very hard. During poor Gordon's doomed boom people replaced their cars sooner than they would otherwise have done because credit was readily available to allow them to do so, now they will hold on to them longer thereby reducing long-term demand for new vehicles. There was little domestic demand for cars over ten years old and those not exported were scrapped when many of them had years of useful life remaining. Now, far more will be driven until they can be driven no longer - just as was the case not very many years ago. At the same time the increased cost of running a car (caused by pandering to the eco-fascists) will cause people to drive less, thereby lengthening the useable life of their vehicle. Green wibble will also force people out of cars and onto public transport, bicycles and donkeys; thereby further reducing the demand for both new and second-hand cars.

Demand for the goods produced by motor manufacturers will, therefore, suffer a massive fall during the recession and has no chance at all of recovering to pre-recession levels because of the continuing kowtowing to selfish greenie bigots. Either we face that fact or we don't. If we do, the proper role of government is to avoid subsidising a failing industry and to make fair provision for retraining and education courses for those unfortunate enough to lose their jobs. If we don't, there would be an argument for trying to keep manufacturing capacity in place pending an upturn (an extremely weak argument, but an argument nonetheless).

The production of non-oil-powered motor vehicles is, in my view, an admirable aim. At the moment we are at the mercy of the OPEC cartel and, as we saw last year, it is possible for petrol and diesel prices to go through the roof in a short space of time. Our government is not prepared to help in such a situation because it has painted itself into a corner using two different but equally wet paints. First it is dependent on the enormous tax revenues from motor fuel and secondly it is committed to nutty greenery which will not allow a reduction in those taxes even if they wanted to make one. So, if we can find a way of replacing oil-fueled cars with something else we would at least free ourselves from the OPEC stranglehold. Unless, of course, they run off electricity generated using oil or gas in which case we are out of the frying pan and into the fire with the added threat of Mr Putin having a say once UK produced gas is insufficient to meet demand.

There are currently available some rather sweet little electric cars with a maximum range of, I believe, thirty or forty miles before you need to unplug the kettle and plug in the car. It is clear that they are forerunners of the replacement for the internal combustion engine but we are clearly years away from this new technology being able to produce vehicles of a sufficient size and with a sufficient range to replace existing cars. In the meantime it seems fair to infer that many will be priced out of having their own car.

When reading Lord Mandelson's speech the question that came to my alleged mind is something I mentioned in my last missive: what is the plan? What is the strategy? Why is he throwing bags of our money at research into non-oil motor vehicles? There can only be one sensible reason - to bring forward the day such cars can be produced in large numbers. So, he wants us to be able to travel in our own vehicles. Thank you Lord Mandelson. And in the meantime what steps are he and his government taking to keep us travelling in our own vehicles? Ah, yes, they are making it more expensive year-on-year and telling everyone to get out of their cars and onto buses and trains. Yet another example of this government pulling in two directions at once.

And what of the current manufacturers? They have seen the writing on the wall for some time. They know the days of the internal combustion engine are numbered and have been looking into alternatives, spending countless millions on research and development so that they can still be in business when old technology gives way to new. Why, then, is the government pumping extra money into this now for no apparent return? Do they fear that the drop in demand for new cars will be so severe that major manufacturers will be forced out of business? Maybe, but even if some are forced out of business others will remain and they will pick up the research and pay for it themselves because the forces operating against existing technology will not go away.

It is usually safe to work from the presumption that any domestic policy put forward by Lord Mandelson is designed with one end only in mind, to keep the Labour Party in power. I know this is one of my constant themes, but it is so important that I feel justified in repeating it: government that governs for itself and not for the people will always harm the people. Only a tiny handful of jobs will be preserved or created by this measure yet Lord Mandelson clearly hoped he would appear to be acting to protect the jobs of thousands of workers in the many marginal constituencies housing car makers and component suppliers.

He didn't step in to save 30,000 retail jobs when Woolworths went under because they were spread all over the country. But when some of the constituencies in which sitting Labour MPs have small majorities might be hit by a particular industry going through hard times he feels he must appear to be doing something. It really is so dishonest, so party political and so contrary to the responsibilities of the government for the UK as a whole that I can only hope it backfires. We cannot reasonably expect Rolls Royce government but one of the worlds most developed countries should be able to expect Saab government at the very least. We seem to have a Lada.

Drifting down and down

In the dying days of the last Conservative government I remember two major concerns being expressed regularly by people I met. One was that the government had just been in power for too long and it was time for a change. The other was that they had run out of ideas. The first is, I suspect, a very British thing: "take it in turn children, let everyone have a go on the see-saw". In order for a child to be able to take his turn he has to be around when it's seat-swapping time and so it is in politics. It was probably time for a change in 1992 but no other children appeared remotely suitable so Mr Major carried on for another five years. The second is more interesting to me because it certainly matches the situation we have in this country today and the situation seen in America under the recently departed President Bush.

Running out of ideas is an inevitable consequence of having to run for election on a platform of policies. Almost all governments have done everything they set out to do by the time they have served about eight years. Maybe it was beneficial, maybe it wasn't, but it was their agenda and they exhausted it. Any new major policy moves necessarily require them to reverse something they staked their reputation on in the past and, as such, they are politically impossible. Even if the Prime Minister and cabinet have the strength to say "we're sorry, we introduced it in good faith believing it would work, but we were wrong, it hasn't worked and so now we will change it", their judgment is undermined. Fewer and fewer people will believe they can get it right a second time having spent years formulating their initial policy and then millions of pounds putting it into effect. In the world of practical politics, reversing a long-standing bad policy can only be done effectively following a change of government.

When you combine the political difficulty of reversing a failed policy with a stubborn refusal to admit it has failed, you get to the position this country is in today. The government simply does not have an agenda for the future other than to carry on as before. This was part of the problem for John Major's government in the late 1990s. Although they eventually got the economy onto its strongest footing since the war, in social policy they were stuck in a rut. Having introduced needless additional bureaucracy into the health and education systems they seemed unable to remove it, leading to too little of the budget being spent on improving patient care and schools. By 1997 they had had their chance and, despite making vast improvements to the country as a whole, there did not appear to be a new agenda for the future. New policies were little more than gimmicks, just as we are seeing today - doing things for the sake of appearing busy.

There is another aspect to stale government and that is the sense of aimless drift, the sense that the government is no longer in control of events but is being led by events. No doubt even new governments are led by events far more than they appear to be because they are not hampered by an established position and can make changes to their plans before they implement them. It is put down to policy development rather than policy change. Once put into effect, however, their position is established and any further change reeks of indecision and bad judgment. In the early years this is much easier than when they have been in power for a decade because they still carry goodwill and can argue the policy is still under development. As I mentioned above, once the reversal of policy becomes politically impossible the whole process of government drifts and leadership can no longer be portrayed.

This does not need to be so in all areas, however. It seems to me that economic and social policy are subject to different political pressures. Social policy is more concerned with value judgments than hard facts. It is based on ideals more than practicalities, which tends to result in overstatements and false assertions of certainty. When they do not bring about the promised result not just the judgment of the government comes into question but its whole philosophy. There is virtually no scope for admitting failure and reversing what has been done, instead bad policies are reinforced by more laws trying to force the pace and more money is pumped into the same black hole with promises that it will work if given enough time and cash.

Economic policy is far more fluid because the government has no option but to change course and introduce new measures when things change. The cost of not doing so is immediate and can be devastating so there is scope for practicalities to override stubborn idealism. Although the Major government appeared very stale it was still able to charter a course for the economy that was hugely successful. Of course they had no option but to make radical changes following the disaster of joining the European Exchange Rate Mechanism in 1990 and having to leave it in 1992. No one could doubt that they had a strong economic strategy despite being in a state of terminal decay through staleness in other areas.

What is so extraordinary about current events is that the government appears to have no economic strategy despite facing ruinous economic conditions. They tell us to save and spend at the same time, they tell the banks to lend and not lend at the same time, they want to keep house prices high but without the 100% no-questions-asked mortgages that caused excessive prices. On every major aspect of the recession they are putting forward mutually inconsistent arguments and backing each of them with money they don't have. There is no sign of a coherent strategy or, in truth, even an incoherent one; there is just no strategy at all.

President Bush was not just discredited by the folly and cost of Iraq and held responsible for the collapse of banks. For several years his administration lacked direction. Although he secured reelection in 2004 that seems to me to have had more to do with continued goodwill following the New York bombings and a pitifully weak opponent in John Kerry than it did any substantive strength in the Bush Presidency itself. There was no evident strategy left in his administration on any major policy field by the end of 2006.

Having no economic strategy during a recession is a dangerous thing. I have severe doubts that governments can affect the length or depth of a recession to any significant degree by direct action. Even if their attempts to cushion the effect of recession by mis-named "stimuli" have the desired effect it is impossible to judge whether the long-term cost of such measures outweighs the short-term benefit. What government can do is something every good manager can do, it can give leadership and instill confidence. Appearing to have no plan and to be reacting to events rather than influencing them makes those who (rightly or wrongly) look to you for leadership to feel cast adrift. A lack of confidence in the economy is exacerbated by a lack of confidence in those charged with improving matters because it has the knock-on effect of making people even more wary of spending or investing and so recovery is delayed. If today's announcement about motor manufacturing (about which more later) is anything to go by the lack of strategy is not likely to change.

Think always of the little people

There seems to be an obsession these days with what "government" and "business" can do. When problems arise there are countless interviews with politicians and economists suggesting that this or that policy should be laid down from above - government should do this, business should do that.
What about us? What about the little people who end up paying for it all?

I suggest an alternative basis for national economic planning. I suggest that we plan things from the bottom up not the top down. It's just a thought for your delectation. Let me explain why I find the idea attractive.

Everything, and I really do mean everything, is paid for by the man on the street. He isn't necessarily on a UK street, when we export goods we do so because somewhere in a land far away there is a person at the end of the chain. We export a pair of fine leather gloves, they end up on the hands of a fellow in Switzerland. We export a chain-making machine, the buyer makes chains and sells the chains. The machine is initially paid for by the chain maker but he can only do so from the proceeds of sales, it is the end purchasers who really pay for it a few cents at a time with every purchase of the finished product. Farmers sell most of their produce to wholesalers or supermarkets, but they are only prepared to pay what they pay in anticipation of then selling the produce on at a profit to us little people. And so the story goes for all businesses. Even in the world of high finance the massive sums gambled by pension and insurance funds have an end user, a human end user, who either gains or loses from their activities.

It is easy to lose sight of this when talking about the activities of big companies and governments. They deal with mind-boggling sums of money as though it were loose change. Want some windmills instead of effective and affordable power stations? Have £100billion. Want a congestion charge scheme in Manchester? Have £1.5billion. Want to sell those bundles of loans? Have £50million. None of it seems to matter as much as it should, it's just figures on a page to those playing the game.

Losing sight of of the little people leads to bad decisions and expensive waste because the strongest check on judgment is removed. The strongest check on judgment is conscience. Conscience forces us to weigh in the balance the adverse effects our decisions might have on others as well as the potential gains. Some adverse consequences are so serious that our consciences do not allow us to take a risky course of action for fear that those adverse consequences will follow. It is why most of us resist the temptation to drive at sixty miles per hour along an urban street even when we know there is no speed camera and very little chance of getting a ticket. It is why most fund managers do not put investment funds on the three-thirty at Doncaster, most archers don't practice in a busy shopping centre and most chefs don't urinate in the soup. For those whose conscience needs a nudge, many acts that do harm to others are also criminal offences or can lead to civil claims for compensation.

Lose sight of your possible victims and it becomes easy to look only at potential gains. The whole game then changes from reaching a balanced judgment to looking at only one side of the equation. This can have two effects. First, and most obviously, too many risks are taken causing inevitable losses when they do not pay off. Secondly, the exercise being undertaken is seen as being for the benefit of the undertaker rather than for the benefit of others. We have seen this in the way banks have put their shareholders and investors at risk by trading in instruments they could not value and paying themselves huge bonuses by assuming the value was high and that massive profits were being made. Now that the instruments have been seen to be seriously flawed and, almost certainly, not worth what the banks claimed they were worth the effect on the little people is simply enormous. Not only do their pension funds look like a rose bush hit by a swarm of leafcutter wasps but the problem is exacerbated by the increase bonuses have made to administration costs.

English law does not have a specific provision aimed at seeking recompense for the innocent victims of such shockingly bad business judgments. It is different in the USA where there are mechanisms aimed at precisely this situation. Financial mismanagement is a serious target for American law because America approaches much of its lawmaking from the bottom-up not the top-down. Its laws are made and applied for the benefit of the little people. Of course it also has top-down laws but these are severely constrained by the terms of the Constitution which makes clear that government exists only because the people permit it. The default position is that harm done by one person to another should result in compensation and, where appropriate, criminal penalties. This has its downside, as we see in particular in the willingness of juries to award vast sums for minor physical injuries but these are almost always reduced to more sensible levels on appeal or by agreement once an appeal is either launched or threatened. What, to my mind, is admirable about America's approach to the criminal and civil law is that it sees financial victims of careless trading in the same light as physical victims of careless driving. It can only do so by recognising that the law exists to protect the weak from the misdeeds of the powerful.

All over America directors and senior managers of failed investment firms are facing prosecution and civil lawsuits for taking undue risks. Of course it can be said that America's laws are not effective because they did not stop bad deals although the reality is that no one can say how many more bad deals would have been done had those laws not been in place. What is clear is that those who took bad decision have to carry the can. Here all they carry is their latest bonus.

We also see the effect of ignoring the little people in the activities of government. Decisions are often taken according to whether they will benefit the government rather than whether they will benefit the citizens. There are innumerable examples of this from the last eleven years. A small recent example has been the holding of cabinet meetings in cities outside London. There is absolutely no possible benefit to the little people from this gimmick. It has been done solely because a government that wants to hold onto power for the sake of holding onto power thinks there might be some votes in holding cabinet meetings in cities containing many marginal constituencies. Each away-day costs taxpayers about £200,000 - a sufficient sum to run a small primary school for a year, a sum roughly equivalent to the income tax paid in one year by fifty average earners, a sum roughly equivalent to eight years' gross wages of an average earner, a sum higher than the average house price in the UK over the last year, a sum sufficient to feed a family of six for twenty years.

Only by keeping the little man in mind at all times can the cost of government decisions be seen in context. But it seems to me far more important to keep the little people in mind so that government constantly remembers it is there to serve us not itself. It is there with our permission, we are not here with its. And therein lies the greatest danger of socialism. It is not just that it requires adherence to a flawed ideology, although that is bad enough, it is that the State and the government are given an existence separate from the people. The socialist State's primary aim is to preserve itself. The socialist government's primary aim is to preserve itself. This leads to a way of thinking evidenced every day by poor Gordon and his cabinet of lightweight autocrats.

Are the people doing what the State wants them to do? If not they must be forced to do so because dissent weakens the State and that cannot be allowed. The longer a single socialist government remains in office the more autocratic its rule becomes. This is inevitable because it is idealogically incapable of admitting to error and reversing bad policy. To do so would be to admit error by the State, a concept unknown to socialist dogma. Thus new policy concentrates on reinforcing old policy rather than improving the lot of the little people. It is a top-down process in which the established policies of the State must be imposed regardless of the consequences.

There is nothing surprising about any business activity turning bad when it is operated for the benefit of its owners or managers rather than its customers. Concentrate on yourselves rather than the little people who eventually pay for your mistakes and you cannot reach a balanced judgment. Bad decisions will be made. Expensive, bad decisions. As in business, so in government. Leglislating against the people rather than for the people is exactly the same as an investment fund operating to maximise it directors' bonuses rather than its customer's returns. It acts against the central purpose of its existence with the inevitable consequence that the little people will lose.

Getting poorer isn't fun

Today's confirmation of two consecutive quarters of shrinkage tells us what we have known for a while, the UK economy is "officially" in recession. A peculiar quirk of this recession is that it comes at a time when we are being called upon to scale-down our industrial activity in order to be nice to the Great Barrier Reef. When the greenies call for a halt to industrialisation they are portrayed by our friends at the BBC as warm and cuddly people who have the best interests of polar bears at heart. With any luck the effects of recession will illustrate that they about as warm and cuddly as seals find polar bears to be.

You see, what we are witnessing is the way a modest fall in national wealth operates in practice. The fall so far has been around two percent, the equivalent of someone taking a pay cut from £500 a week to £490. Looked at in that way it doesn't seem a big deal. Of course no one wants to lose £10 a week, but it's only a couple of packets of cigarettes. Except that it isn't, because it does not apply equally to everyone. Some businesses always do very well during a recession, most suffer a little and some fold. Those employed in the first category find it difficult to see what all the fuss is about, those in the second grumble and those in the third face great problems. Losers outnumber winner by a very substantial margin. So it will undoubtedly be if the eco-fanatics get their way.

All the figures ever promulgated about the effect of cutting-back carbon dioxide emissions are little more than wild guesses, but they are relied upon by those calling for reductions so I will humour them and assume they might be right. The most modest effect a substantial cut in CO2 emissions is claimed to have on UK economic activity is about two percent of GDP. By happy or, perhaps more accurately, miserable coincidence that is roughly the fall in GDP over the last few months. You can't just take current soaring unemployment figures and say that is what every cut of two percent in GDP will cause because the particular circumstances of each downturn are different. Some hit labour-intensive businesses hard while others primarily affect areas in which relatively few people are employed.

That is what is so worrying about calls to scale-back industrial activity. Generally speaking the industries concerned are quite labour-intensive and, therefore, we can expect any reduction in scale to cost large numbers of jobs currently held by people earning below national average wages and living in areas where those particular industries employ a significant proportion of the population. This was one of the difficulties with the closure of loss-making nationalised industries in the 1980s. I have no doubt there was no other practical option because it was necessary both to staunch the financial losses and to break the power of the trade union barons. As always, it is the little man who suffers and even now, almost thirty years later, some towns built on established heavy industry have not been able to attract alternative employers in sufficient number to provide widespread employment to those at the lower end of skill and academic achievement.

Where there is a major problem it often takes harsh measures to solve it and without exception the weakest members of society (in this context those with the least marketable skills) suffer most from those measures. That is why it is so important to be clear that there is a major problem and that the harsh measures proposed are the best solution. This reasoning should lie behind all major structural changes proposed to a developed economy. Just how serious is the problem? Is the proposed cure going to have a downside? If so, can we be sure the cure will in fact be a cure? If so, is the downside a price worth paying or will it create another problem larger than the one it seeks to solve?

The economic problem causing the current recession is that the amount of credit in the economy is unsustainable and must be reduced. Necessarily the cure must involve reducing day-to-day spending in order to repay that part of total credit that cannot be afforded. That is not to say that credit has no part to play in a successful economy, it is just that the amount of credit that is healthy has a natural ceiling for a whole national economy as for a household. If you will benefit from having a car you must balance the benefit you will receive against the cost. You might go without until you have saved enough or you might choose to buy a car now with the help of a three, four or five-year loan. If you choose to have a vehicle now you must look at how much you can afford to spend each month in repaying the loan. It is the same for businesses seeking to buy new plant and equipment. What is their likely income and what return will the new stuff provide? How does that compare to not having a car until you have saved the money or not buying the new plant?

Once there is systemic overborrowing the only solution is to cut back on other expenditure and repay loans faster so that ongoing interest charges are again affordable. The problem is identifiable because it hits you in the pocket and the solution is not only painful for you but has a knock-on effect as you repay an extra £50 a month to reduce the outstanding capital on the loan rather than paying that £50 to the local pub and curry house. The publican and restaurant owner then suffer a loss of income requiring them to cut back which causes a reduction in income for the businesses they no longer frequent and so it goes on until your expenditure is once again affordable. Once you have reduced the capital outstanding by a sufficient sum you might reduce further additional payments to £20 a month and return to the Dog and Duck or the Bulimia Balti Shack with £30 to spend. Then things start to pick up for those businesses and their owners and employees are, in turn, able to increase their spending towards previous levels and before you know it everything is back on track. But it is only back on track because there was a serious proven problem and a solution that was guaranteed to work.

If we look at that same situation from a different angle, we could pop into the Dog and Duck during the good times and ask Mr Ordinary what would cause him to forgo his £50 a month spending on Old Git Ale and chicken vindaloo. No doubt his answer would be "if I can't afford it anymore" and he would be absolutely correct. That expenditure has become part of his normal lifestyle and something to which he feels entitled because he believes he can afford it. It would take strong evidence to persuade him he cannot afford it. Such evidence might come in the form of losing his job or a substantial increase in interest charges on his credit card debts or mortgage. On the happening of those events he would reduce his expenditure because he would have to but in the absence of clear evidence we could expect to see him carrying on as before. And one thing that is undeniably true about cutting back on the quality of life in order to match the thickness of your wallet is that you never forget how much fun it was in the old days at the Dog and Duck. You walk past an Indian restaurant and smell the aroma wafting from the kitchen, your brain does not say "that smells interesting, I wonder what it tastes like" it says "I could murder a rogan josh". Once you have tasted the good things in life you never forget them and you long for their return.

Claims that we must cut back on industrial activity mean nothing unless people have a way of measuring what that will actually mean to them. We can all agree a plan to cut back the consumption of braised kangaroo testicles because very few of us are likely to suffer from that measure. We can all agree to cutting carbon dioxide emissions if we think it will not affect us. Once it is shown that it will affect us and will lead to a reduction of so-many percent of GDP (emissions I mean, not kangaroo testicles), we can still agree to it if we have no comprehension of what a contraction of GDP means in practice. Now that contracting GDP (at the very lowest level called for by the greenies) is upon us we can see the real effect of it. It takes away what people have experienced and what became their settled way of life. It causes real pain for a great many. For some that pain will remain for the rest of their lives because they will not find another job and will live far below the level they once enjoyed.

Perhaps I hope for too much, but I hope the current recession will cause people to ask questions across the whole range of the global warming / climate change issue. As my regular reader will know, I find it utterly incredible that a man-made increase in a gas that forms a tiny proportion of the atmosphere might become the overwhelming driving force of the world's climate. I am not a scientist, I am just a moderately well educated observer with (though I say so myself) an astute sense of smell, particularly when the prevailing aroma is bovine faeces. Others do not share my view of the quasi-science behind the great global warming scam and might never accept it, yet they will be in the line of fire as and when de-industrialisation cuts into GDP. Few under the age of about forty will have experience of the effect of falling GDP until now. We old farts have seen it a number of times, we know it is to be avoided if at all possible. Two generations are experiencing it for the first time and, no doubt, will be horrified by the experience whether they are among the most unlucky victims or just observers.

To volunteer for a reduction of GDP of a minimum of two percent and no maximum is a bold step. I hope some will now question the need for that step by questioning the quasi-science. I hope some will question whether that step need be taken even if the quasi-science is accepted. You see, there is a major difference between an economic recession (with an identifiable cause and an identifiable solution) and a voluntary reduction of GDP to achieve a physical result on the climate. We know that eliminating the cause of the economic recession will put an end to that recession. There is no guesswork or projection involved, it has been seen time and time again around the world and amounts to proof. We can never know that a voluntary recession in the cause of climate control will bring about a change in the climate. No one can say what effect de-industralisation to the extent of a two percent reduction in GDP will have on the climate, if any. No one can say that a further purge resulting in a further drop of GDP will have a certain effect nor whether any effect will be beneficial nor whether any benefit will outweigh the supposed detriment of not volunteering for the recession in the first place. And then there is the most important question - will the potential benefit justify the pain? People around the world will be better placed to value that pain over the next year or so. They will also be better placed to see that the pain will not be spread evenly but will affect those at the bottom of the pile far more than those in the middle and those at the top.

Hard times teach hard truths.

How many feet can a millipede fit in his mouth?

I was taken back many years on reading of the so-called Foreign Secretary's recent behaviour in India and his comments about the so-called "war on terror" (see here and here). When at university I sat on a college committee concerned with student accommodation in my capacity as president of my hall of residence. It seemed to me to be quite a responsibility. We had to decide both policy and detail on a wide range of matters having a direct impact on current and future students. It took time to prepare for the meetings and discussions were always thorough. On each issue we had to reach a decision acceptable to a majority and on the more contentious items that often required a degree of compromise and, indeed, of taking decisions we were unsure of but which we were persuaded were worth trying-out.

And then there were the student union representatives. Not a single meeting passed without them calling for a vote of no confidence in the college Principal or secretary or a head of one department or another or the chairman of the committee or, more often than not, a number of the above. Only the tea lady escaped the need for instant dismissal in the furtherance of the revolution. Thank goodness she never forgot the biscuits.

It really was quite pathetic to see serious business interrupted by such selfish juvenile pranks, but that was the way of the world. It served only one purpose, to ensure their views would never be assumed to be worthy of respect. I decided from my first day not to get involved in student politics and felt entirely vindicated by the pointless posing of those who did. Since then I have sometimes wasted time wondering whether those egotistical radicals ever grew up. Because I cannot remember their names I will probably never find out although I think I have a fair idea that they did not. I draw that inference from the behaviour in government over the last eleven years of other student radicals. Exactly what I witnessed has been seen time and time again on the national political arena. Classic recent examples have come in simple Harriet's support for the legalisation of discrimination on the ground of gender and hapless Jacqui Smith's temper tantrums any time one of her shallow and impractical proposals has hit the buffers. For these people debate is an empty concept. Their minds are made up and they are determined to get their way. Whether or not the subject under discussion has anything to do with what they want and whether or not serious flaws are disclosed in their predetermined conclusion, they do not understand anything other than "me me me". Until recently this was just a domestic problem.

Since 1997 the Foreign and Commonwealth Office has been relegated steadily in importance. Robin Cook was almost credible as Foreign Secretary, Jack Straw was an ineffectual in that job as in every other he has had in government and Margaret Beckett was an insult to the office acting purely as a mouthpiece for the Prime Minister. It was inconceivable that any of those three would act like a student union radical when dealing with senior politicians of a friendly sovereign state - Cook because he had too much sense, Straw because he doesn't believe in anything and Beckett because it was never in the script handed to her from 10 Downing Street. Now we have David Miliband, a man unconstrained by any such qualifications. He is cut from the same cloth as simple Harriet and hapless Jacqui, albeit a somewhat more intelligent cloth than either of them. He is a student revolutionary who has never grown up.

Respecting the view of others and being prepared to act as though you respect them are essential qualities in the world of diplomacy. You do not take a swipe at an outgoing US President by criticising the term "war on terror" that he used to justify policies you supported. If you do you will find his successor including a rebuff to your juvenile grandstanding in his inauguration speech. Nor do you harangue senior ministers from India about their approach to Kashmir. If you do you will find the enormously powerful Indian press reporting every damning criticism of your overbearing attitude and your ignorance of how sensitive an issue Kashmir is in Indian politics.

When I heard about these examples of Miliband's dentopodiatry I cast my mind back not just to the brainless student lefties I encountered in my youth but also to other recent Foreign Secretaries. Not just the three I have already mentioned but their predecessors in the previous two governments: Malcolm Rifkind, Douglas Hurd, John Major (very briefly), Sir Geoffrey Howe, Francis Pym, Lord Carrington, David Owen, Anthony Crosland and James Callaghan. It is unimaginable that even the most bullish of these (probably David Owen) would have been so crass as to upset two massively powerful friendly governments, especially not in quick succession

Diplomacy requires tact and discretion. It is about seeking to advance a position by siding yourself with the person you are seeking to influence and working from the inside, not by antagonising them and trying to impose your will from outside. On that college committee (so long ago that Cif was still called Jif and Mr Muscle was just a twinkle in Vim's eye) I learned a valuable lesson in persuasion from the student union politicos - put up the backs of those you need to influence and you do your cause a double disservice. They are reluctant to agree with you because you seem to be trying to force them into a particular position and they are also reluctant to give your argument credence because you have exposed that you lack judgment. How will the new American administration and the Indian government view David Miliband from now on? Well, let me put it another way. How would you view David Miliband if you were them? Would you hang on his every word thinking he is someone who is on your side and shares your values or would you be wary lest you become the next victim of a verbal attack or find he seeks to interfere in a domestic issue of little relevance to his job?

Fortunately there is little sign of any issue arising on which either America or India needs to seek support from the UK Foreign Office in the near future. Let's hope that remains the position until Miliband is no longer in office. How much damage he has done to relations with other countries remains to be seen.

How crunchy is your mortgage?

An interesting little snippet emerged from a BBC website report on the plummeting pound. It says "UK mortgage lending fell by 30% in 2008 to the lowest level since 2002". Such a statistic would mean nothing if it referred to numbers of transactions, so I infer it means the total value of mortgage loans made in 2008. I wonder whether I am right in finding this neither surprising nor particularly worrying.

The housing market started to turn south in 2007. Prices were being squeezed in the summer of that year and took a noticeable downturn from late summer. Three consequences seem inevitable once prices are being forced down. First, a number of potential sellers are not prepared to drop their price; secondly, a number of potential buyers decide to wait to see how much further prices fall and, thirdly, the total value of sales is likely to fall. The first two factors reduce the number of transactions below what it would otherwise have been and the third is a consequence of not only lower volume of sales but also lower prices on each transaction. When you then add-in further caution caused by the threat of an impending recession and the attached uncertainty about employment you have yet further downward pressure on both volume of sales and individual prices.

It is only once these factors have come into play that a shortage of credit has any effect. If, as we are constantly told, loans are very hard to come by the number of buyers able to finance a purchase will necessarily be reduced. And yet, despite all these downward pressures, the total value of mortgage loans given in 2008 dropped by only thirty percent compared to 2007. That does not suggest to me that mortgage loans are like hens' teeth. Perhaps what was being evidenced was far less a credit crunch than a decline caused primarily by the inevitable bursting of a price bubble.

A new President. Idealist, power seeker or patsy?

A few days ago I made a comment about idealism in one of my witterings. It was picked up by Mr Bob in the comments and expanded very nicely. I am not sure whether what I want to say today is a comment on idealism or greed for power, but I will say it anyway.

So far in this blog I have said relatively little about the EU. The reason I want to talk about it today is because today is Inauguration Day in America. From the way his imminent ascension to the Presidency has been reported, an unknowing observer would think Mr Obama gained 90% of the vote at the recent election. In fact he won a little under 53%. It is a large share compared to most recent Presidential elections but George Bush Senior won a larger percentage in 1988 without a lot of hoop-la resulting and Ronald Reagan was only just short of 60% in 1984. We seem to be seeing in Mr Obama's election an exaggerated reaction because he says nice things. He is yet to say anything of substance, but the sugar syrup flows profusely as it did from the charming, smarmy lips of Tony Blair.

Already Mr Obama is guaranteed a lifetime place at the top table of those dedicated to the concept of world government. Why him rather than his predecessor? Simple, because he says what the established group of self-appointed world rulers want to hear. He backs the great plans of the internationalists - taking wealth from the developed countries to give to the governments of the poor countries (not the people, the governments), using any environmental scare story as an excuse for increasing taxes domestically and passing a substantial proportion of that tax income to bodies controlled by the existing world elite and, most significantly, increasing the power of worldwide political organisations.

Now, I am not arguing that there is a wicked hidden conspiracy occurring. There is nothing hidden about it. They are quite open in wanting the UN and its panels and committees to be the basis of more and more policy-making. It's macro-everything regardless of the impact it might have on individual countries and their citizens. Blair is part of the in crowd. John Major is not despite being a far more competent government minister than Mr Blair ever was. Margaret Thatcher never got a look in, nor did Ronald Reagan. They were concerned with building strength from the individual upwards and decried the notion of strength being bequeathed by a greater supranational power. That disqualified them from membership of the club. Mr Obama has made clear already that he buys the internationalist idea so he's in already. Watch how he is feted by them just as Clinton and his weak Vice-President were, and compare it to how Reagan, Bush Senior and Bush Junior were opposed by them from day one.

The same pattern is seen in the EU. So many politicians rejected long ago by the voters in their own country are at the top table while those who won office domestically and performed well never even get a sniff at the pre-dinner sherry. The real power rests with those who got in early and took the institution to themselves. They realised that elections are a dreadful inconvenience. All those little people being given a chance to say they don't want what is good for them? How absurd. Far better to ensure that what is good for them is delivered, they can have elections about the other things that don't really matter.

The greatest problem with supranational institutions is that they can only set their central policies once. The stakes are so high, both in terms of the cost of change and the egos of those who have appointed themselves the guardians of all that is good, that central policy must remain sacrosanct. Even if it is proved to be unsuitable to the needs of the real world. We see this with the UN's leading role in promoting eco-fascism and its inability to tackle the corruption and brutality of so many African leaders and their cronies. We see it also in the EU's refusal to accept that its own law requiring unanimous acceptance of treaties by the member states should be enforced when a relatively small member state, like the Republic of Ireland, rejects a treaty. Larger countries, like France, can require them to re-phrase the proposal but the substance always remains intact in the next draft.

There is a pre-established programme set out from above which must be followed come what may. Those who issue the programme have no mandate from the people of any country and they perpetuate their position by inviting those of like mind only. So, what can a dissenting country do? Its economy is affected root and branch by the regulations imposed by the supranational body and its ability to do business internationally is affected by trade treaties entered into as part of the supranational body. To say "this is the end chaps, it's been nice knowing you, bye" requires the unravelling of countless sticky tendrils of regulation. It can be done, but it will take time and during that time there is the risk of trade links being severed with no ready replacement.

In theory supranational bodies are a fine idea. But the theory has a fatal limitation. It assumes that there is a single answer to problems, a single answer that covers every situation and remains valid in a changing world. In real life there is never a fixed answer. Circumstances change and sometimes those changes give the lie to something previously considered to be an unchallengeable truth. Not a single unqualified statement can be made about the law, or economics, or science, or art without countless examples being provided to prove that either qualifications are needed or the statement should be abandoned altogether.

One advantage Mr Obama has over any new US President in my lifetime is that he has not committed himself to any set policy on any issue. It is an advantage because it allows him a blank canvass, he can pretty much do as he wishes. But it is also a disadvantage because he enters office without a principled commitment in any area of policy. His choice is to be bold and take his own decisions based on judgment and principle or to seek continued popularity by swaying in the wind. His election campaign put him firmly in the latter camp. That is just what the established international oligarchy likes to see. In the seventy six days since the election was held Mr Obama has been schmoozed by all current leaders of the self-appointed elite. It is too much to expect a new President who has declared no political principle (other than the need for him to be elected) to take risks. I hope I am wrong, but I think he will take the path of least resistance. For a British Prime Minister that means doing what the EU wants, for an American President it means playing second fiddle to the failed and the corrupt egotists of the UN.

Things don't look good.

Self-employment, a way to recovery

Predictions of likely job losses in the UK during the present year paint a pretty nasty picture. None of them is more than educated guesswork and various figures have been bandied about recently. The number counted as unemployed by the government's own fiddled figures reached 1.86 million as at last October and some are predicting as much as a doubling of that figure by the end of 2009.

At the same time as unemployment is rising fast so is the anticipated downfall in economic activity during the current recession. Most estimates are that the economy will shrink by more than 2% in 2009 and even more in 2010 before there is any hope of a levelling-out let alone a recovery. Obviously the depth and length of the recession will be a major factor in how many jobs are lost. There is also a hidden aspect to the contraction in the numbers unemployed as migrant workers return to their home countries because most of them simply drop out of the picture rather than being transferred from the "numbers in work" column to the "unemployed" column. The total number of jobs lost will be greater than the increase in the numbers recorded as unemployed. Could it really be that 2 million or more jobs will be lost from the UK economy in 2009 alone? Time will tell, but as businesses fail and others have to cut costs to stand any chance of survival it is inevitable that a huge number will find themselves without gainful employ.

A question that has troubled me for some time is where new jobs might come from as and when things start to pick up. One obvious answer is that an increase in retail demand will increase employment in shops and distribution companies, but it will not involve replacing like-with-like. An experienced and knowledgeable former employee of a specialist furniture shop might well find a position as a new furniture store opens for business but the £30,000 salary he commanded before is unlikely to be offered, he might have to start on half that and trust his experience, knowledge and hard work to gain him promotion. In addition a lot of people who had earned increases above the minimum wage by loyal service will be back at the starting rate again when they find a new equivalent job.

Perhaps more worrying is the loss of skilled jobs from manufacturing industries. While draftsmen and toolmakers are being made redundant in the UK competitor industries in many countries overseas will be able to stay in business because they are not saddled with the massive expense caused by British labour laws and health and safety bureaucracy. To re-start such a business here is a vastly expensive exercise and can only happen against a background of lost world market share as developing nations undercut on price and establish their reputation. Some new skilled jobs will be created but it is hard to see that it will be as many as the number lost.

Something that happened during and after the last two recessions might give a clue about where jobs can be created without the need for massive capital investment. What was seen was an increase in self-employment. The plumber laid-off by a building firm got a small van and put an advert in the local paper. The assistant no longer required at the garden centre set himself up as a freelance gardener cutting hedges and tending lawns, perhaps occasionally getting a commission for a complete garden make-over. Over the last twenty years we have seen a massive increase in the number of self-employed single person businesses offering their skills in all areas of building work as well as pet care, hairdressing, ironing and a thousand other activities people are prepared to pay for because they either lack the skills or the interest to do them themselves. Naturally, some of these businesses don't remain single-person enterprises for long and grow to something quite substantial. More power to their collective elbows say I.

Being self-employed is not a bed of roses. You are not guaranteed an income, no one makes a contribution to your pension or National Insurance, you have to keep accounts (a wonderful two-edged sword for those paid in cash as they try to keep their declared income down for the tax man and up for the bank manager), there is no sick pay unless you take out insurance, you have overheads you would not have as an employee and so on and so forth. Having said that, a lot of people have found it a far more rewarding way to earn a living than selling their skills for a fixed price to an employer. It doesn't suit everyone but it does suit an awful lot who never thought it would.

The days when little Johnny would leave school and be guaranteed a job in the factory his father and grandfather worked in have long gone. Employed job for life are a dying breed in the private sector. More people than ever are changing jobs and changing employees. I wonder how long it will be before the norm is for everyone to be self-employed and hire-out their services either for individual jobs or for fixed periods. I am heavily biased on this subject because I was self-employed all my working life and relished the freedom it gave me to take a break when I needed it rather than when it was convenient for a boss. Being utterly hopeless at administration I paid countless penalties to the tax man for not filling in pieces of paper or sending a cheque a day or two late, but that was a small price to pay for not being (as I perceived it) at someone else's beck and call.

I hope the current recession will cause many of those losing their jobs to set up on their own account, selling their skills directly. One thing of which I can be fairly sure is that a great many will be waiting a long time for a new job if they do not take their fate into their own hands.

Oh dear, how much this time?

Seconds out, round two, ding-ding. The battle of the banks moves into another phase. Last year the government handed over £37billion to help stabilise them but now a different problem has arisen, or to be more exact the same problem for a different reason. Last time there was a threat of imminent collapse through the banks being under-capitalised, now the threat is imminent collapse because of ... good question, because of what exactly?

It seems to me there is only one thing that can cause the collapse of a bank and that is an obligation to pay money when they don't have enough money to do so. We saw that problem when there was a run on Northern Rock. At the moment there does not appear to be a threat of imminent claims for payment which cannot be met, the perceived threat seems to be longer term. Our old friend Mr Toxic Loan is back in the headlines again.

I waffled on about him back in the summer, but a brief re-cap might be helpful to those who were listening with insufficient assiduity. If a bank makes a loan of £100,000 to allow someone to buy a house it expects to be repaid by the borrower over twenty or more years. Because too many loans were made without sufficient evidence of the borrower's likely ability to repay, many people borrowed money they simply could not afford. That brings the value of the house into the picture because serious default by the borrower leads to the bank seizing the house and having to sell it to recoup its losses. Too many banks lent too high a proportion of the perceived market value of houses and those properties are now worth less than the balance owed. To make things worse a massive merry-go-round operated by which banks and other financial institutions bought and sold the right to receive the income from these bad loans and a right to share in the proceeds if the houses had to be repossessed and sold. Thousands of loans were bundled up into batches and sold as a job lot, then re-sold in whole or in part over and over again. All sorts of people invested their money in funds which depend on these bundles of loans to provide a profit.

The current problem is that no one knows how much of each bundle comprises bad loans. They might have bought identical interests in two apparently identical bundles, one of which is going to be substantially loss-making and one of which is going to be substantially profitable. There are so many individual transactions involved that you simply cannot look at one bundle and try to assess the viability of each loan involved. Even if you tried it would take many months and a lot of guesswork. The only practical way of approaching the problem is to take a stab at the total value of loans made without checking the borrower's means, take a stab at the total value today of the properties used as security for those loans, assume the levels of default will be at the high end of historical averages and calculate what percentage of current worldwide outstanding loans this represents. It's little more that a wild guess and everyone knows it. All the financial institutions with fingers in this rancid pie are being treated like pin-less hand grenades.

As and when the bad loans go into default two consequences follow. First there is no income from the borrower, so a bank that advanced £100,000 expecting a return of 5% a year suddenly has no return on that investment. Secondly, the amount recovered on sale of the house might be less than the amount advanced. So, having invested £100,000 the bank might receive only £80,000 leaving it to dip into its capital to keep its books square. And, of course, there are knock-on effects. Because the bank was receiving income of £5,000 while the borrower was making the repayments it used that anticipated income as cash-flow from which to make further loans to other people. When the source of income dries-up so does a source of funds with which to make new loans, thereby causing a reduction in the bank's ability to do new business and, with it, a likely reduction in next year's income and that for some years to come.

One little discussed aspect of the credit-crunch is the startling effect increased defaults can have on the ability of a bank to lend in the future. Not only is there a shortage of income which would have been available to advance elsewhere, but the need to keep their capital reserves at a safe level means that they have to use income from performing loans to top-up their capital when a defaulting loan results in a capital loss. In the example I gave, the shortfall of £20,000 reduces the bank's capital by that amount so they have to use the equivalent of one year's income from four similar loans just to put cash back in the safe. And so the shrinkage of available funds to lend carries on until such time as the balance of its investments is steady again.

There is no magic way out of this problem. The defaulting loans will cause losses which will have to be paid somehow. If you want the banks to continue lending as though they did not suffer a drop in income, you have to relax the capital requirements. If you want to retain the capital requirements, you have to accept that they have less income from which to make new loans. Less income from which to make new loans means a lower total value of new loans, which means less money sloshing about in peoples pockets and less spending. Less spending means shops, importers, manufacturers and service industries have less income, which means less spending by the people involved in those businesses, and so the cycle progresses. This is the difficulty facing the government when deciding what to do next.

They know they have to insist on banks being properly capitalised because one effect of the government regulators relaxing capital requirements in the past was the massive expansion of bad lending. But they also want to take such steps as they can to prevent the vicious cycle of recession accelerating out of control. Their chosen course appears to be to reduce banks' overheads and give insurance against existing customers' defaults.

Part of the bail-out last summer resulted in injections of capital on which the banks have to pay interest at, I believe, up to 12%. Inevitably this means the banks have to use income from customers who do pay them in order to service that debt, thereby reducing the amount of cash the banks have available to lend. The government appears to be prepared to change the basis of that capital injection by taking a larger shareholding in return for dropping the requirement that interest is paid on the money injected. In other words they will reduce the banks' overheads by reducing the government's income from the banks. This could be a good deal for taxpayers provided the additional shares taken by the government increase substantially in value once the banks are doing additional business and the government then sells the shares at a stonking profit sometime in the not too distant. It might work. The one thing it should do is increase the amount of money banks have available to lend, thereby increasing their chance of returning to trading profitability. That of itself will help the public finances.

Insurance against the risk of default on existing loans is a far more difficult issue. The banks will have to pay a premium for that insurance. How, I wonder, will these additional overheads stand against the reduced overheads caused by removing the need for them to pay 12% on last summer's capital injection? We will see the details shortly, but it is a tricky balancing exercise. As I understand it, this part of the new plan will not increase the banks' ability to lend in the short term because it will not give them any more cash. What it will do is help to repair their capital position when loans default so that they do not need to use as much of their own income to restore their reserves of capital, instead the taxpayer will chip-in. To my mind the crucial question is what method, if any, will be included to allow the taxpayer to recover this money in the future. If there is no such mechanism, this scheme will amount to a potentially massive gift to the banks and an equally massive burden on future taxpayers. In fact it will be an even more massive burden on future taxpayers because the government is borrowing the money and laundering it through an inefficient bureaucracy. This measure is potentially far more expensive than any benefit it could produce.

I have commented before on the failures of regulation which allowed the banks to get themselves in such a mess and on the abject failure of the banks and their shareholders to do what they should have done to prevent the current problem arising. But we are where we are and the issue today is what, if anything, should be done about it. To my mind the one thing that should be at the forefront of government policy is that future losses as a result of past bad business cannot be avoided. They will surface, if not today or tomorrow then next week, next month or next year.

Simply transferring those losses to the taxpayer is not only bad for the economy generally - because higher taxes to pay for them will stifle the creation of wealth for a long time to come - it is particularly bad for those at the bottom of the economic pile. They are always hit hardest by increased tax because (i) there are more of them (so £1 from each is worth a lot more to the Treasury than £10 from each wealthy person), (ii) a higher proportion of their income is spent on taxed purchases and (iii) it is easier and cheaper to collect it from them than from those with the means to find legitimate ways to reduce their tax bill.

One option the government should not leave out of account is allowing the banks in the worst positions to fold. If they do fold, the loss will fall on those owed money by the banks. Mr and Mrs Ordinary will have their savings protected up to £50,000 per bank and that will be a loss borne by the taxpayer. Beyond that, shareholders who have gambled on bank shares producing either an income or capital growth will find they put their chips on black rather than red. So be it, that is the chance they took knowing they were gambling. Other financial institutions will take a hit when there is no money to repay them, just as The Amalgamated Plasterboard Company Ltd takes a hit when Fred Bloggs the builder goes bankrupt before paying their invoice. These risks are spread all over the world, British banks do not only have British investors.

I fear the insurance idea has a fundamental flaw. It guarantees that a proportion of losses will remain at home when otherwise they would be spread around the globe. Say a loss is made of £1million and 80% of the bank's shares are owned by Brits. That loss will cost the British shareholders £800,000 and £200,000 will be borne elsewhere. It might not mean an immediate loss to anyone, but it will reduce the bank's capital which will have to be reimbursed from future income thereby reducing the profitability of the business and, in turn, both the income and capital value of the shares. If the taxpayer has to carry as little as 1% of the loss (£10,000) the shareholders bear £990,000, split £792,000 to the Brits and £198,000 to Johnny Foreigner. The total UK loss is increased to £802,000 (£792,000 to the shareholders and £10,000 to the taxpayer) and our friends overseas get a gift of £2,000 from our taxes. Of course we are not talking about losses of £1million but about potential losses of hundreds of billions. Voluntarily sucking a greater proportion of that into the UK's debit column doesn't seem a very sound way to bolster this country's finances.

If, as I suspect, the real fear is that things are so bad that one or more banks will fold without a cushion against the effect of Mr Toxic Loan's halitosis, taking a measure that will increase the proportion of loss retained in the UK seems extremely risky. Could the scheme make the difference between folding and remaining in business? No one can tell because the potential losses are so massive and where they will fall so unpredictable. I have a nasty feeling about this one.