Greece and Austerity
is an interesting article that looks at the question as to what extent Greece was inherently a financial disaster waiting to happen.
It summarises as: "Greece never had the productive structure to be as rich as it was: its income was inflated by borrowings that weren’t used to upgrade its productive capacity."
There is a difficulty with macroeconomic theories that ignore the nature of the economy and the extent to which it is shored up by unsustainable public spending.
Once you take out that which is unsustainable you then see that which left is far less substantial. Another useful extract is: "Until 2014, the country did not pay, in net terms, a single euro in interest: it borrowed enough from official sources at subsidized rates to pay 100% of its interest bill and then some. "
It is, however, only a question as to how big the problem has become by the time that the nature of the new clothes of the emperor has been finally determined
What I find sad is how little use is made of quantitative models when debating potential economic approaches. The models may not be perfect, but they at least give some indication of potential consequences.
Affordable Housing and Housing Benefit
There was a debate in Parliament yesterday which was interesting because Labour admitted that the Labour government was planning to bring in a flat rate housing benefit payment in the Social Housing Sector. In Labour's current Phraseology "Labour planned a Bedroom Tax for Social Housing".
The full debate is here:
More importantly, however, I asked a question of the Shadow Minister:
John Hemming: I am aware of the proposal to transfer housing benefit money to local authorities with a view to building more properties. Let me ask this: what pays the rent of the people who are already in tenanted accommodation while the new properties are being built with that money?
Helen Goodman: That, of course, is the great conundrum. [... where she does not answer this question ...]
The Shadow minister did not answer this. If Labour bring in such a policy it will only work by top-slicing the housing benefit in some way from tenants. Hence tenants on means tested benefits would have to pay towards their rent, not only those who have spare rooms. In Labour's parlance a "whole home tax" rather than a "(spare) bedroom tax".
If Housing Benefit is cash limited that creates a similar problem. Alternatively some tenants would not be able to get Housing Benefit. However, somehow there is a cash problem.
Some other highlights:
John Hemming: I refer the hon. Lady to the answer that the then housing Minister, the late Malcolm Wicks, gave to a question from the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) in Hansard in 2004:
“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]
If he said that then, why is it now such a bad idea?
Sheila Gilmore: It is interesting that the flat-rate housing allowance for the private rented sector should be raised. What the hon. Gentleman mentions was discussed as a possibility during the Labour Government.
John Hemming: I tried to intervene on the hon. Member for Bishop Auckland (Helen Goodman) to ask her whether Labour would reduce under-occupation by adopting a policy that involved evicting people living in under-occupied accommodation. Does the Minister accept that if we do not remove the spare room subsidy, the only alternative open to Labour if it wanted to reduce under-occupation would be to go round evicting people from under-occupied properties, which does happen in certain tenancies?
Mr Harper: The Opposition clearly do not have a sensible policy.
Yesterday's speech about the role of an MP
John Hemming (Birmingham, Yardley) (LD): I refer the House to my entry in the Register of Members’ Financial Interests. It contains an entry for JHC, which stands for John Hemming & Co., a company I founded in 1983. It currently employs about 260 staff and has a turnover of £20 million. I have declared in the register an income of around £180,000 from that company. I attend a meeting once a month and chair the board meeting. I am a full-time Member of Parliament. I spend five full days during the week and two half days at the weekend on political business. Oddly enough, the motion is so badly drafted that it would not affect me, because the £180,000 I receive is from a partnership, and the motion does not refer to partnerships. Obviously, there is a lot of confusion about equity interest and payment per hour. I spend under four hours a month on the work set out in my declaration of interests.
What do I do? Well, today I met the Latvian Justice Minister, who is concerned about what is happening in the family courts in England as it affects Latvian citizens. I have attended two Select Committee meetings today. I actually sit on five Select Committees, and I probably attend more Delegated Legislation Committees than any other Member of Parliament. Therefore, when it comes to parliamentary activity, I can claim to be as busy in Parliament as one can be. Indeed, one of my colleagues said that he did not think that I had a second job because he always sees me here, and I am here a lot.
Fiona O'Donnell: May I ask why the hon. Gentleman decided to donate to charity his income from taking part in ComRes consultations but not to donate income from his other employment?
John Hemming: The problem with that question is that the hon. Lady has made an assumption that I do not make other donations to charity. I do make other donations, but they are not set out in my entry in the register. I am sorry, but that claim is basically wrong.
I do a vast amount of casework. I have my advice bureau on Saturdays, and the maximum number I have dealt with is 38 groups of people. Admittedly, that took a little longer than normal, but I see everybody who turns up at my office on a Saturday without an appointment—many colleagues who claim to be full-time Members of Parliament require appointments, but I do not. I have been a full-time politician since 2004, when I was deputy leader of Birmingham city council, which is also a full-time job. From a casework point of view, having dealt with about 30,000 cases of varying complexity since then, I am a full-time MP. I run campaigns about secret imprisonment, term-time absence, parents being prosecuted because their children are ill and dealing with people who leave this country because they are persecuted by the state. That is part of my job as a full-time MP.
I am also a pianist, as is well known. I play the piano at the party conference and later in March I have a gig in my constituency in Birmingham for Macmillan Cancer Support, which is sold out. Admittedly, that will all go to charity. As the hon. Member for Perth and North Perthshire (Pete Wishart) knows, I play jazz music in various places for charitable purposes. This year we are not raising money jointly for Macmillan at the Palace of Varieties show, but these things still go on.
I have additional business costs because I am an MP, but where is the conflict of interest? There is a conflict of interest for Ministers, because if they vote against the Government they are fined by losing their ministerial salary. That is why Ministers are called the payroll—they are paid extra money by the Government in order to back the Government and vote with the Government, whether they agree with them or not. So it is very clear, with our system of failed separation of powers, that a conflict of interest arises from the second job of being a Minister.
to take legal action against the city council to try to get it to clean up the streets, which was good in that it got the council to clean up the streets, but bad in that I was ordered to pay costs against the council. That is being appealed through the courts.
How do my constituents benefit from me? I have a little bit more money, that is true, so I pay beyond parliamentary expenses for a benefits adviser who comes to my office to give specialist benefits advice. I was able
Since 2009 I have claimed no second home expenses and I am the most cost-effective Member of Parliament in Birmingham. I use saver return tickets to get to the House of Commons. That keeps my travel costs low so, although I go between London and Birmingham every week because I live in Birmingham, I am by a long way the cheapest MP in Birmingham in terms of personal expenses.
I deliver for my constituents. I deliver more widely on campaign issues. What is the problem with me spending four hours a month continuing to have an interest in the business that I founded more than 30 years ago, which pays a large amount of tax and provides jobs for 260-plus people?
Some responses from the Yardley NHS survey
Firstly on Labour's proposals for another NHS reorganisation.
Secondly on whether there is a role for buying in services.
Software and Grexit
It appears that the Greeks have decided that they are unwilling to compromise and the rest of the Eurogroup have decided that they won't throw good money after bad.
There then comes the technical question of how to establish an economy based upon the "new drachma". When changes are planned to financial software such as benefits and taxation quite a long period of planning is needed before the systems are in place to cope with this. It is really not practical to establish the software and systems for a completely new currency overnight. That would imply the greek government trying to cope with making payments in a situation where those banks holding a lot of greek debt are unable to operate.
I am not quite sure how this actually works.
It does seem, however, that after today the ball is in the Greek government court. They can come back to the EuroGroup suggesting that they agree to something akin to the deal. However, the timescale to avoid chaos is this week.
This creates quite a considerable element of uncertainty. My feeling is that with QE and other tools that the ECB has that things will settle down reasonably quickly outside Greece. However, I would expect some turbulance in the mean time.
Post office at the Poolway
Some of you may
be aware that Central England Co-op have sadly resigned as agents of the branch
which is situated at The Poolway. The last day of service will be in January
The Post Office
maintain that they are committed to continue a Post Office service in the
vicinity and are currently advertising the business opportunity on their
website. They have already been approached by existing retailers in the Poolway
Shopping Precinct, who may be suitable new operators.
Democrat team will work to ensure that you do not lose your Post Office service
as we have successfully done so recently with the Post Office at the Wheatsheaf
We will keep you
updated with regards to any further developments with regards to this matter.
Yardley Hustings Agreed
Having not had hustings in 2010, the candidates (or at least the Lib Dem, Labour and Conservative) candidates have arranged a hustings event between 2 and 4 pm at South Yardley Library on 21st March 2015.
The Respect and UKIP candidates have been told of the event, but neither have confirmed attendance.
Greece and the EU
It is not that easy to predict what will happen with Greece. The arguments of the Greek government are absurd. They cannot revisit the Second World War when the country agreed a settlement many years ago. The argument about profits on Greek bonds is a nonsense given the amount that has already been written off. Now we have, "if we go it falls apart".
If they renege on their contractual commitments "if falls apart". Which is why the other EU countries won't just let them off their treaty obligations.
My personal view is that the elected representatives for Syriza are not going to compromise enough and will push it to the limits. That is likely to lead to Greece being in default and short of cash. In the end this is actually enough to drive them out of the EU. They are unlikely to agree to enforce any ECJ judgments in respect of paying debt. Hence I think they are on the way out of the EU itself - not just the Eurozone.
The fact that they have started with arguments that hold no water at all does lead to the conclusion that Grexit is the end game. However, nothing is certain. The difficulty with Grexit is that no-one would be enthusiastic about "new drachmas" with Syriza in charge.
Not a good situation.
Fracking and the Infrastructure Bill
I was surprised given the Green Party's opposition to Fracking that Caroline Lucas did not vote against the Infrastructure Bill on Monday evening.
The point about the infrastructure bill is that although there was no specific vote as to whether or not to change the laws on trespass for Geothermal Energy and Fracking, there was an opportunity to oppose the bill as a whole.
The Bill did include good things like a cycling and walking strategy, but there were also things that one would have expected the Green's to oppose in addition to Fracking.
The final 3rd reading question can be seen being put here (7 hours 23 minutes and 56 seconds from the start of the video)
. No one was there who shouted no.
Soveriegn Debt Interest Rates
The FT have a useful information page which gives the 10 year interest rate on government debt
The rates are particularly low in the Eurozone apart from Greece at the moment. The UK is also particularly low.
I will extract the current figures for future reference:
Ten year government bond spreads
The end result of these, however, is essentially that Greece is no longer in a position where it can borrow money from people generally (aka the Markets) at a low interest rate. If someone was willing to lend Greece some money at a lower rate then it becomes possible.
Manhole Cover Explodes in Tyseley - twice!
There has been a growth recently in the number of reports of exploding Manhole Covers. One in Tyseley exploded yesterday on the Warwick Road close to Tyseley station yesterday. There are quite a few press reports about this including a video of a little girl who was almost hit by the cover.
The detail is in various press reports including this one.
I have been down to look into it. When it exploded the lights went off with a power surge in at least one local shop. That would imply that the explosion was linked to power supplies in some way. However, the cover that flew off was actually from the telecoms manhole. There were three manholes close together. National Grid (gas) were down to look at the gas supplies and that was not an issue.
There has been a growth in such explosions from under 10 a year a few years ago to over 60 last year. The normal cause is from decaying insulation caused by water on power cables.
I have written to OpenReach (BT), Western Power (the MEB) and National Grid to pin down what is going on and why when the same thing happened at the same location 9 months ago that it still happened again.
Although it is good to report that no-one was hurt in this instance, people have been hurt on other occasions. The HSE raised the issue with the utilities companies last year, but it is unclear that this has resulted in the right action.
I have put in a parliamentary question about this and will keep constituents in touch with the outcomes.
Intel® CT Desktop LAN Adapter
PLAN 1Gbit PCI 2.1 Intel® I210 T1
PLAN CP 2x1Gbit Cu Intel® I350-T2
Conservatives Plan to Close Down e-Commerce
Well ... that's not what they are presenting it as. Instead they are talking about banning encryption. See here
When I say I am a cryptographer I mean that I implemented the second version of the SSL (now TLS) encryption system in the world after Netscape back in 1995. I have written the software for RSA encryption.
What would it mean to ban encryption?
Well the most obvious use of encryption is for web interfaces with the https:// type of URL. http:// is hyper text transfer protocol (without encryption) and https is with encryption.
Properly implemented it is secure. It is used for Hotmail (now outlook.com), facebook, twitters and all electronic communications including online banking.
If you want to find out whether you are using encryption or not just look at the url.
Hence if they are aiming to ban encryption then they want to stop all e-commerce as well because it all uses encryption.
Judicial Review and the Crime and Courts Bill
Questions have been raised as to the modifications In Division 130
as to the basis upon which a decision by a public authority can be quashed by judicial review.
The change introduced by the Crime and Court Bill means that apart from a few exceptions if the court is asked to quash a decision because of procedural flaws it is not to do so if the decision if when remade is highly likely to result in a not substantially different outcome. The few exceptions relate to the "exceptional public interest".
The difficulty is that for decisions that are subject to judicial review (which does not apply to primary legislation of course) the simple fact that judicial review has been applied for can introduce a long period of delay. That delay in itself can harm the public interest. Hence to apply a filter at the permission stage which means that applications for judicial review that are unlikely to result in a final change to the decision are rejected at that stage then stops the delay from happening.
The government's final compromise was to allow the judges if they believes that something is in the exceptional public interest to continue to review (and thereby delay the implementation of) a decision even if it appears to be merely on a technicality.
The NHS and TTIP
There is a lot of confusion about the Transatlantic Trade and Investment Partnership (TTIP) and the NHS. The NHS Confederation has produced a dedicated web page Here
relating to TTIP.
My own view is that the NHS should be kept out of TTIP. I don't personally believe that it is in TTIP at the moment. On the NHS Confederation Web Page there is a lot more information. I will extract one part of this below, but really people should read the web page (referred to above) if they are interested in more information.
Specifically on the web page it says: "Jean-Luc Demarty, Director General for Trade at the European Commission, wrote to Dr Sarah Wollaston, Chair of the House of Commons Health Committee, on 11 December 2014, giving further, more explicit assurances that the EU intends publicly-funded health services to be excluded from the TTIP agreement. Publicly-funded services delivered by private, or third sector organisations will also be protected. EU practice is that "ratchet" mechanisms "locking in" liberalisation will not apply to public services, so that future governments will be free to change policy direction. "
It may be that the TTIP agreement is never concluded. However, I also beleive that we need an open judicial process rather than a ISDS type system. The ECJ has its flaws, but at least it is an open system of justice.
Experts on Retainers
I noticed that I have not posted this case
to my blog.
In this case it was put to the court that having an expert on a retainer to one of the parties stopped the expert being independent. The court disagreed. I disagree with the court.
I think most people would disagree with the court.
Kathleen Danby and the Court of Protection
The Court had the sense to allow Mrs Danby to purge her contempt today and be released. G4S, however, decided that the court order was not enough and they needed permission from the prison service. In the mean time her handbag had been left in Derbyshire and her suitcase left in a hotel in Liverpool. Her tickets had run out to return to Orkney yesterday and she was dumped by the system in Birmingham. Luckily the Daily Mail have agreed to help her get home.
Even if the original court orders on contact had reliable expert evidence and the conclusion of the court on only hearing one side of the argument was right (about both of which issues there are questions). Derbyshire County Council have serious questions to ask as to where the public interest was in spending the money to get her dragged out of a Ken Dodd concert to be taken around the country. It is also obvious that although there is potentially an argument to convict her in her absence there is no argument to sentence her.
Because she was not contactable yesterday or today, it was impossible to ensure she had legal representation. I was prepared, therefore, to act as her McKenzie friend today, but in fact a solicitor was found at the last minute.
It remains, however, that the system as a whole has treated a particular grandparent very badly this holiday period and she is owed a number of apologies starting with Derbyshire County Council.
As I say in this story
: "It is ordinary people subject to an abuse of power, and there's many more of these cases going on. These are the strange sorts of things that happen in this country."
Photo on the Mirror website following the court hearing.
looks back at the Platt report and its conclusions about parents (and grandparents) visiting children in hospital. This has a sensible carry through into cases such as the Danby case.
Remember to wash your weeds
As we move into the new year most of the complaints received by my team have been about problems with rubbish collection. The new system is far less efficient than the previous system and as a result frailer people who need help moving around the large wheelie bins are finding that their rubbish does not get collected. People who have the temerity to put their weeds unwashed (with too much soil) into the recycling bin are being told to wash their weeds
(which I find to be a rather odd requirement) and there remains large amounts of fly tipped rubbish on the streets - although much less in Yardley than other areas. To save time the operatives are deciding from time to time to leave rubbish because the bins are not that full and people who would rather not have wheelie bins are forced to have them even though the operatives merely take the black bags out of the bin to save time.
This is a real issue to be considered within the context of the debates about how public services are to adjust to continued austerity. In Birmingham the Labour Adminstration appear to have ignored the need to be cost effective and efficient and are merely trying to do what they would do if austerity did not exist and then add cuts on top.
Internationally it now looks possible although I would not say probable that the Greeks are going to elect a party to run the country who believes that having a "money tree" policy (as in money grows on trees) rather than a monetary policy is an effective way to run the country. Investors are already running scared of this and it will be interesting to see how long any Syriza government would last if they do actually win the elections. What the Greek situation demonstrates is that governments need to have the confidence of people willing to lend them money (the markets) to be able to cope. This in many ways is the key metric of any economic plan as it affects the interest rate paid on government debt.
Nationally the need over time to balance the books is more widely recognised. Labour still don't admit the errors that they made previously. However, we are at least having greater clarity as to what strains of austerity are being offered in this year's general election.
Earlier this year I blogged about the fiscal smoking gun
. That blog post links to a spreadsheet
which looks at the national accounts in terms of percentages of the national cake. It is this debate that is now starting up for the general election.
The relatively small numbers of digits as to the percentage of the GDP in total managed expenditure by government are the key battleground for the General Election. I was reasonably comfortable with the plans in 2010 as they aimed for around 40% of the GDP spent on public services. Outside the crisis period the Labour governments from 1997 had the following percentages: 37.8, 36.8, 36.1, 34.3, 37.7, 38.6, 39.3, 40.3, 40.6, 40.4, 40.5 (7-8). The forecast in the Autumn Statements include (outturn 13-14 41.5) 40.5 39.5 38.2 36.9 36.0 35.2.
Labour are making the claim that this takes things back to the 1930s. The figure of 35% quoted by Ed Miliband in his speech here
is in fact more than the figure for 2000-1 under Tony Blair (34.3). It remains, however, that driving this down (particularly with certain departments ring fenced) is something that I would not agree with. I am worried about the impact on local services particularly local government. However, it is not the small state sort of GDP that you get in China (23.9) or Chile (23.2). George Osborne may be right to state that the proposed reduced spending is the same in real terms as in about 2002-3. However, the proportion of GDP is relevant as well as the real terms spending.
The autumn statement also looks at the figures from the perspective of whether they are fair. Table 2.f in the analysis (which can be found here
) finds that the tax policies including VAT are progressive by expenditure decile. It should be noted from this that the tax levels for the top expenditure decile have gone up whereas other deciles have gone down. Furthermore the net effect of welfare and tax both direct and indirect is income positive for all deciles other than the richest 10%. It remains that the minimum wage should be increased and we need to see higher wages across the economy, but equity in sharing the burden is important as well.
That does not mean that everything is perfect, but it does demonstrate both that the coalition has been concerned about ensuring that the burden is fairly shared, but also that the coalition has delivered on this.
There have been debates about the growth in food banks and whether this is as a result of government policy. If you look at The Trussell Trust's web page about how they started
you will find that they say: "Paddy investigated local indices of deprivation and ‘hidden hunger’ in the UK. The shocking results showed that significant numbers of local people faced short term hunger as a result of a sudden crisis. "
The recent research from JRF found that most users of food banks used food banks as a result of a crisis. What we cannot tell from the statistics, however, is what the growth in usage would have been were the provision to have been static. This was debated in parliament recently here.
If Labour do localise Housing Benefit in the same way that Council Tax Benefit has been localised (see ippr proposals
) then we are likely to see things being a lot tighter for social housing tenants with many more having to contribute towards their rent even if they get fully means tested benefits.
My experience, however, is that at the moment when normally people are getting the right benefits then generally there is no need to go to a food bank. Situations where people are not entitled to benefits or any public support are different. However, that is a matter of public policy.
Internationally there have been really tragic events such as the attack on a school in Peshawar. The extreme atrocities that are the modus operandi of ISIL and the Pakistani Taliban must be brought to an end and the world should unite against this.
Although not as extreme there seems to be a sad movement away from the rule of law in Bangladesh. I don't think that this will be resolved without new elections under the caretaker government system.
The movement towards recognising Palestine may just give a glimmer of hope of a possibility that Israel recognises that it needs to operate within limits. As the stronger actor in this conflict they need to hold themselves back. This conflict as is often the case is underpinned by a desire for revenge amonst elements of the population on both sides of the conflict. The desire for revenge is often stronger than the desire for peace. This results in the sabotage of any negotiations for peace. People will not, however, often admit the truth about this. Hence as with many places international humanitarian law and the principles of human rights need to be followed to enable peace negotiations to have a chance of happening in earnest.
Sadly the problems in the family division with skewed evidence continue and we have cases like that of a grandmother given a prison sentence for hugging her grand daughter.
Back in Birmingham my office has been busier with almost 4,000 cases being opened during the year. We also now have a couple of hours of pro-bono legal advice and in January will be having a specialist benefits advisor available for a day a week.
In Parliament I have been busy including attending 44 Delegated Legislation Committees as well as five select committees and a few bill committees and the rather esoteric Standing Orders Committee. (this was during the 13-14 session - I think it is likely that I attend more committee meetings than any other MP). I have continued to chair the commons side of the DWP parliamentary policy committee and campaigning more generally on issues.
To conclude I would like to wish everyone a Happy and Prosperous New Year.
Addendum: I have since writing this discovered that the claims about spending being at 1930s levels from the perspective of a %ge of GDP were originally made by the OBR, but relate only to RDEL and not AME. Hence Ed Miliband's speech was wrong because it made the wrong assumption. I think the OBR report is misleading, however, as many services are provided through direct payment systems such as DLA and Housing Benefit. That appears in AME, but not RDEL. Also Total Managed Expenditure (the percentages used above) includes RDEL, CDEL and AME). AME also includes locally raised funds which are significant.
Further Addendum: There was a completely new dataset of TME figures published by the ONS in November which has different TME %s. The lowest of these is in fact 1999-0 at 35.9. I am looking for the audit trail of the changes.