A PM held to ransom

David Cameron returned from the European Summit last week announcing that he had vetoed a new treaty in the ‘national interest’. It would be more accurate to say he was ‘held to ransom’ by the Conservative Party’s friends in the City.

Cameron’s Conservatives are a new breed of Tory. It would be wrong to say that, like the resurgent Wispa bars, they are the same 80’s product in a shiny new wrapper. Nearly 150 Tory MPs are ‘newbies’ who took their seats in 2010. Fewer of them attended private school then in years past- 54% today compared with 70% in 1983. The party is a different shade of blue from Thatcher’s time.

One thing that has not changed is the party’s vested interest in protecting the perceived generators of national wealth. The Smith Institute reports that 27% of the current Conservative crop have a history in financial services. According to Aditya Chakrabortty of The Guardian, the financial sector in this country employs about 1 million people. This means that an industry that employs less than one-thirtieth of the working population is represented by one-quarter of MPs in the dominant governing party.

The Conservatives and the financial sector are entwined in other ways too. A report by GMB reveals that nearly 60% of donations to the Tory party come from individuals and companies linked to finance, hedge funds and other City interests. The Square Mile has often been touted as the beating heart of London. In many ways, it’s the beating heart of the Conservative party too.

In light of such figures, it should come as no surprise that a Conservative Prime Minister should fight tooth and nail in the most prestigious of arenas to protect City interests. Cameron’s so-called ‘veto’ was not a free decision made by a plucky little Englander taking on would-be tyrants overseas, it was the ransom he was forced to pay in return for the continued sponsorship of the financial wizards of the City. On Newsnight, the Minister for Europe effectively conceded this point when he argued that: “There was a real risk that without the safeguards [Cameron] wanted…you would over time have a read across from the closer fiscal integration that the Eurozone countries want to do towards measures that would influence financial services in particular.” The ‘national interest’ was revealed by the bumbling Minister to be code for ‘financial services’.

Is it right that the diplomatic strategy of the British government should be dictated by a closeted club of multi-millionaires detached from the everyday experiences of the vast majority of Britons? Once again the formidable array of interests that profit or benefit from the mysterious operations of finance capital have shifted into gear in spirited defence of the sector. Financial services provide billions in corporation tax. Financial services are one of very few sectors that Britain can boast of being a world leader in. Financial services have a noble heritage reaching back to the dawn of empire, and deserve their vaunted position at the apex of our commercial society.

These are all true statements. What is interesting is that very similar things were said of the coalmining industry in this country thirty years ago, of shipbuilding, and of manufacturing. Other things were true of these industries. They were inefficient, could no longer compete with other nations, and required huge public subsidies just to keep going.

Curiously, the same could be said of the financial sector today. It is no longer efficiently allocating credit to those businesses that need it. It is losing ground to American and European competitors, a process that will only speed up as Britain is left out in the cold while closer fiscal consolidation of the Eurozone takes place. It has required £289 billion of direct financing by the taxpayer since 2008 just to stay afloat, far more that the £193 billion it pumped into the treasury in corporation tax between 2002-2008.

This is the final damning reason why Cameron’s Conservatives are a kind apart from Thatcher’s. Her government identified failing industries, stripped them of their workforce and let them loose to explore the seemingly endless opportunities promised by the ‘knowledge economy.’ Cameron’s government is being held hostage by a failing industry that continues to suck up the resources of the British state and dictate policy terms to a country that no longer sees it as a source of any worth.

Louie Woodall is a member of the Young Fabians and Assistant Editor of the Young Fabians Blog

Cameron: a reluctant Captain

What kind of Prime Minister is David Cameron? What does it matter for the future of his premiership?

The ongoing saga surrounding the passage of the Health and Social Care Bill has unwittingly revealed a great deal about the sort of Prime Minister David Cameron was, and the sort he is changing into. As the story of NHS reform has unfolded we have witnessed his transformation from Major-General, happy to oversee his ministers’ march against the opposition from a safe distance, into hands-on Captain, at the heart of the fight getting bruised and burned along with the rest of his government.

Cameron was undoubtedly sensitive to the fact that he entered office in a climate of hostility towards the “old politics” and, forced into a shotgun marriage with the bright young face of the “new politics”, was encouraged to conduct himself differently from his predecessors. According to the media narrative, Gordon Brown was the Machiavellian tyrant, who enforced his will by tantrum and the occasional thrown telephone; Tony Blair was the obsessive centraliser, the king of sofa government who selfishly prised his Ministers’ fingers off the levers of power; in contrast, Cameron chose to become chairman, rather than captain of his Cabinet.  He allowed his ministers plenty of freedom to run their own departments, an arrangement closely aligned to the ideal of Prime Minister as “first among equals”.

But it also had its costs. Many of the reforms contained within the Health and Social Care Bill appear to have been concocted by the Andrew Lansley, Secretary of State for Health, with little input from Cameron. Unison denounced the bill as a Lansley “vanity project”, and it is certainly true that some of his proposed reforms- especially those encouraging a competitive market in healthcare provision- did not reflect the policy goals of the Conservatives as outlined in their manifesto.

In recent weeks, Lansley has been heavily criticised for the Bill. But so has Cameron for letting his minister ‘off the leash’, and allowing poorly conceived ideas to escape the secrecy of the Cabinet and damage the coalition’s reputation. This led to embarrassing scenes for both men when Cameron publicly overruled Lansley on the pace of reform, and subsequently initiated a “listening exercise” on the legislation. The experience forced the Prime Minister to dive headfirst into the detail of the bill to restore the image of calm control he has so patiently cultivated.

His reputation as a domestic legislator may now sink or swim on the passage of the Health and Social Welfare Bill, as Blair’s did with the battle over academies six years ago.

There is nothing wrong with Cameron’s style of government. He is exhibiting a mature attitude by granting his ministers the freedom to develop policies within their own departments. However, he is now aware of the risks involved in letting Ministers’ pet projects wriggle from his grip.

No matter who the original culprit is, the PM is the one in the firing line when policies go awry.

Louie Woodall is a Young Fabian Member and Assistant Editor of the Young Fabian blog.

Happy Birthday NHS, you might not survive to see 64

Ahead of tomorrow’s Young Fabian Science and Society Network event with Shadow Health Secretary, John Healey, Young Fabian member Amanjit Jhund argues the Government’s reforms are just cuts by any other name.

On Tuesday the NHS turns 63. It’s a time for many of us to celebrate: for most of us it is difficult to imagine life without it.

Yet the Health and Social Care Bill is an attack on the NHS on an unprecedented scale. The concerns for many on the left and in the medical community is that while the aims of the coalition proposals are laudable they are simply being used to mask both spending cuts within the service and the increased privatisation of the NHS.

In fact,  many of the GPs that I have spoken to are fully aware that their budgets for commissioning will only be a fraction of those administered by Primary Care Trusts currently. One GP told me recently that “it’s just a way of pushing through cuts”. While most GPs are pragmatic about the changes and will do their best for their patients no matter which system they have to work within, it is vital that the coalition are held to account on this issue.

With David Cameron purporting to defend the NHS, we must expose the hypocrisy of his words as he presides over changes that will not only slash budgets but will also take the ‘N’ out of ‘NHS’.

Happy 63rd birthday NHS. I just hope you’re still around when I’m 63.

Further reading:

• NHS needs evolution, not Tory revolution
• Briefing: Exposing the continuing flaws in the NHS reorganisation
• NHS forum GP admits private patient doubts

A ‘maxed out credit card’?

Ahead of the Chancellor’s Budget announcement this week, Young Fabian Member Mark Anderson takes the coalition government to task over its positioning of its austerity measures.

One argument given by the UK government for its vast programme of public sector cuts is that the UK has ‘maxed out its credit card’.  Such a crude and misleading analogy bears no resemblance to the reality of Britain’s financial situation, yet it goes largely uncontested in public debate and serves to legitimise the devastation that is being wreaked on public services, the welfare state and public and private sector jobs and working conditions.

Far from the UK being no longer able to borrow money on the international financial markets, the interest that the UK pays on its debt is currently at a historically low level, as is the UK’s debt-to-GDP ratio. UK ten year bond yields are marginally higher than those for the US and far healthier than those for Australia and New Zealand, for example. In the run up to last year’s General Election, amid scaremongering about a potential debt crisis and the dangers of a hung parliament, yields on government bonds remained stable.

In a September 2010 article entitled ‘Can bond yields fall even further from these historic lows?’, Ross Watson, portfolio manager with Securities and Trust of Scotland told the financial journal Investment Week that:

“For the taxpayer, it is excellent news that the Government can fund its deficit at such low returns.”

Such sentiment presumes against a country close to bankruptcy.

Another argument the coalition government gives for frontloading public sector cuts is that it is unfair to saddle future generations with a mountain of debt. This argument is a perversion of the realities of private sector-induced deficits on several counts.

Firstly, it fails to take account of the fact that over 70 per cent of interest payments on government debt remains within the UK, going into savings and pension schemes – yours and mine.

Secondly, it bypasses the fact that you can’t cut your way out of a private sector-created budget deficit. Trying to do so simply condemns an economy to years of low growth – as seen in Japan over the last decade (when the Japanese government cut its stimulus too soon after recession, before Japan’s private sector had had a chance to recover) or in the UK in the 1930s (the last time that a post-recession public sector cuts programme was implemented in the UK on such a scale). Economic slowdowns make it harder to address structural deficits and repay government debt.

Thirdly, taking demand out of the economy when the private sector has not fully recovered risks a double dip recession which would increase government debt, not decrease it. Despite the Coalition’s best efforts to mislead the public, the UK’s structural deficit is a product not of Labour overspending, but of the collapse in output of the private sector following the collapse of Lehman Brothers in 2008.

Fourthly, at a time when the economy is already on its knees, it leaves the economy ill-equipped to compete against its healthier, better educated and better connected, more meritocratic international competitors.

Ending the previous Labour government’s fiscal stimulus, public sector cuts, a contraction in UK GDP at the end of 2010 and increases in unemployment and associated welfare payments, combined with the damage that the prospect of deeper cuts to come has done to business confidence and investment, have exposed the continued weakness of the UK’s private sector and led to a rise in government bond yields, thus further increasing the amount that the UK has to pay to service its debt.

Austerity is doing the opposite of what we are told it is aimed at achieving, and all this before the cuts have really started to bite.

A version of this post has previously appeared on Left Foot Forward.

Libya: The End Game

In this member post, Martin Edobor, a member of the Young Fabian Science and Society Network, discusses the current situation in Libya.

In the past few weeks we have seen a wind of change sweep through the Arab nations; a roaring voice calling for change. The first to fall was Ben Ali in Tunisia, and then Mubarak in Egypt and now on the brink is Libya’s Muammar Gadaffi.

Yet despite Tunisia and Egypt’s relatively peaceful uprisings, the Libyan revolution is proving to be both bloody and horrific. More than 200 people have been killed in Benghazi following protest, the use of mercenaries has been reported and a media blackout enforced.

International criticism from the west is intensifying. Gadaffi has defied calls from the world leaders to stand down and halt his act of aggression against the people of Libya. Political leaders in Europe and the US began are beginning to raise the pressure, pushing for a more concrete plan of action against Gaddafi, including a possible no-fly Zone. David Cameron has even talked up the possibility of military intervention. He made the strong statement: “We do not in any way rule out the use of military assets”, echoed by Italy Foreign minister Franco Frattini who has offered their Mediterranean military bases if the plan for military action were to go ahead.

What’s apparent is that there is a stalemate in Libya: a standoff between the rebel army and Gadaffi loyalists. The options being weighed are whether the West should militarily intervene, and support attempts by rebel leaders to oust Gadaffi, or to stand back and indirectly facilitate the current rebel movement (possibly by imposing a no-fly zone), which may risk a bloody and drawn-out revolution.

This is a tricky dilemma, with both options filled with pitfalls and drawbacks. The question now is what will Obama, Cameron and other western leaders choose to do?

Cameron is right to not completely rule out military intervention – when it comes to a tyrant like Gadaffi all options should be kept open. Yet Western leaders should tread carefully, as military intervention carries risk.

This is an Arab revolution, formed from the cries of freedom and the blood of the Libyan people. If the West intervenes militarily the movement may be jeopardised, changing it from revolution to war.

Unnecessary surgery

In this guest post, Young Fabian Member Tom Keeley argues against the latest set of NHS reforms.

Listening to Andrew Lansley you might believe that GP Consortia are the cure for everything wrong in the NHS.  An idea that will, at once, improve care, reduce cost and give people a say in their treatment.  The “silver bullet” bringing our health outcomes in line with Europe’s.

However, a cursory glance back at two decades of attempts to move care closer to general practitioners should leave anyone in doubt of these claims.  Or perhaps anyone without their ministerial career staked on it.

Governments of all colours have repeatedly returned to the idea of GP commissioning.  Their stated aim is always “improving care”; while in reality their concern is cost control.  Initiatives from GP fundholding to Practice-based Commissioning from total purchasing pilots to locality commissioning have all shown the limitations of GPs buying health care.  Limitations that should be great enough to stop anybody from handing over the majority of the £110 billion NHS budget.

Acting as the buyers of health care doctors can modify their referral rates, make very limited “one off” savings in their prescription costs and exert a downward pressure on waiting times.  But, this comes at the sizeable cost of increasing inequity and reducing patient satisfaction.  GPs have been shown to be incapable of reliably influencing the organisation and delivery of hospital care through budget negotiations.  And, with this ineffectualness comes increased management and transaction costs, as the buyers of health care lose their economy of scale.

When GPs are given a budget responsibility they understandably, and quite wisely, revert to what they know: providing more community services.  While there is good evidence to suggest that the provision of primary care services can improve health and reduce the pressure on hospitals, it is far from being the answer to every health problem.  Furthermore, this throws up an obvious and unavoidable conflict of interests.  GP consortia could commission themselves to provide care.

The greatest problem however, is reserved for the fact that in general GPs are not keen on the idea, or prepared for the reality.  While a good number of “pathfinder” consortia have voluntarily formed, this is about self-preservation.  These pathfinders have, very wisely, given themselves two years to gain experience in the buying of health care, before taking full control of and responsibility for the budget in April 2013.  Lansley should not mistake this for enthusiasm: when a gun is held to your head, jumping off the cliff is a good option.

The obstacles to consortia succeeding are considerable.  Lansley has perceived the limited success of past efforts to be an indication of potential; when in fact it is simply the limit.  GPs should have a role in the commissioning of health care, but this should be limited to a role in the commissioning of primary care, without full devolution of the budget.  If the government of the day seriously wants GPs to succeed in doing anything more, a full 5-year regional trial of policy and a massive overhaul of medical training should be considered an absolute minimum.

In his shadow role Lansley had every potential of being a competent Secretary of State for Health.  A knowledgeable minister who would protect the NHS from the worst of the cuts, while allowing it a period of calm in which to make the required budgetary savings.  As it is, he has, to quote David Nicholson (NHS chief exec), proposed the biggest change management system in the world – one so large “that you can see it from space”.  He has done this with little grounds for hope of success.

What are the Lib Dems for?

This morning, Danny Alexander repeated a line on BBC Radio 5 Live used by Vince Cable a few weeks ago:

“We didn’t win the election. We came third. We’re part of a coalition government. We’ve worked to ensure that as part of the discussions we’ve had that we’ve got a system that is fairer, more progressive.”

I’m not sure this will be a fruitful line for Liberal Democrat Ministers to use in respect of tuition fees, or any other difficult policy discussions they’ll have in the coming years*.

Firstly, it implies that, in the extreme, it is acceptable for two (or more) political parties to campaign on one set of policy proposals but – in the event of a hung Parliament – to ignore all of them in order to form a Government with a working majority. Is that really democratic?

Now if that isn’t what Alexander or Cable meant, then surely their position has to be that Liberal Democrat MPs will support policies on those areas where there is common agreement between the two coalition parties, and on any other issues/policy proposals they’ll abstain from voting or argue they should be left off the agenda for this Parliament.

But that’s not what they’re proposing on tuition fees. At the very least they’re proposing that Lib Dem ministers – the government bit of the Parliamentary party – votes one way, and the rest can do what they want. This would technically be consistent with the statement in the Coalition Agreement on fees:

“If the response of the Government to Lord Browne’s report is one that Liberal Democrats cannot accept, then arrangements will be made to enable Liberal Democrat MPs to abstain in any vote.”

However, it does invite the question: what are Liberal Democrat ministers for if they abandon their policy platform for Government office? Are they even technically Liberal Democrats?

It implies that the role of the Lib Dems in the Coalition is to (a) provide a working majority for the Conservatives and (b) make essentially Conservative proposals a bit fairer. That makes the Lib Dems look a bit pathetic really, and is contrary to the posturing of Nick Clegg and others about their role in the Coalition (see Clegg’s conference speech, for example).

Secondly, it weakens the positive argument FOR policies which were in their manifesto. In future, Lib Dems might well argue that policy X is right and was something that was in their manifesto at the last election for which they have a mandate. But it seems a fair response to say that it is irrelevant what policy proposals they had in their manifesto on the basis that they didn’t win the election – they came third.

They can’t have it both ways with respect to their manifesto.

The Lib Dems really need to work on the justification for this political car crash.

*More of this sort of stuff and the likelihood of the current Government lasting a full Parliament will probably reduce.

Alex Baker is Secretary of the Young Fabians.

Ed, take your time and don’t be hurried

PMQs is a pantomime but it’s one that needs to be entertaining for the right reasons.

With poll results coming in showing Labour on 40 per cent and, amongst students, 42 per cent the question has to be weather difficult PMQ episodes like today’s really matter? Some say yes, some say no. It is no good claiming piously that PMQs is a Westminster oddity that plays badly to the country – we all know it is one of the worst public excesses Westminster allows itself. Nor is it a case of simply taking it on the chin as a ‘bad week’ which won’t happen again. Irrespective of your view, a British political leader needs to show their ability to command PMQs.

Cutting Housing Benefit is a false economy

Earlier this month, the Young Fabian Work and Families Policy Development Group looked at the issue of housing, here PDG member Catriona Hatton finds that the arguments for and against cutting housing benefit all point towards the need for more housing.

In June George Osborne announced that a new housing benefit cap would be introduced in an attempt to slash the cost of housing benefit, which has risen sharply to £19.6 billion per year from approx £11 billion in 1997. The cap places an upper limit of £400 a week on a four bedroom house and £280 for a two bedroom property in rented private sector.

In favour of the cap, there is a strong argument that leaving housing benefit uncapped increases the housing benefit bill, since landlords effectively set the rate at which the benefit is paid. If Government willingly pays housing benefit at the price set by the market, landlords have incentives to set the rents as high as possible, since raising rents will not affect the tenant’s ability to live there. The result is tax payer’s money going to the benefit of private landlords in the buy-to-let market, an upward pressure on property prices for all, and an ever increasing housing benefit bill.

However the arguments against the cap, in my opinion, far outweigh the arguments for it. The impact of the cap will have devastating consequences for recipients, particularly in London and the South East where in many places it is simply not possible to find quality housing at the rate set by the cap. In addition any future increases in the cap would be linked to consumer price inflation rather than increases in rental prices, reducing the real value of the allowance.

Importantly the social mix of the London would be drastically changed, with thousands of families being forced out of inner London, causing greater disparity in wealth between different parts of London. Overcrowding will occur and new slum areas are likely to develop, resulting in the less well off being geographically cut off from the wealthy in society.

All evidence shows that separation in this way lowers life opportunities, for instance due to inferior access to education and employment opportunities and lack of connections. In addition there would be greater pressure on schools and social services in other areas as a result of a sudden influx and overcrowding.

It is argued that the cap will increase incentives to find work. However this is unfair on recipients who are not able to work such as pensioners, people with serious disabilities, and also on those recipients who are already in work but it is too low paid for them to cover their rent fully.

The root cause of the escalation in the housing benefit bill is the under supply of affordable housing and addressing this would be the most beneficial solution. The priority should be to create more affordable homes through the building of council housing, the expansion of housing association schemes, private investment through subsidies and through the expansion of shared ownership schemes. Only when the supply of affordable homes is increased will it be unnecessary for the tax payer to subsidise high private sector rent. Unfortunately the cap will only serve to worsen the problem as waiting lists for council housing and housing association homes lengthen, and ultimately it will push people into poverty.

We must stand by our NHS

In this guest post, Young Fabian member Martin Edobor argues that we might fight the proposed changes to the structure of NHS service provision in the UK, or risk undoing many of the improvements Labour achieved in its time in government.

Upon reading the Coalition Government’s NHS white paper, I was both shocked and dismayed with their plans to restructure the NHS. The proposals are likely reverse the progress that has been made under Labour, where the NHS delivered a new level of health and equality to the people of Britain.

One of the major proposed changes is to give GPs the power to commission the vast majority of health services for patients, which would result in the closure of Primary Care Trusts (PCTs) – the bodies currently tasked with commissioning healthcare from NHS providers. At this moment in time a reorganisation would be the wrong direction to take; in this period of financial uncertainty, the NHS requires stability.

Michael Dixon, Chair of the NHS Alliance, has argued that only 5% of GPs are ready to take over commissioning. While the chief executive of the NHS, Sir David Nicholson, has suggested that the quality of current GP practice-based commissioners isn’t at the level which would be required to transfer commissioning to them under the proposed timetable. At this moment in time, most GPs are simply not prepared nor ready to commission services for their communities. By pushing forward with this reform, the Coalition Government are placing the quality of GP services at risk.

Another major announcement is the increase in patient choice of providers, but this is likely to lead to privatisation by the back door. Allowing private firms greater opportunities to win NHS contracts may result in a two tier system, where those with money will be able to receive better care than those without.

Edward Davies, editor of BMJ Career Focus, claims that the white paper was ‘expected and little more than a logical continuation of 13 years work from the previous government’. He couldn’t be more wrong: the British public did not vote for a re-organisation or privatisation of the NHS. For that reason we must do all we can to oppose this white paper, in order to maintain the quality of the service the NHS provides.