Brexit and The Economist’s Lack of Intelligence Unit

It is now pretty much established consensus that humbled pollsters are having great difficulty calling votes. The pundits – particularly those at the FT and The Economist – are still ever so keen to sound authoritative on Brexit when it is their house editorial line, rather than the objective study of all factors, that is so clearly what determines their analyses. The Economist has a research and analysis division which claims to be a world leader in global business intelligence – the grandly named Economist Intelligence Unit or the “EIU”. As well as offering subscribers research updates it also does consultancy for corporations who want to know what is going on in the world. The EIU says “our knowledge of economics, politics and socio-demographics is second to none. If you need to see into the future, we can help.” Using “bespoke modelling and scenario analysis” the EIU “can provide country, industry or market scenarios based on expert judgement, modelling” so, “if you need to understand how a country or industry will respond to an event… we can model that too.”  Corporations pay good money for the research and expect it to be reality-based rather than just journalists’ wishful thinking…

Guido has got hold of the EIU report for Britain dated June 28, 2016, five days after the referendum result. On politics it forecast:

  • Our baseline forecast is that Boris Johnson—the former mayor of London and one of the leaders of the “leave” campaign—will succeed David Cameron as the Conservative Party leader and prime minister… Theresa May won.
  • This process will commence with the triggering of Article 50 of the EU treaties to begin the exit process; we expect this to happen by the end of 2016. It was triggered in March 2017.
  • The Labour Party is mired in an acrimonious leadership crisis. We expect that the party’s hard-left leader, Jeremy Corbyn, will be ousted, and/or that there will be a formal split. Jezza’s not going anywhere. Labour isn’t splitting.
  • They also predict a second referendum will lead to a “jump in support for UKIP.” That remains to be seen.

On the economy EIU forecast:

  • They expected a contraction of 1% in 2017 (compared with 1.8% growth previously) as a slump in domestic demand pulls the economy into recession. UK GDP is on course to grow 1.9% in 2017. No contraction. No recession.
  • They forecast the number of those in work to fall by hundreds of thousands. More people are in work than ever…
  • They gloomily forecast a rapid deterioration in the fiscal position, falling tax revenues, increasing unemployment. None of which happened…
  • They predicted the US Federal Reserve would have to hold interest rates. The Fed raised rates.
  • The EIU predicted anxiety-driven declines in world stock markets, “When an event promises to strip 6% of GDP from the fifth-biggest economy in the world, it is harder for the rest of the global economy to grow as quickly.” Brexit “will ensure that the global economy continues to underperform its potential for at least another two years”World stock markets have rallied strongly post-Brexit.

The EIU predicted that by next year unemployment will rise by 380,000 and GDP will fall by 6% compared to the pre-June 23 baseline. The authors of these EIU reports are what the brilliant Nassim Nicholas Taleb calls “IYIs”, “Intellectual Yet Idiot” academic no-skin-in-the-game policymaking “clerks” and journalist-insiders. That class of paternalistic semi-intellectual experts with some Ivy League, Oxford-Cambridge education who enjoy telling us what to do. Academico-bureaucrats who are self-described members of the “intelligentsia” who can’t find a coconut on Coconut Island. A year after the Brexit vote the Economist Intelligence Unit has proven that it doesn’t know the right end of a stick.

Corbynistas Attempting to Preempt Co-op Plan

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In yesterday’s Sunday Times, Tim Shipman revealed that some nameless Labour moderates might use their sister Co-operative Party to form a new opposition. While plans for the immediate future include establishing a factional grouping, Shippers has uncovered a scheme to get Labour moderates to sign up MPs to the Co-operative Party itself, which has a pact to work with Labour in Parliament and elections. “Double-hatted” MPs can then apply to Bercow to have themselves recognised as the official opposition in the event of mass deselections from Labour, which will grant them a healthy chunk of short money. Guido is too modest to point out where the idea was previously mooted

The advantage of Labour MPs flagging themselves as Co-op MPs is that it is a non-split, split. 24 MPs are already Labour/Co-op MPs. The parties do not stand against each other under the terms of an agreement going back to 1927. The Co-operative Party is a legally separate entity from the Labour Party, and is already registered as a political party with the Electoral Commission, thus Bercow will be able to designate them as the official opposition with very little legal difficulties. This Guido understands is only one plan being considered – Tom Watson would be reluctant to go along with it – however he will under no circumstances allow the SNP to become the official opposition.

Ideologically the ideas of the cooperative movement; egalitarianism and mutualism with co-operative commercial enterprises will be agreeable to most of the Progress-faction MPs. It has always struck Guido that Labour taking the state socialist route rather than the non-state co-operative route was, in retrospect, a fundamental mistake that put the Labour Party on the wrong side of history at the end of the twentieth century. A less statist, redistributive party that favoured social market and non-state solutions might be the future…

Corbynista’s have of course mobilised quickly, with Momentum groups on Facebook awash with calls to join the Co-op and “avoid its infiltration by the coup plotters!” Carry on comrades..

The “Pitiless Empiricism” of Elections

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Guido has said this before and he will say it again: if the Tories lose this election a large part of the blame belongs to the former Downing Street pollster Andrew Cooper, who claimed that UKIP were a “flash in the pan”. Here is the evidence in hard data form from YouGov; 5 percentage points of the 2010 Tory vote has gone to UKIP, in exchange for 3 percentage points of the LibDem vote. Pollsters and statisticians can argue about what might have been, the data suggests that the Cameroon positioning which claimed the Conservatives could win from the centre has cost at least 2 percentage points. The number of former LibDems wooed is fewer than the number of former Tories spurned and now voting UKIP.

Cooper’s “peak UKIP” theory does not appear to have been anything more than a theory. This YouGov data, based on re-interviewing 31,210 voters polled in 2010, shows Cooper’s hunch that UKIP were a “flash in the pan” which would fade away and return to the blue column was just a hunch, motivated by an ideological preference for centrist modernisation rather than any campaigning logic. Cooper was once lionised by the metropolitan commentariat – in 2011 Matthew D’Ancona claimed that his “great gift to the Conservative Party has not been liberal ideology, but a pitiless empiricism”. A real judgement based on pitiless empiricism is about to be delivered by the voters. Guido suspects that Cooper’s years as Downing Street’s Director of Strategy will be seen as wasted years when the modernisers’ distaste for conservative instincts was over indulged at the expense of a strategy to both secure the base and gain new voters. An arrogant and recklessly rushed modernisation has fatally split the right-of-centre vote.

Relative Values: Lies, Damn Lies and Statistics

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The spat between George Osborne and Fraser Nelson over whether or not the deficit has been halved is very much a Westminster bubble affair of little consequence to anyone outside SW1. Interested voters who even understand the difference between the deficit and the debt know that the government’s target to balance the budget in 2015 has been missed by £100 billion or so. As Jonathan Portes over at the Keynesian redoubt of the National Institute of Economic and Social Research gleefully points out, George Osborne has succeeded in implementing the Darling plan, which his own Financial Secretary to the Treasury condemned, for being endorsed only by The Guardian. The Chancellor deserves a degree of Fraser’s ridicule for only managing to execute the very Plan B that Osborne himself once ridiculed as ruinous.

The Tories are arguing, whilst simultaneously carrying the goalposts, that they have managed to halve the deficit in relative terms, relative to GDP. Professional economists seem to think that is a fair method of measuring the deficit. So how are they doing, in relative terms, on other key indicators?

The national debt relative to GDP is up, from 78.4% under Gordon Brown in 2010 to 90.6% last year. It is still rising, which is in the government’s own self-defined terms a big economic failure.

The Tories like to boast that employment is higher now than ever before, as indeed it was every year under the last Labour government, because the population grows. The unemployment rate is relative to the population. That is down impressively from 8% to 6% thanks to IDS, better still the youth unemployment and long term unemployment rates are also down. A trump card in the economic argument.

Per capita GDP was, as Danny Blanchflower and Ed Balls kept pointing out sombrely with smirks on their faces, falling. We were getting, on average, poorer. According to World Bank figures, the answer to Reagan’s famous question for voters “Are you better off than you were four years ago?” is a “yes”, just about. After inflation voters are on average 1.8% better off now than they were in 2010.*

Quantitative Easing on a scary scale has rigged other economic indicators like inflation and interest rates whilst pumping up asset prices. Great if you already owned financial assets or prime London property…

It seems a long-time since The Spectator was eulogising George Osborne as “the true Tory leader“, the enmity towards the Treasury from the Speccie is near constant nowadays. Guido notes that in a Tory leadership election it is almost certain that the magazine will back Boris, a former editor, against Osborne…

*Although for higher income earners – the income bracket usually well disposed towards voting Conservative – Osborne’s Guardianista pleasing fetishising of the Gini coefficient will mean they are probably worse off. Only a genius political strategist like Osborne would bash his core vote hardest.

Balls Speech Positions Himself

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In the 2010 Labour leadership campaign Ed Balls positioned himself on the tough-love Brownite left and Ed Miliband outflanked via the in-the-comfort zone soft-left. Today Ed Balls in his speech to the London Business School distanced himself from the Labour leader’s anti-business positions and sounded almost Blairite at times. All these things are nuanced, this sounded like a positioning speech for the post-election, post-Miliband Labour Party. We shall see…

Speech highlights:

  • Balls, despite saying “the third way did not deliver”, explicitly identifies himself with the Clinton-Blair agenda

    “I do not believe that the progressives were wrong in their central belief that a path could be taken between free-market economics and protectionism and isolationism.”

  • Attending Bilderberg Conferences has paid off, Balls explicitly accepts the success of neo-liberal globalisation

    “… this is my starting point: over the last twenty years, the global economy has fundamentally changed – and changed for the better. As communism collapsed and countries have liberalised their economies, there have been significant reductions in poverty and increases in living standards across Asia, South America, Eastern Europe and now Africa.”

  • Straining credibility the former deficit denier now promises spending cuts and a balanced budget

    “I have made a binding fiscal commitment that a Labour government will balance the books and deliver a surplus on the current budget and falling national debt as soon as possible in the next Parliament. It will require tough decisions to cut public spending and social security spending, as well as a fairer tax system.”

The rest of the speech dwells on traditional Labour solutions, more training and education, a mea culpa over (the lack of) EU immigration transitional controls in government, plus some sleight of hand over corporation tax.  To back up the new endlessly repeated Balls “pro-business, just not business as usual” soundbite he also advanced the idea of an industrial policy incentivising long term investment, this time with tax breaks for long term equity investors. Can’t wait to see how the Owen Jones left welcomes the idea of more expensive corporate welfare for stock market investors…

SKETCH: Professor Krugman, Where’s the Shark?

Paul Krugman, the Nobel-prize-winning economist is in Oxford until mid-June as the Sanjaya Lall Visiting Professor in Development and Business.

The liberal Princeton/NY Times professor just delivered his inaugural lecture asking the question (the almost-rhetorical question) Do We Face Secular Stagnation?

It follows on from his books The Age of Diminished Expectation, the Return of Depression Economics and articles like Is Capitalism Too Productive? The Myth of Asia’s Miracle and – suggested title – What Are You Laughing At, Can’t You See the State We’re In?

His proposition is that the glory days are behind us, that each recession has been harder to get out of than the last, that we will have extended periods of low-to-no growth, and that under-employment will create “dreary lives” for large numbers of people – because politicians will not listen to him and his $300bn job-creation schemes.

If Labour can get him onto a stage with Ed Miliband, the election will be in the bag. For the Tories.

He talked about the impulses to “austerity” saying that it’s as though governments want to engineer a gratuitous recession in order to have a pre-election year boom, “like the Government has done here” (cosy laughter from the full-to-overflow hall).

Small, bearded, charming, Prof Krugman looks like the oceanographer in Jaws. Remember, that clever fellow, expert in his field, ran up and down the beach warning the pleasure-seekers there was a giant shark out there waiting to devour them.

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Foodbanks, Christianity and Socialism

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Today is Holy Thursday, when the Queen traditionally offers alms known as Maundy money to deserving senior citizens. Scholars say “Maundy” comes from Jesus; “Mandatum novum do vobis ut diligatis invicem sicut dilexi vos”, “A new commandment I give unto you, That ye love one another; as I have loved you”. Monarchs by tradition also washed the feet of the poor as Jesus washed the feet of his disciples. Jesus also said that You will always have the poor with you and can help them whenever you want.” Which brings Guido to foodbanks and socialism.

Socialists believe in the perfectibility of man, a doctrine going back to Rousseau, that people are capable of achieving perfection on earth through social means, without the grace of God. Unlike Jesus they don’t believe that the poor will always necessarily be with us. Foodbanks are mostly run by charities, many Christian inspired. The genuine anger from the left at the expansion of foodbanks is matched only by their incomprehension that some think their growth is a good thing and a sign that Christianity survives in an increasingly secular Britain. Christian help for the poor is an imperative given to them by their faith… 

If like many socialists you believe society can be perfected, foodbanks are a sign of society’s failure. If like most Christians you believe the poor will always be with us, then foodbanks are the successful application of the teachings of Jesus. Guido doesn’t believe in socialism or the perfectibility of man, so sees the expansion of foodbanks as a good thing for the poor. Politically Labour are trying to capitalise on foodbanks, whereas in America Obama rolls up his sleeves and has photo ops helping out at foodbanks. It seems to Guido that Labour either should come out and say openly that they want to see higher welfare transfer payments to the poor or do some real community organising and help out at foodbanks rather than just moan about them. Happy Easter…

Osborne to IMF: I Told You So Third Year of Expansionary Fiscal Contraction

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Chancellor Zero is no more. Growth is back, even the neo-Keynesians at the FT and the wonks at the IMF can’t deny that the UK expanded faster than the rest of the G7 last year and will probably do the same this year. George Osborne is in Washington today to gloat that

“despite warnings from some that our determined pursuit of our economic plan made that impossible. All of this demonstrates that fiscal consolidation and economic recovery go together, and undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth. Indeed that is precisely the wrong prescription for our economies…”

Ed Balls got it wrong is the core message. Labour will point to per capita GDP which is still 10% lower than it was in 2007 – that will be a second term objective for the Chancellor. Balls will less convincingly say George has missed his deficit target, less convincing because Labour would have missed it by more and opposed almost every measure needed to reduce the deficit. The neo-Keynesian argument that higher unemployment would increase the welfare bill and thus the deficit has been proven to be wrong. Unemployment is down from what it was under Gordon Brown, with the warnings from the likes of David Blanchflower of 4 to 5 million unemployed having turned out to be political hyperbole that has fatally damaged his career as a sage. That “expansionary fiscal contraction” that left-wing wonks and economists said would never come is entering a third year…

Leading left-wing wonk and wannabe Labour MP Will Straw argued in 2011 that Britain’s economy faced the risk of a Japanese-style “lost decade” and that “expansionary fiscal contraction” was a “voodoo theory”, and even that there was no such thing as an expansionary fiscal contraction. In 2011 Guido argued the point at length with Will on the BBC’s Daily Politics:


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Having failed at the time to get an on-air apology from Will for his role in Gordon Brown’s Treasury, three years later he must now accept that he was wrong about a lost decade and wrong that there was no such thing as an expansionary fiscal contraction. Over to you Will – as growth is expected to hit 3% you have a second chance to offer an apology…

Pardon Snowden, He Blew Whistle on NSA Crimes

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Ed Snowden has been demonised by some on the right as a traitor. Those on the right don’t as a rule put their trust in governments and Snowden is a patriotic, freedom loving libertarian, not a Russian or Chinese dupe, as some conservatives seem to believe. (He even donated $250 to Ron Paul’s election campaign.) His motivation was ideological and principled – it has cost him his personal freedom and his career. People who Guido would normally expect to side with the cause of liberty have focused on the medium not the message – because it was Alan Rusbridger’s Guardian that broke the story they have got their backs up. Whatever right-minded people think of the Guardian, it was disgraceful to hear Rusbridger’s patriotism questioned by a Select Committee over him publishing the Snowden story.

Ed Snowden was as the New York Times argued yesterday clearly justified in believing that the only way to blow the whistle on the blanket intelligence-gathering was to “expose it to the public and let the resulting furor do the work“, revealing what his bosses covered-up and lied to Congress about. Beyond the mass collection of phone and internet data Snowden revealed:

  • The NSA (aided and abetted by GCHQ) broke the law, and exceeded their authority, thousands of times per year.
  • The NSA (aided and abetted by GCHQ) broke into the communications links of Microsoft, Google, Yahoo, Facebook and other internet giants, allowing it to spy on hundreds of millions of user accounts. Many of those companies are now, thankfully, scrambling to install systems that the NSA cannot yet penetrate.
  • The NSA systematically undermined the basic encryption systems of the internet, making it impossible to know if sensitive banking or medical data is truly private, damaging businesses that depended on this trust. Ironically this opened back doors that could also be used by hostile intelligence agencies.
  • His leaks revealed that James Clapper Jr., the director of national intelligence, lied to Congress when testifying in March.
  • The Foreign Intelligence Surveillance Court rebuked the N.S.A. for repeatedly providing misleading information about its surveillance practices, according to a ruling made public because of the Snowden documents. One of the practices violated the Constitution, according to the chief judge of the court.
  • A federal judge ruled earlier this month that the phone-records-collection programme probably violates the Fourth Amendment of the US Constitution. He called the programme “almost Orwellian” and said there was no evidence that it stopped any imminent act of terror.

When someone reveals that government officials have routinely and deliberately broken the law, that person should not face life in prison at the hands of the same government. Rick Ledgett, who leads the NSA’s task force on the Snowden leaks, told CBS News that he would consider amnesty if Snowden halted any additional leaks. President Obama should do just that, bring Snowden home. He is a hero.

Hat-tip: New York Times

Data Shows Cost-of-Living Crisis About to End

The consensus of broadsheet pundits is that Ed has, with his cost-of-living crisis line that prices are rising faster than wages, nimbly and cleverly switched from a losing argument on the economy to a winning “retail offer”. Guido thinks this successfully plays into the British national psyche; grumbling about both the weather and the cost of things rising. However as the economy rises unemployment falls and earnings will caeteris paribus begin to outstrip inflation as sure as the sun rises. The ONS data shows this is about to happen…

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Guido is beginning to worry that Miliband, like his former mentor Gordon Brown, hasn’t really got a strategy. The whole “too far, too fast” thing was bound to end in tears unless there was a permanent recession. As it happened the predictions by Ed Balls of a triple-dip turned out to be über-pessimistic, statisticians say there wasn’t even a double-dip. The only recession the UK suffered originated under Gordon Brown.

The energy cost argument still generates headlines, however international comparisons show that UK energy costs are middle of the league table for Europe – though US fracking and shale gas means their energy costs are way below ours. Fracking however is opposed by Ed Miliband.

What then? Having lost the argument on debt and the economy, followed – food banks notwithstanding – by the cost-of-living crisis evaporating, Labour will have to change tack again. Labour can’t fight on economic competence, because so contaminated is Ed Balls that he even loses to George Osborne. Labour are blamed for the economic mess and are suspected by the voters of still being untrustworthy on dealing with the deficit and debts. They would be unwise to fight on leadership; “weak and weird” Ed versus “posh and out of touch” Dave is not a great prospect for Labour.

Guido’s guess is they will try to have it both ways, partially accept the coalition’s spending envelope and pretend they can tax their way to prosperity. A policy Miliband’s socialist frère Hollande has now abandoned. All the chatter (spun by his adviser Stewart Wood) about Ed’s plans for “big changes in our economy” – a strategy based on East Coast academic theories from Harvard professors on new “Varieties of Capitalism” – will have Lynton Crosby crying with laughter into his (Australian) Chardonnay. Doesn’t mean Miliband isn’t going to try it…

UPDATE: The FT has surveyed economists and they mostly think households will start to feel better off – this is after consumer confidence surged 20% in 2013. Well spotted economists…

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Flaws in the Ed Balls "Cost of Living Crisis" Attack Line

Labour’s developing retail offer to the voters centres on the cost of living, in essence they will ask the voters on election day “Are you better off now than you were 5 years ago?” Which is why this week – with good economic news abounding – Labour’s twitterati were ignoring jobs and growth and instead chorusing in North Korean style synchronised tweeting this infographic:

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The infographic shows that real wages have fallen behind inflation. A factually correct statistic.

Guido fails to understand why the government parties are not  aggressively countering the Ed Balls cost-of-living crisis attack line with the truth that the average mortgage is £1,000 cheaper because of lower interest rates. Mortgage affordability is clearly illustrated by the fact that, according to data released yesterday by the Council of Mortgage Lenders, mortgage arrears are dramatically lower now compared to where they were when Ed Balls was last in government:

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Throw in the income tax threshold hike (£493), the savings from holding down council taxes (£210) and you have already countered the Balls attack in cash terms – and some – at £1,703. Meaning that in terms of disposable income the “average working person” is better off. So why is this point not being made by Tory and LibDem attack dogs more forcefully?

If in the Autumn Statement the Chancellor rolls back some green taxes, brings back the 10p income tax rate or raises the tax threshold again, in terms of disposable income the voters will be even more better off in 2015 than they were in 2010. To the question “Are you better off now than you were 5 years ago?” the answer has to be “yes”. If it isn’t, the Coalition parties will deserve to lose in 2015.

What Owen Jones and Len McCluskey Don't Tell You:Unite Don't Represent Majority of their Members Politically

Unite’s leaked May 2013 internal political report to the union’s powerful Executive Council written by the union’s political director emphasises that Unite’s priority is to get a majority of its membership in marginal constituencies to vote Labour. Unite’s own research (see page 5) reveals that only a minority of around 37.5% of the membership vote Labour. A figure in line with national polling…

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So when Owen Jones and Len McCluskey claim that Unite represents a political voice for “millions” of its members, it is not completely true. Unite gives political support to the Labour Party whereas most Unite members – according to Unite’s own research – don’t support the Labour Party. McCluskey and his media-friendly paid lobbyist Owen Jones are a small left-wing clique who have got control of the union because most members are apathetic. As evidenced by the fact McCluskey won Unite’s leadership having received only 144,570 votes yet claims to have a “two million strong” union. That if true would make Red Len supported by a mere 7.3% of his members.

owenx480In reality most people join a union to obtain organised represention for themselves in the workplace and primarily in order to have someone to negotiate on bread and butter issues like pay and conditions. They vote on national issues. They certainly don’t join the union to bring about the Marxist wet-dreams of Owen Jones…

Does this Government Care About Middle Class Families?

Guido knew that the structure of marginal tax rates following a decade of Brown’s insidiously stealthy taxation and redistribution was malformed. How malformed was only driven home after reading a note from the Centre for Policy Studies. It is obscene how this government has punitively taxed the middle classes…

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The CPS use a simple not atypical example of a married man with two children, who has no savings or investment income, and no student loans. Factoring in allowances and changes to child benefit, his marginal rates will be as above. A middle-class single income family with 2 children and the father earning £50,001 will have a marginal tax rate of 59.5%. You don’t have to be a fully paid-up member of the Taxpayers’ Alliance to think that is far too much.

Next year will be the thirtieth anniversary of Nigel Lawson’s 1984 Tax Reforms. George Osborne says he is Lawsonian, if the Chancellor wants a legacy and the gratitude of the electorate, simpler, flatter, fairer taxes would be the right thing to do. It might win back the middle classes at the ballot box as well…

Hacked Off's Blackmail Letter to Miliband

hughThe papers are reporting this morning that Ed Miliband, Nick Clegg and David Cameorn were on the verge of agreement until Hugh Grant’s Hacked Off campaign lobbied Labour aggressively. This is the draft press release brandished by Hacked Off to put the wind up Ed Miliband if he went ahead with the deal:

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hughThe language is ridiculous, Hugh Grant is a victim of his own making, calling on the Queen not to carry out her constitutional duty because he doesn’t want his picture in the papers any more is frankly comical. Hacked Off is a bunch of celebs who have been caught with their pants down hiding behind the genuine suffering of the McCanns and the Dowlers who were victims of real crimes which the police are already pursuing. Hacked Off won’t say who funds them, they are self-appointed and they are secretive with a sinister agenda to protect the rich and powerful from the prying eyes of the public.

Guido is opposed to all the proposals to control the press including the government’s misguided plan to enforce extra-territorial control of publications. We won’t be cooperating with any legislation that tries to control a foreign publication like this blog because it is, in the words of the Charter, “targeted primarily at an audience in the United Kingdom”. Imagine if the Soviets had tried to do the same to Radio Free Europe during the Cold War, or the Iranian regime demanded today to regulate the BBC’s Persian Service on the grounds that it is “targeted primarily at an audience in the Islamic Republic of Iran”.

Guido reminded Brian Leveson when he was giving his evidence that under the obligations of Article 19 of the UN Declaration of Human Rights as agreed by Britain in 1948

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

That is more important than preventing the paparazzi taking pictures of Hugh Grant on a bad hair day…

Ed's Zero Base

Labour have spent the last week fretting about economic credibility, the cause is the realisation that the economy has probably bottomed and growth is returning. In fact yesterday saw an upwards revision of previous GDP figures which effectively halved the supposed depth of recession. The unemployment figures are going in the right direction, private sector growth is still anaemic though getting healthier, the re-balancing of the public sector is proceeding. The much awaited expansionary fiscal contraction is, whisper it quietly, almost upon us. This will fatally undermine the Balls mantra of “too far, too fast”. When Shadow Minister Ian Murray endorsed the idea of reviewing every single piece of public spending, he sent Balls into a spasm. Nobody came out to defend the policy or Murray, especially not Chuka Umunna, who despite numerous opportunities, ran to the hills. Now Ed Balls has stolen the policy in an interview with the Guardian.

In what looks like a a pre-conference policy side-step, Ed Balls has jumped on the “Zero Base Policy” bandwagon this morning. This state-slashing policy was outlined by Labour’s Miss Goody-Two-Shoes Stella Creasy earlier this summer. First advanced by the Adam Smith Institute this sensible policy is one that every government should embrace. Incoming governments should assess every single line item and every penny of taxpayers’ money spent. That should not be controversial.

Guido is glad that Balls has come round to this idea, though he does find it odd that just 48 hours ago Labour were trying to distance themselves from the very same policy when we asked. The problem Guido has with this Damascene conversion from Labour is that they have had years to review their spending. Instead of tackling waste they borrowed to spend and spend and spend – like a drunken sailor in a knocking shop. Balls has consistently denied debt fuelled overspending was ever a problem, repeatedly claiming (as recently as last month) that it was all going tickety-boo until the 2008 bank crisis hit. The metamorphosis of Balls into a supposedly frugal fiscal hawk willing to cut spending is something to behold.

Guido will only believe Balls if he announces – before the election – plans for line item spending cuts, in detail, in every government department and agency to balance the budget. Ed Balls won’t because he is only shifting his position because he knows an expanding economy with healthy growth will leave him looking foolish come election day. The only thing that is “zero based” is Ed’s fiscal credibility.

The 2015 New Coalition

Cameroons like to remind the disgruntled Tory right of a simple bit of coalition electoral arithmetic: Tories on 34% + LibDems on 8% = 42%, just about enough to form a government again in 2015. Well UKIP have been also been polling between 6% to 10% for over a year now. If those right-of-centre voters could be brought back into the Conservative Party embrace they would have a good chance of forming a majority government. UKIP have no MPs in Westminster under first past the post, they do however have plenty of voters for Westminster elections.

During the 2010 general election readers of this blog raised over £15,000 to “Get Balls Out” by supporting the Tory candidate in Morley & Outwood. On election night Balls survived by a mere thousand or so votes, fewer votes than the UKIP candidate received. UKIP HQ called Guido on the night and said if they had known it was going to be so close they would have stood their candidate down. Perhaps a formal pre-election pact is politically impossible. However the Eurozone is likely to fall apart in the near future, new arrangements will be put in place by the EU radically altering the existing structure. On that basis the government will be entitled to bring the EU referendum promised by both governing parties. If the LibDems refuse to countenance a referendum the Conservatives need only to promise an immediate referendum within a year of the general election to bring about an implicit electoral pact with UKIP.

If you think this is improbable you could be surprised. The Conservative Party’s main internal Thatcherite pressure group, Conservative Way Forward, has quietly changed its constitution to allow UKIP members to join. The unhappy experience of coalition with the LibDems has opened the eyes of many on the Tory right to the electoral logic of coalition with UKIP. Dan Hannan isn’t the only one who wants it to happen

Happy Fathers Day: Gay Marriage and Divorce

The progressive chattering classes and David Cameron have got themselves worked up about gay marriage – though as many gays point out, they have already got the same rights via civil partnerships. The Equal Love Campaign says the combination of the Matrimonial Causes Act 1973 and the Civil Partnership Act 2004 creates a system that segregates couples into two separate legal institutions, with different names but identical rights and responsibilities. It is not a matter of substance.

Where it seems to Guido the gay marriage campaigners have got it wrong is if they intend, as many suspect, to go on to legally force religious institutions to marry them contrary to the teachings of their churches, mosques, synagogues and temples. Legislation forcing people to do something against their faith seems to Guido to be a breach of human rights, not an extension.

Yet there is an almighty Lilliputian row going on over mere nomenclature. If people want to describe themselves as married, partnered, hitched, contracted or whatever, so be it. Live and let live. Hopefully it won’t go as far as Spain where the socialists have, in the name of equality, legislated so that birth certificates read “Progenitor A” and “Progenitor B” instead of “father” and “mother”.   As a libertarian Guido isn’t convinced that the state should be in the marriage/partnering or birth certifying business in any event.

As it is Fathers Day it seems to Guido a good time to bring up a matter of sexual equality before the law that is a matter of substance – fathers and mothers should be entitled to a legally binding “presumption of shared parenting” after separation, whether it is a divorce or un-partnering. You don’t need to be a Fathers4Justice campaigner to see that the current presumption in favour of the mother is unjust. Where is the Campaign for Equality in Divorce?


News Brands Eclipse NewspapersNewspaper Industry Officially Accepts Dead Tree Press Finished

In January 2010 Guido gave a presentation at Microsoft’s HQ to the Online Journalism Association, the thesis was that newspapers as we know them will die and journalism would thrive. Guido’s pitch was that the old deadline based “news cycle” is being replaced by “news streams” and that newspapers as we know them will be replaced by “news brands”.

Today the industry trade body for the dead tree press, the Newspaper Marketing Association, accepted the thesis and announced it is renaming itself “Newsworks”, dropping dead entirely the word “newspaper”. CEO Rufus Olins says “We need to start thinking differently… It’s all about newsbrands, about delivering content through a range of platforms.” Guido thinks we can only measure the strength of news brands in terms of their mindshare. The broadsheets – Guardian, Times, Indy – all lose money and are more akin to vanity publishing than profit motivated businesses. It is about who they reach and how much they influence their consumers.

As the news industry and more importantly – from a financial perspective – the advertising industry comes to realise that online and print consumers are fungible, reality starts to hit home. In under a decade this blog has become as strong a news brand in our field in terms of readership and mindshare as the New Statesman, hell we’re part way through a reverse-takeover of The Spectator. The great thing for consumers is that because of low barriers to entry, we have an ever more competitive, pluralist, thriving free market in news. Without slaughtering trees…

In Praise of Workfare

“Boycott Workfare is a UK-wide campaign to end forced unpaid work for people who receive welfare” says the new campaign website. They’re planning UK Uncut style occupation of retail stores participating in the schemes. The schemes include DWP organised Work Experience, the Community Action Programme, Sector Based Work Academies and Work Programme placements. The left-wing rhetoric claims that this is exploitative slave labour for big business.

Slaves are forced to work for no return, workfare is what Ed Miliband might describe as “something for something”, long term unemployed young people without work experience, who are on benefits, are given work to do as a condition of continuing to receive those benefits. Is that so unfair?

Millions of working taxpayers on low incomes will think not. Cait Reilly was asked to work for three weeks at Poundland, doing five hours a day. Not too onerous. The 22 year-old graduated last year with a BSc in geology from Birmingham University. She had claimed £53.45-a-week Jobseeker’s Allowance (JSA) since last August and was asked by the Job Centre to work at Poundland. She objected and left-wing lawyers argued in the courts that her human rights were violated by being asked to sweep floors and stack shelves.

She got a chance to get some real world work experience, in the kind of job millions of less privileged, less educated taxpayers do every day. The people who work to pay taxes to pay her to be on the dole are the ones who are forced to slave.

There are two easy ways to boycott workfare; get a job or stop claiming benefits. When people say “there are no jobs appropriate for me” they’re really saying they don’t want to do readily available jobs. Walk around London and you’ll hear a lot of foreign accents, Poles digging the road, Latvians serving sandwiches, it seems like almost every entry level job is being done by East Europeans. The fact is many Britons don’t want to work hard for low pay.

Guido’s first proper job (after working in Westminster) was as a ticket clerk in a City brokers. Aged 25, earning just above minimum wage, overdrawn at the end of every month. Poring over spreadsheets for most of the day was pretty soul-destroying, running from dealing desk to back office with illegible tickets at the beck and call of screaming brokers, it was pretty lowly. It was also an opportunity. Chatting to the older brokers, trying to be helpful, showing willing. To get up at 5.30 in the morning for near minimum wages month-after-month is to believe that you can progress. One crazily busy day during the ERM crisis while waiting for a broker to get off the phone, a short-staffed head dealer holding two phones to his ears and looking at a bank of flashing lines, shouted to Guido “pick up that line”.

Mrs Fawkes worked three jobs in her summer holidays every year for three years, cleaning in the mornings, waitressing in the afternoons and babysitting in the evenings to pay her way through law school.  You have to start at the bottom.

If you want to boycott workfare, fine, get a job. If you are young there are plenty of entry level jobs for those who want to work. Take a job, any job. No matter what your qualifications, you have to start somewhere, however lowly, it is better than making other people slave to pay you dole.

Labour-Centrists Laying Down Reality-Based Policy Ideas

Talking to Labour insiders, ambitious young PAds, think-tankers and old hands alike, the candid admission is that they are stuck with Ed Miliband because as with Gordon Brown, there is no-one else. Ed gets a regular mauling at PMQs despite a terrible economy, still looks and sounds like the kid who does the photocopying, has failed to impress the British public and is unable at this stage of the electoral cycle to push further ahead in the polls.[…] Read the rest

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Alan Sugar on Jeremy Corbyn:

“It’s clear you alluded to students refunds to get votes from young impressionable people. You are a cheat and should resign.”

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