Last week was a shocker for the Government. This week is no better – and it’s only Wednesday

30th May, 2012 9:14 am

David Cameron will no doubt be grateful for the fact there is no Prime Minister’s Questions today.  This week had barely begun before we had the embarrassing Government u-turns on the caravan and pasty taxes, Baroness Warsi being investigated for her expenses by the Lords Commissioner for Standards, plus the Prime Minister’s hapless chief spin doctor being caught on camera berating the BBC for their coverage of News International’s links with Government ministers.

However the really bad news for the Government came last week.  Figures released by the Office of National Statistics showed that the double-dip recession is deeper than anyone had thought.  Not only has the economy shrunk in the last six months by 0.6 per cent, it has actually contracted by 0.4 per cent since George Osborne’s Spending Review in October 2010.

Having spent two years blaming Labour, the Government has an economic record of it’s own – a recession made in Downing Street.  The Government inherited an economy in 2010 that was in recovery.  Indeed, in the second quarter of 2010, the economy grew by 1.2% – the fastest rate of growth in 9 years.  But as many warned in the summer of that year, the recovery was choked off by cutting too deep and too fast.

In the US – where Obama decided to take a different economic approach to Cameron – the economy is now 1.3% above its pre-crisis peak.  Compare this to the UK, where the figure is 4.4% below.  Despite all the problems in the Euro area, France, Germany and the eurozone as a whole have managed to avoid recession.

The Government’s economic plan has backfired and it is families and businesses that are paying the price.  Companies are going to the wall and long-term unemployment is at a 16 year high.  Last week, we found out that that one-in-six people aged 16 to 24 was considered “NEET” – not in education, employment or training – in the first three months of this year.  According to the Department for Education, over 950,000 people in the age group now fall into this category.  This is a record high for this point in the year.  In my patch, recent figures showed that the number of 18 to 24 year olds in Barnsley who have been unemployed for more than twelve months has risen by a massive 170% in the last year.

But bizarrely, the Conservative’s answer to this jobs crisis seems to be to try and make it easier to sack people.  This was the proposal put forward by the Prime Minister’s own adviser, Mr Beecroft, who has acknowledged that under his measures some people would be sacked simply because their employer didn’t like them.  Echoing Norman Lamont’s infamous phrase of twenty years ago, Beecroft said that this was “a price worth paying”.

And of course the Government’s failure on jobs and growth means it is much harder to reduce the deficit, with the Government having to borrow £150 billion more than it planned.

On top of all these problems at No 10 and the Treasury, things are looking no better at the Home Office or the Ministry of Justice.  The Government promised to reduce migration yet we learnt last week that the net migration figure had barely changed in the last two years.  This is despite a rise in the number people leaving the country.  Then there is the shambolic approach to the sensitive area of open justice and the news that 90 per cent of those sentenced in England and Wales last year had offended before – a record high.

Despite saying that they had “got the message” after last month’s elections, David Cameron and George Osborne just look hopelessly out of touch.  Tory MP Matthew Hancock – George Osborne’s representative on earth – tweeted about what he believed was good news on the economy last week, adding that “summer is here!”.  But this summer won’t be anything to celebrate for millions of squeezed families who know that the longer this recession goes on, household bills will get harder and harder to pay for.

Last week was a shocker for the Government.  This week is no better and it’s only Wednesday.  David Cameron may avoid PMQs for a couple of weeks, but he knows he cannot escape from being held to account for his Government’s record.  Things are indeed going badly for the Government.  And you know what?  I’ve not even mentioned Jeremy Hunt…

Michael Dugher is Labour MP for Barnsley East and shadow minister without portfolio

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  • treborc1

    We are back in the bull sh*t politics again , it was not me sir it was them, lets remember your lot, We are the party of no more boom or bust, weeks before we had the biggest explosion in living memory. Darling stated we will cut just as hard as the Tories if not harder.

    So less knocking the rubbish Tories and let know how you would solve the problem, we are really interested in you coming on here to say this is what we labour  would do, please do not tell me about the five point plan if that’s it god help us.

    • aracataca

      Back to the same old crap Treborc. Perhaps you should read what Darling actually said if you can read that is? 

      • treborc1

        well I just need to look around to see the mess we are in , to know that the last three decades have been a total waste of time….love

        I have no picture of Blair in my house

  • AlanGiles

    And, on this brigHT Wednesday, Andy Coulson has been arressted:

    http://www.independent.co.uk/news/uk/crime/andy-coulson-arrested-in-perjury-inquiry-7803896.html

    • treborc1

      will he stay arrested

  • JC

    Given that whatever the government do they will be wrong, you might as well repeat this rubbish every week.  How about explaining what should be done, how much it would cost, where the money will come from and what are the implications of acquiring it? Any old fool can repeat the mantra “You’re wrong, you’re wrong”, it takes leadership to come up with solutions, especially if they are unpopular. This is not supporting the government, just someone getting fed up of the incessant carping from the sidelines with no clear alternative.

    • treborc1

       True and the country has been without leadership for many many years.

    • “Any old fool can repeat the mantra “You’re wrong, you’re wrong” ”

      And that’s what you do on this blog week in and week out and you’re still doing it today.

    • treborc1

      well go on then have a go, after all your backing the Tories what do you think would help this country.

      We need to sort out which way we are heading for power generation, then get building, this will give work to thousands. We need to build homes and houses affordable or council get on with it.

      Railways are far to expensive for what we are getting, sort it out.

      Like it or not we are going to have rebuild our way out of recession

      • JC

        Nice to know I’m backing the Tories. I wasn’t aware. I suppose that debate is unnecessary and that anyone pointing out errors in the proposals is automatically the enemy. 

        I actually think your suggestions are good. However, in order to build more houses, we will have to make it much easier to get planning permission. We create a huge amount of bureaucratic waste under the current system which generally requires house builders to spend more on lawyers than they do on bricks, and have the value of the land at twice the cost of construction.

        Now, how do I join the Tories?

        • treborc1

          Rubbish total rubbish lawyers are only used when Green field sites are refused, so use brown field sites.

          http://www.conservatives.com/get_involved/join.aspx

        • Peter Barnard

          “Now, how do I join the Tories” …. I think that you should draw the curtains and lie down until the feeling goes away, JC.

          You make a valid point about planning permission. It isn’t going to get any easier, either. ONS are predicting an 18 per cent increase in population between now and 2036 and the pressures on use of land for agriculture, housing and production of goods and services will be enormous.

          For sure, Mr Pickles’ Localism Bill isn’t going to cut the mustard – it will make matters worse. Strategic decisions need the attention of national government.

    • Dave Postles

      ”Given that whatever the government do they will be wrong, you might as well repeat this rubbish every week.’
      There have been offers of cross-party conventions and cooperation, usually sunk by the Tories (not least Lansley).  Some of us criticize Her Majesty’s Loyal Opposition (note: it’s not Her Majesty’s Loyal Clear Alternative) for its manifest agreement with some Tory policies (extensions of NL policies). 

      An economic alternative has been offered.  It may not satisfy your criteria of a ‘clear alternative’ or it may not satisfy you – period (in the idiom of the US) – but an alternative has been proffered. 

      Some of the critique derives, moreover, from third-party sources: note the Unicef report on child poverty or the NIESR reports on the economy. Do those fall into your categories of ‘any old fool’ or would you admit of some expertise and informed comment?  Do you expect the opposition to ignore those reports?

  • Cuthulu

    Well, at least I understand now why David Cameron never, ever gives cogent answers at Prime Minister’s Questions: like the rest of his cabinet he’s totally and absolutely clueless about everything and therefore has no answers to give to questions other than planted questions raised by supportive, sycophantic MPs and the lady wife of Peter Bone MP in absentia.

    • treborc1

       Short memory about planted questions then, you learn about PMQ’s of course from the master of the planted questions which was Thatcher, and Blair and Brown, I have never seen a party going way back that never had these silly questions to get the rabble aroused.

      PMQ’s was to be a means in which the public see Politicians working, all we see are the idiot who run the country bluster  not to allow us to see what really goes on.

      I was invited many years ago by my MP to come to Parliament to see how it works, I sat in the gallery for most of my time looking down at what goes on PMQ’s is interesting because ten minutes before you see the arguments the insults flying both leaders are out the back laughing and joking slapping each other on the back, when they walk out after PMQ’s it’s again like an old boys club with leaders chatting laughing joking.   by the time I and the otherts had come out we were in shock to see at same people who were trading blows, slapping each other on the back.

      It’s a show put on for the public.

      • postageincluded

        Out of interest, was your trip pre-broadcast-Commons or or post-broadast. I have the distinct memory that the first radio broadcasts were less knockabout than they later became, and much less so than the TV era. May just be getting old, of course….

        • treborc1

          No that far back it was 1999

  • Peter Barnard

    It goes a lot deeper than who has the best proposal(s) for correcting our current economic situation. Dipping into the toolbox for the “correct spanner(s)” for a bit of tightening or loosening here and there won’t work.

    The fundamental problem lies in the primacy (and stupidity) of financial markets and government fear of these markets. Thatcher made possibly the most damaging remark of all made by any politician since 1945 when she told (indirectly and most publicly, in the House of Commons) Lord Lawson that “you can’t buck the markets,” following the discovery of his covert policy of shadowing the Deutschmark. This placed financial markets on a pedestal and no-one – especially Labour 1997-2010 – has dared since to challenge finance.

    Until we do challenge financial markets – nay, until we actually castrate them – we will not recover.

    • jaime taurosangastre candelas

      Peter,

      I may agree with you, but there is also a fundamental problem for many western governments, which is that they need the markets to pay for the annual deficits.  I’d like to see the government run a balanced budget.  Either we need to increase taxes to make up the difference (and put that to the electorate for moral affirmation), or the government needs to stop spending so much.  Things like paying some people £20,000 a year in housing benefit, which takes 4 families on the average wage to pay for, or the Trident nonsense, or DFID.  Maybe the NHS could be scaled back by 20%, which would still be more as a proportion than any other country in Europe spends on healthcare.

      As long as the government likes to run a deficit and does not have the bravery to make these adjustments, then the government has to go to the market for money.

      • Peter Barnard

        I don’t have a great problem with financial markets responsibly operating as they should do – bringing together supply of, and demand for, capital. I do have a problem with the excesses and waste of the last fifteen/twenty years or so.

        Neither do I have a problem with a government borrowing for capital formation. I see no difference between government borrowing so that motorways, schools, hospitals (all of which provide a return on capital, either directly or indirectly) and so on are built, an individual borrowing to buy a house, or a company borrowing to finance the latest state-of-the-art widget maker. We used to borrow to build power stations and there was nothing wrong with that, either.

        The problem arrives when governments habitually borrow to finance current expenditures, and whatever you may say about Labour and Gordon Brown, they did not borrow (until the financial tsunami rolled around the world) to finance current expenditure, apart from a couple of very minor blips 2003/04 and 2004/05 ; these blips were more than cancelled out by subsequent surpluses on current expenditure, up to and including 2007/08.

        • jaime taurosangastre candelas

          Peter,

          we could probably see an intervening position in that budgets should be cost neutral over an economic cycle – however that is defined.  It should however be defined once and left alone, unlike the serial re-definitions we saw for narrow political advantage in the period 1997-2010.  In the absence of any political agreement, maybe the period of a Parliament for balancing the budget.

          I see no real difference in borrowing to finance capital expenditure or current bills, apart from the political convenience of pointing to an asset as an “investment” instead of admitting that in fact the money raised from the City people in fact went straight to pay the month’s unemployment benefits.  You will I am sure put me right if I am wrong, but as I understand it the difference between capital and current expenditures at the Department level is in fact only a matter of semantics and Departmental plans.  For example, the Department of Employment wants to build a new IT centre and allocates £100 million in the budget plan.  What actually happens is that unemployment rises during the year, things get financially squeezed, and the IT centre is delayed (and probably quietly cancelled).  At the end of the year the money previously allocated is found to have been spent on unemployment benefits.  So “capital” budget becomes “current” budget.

          If borrowing has to be done (and of course it does), then it should be affordable, and in addition it should be for a quality asset.  Unfortunately, I will probably not agree with you that borrowing in Gordon Brown’s years resulted in “quality assets”.  I believe that much of the NHS infrastructure I have observed in the last 15 years is distinctly sub-standard and often not fit for purpose, for example.

          So yes, in principle you have a good point, in practice I strongly suspect that your point is undone when you look at the reality.  Money moves between capital and consumption, and what is spent on capital is often not of good quality.

          • Peter Barnard

            There’s a lot of surmising and imagination, Jaime, in your comment, but nothing in the way of real evidence.

            The difference between capital and current expenditure is definitely not a matter of semantics in any organisation. There can be grey areas, but nothing as elementary or facile along the lines that you have suggested.

            Public expenditure is reported annually (“Public Expenditure Statistical Analysis”) and if you take a look at the glossary in PESA 2011, you will find definitions of capital and current expenditure.

            As far as unemployment benefits are concerned, these come out of the NI Fund and not out of any departmental budget. Many (perhaps all, I don’t know) social security benefits are a legal obligation of government, and it is for this very reason that social security benefits are not included in any departmental expenditure limits, ie a government department cannot say “we’ve run out of money” to a social security benefit applicant : the law is the law.

            Instead, social security benefits are classed as “Annually Managed Expenditure” and AME is not subject to departmental limitations.

          • jaime taurosangastre candelas

            Perhaps I was slightly loose with choosing an example of unemployment benefits.

            However, the budget for the A14 upgrade – a capital project which was only held up by local planning issues – was consumed in general spending in 2009.  The A14 has not been upgraded.  Having been delayed by NIMBYs for 4 years, it then fell foul of the global crash in 2008.  It will be upgraded (the same plan as in 2005, but 10 years later), but new money needs to be found.  Approximately four times as much as the original budget, it appears.

            Over 300 people have been killed on the A14 in the last 10 years, and we’ve had the money once budgeted, then it was taken away, and we will pay 4 times the amount for a capital upgrade ten years late.

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