Monthly Archives: June 2010

The Brutal Budget?

Well, I’ve just watched George Osborne come of age.  The ‘light-weight’, ‘inexperienced’, ‘young’ Chancellor gave an assured performance that will do wonders for his poor reputation.  It should also dispel some of the prejudice that still exists about the modern Conservative Party.

The spin that had been dripping out from Whitehall over the last few weeks could be summarised in one sentence: “This is going to Hurt”.  The facts about the economic situation were not in question –

  • For every three pounds we currently receive in tax receipts we are spending four on public services (i.e we have a significant structural deficit).
  • The National Debt is already £22,400 per head.

The nation could not go on spending like drunken sailors on shore-leave.  You cannot tackle the debt until you tackle the structural deficit.  You can only tackle the structural deficit in one of two ways – raise taxes or cut public spending.  The trouble for George Osborne is that neither is a popular thing for a Government to do.  But in some ways the choice was made for him, as he put it, “We are over-spending – We are not under-taxed”.  So with an impossible juggling trick demanded what is my gut reaction to what he has done today?

Well he had some pleasant surprises that may confuse those who cannot see the Tories as anything other than the ‘nasty party’:

  • The increase in the tax-fee allowance was inspired and will benefit those on the lowest pay.  I fully acknowledge that this was a Lib Dem policy but it is a credit to our Coalition that we really have cherry picked the best thinking from both Parties.  880,000 of the poorest working people taken out of tax.  Wonderful.
  • The raise in Capital Gains Tax will mean that the wealthiest in our society cannot be accused of not shouldering their share of the burden.  Those who thought the Tories were all about protecting the rich ahead of helping the economy have been proved wrong.
  • His surrender of forecasting powers to the Office for Budget Responsibility is absolutely the right thing to do for the country – but removes a key ability for him to ‘play politics’.  The best thing Brown ever did as Chancellor was give up the power to play politics with interest rates – Osborne takes this to the logical next step.
  • The acknowledgement that the banks brought about the financial crisis and the new measures to tax riskier aspects of their behaviour will be in tune with popular feeling and was the right thing to do.
  • Restoring the link between state pensions and earnings.
  • As a small-business owner I was delighted with the measures he put in place to give us a fighting chance of getting through the recession.
  • No cuts in capital expenditure.  A grown up lesson learned from the last time the Conservatives were in power in the early 1990s.

The headline will of course be about the rise in VAT.  For all the above the pain had to come and this is where the punch landed.  A tax on consumption does encourage individual prudence, but it also risks lowering consumer spending to the point that both retail and manufacturing are hurt.  The leap of faith (no doubt supported by economic modelling) must be that the proportional pain caused by the 2.5% rise is counterbalanced by the good to the economy from the reduction in structural deficit.  We need to monitor this closely and make sure the economic modelling is correct – if it backfires we shouldn’t shy away from course-correcting quickly.

Obviously, much of the pain is also going to be felt by the Civil Service when the departmental cuts have to be worked through and Councils as they struggle to work within the constraints brought about by a council tax freeze.  The challenge for both Civil Service and Councils will be to deliver those reductions with the same equity and tone that the Chancellor managed today – and crucially without hitting the public perception of service delivery.  Ultimately, for right or wrong, it will be that upon which the Coalition is judged.

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“Bloody Sunday”: The Lesson For Politicians

Back in the early 1990’s as part of my University Degree I briefly studied the Irish troubles.  I declare no deep expertise – but one thing I am sure of is that even as late as the end of the 1960s and the early 1970s there was nothing inevitable about the armed struggle that would blight us for the next couple of decades.  The lot of Catholics in Northern Ireland was a scandal but there was no reason why it could not have been righted through a peaceful civil rights movement like that led by Martin Luther King in the United States.  Whilst hotheads on the Nationalistic side were agitating for an escalation of the armed struggle the consensus amongst the whole Catholic population still wasn’t fully with them.  Then came “Bloody Sunday” and in one swoop the Provisional IRA won the popular consent of their constituents- from that day on the long armed struggle  was inevitable.

You can see how it came about:  A few hotheads bubbling up in Derry?  We’ll “send  in the Para’s”.  The Daily Mail readership would be thrilled.  It must have been such a feel-good decision for Ted Heath.  A chance to show himself as a strong, decisive leader and to give a nod of respect to the armed forces by trusting them to a difficult job.

The truth is that the Parachute Regiment in the 1970s was about as wrong a force for civil intervention as you could have found in the whole British Army.  At the height of the Cold War these were shock troops whose bread and butter was to ready themselves for an  extreme, brutal, unsophisticated all-out war with an unmerciful Soviet Union.  There would have been an extremely machismo culture in the Regiment and frankly to do the job they were trained for this was essential.  Come World-War-Three these guys were to be front line cannon-fodder and could only be successful and alive with a shoot-first worry-later attitude.  To willingly put yourself up for that kind of front- line role you need to be as hard-as-nails and a little bit of a nutter.  Their entire training would have been to reinforce both those traits.   We shouldn’t apologise for having a force such as this – there are circumstances that the nation genuinely does need this brutal capability – the Second World War had proven that.  The Para’s are an elite fighting force with a proud history and I for one am glad they are British. However, to suddenly expect these young men who have been drilled endlessly in this mindset to wheel-back on these instincts and shift into a more nuanced approach is naive.  Don’t get me wrong, I don’t believe for one minute that the whole Regiment went out there spoiling to ‘waste some Paddys’ and I have no idea if they were shot at first or not.  What I do believe is that once the shooting had started, and word got round amongst them, whether true or not, that there were people in the crowd returning fire – then the adrenaline in these 20-something-year-old men, pumped faster by a genuine sense of mortal danger meant that the instincts honed in their training would take-over.  And they did so with disastrous effect.

Fast forward fortyish years and you can see the Israelis repeating the same mistake with the Gaza floatilla.  Rather than send in the Police or Navy they chose to send in their top Commando unit, the moment the operation looked like it may not go to plan and those involved perceived mortal danger then the instant shift to ‘Plan B’ would only ever involve a sudden massive and lethal use of violence.

Whatever the domestic merits to a Prime Minister of the headlines about sending in ‘The Elite’ the ‘hard-man’ dividend is temporary.  In this media age the free-world cannot abide the sight of the full might of a State being brought to bare on a civilian population.  If anything goes wrong, and it is more likely to than not, you will lose the public relations battle.  Terrorists/Freedom Fighters/Insurgents – call them whatever you will – know this and will go out of their way to manufacture these situations to further their wicked ends.  Policing and soldiering are different jobs.  In your own country when faced with these circumstances you must ‘tool-up’ the police and execute the mission with a police mindset – not ‘tool-down’ soldiers and yet still have them execute the mission with a soldiers mindset.

This is difficult stuff and I have no doubt that the Parachute Regiment and indeed the whole British Army has made massive strides training for civil insurgency which has since been tested for real in both Iraq and Afghanistan.  We should be proud of the progress we have made and the lessons that have been learned and implemented heroically.   But we still must not get away from the fact that policing and soldiering are different tasks. My sincere hope is that never again in my lifetime do we send out soldiers to do a policing job for our own citizens.

Tomorrow, I will read the Saville Report.  I have no idea what gems it will unearth or what value we the taxpayers may get from the millions that have been spent in the Inquiry.  Even if the report dams the Army there is no merit in sending any British Soldiers to Court now and I sincerely hope we don’t get forced down that path.  However, if even one small part of the output is to hammer home the conclusion I reached above and cause pause for thought in future – then it will have been worth it.

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