John Harris

Britain’s economy needs a big push but the Tories can only nudge | John Harris

Wednesday, November 30th, 2011

Osborne’s grand plan to boost growth is a dogma-ridden hybrid that will squeeze the low-paid and rebound on the economy

Until the OECD officially predicted a double-dip British recession today, the spurt of hype and guesswork preceding George Osborne’s autumn statement was just about doing its work. The airwaves crackled with news of the £30bn jump-leads to be attached to the national infrastructure plan, to be part-funded by pension funds, and coalition high-ups talked up 500 projects, including 50 or so “top priority” schemes that will get their money as soon as possible: electrification of the TransPennine rail line between Manchester and Leeds; upgrades to the M25, M3 and M56; work on the good old Kingskerswell bypass. All was sweat, cement and national renewal: a vision worthy of Stalin’s Russia – without quite so much death.

It is easy to get lost in the midst of what seems to be a fit of grand-scale creative accounting but as I understand it, £10bn of the new plan’s funds will be stumped up by the government. Some £5bn of that – a sum which looks likely to be snatched from millions of the low-paid, more of which in a moment – will have been spent by 2015, with the other half to follow later. The total, it should be noted, is a mere fraction of what is already being cut from capital spending.

Moreover, the details of the £20bn supposedly to be provided by non-government sources are very unclear: last week, there were reported noises from Whitehall insiders suggesting that the sum amounted to an “aspiration”, while pension funds confirmed they were only in the foothills of talks with government, and the odd sceptical voice wondered whether such risk-averse interests would actually want to get involved.

This much we know. Pension schemes will not be the only big investors involved; there will also be a sizable role for sovereign wealth funds. On the FT’s website on Sunday there was a piece by Lou Jiwei, the chairman and chief executive of the China Investment Corporation, which punts around a reasonable share of China’s foreign exchange reserves. His set-up, he said, is collectively “keen to team up with fund managers or participate in public-private partnerships in the UK infrastructure sector as an equity investor”. Here was what you might think of as nationalisation at a distance, whereby for all that the political class bigs up the dynamic wonders of Anglo-American capitalism, your local branch line, school gym or toll road will soon be a source of revenue for the state capitalists of Beijing. Interesting times, and all that.

PPP, you may recall, was what the last government intended to call the private finance initiative when it scented trouble; PFI’s serial insanities were again pointed out by BBC Panorama this week, in a programme titled Who’s Getting Rich On Your Money?. Since Osborne came to office he has signed off on 61 PFI deals which will eventually cost us about £33bn: but he has now affected to repent. Last month, he announced PFI was being reviewed, and the Treasury was aiming at a new approach which would mean “a lower cost to the taxpayer” and “better value for public services”. The arrangements behind the national infrastructure plan seem to be the answer.

But here’s the problem. The most important point is simple. Even if they don’t involve the heights of lunacy scraped by PFI, the returns on the new scheme will have to be higher than those on government bonds in order to pull in investors. For Osborne, though, this has one big advantage: as with PFI, what amounts to borrowing to fund capital spending can be put off-balance sheet. Such are the wages of deficit fetishism: if the funds were earmarked for investment rather than consumption, he could raise the money by orthodox borrowing, but at that point the school play titled The Greek Defence would be over. Instead, he takes the circuitous and more expensive route. As one sage on Twitter put it, “China applies its vast surpluses by lending to the UK above prevailing gilt rates, securing future revenue. Snake-eats-own-tail.”

This week I spoke to Richard Murphy, the economist and tax expert, whose new book has the self-explanatory title The Courageous State and brims with imaginative thinking. Using pension funds for national investment, he told me, could be done much more efficiently than the Osborne plan. In exchange for the vast sums granted in pension tax relief – £38bn at the last count – we could be compelling funds to put money into the very infrastructure projects the government is so keen on – and with no need for a mouthwatering rate of return to draw them in. The same logic, he says, applies to credit easing, the roundabout method Osborne is using to persuade banks to supply businesses with money. Again, were we to insist on a quid pro quo for pension tax relief we could channel funds into a national investment bank and send credit directly to those businesses. But that’s all surely too ambitious for Whitehall, and far too dirigiste for the free-marketeers at the top of government. In its present state, Britain needs big push after big push; their approach remains limited to nudge economics.

And so to one other likely aspect of the autumn statement. According to several sources, some or all of the first £5bn for the infrastructure plan will come from squeezing tax credits for the low-paid. Here’s a simple point, but it needs making: if that happens it’ll represent another knock to demand. Though it’s not been pointed out nearly enough, much the same applies to the money being demanded from millions of people in the public sector who will be out on strike on Wednesday. If nurses, teachers and firefighters have to find hefty amounts of money for increased pensions contributions the shock to the economy will amount to billions. From the VAT hike to Iain Duncan Smith’s mad £500 benefit cap, this keeps happening. Why?

The coalition seems to be locked into an economic tragedy. Well aware of the speed at which things are going south, unable to pursue the right remedies thanks to its own dogmatic constraints and therefore tumbling into incoherence: giving with one hand and snatching with the other; extolling the wonders of the doughty British spirit while selling England by the pound. Osborne appeared on TV today, dressed in his now customary fluorescent building-site jacket, as if to suggest that even if it took financial chicanery and robbing the poor, Britain would soon be working again. “I think the public is behind what the government is doing,” he said. He didn’t sound that convincing.

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Why a Rolling Stones bootleg is one of my albums of the year

Wednesday, November 23rd, 2011

Their recent reissues might be rubbish, but 1973 bootleg Brussels Affair shows the Stones at their onstage peak

One of my albums of the year has just arrived, and it pains me to say it’s by the Rolling Stones.

I know, merely mentioning them these days conjures up the acrid smell of their current incarnation, not even a shadow of a ghost of an imitation of their former selves. Moreover, they are maintaining the shameless and unsatisfactory burst of nostalgia that began with last year’s Exile on Main Street reissue, presumably to keep the money coming in while they decide whether or not to haul themselves around the planet for yet another tour. The latest superfluous item is this week’s re-release of the chronically overrated Some Girls. Fancy some 34-year-old out-takes not even good enough to be included on 1981’s odds-and-sods collection Tattoo You, spruced up with new Mick Jagger vocal parts? You really do not.

And so to the online side of their operation. Stonesarchivestore.com has recently been launched, with the standard-issue promises that these days pass for white-knuckle rock excitement: “Unheard music”, “rare merchandise”, “signed lithographs”. But wait! By way of bringing all this to our attention, this new enterprise has begun with the online release of the 1973 live bootleg known as Brussels Affair – put to tape in the well-known R&B heartland that is Belgium, long whispered about as a glimpse of the group at their all-time onstage peak, and put up in fragments on YouTube. Not that anyone seems to have noticed, but it’s on sale for what currency converters today put at £4.46, which was enough to tweak my curiosity.

It is, as I half-expected, unimpeachably great: a beautifully recorded, often unhinged 70 minutes during which the Stones manage to sound like the Platonic ideal of a rock band: simultaneously tight, unhinged, absolutely convincing, and gloriously ludicrous. Stones lore has long held that even at their height, they could swing between being awful one night and inspirational the next, and what this recording proves is just how jaw-dropping the latter occasions could be.

At the risk of sounding like the man from Jazz Club, the bass and drums are so wonderfully lithe and interlocked as to sound supernatural. As opposed to his 21st-century habit of just about managing the riffs in between letting loose an open-tuned “clang” once in a while, Keith Richards’ rhythm guitar lives up to expectation and drives the whole band, while Mick Taylor’s soloing threads itself through the rest of the music with grace and understatement. Mick Jagger, looking back, was at the juncture beyond which lay pantomimic absurdity and a reluctance to sing in what you and I would recognise as English, but everything here is pitched exactly right: in between addressing the crowd in schoolboy French, he growls and hollers to pretty thrilling effect; on the slow songs, he’s simply great.

This was late 1973, when Goat’s Head Soup had just been released – and, according to retrospective received opinion, the Stones had exited the run of form that stretched from 1968 to 1972. To my mind, this view of things omits how good large swathes of GHS actually were, a point underlined here by versions of Dancing With Mr D, Star Star (or, if you prefer, Starfucker), Angie and Doo Doo Doo Dooo (Heartbreaker). The only shame is the non-appearance of Winter, one of my favourite Stones songs – though Taylor inserts hints of it into a gorgeous 11-minute reading of You Can’t Always Get What You Want, so all is well.

So, some concluding thoughts. Leaving aside a disappointing go at Gimme Shelter (which has never worked live, even then), Brussels Affair is better even than 1970’s Get Yer Ya Ya’s Out – and, unlike that record, apparently unsullied by post-production cheating. It shreds such other Stones in-concert albums as Love You Live, the woeful Still Life, and the even more miserable Flashpoint. Only one mystery hangs over the whole thing: why did they take the best part of 40 years to release it?

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John Harris’s national conversations podcast: Tim Collins

Tuesday, November 22nd, 2011

Tim Collins speaks from the heart about his army career, Tony Blair’s wars and his contempt for the decision-makers that leave the army “about the third of the size it needs to be to meet requirements that are being set on it”.

In the final part of John Harris’s national conversations series of interviews, Collins looks back on the Iraq war. On the eve of the invasion Collins, then the commanding officer of the 1st Batallion of the Royal Irish Regiment, made a speech to his troops in the Kuwaiti desert. In it, he told his men “if you are ferocious in battle remember to be magnanimous in victory”.

The speech was so unexpectedly powerful that it was leaked, and he became a poster boy for the early days of the war. Rumour had it that President Bush hung the speech on the wall of the Oval Office and Prince Charles wrote to Collins praising his rhetoric. Kenneth Brannagh played him in a BBC drama a few years later.

When he was accused of war crimes the fall from grace was dramatic. He was cleared, but quit the army in frustration anyway. These days, he is angry about Operation Telic – otherwise known as the Iraq war – which officially ended in May this year. He says the British contribution in Iraq will be seen in the future both politically and militarily as an example of how “not to do it”. He blames the Blair/Brown tussle for the inadequate leadership, arguing that they used the war “as a lever with which to whack each other”. He believes that, as a result of the Iraq war, the US military regards the UK military as “fillers in a chorus line, as opposed to frontline trustworthy troops”. The British performance, he says, was “frankly lacklustre”.

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Tim Collins: ‘The Iraq war was a perfect example of bumbling military incompetence’ – video interview

Tuesday, November 22nd, 2011

In the latest in John Harris’s National Conversations series of interviews, retired British army Colonel Tim Collins discusses his famous eve-of-battle speech before the invasion of Iraq in 2003

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Stop targeting this imaginary army of long-term sick | John Harris

Tuesday, November 22nd, 2011

The sickness absence review will only lead to incapacitated people limply tramping the streets looking for nonexistent jobs

Another week, another government attempt to kick the supposedly malingering and faux-sick into work. Fair play to ministers at the Department for Work and Pensions: despite plunging consumer confidence and flatlining demand, their enthusiasm for shoving no end of people back into an almost nonexistent job market shows no signs of abating. Some would see that as an admirable kind of determination; others might see the distinct signs of a delusional zealotry that is already leaving misery in its wake.

Last week, there came early news of the official sickness absence review – commissioned by the prime minister back in February, and published today – which advocates eligibility for sick leave being decided by “independent assessors” rather than GPs. Moreover, in its vision of things, anyone signed off sick should be placed on jobseeker’s allowance rather than employment support allowance (the successor to incapacity benefit), and thereby have to prove that they were actively seeking work, despite being officially confirmed as being ill. Newly stringent requirements as to what “actively seeking work” actually means will presumably apply. As far as I understand it, this will mean lots of incapacitated people limply tramping the streets looking for jobs that do not exist.

As for the assessing, we can presumably look to the work being done on welfare-to-work by Atos, whose treatment of benefit claimants has created a seething mass of anxiety and fear, and been roundly criticised by MPs.

Now, Britons are regularly accused of taking more “sickies” than other Europeans, though the hard evidence on the big sickness-absence picture suggests something rather different. In 2010, a TUC survey found that 36% of people had gone to work while too ill to do so in the previous 12 months. More conclusively, a 2009 study found that UK sickness absence rates were the second-lowest in Europe: we come in at 5.5 days per year, the European average is 7.4, and in Bulgaria, the figure is a mind-boggling 22.

Bear in mind also that Britons continue to put some of the longest working hours in the developed world, which shrinks the proportion of time lost to sickness even further.

Besides, the brief sickie is not where this review is chiefly aimed.

As is becoming the norm, it targets the “long-term sick” – that is, people on illness-related benefits, part of that great imaginary army who are implicitly accused by ministers of swinging the lead, on an almost weekly basis. As the review’s authors see it, there are “serious flaws” in the way we treat them, and far more should be redirected to work as quickly as possible. To quote from the text:

“Each year 300,000 people fall out of work on to health-related state benefits.
“Before reaching this point, many have been long-term sick off work. Much absence and inactivity is due to comparatively mild illness which is compatible with work – and may indeed be improved by work.”

Best, then, to get after these not-really-very-sick people, and quick.

The backdrop to all this is the fact that Britain is hardly without chronic issues of widespread mental illness, along with cancer, diabetes and other long-term complaints – all of which require much more nuanced and long-term action than the coalition’s punitive approach on welfare changes promises. Even in the Daily Telegraph, which seems to have been cheerleading for the review for a while, you will find sentences such as this: “Of course, people are ill, often with chronic conditions which need long-term management and may mean significant periods of quite justified time off.”

But by way of a copper-bottomed argument against these new moves, try this: in the current climate, even if there are indeed some issues surrounding benefit claims and people’s readiness for work, now is hardly the time to be using such a swivel-eyed approach. For supporting evidence, have a look at this week’s Economist, which quotes one Jonathan Cheshire, the boss of a Hampshire charity that has got 4,000 erstwhile benefit claimants into work over the last 10 years, but which now faces increasingly difficult circumstances. “Mr Cheshire applauds the government’s goal to simplify welfare and make work pay,” says the piece, “but worries that the policy was designed for the labour market of 2008. The whole approach rests on expanding the pool of employable labour, with intensive careers guidance paid for by welfare savings, he notes. ‘Without jobs growth, none of this works.’”

Quite so. But is anyone in Whitehall listening?

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