A child’s verdict on Osborne and Balls? “Like kids. Actually, worse than kids”

The chicklet likes to watch the news.  It’s one of his deft tactics to avoid the start of the long, and ever so slow, march to bedtime.

He was transfixed watching the scenes from the House of Commons on Channel 4 on Thursday, as Osborne and Balls slugged it out over the Libor-Barclays scandal.  As they exchanged verbal jabs and hooks, they were by turns spurred on and jeered at by the braying mobs sitting behind and opposite them.  The chicklet was agog.

I sought his opinion.  “Like kids.  Actually, worse than kids.  Much worse than anything we’d be allowed to do in the playground.  They made a lot of noise, it scared me a bit.  What was it about?”

Where to start?

Another banking scandal – the mother of all banking scandals – has at last achieved what none of the other outrages of the last five years could manage.  An inquiry will be held into the state, culture and practices of the industry and all that remained to be determined was the type:  the Eton toffs wanted a parliamentary one, the opportunists opposite demanded a judicial one.  At the start of the week, the Conservatives decided that offence was the best defence to any claims that their world was too closely entwined with the banks, claims which had been made in several Sunday papers.

To divert attention from them not wanting to do anything much, they focused attention on the previous Labour government.  Briefings culminated in Osborne giving a J’accuse interview to the Spectator.  Ed Balls, the current Shadow Chancellor who was a pivotal member of Labour’s Treasury team, was the man in their sights, requiring him to find a way off the ropes.  The result was the unedifying scenes in the UK Parliament on Thursday.

Both protagonists should be ashamed of themselves:  they would be, if they had a shred of decency between them.  This issue, one which yet again has found our financial institutions wanting, where the greed of a few threatens – continuously – the well-being of the many, should be a sober topic requiring our politicians’ fullest attention.  Yet, these boys treated it like a game: if they could have used conkers, they would.

What the main UK political parties have forgotten is that this is not about them, but about us.  None of us cares anymore who is to blame for the mess we are in.  We all know that both are culpable:  neither party seriously questioned the wisdom of removing the regulatory framework at the turn of the century, nor have they seriously suggested clamping down since.  Promises from the banks and their advocates to behave better when they came down off the naughty step have proven shallow.

Still, they – and their pals in Parliament – resist the need for greater regulation.  At the same time as the Tories were doing the rounds dissing Ed Balls, familiar calls were being made on the back of LIBOR and interest rate swap mis-selling not to rush to temper the excesses of the banks, on the now spurious grounds of turning away the talent and turning off the profit.  Osborne himself has been at it this weekend, preparing to “fight for bankers’ bonuses in Europe” (the European Parliament votes on bonus-curbing measures this week).  Hasn’t he had enough of the bare-knuckle stuff, for we certainly have?

MEPs – somewhat bizarrely – appear to be more in touch with the mood of the people(s). If limiting bonuses results in higher wage costs and removes some of the gamblers from European markets altogether, so be it.  Yet, the bankers have mounted a ferocious rearguard action, and even if the Parliament votes for the move, it is unlikely to be ratified by all member states.  The UK will be at the front of that queue.

If we needed reminding of Labour’s unreadiness to govern, their willingness to fold on the type of inquiry provided it.  Bob Diamond’s outing before the Treasury Select committee showed just how useless and pointless an exercise this is going to be.  Politicians might spend much of their career applying spin and gloss but when it comes to telling porkies with a straight face and trembling voice, no one can compete with bankers.  Lying to Parliament holds no fear, only lying to judges might.

Today, Ed Miliband is trailing a speech setting out his strategy for putting the banks in order.  Break them up and simplify it all hardly amounts to a Nobel prize winning approach and it’s all a little, well too little, too late.  These are things his own government could have set in train before it was shown the door and they are changes already much called for by the Lib Dems.  Where was Ed when Vince Cable was looking for political support for similar?  A potent Labour leader would have ignored partisan politics on the basis that this is a crisis that needs sorting,  one we are all in together and which we must all work together to fix.  Backing Vince Cable would have been seen as a sign of strength, not weakness.

No, this is about posturing and gesturing in the run up to the next General Election:  Miliband’s interview is in the Mail on Sunday which speaks volumes.  In truth, none of them actually wants to take responsibility for doing anything about it.  The banks reign over all of us and politicians and parties – still – are in thrall to them.  Consequently, they fiddle, we burn.

Others have already commented on all this – Marina Hyde, Charles Moore and Kevin McKenna especially wrote articles that made the burd cheer.

And here in Scotland, does any of it matter?  As McKenna suggests, as long as the current state of things continue, “the SNP doesn’t need a strategy for independence“.

He is half right.

The do nothing and letting it all play out tactics seem attractive.  But like the chicklet, many of us were wondering what this week’s playground antics in Westminster were all about.  Some of us need it spelled out and reminded – regularly – that this is them, not us.  And that we can do something different if we take charge of our own affairs.

Which would require resolution of the tensions in a referendum strategy aiming to persuade the populace that independence means we won’t have to change much and can also keep our British culture.  It might also require setting out different how.  All of which requires another blogpost to explore.

 

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Political faultlines over Financial Transaction Tax

David Cameron appears to have forgotten the golden rule of modern politics.  We, the people, lead and they follow, in that public opinion helps makes politicians’ minds up when it comes to the big issues.

The Eurobarometer blogged on yesterday also asked EU and UK citizens for their views on the idea of a financial transaction tax.  In the UK, 53% of respondents were totally or somewhat in favour of such a tax, with 31% fairly or totally opposed.  This isn’t as high as for the EU as a whole, with over two thirds of respondents totally or somewhat in favour, but it is pretty clearcut.  Here, people want to see the banks get theirs.

This is borne out by the reasons why people support such a tax.  Nearly half of UK respondents reckon it will make financial players contribute to the cost of the crisis with a further quarter suggesting it will combat excessive speculation and help prevent future crises.

Yet, David Cameron – and the Tories at home and in Europe – think such a tax is “a bad idea”.  And they claim not to be playing a little Britain card:  their concern is because it would harm people all over Europe.  Kay Swinburne, the Conservative MEP for Wales, said: “It is no secret that the United Kingdom stands to lose the most from the imposition of such a tax.  But I am not here to argue against the FTT as a Brit, but as a European concerned about the welfare of our economy and the future wealth of Europe’s citizens”.

To which, the rejoinder “aye, right” seems most appropriate.  She also claims that the discussion around the tax has not been objective nor evidence-based, accusing EU politicians of not being honest about the harm such a tax would bring to Europe’s savers, financial stability and economy.

Yet, the Tories lost the argument as the European Parliament voted yesterday to support a report backing such a tax.  Indeed, the European Parliament went further, adding to a proposal made by the European Commission in 2011, to extend the tax to securities traded within the EU by financial institutions located outwith.  While the proposal does not say directly that proceeds from such a tax should be added to the EU budget, it does suggest that if this were to happen, member states’ contributions to the budget could be reduced, by up to 50% in such cases.  You’d think this might be up Cameron and the Conservatives’ street.

The rapporteur on the issue, Anni Podamata (Greek MEP, member of Socialist and Democrat Alliance in the Parliament, as are British Labour MEPs), sent a strong message to the naysayers after the vote.

With the EU having the largest financial market, it is up to us to make the first step.  We cannot be held hostage by a handful of Member States.”  She continued: “We should not be afraid of scaremongering by the most reckless of speculators…who say they will leave the continent if there is an FTT. It is time to call their bluff and if some choose to leave rather than change their business model that will also be a positive outcome.  Choosing to let the financial sector off the hook from sharing more of the pain of the crisis would be a decision defying all political logic.  We are elected to serve the 500 million citizens not a handful of traders and their hang-along lobbyists”.

When did you last hear such fired-up rhetoric on these shores huh? And yes, as a Greek representative, you can hear and feel her pain and it would seem as though faultlines are drawn clearly between left and right over the FTT.  Alas, not.

The situation is more complex, leading Scotland’s two Labour MEPs, David Martin and Catherine Stihler, to vote for the proposal while the rest of the Labour MEPs abstained and the SNP’s Ian Hudghton and Alyn Smith to vote against.

The Tories tried to have the proposal rejected outright – this the SNP MEPs (and presumably everyone else) voted against.  There then followed a series of amendments trying to remove the proposal that revenues go to Europe and assert the principle that taxation is for member states (something the SNP held to and was involved in).  These amendments were supported by an odd mix of SNP, Tory and Labour MEPs from the UK, with the Liberal Democrats voting against them, proving that the faultlines are far more fluid than we might think.

For many, including the SNP and most Labour MEPs, the failure to include pension funds within FTT jurisdiction was flawed, because it created exemption status for certain bodies rather than establishing a principle of taxation according to the nature of the transaction.  And as usual, politics got in the way:  because some MEPs were trying to use the FTT proposal as a kind of Trojan horse for the European Parliament to assume direct tax-raising powers, this created a vital fault line that many, including the SNP and most Labour MEPs, could not cross.  Yet, both parties are sympathetic and indeed, supportive of the idea of a global FTT.

Yet, the proposal had enough backing to be voted through.  So that’s that then, a financial transaction tax there will be?  Er, no.

The Council of Europe (where Ministers from member states come together) and the European Commission can just ignore the Parliament’s recommendation.  Even if both institutions did not, unanimous backing is required from the Council to get it through.  And as David Cameron has indicated, that ain’t going to be coming from the UK anytime soon.

A lot of fuss about nothing?  Actually no.

People everywhere want there to be some kind of tax on financial transactions, as well as a check and balance to prevent the kind of risk-taking fiscally irresponsible behaviour, that got us to the brink of Eurozone collapse with teetering national economies, austerity, joblessness and indebtedness.  Despite the misguided nature of parts of the European Parliament’s proposal, it – and the best efforts of most of its MEPs to improve that proposal – represented the democratic will of much of Europe’s citizenry.

The Tories stand almost alone in trying to thwart that.  Which begs the question – whose side are they on?

 

Taking the temperature: what the Eurobarometer tells us about attitudes to the economic crisis

Despite what the Daily Mail et al try to tell us, the European Parliament likes to keep in touch with public opinion across Europe.  It regularly commissions polls to test views on key, topical issues.  The latest is on the Crisis and Economic Governance;  the Parliament is nothing if not brave, asking citizens across the European Union in March for their views before the latest crisis hit us.  It doesn’t seem if any of the leaders read the findings, mind.

Handily, a breakdown of the findings of the UK sample (1,305 people) is provided, and even more handily, it compares what we had to say on issues with what the 26,593 folk across all EU states said.  There’s not nearly as much divergence as you might imagine, and where there is difference?  Interesting, I think is the correct phrase.

Respondents were asked about what we should do to get us out of this mess.  Slightly more UK citizens than EU ones (27% to 25%) reckon we should be investing in growth measures but considerably fewer in the UK think member states should first reduce their public spending than across the EU as a whole (17% in UK v 23% in EU).  Which suggests that we’re less austerity friendly than many member states currently worse off than we are.  About the same number – 44% UK 47% EU – think both should happen at the same time.

There’s also an age differential.  While over 55s in both UK and whole of EU largely agree on the need to invest to boost growth (44%), younger age-groups in the UK support the idea more than in all EU states.

The biggest difference is on whether to act in consort or go it alone in terms of protecting us from the current crisis, which seems to support our general ambivalence, if not antipathy to the concept of greater economic cohesion.  In the UK, less than a third of respondents thought we’d be better protected if measures were adopted and co-ordinated across all EU states to protect us, compared to over half of those in all EU member states.  And 62% of UK respondents thought we should apply such measures individually, compared to 38% of people surveyed across all Europe.

But attitudes also differ between citizens in Eurozone countries and those outside.  Only 43% in non Eurozone countries support co-ordinated application of protective measures, compared to 61% of those inside the zone, while just under a third inside the zone support separate measures compared to nearly half not in the single currency.

Another finding that might reinforce our assumed isolationist stance was on the proposal for member states to consult with EU institutions – the Parliament, the Commission and the Council of Europe – when drafting budgets.  While nearly two-thirds in all EU states were in favour (totally or somewhat) of doing this, less than half of UK participants were.  But still!  That’s a sizeable minority in favour of consulting across the EU in drawing up our spending and saving plans.  We’re perhaps less thirled to our economic sovereignty as politicians and media suggest.

In light of these results, you might think we might be more reluctant to bail out our fellow Europeans who get into fiscal bother.  Well, yes and no.

Respondents were asked if financial help to states in difficulty should be conditional on the enforcement of common rules on public debt and deficits.  While 62% were totally or somewhat in favour of applying such conditions in the UK, 80% across Europe were.  Both are commanding majorities in favour of acting tough, but we appear to be slightly more amenable to helping out the so-called PIIGS.  It’s a similar finding on the prospect of automatically applying financial penalties on defaulting nations – 57% in the UK support doing this compared to 72% across the whole of the EU.

Respondents were then asked about pooling debt and what impact this would have.  Again, what is surprising on such a supposedly controversial measure is the large degree of agreement between UK and all EU citizens.  In fact, the only real divergence was on the political impact of such a move, with far fewer UK respondents seeing it as necessary to show solidarity between member states.  You might suspect that we’d be more likely to see it as penalising member states not in trouble or benefiting only those in the worst difficulties, but actually as many respondents across all EU states agreed with these reasons.  In short, we’re not the only ones in Europe suspicious of EU wide measures to help those in trouble.  Comfort?  Perhaps, but pretty darn cold.

When asked to prioritise activity which could boost growth, what is interesting is the level of agreement between those polled in the UK and across all of Europe.  UK respondents were significantly more in favour of ideas like investing in education, training and research and in preventing early school leaving, while more in all EU member states favoured fighting against youth unemployment, reducing bureaucracy and encouraging entrepreneurship.  Which is astonishing really given the amount of political patronage to these ideas as ways of stimulating growth here in the UK.

So, having taken the temperature of European citizens on the economic crisis, what do we know?  That here in the UK, we are much more in tune with European sentiment generally – and all of us are in the mood to act tough on the defaulters.

What should worry the ConDems, though, is our favouring of growth as much as, if not more than, fellow Europeans and our willingness to consider pan-European action to resolve the mess we are in.  Neither policy finds favour with our current UK Government.  Which might explain – at least partly – why Labour is currently trouncing both parties in the polls.