Clegg, Cameron, And Europe: The Big Kerfuffle

What a kerfuffle, eh? The press do love a bit of a fight.

Most journalism is about disagreement, difference and dissent. It creates drama and drives a story. In general, in British politics, this means  the arguments between Labour and the Tories. Over the last decade or so, fleet street have enjoyed milking the Blair/Brown divide within the Labour party, which was always good for a headline or two.

However, nowadays at least, Labour has a problem making a case on issues like the NHS, the

Schengen Agreement

economy, and defence, no matter how right we might be. That’s because the media doesn’t want to write about Ed Balls’ disagreements with George Osborne, or Andy Burnham’s differences with Andrew Lansley.

That’s not where the money is. The money is in the slightest sign of a split within the coalition.

So it’s been a bit of a boon for the media in the last few days.

As I write, Cameron is making to the House of Commons on the European summit and what it means to Britain. Nick Clegg is nowhere to be seen and any number of jokes about ‘alarm clock Britain’ will be being penned up in the press gallery above the Speaker’s chair.

The reason that will be given for his absence will probably be some prior engagement that couldn’t be cancelled. But the truth is far more likely to be that if he turned up, he’d be jeered by the Tories behind him on the government benches.

This is all because of his strangely evolving reaction to Cameron’s announcement of the use of Britain’s veto at the EU summit.

As an aside, Cameron and the Tory party using the word veto is a bit of a misnomer. I’m not sure it means what the Prime Minister seems to think it does.

The dictionary defines veto as:

the power or right vested in one branch of a government to cancel or postpone the decisions, enactments, etc., of another branch, especially the right of a president, governor,or other chief executive to reject bills passed by the legislature.

I really do struggle to see what exactly has been cancelled or postponed other than Britain’s chance to influence the future of the European Union for the next few years.

And I’m pretty sure that Nick Clegg agreed with me. At least he did at some point over the weekend. On Friday morning, he was telling the press (sniffing for splits as usual) that Cameron’s manoeuvre was probably in the best interest of the nation. By Friday evening, he was frustrated with Cameron’s manoeuvre. On Saturday, he was telling Toby Helm that he was ‘furious’ with Cameron’s manoeuvre. On Sunday, he was unleashing this tirade on the morning politics shows about Cameron’s manoeuvre. By Monday afternoon, he’s gone into hiding otherwise engaged.

It’s all a bit unwise from Clegg, really. Creating splits in the coalition, which in theory could lead to a general election, when you’re in single digits in the national polls is not a clever thing to do! His invisibility today combined with Danny Alexander and David Laws both backtracking on national television to try to paper over any splits that may have appeared, like the tenants of a slowly subsiding terraced house.

The LibDem leadership obviously feel they’ve made an error in creating the sign of disagreement. But I think their mistake is not to have disagreed in the first place. Clegg has committed that most grievous of politicians’ sins. He’s flip-flopped. First supporting, then disagreeing and now rowing back faster than an Oxford coxed eight. Clegg is left losing his rag over a decision that has broad popular support with the public, rightly or wrongly.

The Tory European actions are all very short-termist in their thinking, or at least I think they are. Losing influence across an entire continent to keep influence with 305 parliamentary colleagues, strikes me as pissing off the teachers so the kids in class will like you.

You have to wonder just when David Cameron decided to use his ‘veto’ given that he’d already planned in advance to be dining with Euro-sceptic backbenchers that same evening, despite talks still going on in France.

You could also say the same about Clegg’s anger as well, of course. Did he betray his true feelings on Friday morning and then try to keep the UK’s hand in the game with the EU by letting them know some in Government are pro-Europe? Was Nick attempting diplomatic relations there? Or was he just being stupidly naïve?

Update: Clegg’s office have apparently not gone with the prior engagement argument. They’re just saying he’s not attending the PM’s statement because “he doesn’t want to be a distraction”. If we can’t see him in the chamber, we’ll apparently forget all about any disagreement, difference and dissent.

A Belated Posting

Moving house, a bout of flu – actual flu, not the man-flu variety – lack of wi-fi, a family funeral, a busy couple of weeks at work, and a hectic number of after-work engagements as we approach the Christmas holidays.

Those are the reasons I’ve not written a blog post for a month or so. I apologise, but I’m sure you – Dear Reader – have been just as busy as I have, and I bet you’ve as many blogs in your reading list too, so I doubt I’ve been missed too much!

A bit of time away from the blog has given me time to think about things I want to write about a bit too. Writing a political blog while working in Westminster tends to make me feel like I need to write about things as they happen like some lobby journalist on a deadline.

Take the Autumn Statement given by George Osborne. It was delivered on the afternoon of November 29th. If I’d been firing on all cylinders, I’d have written and published a response by the evening of November 29th. It would probably

English: George Osborne MP, pictured speaking ...
George Osborne

have been an interesting read with at least a half-decent cursory opinion on why Osborne and his statement were a bit poor.

Now, I’ve had time to read the statement in more depth, I’ve had time to study the impact, and I’ve seen the later debates in Parliament. Including the one a couple of evenings ago where Labour won their first vote for some time. I say Labour won, but I think it’s probably more accurate to say the Government lost it. Very poor management from the coalition whips meant that hardly any government MPs were there to follow the line and head through the lobbies. I rather suspect there was a severe bollocking for whoever was on whips duty for the government benches that night.

Any way, back to the Autumn Statement. It’s very clear that Osbornomics just hasn’t worked. People up and down the nation have felt the pain of George and Dave’s plan for months now, but Osborne finally admitted that his economic manoeuvring had essentially failed.

That would be fine if it was as simple as just saying ‘hey ho, plan A didn’t work, let’s have a bash at something else chaps’. But it isn’t that simple. There is a cost to economic failure. They originally came to power saying that the harsh cuts were necessary to make sure the structural deficit was slashed by the end of the current parliament in 2015. In this statement, Osborne told us the deficit wouldn’t be gone until 2017. In fact, he went on to tell us that rather than carefully managing borrowing, government would borrow £158 billion more than they had planned 12 months ago.

Even the IMF have now announced that, if the economy continues to stagnate and underperform against forecasts, Osborne should do what Labour has said all along and slow down the cuts. Of course, George is so arrogant that he’s just going to carry on regardless. More and more he reminds me of the captain of the Titanic, heading inevitably toward the icebergs with no sign of slowing down.

Tonight, Cameron is at yet another European summit to discuss the failure of the Eurozone. No doubt Osborne will add this issue to the list of other excuses for British economic failure. We’ve had snow, weddings, and probably leaves on the line. And of course the Euro has an impact on our country, but that doesn’t explain why the UK has slower growth than 23 of the 27 countries of the European Union in the last year.

The OBR forecasts growth in the Eurozone at 1.6%, while it forecasts the UK’s at 0.9% over the same period. You have to wonder, given those numbers, how Osborne can logically blame the Euro crisis for his own failings.

Just to drive my point home, here are some other OBR numbers for you:

Slower growth this year, next year and every year up to 2014

OBR’s forecasts for GDP growth (%)

 

2011

2012

2013

2014

2015

June 2010 (pre-Budget)

2.6

2.8

2.8

2.6

n/a

June 2010 Budget

2.3

2.8

2.9

2.7

2.7

November 2010

2.1

2.6

2.9

2.8

2.7

March 2010 Budget

1.7

2.5

2.9

2.9

2.8

November 2011

0.9

0.7

2.1

2.7

3

Change since Mar 2010

-0.8

-1.8

-0.8

-0.2

+0.2

 

Higher unemployment next year and every year up to 2015

OBR’s forecasts for ILO unemployment (% rate)

 

2011

2012

2013

2014

2015

June 2010 (pre-Budget)

7.9

7.4

6.8

6.3

n/a

June 2010 Budget

8.0

7.6

7.0

6.5

6.1

November 2010

8.0

7.7

7.2

6.7

6.1

March 2010 Budget

8.2

8.1

7.6

7.0

6.4

November 2011

8.1

8.7

8.6

8.0

7.2

Change since Mar 2010

-0.1

0.6

1

1

0.7

 

£158 billion more borrowing than planned a year ago

OBR’s forecasts for public sector net borrowing (£bn)

 

2011/12

2012/13

2013/14

2014/15

2015/16

June 2010 (pre-Budget)

127

106

85

71

n/a

June 2010 Budget

116

89

60

37

20

November 2010

117

91

60

35

18

March 2010 Budget

122

101

70

46

29

November 2011

127

120

100

79

53

Change since Nov 2010

+10

+29

+40

+44

+35

More Carrot, Less Stick

 

I’m not entirely comfortable with the big beasts’ handling of the Eurozone crisis

Coat of arms of Greece since 7 June 1975.

in Athens.

According to Greek Prime Minister (at the time of writing, at least!), Angela Merkel and Nicolas Sarkozy joined forces to tell Papandreou that if Greece fail to accept the bailout, then they’ll be out of the EU for the next 10 years.

Now, I’m not sure whether Germany and France are even capable of making that happen. This point that there’s no provision for withdrawing from the Eurozone without leaving the European Union may be true in theory, but in practise there are plenty of countries in the European Union who aren’t part of the Eurozone, including this green and pleasant land in which I write.

The other problem I have isn’t just to do with the facts of how the mechanics of the Eurozone work, but also with the politics of the handling of Greece and the Greek people.

One of the few comparable situations where a European country was forced into an austerity programme was Germany in 1919.

In the aftermath of the Great War, the German government was forced to sign the Treaty of Versailles which meant making reparation to the other European nations to the value of £325billion at today’s value.

The cover of a publication of the Treaty of Ve...

The German people were hugely against the austerity measures being forced on them by the rest of Europe and, consequently, hugely against their government for agreeing to it in the first place. Sounds reasonably familiar doesn’t it?

The Weimar republic began a slow and very messy collapse over the next few years with the economic situation in the country giving an opening to a right-wing Chancellor in January 1933. I don’t think I need to write about what happened next. If you don’t know, you probably should be reading something other than my little blog. Seriously, go buy some history books.

It’s very dangerous to push a nation and its populace beyond their limits. The stick is fine to a point, but there needs to be a lot more carrot offered to Athens. Papandreou will probably go and Greece will have to make some hard choices. And, like 1919, they’ll be choices that will affect the continent for many years to come.

Eurozone: Return Of The Visigoths

Reading the newspapers this morning, you might get the impression that the European monetary crisis had somehow been resolved by the standard overnight marathon meeting of the Union’s financial ministers.

You might get the impression the banks are all safe.

European Union

You might get the impression Greece’s debt has been massively reduced.

You might get the impression Italy is no longer about to implode.

You’d be wrong.

The Euro has been given a reprieve of, perhaps, a month but that’s about it. Greece will eventually default on its loans, and Rome will burn like the Visigoths have returned before long.

If I had a mortgage of £100,000 and only offered to pay my bank back £50,000 of it, my bank would declare that I’d defaulted and would take back my (extraordinarily cheap) house. But because Europe asked the banks to do the same thing for Greece, this isn’t according the EU at least, a default. It’s just a mere ‘haircut’. Oh how I loathe that term.

If I went for a haircut and the barber removed half the hair on my head, I’d be more than slightly annoyed at him. Even describing it as a ‘severe haircut’ doesn’t do that justice.

Anyway, to get out of the barber’s chair and back to the fiscal meltdown, European finance ministers are desperate to avoid a Greek default, even if that means completely redefining your definition of the term. That’s because lots of people have taken out insurance against such a default in the form of credit default swaps.

A technical default would mean the financial institutions holding those credit default swaps would have to pay them out. That doesn’t sound so terrible until you realise that there’s no single database of who has sold credit default swaps and who’s bought them. So no analysts can tell you just how big a payout a default would cause.

So a default would cost the financial institutions and European governments a fortune in money loaned to Greece that will never be repaid. But they could also lose a second fortune in paying out on credit default swaps.

Bad times for Europe and yet more overnight marathon meetings await George Osborne, David Cameron and their counterparts on the mainland.

Cameron’s Euro-Headache

Sometimes in life, it’s nice to know that some things just don’t change. I know, for instance, that

DAVOS/SWITZERLAND, 29JAN10 - David Cameron, Le...

there’s always a bed for me at my mum’s house. I know that if I pick up the phone to a few old friends, they’ll drop what they’re doing and lend a hand just as I would for them. I know that I’ll always be moved walking into St James’ Park to see my football team play. And I know, without a shadow of a doubt, that the Tories will fall apart over Europe.

It’s been a while. Cameron has done well with his husky-hugging and hoody-riding. His tilting at windmills on his Notting Hill rooftop. His cycling to work while the chauffeur brought his suit and briefcase in the car. Not a hint of Europe in any of that. But that was opposition. Opposition’s easy.

Now, Cameron has been in government for over a year. His dragging of the Tory party to the political centre-ground is beginning to annoy the right-wing of his party. And now that one of their standard-bearers in the cabinet has fallen on a Werritty-shaped sword, the natives of the backbenches are getting restless.

So now, despite the massive issues and problems that Parliament should be looking at – the stagnant economy, the rising unemployment, the cost-of-living shooting up – what it’s actually going to be debating is a ridiculous bill on Britain’s membership of the European Union. John Major must feel for David Cameron. A bit. I imagine there are nights when brave sir John wakes up in a cold sweat the word ‘Maastricht’ ringing in his ears.

Cameron is learning just what it is to deal with a eurosceptic backbench muttering ‘rebellion’ in the corridors of Westminster. Number 10’s threat that it would sack any junior members of government who failed to follow the Party’s 3-line whip seems to have had little effect with around one hundred Tories now ready to rebel and some PPS’s and junior ministers threatening to resign. They seem to have had enough of toeing Cameron’s line and are giving him a shot across the bows (I had to get a naval metaphor in on Trafalgar Day!).

One worrying thing for Team Cameron – at least it should be worrying them – is just how early into a five-year Parliament this is happening and just how many of the rebels are from the 2010 intake. Historically rebellions tend to be led by the old guard while the new members maintain fierce loyalty to their leaders as they seek to climb the ladder.

Of course, part of the problem is of Cameron’s own making. This all started with a motion tabled in the Backbench Business Committee, which is there to give backbenchers a bigger voice. The sensible thing to do would be to have allowed the motion to be debated on a Thursday afternoon or even a Friday and then pack it with amendments and kick the resulting decisions into the long grass.

Number 10, in all it’s wisdom, decided to bring the vote forward to Monday. The idea I think being that this would give less time for the Eurosceptics to organise their vote and lobby more members. The problem with that is that those same sceptics were lobbying colleagues before the motion was even tabled. Quiet backroom discussions have gone on a while fortifying the oncoming rebellion.

And now the Tory whips are out twisting arms like limp-wristed four-year-olds for all the good it’s doing. Even the Prime Minister is to be found spending time in his Commons office, a place he rarely darkens with his presence in a normal week.

Constituency for the European Parliament elect...

The fact this motion is being put before Parliament at all shows just how little regard most Tory MPs have for the people of Britain. This is all about internal Party politics and ideology and almost nothing to do with the good of the nation.

Britain’s withdrawal from Europe would be highly likely to cause huge problems in – and a potential collapse of – the Eurozone. While that might sound good to the right-wingers driving this through Parliament, failure in Europe would mean failure of the member states with which we do a huge amount of trade. And that would soon send economic waves across the English Channel and North Sea and find them lapping on the shores of the UK economy.

Economic waves on the shores of the UK economy are the last thing the country needs as we stagnate under Osborne’s management. People who have a reasonable wage coming in are worried about being able to afford their weekly shop, worried about putting their heating on, worried about paying their mortgages. A government which dives headlong into an argument about Europe at a time like this, is a government that will alienate the electorate who want to see growth, housing, and healthcare as the focus of Cameron and his colleagues.

Not that the motion will pass, but the very raising of it will become a problem for Cameron. The party, already suffering from scandals of Fox, Letwin, Coulson, will now have a split over Europe lurking just under the surface of everything they do.

The Lib Dems will not join a rebellion and it looks likely that Labour will also vote with Cameron to defeat this motion. The Lib Dem vote will give the Tory right motive to increase the ferocity of their attacks on Clegg’s party.  The Labour vote will kill any referendum off but it will drive the anti-European Tory voters further into the arms of UKIP, aiding Labour and making Cameron’s life that bit more difficult.

Whether the motion passes or fails, Cameron will have headaches from this. And those are the sort of complications he could live without.

The Teetering Eurozone

I wrote yesterday of the impending bailout of Ireland by the EU, and some of the implications. Since inception of the Euro, in 2000, we have had a relatively smooth ride in an economic boom-time. All the member countries have enjoyed the increasing strength of being tied to one monetary standard and all has been well. Unless you lived in the UK and wanted to book a cheap holiday in Ibiza or Crete, in which case you got stung by price increases everywhere.

Ten years later and the boom-time is over. We’re well and truly in the bust part of the cycle which Gordon Brown famously pronounced was no more. And we can now see that, as soon as we hit our first economic problem, the single currency starts to teeter as the smaller members struggle and Germany gets tired of propping up other members. As soon as a crisis occurs, Eurozone member-states return to being individual nation-states out for themselves and their citizens.

Because of this, and because the economic reality is that the member-states were all at different stages of the economic cycle when they joined the Euro and all have different economic theories driving their governments, we shouldn’t be surprised if this is the beginning of the end for the European single currency. It won’t collapse now. The EU will prop it up, but that won’t solve the problems in Ireland, Greece, and Portugal. It will just put them off to a later date. Probably the first quarter of 2011.

I am, broadly speaking, pro-European but it seems to me that this crisis in the Euro is a symptom of the fact that the EU is beginning to look anachronistic in the 21st Century. The European politicians who adamantly insist that the EU can act as one – like some sort of United States of Europe – when in fact it can’t. The differences between the economies of Germany or France and Ireland or Portugal can’t sit within one common economic policy while at the same time maintaining sovereignty over tax rates and adhering to no regulation.

The European Central Bank (based in Frankfurt) is now preparing to bail out Ireland as well as Greece, and will no doubt be closely monitoring Portugal, Spain, and even Italy. It will be thinking the same as me. That to make a single currency work, there must be a single central control of tax and spending. Economically, that makes perfect sense. But politically, German control of the economies of other countries in Europe will not be stood for. That is an unchangeable reality.

Given that reality, it is only a matter of time before the German people and leadership – already voicing concern – decide that money being raised by their economic engine would be better spent in Germany and not in Ireland, Greece, or anywhere else. When that happens, the Euro collapses and so does the UK’s trade with Europe.

Maybe David Cameron should head back to Beijing or Delhi and continue strengthening those Asian trade links.

Cameron’s Coming Headache

Nigel Farage.
Image via Wikipedia

While we political geeks interested observers were watching Woolas, Cameron’s vanity staff, and the other comings and goings of the last week, another headache – and potentially a big one – for the Prime Minister reared it’s head and created barely a flicker of attention. Team Cameron no doubt noticed it but chose not to draw attention to it.

What? No! Of course I’m not talking about the final of Masterchef Professional. Clearly, you have an odd idea of what is politically important. I talk of the lurking danger for the Tories that is the United Kingdom Independence Party, better known as UKIP, or “those idiots over there” that all the other activists point and laugh at. I realise you’re now thinking Rob’s losing the plot a bit. But I’m not. Seriously. I’m really not!

Cameron’s inner circle have always had a wary eye on UKIP because they know that if UKIP pick up popular support and begin to gain momentum, then it will affect the Tories more than anyone else. Don’t get me wrong, Dear Reader, I don’t believe UKIP are about to steal a load of Parliamentary seats. But what they are capable of doing is taking just enough votes to split the naturally-Tory vote and to stop Cameron winning seats they normally would. It would only take a small percentage to choose UKIP to cost the Conservatives a seat to Labour or the Lib Dems.

Of course, not every UKIP voter would have voted Tory, but when you look at UKIP’s manifesto you’d have to say it’d be a safe bet that many of them would be. UKIP polled ahead of the Tories in 21 seats in May, and remember UKIP was led by a man, in Lord Pearson, who admits to not being cut out for the job. Despite poor leadership and bad presentation, UKIP still increased it’s share of the vote by 50% on the previous general election with 900,000+ votes.

And now, Dear Reader, we come to the aforementioned major headache for Cameron. Nigel Farage is back as the leader of UKIP. And Farage knows how to lead a campaign and how to present himself and his party to the media and the electorate.

Farage, whatever you think of his politics and his policy, is a very clever reader of the public mood and is aiming to direct the anti-political establishment feeling created in the wake of the expenses scandal, and turn it  into votes for UKIP. Just this last week he’s been telling anyone who’ll listen that UKIP is the British Tea Party to pick up the popular support for such a movement in the right-of-centre.

At the next general election, David Cameron wants desperately to win an overall majority. He wants to govern on his own terms, but it looks highly unlikely that he will increase his majority after failing to make any impact in parts of the country despite pumping millions of pounds into them. That means that every seat Dave already holds is vital and he can’t afford to allow UKIP to make inroads into any of them.

And now that Cameron’s Eurosceptic days are well behind him, he can expect Farage to increase his allegations of Cameron letting down the british people in Europe. UKIP under Farage will spend every working day goading Tories about coalition policy on Europe, which some Tory backbenchers are already grumbling about. Those backbenchers will be forced by UKIP into demonstrating their Eurosceptic credentials by putting pressure on Cameron and the frontbench on any European issue in Parliament.

I guarantee we’ll be seeing more difficult questions being asked of Cameron, and Cameron is going to find it difficult to fend off attacks from UKIP and his own party’s right-wing backbenches. His juggling to keep the coalition together mean the Prime Minister can’t suddenly go back to his Eurosceptic stance and he has nowhere left to go.

In fact, between now and 2015,  Cameron is going to find it increasingly difficult to please his pro-Europe coalition partners and fight off the Eurosceptic attacks that will come his way at the same time. Cameron has trapped himself and Farage won’t let that opportunity pass him by.

That is Cameron’s coming headache and it’s a big one.