I don't understand.

There are two imponderables in the current General Election campaign that are difficult to fathom.

The first is that the SNP are are miles ahead in Scotland and steaming to victory.  The second is that the Conservatives are not miles ahead in the polls in the rest of the UK and steaming to victory.  Neither makes sense.

Gerald Warner remarked recently: “Scottish nationalism is no longer a constitutional agenda: it has been transmogrified into a spiritual cult, an esoteric experience that elevates devotees far above sublunary considerations such as gross domestic product, public sector borrowing requirement or revenue inflow. Its dwindling essays into policy making are now a form of transcendental meditation.”  I know it feels like that when aggressive Nats dominate Hustings. But I’m not so sure I’d give it cult status. 

But economic of the madhouse status seems entirely reasonable.  SNP’s fiscal autonomy would leave £9bn gap in Scotland's finances, says IFS, not known for their exaggeration of anything.  And that’s a big hole that has to be filled by someone somewhere.  That a gap that would only be closed if growth in Scotland were to be double that predicted for the UK as a whole.  And that’s going to happen?  Aye right.   The answer by those who don’t understand the basis of how businesses work is always the same.  The taxpayer either in the form of people or businesses.  They just don’t get it.  Taking money away from the productive sector to pay for the unproductive only ever has one out come.  Failure. And greater poverty for the people who are the poorest.

The IFS observation note also suggests that Scottish revenues per person would need to grow by more than twice as much as forecast for the UK as a whole – 4.5% in real terms per year – by 2020 in order to offset the gap.  Ouch, as the taxpayers will be saying.

I’m not partial to quoting Scottish Labour as their handling of the economy under the last Labour administration didn’t exactly go well.  But Scottish Labour’s deputy leader, Kezia Dugdale, did have a point when she said the latest projections by IFS were proof of her party’s argument that the SNP manifesto “signed up to massive spending cuts that would make even the Tories blush”. 

So why are SNP sailing so high in the polls when, by any reasonable analysis, their figures just don’t add up?

And so what of the Conservatives?  Why are they not miles ahead?  Unemployment down.  Employment up.  Growth (in spite of the blip today) running at 2.5%, miles ahead of the G8 countries.  Crime down.  If the voters are asked who would make the better leader in a dangerous world, David Cameron wins easily.  If they are asked which party would be better for their families’ prosperity, the Tories have a comfortable lead.  So why are the Tories not ten points ahead?

We have but a week and 2 days left to ponder these questions.

Bit awkward these pesky IFS people

Sometimes you really have to wonder about the First Minister of Scotland.  In one breath she says  Sir John Major's warning about the threat the SNP could pose to the UK is an "affront to democracy".  The next minute the SNP leader refused to rule out staging a second independence vote after the 2016 Holyrood elections, surely an affront to democracy given its only 8 months since the people of Scotland, in a once in a generation vote as Nicola helpfully told us, decided very clearly that they want to stay part of the UK, warts and all.

All there would need to be is a "change of circumstances" (as she sees it) to justify another referendum, such as the Tories' proposed referendum on EU membership.

On one hand the former Prime Minister is simply plying political cut and thrust.  That’s the rough and tumble of an election.  On the other hand Nicola Sturgeon is saying that the democratic will of the people of Scotland expressed last year actually means nothing.  In the vote 8 months ago, very clearly, the people of Scotland said they wanted to stay within the UK.  What bit of “we want to stay part of the UK” does the First Minister not get? 

So the people of Scotland, having decided the UK was the place for them, will now be ignored by the SNP.  This idea the SNP are putting forward that there will have been a change of circumstance is too ridiculous for words.  The people voted to be part of the UK.  It had been made perfectly clear long before the in-out referendum on Scotland staying in the UK that the Conservatives would offer an in out referendum on the UK staying in Europe. So there really are no changed circumstances at all.  The people knew that could be a consequence and still voted to stay in the UK.

Perhaps referenda are just there for the things Nicola wants to vote on and not the things the whole of the UK which we elected to stay part of want.

Or were her words today less than subtly trying to wrestle the agenda back from the rather unfortunate report by the Institute for Fiscal Studies (IFS) that the SNP plans to move to full fiscal autonomy for Scotland over a number of years would not address the "fiscal gap", with projections suggesting it would increase rather than shrink over the next few years.  Bit awkward that when trying to show you are fiscally literate.

So tonight’s doorstep question.  “If you believe in referenda and respecting the will of the people, why not one on Europe?”.  After all it is certainly a couple of generations since we last had a chance to vote on Europe.

Madness vs Austerity

Definition of Madness.

Spending what you don’t have.  Borrowing what you can’t afford.

Definition of Austerity.

Not spending what you don’t have.  Not borrowing what you can’t afford.

£1,873

Here are some facts.  Always a good place to start.  Last year, the UK government spent £90bn more than it received in tax.  That left a budget deficit worth 5% of national income.  It’s a fact that the economy is growing.  It’s a fact that more people are employed and unemployment is falling.  So far, so good.

But let’s now we move to the assumptions, not facts.  If the economy is growing there is an assumption that tax revenues should increase and welfare payments will come down.  This assumption continues to suggest some of the deficit will be whittled away naturally.  But perceived wisdom of experts in the City, academia, the Office for Budget Responsibility and the Institute for Fiscal Studies (IFS) suggest that part of it will remain.

So if no one is quite sure how big the residual deficit will be, how reasonable is it that your assumptions are good enough to help formulate a coherent economic policy?  Reading today's SNP Manifesto there seems to be a great deal of assumption in its calculations.  But what if the SNP gets it wrong?   Can the assumption made by the SNP, where it hopes that more of the deficit can be tackled through the stronger growth that will result from abandoning spending cuts, really stand up?  It's a really fragile assumption that deserves a great deal of scrutiny.  What if it doesn’t happen that way?  

It’s a massive risk changing path given the Conservative Lib Dem route has at least started to get the economy back on some sort of sensible road.

As Larry Elliot economics editor at the Guardian points out, there are a lot more if’s and but's than the SNP care to admit.  First, the economy will have to grow faster than most analysts are expecting for the next five years and do so without creating inflationary pressure. That’s a very big if.

And second, the Bank of England and the financial markets will have to be relaxed about the abandonment of austerity.  (For whatever austerity actually means, see earlier blogs.)   If they take fright, interest rates will go up and any positive impact on growth from saying no to further spending cuts will be offset by the negative impact of higher borrowing costs.

And that could leave us where?  A perfect storm.  Quite possibly in a worse place than we were when Liam Byrnes’ infamous note was left on the incoming Chief Secretary to the Treasuries desk.  And we will be continue paying out of tax payers pockets the interest payments.  That accounts to £45bn a year or 3% of GDP.  Or putting it another way, every household will pay £1,873 this year, just to cover this interest.  I’m not sure I read in the SNP manifesto any real logic to back their assumptions they can deal with this drain on people pockets.  And every pound the people have taken out their pocket, there is one less pound people can spend in the productive sector that funds all the spending desires of political parties.

So I guess a question to ask any candidate who happens on your doorstep tonight could be, “why do you think that taking £1,873 out of my families pocket this year that I could have spent on helping create employment in businesses and shops will help the economy?”.

I went to listen

I love the cut and thrust of political debate.  It is good when people get passionate about what they believe.  But when that spills over into a shouting match it begins to lose its gloss.  And so it was last night as I sat in a Hustings in East Dunbartonshire.  The candidates all tuned up (except UKIP:  I think he lives in Ipswich) to debate the issues of the day. 

What didn’t surprise was there were clearly people there as supporters who were not floating voters like many of us there to be persuaded by the candidates, surely the purpose of a Hustings.   Each party had supporters who toed their own political line.  All parties do that. And good luck to them.  

I like it when people debate polices hard.  When there is constructive interaction between the platform and the floor.   But I thoroughly dislike it when some of the audience who are there, not to learn but to give vocal support to “their” candidate, get in the way of those wanting to listen to the answers.   It spilled over into a bit of a barracking match with SNP supporters basically shouting throughout the answers of other candidates.  It’s as if they don’t want others to hear what is being said.  (Just pause and think that one through in an historical context for a moment).  It was certainly a misguided tactic from the floating voters point of view.  The SNP supporters were, putting it politely, boorish.  And didn’t do their cause any good from where I was sitting.

One of the stupidest comments of the evening was made about the Lib Dem candidate giving up some points in their manifesto to make a coalition.  Er, that’s what you do in a coalition; you give and take so that you can move forward constructively.  Yes, even sacred cows can and do go.  But in doing so they seek to do so for the good of the whole country.  And let’s not forget the disastrous state the country was being left in.  Who can forget the infamous note left by Liam Byrne.   Clearly the SNP supporters in the room thought collation is all about taking and not giving.  Mr Miliband is in for a very rude awakening should he find himself leader of the largest party but without a majority.

And so it was that I left with the rather vacuous feeling that this hadn’t been about democracy.  It had been about a small minority mob rubbishing everything the candidates they didn’t like said.  Like Chelsea footballers surrounding the referee when the give a ruling they don’t like.  It was unpleasant.

Take back the NHS means what exactly?

Today the Green Party of England and Wales is launching its election manifesto with a call to "take back" the NHS from the private sector. 

In terms of meaningless statements I’m not sure I can think of many better.  

Let’s just think what the NHS is.  It has only one role.  And that is to provide a free at the point of delivery healthcare service to the nation.  No party I’m aware is advocating anything different. 

It employs people to deliver services, that’s true.  But here is where it begins to unravel very quickly.  Is Natalie saying everyone who delivers a service for the NHS should be employed by the NHS?  Is she saying every service provided by the NHS should be State owned?  Is she saying that the NHS should only use equipment that is made by the State?  You can see very quickly how ridiculous such a statement is.  This really is not the progressive politics that she claims it is.  It’s regressive.  It’s old eastern bloc thinking of yesteryear.

So in her model of utopia I guess she will have to start with employing all the GPs in the country as currently they are all independent businesses that deliver services on behalf of the NHS.  So they will have to buy out every GP practice including in many cases their premises.  Though one wouldn’t wish to hold their breath on them paying compensation.  That car crash of an interview with Nick Ferrari a few weeks back had Natalie having a cough at the critical time when she was being asked how she could justify such a low cost in building new houses when the land had to be bought.  Was it a strategic cough there to hide the reality of the Greens?  They would simply nationalise the land, the State taking away without compensation what was not theirs.

Then there are the businesses who build hospitals.  I don’t think I can name a hospital that was built by the public sector.  And there is all the goods and services that are used.  The beds, the monitors, the sheets on the beds, the drugs, the syringes, the clothes the nurses wear.  You see where this is going.  The NHS can’t exist without what the private sector provides.   In addition, ask yourself, “who funds every single nurse working in the NHS?”.  The private sector.   

The Greens want to go to a model where the State runs, the State provides.  And as we all know only too well, that brings mediocrity at every level.   The olden days we called it Communism.  Today we call it Green politics.

So when a Green candidate pops on to your doorstep, ask them, what exactly do they mean when they say they will take back the NHS. 

Why do businesses pay dividends?

I don’t know about you but I kind of hope that the people who serve our nation as Prime Minister and Chancellor know what they are doing.  So like many I have read with interest what Labour had to say today as they launched their Manifesto.  All gloss.  All nice words.  All seemingly so easy to achieve.  But achieve what?  That's where the clarity breaks down.  That’s where the problems start. 

Paul Johnson, director of the Institute for Fiscal Studies said of the Labour manifesto: “Literally we would not know what we were voting for if we were going to vote for Labour”. 

 

In a way I’m not surprised that the august IFS have come to such a conclusion.  There is a theme of economic illiteracy flowing though Labours core.  Labour really don’t understand how the economy works. They showed that with devastating results under the last administration.  Nor do they understand how businesses work.  And it is businesses that will fund government expenditure either directly though taxes or indirectly through the taxes their employees pay.  

We all know that Ed Miliband is not that sympathetic to the private sector.  But then he has never worked in the private sector, never had to understand what running a business is all about.  One head of a FTSE 100 company was recently given “facetime” with Miliband.  The business leader was reportedly stunned into silence when Ed asked him “Why exactly do you need to pay your shareholders dividends?” 

Now, this was the man who, along with Ed Balls who aspires to be Chancellor, played a big part in crashing our economy when they were last in power.  Borrowed what we couldn’t afford.  Spent what we didn’t have.  And with recent comments like those to the head of a FTSE 100 company, leaves you really wondering if their arithmetic adds up. 

So, should a candidate chance on your doorstep tonight, ask them if they know why companies pay shareholders a dividend.  If they don’t know, don’t let their party anywhere near No 11 Downing St.

Is Nicola extracting the Michael?

There was a bit of pot calling the kettle black on the second the leaders debate in Scotland.  As David Coburn (UKIP) was explaining why, as he saw it, the problem was….    And before he got a chance to utter it, Nicola Sturgeon said “Europe”, they (UKIP) always blame Europe.  Which I did have a wry smile at given everything ever to go wrong in Scotland is always someone else’s fault, never the fault of Nicola and her SNP government even when it’s a devolved issue like the NHS.  London always gets the blame.

During the course of that debate Nicola said, when it comes to having a 2nd referendum, the people of a Scotland will decide.  Well, perhaps like so many other things, Nicola is trying to air brush inconvenient truths out of the SNPs recent past.  For example, the people of Scotland gave a pretty emphatic decision when given the chance to not be part of the UK.  They said No.  That sounds a pretty clear decision by the peoples of Scotland to me. 

She lost the once in a generation chance to convince us to leave the UK.  So she can’t now say, “Scotland didn't vote for the government in power”, as she seems to be hinting will be her rhetoric in the future, if a democratically elected UK government, which had as part of it's manifesto, offered an in out referendum on the UKs continued involvement in the EU.   What part of the emphatic yes to staying within the UK doesn't she understand the people of Scotland gave last year?

You know, they may be politically miles apart but there are increasing similarities between the first minister and former prime minister Margaret Thatcher in her last year in power.

Increasingly shrill.  Increasingly myopic.  Increasingly intolerant.  And increasingly extreme.  The difference is Margaret Thatcher won three democratic general elections.  Nicola so far has won nothing.

Who actually pays for things governments decide are good for us?

Patrick Harvey, leader of the Greens in Scotland and Nicola Sturgeon Leader of SNP were in action last night on the BBC Leaders debate from Aberdeen.  It was difficult to put the ubiquitous fag paper between them when it came to tax and spend.  So, in the spirit of free thinking, here is a little exercise to consider.

There are two people.  One works for the private sector.  The other works for the public sector.  Both get paid £100.  And both are taxed at 30%.  Which one is more vital to the economy?

Now I know it’s a bit of a false question.  But I ask it because I met one of these public sector workers the other week.  A responsible position.  Managing seriously big budgets. And the conversation turned to civil service salaries and who funds them.  "We all pay taxes”, was the reply. "But who made up the 70% of your salary that your own taxes don't pay for?", I asked.  It seemed a logical question given an individual public sector worker can’t fund their own salary through their own taxes. So where will that money come from?  It has to come from somewhere.

What surprised me was that this individual had no understanding that this was the reality.  Their whole career in the public sector had them simply dealing with budgets, very big ones in this persons case.

Now don’t get me wrong.  We need people in what economists would call the non-productive sector.  Being non productive doesn't mean you don't do anything.  It simply means that in economic terms a nurse will never pay herself out of her own taxes. 

So where will that 70% of money come from to fund the nurse?  Only one place.  The private sector.

So, yes, we all pay taxes.  But it is the taxes of the private sector that fund the activities of the public sector.  And that’s good.  But let’s not forget who lays the golden egg.

So every time a politician argues that we need to add 1% more in public expenditure, ask them where it’s going to come from.  If they say "borrowing", ask them how we can borrow our way out of debt.  If they say "taxation", ask them why they think it’s a good thing to tax more the people who are creating the recovery, the private sector.  And given businesses will then have less money available to spend, ask them where they think these companies will find the money to invest in growth of their businesses.

He said what?

I’m into quotes this morning.  So, who said this yesterday?

“Remember the relief we felt when Scotland voted no.  Why was that?  Because towards the end, having paid only intermittent attention to the enormity of the decision, we awoke to it and realised – I think with shock – how close we had come to relegating ourselves from the Premier League of nations.  Now think if the vote had gone the other way.  It doesn’t bear thinking of.  It would be exactly the same with a vote on Europe.  We’re frankly not much focused on it now.  But that is the same semi-conscious torpor that almost led us to disaster in keeping the UK together.”

Basically Tony Blair is saying the people are stupid.  Don’t give them the chance to vote for something you don’t agree with.  After all, you can’t risk the people getting it wrong by giving them the chance.  It is only a frighteningly small step to “they will vote wrong in the next general election so let’s not give them the chance.  Let’s cancel the election”.  Don’t laugh. It’s been the excuse by the political elite in many a country who are out of touch with the people who put them there in the first place.

Morning after the night before

North of the Border we had a four way debate between the main party leaders last night.  Fresh from her elevation in the UK media to being winner of the UK debate, would Nicola Sturgeon win again?  Well, it certainly wasn’t last weeks result.  As I think we all thought, once on home soil, when she can be challenged on her record in Scotland by people who know, wheels can start to come off.  And they did.  But more of that another time.

What was also interesting to see was Jim Murphy under the cosh.  Being derided for repeatedly mansplaining Ruth Davidson and Nicola Sturgeon and coming fourth with the Sun’s Twitter worm I don’t think Jim will be too comfortable this morning

But it was also the moment the Scottish Tory leader pummelled her Labour counterpart on the economy:

RD:  “There’s a massive difference between you and me.  You crashed the economy and I’m trying to rebuild the economy.  That’s the difference between you and me, Jim.  You’ve run from your role in the referendum and I’m proud of my role in the referendum.  That’s another difference between you and me, Jim.”

JM:  “…The growth big growth in the last few years hasn’t been in industries, it’s been in foodbanks.”

RD:  “The big growth in the last few years has been in jobs, you had higher unemployment…”

JM:  “…There are people out there tonight sitting over their phones who have got zero hours contracts…”

RD:  “And 68 of your MP colleagues employ people on zero hours contracts.  Have you ever worked on a zero hour contract?  Have you ever worked on one?  I have.”

Ouch!

Where is your vote going?

Here is an interesting little exercise.  Click the link and go through it and then leave the options open for all Parties at the end.  See who you align with.  It may surprise you.  It did me!