Labour trying to have it both ways

Geoffrey Robinson in conversation with Sue Cameron and Lord Lawson on "The Week in Westminster" this morning said that the rise in borrowing showed that the coalition's plan was failing and the extra borrowing should be spent "on investment instead". He is either unwittingly or deliberately confused.

What Robinson (not to mention the succession of Labour speakers peddling the same basic line) failed to point out is that the continuing rise in public borrowing was built in to the coalition plan from the start. It results from not eliminating the budget deficit at a stroke. Even if the Conservative proposal (see their 2010 manifesto) to remove the bulk of the deficit by 2014 had been put into operation, debt would inevitably have accumulated until that point were reached. (There is a neat explanation of the relationship between debt and deficit here. It is a US site, but the principles are the same for all national treasuries.) All the government hopes to do is to slow the rate of increase.

Robinson should have given credit to Liberal Democrats in the coalition for their refusal to go along with the more draconian Conservative cuts. In fact, the coalition's deficit reduction programme is, give or take a billion pounds, of the same order as that planned by Labour's outgoing chancellor, Alistair Darling, and that in the Liberal Democrat manifesto.

The process has been dragged out even longer by the unexpectedly protracted eurozone situation. Labour was very quick to say "it wasn't me, guv", when the 2008 transatlantic credit drought struck. (Some of us, though, apportion part of the blame to Labour's failure to regulate the London end of financial institutions.)  It is therefore inconsistent for Labour to place all the blame for the drop in GDP over the last twelve months, common to most western nations, on the coalition.

But it was that word "instead" that particularly struck me. Most of the increase in the deficit, and therefore in the bulk of the extra borrowing, is caused by social spending. Does he advocate a further shift from benefits to pay for public construction schemes?

It is not as if the coalition had dragged its feet over infrastructure schemes, in the same way as Labour had. We in South Wales especially will benefit from the electrification of the Great Western main line, and there are similar examples in England.

Turning the oil-tanker round

At the end of his segment of the Radio 4 programme, Lord Lawson counselled patience. (It is not something I recall Nigel Lawson, chancellor, as being well-known for, but he has clearly matured.) It is going to take time for government plans to show results. Even so-called "shovel-ready" construction schemes take time to get going.

Impatience renders politicians susceptible to the blandishments of political Snake-oil salesmen. The Beecroft report raised its ugly head in Business Questions in the House last Thursday. It is disappointing, but understandable, that Jo Swinson in her first session as junior minister did not give a more robust answer to Sir Tony Baldry's question. Beecroft's most contentious proposal, to scrap the concept of unfair dismissal, would make little impact on the speed of the current recovery. What it would do, though, is aggravate the next recession as firms - large as well as small - would find it easier to sack workers.

A concern is that the up-turn coincides with one of these wild ideas (like the Welsh government tearing up environmental guidelines), thus giving unwarranted legitimacy to something which would otherwise be summarily thrown out.

Shop occupancy

Wrexham Plaid (complete with greengrocer's apostrophe) reports that shop occupancy in the town is up on 2009. Skewen's shopping street is noticeably more active than in the 2008 slump - I reckon that there are only one or two blank shop fronts. The MP representing Holmfirth claimed in the House of Commons this week that all the shops were fully occupied for the first time in years.

Steve Morgan, founder of Redrow, aims to take the house-builder private again because he believes the share price undervalues the company.

This confidence at the grass roots contradicts the pessimistic forecasts from on high.

Later: industrial output rose at its fastest rate for twenty-five years in July, making up for the fall in June and a touch more.

Rail fare increases

The Welsh Government has not yet announced the basis for future railway fare increases. I beg them not to use the Retail Prices Index (RPI) as England and Scotland have done, but instead the Consumer Prices Index. This would align the cost of travel with pensions and other benefits.

There is moreover a built-in escalator effect on the RPI. It is based in part on the Carli Index - see wikipedia for explanations of the various price indices. (The other component is Dutot, also explained in that wikipedia entry.) As the writer says, "the BBC Radio 4 programme 'More or Less' noted that the Carli index, used in part in the British Retail Price Index measure, has a built-in bias towards recording inflation even when, over successive periods there is no increase in prices overall."

First thoughts on reshuffle

A minister with South Wales roots and an English constituency has been replaced by a member with a North Wales constituency. The bad news is that a man has replaced one of the few women in the cabinet. Cameron has balanced this by promoting Theresa Villiers from a junior post in Transport to Northern Ireland.

Daran Hill of the Positif consultancy confirms my impression: "History will treat Cheryl Gillan kindly, both for her time as Secretary & Shadow Secretary of State. A decent, kind and effective politician. She has done much for Wales and for her party".

However, the side-lining of women betrays a bias on the part of both David Cameron and Nick Clegg, who, it should be remembered, had to be consulted over the changes in the coalition government.

Ms Villiers did seem to have been a supporter of rail transport. Justine Greening was also an opponent of  concreting over more of southern England. Owen Paterson, who moves to DEFRA from Northern Ireland, is reported to be keen on the Heathrow expansion.

Is Ken Clarke's move to Minister Without Portfolio a sop or will he have real power and thus act as a more business-friendly counter-balance to Osborne? If the latter, then there could be tension as when Harold Wilson set up the Department of Economic Affairs under George Brown.

The news from BBC News Channel has slowed to a trickle, so time to make a coffee and throw something in the oven for lunch.

[Later] It gets worse on the equalities front: see Caron's Musings.

County cricket fixtures

Glenn Moore in the Independent puts it very comprehensively. The seemingly random distribution in time of fixtures for the counties must put off the average cricket follower. Nor can it help cricketers keep themselves match-fit when there are gaps of a week or more between periods of hectic activity in matches of different formats.

The England and Wales Cricket Board is clearly taking seriously the fall-off in county match attendance. Earlier in the year they emailed known enthusiasts with a questionnaire on the subject. I have had my say and I hope there were many more respondents on the same lines.

The ECB may also care to look at the months during which cricket is played. Britain seems to be in a phase of hot dry springs and warm settled autumns with cooler, wetter summers. It would seem to be sensible to start the season a week or so earlier and allow time in September and October for replaying championship matches which have been rained off.

Mice keep their word, men break their promises

This is the counter-ethical world of Tim Yeo, who has called on the coalition to renege on its promise not to build a third runway at London Heathrow. (There is more in the Daily Telegraph.) Guido Fawkes here and here has drawn attention to the links between Yeo's public statements and his business interests. One wonders whether other proponents of London airport expansion (Grant Shapps,  Sajid Javid & Matthew Hancock, Alistair Darling and most of the last Labour cabinet) also have vested interests. Large construction companies contribute to the Conservative Party. Investment banks would make a turn on providing the capital funds, and we have seen how close leading Labour figures have been to bankers.

There has to be a very good reason for tearing up more of the British countryside, including at least one long-established village community. The current chant is that it would be good for business. But it would not address what has been the major obstacle to business for the last five years: the lack of investment. There is no point in increasing the landing slots in the London area if there is no increase in commerce or industry which could benefit from them.

Another argument is that Britain needs a hub airport on the lines of Paris Charles de Gaulle, Amsterdam  Schiphol and Frankfurt. One wonders how much the increased opportunity for changing planes has given to those cities. By that yardstick Clapham Junction should be the richest area of London and Crewe that of north-west England.

If it is essential for national pride to host the largest number of aircraft movements in Europe, it would make more sense to expand a British airport where there is room to do so with minimum impact on nearby towns and villages. Easy connection to major road and rail routes is clearly important (thus ruling out merging St Athan into Cardiff Airport ;-)). The obvious candidate is Birmingham.

Labour can't complain about borrowing figures

 UK public sector borrowing last month unexpectedly rose. Labour's Rachel Reeves blames the coalition's deficit reduction plan for the reverse, yet Labour's ripping wheeze for raising GDP implies more borrowing.

VAT and income tax seem to be coming in in line with the coalition's plans.The shortfall is largely due to poor corporation tax returns. Labour is silent on means for increasing the tax take from companies, but this is hardly surprising given their cosiness with large corporations during the Blair/Brown years.

I wonder whether something else is happening in big plcs. Corporation tax is due to fall to 23% in 2013/14. Could it be that expenditure is being brought forward while accounting for sales is being pushed back?

Steam Sundays up the Llynfi valley?

Gary Lewis writes from Maesteg:

 I noticed that there are no trains to Maesteg on a Sunday.
 
While some may see this as a failure, on the part of the rail operating companies, I see an opportunity.
 
At the beginning of the month I went along to the Dean Forest Railway, photos of which are on my facebook page. This track run by volunteers, contains some 2.5 miles of track, a number of coaches, a 0-6-0 BR Pannier, a 0-6-0 Saddle Loco, an old Diesel Multiple Unit, and other rolling stock.
 
Would anyone fancy the idea of having a "Steam Day" in the Llynfi Valley?? Huge amount of track, running from Platform 3, Bridgend Train Station through Tondu, all the way up to Maesteg... In addition, at Tondu, by the Signal Box is some more track, going down past Parc Slip all the way to Pyle.
 
What an opportunity to bring steam back into the valley for a few Sundays in the summer months.