Phew! Returning from the Conservative Party conference and watching Theresa May’s speech at my desk, with my heart in my mouth, it is now over: positive, optimistic, serious and well delivered. Supporters can now relax!

I didn’t agree with some of the content, particularly on Brexit, but there was some good stuff on domestic policy and it has bought the PM a little more time with the Party faithful. My, does she need it.

And what of her opponents? I am relieved to say that Boris Johnson blew it. His speech yesterday was obviously box office in a dull conference but many of the same people applauding him were back today applauding Theresa May. It was witty in part but long on objectives and short on solutions. It was like musical theatre; nice on the ear, entertaining, but with no definable substance. The growing irritation with Johnson from his parliamentary colleagues is what really matters and the recent photograph of him running through a field of wheat in parody of the PM to many was the final straw…

Nobody really wants the PM’s job before next March (except the former Foreign Secretary) and my betting is that she has another year or two. There is a strong consensus that Theresa May is a real trouper and deserves to be supported now but shouldn’t be allowed to lead the Tories into another General Election. That would still give her 4/5 years as PM and a chance to deliver Brexit. There are worse premierships.

Lastly, a few additional insights from Conference:

• Graham Brady, Chairman of the 1922 Committee, which decides the leadership rules for leader, confirmed in conversation, that some MPs claiming to have submitted a no confidence letter to him on Theresa May have actually done no such thing!
• The PM understands that a fudge to get Brexit over the line on March 29th with the real decisions being taken in the transition period is untenable. The uncertainty and damage to the economy would be too great.
• A no-deal has really serious implications for supply chains and ministers say quietly there is no exaggeration in some of the dire predictions if talks break down. It drives the desire for a deal even if it requires further (limited) compromises.
• Should there be a leadership election, in reality Boris is almost certainly a busted flush with his parliamentary colleagues. The next leader will come from centrists in the Cabinet; Sajid Javid, Jeremy Hunt (although his speech comparing the EU to the Soviet Union was poorly received) and possibly David Davis as a stop gap from outside the cabinet.

There you go. Theresa May survives and ends the conference a little bit stronger. Only a Brexit deal to deliver in a matter of a few weeks!

 

‘Oh Jeremy Corbyn’ has spoken and it doesn’t sound good for those of us who believe in free markets. Fluent for him, with some witty lines, he took apart capitalism at his Party Conference claiming our economic system is broken.

Indeed, there was a flurry of economic initiatives throughout Labour’s time in Liverpool and, uncomfortably, it reminded me of the 2017 General Election campaign. However impractical, sharply defined policies sounding superficially good were showcased, making the Tories, drowning in Brexit, appear flat footed. Umm…Ground Hog Day…

And those policy initiatives will resonate with many of the electorate. Taxes on the rich, massive increases in public spending, hundreds of thousands of ‘green’ jobs, extended childcare, workers on boards, wholesale nationalisation of utilities and a scheme to hand out 10% of the shares of big companies to workers. These policies could really fly and a Labour Government is not nearly as improbable as it should sound. The only firewall is a few DUP MPs keeping the Tories afloat. It all feels a bit precarious.

Of course the shear incompetence of the Labour front bench, the fact that nationalisation doesn’t work despite the failings of some privatisation structures, massive debts which will ultimately be paid for by the ordinary public, all mean many of these policies would be disastrous.

The first problem of course is that many voters don’t remember the chaos of a left-wing Labour Government. The second problem is more intractable; capitalism globally has failed in several respects over the past decade and is losing popular support.

A brilliant article by Martin Wolf in Wednesday’s FT summed it all up incisively. Inequality is rising across the West, driven by quantitative easing and inflated asset prices. Austerity is being borne by the poorest, global corporations avoid tax due to tax structures rarely crossing borders and excessive market liberalism, which caused the 2008 financial crash in the first place, has fuelled migration causing enormous tensions and the rise of populism.

Capitalism should be reformed and in the UK I would rather that was undertaken by the Right rather than the likes of Corbyn.

So what needs to change? As Wolf says, those who govern us should ‘promote a little less liberalism, show a little more respect for the ties binding citizens to one another and pay more tax’. Only in this way can we keep politics close to the centre ground and protect the social liberalism and democratic values that we take for granted.

There needs to be negotiations on comprehensive global tax structures. At home, subsidies favouring the rich such as higher rate tax relief on pension contributions need to end.  The obsession of cutting corporation tax has also run out of control. Planned further cuts should be frozen and companies also need to reform excessive remuneration structures. It is perfectly fair to reconsider reforming NI contributions for the self-employed too so that they are treated equally with other workers. Then there has to be comprehensive social care reform and a commitment to infrastructure spending in the North.

As for immigration pressures, they should be managed but the solution is not Brexit. It is at least a pan-European issue and we are walking away from the table at the very moment our influence is needed.

If there is any bandwidth outside the Tories’ obsession with Brexit, they need a radical agenda to reform capitalism that most of us can buy into. Otherwise Corbyn will do it for them and not in a good way.

 

 

I am a Remainer. Always have been, always will be. But even I felt the urge to shout f**k off at the TV as I watched Donald Tusk give his statement that the Chequers solution for the UK’s departure had been wholly rejected by EU leaders at their summit in Salzburg. The language was blunt, Theresa May ambushed and dismissed. The attitude had arrogance written all over it.

The problem with those EU leaders driving an ever closer union is that they are out of touch with their electorates and certainly the Commission is out of touch with almost everyone. It has fuelled populism and provided an easy target for those advocating Brexit.

In treating Theresa May so badly, they continue to be blind to the consequences of their actions. It may fuel a rise in support for Brexit, and I suspect a rise in support for Theresa ‘the battler’ May. She came out fighting today and pictures of her isolated at the summit in a striking red jacket facing a gang of mostly white, bullying European male leaders will resonate with all sections of the British electorate. A People’s Vote should no longer be seen as a route back to EU membership. Well done Merkel and Macron…not.

However, the UK has always underestimated the strength of commitment of Germany and France to the EU as a political project. Our negotiators in advocating a Chequers solution which threatened this have made the same mistake again. A deal will probably still be done but don’t bank on it. Theresa May politically can’t budge from where she is and has thrown down the gauntlet to the EU. The EU will find it difficult to backtrack from here. There is either some brilliant acting going on or a ‘no deal’ is now a real possibility. Oh dear.

The obvious solution to this impasse is to join the European Free Trade Association a la Norway (see an earlier blog). This could be sold as stage 1 of a decisive break from the EU with an extended transition period leading to further escape routes from the EU’s embrace. Sounds like Michael Gove? Umm…what is this disastrous process turning us into…

The problem with this solution is that it crosses Theresa May’s foolish red lines and she would have to go. A General Election? Corbyn? None of these options are palatable to the Tories so for the time being we stay as we are. A ‘no deal’ is possible with really serious consequence for the EU as well as the UK and all because arrogant European leaders in Salzburg overplayed their hand.

It started with the collapse of Lehman and nearly finished with the end of capitalism as we know it. At the time it seemed every bank was about to go under and Alistair Darling, then the UK’s Chancellor of the Exchequer, made the staggering claim that we were 24 hours away from cash points running out of money to dispense.

Governments responded correctly in the end (even if they failed to regulate in advance) by pumping massive liquidity into the system to prop up the banks and keep the financial system afloat. Subsequent bureaucratic, but necessary, regulation followed; separating retail and investment banking, cleaning up balance sheets and raising capital ratios to name but a few initiatives.

So where are we now? Partly in a good place. The future of the global financial system has been secured (until the next time), asset prices have risen, steady global economic growth has been achieved and unemployment cut.

However, there are worrying consequences too and further lessons to be learnt. First, those consequences…

The massive quantitative easing (central banks buying bonds) has to be unwound and some estimates suggest the sums involved are in excess of $20 trillion. It has gone on too long with record low interest rates over a prolonged period causing pain for savers and worrying asset price bubbles. If a crisis were to occur tomorrow, a no-deal Brexit for example, there is no further fire power in central banks’ arsenal until policies are reversed.

Government debt has also soared, causing austerity measures that have acerbated the divide between rich and poor. All this sowing the seeds of the populist surge in politics we are seeing now.

The unfortunate consequences point to lessons still to be learnt. If capitalism is to succeed it needs to retain consensual support and that means implementing firm measures to encourage long termism in our financial system.

Disparity of wealth within companies needs to be tackled too. Executive pay amongst FTSE 100 CEO’s, for example, went up 11% last year to £3.93m whilst that of full-time workers rose 2%. The mean pay-out ratio between FTSE 100 bosses and their workers has been on a steadily rising trend, up from 128:1 to 145:1 in 2016/17 alone. Such inequality and the feelings of injustice that accompany them, have arguably led to Trump, Brexit and other challenging populist political consequences, all of which can be traced back to the events of 2008.

Here in the UK, policies across all arms of government are under review but so too is corporate governance, with a view to correcting key elements of short-termism and fairness in society. There is a massive opportunity for the City to play its activist part on a host of issues from executive pay to diversity issues and broader ESG initiatives, let alone helping to solve a growing savings and retirement crisis. No wonder the financial services industry is in the spotlight. How great it would be, Brexit allowing, if it takes the lead in learning the lessons of 2008..?

The clouds of global politics just seem to get darker. The partly understandable but appalling drift to populism across continents continues relentlessly.

Trump lashes out as he is trashed anonymously by a senior White House adviser who outlines the sheer awfulness of his presidency. We are protected apparently only by the actions of White House staffers who, with ‘quiet resistance’,  work around the president’s ‘amorality’. Yet his popularity amongst core supporters remains undiminished.

In Europe, the Far Right advance with riots in the German town of Chemnitz. They are present in the anarchy of Italian politics and are predicted to make major gains even in traditionally liberal Sweden. They run or part run governments in Poland, Hungary and Austria.

In the UK, Putin continues his thuggery with the now proven attempted assignation of Russian nationals by his gangster State, killing a vulnerable British woman in the process.

And there is Brexit… Here we are, watching with growing incredulity, contingency planning for the stockpiling of medicines and food in the event of a no-deal EU exit, advocated by many in the Tory Party. The only opposition to the government’s reckless actions is the Labour Party, hopelessly mired in self-inflicted anti-Semitism and hard left ideological disputes.

Wow. Not even a week has gone by since the summer break!

But no further comment on all this for now…. There is little new to say until further events unfold.

So let’s focus on an immensely solid and heart warming silver lining that has gone fairly unnoticed.

India’s Supreme Court has just ruled that a colonial-era law criminalising homosexual sex is unconstitutional. This is a huge victory for the LGBT community who have battled to have this law overturned for 20 plus years. It also unanimously confirmed that India’s LGBT community has a fundamental right to equality, dignity, self-expression and privacy. Even Modi’s conservative inclined government chose to sit on the side-lines as the rulings were announced, leaving it to the ‘court’s wisdom’. This in the knowledge that popular opinion was supportive of the judgements.

So a nation with a population of 1.4 billion, almost certain to be a future super power, takes a great step forward in embracing equality and social liberalism. There are silver linings and this is a major one. Worth celebrating amongst the gloom.

 

Operating in a political bubble, MPs battle between themselves on the issues of the day. Social conservatives versus liberals, those tough on immigration versus those taking a more pragmatic approach. Ideologues versus pragmatists. Career politicians ruling the roost.

Such is the vehemence of the battle, they are prepared to oust their leader at the drop of a hat. No loyalty to the PM despite a constant placation of conservative critics. Just constant plotting. Even successful economic policies, which used to be the key to political longevity, mean nothing.

Such is the behaviour of the Conservative Party in the UK.

And then you have Australian politics…

Even more brutal than Westminster, MPs have ousted 4 PMs in 8 years, with no PM fulfilling a full three year term since 2007.

This time the centrist, liberal (with a small ‘l’) Malcolm Turnbull is replaced by Scott Morrison, a social conservative who opposed the same sex marriage bill. Ruthless on immigration, he will try and shore up the Government’s Liberal led coalition. Nobody asked for this new agenda except some pretty bitter, unpleasant back benchers.

And what is the cost of all these machinations? Vital legislation on energy use, including a much needed emissions trading scheme, has been ditched. This occurring even as Australia experiences its worst drought ever as climate change takes hold. Important policies on corporate tax and public spending have also gone nowhere.

But the real damage is to the esteem in which politicians are held by the voting public. They watch with disgust as they see games being played at the expense of solid policy achievements. The walls of the political bubble just get thicker, fuelling frustration and the rise of populism.

This is what is happening in Australia. This is what is happening in Westminster.

In the UK, the Tories scrap over Brexit, with ministers forced to make incredible statements on potential food and medicine shortages in a ‘no-deal’ scenario. The economy remains strong but is increasingly being weakened by uncertainty. Vital social care legislation, infrastructure investment and a raft of other key policies are on hold as Brexit takes up all the policy bandwidth. The sop of a further £20 billion of unfunded expenditure on the NHS barely registers through lack of credibility.

The PM is constantly harried by a bunch of disloyal MPs. Placating the conservatives with red meat has them just wanting more. The Opposition is useless and the public look on incredulous. Democratic structures increasingly lack appeal. The threat of populism is ever present.

In the UK, we should learn from ‘Down Under’, and head in the opposite direction.

 

Just a thought as I was travelling through Northern Italy and Southern France… Both countries have stunning second/third cities. Italy has Milan and Florence, France, Lyon and Bordeaux. Spain also has Barcelona. Of course they have their problems, but they are grand cities with significant investment and land mark buildings. They are tourist centres in their own right outside their capital cities, making bold gestures from food and wine to the arts and architecture. All supported by relatively smooth infrastructure.

In the UK, we have Manchester and Birmingham and the beautiful but small Edinburgh if you reach up as far as Scotland.

Is that enough? Not quite, even though I come from the North West.

What becomes apparent as you discuss the UK on the continent, outside confusion over the self-harm of Brexit, is the dominance of London. Many Europeans simply don’t know what lies beyond or if they do, don’t see the regions competing on any even footing with London. Few non-UK tourists reach for a guide book on Manchester and Birmingham I suspect, or even know about the beautiful countryside of places such as the Lake District. Stratford-upon-Avon, Bath and Oxford and Cambridge may just occasionally creep into their consciousness.

This must change, particularly as we have to forge a sharper identity outside the European Union. Real investment in the Midlands/North with some grand architectural gestures and new arts and food initiatives is crucial to balancing the image of Britain.

That means investment. HS2 is a good thing, although the cost of travelling by public transport is not. The Northern Powerhouse attracting investment to the North is crucial too but seems to be losing headway under Theresa May and Brexit chaos. We need brave gestures to further renovate our grand provincial city centres. Michael Heseltine, as Environment Secretary under Thatcher, did this brilliantly in Liverpool (but further to go….) and we need a similar champion now. Even London could do with more effort. Why couldn’t we achieve consensus over the garden bridge and where are the plans for cross-rail two?

The UK needs to be bold as it works out a future outside Europe, not mean-spirited and penny pinching. The Government should invest but so should business along the lines of the huge sponsorship initiatives beloved by the Americans. It is time to shake up Provincial Britain to challenge anywhere the continent has to offer.

These are just first gentle ideas on my return from holiday, with Boris Johnson barely registering….

Putting all that unused preparation for Sky News into delivering the penultimate blog before the summer holidays, here are a few thoughts about the direction of Brexit politics over the coming months. After months of vague speculation, individuals and businesses should now be taking greater note of unfolding events as an unthinkable no deal scenario and the fall of the Government seem an increasing possibility:

• As Philip Johnston wrote in Wednesday’s Telegraph, Theresa May’s biggest mistake was articulating her red-lines which prohibited any flexibility on free movement of people and the jurisdiction of the ECJ. We could have been part of the European Free Trade Association a la Norway. This would have encompassed leaving the EU, we could have negotiated some freedom from the Schengen Agreement and at least taken control of our fisheries and agricultural policies. It would also have taken us out of the customs union allowing us to negotiate our own trade agreements. It could have been sold as a significant break from Europe and we could be home and dry by now. Hey ho. The damage of the ideologues has been done.
• We are now in a position where there is no Commons majority for Theresa May’s Chequers agreement and we haven’t even had the EU’s formal response yet. If she moves one way or the other to gain agreement, opponents are ready to pounce and unprincipled Labour will not come to her rescue. Why should they?
• The battle will come to a head in October when a final agreement on departure from the EU has to be discussed at a EU summit on 18th. There is a fall back summit on 13 December if there is still no agreement but things will be pretty desperate by then. A no deal scenario becomes more likely.
• What of Theresa May? She is safe until the Autumn (nobody wants her miserable job now) but if we are in a no deal scenario, she will be vulnerable to a desire for a new approach, from a new leader.
• If the Tories switch leader, with Theresa May departing unwillingly, there will almost certainly be a blood bath and a subsequent General Election. The EU would be forced to extend the transition period.
• A General Election just might well facilitate, through a party’s manifesto, a second referendum along the lines of Justine Greening’s proposal; preference voting on a new deal, a no deal or stay within the EU.

So the odds:

• TM as PM until the Autumn, assuming she wants it, 100%
• TM as PM beyond that to March 2019 70%
• TM as PM post March 2019 50%
• A GE in the next 12 months 40%
• A Labour Government (depending on the scale of bloodletting in the Tory Party) 40%
• A no deal scenario 20%
• A second referendum 30%
• Further damage to the UK’s international standing, its economy, to public life in general 100%.

Time for us all to go on holiday….

Appearing on Adam Boulton’s Sky News All Out Politics show this Wednesday (18th) reviewing the papers. The agenda could be anybody’s guess with the current pace of politics… Tune in! #alloutpolitics #insiderightpolitics

Don’t we love him…Rude, ignorant and brash but what a headline grabber! Insulting your host whilst being wined and dined is quite something. Wandering into Brexit without reading Theresa May’s proposals, praising Boris Johnson and looking forward to a meeting with the vile Putin more than one with his allies, has all been the roller coaster ride we expected.

But when we look back on this period of Trump, almost certainly likely to be 8 years as the Democrats drift to the Left and the US economy roars, it may well be with a degree of nostalgia. Trump is an economic nationalist but he has no process, no coherent philosophy and rarely prepares. He will not make the most of his time in office in terms of changing the world. His ability to shock will diminish and complacent liberal democrats will see him as a one off.

But we should be worried. Because what comes after Trump may be much worse. Read and watch the Steve Bannons of this world. Nationalist, isolationist, attacking even modest political correctness and increasingly organised, they are incubating a hatred of liberal democracy. They loathe those governments perceived to be ‘debasing citizenship’ and central banks that debase currencies. They advocate economic wars and work up many of the average voters with extreme and threatening language.

And the trend, as they say, is their friend. The AfD is flourishing in Germany, as is the far-right in Austria. Radical nationalists are making in-roads into Italian politics whilst populists seize the agenda across Eastern Europe. We have Putin and Brexit. In no particular order one could go on.

Economic nationalism is here to stay as the world order of global cooperation weakens. Liberal democrats seem unable or unwilling to oppose effectively, complacent as they are or simply bogged down with the frustrating minutiae of decent government.

Imagine if a successor to Trump had a plan, a philosophy to unite the forces of nationalist populism without caring about casualties along the way. Smart, organised and with clear convictions, such a leader could make a huge impact.

Many people believe the state of international politics is now direr than it has been for decades. But it could get worse. This may seem bleak but a more coherent, coordinated version of Trump could devastate liberal democracy for a generation.

In this context, an opposing, coordinated force of ‘muscular moderatism’ has never been more needed.