So Trump has spoken and his State of the Union Address wasn’t too bad. In fact it was quite good. Moderate in parts and optimistic in tone, his firm and sometimes dark beliefs were cloaked in unifying words. He stuck to his teleprompter and it worked. The immediate opinion polls were positive. The BBC called him the pugilist President. He would be pleased with that…

We await his next tweet barrage with glee but what if it doesn’t come? What if Trump  acquires a taste for broader popularity?

Let’s look at his record to date and then his speech. After a terrible start with too many mistakes to mention and wild invective, a powering economy and stock market with a record tax cut (the disastrous consequences will take time to arrive) are providing a major boost. It is the economy stupid even if Barack Obama should take the real credit for its current performance.

In his speech he boasted of record low African American unemployment, wants a deal for Dreamers (children of illegal immigrants) but not all family members and is tough on terrorism, drugs and gangs. Keeping Guantanamo open is hardly a vote loser and even the nonsensical Mexican wall which will now be paid for by the US (almost certainly courtesy of the Democrats…) keeps his core base happy. His commitment to infrastructure strikes a chord too.

The Democrats’ response? Churlishly sitting on their hands at too many points of his speech, hand wringing over immigration, not seeing that the game has changed… just look at Brexit and Europe as a whole driven to a frenzy by too much immigration. They could only find a Kennedy to respond averagely. Talk about back to the future…

The Democrats still don’t understand why Trump won the election and still have nothing to say to his core base. Egged on by a largely liberal media, they are too shrill and partisan in their opposition. Torn between the Left and centrists, they have no new alternative agenda and no leading light yet to seize a new presidential mantle. The Democrats should treat Trump more cleverly, embracing some of his more palatable initiatives. Hug your enemy close. If he blows up as they are so certain he will, then they will look magnanimous in victory.

Many issues may (hopefully) derail Trump but if he gets remotely clever, he will have the current Democratic opposition on the ropes. Those November midterm elections seem along way a way…

 

You couldn’t write the script. A bunch of fabulously wealthy elites arriving by private jet to a luxury mountain resort to discuss…the inequities of capitalism…To add insult to injury, Donald Trump is wrapping up the session. Pandering to his POTUS role, they seem to have developed amnesia towards his recent tax bill which slashes corporation tax, rewards the individually better off and inflates the deficit leaving less money to help ease what…oh yes, the inequities of capitalism…

Most sensible people know free markets work and the State should be a facilitator and only a part contributor, aiming to provide equality of opportunity and protecting those who simply can’t manage on their own.

But to limit the role of the State, the rules of economic engagement must be applied equally and they are not currently. The richer you are, the more you can avoid paying tax (global corporations for example, well represented at Davos…). Add to that executive greed, frequently found in privatised industries, exposure to rising property prices and stock markets, all under the scrutiny of social media, and you have a toxic mix that allows the rich to get richer, in full visibility of the ordinary voter.

Making capitalism work fairly involves corporations paying fair taxes globally; executive remuneration based on long term incentives for wealth creation, and the State not over-promising in its role as facilitator and contributor to investment whether it be infrastructure, health care, education, to name but a few services.

The solutions lie partly in active corporate governance. Owners of our pension funds for example need to act in a wider capacity than simply short term gain because in the longer run, it benefits us all. Privatised industries need their monopolies breaking up. Public services under strain also don’t need the exaggerated claims of competing political visions but genuine reform driven by cross-party consensus. There is always a role for government but just think, for example, how valuable free markets are in the area of the environment, where competing firms are driving hugely beneficial technological developments.

When we talk about capitalism and free markets, we really mean a mixed economy. If the tilt is to be away from an ever growing State, the Davos crowd need to step up to the plate and make a few expensive sacrifices. If there is acknowledgement that this is necessary, then through the snow blizzards, you might just see evidence that the system is working…

This has not been a good week for the private sector generally and the role of privatisation in particular. Carillion was apparently a disaster waiting to happen. Its collapse has left a range of public services and smaller company suppliers under threat. Then the Secretary of State for Transport has rescued train operators from East Coast rail franchise terms they willingly signed up to. The political fallout provides further support to the depressing narrative from Corbyn and his team that only state control of public services works.

Can you really imagine the inept Labour frontbench grabbing power over a range of privatised companies and running services better? The collapse of Carillion at least goes to show that civil servants and ministers simply don’t have the skills to oversee complex companies let alone run their services from scratch.

There is a further, long-term narrative from all this however. How far is the private sector and free markets as they stand, serving the wider interests of society? Theresa May once had ambitions to make the governance of companies work better for all stakeholders. Damn Brexit burning up band-width and a barely workable majority put paid to this. A real shame as it could have been her legacy initiative.

Asset managers in alliance with asset owners are at least putting their shoulder to the wheel on companies they invest in, in relation to Environmental, Social and Governance (‘ESG’) issues but is it time to be more radical? Should there be greater, even compulsory, intervention in executive pay deals that are grotesque in size and short-term in nature? Remuneration must be aligned to the long term interests of all stakeholders. Should there be more scrutiny of excessive dividend payments which detract from long term investment? This is often a downside of quoted companies. What is wrong with having employee representation on company boards? It works fine in Germany. Is it time for the Government to wield its influence with golden shares in companies that provide key public services? That’s how many privatisations started.

There is a comprehensive debate to be had. But, in the meantime, what is clear is that there should be at least more business and procurement skills within the civil service. Markets and the way they allocate capital must also work better for all stakeholders (including the tax payer) and shorter term greed and rewarded incompetence must not be allowed to outweigh the manifest benefits of private sector competition. If that takes bolder corporate governance legislation from a Conservative administration then so be it.

If the Conservatives don’t act, Corbyn will, and the results will be very messy indeed for all concerned, not least the consumers of public services.

Oh dear. The best that could be said about the last two days is that reshuffles don’t really matter. Most names are unheard of by the public and it is the longer term, overall perception of Prime Ministerial/Government competence and key policies that matter.

Umm…this week does not contribute to the perception of a Prime Minister in command. At the very least, like a lot of her predecessors, she needs better HR advice/procedures!

How could the mistake be made about Chris Grayling, Chairman of the Party for 27 seconds…? Why wasn’t the disappointing departure of Justine Greening foreseen? Why was Jeremy Hunt’s rumoured promotion allowed to gain legs? Surely it was also obvious he wouldn’t want to be pushed sideways in the middle of an NHS crisis. Why has the awful Andrea Leadsom been allowed to stay on? The list of gripes is endless. Reshuffles are much harder to execute than it seems from the outside but this one involved a series of unforced errors exacerbated by an unpleasant and inaccurate advance rumour mill.

At Cabinet level, there has been a revolving door of Justice, Education, DWP ministers to name but a few. No wonder there is a belief that the Civil Service really runs government.

The good news is that there is a talented cadre of up-and-coming ministers seen on the second day of the reshuffle. If only the public knew some of them, they would realise there is far more depth to the Conservative Party than simply visible around the Cabinet table. Theresa May staying on is good news if it means the next leader comes from this generation.

Lastly, insiderightpolitics (that is me…), will be in the audience (sadly not on the panel…) of this week’s Question Time cheering Gina Miller and booing Piers Morgan. Tune in!

 

2018 will not be a vintage year politically. In particular, here in the UK, it will be a depressing slog through Brexit with badly needed political initiatives in other areas such as social care making little progress. The reshuffle won’t change much in the shorter term (more on that another time) and Theresa May’s imminent pronouncements on a series of domestic policies are awaited with less than feverish excitement…

Elsewhere, intractable problems accompanied by erratic political leaders, will hardly inspire confidence although it is a golden time for satirists. Two positives, however, stand out: reasonable global economic growth subject to a geo-political crisis and Macron.

So in more detail, what can we expect? Emboldened by the predictive failures of the ‘experienced commentariat’ here are a few ‘insiderightpolitical’ predictions for this year:

• There will be no General Election in the UK. Theresa May’s sheer perseverance and fears of a Labour victory will keep Tory MPs onside.  In fact Theresa May herself will go on well into 2019 and perhaps beyond, buoyed by a lack of alternatives and the determination to resurrect her reputation from the calamitous 2017 election.
• However, the Tories electoral position will gradually deteriorate unless there is a radical over-haul of its organisation and policy offering. A lamentable political membership base with unpopularity building in areas such as the NHS will be corrosive and take time to fix. Local election results will be poor and London a disaster. Only the extremism of Corbyn and his allies combined with their sheer incompetence on Brexit alone currently stand between the Tories and the political Armageddon many people think they deserve.
• The Liberal Democrats will go nowhere. With such definitive issues to tackle this is no time for wishy-washy hand wringing even if ultimate solutions have to come from the centre ground of politics at some stage.
• Elsewhere, despite the chaos reigning in the White House, the midterm elections whilst poor will be better than expected for the McDonald’s munching Trump. The Democrats, badly led, and offering no clear alternative, will not make the progress hoped for. There is still a real chance of an 8 year Trump presidency. Scary…
• Merkel will go. Her authority is starting to drain away as coalition talks fail to make progress. She has simply made too many major mistakes (Brexit, asylum seekers) and her competent but bland consensus style of politics will not save her.
• Macron will shine. Despite missteps through hubris, he is gradually making progress. Confident in what he wants to achieve, he will be an increasingly influential leader in Europe and beyond – a model for the next generation of politicians in western democracies.
• The global economy will continue to prosper, increasingly divorced from the actions of clowning political leaders. Business matters more and only a war in Korea or a significant Middle East crisis will change this outlook.
• Lastly, watch Iran. By far the most interesting country in terms of potential if demonstrations lead to any real, positive change.

So there you go.  If much of it feels same old, same old…then take comfort from the fact these predictions may well be wrong. For the last time in 2018: Happy New Year…

Since 1947 the City of Oslo has sent us a Christmas tree in gratitude for our support in the Second World War. We really appreciate the gesture….but…the tree tends to be tall and thin, decorated in energy efficient white lights. It sits in Trafalgar Square, worthy but dull. It is time for a change!

We need more glamour in London. Returning from outsized New York, eyes still dazzled by the Rockefeller Centre Christmas Tree (capitals essential!), it is time for more colour, brighter lights and, yes, if you insist, a bit more Camp at Christmas. Things are getting better but it would be great to see huge decorations adorning London’s walls, a Trafalgar Square tree which is bushy, humorous in the sheer audacity of its decorations with lights everywhere. Who cares, let’s go over the top!

And whilst we are at it, why can’t we have a Garden Bridge in London too, paid for by private funds. It would be a ‘statement’ (and we need a few of those in a post-Brexit world…), competing with the undoubted success of the High Line in New York. Oh, and glass pyramids a la the Louvre, and an amazing new concert hall showcasing radical architectural ideas.

Austerity Britain is making us all weary. London is a dynamic, exciting city. Let’s take a few risks, ditch the moaning Minnies and make it a bit more fabulous too. Manchester, Birmingham etc. you can follow or take the lead. If Britain is to be a Little Island, we should be as lit up as possible.

Merry Christmas!

 

There are a lot of gloomy people out there. Brexit and Trump have ‘triumphed’, the far right and far left in western democratic societies have all gathered more support than feels comfortable (Corbyn, Sanders, Le Pen, the AfD to name but a few) and ‘elites’, whatever this title means, are despised. Nationalism is on the increase and King Canute-like, key economies are trying to turn their back on globalism. The world feels a much less safe place nowadays.

Why are we at this point? For decades in western democracies politicians have over-promised and under-delivered, telling the electorate what they want to hear and racking up deficits in their attempt to deliver. At the same time, post the 2008 crash, the rich seem to have got richer with cuts disproportionately impacting the less well-off. The long term benefits of globalisation for many have been out-weighed by shorter term pain.

What is the solution? Well, first, things are only going to get worse before they get better. The anger with the establishment is not going to abate soon. Trump is still absurdly popular amongst his core base (don’t be reassured by the Democrat win in Alabama); Brexit is happening (regardless of MPs now having the final say on terms) and deficits mean there will be no helping the relatively less well off soon. Corbyn looks alarmingly electable in the UK whilst extremists in continental Europe continue to prosper. And that is before all these populists with their manifest incompetence fail to deliver for their supporters.

And financial markets seem oblivious to any sort of geopolitical risk. A journalist from The Economist speaking recently on rising tensions, reached the conclusion that growing disillusionment with the current order is simply not reflected in the level of markets or price of real assets. If threats cause the bull market in bonds and equities to end sharply, there will be even less money around to oil the wheels of consensual capitalist democracies, further fuelling extremism.

Now back to the solution…What is required is a new political class of higher calibre politicians who tells it to the electorate as it is. Firm on budgets and over-blown promises, socially liberal and willing to take the risk of walking away from existing Party structures, they must act and talk long term, ignoring the 24 hour media cycle. They must measure their success by creating a new economic consensus not by how long they remain at the top.

Remind you of anyone? Well let’s start with Macron in France. Then let’s look to the future; individuals forming a break away Labour Party, a moderate Conservative Party leader not obsessed with Europe or a full political party realignment in the UK? A rejuvenated Democratic Party in the US? That’s just the start.

Sounds optimistic? I hope so. It is the only option.

America is our closest ally. The world has benefited from American global leadership and so have we. Corbyn and his allies don’t get this. The Government and most of the British public do.

And yet, America is currently led by an appalling president. Let’s just run through a few of his actions in the past week whilst I have been here:

• he has resurrected claims that Barack Obama is not a US citizen
• he claims that the tape recording of his comments about assaulting women which he apologised for during his campaign may now be fake news
• he has retweeted racist, far-right videos to the horror of the UK and then had a public spat with the Prime Minister
• he is driving forward tax reform, now just passed by the Senate, which rewards the rich and further undermines Obamacare (it also allows for drilling in Alaska’s Arctic National Wildlife Refuge…)

American politics is in turmoil reflecting a divided country – one half of the country appearing to live in a parallel universe to the other.

And the Democrats are not without blame in all this. They have ignored many voters to their cost believing an alliance of minorities and support for, seemingly at times, extreme political correctness is enough. Their hypocrisy over a recent torrent of sexual abuse claims where they have condemned Republicans but have been found to ignore dubious behaviour within their own ranks has only compounded divisions. They lack fresh leadership and a new narrative which allows Trump to get away with far more than he should.

But the real issue is Trump. He corrodes public discourse, taking a scorched earth approach to political debate. He is petty, vindictive, divisive and a blatant liar. Factual reporting is undermined by reckless accusations of ‘fake news’. It will take much longer than the tenure of Trump’s presidency to heal the wounds.

On foreign policy, he is also  dreadful. His withdrawal of America from the international stage is leaving a vacuum nicely filled by a far from altruistic China. Let alone giving carte blanche to his corrupt friend Putin. It is not so much about ‘Making America Great Again’ as ‘Making America Small’. The long term damage is incalculable.

As America’s closest ally, it is time to cut ties with Trump, withdrawing an invitation to visit the UK. Such is public opposition to him, the trip would be a disaster anyway. A famously inward looking country needs to know what impact their president is making internationally and in particular to a friend like Britain.

The Republican leadership don’t like him, nor do much of the American public. We will get our post Brexit trade deal without him. We should embrace the rest of America as we always do, positively, but without Trump. In doing so, we would be doing ourselves and, equally importantly, America a favour.

It is dangerous writing about budgets so soon after delivery since they can unravel with alarming speed but a US trip beckons so there is no alternative…

This was the Conservatives at their fiscal best. Cautious, caring, with some targeted extra expenditure, and sensible reforms to the tax system. All without losing sight of the grinding need to bring down the deficit. In contrast, Corbyn’s financially illiterate, ranting response demonstrates why the Opposition is so manifestly incapable of taking responsibility for the economic stewardship of the country.

Most notable budget positives were a continuing above-inflation rise in the national living wage, improvements in the delivery of Universal Credit, more investment in infrastructure and technological initiatives and modest further investment in the NHS. On housing, there was an impressive £44bn increase in loans and capital spending to increase the supply of housing by 300k units per year by the mid-2020s combined with the abolition of Stamp Duty for first-time buyers on properties under £300k. More complex reforms to land bank management and careful relaxing of pay levels for the retention and recruitment of key workers such as nurses, are rightly put to an enquiry. The list could go on. All sensible stuff and seemingly unlikely to unravel.

The economic record of the Conservative Government (sometimes part coalition) has largely been outstanding since 2010. Despite some missteps, a falling deficit, 3 million plus more jobs and the relative improvement of those most poorly paid have been excellent achievements. Perhaps underpinning the benefits of EU membership…

Austerity can and should now be gradually loosened, particularly where it is cutting into the bone of local services and this is starting to happen.

And yet, sadly, this was no radical budget and is unlikely to alter the current political narrative. The Chancellor today provided something for a lot of people but not enough for any one group and few initiatives will impact immediately. Headlines are partly dominated by the forecast of economic growth slowing sharply, restricting future room for manoeuvre. Brexit has apparently cost £700m so far with another £3 billion to come, only re-emphasising the scale of damage this decision, guided by so many Conservatives, is causing.

In the last piece of commentary a game changing budget was asked for. This was not it. The next rescue bid for this Government moves to EU negotiations. A more generous exit settlement combined with talks starting on a trade deal may provide the lifeboat needed. We shall see.

 

Caution isn’t working. Since the disastrous election, Theresa May has been walking on egg shells. Until recent scandals, the Cabinet remained largely unchanged despite grim behaviour from some members. Brexit negotiations have stalled despite a few U-turns here and there, and domestic policy has offered no refuge. Any initiatives at home have been tepid at best and gaffes dominate the political agenda. The government has seemed exhausted from the start, overwhelmed by the intricacies of leaving Europe.

The consequence? Theresa May is weaker than ever and Labour is stronger than ever; Brexit is heading over a cliff fuelled by internal Tory divisions. We await the skirmishes over the EU Withdrawal Bill with trepidation but Parliament, begrudgingly, has at least been given a vote on the final Brexit deal.

The Prime Minister has also lost control of events closer to home. Cabinet changes have been thrust upon her with replacements involving timid, minor reshuffles. She leads a divided party and a poor Cabinet with the media in full pursuit. What price Brexit for the Conservative Party now?

The consensus amongst those at the heart of government was that there would be no challenge to May or a consequent General Election for fear of something worse. That consensus is breaking down. Theresa May looks damaged and is almost certain to go sooner rather than later unless…unless…

Like a dying patient requiring resuscitation, she needs shock treatment. And that shock has to be self-delivered and involve the following: first, there must be a wholesale cabinet re-shuffle with those not up to the job (or disloyal) departing. There is no longer any room for the Boris Johnsons of this world. It is time to move a new generation of MPs into ministerial positions generally and the Cabinet in particular. Second, EU negotiations need to be kick started with the offer of a comprehensive financial settlement combined with full confirmation of the rights of EU citizens in the UK. Then a broad transition deal needs to be negotiated. Third, a sensational budget is required. This feels close to being the last throw of the dice. How about ‘war time powers’ to seize land for house building purposes and cutting the deficit through radical changes to some expensive pension tax reliefs (first mooted by George Osborne) which simply benefit the better off?

It is time Theresa May faced down the critics in her party and the media with bold actions. If it hastens her departure, then she can go with her head held high. Anything is better than death by a thousand humiliations and she just might rescue her government in the process.