Westminster: August 2008 Archives

While it's often said that the first responsibility of a Chancellor is to talk the economy up, when everyone knows better it just sounds Panglossian and out of touch. So I think he's right this time, albeit for the wrong reasons. 

It's not primarily about a credit crunch. Like the dot com bust before it, we're seeing the end of a bubble spun up by market players and governments to try and fend off something worse. Its symptoms are grim, sure, but the underlying problem is that we're well into the dying days of the cheap oil economy, more commonly known as globalisation. 

Oil prices have dipped again, but as the FT says, this is just a lull in the storm. Colin Campbell and the good people at ASPO told us a long time ago what would happen, and so far it's all following their predictions. 

As global oil output starts to plateau in 2007, they said, prices will spike. Given the total dependence of our economic model on cheap oil, we'll see a serious economic slowdown. This will lead to a drop in demand for oil, easing prices. Demand destruction, they call it. However, with maximum production matching supply so closely (i.e. in the absence of a swing producer), even small threats to production will cause significant price changes. 

So far, so recognisable. We can expect the easing of prices below $100 again to lead to a small economic rally, and thus an increase in demand. My guess is that's probably not due before the spring, although I'm reluctant to make predictions. 

As demand then picks up, and as oil output starts to drop properly, probably 12-18 months from now (click on the chart above for a bigger version), we'll see another spike, almost certainly higher than the $147 peak seen in July, although that partly depends on the strength of the dollar. Cue even greater demand destruction.

No-one in government in London or Edinburgh, nor amongst their main oppositions, has any idea about how to cope with this. They're just hoping it'll all go away, and dammit, it won't. The timescales above may be out, but sooner or later it's coming. 

Darling tells the story of a member of the public who said to him "I know it's to do with oil prices - but what are you going to do about it?". His response? "People think, well surely you can do something, you are responsible - so of course it reflects on me." 

The man at the pump knows more about the problem than Darling, because he knows Darling can do something about it, a fact that seems to escape the Chancellor. Perhaps this random member of the public should do the job instead. 

Of course Darling could do something about it: he could divert spending away from wasteful projects and wars and into renewables, R&D, public transport, etc. He could set an objective of energy independence. Any politician who doesn't tell you that getting off our fossil fuel addiction is their top priority doesn't deserve your vote.

The alternatives if we don't achieve that are likely to be dire. Coal's already back with a vengeance, and there's no dirtier fuel except old car tyres, so any idea that decreasing oil use will help climate change is a pure pipe-dream. The hard right and neo-Nazis may well start to do better as the economic situation worsens. They certainly think so: see point 4 on the top link here (that's a google link -  I'm not directly linking to the bloody BNP's site!).

A lot of the goods and services we take for granted will become incredibly expensive, and fuel poverty will hit levels last seen when Good King Wenceslas famously looked out. Poverty as a whole will rise. I wouldn't bet against more resource wars, either. 

There's no point worrying about it, though, when you can spend your time working to get more Greens elected instead. 

Back to Darling's interview. His economic warning has understandably overshadowed his line that "This coming 12 months will be the most difficult 12 months the Labour party has had in a generation." 

It's a pretty extreme prediction too, though. What, it'll be worse than the last 18 months where you lost every election going? Worse than a million people marching against a Labour-led imperial war? Worse, Darling, than any given part of 1978-1993?  

How has it come to this, for Labour to have no imagination whatsoever about how to use a working Parliamentary majority? Here's a tip: why don't you address the looming energy crisis with something more constructive than nuclear and coal? 

All Labour has left is angst about themselves, fear of being exiled into opposition, and fear of being shown up by the Tories. Their absence of vision is now absolute, and it does indeed sound as though Darling's had enough. Perhaps he, like his namesake from Blackadder Goes Forth, is about to go over the top. 

On Iain Gray and Andy Kerr: "The two men spoke first and frankly it was vacuous nonsense focused on what positions they held and bash the nationalist no mention of policy, Kerr if anything was to the right of Gray who is apparently Browns favoured candidate."

Cathy Jamieson: "talked about working with trade unions and for the party to be involved in making policy, whilst much of this was vague it was considerably more political and to the left of the other two."

She won his support, but it was hardly wholehearted: "I came out of the husting believing that was I in Scotland I would have little choice but to vote for Cathy Jamison despite the history of privatising the prison service and her dreadful appearance on question time were she seemed to support DNA collection of all UK citizens from birth."

He thought Bill Butler was clearly the best candidate for deputy, but: "didn't entirely agree with every thing he said such as his view that PFI should compete on a level playing field with other public sector financing, why it needs to be in the field at all I don't know."

Does anyone know why anyone with views like this, so antithetical to the modern Labour Party, would continue to support the party of PFI, war, privatisation, ID cards, and the rest? It's a mystery to me.

They included Des Browne, top Minister at the War Office, and therefore ultimately responsible for the decision to deny John Macdougall compensation for his asbestos-related lung cancer. 

He disputed an advert for Foxy Bingo (Foxy seen left with the ever-classy Jordan) which offered free money to play bingo with on the traditional "hey kids, first sample free" basis. 

Except not kids, because, well, it's bingo.

Have a look at the third paragraph of the assessment, in which the ASA show how players either lose their free tenner or get to take their winnings out. Shouldn't a Shadow Secretary of State have been able to work that out? Do real Secretaries of State do stuff like this? Why am I even wasting my time writing about it?

Update: I recommend the following judgement against "Margaret". Now there's some unsubstantiated claims!

Whether it's party policy or just his policy isn't clear - if you search for it, Google thinks it's called "Front Page Nick Only". They seem to have decided to go really personal, because they think that's worked for the Tories. 

Labour-run NUS Scotland was "bravely" arguing for their poorest members to lose their grants, incidentally. Labour most recently voted to impoverish students in December last year, but fortunately there were enough SNP, Liberal & Green votes to overturn the fees that Labour and the Liberals had brought in.

Anyway, we worked out of Andrew Welsh's office that week, and made good contacts with the Tories, in particular David Willetts and Teddy Taylor, both of whom were very hospitable solely because we were there to try and make Labour's life more difficult. Teddy was particularly impressed with a bit of research we'd done, and waved a copy of it at the Minister during the debate. 

That was the first and last Commons debate I ever went to, and I left thoroughly depressed by it, except for the passing satisfaction of our report being used in anger. I had had low expectations of Labour Ministers, but still thought they'd be an improvement on the Tories. 

However, when I closed my eyes, I heard Labour (I think in the form of Brian Wilson) making Tory arguments about competitiveness in higher education, indistinguishable from their predecessors in government.

Meanwhile, Willetts and other Tories were making the social inclusion case for poor students, arguing for equality of opportunity, just like their predecessors in opposition. 

It made me think of that 70s anarchist graffiti - no matter who you vote for, the government always gets in. And something Teddy said to us over tea has stuck with me.

"We'll do what we can for you now, but don't trust us if we ever get back into office."

Good advice, I always thought. And it came to my mind again this week when I read comments on air travel from their transport spokesperson, Teresa Villiers. She apparently told Today that the economic and environmental case for a third runway had yet to be proved. The BBC quote her saying:

In case you're wondering what the peak of Labour hypocrisy is on this issue, I give you ... the Minister responsible for Post Office closures arguing with himself.

Get your regular Cochrane here.

Their debate in today's Guardian is illuminating, but not in the way they may have hoped. Philpot thinks letting poorer parents, jobseekers and even truant schoolchildren manage budgets for their own improvement will work. Actually, the childcare one isn't nonsense to exactly the same degree, but the others show he's drunk so much of the Blairite Kool-Aid that there's no hope for him.

Conversely, Lawson argues for the following policies:

In other words, a 95% Green agenda. A living wage is less radical and effective than a citizens' income, sure, but it's a step in the right direction. We wouldn't add a new tax on graduates - they pay more already, see, because they earn more. 

Equally, I'm not sure how you'd prevent children seeing any advertising. Ban all billboards, commercial television, and bus-stop ads? Actually, that sounds quite appealing. Overall, though, PR, no ID cards, end reliance on oil? Sure, about time.

But what an odd debate. One of these two numb-skulls thinks that a Labour party enmired in marketisation and resisting change will win the next election. And the other thinks that a Labour party which has been hollowed out from the inside by Blairism is ready to become more or less the Green Party. 

My advice to them both? Mr Philpot, congratulations, you're on the very left of the Conservative Party. Mr Cameron will be delighted to have you because you'd prove he was "progressive", and you'll find it's better than opposition. Mr Lawson, you've not got the best political antennae, but please do nevertheless join your local Green Party. 

This Labour Party you're squabbling over, it's finished. 

However, you have to admire his courage to put across potentially unpopular positions, such as: house price falls are "painful, but necessary". 

And the Stalin to Mr Bean thing was an excellent line.

This old idea reappeared thanks to Alex Salmond: no surprise there. But for Gordon Brown to copy it the same day? Did they think no-one would notice?

Update: others subsequently came to the same conclusion.

The reality is (see that first link) that they've underestimated the carbon Britain's responsible for by a staggering 49%.