The importance of appearing in control and how not to do it (when in opposition)

I started out this particular blog post to try and suggest some answers as to why we have ended up in such a mess over the Brexit process (because the road to the decision is a strange and dark one, and I have talked about it enough. In particular to look at the behaviours of the two main political party leaders in the UK. They have, in my opinion, both shown a lack of leadership and this is at the heart of the situation we currently find ourselves in.

            I have already spent a lot of time on the first part of this blog considering how Theresa May has fared against a relatively common set of leadership characteristics:

• ·      Integrity – not just being honest, but being seen to be honest, and doing the right thing even when you can get away with doing the wrong thing
• ·      Courage – in making decisions, even unpopular ones, with limited information, and willing to address difficult points
• ·      Impartiality and fairness – not pandering to special or favourite causes, identifying the fairest outcome for everyone from a situation
• ·      Good communication – in both directions, able to explain their message so others get it with clarity and conviction, and able to listen to others and hear their points
• ·      Flexibility and responsiveness – able to alter not only their plans and direction, but their style to achieve their outcome, and able to listen to other people’s ideas and use the best one, not simply their own

Against which time and again she has been found wanting, and badly ( https://unexpectedsocialist.blogspot.com/2019/01/the-importance-of-appearing-in-control.html ). But surely it is only fair to consider Jeremy Corbyn by the same yardstick? The great man of principle who is very much beloved of party members (if not entirely by his parliamentary labour party) must hold these qualities in spades?

Its much harder to cover the entire process for the opposition leader. Firstly he has had very little (i.e. nothing) to do with the formal process. I will therefore focus on a few key points in the process where he had opportunity to show leadership. Specifically: in the immediate aftermath of the referendum result; the vote on Theresa May’s deal and calling and holding the vote of no confidence.

I remember after the vote itself being completely shocked, saddened and well, scared the following few days. This was a fundamental shift for our country. I had always been European as well as British and English, with family, friends and work colleagues across Europe and here from Europe. I’ve worked as an accountant and seen the millions of pounds of EU money coming in to areas of the North East desperate for regeneration. I’ve studied Economics and understood the absolute logic of being part of trade blocs.

This was a body blow to me and many others. We were dismayed and confused. What we needed was calm, a chance to re-group and get used to this. Instead we got a Prime Minister running away from the problem he had created and a leader of the opposition calling for an immediate invocation of article 50. There were two massive problems with this immediate approach.

Firstly, Corbyn had a long history of concerns over being members of the EU and expressing a desire to leave. He belatedly became an advocate for staying. Throughout the campaign he had stayed away from the main campaign to avoid standing with David Cameron (his reason). Calling for this so quickly immediately left his integrity open to question. It doesn’t matter whether he was being genuinely honest or not. Its whether people see you as being honest. This approach damaged his integrity. Coupled with repeated questions on which way he voted that he refused to answer, he was opened up by his detractors and across the press as lacking integrity.

Secondly, what we needed was calm and a chance to come back together as a nation after a referendum campaign that had been divisive and nasty. But it appeared that this opportunity to make political capital, and to put pressure on the conservative party was more important. It is really hard to see the fairness in that – putting party politics ahead of doing the right thing. Both of these issues stemmed from a man who was no longer listening to the pulse of the country, and a man who had failed to get out his message.

Of course many Corbyn supporters (and I class myself as a supporter) will point out that it is hard to communicate when you have large parts of the press against you. This hasn’t happened over night. There has always been an image of him portrayed by his detractors. It didn’t suddenly appear. The narrative he has been wrapped in is made to measure. But the reason it fits so well is that decisions he makes and how he communicates absolutely lend themselves to it. It sometimes feels like there is a conspiracy to ruin his credentials – and that conspiracy is made up of the Conservative party, right wing media interests and Jeremy Corbyn.

I absolutely get that Jeremy has painted his life as a man of integrity, and a man of principle. There can be no question that he has made difficult and unpopular decisions based on a strong moral sense of right and wrong. Once he has decided what he feels is the morally right thing then he sees it through.*

I absolutely get that Jeremy Corbyn is unwilling to change. He’s made a career out of purposefully choosing the other view – almost for fun. He makes a snap decision on evidence at the time and sticks with it come hell or high water. This “man of principle” is so addicted to being morally right that he can’t accept when he is wrong or things change.*

(*Delete as appropriate)

And therein lay the problem. Because his behaviour and the way he acts and delivers his message can be played both of those ways. In order to be an effective leader you must be able to communicate and be flexible. You have to be responsive and aware. Sometimes sticking to your guns and your tried and trusted methods because you have always been that person is actually the counter to integrity – not the embodiment of it. Jumping into the trap laid for you over and over again shows a lack of flexibility, responsiveness and communication skills.

We’ve seen this behaviour in the House of Commons over the last few weeks. In fact both Corbyn and May have been guilty of the title of this blog – wanting to appear in control rather than wanting to be in control.

When Theresa May lost, as she knew she must, the vote on her badly-won, self-serving, ill-communicated, cowardly deal she immediately challenged Corbyn to bring forward a motion of no confidence in the government. Everyone knew he had to. But to her mind this was her showing the world she was still in charge. If anybody other than May and Hammond believe she is still in control of events then please send them my way – I have a second-hand bridge over the Thames I would like to sell them. However it gave her a chance to remove the initiative from him.

When that motion failed, as he knew it must, Jeremy Corbyn immediately rebuffed May’s offer of talks without his pre-conditions were met. Again, this was an attempt to show he was now in control and would only meet on his terms. Whilst this has now proven to be correct, and that the talks were merely Mrs. May trying to sell her original deal, only in smaller groups and with coffee and biscuits, this was immediately played in the press as Mr. Corbyn refusing the outstretched hand. It could not have been more clearly a trap if the prime minister had read it from a card marked ACME on the back. Because it is how he is expected to react and unfortunately no flexibility or learning is allowed.

I do worry for Brexit and our immediate future. We have days left now until we crash out without a deal. The leaders of our political parties, whilst having very different policies, views and desired outcomes, appear very similar in their approaches. Once the referendum result came in, any opportunity for coming together as a country was lost. Both leaders have allowed their own personal views and animosity along with political calculations to stop them from doing what we need most. Which is actually lead.

The importance of appearing in control and how not to do it

In the space of less than 24 hours we had 2 of the most unique, important and interesting votes that the House of Commons will ever give us. Most would argue that we have had enough drama of the sort we have seen to last us for a long time. Unfortunately, those votes and the debates and issues supporting them appear to really only be at the end of the beginning, not even close to the beginning of the end. The ongoing saga of Brexit has now dragged on for over two and a half years since the referendum itself. Legally speaking, as it stands, we only have around 10 weeks left to organise a withdrawal deal, or we crash out with No Deal.

            Nobody knows how this is going to turn out. Nobody knows, with absolute certainty, what is the best result for the UK and the EU. We can all choose to believe whichever experts, anti-experts or shaman most suits our views. Generally, that is what the overwhelming majority of use have been doing. My view, and one I want to explain, is that the biggest gap we have faced throughout the process has been the gap in genuine leadership – none more so than from the party leaders themselves.

            There are hundreds of lists of leadership qualities, and books have been written about the subject since we started recording history. I want to focus on a few of those qualities that appear across a wide range of them – it’s impossible to find some that appear in all of them. The most regularly repeating qualities for effective achieving leaders appear to be:

• ·      Integrity – not just being honest, but being seen to be honest, and doing the right thing even when you can get away with doing the wrong thing
• ·      Courage – in making decisions, even unpopular ones, with limited information, and willing to address difficult points
• ·      Impartiality and fairness – not pandering to special or favourite causes, identifying the fairest outcome for everyone from a situation
• ·      Good communication – in both directions, able to explain their message so others get it with clarity and conviction, and able to listen to others and hear their points
• ·      Flexibility and responsiveness – able to alter not only their plans and direction, but their style to achieve their outcome, and able to listen to other people’s ideas and use the best one, not simply their own

If we start by looking at how the negotiations process has been operated by Theresa May, and the strategy taken to those negotiations, it becomes very clear very quickly why she is not the right leader for the country. And most certainly not at this point in our history. Look at the strategy she has taken and it crumbles very quickly.

First of all, from the outset the decisions and approach have been her decisions and approach. She ignored every opportunity to reach out to other parties. She refused to listen to ideas from anyone outside her immediate circle. Throughout her career there are countless examples that point to her need to be completely in control. It is a unifying thread that runs like iron through it. How can you be impartial and fair if you are always right? Where is the space for responding to other ideas if you wont even hear them? This political change was the biggest we faced for at least 40 years – and arguably since the Second World War. Why not put in place a specialist commission? A government of unity? Citizen’s panels? No – Theresa knows what is best. Much better for her to go away, decide and then come and tell US what is right.

Of course she realised very early on in the process that in order for her to get away with that as Prime Minister, she needed to have as much personal power and mandate as possible. So whilst we had a backdrop of a clock running down, she called a General Election. Not for the good of the country, not for the good of the negotiations, not even for the good of her party. For her own benefit. And all after explicitly ruling out the idea. Because she believed she would win a landslide. Where is the integrity in that decision? Where is the impartiality and fairness of putting her wants in front of our country’s needs?

During the election itself, she showed herself again and again to have no communication skills. Strong and stable can not be the answer to every question. I imagine during that period if asked her how she took her coffee she would answer “strong and stable”. She ran scared of taking part in debates – sending other people to do them. Because she has all the communication skills and warmth of Buck Rogers friend Twiki, but without the warmth. Or communication skills. Where is the courage in being afraid to stand up without all of your lines safely locked down – taking no risks.

Having refused to talk to other parties, setting out her way of doing it as the only way, and having been embarrassed in a general election because she didn’t realise that the public didn’t want one, she then found herself weakened. The hung parliament that she caused meant that she then had to sell out some of her power to the DUP. This was at the cost of £1bn+ and additional red-lines. She used public money to protect her own position. She reduced her flexibility further.

Whilst all this carried on, Brexit Secretaries and other ministers led a constant stream out of her government because she wouldn’t listen to anyone else, and she kept coming back to the UK having given away more and more negotiating strength. Because she was right, and how dare anybody question or challenge her. She had to survive – she was the only one who was right. The single most important point, throughout this process, has been the survival of Theresa May. On average we have lost a government minister every month since she became Prime Minister. Nobody knew what the current deal was, until she deigned to tell us. No communication, no flexibility.

Where did this lead us? Her own party realised this couldn’t continue – and she survived a confident vote there. 117 of her own MPs – one third of her parliamentary party – wanted her to go. Did this change her approach or make her consider her position? Not for a minute. She not only led her government to be in contempt of parliament (for the first time ever), but she ran down the clock by delaying the vote on her deal. Not for any purpose other than she didn’t want to hear the truth – that she had gotten it completely wrong but couldn’t bear to hear it. She suffered the biggest governmental defeat in history. Only one third of parliament supported her deal – not even the £1bn bung could persuade the DUP. Did this make her consider her position? Not for a moment.

On the back of this she faced a vote of no-confidence in parliament. And I want to return to that point in part 2 of this blog – because we also need to consider the leadership of Jeremy Corbyn in doing that.

You can't trust Labour on the economy (Part 2)

One of the most often repeated claims you will hear from Conservative party supporters is that you can't trust Labour on the economy. It is a message that has been repeatedly pushed by large parts of the media for many years. In fact, it has been heard so often it sometimes seems like it as is obvious as gravity, Liverpool football club struggling against smaller teams or that you can't get a decent cup of tea in a coffee bar. If you missed the first half of this blog, it might be worth visiting ( http://unexpectedsocialist.blogspot.co.uk/2016/01/you-cant-trust-labour-on-economy.html ) - although I am not guaranteeing it is worth visiting. In that I set out 3 major tests of whether an economy is working - a good economy would be one where: 

1. any growth in the economy benefits those who work for it;
2. it provides opportunities for everyone to participate and add to the economy whilst;
3. providing a reasonable level of protection from external shocks to the national economy and individual shocks through changes in circumstance

I also asked how we could know if we could trust a party to deliver either of those. To be as fair as possible, I have split this down into 3 governments we can compare - that of the previous New Labour administration, that of the current coalition & Tory government, and a future potential Corbyn government.

So going back to our central question - are the Conservatives any better than New Labour at getting people to participate in the economy? And would Corbyn be any better than that? 

Looking at the immediate headline statistics this seems obvious and clear cut. We are told every month now that employment figures are at a record high, unemployment at a record low. Obviously, the Tories win this hands down. But it doesn't take much scratching of the surface to get below that and see that it is not quite as it seems. 

The headline rate is shockingly good - 74.4% employment rate. This means that 74.4% of the people who could work are either employed or self employed. This is the highest since records of this sort began. Under the last Labour government, just before the global economic crash in 2008, the best they achieved was 73.0%. 

That 74.4% equates to (between 16 and 64) 30.67 million people either working or self employed. For the New Labour government, at it's highest point, this was 29.06 million. So there are 1.6 million more people employed compared to eight and a half years ago. But just being employed is not the entire picture. What is also important is how much you are earning for that employment. Because it is this - your income - that determines how much you can participate in the economy. In that case, we are doing slightly worse. In fact, average earnings (which excludes self employed people) are down by 3%. So more people are working, but earning less than before. 

What is causing this? Well, whilst it is hard to reach a really strong conclusion, there are some really good candidates for part of the explanation.

Firstly, the national minimum wage has not increased quickly enough. This had slowed down until then Chancellor George Osborne made some moves to re-dress the imbalance he had caused. Secondly, almost the entire public sector has had pay freezes or raises limited to 1% for 7 years. The public sector workers are carrying the rest of us through austerity. Third, there are more immigrants now in the country - willing to work for much lower wages - potentially around 800,000 in that period. Finally however, and this seems to have had the biggest effect, is the rise of the zero hours contract. 

Since the last Labour government 700,000 new jobs have been created where those people have no guarantee week to week, day to day, hour to hour. The number has gone from 200,000 to 900,000. What was once a flexible way for employers and employees to work where this arrangement suited both parties has become the standard operating model for hundreds of employers. The coalition and tory government have done nothing to stop this. If you aren't on one of those contracts - just imagine what that is like. You never know if you are going to eat or pay bills - and you can't work anywhere else. It is as close to modern day slavery as most of us will ever get. 

So whilst employment has gone up far fewer people are actually able to participate in the economy in a meaningful way. We all on average have less to contribute with. And the increase in employment figures can almost entirely be matched to inwards net immigration and zero hours contracts. So whilst we had increasing spending power and jobs under the Blair / Brown governments, we have not seen this under a tory government. But what would we see under a Corbyn government?

Well, that is hard to say. If we believe the promises made as part of his election campaign, there would be increases in the minimum wage, an end to zero hours contracts, pay rises for the public sector and real genuine investment by the government in major infrastructure projects - and the aim would be to increase employment rates through this. Of course the challenge for any future Corbyn government will be how to pay for these. This ties in to managing to deliver without destroying the economy and leaving it protected from shocks - but that will be part 3 of this blog.

Step right up, now everyone’s a winner, bargains galore.

Thank goodness for Donald Trump and Boris Johnson. There was I, worried that leaving the European Union might in some way be bad for our economy, workers’ rights and public sector, when they come along and show me that everything is going to be OK. Of course it is not just the US. Apparently, countries are queueing up to do trade deals with us. We now thankfully have some greater clarity on what Theresa May plans for her brexit strategy. So, what can we take from her announcement yesterday? And how bright is the future looking for us? Can we get ready for a massive influx of trade we don’t currently have? Is the prospect of a Global Britain better than the prospect of a “Shared Britain” (now removed) or a “Red, White and Blue Brexit” (now removed) or is it just another meaningless slogan?

Really, we need to understand from the speech what we are potentially losing compared to what we might gain. That is the only way we can judge whether we are looking at a net positive or a net negative. This was the most important speech that the Prime Minister has given since we voted for her to be our leader. Only joking of course, we live in a parliamentary democracy where elected representatives are chosen and entrusted to make our decisions for us. Well apart from THAT decision obviously. So, the most important speech since her party voted for her to be party leader and therefore Prime Minister. Only joking, there was no vote for her. So, the most important speech she has given since 35,000 in the borough of Maidenhead voted for her (that’s right Americans, you think you have problems).

I am going to focus purely on the aspects relating to trade and the economy. There was actually some good stuff in there, relating to how the process will run, and also massively important areas around immigration and nationality, borders and governance. But that will have to be part of another blog. So what did we learn? Well the key points were these:

·         All existing rules and regulations of the EU will become British Law and workers’ rights will be protected, then will “keep pace with the changing Labour Market”

·         We will leave the single market, and the customs union then “pursue a bold and ambitious Free Trade Agreement” with the EU

·         We might pay to be a part of “specific European programmes”

·         If we don’t get the deal we want with the EU, we will trade with them without a trade agreement

·         We will seek out new trade deals with other partners that we don’t currently have in place

Keeping existing rules and regulations, and workers protections

                So, depending on your point of view, keeping existing safety and consumer laws is a good thing or a bad thing. It will mean that we can continue to export to mainland Europe because our goods and services will be comparable. But it might also mean that we are held to a higher level of regulation than say US or Chinese manufacturers. Therefore, this could make our products uncompetitive on a global market. So this really depends on whether we get a trade agreement with the EU.

                More worryingly, is the specific language used around workers’ rights. This should be a massive big warning sign to everybody who is employed in the UK. Over the last 6 years the Tories (and their coalition partners) have overseen the stripping away of workers’ rights, and have resisted every opportunity to improve them. For example, even at the height of the furore over zero hours contracts, the government did nothing. Coupled with that our rights to strike have been eroded, weakening our bargaining power with companies. And senior members of the government are openly talking about banning the use of strikes across industries.

                Mrs May could have said that workers’ rights would be improved upon, or strengthened. But the language is purposefully specific. “Keeping pace with the changing Labour Market”. Well, if we look at how the Labour market is changing, more people are being put in to roles where their employers can pretend they are self-employed; employers can give up any sort of responsibility through the “gig” economy; zero hours contracts will become more prevalent; trade unions will be downgraded and weakened at every turn; pensions agreements will no longer be stuck to by employers whilst taxpayers bail out pensions funds. Basically, if you are employed, then this is the start of a bonfire of what rights you currently have. If you are applauding this speech, you are either an employer yourself, or not paying attention. Perhaps somebody could remind me, when we voted for the UK to leave the European Union, where we also voted to give up our working rights to Sir Philip Green and Mike Ashley? I obviously ticked that box without realising.

Leaving the Single Market and Customs Union, getting a trade deal with Europe instead, paying for access

                It is probably worth, as a starting point, understanding what our trade deal within Europe currently means. Firstly, it is worth stating that it is probably the most comprehensive, invasive and wide-ranging multi-lateral trade agreement in the world. It includes everything from free trade (meaning we trade our goods free from tariffs being applied by other countries), customs union (meaning we all apply the same tariffs to goods coming from outside our deal), free movement (of services, capital and resource ie people) and a level of political union too. It covers almost every aspect of trade and commerce, industry and services, import and export. The effort to split ourselves out from it is on a scale unprecedented and untried. It is not simply rhetoric to say it is of the scale that countries leaving the USSR and Eastern-bloc felt during the early 90s.

                So we would be leaving, with great difficulty and cost a free-trading bloc of 450 million people in 27 states (once you take us out of the official figures). It has GDP of US$13tn (again once you take us away from the published figures). It is 41km away from us at the closest point. Those are the really key considerations in any trading deal we want to do: how many individual consumers are there, how wealthy is it, how far away is it, and what tariffs would we expect. It is worth also stating that given the depth and breadth of the negotiations that will be needed, this will (you would hope) require a great deal of considered and careful negotiation. We currently have no experience of trade negotiations, given that we haven’t had to for about 40 years. It seems a reasonable assumption that what experience we can muster together will be focussed on this deal. Two years of effort to LEAVE that free trade deal.

                Of course, it is possible that we could end up with an even better trade deal. However, it is highly improbably. By its very nature, if we are choosing to say to a trading bloc that have grown together “we want to trade with you, but don’t wish to pay in to your structural costs” then it is only reasonable to assume we will get a worse deal than full membership. Even Theresa May accepts that. Hence why the Prime Minister and others have been warming us up to the idea that we will still have to pay something to continue to trade freely in certain markets. I think it is fair to assume this will include the Motor industry (if not, then what the hell have we promised Nissan?) and financial services (given it is our biggest single industry). Of course, that gives us the question of what will the cost be? How much will we have to pay for access? Not only that, does it mean any industry which isn’t beloved of the Tories (Steel, manufacturing, non-financial services) should now expect tariffs to start to affect their business. So there we have it, a deal where we still pay in (when it suits the Tories) and everybody else has their business negatively impacted.

                Not only that, but what if we start imposing our own tariffs on European goods? Well, that will lead to massive instantaneous inflation, whilst at the same time our economy is getting worse. We had this in the 1970s – and the term which was coined was stagflation – a stagnant economy whilst prices rise. It was a horrific time. If you are too young to remember it be grateful, then ask somebody who was around how it felt.

No deal is better than a bad deal, trade deals with other parties

                Of course, we could choose to have no trade deal at all with Europe. However, just the most cursory glance at this shows how completely stupid and damaging this would be. This would mean that we would immediately start trading with ALL of the European Union at WTO Tariff rates. In effect every single item that we export to Europe would immediately be less competitive, and therefore we would either have to sell less OR sell them more cheaply. The idea that no deal is better than a bad deal is complete hogwash – and everybody knows it. God even to export Oxygen to the EU we would have to pay a tariff of 5% - and they breath the bloody stuff (yes, I know, thanks). So this idea that we will go with No Deal is never going to happen. Besides which, in all honesty both parties want to get a deal. It is in their interest as well. It is entirely a PM trying to sound tough for the UKIP-leaning voters in her own party. It is simply within our interest to achieve some deal with Europe (popn 450m, GDP US$13tn, dist 40km) – and it is theirs to do a deal with us (popn 65m, GDP US$3tn, dist 40km).

                What about other deals? We are told by Boris Johnson that countries are “queueing up” to do a trade deal with us. Well, the first consideration is – why aren’t we trading with them currently? If these countries are so desperate to get a trade deal with us, why is that? Well, we already do trade with many of them. But it is at a lower level than perhaps we could. Therefore, any belief that this will lead to a massive influx of NEW trade is again erroneous. What it will do is make trade easier and therefore give some lift to our global trade levels. It might also (if we remove import tariffs) lead to consumers paying less for certain goods. It is way beyond me to be able to state with any certainty what scale the impact would be. But it would need to be very high indeed to offset any major losses of trade with the EU. I am going to leave the US to one side for a moment, but still, let’s pick out some of the options which do look like “live picks” ie countries that are talking about trading with us:

Country	Population	Size of economy	Distance	Comments
EU	450m	US$13.1tn	41km
Iceland	0.3m	US$0.016tn	1,894km
India	1,300m	US$8.72tn	7,194km
New Zealand	4.7m	US$0.174tn	18,500km
Australia	24m	US$1.2tn	17,000km
Canada	36m	US$1.5tn	5,700km
Ghana	27m	US$0.121bn	4,800km
Mexico	120m	US$2.2tn	9,000km
South Korea	50m	US$1.4tn	9,000km
Total	1,562m	US$15.3tn	9,136km average

                So, if the worst happened and we stopped all trade with the EU (which no-one is suggesting, to replace it we would need to trade with these 8 separate economies to get a trading block of the same size. Ignoring the fact that on average that would mean sending goods 45 times further on average to sell them.

                To put it another way, our trade with the EU accounts for 45% of our exports. If we lost a quarter of that export trade – on our doorstep – we would need to boost our sales internationally to non-EU countries by 11%. Unfortunately, our trade with international neighbours is already at record levels for us. What else are we going to sell – at a competitive price after sending it an extra 9,100 km? The very desperately sad thing is, we are already a successful trading nation. Is it really possible that not being part of a customs union with the EU is going to boost our trading with every we currently trade with across the board by over 10% BEFORE the end of the current deal with the EU in 2 years’ time?

                Who is going to negotiate these trade deals? Everyone with experience or knowledge will be working on the EU deal? Or should we leave that to Boris “let’s joke about the Nazis” Johnson? Genuinely? Of course, we have the trade deal to look forward to with the US. After all, we have been promised a trade deal by the President-Elect, a man who never goes back on what he says. Well, he has already threatened to pull out of NAFTA (a free trade deal), and put 35% import tariffs on goods from China and Mexico – 2 of their biggest trading partners and very strong economies. If Donald Trump is looking to trade on those terms with others, why would we believe we would get anything more beneficial?

Everything’s rosy

                There is no hard evidence to say that is all impossible. It may well be that against all odds the government manage to deliver. But for that to happen we would need a massive turnaround in fortunes, in abilities, in industry, in trade patterns and in the views of our own government. At the same time we would need the EU to be kind to us in any future trade deal. Put quite simply, the potential risks are much greater than the opportunities at the moment. I would love to be wrong about this – and I am often wrong. But I see no analysis which suggests anything other than this stark conclusion – by leaving the single market we are throwing away access to a strong market on a really good deal for the possibility of access to less accessible markets, with less good deals. This can only be bad for our economy. 52.1% of people voted for Brexit. But how many voted for an almost certain worsening of our economy, job losses, rights and protection losses, uncertainty and a weaker economy?

You can't trust Labour on the economy (updated since originally posted 15 months ago) Part 1

As the general election campaign for 2017 has now started in earnest, I have been locked away trying to understand the outcome from the Margaret Beckett report on why Labour lost the last election (http://press.labour.org.uk/post/137620361394/learningthelessons ). Now, whether you believe the report or not http://www.bbc.co.uk/news/uk-politics-35392319 is entirely up to you. However, even without the additional analysis being included, one thing can be said with certainty – voters did not trust Labour with the economy. This has been borne out by my own un-scientific research – i.e. speaking to people on internet forums and social media. It is one of the most repeated phrases I hear and read from a whole spectrum of people. It is one of those "truths" that has become so because it has been so oft-repeated.

There will always be a subset of people who, no matter what can be proven, will decide that they will blindly vote Conservative. We have the same people in the Labour party and that is absolutely fine. People vote for their own reasons. If you are one of those people who hate the Labour party and will never look at evidence with a view to changing that position don’t read this. Use the time to do something useful – read something else, make a cup of tea, look after your children, speak to your life partner. That is fine. But I did want to consider that individual central tenet – that people did not trust Labour on the economy, and therefore wouldn’t vote Labour. I am going to try to extrapolate that too – should they trust Labour on the economy now or in the future.

In order to split this down we probably need to think about two things – firstly what is a “good” economy and what does that look like? Secondly, why should we trust a party? If we can answer those two, we should be able to put together a fairly strong case one way or the other. Just writing those two questions down outlines a whole host of problems, but let’s try and answer them.

What is a “good” economy?

So, the real difficulty with this is that there is not, and can not be a single definite answer to this. There are some broad areas of understanding, but nothing that we can concretely say “that right there is your answer”. Each individual will necessarily have their own view on this – and it will be coloured by their upbringing, their view on how the world works and what is important to them. We are after all a country of approx. 60 million single issue voters – that single issue being “what is important to me”.

From my perspective then (as a socialist) there are a number of measures of what makes a good economy. The key one is that the national economy should be measured on how that is used to provide a wellbeing for those people involved in and covered by the economy. A good economy would be one where: 

1. any growth in the economy benefits those who work for it;
2. it provides opportunities for everyone to participate and add to the economy whilst;
3. providing a reasonable level of protection from external shocks to the national economy and individual shocks through changes in circumstance

I don’t pretend this is the only answer. There are other things that we could look at - a key one being how the economy is used to look after members of society in need. There are I am sure many issues that this doesn’t address. As we will discuss, some of these items might even rub against each other in different directions. Lots of people would argue that some of those goals are impossible whilst we live in a capitalist system. It is the system we have at the moment and nobody has yet convinced the British public to rally together to change this system for an alternative one. Additionally there are some huge topics that I have left out – the Private Finance Initiative (PFI and PF2 which are the same thing) are a massive burden on this country. However, political parties of all hues are currently wedded to continue delivering them, so they don’t provide a difference between how they are treated. This is a massive topic and the subject of so much unknown and unknowable that it has its own Nobel Prize. To expect me to do justice to it in a blog is probably asking too much. Even with the simplified items above I am going to split this down into a couple of (hopefully easily digestible, probably completely incomprehensible) blogs to not completely frazzle people.

Should we trust a party to deliver?

The next question should then be: How do the last Labour administration and the current (including the coalition years) Conservative government stand on each of those measures? And how do we believe a Corbyn government would stand against those measures? Whilst this may be a little unfair (every government in waiting is brilliant until it gets in), we need to recognise that a Corbyn government would be very different to a Blair / Brown government. 

Well the first measure mentioned above on economic growth and fairness really requires two parts to it – one is a growing economy, and two that the benefits of that growth are shared amongst the actors within it. Whilst there are a range of indicators for a growing economy a useful one is GDP per capita. This shows the value of the outputs of an economy shared equally by the population of that economy. For the UK, this shows the following output (taken from https://knoema.com/atlas/United-Kingdom/GDP-per-capita ).

What you can see from this is that under the last Labour government the GDP per person was higher than it currently is at its high point. It also had a steeper growth – i.e. people were (on average) getting wealthier, faster. This changed in 2008 because of the sudden correction in the markets – caused by the banking crash. The key term there I feel is “correction”. Put simply the market growth was to some extent a myth, caused by a bubble of over-inflated house prices across the globe and reckless behaviour of banks and consumers around the world.

Can we blame Labour for this? I think there must be an element of realisation that for Tony Blair and Gordon Brown the key indicator for economic success was GDP growth. Therefore the worst excesses of the banks were missed at best or ignored and encouraged at worst. This lends to the suggestion that Labour can’t be trusted. In order for us to stick with that as a reason, we should also look at the behaviour of the Conservative party in office. If the property bubble and banker behaviour were key components of the sudden correction, then to trust the tories they would have to clearly demonstrate a different approach.  

I would say that quite clearly isn’t the case. In fact the light regulation that allowed this to happen is slowly returning. Despite the rhetoric about this at the time, the Conservative Party (funded by hedge fund managers and property tycoons http://blogs.channel4.com/factcheck/labour-funding-party-donors-tories-factcheck/13899 ) is indeed pushing back on the regulation of the banks. Ring-fencing of banks (to protect consumers and the economy) has been watered down. There have been a plethora of new scandals SINCE the financial crash ( http://www.channel4.com/news/five-other-banking-scandals-since-2008 ) they have slowly stopped investigations and reviews into the current banking market. 

So, if you don’t trust Labour on the economy for this reason, you quite clearly can’t trust the Conservatives either. As an argument, it is nonsense. Oh, and if you think that they have at least made sure another housing bubble wont appear and burst, then forget about it (http://uk.businessinsider.com/roubini-the-mother-of-all-asset-bubbles-will-burst-in-2016-2014-12?r=US&IR=T and http://moneyweek.com/uk-property-market-could-be-in-trouble-after-the-2015-election/ ) – those risks are still there. Worryingly from the above graph we can see that rather than the Tories increasing GDP per capita it has fluctuated and is falling again - and this is before the impact of Brexit takes its toll. 

The next thing to consider from any growth in the economy benefits those who work for it is that it benefits those who work for it. To me, this means that the benefits are shared in line with hard work, effort and risk. That is impossible to measure on an individual basis. It is also massively unfair when we have different starting points. Instead a good measure of how the people in an economy are benefiting, and whether it is fairly or not, is something called a "gini-coefficient". If you wish to understand the maths behind it, then it can be readily understood from wikipedia. It basically measures how fairly income is shared amongst a population. This ties in with GDP above – as it measures the income in a period, in much the same way, and then looks at how income is spread between people. There are 2 extremes – but the lower the gini-coefficient the more equally money is shared between the people in the economy. Gini is calculated as between 0 (everyone gets the same) and 1 (1 person gets all of the income). As a co-efficient it is not useful on it's own - but is useful for comparing 2 things - such as different points in time, different countries or different governments.

In order to get a fair reading on this, then we must look at not only what the gini-coefficient was but how it has changed over time under each of these governments. So under the previous Blairite Labour administration, the gini co-efficient (http://www.ons.gov.uk/ons/rel/household-income/the-effects-of-taxes-and-benefits-on-household-income/2013-2014/data--the-effects-of-taxes-and-benefits-on-household-income--financial-year-ending-2014.xls ) after tax showed a gini-coefficient of 0.38 between 1997 and 2008 – this didn’t really move. Since the coalition government came to power there has actually been an improvement in income equality - the figure got lower to 0.36 up to the end of 2013/2014. This will be in large part due to the changes in taxation that was pushed through by the Liberal Democrats. 

What remains to be seen is how the changes enacted since then will impact through 2014/2015 and 2015/2016. Although if you believe that trying to cut working families tax credits and battering disabled people’s payments will make income more equal then you have really missed the point. I would expect that the gini-coefficient starts to move back out sharply. After all, the current government have tried to remove income from their definition of poverty ( http://www.mirror.co.uk/news/uk-news/tory-plot-scrap-child-poverty-7244505 ). That can never be a good sign. Whilst we don't yet have the official figures for 2015-2016 (the first year of a solely Tory government), for 2014-2015 the gini coefficient has started to move out again - that is we are becoming less equal once again.

What we can't know is how this will change under a Corbyn led Labour government. However, we can look to the policies that have been unveiled already - investment in public works to kick-start the economey, higher taxes on large corporations and wealthy individuals, higher national minimum wage, a clampdown on tax avoidance and evasion and an end to using the benefits regime to punish the disabled and these would all point to an improvement in this measure (and all measures) of inequality. In fact, his first major speech of this election campaign has been entirely rooted in sharing wealth more equally. So, if we believe that he will be true to his word, this would suggest that on my first measure there would be an improvement in both GDP per capita and how that is shared. But, what we can already say based on the available, independent evidence shown above is this - the Conservative party are NO MORE trustworthy than the last Labour Government. That isn't opinion, that is clear fact when you consider the above. So don't let anyone suggest otherwise - without proving them wrong. 

Of course, this is only one measure, and I will look at the others in my next blog. An absolute key one is what state the economy and public finances are left in. This is another area where many believe what they are told in the media - that every Labour government bankrupts the national coffers if it is allowed to do so. But is this really true? Well, hopefully I can answer that point in my next blog.