Weak, Weak, Weak

“Weak, weak, weak” is a famous quote from Tony Blain in the 1990s when he was criticising John Major’s government. I believe this is also an attack that could be levelled at the current government. Today the government did its third U-turn in a week, this time on the issue of capping the amount of tax relief available for charitable donations.

The tax was met with anger from charities and philanthropists alike; they were worried that the new law would reduce charitable donations considerably. This was one of many unpopular measures in the budget that have since been chucked in the bin.

Although I am very glad that the government has performed the U-turn, I do believe that is shows just how weak the government is. It doesn’t seem to understand the public mood and lacks a sense of direction and confidence. It would appear that the public pressure surrounding Jeremy Hunt is the only area on which Cameron and the government has remained steadfast, which is very unusual.

Unless the coalition sorts itself out both parties will not have any hope of achieving electoral success in 2014. The public are recognising that the coalition is extremely weak and incompetent, if they do not sort out this mess then Labour will clean up at the next election.

The Fate of Europe in the Hands of the Irish

Polls in Ireland have just closed, turnout looks like it is extremely low possibly below 50%. The no campaign is led mainly by Sinn Fèin, whereas most of the political establishment is rallying behind the yes campaign, including the government and most of the opposition.

The no camp argues that agreeing to this is basically handing over Ireland’s independence to bureaucrats in Brussels and Berlin. Many on that side also believe that the limits on a budget deficit would prevent Ireland from leaving austerity and recession; they believe that the Irish government should be spending to create jobs and eventually help Ireland recover.

The yes camp believes that by voting for the new treaty will allow Ireland to get a second bailout from Europe, should it ever need it. They mostly also believe that austerity is the way to get Ireland out of the crisis and a budget deficit will not help Ireland’s economy grow.

So the results tomorrow will be waited on patiently across Europe and indeed the world, if Ireland votes no it will be difficult to grasp the magnitude. As Ireland is in the Eurozone it will make things more difficult for Merkel and other austerity leaders. It will also be welcomed in Greece, as this may prompt a new and more lenient treaty that would be of great benefit to Greece.

Hunt Admits his Bias

Jeremy Hunt has appeared at the Leveson Inquiry today to answer questions on his media policy. The day primarily focused on his bias in favour of the News Corp takeover of BSkyB, it has been a difficult day for the government. Despite what has emerged today David Cameron is still confident that Hunt “did not break the ministerial code”.

One of the more worrying concerns is texts sent by Hunt to a number of people, including James Murdoch and George Osborne. The texts were sent on the day that Vince Cable was stripped of his right to oversee the BSkyB takeover, the texts clearly demonstrate that Hunt was completely biased in favour of the News Corp takeover and shot not, therefore, be handed the responsibility of overseeing it.

Here is a timeline of the texts that day:

12:00: News Corp is given the go-ahead by the European Commission in Brussels to buy the remaining shares of BSkyB. The EU competition commissioner, Joaquín Almunia said “I am confident that this merger will not weaken competition in the United Kingdom.”

12:46: Jeremy Hunt texts James Murdoch, “sorry to miss your call. [I] am on my mobile now.”

12:52: Murdoch texts Hunt, “Have to run into next thing. Are you free anything after 14:15? I can shuffle after this.”

[Murdoch and Hunt arrange to meet at 16:00]

12:57: Hunt tests Murdoch, “Great and congrats on Brussels. Just Ofcom to go.”

14:30 The full transcript of the interview between undercover reporters and Vince Cable is published by the BBC’s business correspondent Robert Peston. The report includes some information that the Daily Telegraph had not published.

15:56: News Corp issues a statement saying that they are “shocked and dismayed” by the reports of Cable’s comments. “They [the comments] raise serious questions about fairness and due process.”

16:00: Hunt and Murdoch talk briefly on the phone about Cable’s comments.

16:08 Hunt texts Osborne, “could we chat about Murdoch Sky big? I am seriously worried we are going to screw this up.”

16:08: Hunt texts Osborne, “Just been called by James. His lawyers are meeting now and saying it calls into question legitimacy of whole process from beginning. ‘acute bias’. etc.”

16:10: Hunt email to Coulson, “Could we chat about this? I am seriously worried Vince Cable will do real damage to coalition with his comments.”

16:58: Osborne text to Hunt “I hope you like the solution.”

17:45: Vince Cable is stripped of his responsibility over the BSkyB bid and it is handed over to Jeremy Hunt.

I find it impossible to understand how the government does not believe they did anything wrong when appointing Jeremy Hunt, even with hindsight. Cameron stripped Cable of his responsibility due to bias and handed to Hunt, who was also known to be biased… but in the opposite direction. The fact that Hunt texted Osborne with before Cable had been removed from the BSkyB bid process shows that Osborne and Cameron knew that Hunt was biased. They have no excuse, it is an absolute disgrace.

I agree with parts of the media that call Hunt “the Minister for Murdoch.”

The Never-Ending Woes of the Eurozone

The never-ending Eurozone crisis has reached a new low today with the cost of borrowing for Spain rising to almost record levels, just a whisker below 6.7%. Tomorrow is also going to be an important day for the Eurozone, the Irish are going to the polls tomorrow to vote in a referendum on the new EU fiscal compact treaty. If the Irish reject the treaty, it will send shockwaves throughout Europe likely destabilising Greece and Spain even more.

More discussion has focused on the likelihood of Greece leaving the Eurozone. The Economist Paul Krugman who has written a book on, what he calls, an economic depression is becoming increasingly visible. He claims that a Greek exit would be “awful” for the world economy and that Greece may never recover, he believes that the austerity imposed on Greece and other Eurozone countries simply is not working. In the UK he is calling for the government to use the record low borrowing costs to borrow money to fund infrastructure projects and help to boost the economy.

Krugman has claimed that the crisis will send the world economy into chaos and he believes that if the leaders of Europe want the euro to survive there must be some form of political union. Although this appears unimaginable it does make sense, a political union would make it easier to spread the wealth around and allow Greece and Spain to become competitive again.

So what are the risks for the UK? Well we have very little exposure to Greece itself, but the fear of contagion if Greece defaults or leaves the Eurozone puts us at bigger risk. The exposure to Italy and Spain for Barclays, RBS and HSBC is about €10 billion each, but RBS’ exposure to the Eurozone as a whole is €70 billion. If Greece defaults and leaves the Eurozone it will have catastrophic consequences for the Eurozone. Krugman believes that unless Merkel and the Germans concede defeat and allow the Greeks to have more lenient austerity a Greek default is inevitable. 

US economist Paul Krugman

Brutal Murders at Houla

The anger of the international community is still rising after the Houla massacre last Saturday in which over 100 people are now confirmed to have been killed.

The killings have confirmed what many feared (including myself) that the ceasefire would turn out to be nothing but a farce. It is the biggest post-ceasefire attack and has caused many on the international stage to turn further against Assad and his regime. Since the rising began Russia and China have both vetoed two UN Security Council resolutions on Syria. Since the Houla massacre Russia is appearing to try and distance itself from the Assad regime, supporting a resolution condemning the regime for the attacks.

In the United States to, things appear to be changing. Today the USA expelled Syrian ambassadors, joining much of the EU (including Britain and France) as well as Australia and Canada, further putting strain on the Assad regime and reducing its legitimacy even further. Romney is also pressing Obama to be more forceful on the issue of Syria. Yet Obama knows that America is a war weary nation, and intervention in Syria isn't all that popular with his party or independents. At the same time Obama does not want to seem weak and unable to handle foreign affairs. It also doesn't help him that US military leaders have warned the Syrians that they may face military action if the massacres continue.

The bodies of the victims being buried

The Government of U-Turns

The government has performed a U-turn once again on the budget, this time it is on the “pasty tax” and the caravan tax. Originally the government intended to extend VAT to pasties, sausage rolls and other cold food sold in bakeries. This type of food is eaten by many working class people at lunch and helped to re-enforce the image that the government, particularly George Osborne and David Cameron, are out of touch with the public. The proposed caravan tax didn’t help either, originally the government had intended to introduce VAT at 20% on static caravans (ones that do not move), this got strong opposition from Tory backbenchers, the caravan building industry and holiday makers. They claimed that introducing the tax could have cost up to 7000 jobs whilst again re-enforcing the image that the government was out of touch as people who could afford to buy a holiday home wouldn’t have to pay tax, whereas those who could only afford a caravan would have to pay tax. Now the government has decided to introduce VAT at only 5%.

The U-turns have been praised by the Tory backbenchers, but the issue has still damaged the government. The image after the budget is still going to be one of an out of touch government unable to understand the ordinary people. The U-turn isn’t the government’s first either, the coalition has performed many of them in their first two years in office and likely there will be many more. Every U-turn makes the government seem weak and possessing no sense of direction.

There are other unpopular measures in the budget, the “granny tax” and the tax cut for the wealthy. The budget from Hell and the recent return to recession is why Labour has managed to gain an eight point lead over the Conservatives. Although this does not mean that Labour can gloat just yet, it’s a long time until the next general election.

Blair at Leveson

Today former Prime Minister Tony Blair appeared at Leveson Inquiry. It was interesting to watch Blair being questioned on his relationship with the press, but on the whole nothing scandalous or shocking was revealed. Probably the most shocking part was when a protester entered the courtroom and started to accuse Blair of war crimes. The protester was quickly removed from the courtroom and not seen again.

Blair claimed that he did not do a deal with the Murdochs to get power and once in power went against the Murdochs’ wishes more times than he went along with them and claimed that there was nothing out of the ordinary about phoning Rupert Murdoch in the ten days before the Iraq War in 2003. He claimed that he had problems with the Daily Mail, calling it a “personal vendetta” as it frequently attacked his family, particularly Cherie, and he found that difficult to deal with. Blair said he did not believe the attacks on his family were “real journalism”. Blair told the Inquiry that between 2006 and 2011 his family lawyers had sent 30 letters of complaint to the Daily Mail concerning stories about Cherie.

“The Daily Mail… have attacked me, my family, my children, those people associated with me, day in, day out. Not merely when I was in office but subsequent to it as well. They do it very well, very effective. It’s very powerful.”

When asked about why he didn’t tackle the press Blair said he would be unable to do so as it would have opened up the wrath of the press and attempting to tackle the power of the press would have taken up a sizeable portion of government time and side-lined other, more important issues.

“My view is, and I think it’s still my view actually, that you would have had to clear the desk, this would have been an absolute major confrontation. You would have had virtually every part of the media against you in doing it. And I felt that the price you would pay for that would push out a lot of the things I cared more about.” He said it would be “A long, protracted battle that will shove everything else to the side”

Although he acknowledges the political difficulties of doing so he says that now is the time to tackle the press, in the wake of the hacking scandal and the Leveson Inquiry it would be possible and the public would be prepared to listen. Blair has urged politicians across the board to support Cameron if he tried to tackle the press as he cannot be left alone to do this.

Blair at the Leveson Inquiry yesterday