Monday, 23 December 2013

What can we expect for UK PLC in 2014?

The end of any year is a time to reflect. A time to recap. And a time to look forward. And that's what we're going to do today - reflect, rather than react.

2013 was the year that the British economy finally began to pull away from the black hole that the financial crisis of 2007-2008 had caused - and which was then exacerbated by the economic policies of the UK's coalition government. The level of growth which we actually got - of 1.3 per cent to 1.4 per cent, if we're lucky - was pretty rapid given that we entered the year fearing another recession. And now next year now bids fair to be pretty good - if we only look at the headline numbers for Gross Domestic Product overall. Every estimate now seems to push predictions upwards, rather than cut them - a depressing and salutary lesson in how little we know that we'd got used to for far too long. The doomsayers have been consistently proved wrong since about last spring, when a gentle but perceptible thaw started to take hold.

But it's not going to be the sunlit uplands. Sure, 'Public Policy and the Past' has probably been too gloomy about the prospects for Britain's economy up to now (though we always pointed out that her industries and businesses were more robust, in the medium term, than they looked). But the British economy remains fundamentally unbalanced - as it was always going to be, once Chancellor George Osborne made the decision to cut back the public sector so rapidly, and to rely on massive increases of private debt to take up the slack.

The result, especially once the Government adopted its apparently growth-at-all-costs mantra late in 2012? Well, it's what everyone knows in their heart of hearts: what even Mr Osborne's colleague and Business Secretary, Vince Cable, calls a raging house price boom in the South East of England, unmatched by similar prosperity elsewhere. And, at one and the side time, a really horrible record on productivity and exports, both figures which seem to look worse every time we look at them. And endless, endless public sector cuts - all the way to 2018/19. Let's imagine the British economy like this: a reluctant diver, it has finally left the podium to try to slice into the water after a lot of shivering and dithering, but it's arcing through the air with a bent neck and back that'll see the body smash and shatter when it reaches the pool. The next Parliament will be a time of continuing economic pain, especially as interest rates are now likely to rise pretty quickly after the General Election of 2015 - if they haven't already, to career-ending effect in Mr Osborne's case.

So the prediction for 2014? More unspectacular but gently accelerating growth, tugged along by a more and more buoyant United States. More below-inflation wage growth for nearly everyone, until right at the end of the year (or not at all). A strenghtening, but still below-par labour market that struggles to deliver any improvements in Britons' standard of living. All in all, it'll be a situation which will see the main governing party, the Conservatives, continue to cut into and erode Labour's rather fragile lead in the polls - though perhaps not by enough to be confident of returning to Westminster as even the largest Party after May 2015. The macroeconomy will look positively healthy by recent standards; normal citizens will still feel poorer.

None of which is very earth-shattering in terms of punditry, really. But it's at least a welcome return to some sort of normality after the last few years - and the occasion of at least half a glass of Christmas cheer.

So that's all for now. We'll be back in 2014, to talk about the impending General Election (of course), the economy (naturally), and any continuing public policy debacle that might have been avoided had a friendly historian been on board (and yes, we do mean you, Mr Duncan Smith). Look for new posts from Monday 6 January, and you won't go too far wrong.

Meanwhile, Happy Holidays!

Tuesday, 17 December 2013

The Ashes: sometimes, the day just goes against you

England's cricketers have relinquished the Ashes as quickly as they could. Old enemies Australia (above) are cock-a-hoop, and they're rightly ecstatic that their long losing streak has finally come to an end. A proud and patriotic people, deeply invested in their sports and teams, getting kicked around the cricketing world was just no fun at all.

Now an inquest will start. It'll have to, because England have been beaten so badly, and so quickly, that nothing else will do. Already the dread words 'deep-seated', 'malaise', 'domestic game' and the like are being bandied around. Suddenly tinkering with the county game is the problem. Or the tedious go-slowism of England's conservative and non-attacking top batsmen. Funnily enough, no-one was saying any of that six months ago. 

Regular readers will know that Public Policy and the Past is sceptical about these sorts of explanations. It's difficult to tell where structure ends and agency begins, of course, but in a game like cricket - which is all in the mind of the players, and all in the momentum of any game or series - we're all in favour of agency here.

Remember that, even this time, Australia had a really bad first day in this series. When a visibly nervous Mitchell Johnson came in to bat during the First Test in Brisbane, they were tottering at just 132-6. A few whacks later, and the next day's fateful leg-slide flick by Jonathan Trott that got him among the wickets, and things looked utterly different. The Australians looked like they didn't know what to think until they got some breaks - like the three tosses they won to bat first three times in a row. Had England taken their catches on day one of Adelaide's Second Test, the result might have looked pretty different there too. The visitors wouldn't have spent all those punishing hours in the field. They wouldn't have started to pine for the dark evenings and Christmas lights of home - or just about anywhere that wasn't full of jeering opponents. England got some tough breaks, as well as coming up against some tough opponents.

Don't take it that PPP is saying that it was all about luck rather than judgement. This debacle had probably been coming for a long time, especially since Australia did so well in coming back into last summer's Ashes following their humiliation at Lord's. The signs have been there for a long time - if people have wanted to see them. But the humiliation, the burn-out, the grind-your-faces-into-the-dust level of defeat? That's probably down to the sequencing as much as any so-called 'underlying' causes. Oh, and the individual misjudgements of batsmen who were subject to a slow-motion landslide that needed a few pebbles, somewhere - almost anywhere - to get it going.

You know what? Sometimes it's just a bad day. Or fifteen.

Monday, 16 December 2013

Real wage rises might save the Government

Sometimes it's hard to see a route to re-election for the present UK government. The economic winter has been long and cold; left-leaning voters have defected from the Liberal Democrats in their droves, gathering around Ed Miliband's relatively left-wing rhetoric, while the challenge of the United Kingdom Independence Party shows little sign of going away.

All in all, there seems little respite for Britain's governing Conservatives, who have lagged in the polls for two years now. But there is one single chink of light: rising real incomes, which might save them in the medium term. Macroeconomic numbers have been telling us for some time that Britain is on the mend, but now it's becoming more and more apparent on the ground. House prices are likely to surge ahead next year; the construction industry is growing quite rapidly again; every economic update seems to upgrade Britain's growth prospects. That might not be that sustainable - it looks for all the world like yet another house price boom - but it will last us for this Parliament, that's for sure.

This will definitely have political consequences, and it may help the Conservatives to carry on in office - as a minority, perhaps, but power is power. American political scientists have long looked at real disposable incomes, rather than macroeconomic indicators such as unemployment and inflation, to explain election results: some recent work has suggested that President Obama's 2012 victory was partly down to voters' wages growing in the months leading up to the November 2012 contest.

And the main personal finding of recent work by the Office for Budget Responsibility? That Britons' incomes will start to go up in the last few months of 2014, before growing more quickly just before the upcoming General Election of 2015.

Things might look bad in No. 10 Downing Street right now - but as regular readers will know, 'Public Policy and the Past' has long been unimpressed by Labour's performance in local government elections, and in the polls. There will be a swingback - there always is. Mrs Thatcher looked in dire trouble in 1982 and 1985, only to storm back to victory two years later.

That might not happen. But the Government still has a good chance, if the OBR is right about wages. If incomes continue to fall, of course, they're toast. But the outcome of the next General Election is still uncertain. That's easy to say, and hard to feel when you look at such apparently stable polling. But it's where we still are now.

Thursday, 12 December 2013

The curious case of the generous Chancellor

Amidst all the talk of continuing budget cuts and austerity in last week's Autumn Statement, delivered again by Chancellor George Osborne (above), there was one curious giveaway: an announcement that there will no longer be any limit on the number of students universities can admit. Now, the fact that such a barrier still existed will have been a shock to any members of the public still convinced of the old, silly myth that governments had pressganged ever-greater numbers of young people into Higher Education when quite the opposite situation has pertained for many years. But I digress.

The real shock here was twofold. For one thing, the Government had been privileging 'top' universities in its progressive liberalisation of the sector's controls on numbers, allowing them to take unlimited numbers of students with ABB or higher at A-Level. Now it's 'reverse engines', and everyone can have as many students as they like: a concept met will ill-disguised fury from the Russell Group of the most selective institutions, and the cause of much shock and confusion among academics and administrators.

But more importantly for a blog on public policy, the real question mark must be: why announce this now, when it's so expensive? The Government's new student loans system is already set fair to leak 40 per cent of all its initial outlays, and that figure will probably rise until nearly half of all the money shelled out by the taxpayer never comes back in student loan repayments. And the Department of Business, Innovation and Skills has recently had to slam on the brakes over private college expansion and European Union student finance because it's so strapped for cash.

The answer? It appears that the Treasury think that the sale of the remaining parts of the old student loan book will plug the gap - except that of course that'll be a once-and-for-all sale, which will only support the extra monies flowing into universities up until 2018/19. Neither do we really know what the net income to the Treasury will be once we tot up all the future losses involved in foregoing all those repayments. The Treasury appear to have made a series of elementary accounting errors there, by the way, which we will ignore for now. You'd think it was impossible, except after the spreadsheet debacle over Virgin's West Coast mainline train services bid, almost anything seems believable in Whitehall these days. Anyway, the headline here is simple: after 2018/19, the taxpayer is on the hook for yet another £700m of spending following last week's announcement.

Another thought? Well, just selling off the loan book can't be all there is to it. Not even this profligate government could possibly be so incompetent. There must be a long-term plan to constrain costs in the back of the cupboard somewhere. 'Public Policy and the Past' would suggest that the funding hole will be met in two ways: firstly, a complete liberalisation of the market in Higher Education after the next election, designed to drive down costs (except that it wouldn't, but that's another story). There'll be a massive expansion of private colleges, which might well in the end drive spending upwards, but there you are. Maybe the Russell Group will be allowed to charge what they like (up to, say, £24,000 per year in some subjects) and still get access to state sector research money, even if they would then have to be barred from the state loan system for undergraduates. And, more importantly, there will almost certainly be a revision of the post-2010 university finance system, already underway at the margins for poorer students. Interest rates on the loans might be raised, or the repayment period shortened. Only then does this move make any sense.

Otherwise, the puzzle of the generous Chancellor will hang in the air for some time to come.

Sunday, 8 December 2013

Nelson Mandela and the art and craft of the historian

The passing of President Nelson Mandela has made many people reflect about many things: the nature of leadership, of rhetoric, nationhood, race, and politics itself.

Historians have got a lot to add here. As Richard Toye of the University of Exeter has reflected, one thing we can say is how complex things seemed at the time, bringing to the question a degree of fine detail and a sense of contestation that might be lost if we celebrate a totem and an image rather than a man. Mr Mandela was opposed by many, in his own country and beyond. He was a politician, not a saint, and he used cunning, rhetoric and sometimes force to move towards his objectives. We have to look forwards, from the perspective of a deeply divided South Africa as it existed in the 1980s and 1990s, rather than just backwards from the more united and fairer society that Mandela forged.

What we historians might also highlight is the admixture of structure and agency which makes up changes in our history - and the way we professional historians try to deal with them.

Consider the situation when he walked to freedom from his prison cell in 1990. A sinister security infrastructure was quite happy to stir up the prospects of a civil war. The ANC was faced with enemies on every side, and had it lashed out in angry vindication the whole structure might have come tumbling down in an all-out confrontation that would have left the region devestated. Nelson Mandela's words and deeds - who can forget 'take your weapons, and throw them into the sea'? - helped to stop that happening. In President Obama's memorable phrase, he 'took history in his hands'.

Now things may not have been as bad as they seemed. The end of the Cold War and changing views within white South African society meant that the governing classes of the time had few other places to turn. But their erstwhile opponent made it easier for them - and for the ANC's other enemies. He provided them with a respectable face to bargain with, and a set of ladders to climb down.

Where will the balance between the individual's role in history, and the logic of the situation, be struck? What will future historians think of the agency and the structure? We don't know yet - but we know, at least, that we will have to know.

Friday, 6 December 2013

A bizarre Autumn Statement

This year's Autumn Statement on the economy, as delivered for the fourth year by Chancellor George Osborne (above) was a right old curate's egg affair - a mix of the good, the bad and the downright ugly (if you'll forgive two cliches in one sentence).

On the one hand, the economy is growing again - rather rapidly, in fact, though actually the Chancellor very slightly revised down official growth forecasts for 2015-17. That'll leave him plenty of room to talk about a boom in a May 2015 General Election, of course, and the lacklustre reply of the Shadow Chancellor, Ed Balls, will have cheered him no end as well.

So is the Chancellor similing? Probably not, no. Because when he announced that he wanted to 'rebalance' the economy, and lauded 'the march of the makers' - aspirations he still mouths, though less and less convincingly - he didn't think that productivity, investment and exports would do so, so badly.

The impression lingers that this isn't the recovery the Chancellor wanted, and that he's grabbed at Help to Buy and a debt-driven consumer binge to get himself out of the hole he himself dug. Just like the Conservatives did in 1954-55. And 1963-64. And 1986-87. Etcetera. The Office for Budget Responsibility now thinks that ridiculously buoyant house prices will shoot up even faster than they thought a few months ago, and that personal debt will go up more quickly at the same time. That's because real wages are going to continue to stagnate or go down, and Briton's won't be borrowing to make themselves feel good: they'll be running down their savings rate to pay their bills. All at a time when austerity as executed by public sector spending reductions won't do anything to put wind in the economy's sails: for the Government is going to speed up spending cuts, not slow them down as we get closer to balance in the next Parliament - leaving the public sector smaller than it's been for two or three generations.

It's a recovery, but it might be a voteless one - akin to the Wilson government's 'recovery' in 1968-70, which eventually led to Edward Heath defeating Labour at the polls in 1970, or the even stronger growth of 1994-97, which ended in disaster for the Major Conservative government of the time. Half of voters seem to think that the Autumn Statement was bad for an economy they increasingly define as their own household budget and outgoings. It's hard to come back from those sorts of figures.

Growth, yes. Victory, no.

Thursday, 5 December 2013

The great badger cull disaster

So the badger cull in the South-West of England has been called off, hopefully for good. Natural England has finally pulled the plug, after many months of being told - by the Royal Society for the Prevention of Cruelty to Animals, among others - that it just wouldn't work. 

Ministers set out to kill enough badgers to stop the spread of the tuberculosis that many of them carry through to cattle. It's a terrible disease in livestock, and it causes thousands of fatalities a year. Had the killing worked - if it had ever looked likely to work - a culling programme would probably have been justified. But first the Government ignored all the evidence that shooting badgers has never made any difference to overall disease levels. Then it said that it wasn't going to do any follow up studies or scientific work on the cull at all - so that the limited killings, in only one part of England, wouldn't have any wider applicability whatsoever. Then it failed to get enough of the badgers killed to reach the threshold where culling would do any good anyway, even in the very tightly-drawn boundaries of the test area or the local region.

In the meantime, many hundreds of beautiful, healthy, inoffensive animals have been slaughted. The Government has blown millions of pounds of your money, to absolutely no effect. And killing the healthy animals that marksmen could find, allowing diseased animals to move into their ranges and disrupting a settled situation, has probably made the TB problem worse.

What a disaster. And it's not alone, either. Universal Credit has become a laughing stock. Higher Education tuition fees in England have managed the trick of asking both taxapyers and students to pay more, without giving universities much more money. The Government has to do better soon - or its chances of re-election, even as a minority or in a coalition, will be gone.

And let 'Public Policy and the Past' get this straight: this bungled cull is now, and always was, blinkered, nasty, disgusting, immoral and wrong. The word 'fiasco' doesn't cover it, and all we get out of the Ministry in response is a bland press release. In any honourable world, the Secretary of State - who so memorably said that it was the badgers themselves who had 'moved the goalposts' - would resign immediately.

But of course we don't, and he won't.

Monday, 2 December 2013

The drinking water myth

So we all know that you should drink quite a lot of water to stay healthy, right? It reduces the strain on your kidneys and your bladder. It's good for your bowel. And your skin. And it stops you getting 'dehydrated'.

Well, regular readers will recall that I'm writing a book right now on 'The Politics of Water in Post-War Britain'. And I'm afraid to say that - just as most people didn't smell that bad, despite only having a bath once or twice a week - we don't appear to need that much water after all. All those cups of tea and coffee that people drank instead during the 1950s and 1960s? That might have done just as well.

So where did the idea come from? Well, it probably came from three, relatively interconnected, historical sources: the first, state-driven attempts to make us 'better', and 'healthier', partly so that we could ward off foreign menaces and serve the warfare state of the 1940s and 1950s. It does look as if the US National Academy of Sciences was the source of the idea (registration required), in a not-very-well-sourced set of 1945 recommendations. The second reason? Bottled water's attempts, from the 1970s onwards, to persuade us that it's 'purer' and 'better' than tap water - though it isn't, of course. A third reason for the rise of this concept, which has seen everyone marching around with plastic bottles of water even though they don't feel thirsty, is an increasing food festishism and faddism related to the way in which we eat food. Hunger? Seasonality? They're almost gone, relaced by a set of food-as-lifestyle indicators that are supposed to say more about who you are than how you feel. Bottled water makes you look healthy, fashionable and busy: you'd better get it down you if you want to look like a top sportsman or woman. Even they don't need quite so many bottles of isotonic sports drinks as they're told, but still.

Sure, if you're going to the gym a lot, or sweating it out in some hot climes, you should in all probability get a couple of litres in you a day. And it's better than guzzling down all those calories in fruit drinks. Otherwise, your body will just retain more of what you've got - and you should be more than okay. You can get most of the water you need from the food you eat anyway. Get plenty of fruit and vegetables and a couple of glasses of water in you every day, and you'll probably be fine.

That's it for today - not much of a public health announcement, but enlightening about our mythic 'knowledge' and common sense, all the same.