A TERRIBLE YEAR FOR THE CENTRE LEFT

 

THE CENTRE FALLS APART.

Let us hope 2016 represents the darkest hour for the centre left in Britain, Europe and the world. It is not just the defeats suffered by people like Hillary Clinton and Italian Prime Minister Matteo Renzi and the victories of Donald Trump and re-election of Jeremy Corbyn. It is the inability of the centre left to have any convincing answers to the problems of globalisation, terrorism and immigration. Because of this, Leave won in Britain, Putin was strengthened in Russia and President Obama became impotent in the Middle East.

2016 has seen a weakening of belief in organisations that have become part of the post 1945 architecture particularly the European Union, NATO and free trade. Comparisons have been made with the 1930s. They are exaggerated because we do not, yet, have large overtly fascist parties backed by tacit or overt military support that prevailed in that troubled decade. What we do have is a growing populist movement headed by politicians from right field offering to sweep away the old parties with their jaded remedies. The populist right offers simple solutions to complex issues to voters disillusioned by politicians who have failed to deliver for all. The other valid comparison with the thirties is even more worrying. These populist politicians have people to blame, usually immigrants. This has led to increases in racial abuse and worse.

The demand for instant solutions is made worse by social media with its opportunities for “echo chamber” fervour and vile abuse. There is a weakening support for democracy. The warning signs of how quickly things can disintegrate came with the razor wire fences erected in the Balkans against immigrants and refugees.

Our own EU Referendum showed how foolish David Cameron was to put a highly complex issue to a binary vote. His departure is one of the best things to happen this year. As the Brexit crisis drags on he will be increasingly be seen as one of the worst Prime Ministers in our history.

The centre left needs to assert the value of international and domestic cooperation, express enthusiasm for the European ideal, point out that we are in a global world whilst developing policies on immigration, a tough approach to tax havens and bank control.

SHADOW OVER THE NORTHERN POWERHOUSE.

The year has seen major figures at the heart of this important project leave, or prepare to leave, the stage. The Chancellor George Osborne paid the price for calling the EU Referendum, although he has formed the Northern Powerhouse Partnership think tank. That’s not to be confused with the Northern Powerhouse Partnership set up by Andrew Percy, the Minister in charge of devolution to the North.

There was a period of uncertainty about the government’s commitment to the Northern Powerhouse which saw the sad loss of Lord Jim O’Neill of Gatley who’d been a strong advocate of more power for the cities. We are also now in the final months of Sir Howard Bernstein as Chief Executive of Manchester Council who has helped shape the major devolution deal in his city and in wider areas.

With government uncertainty and local tensions a complex patchwork of devolution has developed during 2016 across the North. Greater Manchester has most powers with the Liverpool City Region resolving some of its internal difficulties to gain a reasonable devolution package for the incoming city region mayor.. Leeds has not resolved its issues with surrounding districts. HS2 was confirmed but despite the growing importance of the organisation Transport For the North, the Secretary of State, Chris Grayling, is saying he’s waiting to hear about the plans we have for improving East West connections over the Pennines. They’ve been around for years!

People need to see practical benefits from all this and want a say in what has been a behind closed doors exercise. The centrifugal forces of London are always there.

Despite everything I hope you have as merry a Christmas as possible.

Follow me at www.jimhancock.co.uk

MERVYN’S PANICKING!

THE ECONOMY

With inflation heading for 3%, the Governor of the Bank of England wants £25bn more quantitative easing. What are we to make of Sir Mervyn King’s views revealed by the publication of the latest Monetary Policy Committee (MPC) minutes?

 

He may have been influenced by Mark Carney’s indication last week that inflation targeting may be eased when he becomes Governor in July, or he may have run out of ideas to help our flat lining economy. In any event he was overruled by a majority of the members of the MPC.

 

Having been cheered up midweek by a speech by Sir Howard Bernstein, Chief Executive of Manchester Council at a Downtown event full of ideas about the city’s drive for foreign investment; reading the MPC deliberations was a reminder that we are in a dark forest economically with few chinks of light.

 

The Budget is less than a month away but there are low expectations that the Chancellor can pull any new rabbits out of the hat. The headwear is empty. Quantitative Easing, low interest rates and infrastructure spend have all been tried but the headwinds blow strongly.

 

There are indications that the mortgage market is easing and the infrastructure investment has long lead times but the recession continues to take its toll with Axminster carpets following HMV, Jessops and Blockbuster off our high streets. George Osborne was also a billion short on what he expected from the 4G sale.

 

Last December the Office for Budgetary Responsibility had factored in £3.5bn from the sale. It was an important factor in the Chancellor being able to claim that the deficit was falling. Some economists now claim the government overshoot this financial year will be £10bn.

 

Internationally there is talk of currency wars breaking out as countries try to boost exports. Japan has certainly embarked on this course. The pound is weak which partly explains the 10p hike in a litre of petrol since Christmas. By the way a friend of mine was asking the other day where are the fuel protests that we saw in 2000? A good question I thought.

 

COUNCIL TAX

Against this background local councils across the North are fixing their budgets for the forthcoming year. In our urban areas most people will face a rise in council tax. The politicians will argue they have no choice considering the cuts in government grant. Cynics will point to the fact that the metropolitan councils from Leeds to Liverpool have no elections this year. The Environment Secretary Eric Pickles is threatening to penalise councils like Manchester who have found a way round the need for a referendum if council tax rises by more than 2%.

 

EASTLEIGH BY-ELECTION

Meanwhile the voters of Eastleigh have to choose between the two parties of government as they go to the polls next week. We can judge the seriousness of Labour’s challenge by the refusal of their candidate John O’Farrell to live in the constituency if he was elected.

 

So it’s between the incumbent Liberal Democrats who have a dull but worthy candidate and an off message Tory. I don’t expect the “Chris Huhne” effect to be too damaging and I’d bet on the Lib Dems getting some good news at last.