Wednesday, September 25, 2013

Running out of energy

The problem I have with Ed Miliband's set piece speeches is that I get most of my news through newspapers and blogs, and very rarely actually hear him speak. This means that when I do, in the occasional PMQs or conference speech, a large chunk of my reaction is taken up with noticing how odd he looks and how strangely plaintive his speech cadences are.

That said, and given that the ability to remember an hour long speech more or less verbatim is impressive, presentationally I thought that much of his speech yesterday was pretty good. It was a bit revivalist in character, but since Labour likes to think of itself as a great moral crusade, that's probably no bad thing.

As to the content, well I wouldn't be expected to agree with much of it, and I didn't. Rather than go through it point by point (because I'd rather not write it, and you'd rather not read it) I just thought I'd look at the two most eye-catching initiatives - the energy price freeze and the 'use it or lose it' policy regarding undeveloped land. In each case, the policy identifies a genuine problem and then proposes a solution by Government diktat. It's a classic left-wing position.

Energy prices first. The energy companies don't register particularly excessive profit margins - between 4 and 7%. The principal reason for sharply increasing energy bills is the cost of oil and gas, exacerbated by the diminished value of the pound (especially given the drop in North Sea production). Energy bills are high because energy is expensive. Asking people whether they would like these bills to be lower is something of a no-brainer, it's Hopi Sen's pony polling:

1. Would you like a pony?
2. Would you like someone else to pay for your pony?

Keep that in mind when reading Jonathan Freedland's article about how well all this went in the focus groups:
Labour tested the energy freeze on focus groups and saw approval go "off the charts", according to one senior figure.
Well, quite. Food prices have risen quite a lot too recently - nearly twice as fast as energy prices - can we expect the price of bread to be capped as well? If not, why not? What's the intellectual justification for caps on one and not the other? Labour are trying to deal with a problem by legislating for it to go away. We don't just have historical and academic evidence that this doesn't work, we have a contemporary example.
A Venezuelan state agency on Friday ordered the temporary takeover of a factory that produces toilet paper in what it called an effort to ensure consistent supplies after embarrassing shortages earlier this year. 
Critics of President Nicolas Maduro say the nagging shortages of products ranging from bathroom tissue to milk are a sign his socialist government's rigid price and currency controls are failing.
It's the same problem that characterises Miliband's other eye-catching initiative: the confiscation of undeveloped land. There's a shortage of housing in this country, and house prices are very high. There's clearly a supply-side problem. Ask most developers, and they'll pinpoint the planning system as the key blockage. The reason most developers have substantial land banks (the undeveloped land that Miliband wants to confiscate) is that it takes roughly 4 years to get planning permission to develop it. The best way to clear the logjam in British construction is to fix the planning problem - again, something Labour is opposed to.

Labour is trying to resolve difficult problems by legislating them away. It doesn't work.

Thursday, September 05, 2013

Ed Miliband: the death of leadership

David Aaronovitch is magnificently scathing about Ed Miliband's leadership (or, more accurately, abject lack of it) over Syria in the Times this morning. The more one examines Miliband's conduct over the Syria vote, the less defensible it appears. That can best be illustrated by Martin Kettle's attempt to do just that in today's Guardian:
Last week, Miliband did the right thing in the Syria debate. He put forward an amendment which stressed the need to complete the weapons inspectorate's work in Damascus and the observance of proper United Nations processes, while retaining the option of supporting military action against the Assad regime. That amendment was defeated, whereupon Labour voted against a government motion which was less specific.
So there's the justification for the amendment: i) it stressed the need to complete the weapons inspectorate's work in Damascus; ii) it stressed the need to go through UN processes; and iii) it left open the option of military action. That's why Labour couldn't support the Govt motion. The following lines are from the Govt motion:

This House... Believes, in spite of the difficulties at the United Nations, that a United Nations process must be followed as far as possible to ensure the maximum legitimacy for any such action;
Welcomes the work of the United Nations investigating team currently in Damascus. Whilst noting that the team’s mandate is to confirm whether chemical weapons were used and not to apportion blame, agrees that the United Nations Secretary General should ensure a briefing to the United Nations Security Council immediately upon the completion of the team’s initial mission;  
Believes that the United Nations Security Council must have the opportunity immediately to consider that briefing and that every effort should be made to secure a Security Council Resolution backing military action before any such action is taken. Before any direct British involvement in such action a further vote of the House of Commons will take place.
The only substantive difference between this and the Labour amendment was that the amendment required 'compelling' evidence that Assad was responsible. What exactly 'compelling' meant was undefined. It was evidently not felt that the JIC report showing that Assad has used chemical weapons 14 times since 2012 met this standard. Far from the Government motion being 'less specific' as Kettle has it, it was the Labour amendment that featured a fatally ambiguous component. This wasn't a principled voting down of a motion, it was a shabby political fudge. Aaronovitch concludes by saying:
His technique for victory to is follow behind the leader, wait for a slip-up and exploit his or her mistakes. He did it to his brother. He hopes to do it to David Cameron. He is neither hunter nor prey, he is scavenger. He is a political vulture. Mission creep? His mission is all about creeping.

And though you can just about see how in a bad year Ed Miliband could become prime minister, what I cannot any longer pretend, after three years of his leadership, is that he would be a good one. On the contrary. I think he would be a disaster. Strangely, I think both the country and his party already know it.
 And, in Kettle's piece defending him, you can see that Aaronovitch is spot on:

Here are Miliband's ratings in a YouGov poll taken this week: decisive 5%; strong 4%; a natural leader 3%; charismatic 2%.
God help us.

Wednesday, September 04, 2013

Is Gibraltar a tax haven?

Syria may rather have knocked Gibraltar off the front pages in the last week or so, but Spain is still rattling its sabres at the Rock. Its latest plan is to ban the bunkering of ships in the waters off Gibraltar (although you'd think this would be hampered by the fact that Spain has no jurisdiction over these waters). While the reasons for Spanish anger over Gibraltar are slightly complicated, clearly the recent economic success of Gibraltar is acting as a goad to Spanish pride - how can a tiny rock with no natural resources manage a GDP per head that is more than twice as high as Spain's?

Well, obviously, it's because it's a tax haven. Or at least that's what Spain says (and Simon Jenkins and Richard Murphy, obviously). But the OECD disagree - Gibraltar is on the white list of countries that have applied internationally recognised tax standards. Naturally, however, the slur of tax haven (or 'fiscal parasite' as the Spanish prefer it) is too good a one to drop merely because it's not true
"Here, a tax haven is a place that has a VAT of less than 21 percent, a marginal rate of income tax of less than 56 percent and a tax on companies that is less than 30 percent of their profits," says Paula Papp, an expert from International Financial Analysts.
If your definition of a tax haven stretches to include France, Denmark, Norway and Germany then its probably a touch too broad.