Darling blows smoke into punctured bubble

The housing bubble burst splattering mud on the faces of the government. Blair sneaked out just in time to let Brown take the heat, though it’s as much his doing as Brown’s. Now Brown has the impossible task of looking like a good leader when he’s up to the neck in it.

So today, after Brown confirms he's sticking with the Chancellor, Alistair Darling tries to blow some smoke back into the bubble. He preps us by telling us over the weekend that we’re entering the worst economic period going back 60 years.

Darling’s puff seems rather short. The main measure, estimated to cost the Treasury £615m, is a one-year stamp duty holiday on house purchases valued between £125,000 and £175,000. The stamp duty on these properties is, in any case only 1%.

Buyers are not likely to coming flocking back to the market with such a tiny incentive, especially when mortgage providers have reduced the proportion of the property value that they're prepared to lend by much greater percentages.

Moreover, the entire housing market has burst, not just the cheap end. Properties valued over £500,000, which attract 4% stamp duty, have also stopped changing hands.

It seems, then, that this is a populist measure aimed at getting grassroots traditional Labour supporters to get behind the party. These are the people who are most likely to benefit from the shared ownership proposals whereby Housing Associations could take part ownership through partial sale-and-rent-back deals.

If, on the other hand, the government really wants to pump up the housing market, we have a big problem. The bubble needs to deflate. Never before has there been such a disconnect between earnings growth and house price inflation as has been seen in the last 10 years.

House prices have risen beyond the growth of the economy and ultimately to its detriment. The house bubble was bound to burst and the economy to implode when property values were increasing because buyers were taking on debt of greater and greater proportions to the total value of the purchase.

Demand was being stoked by gearing. Supply, meanwhile, was being choked by the vast number of government-subsidised buy-to-let deals.

Just a thought.
Lord Goring

G8 leaves climate change up to future generations

So, in 42 years' time, will you remember the names of the G8 leaders who came up with the latest "breakthrough" agreement on climate change? Well, they're reckoning on not being around. Or, if they are, that you won't look back to today and point the finger.

The G8 have just committed to halving carbon emissions by 2050. It's pathetic in itself as a target and would not require less than a 2% per annum reduction on a compound annual basis. In fact, funnily enough, the "leaders" have not committed to doing anything at all, since there is no intermediate target. You can look these fellows up in 2020 and ask them how it's going and no matter where things stand, they can happily say, "we're on course". Indeed, the US has no intention of reducing emissions before 2020.

Meanwhile, the chairman of the Rocky Mountain Institute, Amory Lovins, says that CEOs should think of energy and resource efficiency as a key source of competitive advantage. He comments in the McKinsey Quarterly*:

In my team’s latest redesigns for $30 billion worth of facilities in 29 sectors, we consistently found about 30 to 60 percent energy savings that could be captured through retrofits, which paid for themselves in two to three years... The real leaders are going to be smart companies that see the competitive advantage in leading energy transformation in their sectors.

Suppose then, that our G8 leaders went back home and encouraged their CEOs to do just this instead of subsidising inefficient practices, what then might happen?

Just a thought.
Lord Goring

*An interview with the Rocky Mountain Institutes Amory Lovins, McKinsey Quarterly, July 2008

Brown's apartheid

On 1 May 1963, the apartheid government of South Africa enacted the General Law Amendment Act. Better known as the Ninety-Day Detention Law, it waived the right of habeas corpus and authorised any commissioned officer to detain - without a warrant - any person suspected of a political crime and to hold them for ninety days without access to a lawyer. This was followed in 1965 by the Criminal Procedure Amendment Act, which provided for 180-day detention and re-detention thereafter. While the Terrorism Act of 1967 allowed someone suspected of involvement in terrorism, defined as anything that might "endanger the maintenance of law and order", to be detained indefinitely without trial on the authority of a senior policeman.

This piece, however, is not about African politics. It is not about Mugabe's repressive regime. It is about the politicisation in the West - and especially in the UK, yes, the UK, not the US - of terrorism. There are no solid arguments for extending detention. None at all. Indeed, after the goverment was defeated on the 90-day proposal two years ago, ministers dithered for months before coming up with another proposed time limit. As Diane Abbott said:

"They did not have a number of days because this is not an objective, evidence-driven bill. It is the purest politics. It is about the polls and about positioning. It is about putting the Conservative party in the wrong place on terrorism."

When so many key figures in counter-terrorism have spoken openly against the need for this extension, one cannot help but wonder what kind of authoritarian state Gordon Brown is building purely for political purposes.

Lets not be too dramatic - no one wants to come across as a preening David Davis - the UK is not on this soil going to impose apartheid measures, surely. It would not be possible, for example, for a person to be detained without trial and without charge for several weeks, would it? One can only hope that the Lords kill the terror bill; and that both Davis and Brown lose their re-elections.

Just a thought.
Lord Goring

*Sources: Nelson Mandela, Long Walk to Freedom; Terrorism Act No 83 of 1967 - Wikipedia, the free encyclopedia; The Liberation Struggle: South Africa at War 1600-1994

UN Convention on the Rights of the Child

Tom Cruise, playing the part of Chief John Anderton in The Minority Report, headed up the department of pre-crime and was responsible for arresting criminals before they committed their misadventures. I wonder whether Jack Straw, Secretary of State for Justice, doesn't think of himself as the man who will detect and prevent criminal activity and mete out punishment on the basis of the possibility that a misdoing is about to take place.

Shay Clipson, a (former) magistrate from Grimsby, has been booted out of her job for criticising the police. Mr Straw said:

"It is clear that by mentioning you were a magistrate and then criticising the police, the two issues became linked and therefore there is doubt whether you would be able to consider matters involving the police impartially."

So there it is. You're employed. There is no suggestion that you've done a poor job. Then your 13-year-old daughter has the shit kicked out of her for being Welsh by a gang who has warned her of the upcoming beating. Despite your asking first the school and then the police to intervene, they refuse. Naturally, you complain about the inaction and the next thing you know you're out of a job because the police report your behaviour to the local bench committee.

So I'm wondering if the local bobbies are going to be joining civvie street or if they can continue to sit on their arses at Her Majesty's leisure.

I'm also wondering about the Government's Children's Plan. Back in December, Children's Secretary Ed Balls launched the programme saying:

"We have been listening to parents, teachers, professionals and children and young people and the Children's Plan responds to their concerns. Over the next ten years I believe this plan will herald a radical change in the range of positive activities for our young people and a revolution in the way parents are involved in their child's education."

What Mr Balls did not say is that the Government will not tolerate parents getting involved in their child's education. Meanwhile, here's the range of positive activities that the local constabulary permitted a gang to undertake upon Ms Clipson's daughter:

• racial abuse
• spit on her
• stub out cigarettes in her hair
• throw her into the traffic on a busy road
• kick her unconscious on the school playground
• enjoy watching the show on YouTube

So perhaps it comes as no suprise that the UK, according to the Children's Rights Alliance for England (Crae), fails to meet the minimum standards set out in the UN Convention on the Rights of the Child, ratified by the UK in 1991. Mr Balls today admits that a good childhood is not a reality for evey child but pledges to do all he can to make this a "golden age for our children".

One suggestion: the police should intervene in situations where a child is walking the 'green mile' to a gang beating. Maybe schools should also be required to get involved. When 90% of children say they would consider carrying a knife or gun if they felt unsafe, it's time to do a little more than spend £3m on a 'viral' information campaign.

Threatening to shut down underperforming schools is probably not the solution either.

Just a thought.
Lord Goring

UN Food Summit

Lula da Silva's claim that the link between biofuels and fuel prices does not stand up is obviously rubbish. He's right that the causes of food inflation are complex but the link with biofuel is clear: while Washington suggests biofuel production is responsible for about 3% of the increase: other estimates put it as high as 30-60%.

In general, biofuels are not considered to be the prime cause of food inflation and it is right not to focus the whole debate on this single factor. However, the biofuel 'experiment' is at best a red herring, at worst a catalyst for further environmental destruction. Let's be clear: first, it has a role in causing food inflation; second, the subsidising of biodiesel is an encouragement to increase carbon emissions.

The subsidies given to the production of biofuels is greater than the cost of production of petrol or diesel. So the shift to biofuels is very expensive: for OECD members this amounts to about $15bn but only delivers 3% of liquid transport fuel. To counter future supply shortages of oil, some countries are proposing to derive 30% from biofuels, at a cost of $150bn.

Is this money well spent? Of course not!

Biofuels have very little impact on carbon emissions (13-18%). Fundamentally, the vast investment into biofuels through subsidies and tariffs - Brazilian ethanol faces tariffs of 50% in the EU - could be spent on more effective ways of reducing carbon emissions.

Of course, the whole story is not about carbon emissions either: there is a growing shortage of easily available energy. By framing the problem in this way, the response is to find alternative energy supply. There are many parties interested in maintaining the status quo: the agricultural lobby is doing very nicely from the boost to crop prices; while oil producers are enjoying the high price of oil, especially relative to the dollar.

Just a thought.
Lord Goring

Fuel taxes

Lord Turner has a point: putting a price on carbon is a crucial instrument to cut emissions. He rightly says that the emphasis should be on encouraging people to cut their fuel use, rather than easing price pressures: “There are huge opportunities for energy efficiency.”

Absolutely. One problem, however, lies in our splendid British tradition of unilateral action. Although our striking truckers earlier this week were being a little economical with the truth about relative diesel prices across the EU, it is clear that they face higher fuel costs than their continental peers. Further increasing the cost of fuel for British truckers will make it hard for them to remain competitive. Does this mean, as Lord Turner suggests, that emissions will be reduced? Not at all. In place of British truckers, who pay tax and spend their earnings in the UK, will be foreign-based drivers. There is no environmental justification for UK diesel to be taxed at 75% while in France and Germany it's taxed at 65%.

What really tickles me, though, is this comment:

“If you are worried about the impact on low-income groups of fuel prices, the response should be to intensify support for them to improve their energy efficiency, rather than say you have to give up on climate change objectives.”

So while Lord Turner can happily spend his king's ransom on private jets to exotic locations, the man on the Clapham omnibus - traditionally a Labour-voter - can stick out the next winter without heating.

Just a thought.
Lord Goring

Knife Crime Campaign

So the Government has wasted another £3million pounds on a viral campaign to stop slap-happy puppies carrying blades. The idea: 'grisly' images of real-life wounds to shock youngsters. Imagine for a moment that you are one of these lads. You're chatting on Bebo with your pond-life mates, when one of your fish-brained friends comes across a picture of some guy with his intestines spilling out. Does he:

1. say "Yuk! that's gross!! gotta stop slicing up these muthas"; or
2. suggest you all go cut up some punk?

You can see I have no idea how these people talk. But my intuition tells me that the answer isn't number 1. You're showing "shocking" 2-D images to kids who've done the deed, sliced up some granny and filmed the whole show to prove how hard they really are.

On the other hand, you have Home Office minister Vernon Coaker saying:

"We know many young people carry a knife because they are fearful and these adverts tell powerful stories about the dangers of going down that path."

No they don't. If you're scared of getting your skin flayed by your classmates and you happen to feel safer with a butcher's cleaver up your sleave (it's a big sleave), my guess is that you're not going to see these pictures, come over all Christian and turn your other cheek for a matching gash.

Just a thought.
Lord Arthur Goring