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George Osborne and the Defamation Bill: a government of all perspectives



The Government has a busy agenda, having to enact legislation on defamation at one end, and people in the media wondering whether George Osborne has in fact overstepped the mark beyond the customary “rough and tumble” of politics. There has been a lot of hoo-ha about whether George Osborne’s comment in the Spectator was defamatory. This aside, as reported here in Business Week, is as follows:

“Osborne said in the Spectator that people close to former Prime Minister Gordon Brown, for whom Balls worked as an aide before becoming a minister in the previous administration, “were clearly involved” in the Libor affair and that “we just haven’t heard the full facts.” “My opposite number, who was the City minister for part of this period and Gordon Brown’s right-hand man for all of it, so he has questions to answer,” Osborne told the magazine. “That’s Ed Balls by the way.””

Put simply, libel is defamation in permanent form such as in writing (slander is oral). A defamatory statement is one which injures the reputation of another by exposing him to hatred, contempt, or ridicule, or which tends to lower him in the esteem of right-thinking members of society (Sim v Stretch [1936], 2 All ER 1237, 1240, per Lord Atkin).

In this discussion which follows, it is important to understand that no legal claims have been brought. The discussion is only for theoretical purposes, and no criminal offences have been demonstrated.

The putative claimant (Ed Balls) must prove that the statement was defamatory, that it referred to him, and was communicated to a third party. The onus then shifts to the putative defendant (George Osborne) to prove any of the three defences: truth (or justification), fair comment (in the matter of public interest), that it was made on a privileged occasion. ‘Vulgar abuse’ is not held to be defamatory (Thorley v Kerry [1812]), and it could be that George Osborne argues that it was ‘vulgar abuse’ made ‘in the rough-and-tumble of politics’. A problem for George Osborne is that innuendo can be held to be defamatory, and therefore such a statement may be defamatory; here the test is that ‘the hidden meaning must be one that could be understood from the words themselves by people who knew the claimant (Lewis v Daily Telegraph [1964]), and must be pleaded by the claimant. Here, the test therefore refers to the people who know Ed Balls, who presumably are not confined to the readership of Labour List or Left Foot Forward? The potentially defamatory remark is specific, as a remark aimed at a wider class of members which is sufficiently wide may not be defamatory (this issue is considered in some detail by the House of Lords in Knupffer v London Express Newspaper Ltd. [1944]).

Since its original publication in the Spectator, secondary reports of this accusation are now widespread. For example, the reports are now by Hélène Mulholland, Peter Edwards in Labour List, Andrew Trotman in the Daily Telegraph, Dan Hodges in the Daily Telegraph, the Guardian website, World News, Yahoo, and Nicholas Watt in the Guardian. However, such people who have reported on this would not be held to have committed a defamation, enshrined in s.1 Defamation Act [1996] as a defence of ‘innocent dissemination’, for a number of valid reasons including if the people knew or had reason to believe that what (s) he did caused or contributed to the publication of a defamatory statement.

We now have good reason to believe that the statement was false, but was made to discredit Ed Balls politically (therefore lower his reputation amongst right-thinking voters, quite literally.)  Jill Treanor, Rajeev Syal and Nicholas Watt write in the Guardian: “Amid Tory unease over Osborne’s tactics, Balls demanded a public apology after Bank of England deputy governor Paul Tucker repeatedly told MPs that he had not been encouraged to lean on ­Barclays to cut its submissions.”

5.49 pm on the Guardian blog yesterday reads as follows:

Labour MP Chris Leslie has put out his response to Tucker’s evidence, calling for an apology from Chancellor George Osborne.

Osborne said last week that “people around Gordon Brown” were “clearly involved [in the scandal around the manipulation of Libor]… That’s Ed Balls, by the way”. Leslie says:

The game is up for George Osborne. It is now crystal clear that the allegations he threw around were completely wrong and without foundation.

The deputy governor of the Bank of England has made it 100% clear that neither Ministers nor officials leaned on the Bank of England to ask Barclays to fix Libor rates. In addition Bob Diamond has also said that he did not believe he was being asked by Ministers or officials to fiddle Libor rates.

The last Labour government was rightly concerned with legitimate policy changes to reduce inter-bank lending costs during the global financial crisis. The Conservatives at the time even said they did not go far enough to reduce Libor. But that is completely different from the deliberate fixing of the Libor rate, which Barclays traders were involved in over several years.

Statements made in either House of Parliament are subject to ‘absolute privilege’. The actual publication in the Spectator itself may not be subject to parliamentary privilege, though this would be a media lawyer not me to opine about. Osborne, if a claim for defamation were ever made, might be able to argue that this was a legitimate point of debate, raised in the public interest. Angela Newsom, on the Treasury Commons Select Committee, said on BBC’s “World Tonight Programme, “I think it was a very valid discussion at the time about who knew what and it has now been completely squashed by Paul Tucker.” Generally, this public interest defence would normally apply to the ‘activity of public figures’.

At the other end of government, the Coalition is producing the Defamation Bill, and this has now reached the ‘report stage’ of legislation. You may review of the pdf of the Bill here. However, the emphasis of the new defamation legislation is different.

However, these worthy libel law reformers are missing the point when it comes to science. Scientists do not usually get sued for writing peer-reviewed articles. Similarly, scientific publishers do not usually get sued for reporting on what happened at a scientific conference. They are normally sued over news or investigative articles or comment pieces, as the above two cases demonstrate. The proposed reforms for science would not have made a jot of difference to either case. An interesting article, written by  Niri Shanmuganathan and Timothy Pinto are media lawyers at international law firm Taylor Wessing, who in fact represented Nature in the libel case brought by Professor El Naschie, raises the relationship between media law and scientific writings.

If parliament wishes to help prevent the law censoring scientific free speech, it may wish to consider two points. First, for science-related articles of high and genuine public interest, perhaps the claimant should have to prove that the publisher was being reckless in publishing in order to win. That is how American law deals with its “public figure” defence. Second, in any event, there should be a streamlined procedure so that it does not take two or three years for a publisher to dispose of a claim. This would help claimants too, as justice delayed is justice denied. Such a procedure could limit the length of parties’ submissions, the number of witnesses and the duration of cross-examination; with the judge firmly in charge of resolving the case as quickly and cheaply as possible.

It will be most interesting to follow the development of the Bill until it obtains Royal Assent in due course. These are certainly exciting times for the Government, as another issue of massive constitutional significance gets assessed summarily today in the Houses of Parliament – that is, reform of the House of the Lords.

 

Does it really matter if George Osborne peddles another myth?



 

 

 

I think most adults now know that politicians don’t tell the truth, in the same way that Santa Claus doesn’t exist. A ‘Nick Clegg pledge’ should be in the Oxford English Dictionary to mean a completely unenforceable electoral promise. So does it matter if George Osborne peddles another myth? Yes it does. It does because of the ‘it’s the economy stupid’ factor. For the first time ever, more people trust Ed Balls with the economy than George Osborne. Two big reasons contribute to this; firstly, Osborne’s plan A of austerity has blatantly failed, and, secondly, Balls predicted that the plan would fail. The media have recycled stories about Gordon Brown throwing around Nokia phones, Gordon Brown selling ‘gold bullion on the cheap’, Gordon Brown ‘raiding the pension funds’, so it’s only fair that some of the vitriolic smears are returned in the Conservatives’ direction. Unfortunately, “repetition does not transform a lie into truth” (Franklin D Roosevelt).

Here is a compilation of my favourite myths peddled by George Osborne.

 

1. “We will go bankrupt like Greece”

“Greece crisis allows Osborne to peddle myths”, Guardian, 9 May 2011, Larry Elliott (press here to go to the article)

“To the extent that Britain is like Greece, it is that slower growth is making it harder to get borrowing down. In all other respects, the comparison does not bear scrutiny, not least because the UK is outside the eurozone and thus has the advantage of a floating exchange rate. But Osborne has been able to use the crisis in the eurozone to justify what he has been doing at home, and he was at it again yesterday, combining an avowed reluctance for the UK to be involved in a second Greek bailout with the warning that it would be a disaster should the government backtrack on its deficit-reduction plans now.”

 

 

2. “The UK economy is like one giant credit card”

Prof Paul Krugman, Nobel laureate in economics, offers an explanation in his article, ‘Nobody understands debt’ (press here to go to the article in the New York Times).

“Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments. This is, however, a really bad analogy in at least two ways. First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation. Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.”

 

3. “Osborne used the statement to launch an unprecedented attack on Balls in the Spectator magazine, saying the Treasury minister in question may well have been Balls. “My opposite number was the City minister for part of this period and Gordon Brown’s right hand man for all of it,” he said. “So he has questions to answer as well. That’s Ed Balls, by the way.””

“Paul Tucker Says Ed Balls “Absolutely Did Not” Try To Lean On Bank Of England Over Libor” – The Huffington Post, 9 July 2012 (please here to go to the full article.)

“Bank of England deputy governor Paul Tucker has given former Labour ministers Ed Balls and Shriti Vadera a huge boost by telling MPs that he had no conversations with them about Libor-fixing during the height of the banking crisis in October 2008. Paul Tucker’s evidence – including a startling claim that he had no conversations with former business minister Baroness Vadera during that period – came as he answered a series of questions from MPs, insisting that he “absolutely” refuted claims he attempted to influence Barclays into manipulating the Libor rate. Speaking before the Treasury Select Committee, Mr Tucker also said that a record of a contentious phonecall he had with former Barclays boss Bob Diamond about lending rates gave the “wrong impression”.”

 

 

 

Does it matter? Yes, according to Fraser Nelson of the Spectator prior to George Osborne according to a recent article (press here to take you to that article), before being disgraced publicly for his smears.

“It remains to be seen how much of this will come out in the parliamentary inquiry. Tyrie may have one of the most forensic minds in Parliament, but he is not a praetorian – and I suspect he was deeply nervous about Osborne’s attack on Balls, fearing this may prejudge the outcome of his committee. But the Chancellor is, as always, thinking ahead to the next election campaign, where his slogan will be: Britain is recovering, don’t let Labour take us back to the bad old days. This explains why he is making his j’accuse with such force, and why Balls is defending himself with such venom. This is not about Barclays. For both Balls and Osborne, this is the first skirmish of the next election campaign.”

 

 

Just a word of advice from Quintilian: “A liar should have a good memory.”

Osborne and financial regulation: the article Osborne doesn't want you to talk about



 

 

 

 

 

On February 23rd 2006, George Osborne wrote about how wonderful the Irish economy was, how we could all learn lessons from it, before it went bust. This is concluding paragraph of that famous article in the Times by George Osborne:

 

The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed.  In Ireland they understand this. They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn.

 

This is observed in the Financial Times:

“Poor regulation wasn’t a problem identified by Osborne at the time. Indeed, he thought Brown had some lessons to learn from the Irish light touch. He warned that Britain was “falling behind” Ireland: “Poor skill levels, rising taxes, bureaucratic planning controls and chronic overregulation are high on the list of culprits.” 

 

The contribution of this deregulation to the Irish economy ‘bust’ has been well documented. Here’s an extract ironically from their report on the banking crisis:

 

“It appears clear, however, that bank governance and risk management were weak – in some cases disastrously so. This contributed to the crisis through several channels. Credit risk controls failed to prevent severe concentrations in lending on property – including notably on commercial property – as well as high exposures to individual borrowers and a serious overdependence on wholesale funding. It appears that internal procedures were overridden, sometimes systematically. The systemic impact of the governance issues crystallised dramatically with the Government statements that accompanied the nationalisation of Anglo Irish Bank. Some governance events are already under investigation. There is a need to probe more widely the scope of governance failings in banks, whether they were of a rather general kind or (apparently in far fewer instances) connected with very serious specific lapses, and whether auditors were sufficiently vigilant in some episodes.”

 

This is the article here which I am produced for ‘public interest’ given that George Osborne is currently the Chancellor of the Exchequer. Unfortunately, it has been deleted off the Times website which is most unusual given that the Times archive is otherwise complete and reliable; it also has been recorded for posterity here. The existence of this article on February 23rd 2006 is well evidenced in these articles (example 1, example 2, example 3, example 4).

 

“A generation ago, the very idea that a British politician would go to Ireland to see how to run an economywould have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.After centuries of lower incomes, Irish average incomes are now 20 per cent higher than in the UK. After being held back for decades, the productivity of Irish companies — the yardstick of economic performance — has grown three times as quickly as ours over the past ten years. Young Irish families once emigrated in their millions to seek a better life overseas; these days it is young people across Europe who come to Ireland to find good jobs. Dublin’s main evening newspaper even carries a Polish-language supplement.

Ireland is no longer on the edge of Europe but is instead an Atlantic bridge. High-tech companies such as Intel, Oracle and Apple have chosen to base their European operations there. I will be asking Google executives today why they set up in Dublin, not London. It is the kind of question I wish the Chancellor of the Exchequer was asking.

What has caused this Irish miracle, and how can we in Britain emulate it?Three lessons stand out. First, Ireland’s education system is world-class. On various different rankings it is placed either third or fourth in the world. By contrast, Britain is ranked 33rd and our poor education performance is repeatedly identified by organisations such as the OECD as our greatest weakness. It is not difficult to see why. Staying ahead in a global economy will mean staying at the cutting edge of technological innovation, and using that to boost our productivity. To do that you need the best-educated workforce possible. It is telling that even limited education reform is proving such a struggle for the Prime Minister.

Secondly, the Irish understand that staying ahead in innovation requires world class research and development. Using the best R&D, businesses can grow and make the most of the huge opportunities that exist in the world. That is why it is shocking that the level of R&D spending actually fell in Britain last year. Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland. While the Treasury here fiddles with its complex R&D tax credit system, I want to examine whether we could not adopt elements of Ireland’s simple and effective approach.

Thirdly, in a world where cheap, rapid communication means that investment decisions are made on a global basis, capital will go wherever investment is most attractive. Ireland’s business tax rates are only 12.5 per cent, while Britain’s are becoming among the highest in the developed world.

Economic stability must come before promises of tax cuts. If, over time, you reduce the share of national income taken by the State, then you can share the proceeds of growth between investment in public services and sustainably lower taxes. In Britain, the Left have us stuck debating a false choice. They suggest you have to choose between lower taxes and public services. Yet in Ireland they have doubled spending on public services in the past decade while reducing taxes and shrinking the State’s share of national income. So not only does Ireland now have lower business and income taxes than the UK, there are also twice as many hospital beds per head of population.

World-class education, high rates of innovation and an attractive climate for investment: these are all elements that have helped to raise productivity in Ireland. It is not the only advanced economy to have achieved this uplift. Last week in Washington the new Chairman of the Federal Reserve, Ben Bernanke, told me about the impact that the sustained increase in productivity growth had made in generating prosperity in the US. By contrast, in Britain productivity growth has fallen in recent years and is far behind the likes of the US and Ireland. Indeed, it is one fifth the rate it was when Gordon Brown walked into the Treasury. Poor skill levels, rising taxes, bureaucratic planning controls and chronic overregulation are high on the list of culprits. Britain is being left behind.

Faced with the extraordinary rise of economies such as China, India and Brazil, many European governments seem to have accepted that long-term decline is inevitable. I detect a similar pessimism here. How on earth, people ask, will we ever compete in such a fiercely competitive world? The Chancellor’s answer is to put up the shutters and stick on a path of ever-higher taxation and an ever- growing State. But you cannot shut out the future.

The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed. In Ireland they understand this. They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn.”

 

 

George Osborne’s economic judgment, aside from the fact his economic policy directly produced the double-dip recession against the advice of various Chairs in economics and Nobel Prize winners, cannot be considered to be ‘fit for purpose’ by any stretch of the imagination.

A discredited government which the country is disgusted at



If you were a trader in shares of Osborne plc, on the basis of this afternoon’s session in the Commons, you’d be urging your fellow commodity sellers to cheer the mantra of ‘Sell, Sell, Sell’. David Cameron and George Osborne has made a very grave error of judgment, as the pathology in the culture of the banking industry is not just restricted to the LIBOR fraud from Barclays. Don’t let the BBC deceive you – the Government has been proven to be a moral cesspit, and the country is completely exasperated.

Bob Diamond in a incoherent set of responses yesterday in the Commons Select Committee, best described as ‘implausible’, was unable to explain why senior ‘LIBOR’ setters, who had apparently been doing the job for decades, were oblivious to the emails from traders publicly wishing the LIBOR rate to be fixed. He had no explanation why it took so long to get to senior management, and provided that the compliance officers had had a duty to report criminal malpractices. This is reminiscent of the “shock” experienced by Rupert Murdoch when he found out about the morally repugnant phone hacking which had apparently occurred at News International. The problem is that ignorance is no defence in our law at least, where company directors are, despite promoting the success of the company, are supposed to act with due care, skill and diligence.

On 28 July 2012, Rachel Reeves claimed that the Chancellor made a conscious decision to exclude LIBOR from the Financial Services Bill in its current form, even when he must have known that a massive FSA investigation into the scandal. It is hard to know how corporate governance mechanisms have failed so dramatically in News International and Barclays, but there is nothing more off-putting to a corporate investor than a large company, albeit running profitably, committing openly criminal activity to pursue its aims.

This afternoon, Ed Balls utterly annihilated George Osborne’s speech, like taking candy from a baby. Balls effectively told him to ‘put up or shut up’, asking him effectively to prove his nasty allegations or desist from making them. The involvement of the Bank of England over LIBOR and the gilt markets is far from clear, and the only way to achieve a solution on this is an independent judicial-inquiry. It is a complete non-argument to say that it is too time-consuming and too costly, as those might have been the same grounds of opposition for the Leveson Inquiry which has gone a long way to showing that the pathology was substantially more than some ‘rogue reporters’. The parliamentary select committee is not able to examine witnesses with the skill of a lawyer, or QC, and probably yesterday afternoon was the best advertisement yet for a judicial-led inquiry.

While this issue runs-and-runs, there can only be lasting damage for David Cameron, whose personal poll ratings are at an all-time low. There will be no closure from a parliamentary inquiry, aided and abetted by the Liberal Democrats who are expected to be electorally obliterated in 2015. The most damaging label for David Cameron is that of the Flashman identity, of a man completely ‘out-of-touch’. The judiciary is the only lifeline for restoring the credibility of the legislature, and a judiciary-led inquiry is the only way for MPs as a collective group to restore their damaged reputation. Cameron is damaged signficantly, the country is most unimpressed, and this could prove to be fatal for this government.

Osborne is a D-rate tactician, not a master strategist – remember Ireland?



 

On talking about Jagger, “Mick can write!” exclaimed Keith Richards in his autobiography. “It’s unbelievable how prolific he was. Sometimes you’d wonder how to turn the fucking tap off.” This has been written about at great length in the strategy of innovation literature (see for example this seminal article by Malcolm Gladwell in the New Yorker.)

 

That is in fact meant to be hallmark of people who have extraordinary gifts as innovators. True innovators, considered to be at the heart of the recovery that never was in the UK, are prepared to have a few ‘dead ducks’ in the hope that one or two brilliant ideas will survive. Unfortunately, there is no sign of Osborne turning the f*-ing tap off just yet. And great innovating strategist he is not.

 

There has recently been much greater scrutiny amongst the Tory commentators of this accepted teaching that George Osborne is a ‘master strategician’. There is no clear sign of what this strategy is, for example in economics, his ‘day job’. One thing that you can say confidently about Osborne, however, is that he is very good at concealing his cock-ups. Thankfully, Duncan Robinson in “The Staggers” of the New Statesman provides a ‘hard copy’ of how Osborne had famously bragged about the wonders of Ireland as an economy, which Robinson accurately summarised on account of: “Ireland boomed instead on a toxic mix of cheap credit, lax banking regulation and by becoming a borderline tax haven.” George Osborne, who is addicted to bragging, claimed, “Ireland stands as a shining example of the art of the possible in long-term economic policymaking.” It’s virtually impossible to find a copy of this article – so if you have a copy of it please do let me know.

 

Some people on the Right would actually like Osborne to turn the f*ing tap off. He has become a ‘falling star’ in the sky of the Tories, as Fraser Nelson, elegantly put it, with one of the most catastrophically delivered Budgets ever in history (which Fraser describes as “shambolic”). There wasn’t any screw-up too minor or major for this Budget, ranging from pasties, to attacks on philanthropists, raids on pensioners, to name but a few. Osborne succeeded in protecting the high earners, who are not part of the ‘squeezed middle’ however Ed Miliband has finally decided to define this. Osborne should like to be perceived as Corporatilist with a big C – his Big C ethos is best illustrated by Robinson’s view of the Osborne Ultimatum on tax: “We should learn from Ireland’s mistakes. Unfortunately, however, Osborne wants to copy them — at least judging by Osborne’s cuts to universities, the 3.4 per cent reduction in the education budget and his continued obsession with reducing corporation tax — to the point where companies could end up paying less tax than their cleaners.”

 

George Osborne’s economic policy has failed, in a perverse opposite to ‘not mending the roof when the sun was shining’, rather ‘not spending on a new roof when it was bucketing down with rain’. You don’t need to have read Keynes’ 1948 ‘General Theory’ to understand how Osborne produced a textbook plan for producing a recession. This strategy has failed Britain. ‘Master strategists’ decided how to allocate resources effectively and how to build a competitive advantage; for example, spending time on campaigning against Scottish independence, a position supported by Labour, fails on both counts.

 

Osborne is instead the Conservatives’ chief thrower of custard pies. He is throwing so many custard pies, he is hoping one does land on Ed Balls, but this is a dubious desperate tactic; as per an article by James Forsyth, in a frenetic ‘J’accuse’, Osborne remarks, “They were clearly involved.” In this way, he comes the closest of the mentality of an innovative strategist. Steve Richards is correct, as is James Macintyre, to observe leadership qualities in Ed Miliband, in being right to capture the agenda of those who wish to implement ‘responsible capitalism’. Miliband’s speech in 2011 at conference I feel will go down in history as seminal. It has laid the foundations for the judge-led inquiry into the media which has been most instructive in exposing the corrupt phone-hacking. The majority of the country, according to a You Gov poll, want a public-inquiry into the banking industry, feeling that a parliamentary-inquiry would effectively sanction a ‘cover up’. Recent polling has also provided that George Osborne is perceived as one of the worst Chancellors in recent history.

 

The media has thus far been running a media ‘democratic deficit’, with Nick Cohen correctly observing that the agendas of writing the Corporatilist articles in the Right Wing press being at odds with the majority of readers who comment on them. The irony is that corporates don’t want a toxic culture either, with Prof. Porter, Professor of Strategy at Harvard Business School, who makes Osborne’s understanding of strategy look like O-level standard (keeping ahead of the times with Michael Gove), will be the first to tell you (see his seminal article in the Harvard Business Review). Corporates attract greater investment if they are pursuing ‘responsible capitalism’ policies, and this is now a well established fact in business. Furthermore, no business, in an international arena, will wish to invest their resources in a country, which Nick Cohen elegantly refers to as, “a pirate state which you visit, rob or be robbed but never to conduct honest business”

 

The problem is that the custard pie thrown at George Osborne will either miss or it won’t stick. It may be a useful short-term tactic, as argued by Steve Richards today, but it lacks credibility. Ed Balls has vigorously denied it, and Bob Diamond in his evidence yesterday did not play the ‘It’s all Labour’s fault‘ joker. An independent inquiry, led by the judiciary not the legislature essential for legal ‘separation of powers’, is the only way of finding out how a toxic culture can go unnoticed by CEOs of powerful corporates, and why banking is so much for the benefit of its shareholders rather than its customers. We need answers to this – in summary, Ed Miliband is right, and George Osborne is so very wrong.

Lonesome George's economic policy is dead. Anatomy of a Osborne-generated recession.



You can’t actually joke any more that the UK is the ‘sick man of Europe’, as there’s now a handful of us: as reported recently. Spain has become the latest European country to slip into recession joining the Belgium, Cyprus, The Czech Republic, Denmark, Greece, Italy, The Netherlands, Ireland, Portugal, Slovenia and the United Kingdom. ‘Sick man’ jokes are best avoided as the UK hurtles towards privatisating its NHS, a policy which nobody had actually voted for in the UK general election in 2010. Our ‘Lonesome George’ is going an incredibly slow rate because of an economic policy of entirely his own making; he is pursuing, without acknowledging failure, a disastrous policy which has never been shown to work. Many voters can’t wait to show them their complete contempt for a policy which has seen Osborne and Cameron pit the public sector against the private sector, both extremely valuable parts of the UK economy, with the disadvantaged including disabled citizens sidelined and even feeling victimised. Meanwhile, many people have got away completely unaffected, with even some tangible improvements in policy (such as lowering the top tax rate of income tax).

Of course, the deeply tragic news is the death of ‘Lonesome George’. This is an extract from a very nice tribute which has just been published on the online Guardian.

“He was on Ecuador‘s bank notes and stamps, an evolutionary remnant, a money-spinning tourist attraction and an icon of internationalconservation. No one knew if he was gay, impotent, bored or just very shy. But he is thought to have been about 100 years old and in his prime when he died on Sunday at the Charles Darwin research centre in the Galápagos Islands, although the giant tortoise known as Lonesome George and commonly called the “rarest animal on Earth” may in fact have been far older – or much younger.”

‘Lonesome George’ is dead, and may George rest-in-peace. Osborne’s economic policy is also dead, only kept alive as an emergency measure with artificial life-support from the BBC. It doesn’t take a person with an economic degree to work out how No. 10 generated this domestic recession. Oh yes, I genuinely forgot just then that Osborne does not have an economics degree. I’d be surprised even if he studied it for GCSEs which Michael Gove intends to scrap anyway.

Here’s an overview of how George Osborne, “strategic mastermind” (LMAO ROFL), created a recession when the UK was in growth when the Conservatives and Liberal Democrats did not win the election but came into government together.


More credit where credit is due – not for Mervyn King in other words



§

Mervyn King, the Bank of England governor, last night stated that the Bank of England will launch two new stimulus packages in response to the worsening economic outlook. Together with the government, it will provide billions of pounds of cheap credit to banks to lend to companies. It will also offer banks access to short-term money to deal with “exceptional market stresses”.

Spinning the message of George Osborne, King in his Mansion House speech provided:

“Our recovery and rebalancing may have become more difficult, but they are no less important. Meanwhile the imbalances in the world economy still await resolution. It is an ugly picture. Leaders of the G20 will next week confront formidable challenges. In the United Kingdom, we can and will get through this. But it would be naive to pretend that any of us can know when the storms from overseas will have passed over our shores and the economic skies begin to brighten.”

However, King has presided over, and is firmly enmeshed in, a disastrous Downing-Street created recession. Ed Balls, who accurately forecast what would be the result of lack of sufficient investment in the UK, through lack of support for infrastructure projects such as ‘Building Schools for the Future’, increased benefits payment, a threat of inflation and unemployment, diminishing tax receipts, and an economy going in reverse gear from growth to a double-dip recession through customer demand suffocated by an increase in VAT, succinctly explained:

“What more evidence can David Cameron and George Osborne need that their policies have failed and that they now need a change of course and a plan B for growth and jobs? It’s now clear that this is a recession made in Downing Street by this Government’s failed policies. Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months.”

According to a relatively recent article by Philio Aldrick, Economics Editor of the Telegraph, David Cumming, head of equities at Standard Life and one of the most influential figures in the City, said the Treasury must improve on Sir Mervyn when his second term expires in June 2013. George Osborne has provided that the appointment process will officially begin in the autumn, with the successor named before the end of the year. King has not particularly endeared himself with the City since the financial crisis. However, despite the underlying animosity, senior finance professionals have previously rarely spoken out so strongly against King. Mr Cumming said: “The current appointment in my view has been a disaster, so its important to get a better man this time round.”

Sadly the only thing that can save the economic reputation of Mervyn King and George Osborne is a full-blown Eurozone crisis. Thankfully also it has been predicted by Prof Steve Keen that the UK might enter a further credit crunch this year. Keen was interviewed by Paul Mason on BBC Radio 4 yesteday. He set out his criticisms of conventional  macroeconomic theory and proposed how he would approach remedying the ongoing fundamental problems facing the global financial system. Towards the end of the interview he suggests not only that austerity policy is entirely inappropriate in the context of private sector deleveraging but also that the present excessively high levels of private debt in the UK mean another credit crunch is very likely. You can listen to the interview here.

This post does not represent the views of BPP or of the BPP Legal Awareness Society, a student society run at BPP. The author, Shibley (@legalaware), is currently President of the BPP Legal Awareness Society.

George Osborne and the perception of apparent incompetence



 

There’s only one person who is genuinely funnier than David Mitchell. I think that person is Robert Jay QC, lead Counsel for the Leveson Inquiry. Jay can deliver gags with more precision than an exocet missile, for example referring to the bias of Jeremy Hunt as ‘equal and opposite’ to that of Vince Cable.

Jay has been clearly worrying about the issue of the difference between apparent and actual bias in his line of questioning. The jurisprudence of this will indeed be very well known to all law students, including Porter v Magill and Pinochet [No 2]. On the whole, apparent bias, so believes (or so knows) Jay, is harder to prove than actual bias.

So by what standard should we judge George Osborne?  Should Osborne be judged by the standards of a reasonable Minister, or one who has a specialist expertise in economics and finance? Arguably he should not be judged against the latter as he has a II.1 in the Final Honour School of Modern History from University of Oxford.

Victoria Coren, who is better known as Victoria Coren than Mrs David Mitchell, was forced to respond to a question last night on BBC Question Time (available here) as to whether Osborne was incompetent. Coren conceded that this was a difficult question, but explained that – if it came to looking after her pets or pot-plant when she went on holiday – the answer was no.

Labour has a massive problem in the perception of its economic competence. That is despite the overriding consensus of available data proving that Osborne’s economic experiment has wholeheartedly failed. Osborne managed to reverse a growing economy into a failing economy, way before any Eurozone crisis, with falling tax receipts, an overall decrease in full-time employment, greater spend on welfare benefit, and of course negative growth. That is actual incompetence.

It is going to be easier to prove the apparent incompetence of George Osborne. Members of Labour will remember clearly how he used to treat Alistair Darling with contempt, but there is now a never-ending stream of debacles for Osborne to admit. You can choose between the caravan tax, the pasty tax, or the charity tax, in addition to an imploding economy – it doesn’t matter. Whether you throw into the mixer his collusion with Jeremy Hunt in dealing with the BSkyB, as evidenced in Leveson yesterday, quite frankly neither here or there.

I have never bought into the agenda of Osborne as a great strategist. In fact, I think he is also abysmal at economics. He epitomises for me what the wonderful John Maynard Keynes, from King’ s College Cambridge, described as the type of person who does not wish to invest in the future, for various reasons:

(vii) To bequeath a fortune.

(viii) To satisfy pure miserliness, i.e. unreasonable but insistent inhibitions against acts or expenditure as such

“The general theory of employment, interest and money” John Maynard Keynes

It’s no accident that the UK tax system treats capital and income separately. In an ideologically-driven austerity driven agenda ‘to pay off the credit card debt’, the deficit doubled in February 2012, as the nation’s income fell, as a result of its disgraceful treatment of human capital, in what promises to be one of the most spectacular failings of the UK government. The return on such high risk strategy means that Osborne will not be able to pay any electoral dividends in 2015 as he will have no distributable profits by then; in fact, the Coalition deserves to go into receivership.

 

 

[This post does not represent the views of BPP, or of the BPP Legal Awareness Society, a society to promote law in the business strategy.]

Labour is not trusted with the economy, stupid! Autumn statement 2011



Nobody ever came clean with the public how bad the economy was before the last General Election, and this legacy continues to haunt Labour as it was the incumbent Government for the last decade at least. Labour may wish to argue that the VAT rise has throttled consumer spending, but Labour it seems wished to implement a VAT hike itself, and the VAT rate is indeed now comparable to the rest of Europe.

As George Osborne waits to deliver his Autumn statement on Tuesday, it is clear that the public are not satisfied with the running of the economy. And why should they? GDP is currently growing at +0.2%, but unemployment is rising, and inflation until recently had been rising.  Public borrowing fell to £6.5billion in October, according to the Office of National Statistics – down from £7.7billion the year before, but below the City’s forecast of £6.8billion. However, there are increasing fears that the worsening state of the economy will scupper the deficit reduction plans by increasing the Government’s benefits bill and lowering its tax income. The Independent Office of Budget Responsibility will downgrade its forecasts for the economy next week, raising questions over whether the coalition can meet its pledge to eliminate the structural deficit by 2015.  Interestingly, voters do not appear to be that moved by the objective financial growth data. We are spending more than ever before, £613 bn, so there’s a limit to the argument ‘we’re cutting too fast, too deep’. Labour’s strategy for growth, like various relaunches of the Big Society, has failed to gain any traction with the public; many voters are simply uncertain what that strategy is.

Whilst some pretty awful decisions were made regarding the construction industry last year, deteriorating growth, there is an Eurozone crisis which simply can’t be ignored. Destruction of the Euro might yet resurrect Tory and Liberal Democrat fortunes in 2015. The deficit is undeniably a huge issue for the UK as a whole, and if this deficit were not tackled the cost of borrowing would explode; however it is a lie to imply that we are Greece, and the scare stories by George Osborne were unrealistic and excessive.

The Government will underwrite loans to small businesses on Tuesday, and indeed Labour cannot oppose it as it is part of their own ‘growth package’, and indeed its attempts to get pension funds to invest in infrastructure projects is a meritorious one. It’s apparent that not everyone is on the Coalition’s side. Whenever the ‘It’s Labour’s fault’ rant gets delivered at Any Questions or Question Time, the audible groans became unbearable, but likewise the ‘the Tory-led government is cutting too fast too deep’ is wearing a bit thin with lack of specifics about what the Tory-lite economic policy actually provides.

 

We’ll see queues at Heathrow on Wednesday, and it’s going to be hard to say how the public will react to seeing Britain ‘shut for business’.  Whilst people are blaming the Government for the cuts, many feel that the cuts are necessary, reject the Keynesian view of the need for further borrowing, but likewise may not jump at blaming Unions for a feeling of discontent in the country. Some of the unions threatening strikes have not been on strike for years (in some case decades). However, Labour in my view have failed to explain what the purpose of the unions is in protecting stakeholder rights, as opposed too the maximisation of shareholder dividend, and yet the Unions do not appear to be considered as toxic in the 1980s. Labour has failed to explain why maximisation of shareholder dividend, for example in the context of Southern Cross or News International Inc., may not have been necessarily for the benefit of wider society.

Anthony Wells is the Associate Director of YouGov was on BBC’s Westminster Hour last night (link here), and explained last night that by a margin of 2:1 the public feels that the Government is handling the economy badly. Whilst people appear to be unhappy with the Government, the public still seem to prefer Osborne and Cameron to Balls and Miliband, giving the impression that they prefer the Tory-led government to Labour. Labour are still blamed for the state of the economy; and price inflation seems to be a concern of most voters. In terms of political charisma, Ed Balls and Ed Miliband are yet to command confidence, trust and respect for the potential stewardship of the economy under Labour, and it is hard to see how this will be remedied fast by 2015. Nobody is particularly clear what the Liberal Democrats wish to do, apart from the massively important task of supporting the Coalition’s economic policy, but it is impossible to say that this will cause a resurrection in their fortunes in time for 2015 in much the same way that a rebranding in the genre of Oxfam would.

 

 

 

Explosion of the deficit and implosion of the Liberal Democrats



 

The Liberal Democrats can never be trusted with the economy again. Cable once uttered in Parliament with almost delusion of grandeur that it didn’t matter where the economic recession came from. Probably having choked on his coffee that morning, he could not contemplate the concept of a global recession?

The left wing continually warned that if you strangle the economy manufacturing output will fall, benefit payments will go up, tax receipts will go down, and GDP will go down. We now have the issue of the UK doing extremely badly, with extremely poor growth. If you add to this the Eurozone crisis and the debt ceiling, and the marked falls in stock prices, you see a situation where the bankers need to be bailed out again. The challenge for George Osborne is not make the deficit explode, now that he now has generated poor growth. The challenge for the Liberal Democrats is to ensure that they do not totally implode come the next election, having voted for the Conservatives’ policy throughout this term so far.

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