Sunday, April 29, 2007

Sunbathing to independence?

In London last week the Guardian columnist, Jonathan Freedland, told me that when he filed his copy from the Scottish election campaign, his desk editor him asked what dateline to put on it, as if it were a foreign report. A telling illustration, perhaps, of London’s attitude Scottish independence: a lot of people already seem to think Scotland is another country.

This may explain why most metropolitan political commentators were more interested in the French Presidential election last week than the Scottish one - even though the Holyrood outcome would arguably have greater impact on Britain. On the three hundredth anniversary of the Act of Union, Scotland appears to be on the verge of tearing it up by allowing the Scottish National Party to share power.

But if my observations are correct, England is unfazed - dreaming on in the long hot spring. The Prime Minister may believe that Britain itself is in danger, faced with an unscrupulous nationalist party leader, Alex Salmond, who is determined to foment trouble and strife. But London isn’t exactly donning hard hats and digging trenches. Constitutional crisis? What crisis?

There is, of course, that strand of rabid English nationalism on the internet, which believes a Scottish Raj is running England and draining it of treasure. They are looking to a fight as always. But most London people I spoke to last week aren’t antagonistic to Scotland; mostly, they just don’t care. And why should they? Scotland is a cold northern territory, with large landmass but few people, which doesn’t really have much to do with the South East of England. Even the climate is different now that global warming has really arrived.

The City of London was congratulating itself last week on becoming the world’s number one financial centre, having relegated even New York as the place to do the business. Billions are raised and spent on the stock-markets every day, and private equity houses are tearing up the corporate structures of the world. London is a global economic hub, with intergalactic house prices, and apparently limitless wealth. Why should it be bovvered about what happens in Scotland?

We have a strong financial sector in Edinburgh, but it isn’t in any obvious sense a rival. We don’t have any industry and the oil is generally assumed to be running out. We are not strategically important, except of course for Trident, and England doesn’t need Scots to fight colonial wars any more - they have Prince Harry to do that.

It’s often said that Scotland has reassessed the Union, now that the ties of Empire that bound these two nations together have weakened. That Scots don’t have a stake in the UK any longer. But the same is true for England. The sentimental attachments have gone, consumed in the fire of globalisation. If Scotland wants to be independent, as David Cameron himself put it recently, then it would be unfortunate, but no national disaster.

I still detected mild irritation at the Scottish propensity to consume public spending, but I think most people in England get this in proportion. The sums involved may seem large to us - perhaps a thousand pounds per head in public spending - but to a stupendously wealthy country like England, five billion is a drop in the bucket. Lost in the national accounts of one and a half trillion.

Anyway, as the Financial Times itself noted last week, if oil is taken into account, the deficit - or “Union Dividend” as Labour call it - shrinks dramatically to 1.2%, which is half the deficit that Gordon Brown is running for the UK. The Scottish press, true to form, reported the Financial Times analysis as a warning to Scotland that an independent Scotland would be unviable as the oil runs out. But the report was actually pretty potent propaganda for the SNP.

The FT concluded that: “the current high level of oil prices would allow Scotland to declare independence from the rest of the UK without having to cut public spending.” It went on to warn that oil is a declining resource, and that there may be little scope to build up a substantial oil fund in future. You can’t build an economy on one natural resource, and Scotland would have to diversify and grow its economy.

Incidentally, the FT also endorsed the SNP claims about Scotland’s poor performance under Labour. After adjusting for inflation, FT figures show that Scottish “gross value added” – workforce incomes and profits – grew 17 per cent between 1997 and 2005 against 25 per cent in England. And a lot of this was down to increased public spending. The Scottish private sector grew by only 11.6 per cent, a miserable annual rate of 1.6 per cent, against the English rate of 2.8 per cent.

But that's Scotland's problem. From a London point of view, the falling future oil wealth merely confirms Scotland’s marginality to the UK economy. I find that most people in England who know anything about the history of Scottish oil accept that the UK did pretty well out of it and that it more than justified any Barnett premiums on Scottish public spending.

But again, this all has the air of an old argument, an intellectual relic from the days before Scotland had its parliament, and when the failing UK economy depended on oil revenues. This is now, and whatever else happens, England is certainly not going to go to war over oil or Scottish demands for more autonomy.

Where conflict may break out over the SNP factor is in parliament, in the wake of the Gordon Brown coronation as Labour leader. An SNP victory in the Chancellor’s heartland would embolden the Tories to play the English card in Westminster. If the SNP is the largest party, the Tory leader David Cameron, will say Brown is fatally undermined by this rejection in his own home land.

The Conservative press will say that the new PM has no right to dictate policies to England when he sits for a seat in a ‘foreign’ country. The Conservatives will demand “English votes for English laws” - for Scottish MPs to withdraw from votes on purely English legislation. And Alex Salmond, if he is FM, will be egging them on.

This may lead to some constitutional wrangling, no doubt. There will have to be some kind of constitutional commission to review the situation in Westminster, West Lothian Question and all that. The Scottish parliament will certainly demand more powers if an SNP-LibDem coalition is formed. However, my own view is that the Tories will stop short of demanding that Scots MPs are thrown out of Westminster.

I believe they will see it as important to keep Scottish representation in what is becoming, de facto, a federal parliament in London. This is England, after all, and the English are too mature and sensible to want to provoke needless conflict over abstruse constitutional anomalies. A way will be found to muddle through. As the temperatures rise in the hottest April London has ever seen, it will be in everyone’s interest to cool it.

So, if my visit south is any guide, England is - right now - pretty sanguine about the rise of Scottish nationalism. Probably, like most Scots, they don’t really believe that Scotland will ever be independent in a formal sense. Fused at the hip on this island on the edge of Europe, Scotland and England have a common destiny which they cannot avoid. We are ‘in and out’ of Europe, speak the same language, share a common currency, have close family ties.

Many of those English families, who still have their sons living at dependent at home in their late twenties, can well understand the argument that it might be good for Scotland to go it alone economically. That you can’t live on subsidies forever. Doesn’t mean that the family is broken up or that they start going to war with each other. Both countries would just have to learn the art of living apart together.

Saturday, April 28, 2007

Why the Sunday Herald supports the SNP - sort of.

Given that the entire Scottish press is agin’ them, the success of the SNP in this election campaign so far is pretty remarkable. The nationalists have consolidated and even increased their pre-campaign lead - something they have never done before.

They haven’t won the election yet, but they have already won a moral victory of sorts. Their leader, Alex Salmond, has dominated the election campaign, set the terms of debate and persuaded hundreds of thousands of voters against the collective advice of the nation’s opinion formers.

You can’t help thinking that there is something wrong somewhere, when the national press is so out of step with the voters. You would think that this huge shift of opinion would be reflected somewhere in the public prints. But it remains the case that, until today with this paper’s endorsement of Alex Salmond, there has been no major newspaper in Scotland willing to offer even qualified support to the party which, if the polls are to be believed, now commands the majority support of Scots.

Alex Salmond would do well to brace himself for some rough treatment in the closing days of the campaign as sections of the press try to destroy Scotland's apparent infatuation with him. No, it hasn’t been as bad as 1999, when the SNP were monstered, but there have been pretty robust attacks from the red tops nevertheless. Just look at some of the Daily Record’s recent headlines: “1000’s OF DRUG DEALERS WOULD GET OUT OF JAIL”, it claimed, if the SNP won. “SNP TRIPLE TAX GRAB”...“DONT LET SNP DESTROY PROSPERITY”... “ECK OF A BAD DAY”.

The Sun, which once flirted with nationalism, has been equally hostile to the SNP. All we need now is a reprise of the famous Sun front page of 1992: “If Alex Salmond wins the election will the last person to leave Scotland please turn out the lights”. Mind you, the Scottish bra Queen, Michelle Mone, appears to have got there first, promising to take her uplifting business elsewhere if independence looms.

Of course, television is the dominant medium of modern politics, and it is obliged to be impartial. But the written press influences debate in the electronic media, it sets the agenda, makes the stories, identifies the issues. Perhaps this election is an illustration of the limitations of the media in influencing voting intentions. So far, it’s the Sun wot lost it.

Labour’s strategy for this election, as conceded last week by Jack McConnell, was to surf the expected tide of pro-union feeling in the last two weeks of the campaign. Just as John Major wiped out Labour’s lead in the last fortnight of the 1992 general election campaign over the economy, so Labour’s strategists confidently forecast that they would do the same to the SNP. They would first burn off the narrow SNP lead, and then grind them into obscurity in the closing days, by exposing their tax and spending pledges to relentless scrutiny.

But it hasn’t happened yet. The polls last week moved in the SNP’s favour, with MRUK in Thursday’s Herald, turning a four point deficit into a four point nationalist lead, and Yougov in the in Friday’sTelegraph according the SNP a nine point advantage over Labour. The largest poll yet, by Yougov for Strathclyde University, today indicates the SNP are eight points ahead in the first vote. This means the SNP have almost doubled their headline first vote polling lead in the space of a fortnight.

Doesn’t mean they will win of course, and there are still a lot of “don’t knows”. Moreover, under the vagaries of the additional member electoral system, they could win and lose at the same time. That nine point lead for the SNP in the Telegraph/YouGov poll translates into a five seat lead, according to professor John Curtice of Strathclyde University. A similar lead for Labour in the 2003 Scottish election gave them a twenty three seat advantage over the SNP in the Holyrood parliament.

The spread of SNP votes makes it difficult to translate its poll figures into actual seats, especially in West Central Scotland. The nationalists need to take key Labour constituency seats like Kelvin, Govan, Kilmarnock, Cumbernauld in the West, as well as Linlithgow, Livingston, Aberdeen Central and Dundee West. This is why no few commentators are willing to predict that the SNP will be the largest party on Friday morning. One possible nightmare scenario is of the SNP winning the largest number of votes but not returning the largest number of of seats in the Holyrood parliament.

Much still depends on the extent to which the marginal parties, like the SSP and Solidarity and the independents enter the race in the closing days. The Greens may turn into late-breaking king-makers, if as the other parties expect, their vote increases. It is quite possible that, if they return eight or nine seats, the Scottish Green Party could hold the balance of power in Holyrood. It would force the bigger parties to launch an auction of environmental policy promises to win the support of the Greens.

This might be no bad thing. The environment is such a huge, overarching issue that many Scots will be inclined to split their votes, as they did in 2003, backing the Greens on the list. The Liberal Democrats have tried to colonise green territory by pledging that Scotland will be carbon free by 2050. But the Libdem equivocation on things like road tolls has not done a lot for their environmental credibility. .

Nor is there much certainty about how the Liberal Democrats will perform on Thursday, they are running a low-key campaign with a low-key leader. Nicol Stephen seems to regard an hour’s PE as an election winner, and scarcely opens his mouth without mentioning it. The Liberal Democrat leader has tried to argue that the Holyrood election is a referendum on the constitution, which it manifestly isn’t, and implied that Scots have no right to hold one, which is presumptuous - especially since the Libdem have actively participated in the last three referendums on the UK mainland. Nicol Stephen also angered Labour by appearing to rule out forming a coalition with them if they aren’t the largest party.

The Scottish Conservatives have mounted a dignified campaign led by the doughty Annabel Goldie, everyone’s favourite auntie. They have also talked a good deal of sense on issues like local taxation, affordable housing and drug rehabilitation. But they have been caught between the grindstones of the constitution debate. Annabel Goldie’s defiant insistence that the union is inviolable has contrasted with comments from figures like enterprise spokesman, Murdo Fraser, and even David Cameron that - though they don’t recommend it - Scotland could survive perfectly well as an independent country.

In taking this line, they are trying to come to terms with the debate as it is taking place in Scotland. Labour, meanwhile, have simply excluded themselves from it. Tony Blair’s visits have become increasingly negative, culminating in his highly personal remarks on Thursday that Alex Salmond is only interested in “fighting England”, as if the SNP leader were a latter day William Wallace.

Now, there is a case to be made that the SNP leader, if he became First Minister, would be likely to take a more robust line towards Westminster on issues such as the attendance allowances which were withheld from free elderly care, or the #381 million in council tax benefit. Then of course there is oil, Trident, immigration... But it might be that the Scottish voters, while showing no obvious interest in secession, may want a government in Holyrood, which is a little more confrontational.

This is the only way of reconciling the great electoral contradiction of this election, which is that support for formal independence is dwindling, even as the SNP is drawing ahead of Labour. In the Yougov poll on Friday, support for a separate Scotland in Europe was down to 23%. Other polls have placed independence in Europe lower still, while showing a large majority in favour of more powers for Holyrood.

Jack McConnell is convinced that this contradiction is the key to victory. He has been tearing round the country to shopping centres and old peoples’ homes, selling the message that Labour, not the SNP, is the real “patriotic party”, Scotland’s real national party. However, he still looks the underdog. TV interviewers have begun to treat him as a loser, talking down to him and badgering him about inconsistencies in his local taxation policies. Bernard Ponsonby’s assault on the FM, currently running on YouTube, isn’t a pretty sight.

The SNP has conducted a cool presidential campaign, based around the personality of their leader and on an independence-lite policy programme. This is either perpetrating a fraud on the electorate, as Labour say, or it is just what it says it is - an attempt by the SNP to show it can be a credible party of government in Holyrood. The intriguing question, given the dismal showing in the opinion polls for a separate Scotland, is whether the SNP has now entered on a course that will inevitably lead it to become a “post-nationalist” party like its Catalan and Quebecois equivalents. Certainly, there is a long way to go before the SNP could conceivably win a referendum on independence. All those spending commitments have to be honoured, local income tax introduced, relations with Westminster harmonised.

And, first things first, it has to win the Holyrood election on Thursday and manage to cement a coalition government with the Liberal Democrats who are still refusing to countenance any referendum on anything. It all seems like an impossible task.

But the polls can’t all be wrong. And what they are saying is that, unless Labour pull something out of the hat in next three days, Alex Salmond will the next inhabitant of Bute House.

Thursday, April 26, 2007

This time Macavity was there

Well, this time Macavity was there. Gordon Brown can’t escape responsibility for the Scottish Labour election campaign, as he has so many of Labour’s earlier disasters. The Chancellor was very visibly at the scene of the crime, having spent much of the last six months masterminding the effort to stuff the Nats. If Labour goes down to defeat, his paw prints are all over it.

David Cameron will point to the hundreds of expected losses in the English council elections and declare it a double verdict, on Blair and Brown. It would indeed be a dismal opening to his premiership for Brown to lose Scotland and half of England as well. The politician who “loves Britain”, who pledged to bring Scotland and England closer together, will be accused of driving them further apart.

It almost looks as if Blair stayed on just long enough to do maximum damage to Brown’s prospects before leaving him to clear up the electoral mess. Labour’s Scottish polling figures are dreadful, but their UK figures are even worse. Recent polls have polls have placed Labour in its worst position since 1983 and the days of Michael Foot.

Brown’s coronation, without any serious contest, will be seen, in this context, as an undemocratic fix. At least John Major had a proper leadership election in 1990. Brown will be attacked as a prime minister whose time has passed even before he made it into Number Ten. Hardly surprising that Blairites are sucking their teeth and saying that the next general election is already lost.

Of course, it’s not over till it’s over, and Labour is still hoping for something to turn up, in Scotland at least. Labour took the advice of this column last week and effectively brought forward Tony Blair’s resignation by floating the idea with the Daily Telegraph that there might be an announcement on Blair’s future as early as tomorrow. The PM denied it, of course, but there was no denial that he was going on the 9th or 10th of May, which was the substance of the story, and the press has already started running retrospectives on the Blair years.

But it seems that it is too late for this ploy to work, at least in isolation. Just making Blair history is not longer enough; Brown is not the election winner he was in Scotland still less England. Labour would have to make some very dramatic and humbling gestures in the last few days of this campaign to encourage Scots back into the fold. It would take an admission that they had misjudged the mood of Scotland, had misunderstood the dynamics of devolution, were prepared to review the powers of the parliament to change things at this late stage.

I doubt if the party is in any position to make that kind of switch in the dying days of this Holyrood campaign, and the party is now hoping that the vagaries of the electoral system will save them from defeat. It’s generally assumed that, because of the distribution of nationalist votes, the SNP needs to win around 2% more votes than Labour to return the same number of seats. Thursday night is going to be a real nail-biter, not that Gordon has any left top bite.

But the momentum is undoubtedly with the SNP. Yesterday’s YouGov poll, for the Economic and Social Research Council, the largest in the campaign, indicated that the SNP are eight points ahead in the constituency vote. Three Sunday papers came out in favour of the SNP - the Sunday Herald, Scotland on Sunday and the Sunday Times - in a remarkable break with the unionist past.

That these influential organs, which range from the liberal left to the conservative right should have decided to back Alex Salmond for First Minister, is a tribute to the effectiveness of the SNP’s well-funded campaign. But this wasn’t all down to Souter’s shilling. Salmond’s strategy has been to allow Labour to lose by mounting a negative and scare-mongering campaign about independence - the one issue which this election wasn’t about, because of the promised referendum. Labour played exactly to the script.

Brown aides have already started the process of dumping blame on Jack McConnell. Press briefings over the weekend suggested that the First Minister will be “assassinated” as early as Friday. Even if Labour somehow manage to scrape back in, McConnell’s days are numbered, we are told, as Wendy Alexander is pressed into service by Prime Minister Brown. If Wendy survives, that is.

Of course, McConnell clearly carries a lot of responsibility, and his TV has been dire. His worst contribution was the attempt to “fix” the council tax banding - an ill-considered and incoherent move that rebounded and distracted attention from the many weaknesses of the SNP’s local income tax. Tony Blair was little help either. Though personally popular on the stump, the Prime Minister’s high profile visits served only to import the negatives of Iraq and cash for honours.

However, when it comes to Scotland, Blair always defers to Brown. It was the Chancellor who set the parameters of the Scottish campaign. It was Brown who ordered a rerun of 1999 - “divorce is an expensive business” - failing to understand that Scotland is a different country now. Not as easily scared as it was before the creation of the Scottish parliament.

To his credit, McConnell understood the change and wanted to present a much more positive, pro-Scottish, “patriotic” campaign, talking up Scotland’s economic prospects and urging comparison with other small countries in Europe. He wanted a campaign that said Scotland could and would make its way in the world, and that the Scottish parliament would acquire any new powers, as and when they were necessary, to ensure that success.

But the Chancellor had other ideas. He decreed, in that interview with Scotland on Sunday, that Holyrood had all the powers it was going to get - a perverse edict, which flies in the face of constitutional reality. Brown also engineered the economic case, built on the dubious premise that the Scottish deficit was actually a “union dividend”; raising the phoney spectre of “triple tax grabs” by the SNP, of huge spending cuts, of Scotland being thrown out of the EU. All the tired old unionist bogeys.

Well, it clearly hasn’t worked. People want something better in Scotland than another four years of Lib-Lab mediocrity - someone with a bit of style and verve in Holyrood who will make them feel good about themselves. Many seem persuaded that if no one else can do the job, then they should let Alex Salmond show what he’s made of.

But, hey, look on the bright side: this might not be a bad time for Labour to loose. They have four years to sort themselves out in opposition, decoupling themselves from London Labour, while an unstable SNP-led coalition, with inexperienced ministers, attempts to implement a massive spending programme at the very moment when public spending is being reined in. Alex Salmond may be smiling fit to burst, but he may not be so happy when he opens the books.

Monday, April 16, 2007

The Liberal Democrats: the Abominable No Men

Last week, at their manifesto launch in in Edinburgh, the Scottish Liberal Democrat leader, Nicol Stephen, retired exhausted following an arduous fifteen minutes of questions. The assembled hacks demanded extra time to discuss the party’s opposition to a referendum on devolution and other matters.

Tavish Scott, the party transport spokesman, was obliged to convene an impromptu news conference in order to soothe the brow of the beast. He did a pretty good job as it happened...of imitating the Rev Ian Paisley.

Aren’t the Libdem prepared at least to negotiate on the referendum? No! said Tavish. Would they accept a referendum with three questions on it, one of which might be the Liberal Democrat option of federalism, ie more powers for the parliament. No!

What about the Constitutional Convention Mark 11, which they propose to set up to give Holyrood more powers. Would they consider putting its findings before the people in a referendum? No! No! No! Truly, Tavish is now the Abominable ‘No’ Man of Scottish politics.

The Liberal Democrats are in danger of making themselves look ridiculous. Correction, the Liberal Democrats are looking ridiculous over their opposition - under any circumstances, until hell freezes over - of a referendum on the constitution. This was always a very strange position for a party of constitutional reformers which has participated in numerous referendums over the years.

Whether on Europe, Scottish and Welsh devolution or the Good Friday Agreement, referendums are how we do things in this country. Over three decades, they have become the accepted means of resolving constitutional issues. What makes the Liberal Democrats think they can dictate otherwise?

Try turning the issue on its head. If, as the LibDem leader, Nicol Stephen, insisted last week the “real referendum is on May 3rd”, what does that mean if the SNP wins? Does it give the nationalists the right to break up Britain, begin negotiations with Westminster over secession, without first getting a further explicit endorsement from the people? Of course not.

People vote on all manner of issues in a general election. You cannot simply infer a nation’s attitude to one of the most profound constitutional issues in a generation from how many people voted “Alex Salmond” on the ballot paper. Many people in May will be voting to scrap council tax, remove Trident or because they didn’t like Jack McConnell’s face.

Their former leader, Lord Steel’s Constitutional Commission, eighteen months ago, proposing a whole range of new powers for Holyrood, from fiscal autonomy to welfare and immigration. The Steel Report actually looks a lot more nationalist than the SNP’s own very tame manifesto published last week. Given the history of devolution referendums, it would be unthinkable to wrest so many new powers from Westminster without the people of Scotland being giving and explicit endorsement of it.

Yet the referendum is the only issue upon which the ideology-lite Liberal Democrats refuse to compromise. In the eternally shifting sands of LibDem policy, where everything is provisional and principles are merely negotiating postures, their rejection of a constitutional vote is the one bedrock, the one issue upon which they will not be moved; the one item on which they cannot be bought. They aren’t the Liberal Democrats anymore; in this election they are the No Referendum Party.

Ludicrously, they say they will not even sit down with the SNP, should the nationalists be returned as the largest party, unless Alex Salmond abandons the referendum and presumably goes back to the old SNP policy of regarding an election victory as a mandate for independence. If he refuses, the Liberal Democrat ministers will forgo their ministerial cars, along with their red boxes, and sulk on the backbenches, rather than allow Scotland to choose the constitutional arrangement which best suits them. It beggars belief.

Indeed, and most people simply don’t believe the Liberal Democrats. Such is their form, on issues like road pricing that no one believes they will actually do as they say.

The Mail on Sunday ran a stories at the weekend claiming that a deal has already been struck behind the scenes with the SNP. This is fiercely denied by the Libdem, and seems to have more to do with SNP open-mindedness on the nature of the referendum than anything that’s coming from the Libdem.

Alex Salmond has moved a long way in the last week. At the SNP’s manifesto launch he told the media that his “preference’ was for a single question referendum putting only the option of independence or the status quo. But he pointedly refused to rule out there being another options, on the ballot paper. This was a pretty remarkable concession.

Look at the arithmetic. If the polls are to be believed, in any multi-option referendum the nationalists would lose. In the recent Times ICM poll, 88% of Scots said they wanted more powers for Holyrood, but only 27% wanted full independence. Od course, the precise level of support for Scottish independence is hard to determine because it depends very much on how the question is phrased. But most polling experts accept that while a comfortable majority of Scots want more powers for Holyrood, only around a third favour leaving the UK.

In other words, the Liberal Democrats are rejecting a constitutional referendum which they would almost certainly win and which would probably cement Scotland’s place in the United Kingdom for the next decade. What are they waiting for? They should be claiming: ‘game, set and match’.

But the Libdem say they will do nothing to endanger the union. That the SNP would turn their joint administration into a battering ram for independence, by fomenting rows with London, to prepare the ground for 2010. But surely, the nationalists would do that anyway, whether or not there is a referendum. In fact, a referendum would surely encourage the SNP to behave as responsibly as possible to demonstrate to the people of Scotland that they are capable of running a responsible administration.

But where this becomes objectionable is in the way the Liberal Democrats seem to believe that they can have a veto over the parliament itself. This is a decision of Holyrood, not any particular party. We have had two referendums on devolution - 1979 and 1997 - and it is the height of arrogance for for one party to decided, unilaterally, that there should not be a third before further radical change.

The precedents are too well established now for the Libdem to dump this. Their rejectionism is constitutionally unsustainable, morally insupportable and politically inept. If the Liberal Democrats really want to give Scotland a reason for rejecting them, this is the way to do it.

Sunday, April 15, 2007

Dead Men Sell No Tales / Cash for Dishonours

I didn’t know that I had such a high regard for our armed forces until last week. In fact, coming from a pacifist family, I wasn’t aware of having any regard for the services at all. It was only on observing my reaction to the ‘cash-for-dishonours’ affair that I discovered just how much my mindset is still conditioned by those old black and white wartime images of Navy valour.

You know - chaps in duffel coats puffing unflappably on pipes as the enemy bore down; men who would no more sell their stories than sell their souls. Part of me still believed that there was something of that old moral fibre written into the Royal Navy DNA. Now we see that the reality of today’s senior service is Operator Mechanic Arthur Batchelor, aka “Mr Bean”, weeping over the loss of his ipod while he was in captivity - as told exclusively to the Mirror.

The great British press reached previously unplumbed depths of hypocrisy last week by condemning the naval detainees for selling their stories, even as it was trying to buy them. “Wot a disgrace! Wot is the world coming to? Something should be done about us! String us up - it’s the only language we understand!”. The press performed the role of a demented chorus in what was a truly tragic week for Britain’s international image.

There has been something of the Jade Goody/Big Brother affair in all this. We have looked into the mirror and reacted with collective horror at what Britain has become. We scoff at the old military virtues and antique notions of British Greatness, but no one likes to think that their country is being pilloried, certainly not me. Half the world is laughing at the antics of our dim naval wimps clutching their goody bags, while the other half snarls in contempt at our willingness to inflict death and destruction on the people of Iraq for no legitimate reason.

The military blogs, like Rum Ration and Army Rumour Service, have been particularly
savage in their attacks on Batchelor and Leading Seaman Faye Turney, who made a hundred grand out of her tearful reminiscences of a not particularly arduous ordeal. I mean - don’t we handcuff and blindfold detainees and send them to places like Guantanamo? “Send them back to Iran” said one post,”they’re welcome to them.”

The marines have not covered themselves with glory but neither has the British government, whose cynicism trumped their venality. The claim that Number Ten had nothing whatever to do with the way the hostage crisis was handled, or the decision to allow them to sell their stories, is simply beyond belief. Come on guys! Number Ten would have been all over this story from the moment that the Brits were seized.

The notion that this media-obsessed administration would not take an interest in whether their stories were then aired in the popular press is risible. It would be like Alistair Campbell saying he took no interest in the media management of the death of Diana, Princess of Wales. Any MoD press officer who didn’t tell Number Ten what his media strategy was going to be in an international crisis such as this would be looking to an early end to his career.

And I don’t believe for a second that our shy, retiring defence secretary, Des Browne - who makes his predecessor, Geof Hoon, seem charismatic - would have acted on autopilot. The government clearly calculated that there would be a wave of sympathy for the detainees, once their harrowing stories were told, and that would cement the British people behind their government’s handling of the war. Once they realised their mistake - when even antiwar liberals like me started saying that the honour of our armed services was being sold cheap - they tried to blame the Navy, then the MoD press office, and then left Des Browne to make a kind of apology, which managed to be grovelling as well as evasive.

“Although this was a Navy decision” said Mr Browne midweek,”I have to take responsibility for it, and I don’t seek to hide behind the fact that the Navy made the decision”. Except of course that I do. But there will be no hiding place for Browne tomorrow as he faces the full wrath of the House of Commons in a statement over the affair. Heads will have to roll for this national humiliation and his looks to be the first off the block.

The charge is that the British government connived with decidedly unheroic naval ratings to breach Queens Regulations in order to sell their stories to the highest bidder. The MoD press office even played the role of Max Clifford in handling the bids from the media. And this was in the week we saw the bodies of the four British army personnel, including two women, being brought back to Britain. There was no cash for coffins though; dead men sell no tales.

The detainees talked of their suffering at the hands of he Iranian Revolutionary Guards. Well, contrast that with the report last week from the International Committee of the Red Cross on the plight of ordinary Iraqis four years after the British/American invasion. “The suffering that Iraqi men, women and children are enduring is unbearable”, said the report recording that families were being destroyed and children driven insane, in a country where nothing works, death is an every day occurrence and hospitals have no doctors. Iraq has been a military disaster for Britain; now it is a moral one as well.

In further dramatic confirmation of the scale of that defeat, suicide bombers on Thursday struck at the very heart of the occupation - the Iraqi parliament. If insurgents can even bomb the most heavily defended institution in Iraq, deep inside the protected Green Zone, behind eight levels of security screening, then clearly nowhere and nothing in Iraq is safe. It was an act of heroic futility for Sunni insurgents to destroy the one thing that might have justified the invasion: democracy. But it summed up the impossibily of any kind of legitimate democracy while the the country is under military occupation.

We all now know what has to be done. We must announce a phased withdraw immediately, disown the Bush administration, hand over to the UN, convene a regional peace conference involving Iran and Syria, abandon the conceit that we can launch a second front against Ahmadinejad, and devote every waking moment to a diplomatic resolution to the Arab/Israeli dispute. In short, we must get the hell out of there.

Recent events have forged a new and potent moral coalition in Britain among people of very different backgrounds who feel that this country has suffered irreparable damage to national prestige. From the Independent to the Daily Mail; from John Pilger to Michael Portillo; from Rose Gentle to General Sir Michael Rose there has been a collective howl of anger at the damage that has been inflicted on Britain’s image abroad.

Most of us genuinely believe that our soldiers in Iraq did their best, honourably, to protect the local population and try to bring some civil order. But they were given an impossible task, and ended up targets of a poisonous insurgency. To put soldiers in the line of fire in an unwinnable cause which has no moral justification is, or should be, a criminal act.

Not just my views, but those of General Sir Michael Rose, who led the UN force in Bosnia and compares the Iraq crisis to the collapse of he British army after the American Wars of Independence, when the Brits lost to a citizens army of American volunteers. To compare Islamist insurgents to the soldiers of George Washington is pretty breathtaking from the man who led the SAS in the Falklands.

Rose said that Tony Blair would be “doing 40 years in jail” if he’d been the director of Enron. Who knows, it might come to that.

Campaign Commentary, Week 2

The titanium-clad Lindsay Stewart lecture theatre in Edinburgh’s Napier University, where the SNP launched its manifesto last week, pokes out of the ground like the head of one of those mechanical monsters from War of the Worlds. You half expect it to rise up on its tripod legs to the sound of foghorns and start vaporising the citizens of Morningside.

Well, that’s not far short of what Labour says will happen if the SNP gain power. Chaos and doom. Four years of “tax and turmoil” will follow if the nationalists are allowed to get up on their hind legs. Don’t listen to their assurances about referendums and cutting taxes, says Jack McConnell. These are secessionists, who will destroy the union, vaporise prosperity, divide family from family and turn Scots into aliens in heir own land.

Well, thus far, the Scottish voters don’t seem to have been scared by Labour’s monsters. They don’t seem to see the nationalists as revolutionary fanatics bent on destruction, but relatively benign patriots looking for a better deal for Scotland. In the coming weeks, voters will find a million glossy brochures falling out of their Sunday newspapers featuring Alex Salmond looking like one of those celebs modelling a Marks and Spenser’s suit. This isn’t just a nationalist party...

The SNP are certainly showing us the money. The network media, from the BBC’s political editor Nick Robinson down, were in attendance at the Salmond spectacular in the Napier, and they were rather impressed, if only by the stage management. The London-based media are going to play an important role in this Scottish election, if only because it happening in the future Prime Minister’s backyard.

But they want to know if the SNP are for real this time, of if this is just another fleeting nationalist spasm. Is the SNP leader a potential national leader or just another soundbite-monger? Alex Salmond was so under control it almost hurt, trying to sound statesmanlike, suppressing his instinct for the cheeky phrase and the catchy put-down.

But breaking up Britain? No, no, no - that’s all left to the distant future, the referendum or ‘neverendum’ on independence. In 1999, the SNP were taken severely to task for putting independence tenth on their election priority list. This time, it merited but three lines at the foot of page 15 of the 74 page manifesto. And it was so hedged about with provisos that you could almost think this was a strategy for preventing independence rather than achieving it.

The manifesto promises: “Publication of a White Paper, ENCOMPASSING a Bill, detailing the CONCEPT of Scottish independence in the modern world as part of PREPARATIONS for offering Scots the OPPORTUNITY to decide on independence in a referendum with a LIKELY date of 2010”. Not exactly the Declaration of Arbroath. There was a time when true nationalists would have been chewing their sporrans at such a mealy-mouthed formulation.

But Labour say we shouldn’t be fooled. As we left the Titanium mother ship, mobiles trilled that Jack McConnell himself was ready to present a detailed rebuttal of the SNP manifesto. This was impressive work. Labour staffers had within two hours deconstructed the entire spending programme.

Costing every item from their tax exemption scheme for artists to writing off all student debt, from abolishing bridge tolls to introducing first time buyers grants of #2,000, Labour number crunchers come up with a figure of #5,000 in tax for every family. Unfortunately, since this was the same figure they had been using before the costing exercise, it slightly undermined its credibility.

But it has to be said that the nationalists’ list had a lot of wish in it. Abolishing bridge tolls, a thousand more police officers, scrapping prescription charges, abolishing business rates for small businesses, massive investment in renewable energy - it looks like the SNP have taken every demand from every pressure group in Scotland, thrown them together and called it a manifesto. It is the kind of thing Labour used to do, and was rightly criticised for it.

McConnell sliced through the SNP’s local income tax numbers, claiming that even on their 3p cap a two earner couple living in an average Band D property would pay more when their household income is over #47,703 rather than the #64,000 the SNP claim. My own problem with local income tax is rather more straightforward. Why it is fair to remove the burden of local tax from middle aged owners of houses, which have tripled in value, and from people who are living on investment income from shares, in order to place this burden on the backs of younger working families who are currently struggling to get on the housing market?

But the real question is why, when Labour had delivered such a comprehensive demolition of the SNP’s numbers, the Scottish press almost completely ignored it. It was Jack McConnell who was on the defensive, fending off repeated questions about holes in his own council tax policy.

Labour’s own manifesto launch three days earlier - in a rather cramped room in the Glasgow Royal Concert Hall - had diced with disaster. After successfully delivering his pitch on making Scottish education the best in the world, McConnell appeared to lose the place over his own plans for local taxation. Labour are promising to halve and then abolish water charges for pensioners and to extend the council tax bands to make them more progressive.

Sounds sensible. This would target pensioners accurately and make owners of big houses pay more. Trouble is, the First Minister didn’t appear to know how many big houses would be affected, nor how the water charges would be paid. He suggest there would be direct payments to pensioners, but his advisers later indicated that Scottish water would receive the subsidy.

Now, these may seem rather arcane, even trivial points, but in the present state of hand-to-hand fiscal warfare, it was incredibly important that Labour had their ducks in a row over local taxation. They had costed every dot and comma of the SNP’s programme, and it was reasonable to expect that McConnell would be able to give a good account of his own.

Fiscal authority figures, like Professor Arthur Midwinter of Edinburgh University, have been looking from on high and issuing thunderous critiques of the various parties’ attempts to play the numbers game. Ten days ago he said that the SNP’s budgetary farrago indicated that they “weren’t fit to govern”.

The nationalists suspect that Prof Midwinter is a Labour stooge, but I can assure them that he is not impressed by Labour’s numbers either. Not just the vagueness about splitting the upper and lower council tax bands to make “some people” in bigger houses pay more. He was dubious also about Jack McConnell’s pledge to funnel #1.2 billion to education by effectively freezing the spending of other departments. This Professor Midwinter says, Jack is not in a position to do, because above-inflation increases are built into the spending of certain departments like health. “McConnell will have to revisit this”, he told me.

Of course, everyone remembers the former Liberal Democrat leader Charles Kennedy coming to grief over local taxation at an early morning news conference in the 2005 general election. The Liberal Democrat leader, Nicol Stephen, didn’t fall into that trap, probably because most of the press corps had nodded off. The LibDems want to raise local income tax by 3.5-3.75 to pay for it the abolition of council tax. Otherwise, there manifesto, with its promises of more schools, renewable energy and such like was suspiciously close to Labour’s. And it’s clear where the LibDem sympathies lie.

Tavish Scott, held an impromptu post-manifesto session in which he repeated that the LibDems will never, ever, (read my lips), NEVER agree to a referendum on independence and hope to die. Even if there is another option on the ballot paper - as Alex Salmond hinted at during the SNP manifesto launch - proposing the Liberal Democrat “federalist” policy of more powers for Holyrood, the Tavish Scott says they will not be interested. The Liberal Democrats are prepared to negotiate on every one of their policies except this one.

In other words, the Liberal Democrats will do everything in their power not to form a coalition with the SNP if the nationalists are the largest party after May. They will look instead to support some other arrangements with the non-SNP parties. Anything but let Alex Salmond into Bute House.

Whether this is quite in the spirit of a proportional parliament, or even of the Liberal Democrats’s own democratic traditions is open to debate. They have participated in numerous constitutional referendums in the past. Nicol Stephen’s claim that the May ballot is real “the referendum on independence” is disingenuous. He understands the difference between a constitutional proposition put to the people, and the election of a party to run a legislature.

Whatever, it looks as if the SNP, if they do win, will have to look to minority government, or some form of loose agreement short of giving the Liberal Democrats any place in government. Will the LibDems be happy to do without their ministerial motors? Well, they hope that it will never come to that.

At the end of this crucial manifesto Labour are worried, but still confident that their dominance of all those constituencies in West Central Scotland will prevent the SNP from converting their opinion poll lead into actual seats. They still believe Tony Blair is an election winner, even Scots want to give him a kicking. It is the oldest cliché in political campaigning, but there really is everything to play for in this fascinating election. And Scottish voters are starting to feel the hand of history on their shoulders.

Sunday, April 08, 2007

Is this the SNP's 1992 revival?

Herald: 8/4/07

It’s not been a happy Easter for Labour. Another weekend poll, this time in the Mail on Sunday, showed the SNP twelve points ahead in the race for Holyrood. There were stories about Brown and Blair arguing in the back of their limo over the impending electoral disaster; there was renewed speculation about Jack McConnell’s future; and Labour insiders were saying that their own internal polls show Labour is trailing the SNP.

In other words, everything is going to plan. Yes, Labour are remarkably relaxed about their poor poll showings and negative press. They seem almost to be talking up the SNP as a tactic, the better to bring them down later in the campaign. There is method to this madness.

Labour’s poll guru, Philip Gould, in Scotland last week compared the Scottish elections to the 1992 general election campaign. At this stage in ‘92, Labour appeared to have a comfortable lead over the Tories. But as soon as voters looked at the small print of Labour’s economic policies, they took fright and threw in their lot with the devil they knew: the Conservatives.

If history is repeating itself, then it makes sense to play up the prospect of an SNP victory the better to concentrate the minds of the electorate on their policies. Mind you, it’s pretty hard on Gordon Brown and the late John Smith who were responsible for the 1992 shadow budget which Gould says didn’t add up.

But is it a legitimate comparison? I remember the 1992 general election campaign well, since I was working in Westminster at the time. At this stage the early polls certainly placed Labour ahead by around five points. There was an infectious air of excitement in the media, just as today, at the prospect of a historic change of government.

It never happened of course, and Labour’s economic policies probably played a part. However, it was a very different economic and political climate. Britain was still in the depths of recession and house prices were collapsing across the South of England. Scotland today is booming and most people in work have never had it so good.

Moreover, I seem to recall that the decisive moment in that 1992 campaign was the infamous Sheffield rally, where Neil Kinnock let his hair down - metaphorically speaking - and started punching the air crying “well, all right...” like a superannuated soul singer. Maybe Sheffield’s significance was exaggerated, but Kinnock certainly feels he blew Labour’s chances by exposing a side of his character that was not sufficiently prime ministerial.

You couldn’t imagine Alex Salmond doing the same - or could you? Remember the “unpardonable folly” remark about the bombing of Belgrade during the 1999 Scottish election campaign. Labour certainly believe that Salmond has it in him to make a series of arrogant gaffes, and a lot of effort will to to into provoke him into delivering one. Hence Jack McConnell’s repeated taunts about how the SNP leader cut and run to Westminster in 2000 because he couldn’t hack it in the Scottish Parliament.

However, the SNP leader has been showing considerable restraint in this election so far. Salmond’s minders have been impressing upon him the need to leave his “guerilla opposition” days behind him and take on the mantle of sober statesmanship. Stop scoring cheap points in debate, curb his soundbites and avoid leaping onto the air waves to rebut every Labour slight. Seems to be working so far.

Last week Salmond and most of his party virtually absented themselves from the entire campaign, allowing the Chancellor, Gordon Brown, free rein to rubbish their monetary and fiscal policies. It culminated in an astonishing attack at the weekend by Professor Arthur Midwinter of Edinburgh University, an adviser on fiscal matters to the Scottish parliament’s finance committee, who told a sunday newspaper that the SNP “are not fit to govern” because they have not been able to defend their policies on local income tax.

Now, in the past, you would have expected a whole series of SNP figures to be leaping up like Jock-in-the-boxes, to defend their policies on council tax, the deficit and keeping the pound. John Swinney, Jim Mather, Alex Salmond to name but three. They would unintentionally have contradicted each other in subtle ways, which the press and Labour would have been able to exploit. In other words, their interventions would have kept the story running, and allowed the focus to fall on the areas where they are weakest.

Instead of that, the nationalists kept their own council, avoided the airwaves and simply released a couple of alternative academic papers, one from Professor David Simpson, former chief adviser to Standard Life and one from Professor Neil Kay, of Strathclyde University, arguing that the SNP numbers are sound. Or at any rate, no more unsound than anyone else's’.

Salmond has kept his ammunition dry until a press conference in Aberdeen today, where he promises to deal with the issue, on his own, point by point. This is not the febrile SNP we have seen in the past. It represents the kind of self discipline that Labour showed, not in 1992 perhaps, but in 1997.

Of course, the SNP will have to get their act together. The charge is that local income tax would make Scotland the highest taxed region in Britain, would discourage investment, and would hit poorer people hardest. There are some very dodgy numbers flying around about just how much local income tax would have be levied.

The respected Institute for Fiscal Studies says 5p on the basic rate. Salmond says, and will say again today, that - assuming the existing council tax benefits are retained which is by no means certain - the increase would only be 3p plus efficiency savings of around half a billion pounds. Hmm. Whenever a politician resorts to efficiency savings to fund policies, economists reach for their revolvers.

Midwinter points out that government in history has ever achieved cost reductions of that scale, equivalent to 1.5% of total spending. Mind you, the Chancellor is supposedly applying efficiency savings of 2.5% under the existing Gershon review, so I suppose Gordon Brown isn’t fit to be in government either. Or Jack McConnell, who promised to cut Scottish spending in the last CSR round by more than Gershon.

Labour have now made a dramatic promise to halve and eventually abolish water and sewerage charges. There will be more tomorrow from Labour at their manifesto launch about making council tax fairer and more progressive. By the end of the week, it will not just be the SNP who will have to show that they can get their numbers to add up.

However, to return to 1992 and all that, there is another very big difference. In 92, Labour were bidding to be the government of the UK, not coalition partners in a regional legislature. Voters know that the SNP would have to share power with the Liberal Democrats and that Scotland would have to vote for independence in a referendum in 2010. Labour’s task is to convince an electorate fed up with them that it cannot afford to take even this limited risk with the future.

Campaign Commentary Week 1

The first week of any election campaign is usually an anticlimax, and this one was no exception. Tony Blair and Gordon Brown came north to warn again of the economic cost of independence, the SNP tried to keep their heads down, the Tories tried to persuade themselves that they still exist.

But the image of the week has to be the Liberal Democrat leader, Nicol Stephen, brandishing that giant toothbrush. The idea was to underline the collapse of NHS dentistry in Scotland, but since the Liberal Democrats were part of the administration responsible for the situation, it didn’t really wash.

The opportunism of the Liberal Democrats has been an intense irration for the SNP and Labour. Nicol Stephen unceremoniously dumped his party’s policy on congestion charging after discovering that it was a vote loser. Shades of the Edinburgh congestion referendum three years ago. Their comments on local authority finance have been so sparing you would hardly believe that they supported a local income tax.

The Liberal Democrats may be small fry but they are immensely important politically. They came fourth in 2003 but they are the only party in this race which is more or less guaranteed a share in any coalition government. The more votes they win the greater their influence.

The big parties are convinced the Liberal Democrats are doing better than their dismal poll figures suggest. The SNP and Labour fear, with justification, that while they slug it out in the forefront, the LibDems will sneak off with lots of votes behind their backs by pretending to be the ‘none of the above’ party. Hiding behind Nicol Stephen’s smile, they will get through the campaign with minimal scrutiny of their policies.

Mind you, the SNP, for their part, were also trying to avoid policy scrutiny last week. Indeed, they seemed to have disappeared mid week, when their biggest draw appeared to be a photo-opportunity in Bathgate. They studiously avoided rising to any of the barrage of economic challenges hurled in their direction by the Chancellor.

Of course, the SNP realise that they are the ones with the most to lose in this contest and they are in the business of avoiding unforced errors. In a curious role reversal, it is Labour who are the underdogs and the SNP who are burdened by the expectation of victory, based on a run of six opinion polls which came to an abrupt halt on Friday.

The Herald poll showing apparently showing Labour back in the lead surprised everyone, psephologists included, who had expected a continuation of the SNP winning streak. The polling organisation, MRUK wasn’t one of the usual suspect, and the SNP insisted that their was something decidedly murky about their sampling technique. They had put the questions in 23-25 March and then sat on them for a fortnight.

But rogue or not, polls like this are significant in terms of morale. Traditionally, the SNP have shown a brittle self-confidence that is easily shattered by unexpected events and set backs. This is a testing time for them, and that is no bad thing. There was a hint of triumphalism entering into their rhetoric which would do them no good at all.

They may have been showing a consistent lead in recent polls, but there was always a question mark about how reliable those polls actually, given the low visibility of Holyrood politics and the large number of ‘don’t knows’. In short, most people hadn’t realised there was an election on until last week. It is only now, as the parties really get into gear with their manifesto launches this week, that the public will begin to sit up and, fitfully, take note.

Labour knows this only too well, which is why they fielded their ‘big guns’ Gordon Brown and Tony Blair again in what was almost a repeat showing of last month’s engagement. Their message was the same as before, same as it ever was: the SNP economics don’t work; independence would cost every Scottish family #5,000; Scotland would be the highest taxed region of Britain; and anyway they will keep the pound so they aren’t really nationalist.

Gordon Brown went ballistic over the SNP currency policy in his visit to Glasgow, denouncing the nationalist policy of remaining with sterling for leaving Scotland at the mercy of the Bank of England. But the real damage was inflicted on the SNP’s plans for a local income tax. The Institute for Fiscal Studies - the accepted authority on such issues - redid the numbers and claimed that it would take a 5p in the pound increase in income tax to raise the equivalent revenue of the existing council tax.

LIT could turn into the equivalent of the SNP’s “penny for Scotland” back in 1999. It is always dangerous to propose new taxes, even if they involve the scrapping of existing ones. For all its faults, council tax has been around for many years and people are used to paying it, however reluctantly.

The problem with shifting the burden from property to income is that it will look like, well, an income tax It may be progressive, but that doesn’t necessarily make it fairer. It will hit people on low earnings who pay no council tax at present, students and houses with multiple occupants. Council tax is unpopular, but the SNP have yet to explain how their system will be less so.

The irony of course is that the low paid who would be hit by the SNP’s local income tax were also clobbered by the Chancellor’s axing of the 10p income tax rate. This is not a good time to be on the minimum wage. The political parties seem to have given up on the poor, now that everyone has become infatuated with the business vote. There is an assumption from the SNP and from Labour that what is good for businessmen is good for the country.

However, a useful corrective to this media preoccupation was provided by the BBC’s election poll this week. Top of the electoral pops for Scottish voters in 2007 appears to be ensuring that hospitals and schools are built and run by the public sector. I take this to be less about opposing PFI - though there’s no indication that it is particularly popular - and more about the Scots continuing commitment to collective provision.

Scottish Labour has been absolutely correct in resisting the market reforms which have been introduced south of the border - even though Number Ten was not impressed by their decision. Scots still hold to traditional Labour values, even if New Labour does not.

Even on council tax want pensioners to be exempted in the belief that this would alleviate hardship. Crime and schools are next on the list, and it’s no secret that they will feature prominently on Labour’s manifesto when it is published on Tuesday. McConnell will promise to give Scotland the best schools in the world, to crack down on crime, to make the council tax bands more progressive and, of course, to keep Scotland in the union.

Last week the SNP kept its head down; this week we will see the bullets fly. This will be the decisive week of the campaign, when Scotland finally awakes to the choice it has to make in four weeks time.

A Very British Hostage Crisis

It was a very British hostage crisis. We just can’t take ourselves seriously anymore as a nation at war, and the return of the gallant fifteen was pure Monty Python.

In their appalling suits, clutching their goody bags containing Iranian craft items, sweets and Sir Alex Ferguson’s autobiography, the gallant fifteen smiled and shook hands with their captors. Happy Easter bunnies.

Apparently the ill fitting tin flutes are the off-duty uniform of the Iranian Revolutionary Guard, so in a very real sense the British detainees were being given a dressing down. But since when has the Manchester United coach been seen as an icon for the Iranian mullahs? I think we should be told.

Of course, things were tougher for the captives in Iran when they were off the TV screens - kept in isolation and held at gun point - though there is no evidence they were never actually mistreated. Some wish they had been. Armchair generals were distinctly unhappy about their compliant conduct; what the Daily Mail called the “grovelling acquiescence” of the 15 British naval personnel.

What ever happened to name rank and serial number? Did they need to be quite so, well, co-operative? The odd black eye wouldn’t have gone amiss. “They may deserve our pity,” remarked the Mail columnikst Max Hastings” but they do not command our respect”. John Buchan was no doubt turning in his grave at the sight of Britons being so humbled

But servicemen and women aren’t taught to resist anymore. No one seriously expects soldiers to sacrifice themselves to defend the dignity of the flag. All that Boy’s Own stuff went out with Trevor Howard and the Second World War. Modern marines are trained to do whatever is necessary to ensure survival in captivity, short - presumably - of releasing information which might endanger other British military personnel.

They aren’t really taught to fight either, especially in the navy, which hasn’t been involved in any actual war since the Falklands twenty five years ago. In our gender-balanced, allergy-free, risk-averse Royal Navy, you are meant to spend your time looking at digital read outs from machines that go ‘ping’.

Except when you get a little too close to disputed waters and you get lifted by an Iranian gun boat. I don’t know whether the British patrol strayed into Iranian waters or not - the evidence suggests that they didn’t. But they were getting rather close to a country with which we are engaged in a proxy war over Iranian support for the insurgents in Iraq.

The Americans have been capturing Iranian nationals, so it should hardly have come as a surprise that the Iranians decide to lift a boatful of nearby Brits to even the score. And in propaganda terms, it went beautifully, consolidating President Ahmadinejad’s position domestically against his many critics. Uniting the country against foreign “aggression”. His unexpected release of the detainees was a stunning media coup worthy of Alastair Campbell himself.

Tony Blair’s initial bluster rapidly faded as the issue got lost in the United Nations, which couldn’t decide whether this was an unprovoked act of aggression or an overzealous policing action by the Iranians. Hardly matters now that Ahmadinejad has been allowed to display his magnanimity in the eyes of the world by “gifting” the personnel back to Britain.

The Iranian leader was able to thumb his nose at the most powerful nations in the world for nearly a fortnight - making it look as if the infidels, for all their technological sophistication, were weak, decadent, cowardly even.

Would Iranian revolutionary guards have behaved with such
passivity? Would they have confessed so precipitately? Would they have laughed and joked with their captors and allowed themselves to be paraded like performing chimps on the world’s media? Probably not.

But, look, it’s no bad thing that we behave differently to Islamist fanatics. Senseless martyrdom would have helped no one. The British behaved like representatives of a peacekeeping force should behave, even if they weren’t really there keeping the peace.

British diplomats went into action behind the scenes, keeping open the channels of communication, gently cajoling Tehran, trying to do a deal. Our foreign service is very good at this kind of thing - talking our way out of crisis rather than retaliating first.

Imagine if it had been US marines who had been captured? We would probably be at war with Iran right now. The marines might well have fought back - though armed only with rifles, they wouldn’t have got very far. But they would probably have offered some resistance, passive or otherwise.

President Bush would immediately have threatened Tehran with air strikes. There are two battle groups in the Gulf right now, practicing bombing runs against Iran’s nuclear facilities, and the Guardian reported last week that the Americans had offered to “buzz” Revolutionary Guards positions during the crisis. You could almost hear President Bush’s disappointment when the affair ended peacefully.

It may still come to war, anyway. Tony Blair was quick to blame Tehran for the deaths of four British soldiers last week in Basra by an “Iranian-made bomb”. It’s not clear that the militias who killed the British soldiers, two of whom were women, were actually from the militias supported by Iran. But there is little doubt that Iran has been supporting the Shias in Iraq and has been providing training, refuge and explosives for the deadly IEDs.

Sabres will be rattled. But the whole affair has only underlined again how disastrous has been the entire Anglo-American policy in the Middle East. By invading Iraq on a false pretext, the “coalition of the willing” alienated moderate Arab opinion and encouraged every extremist in the region to pile into Iraq to have a crack at the infidel. We gave the Ahmadinejads of the region their best platform from which to attack the West as neo-imperialists.

We have lost the war in Iraq, and it is only a matter of time before the British and then American troops are withdrawn. What Iran has done is position itself very favourably for the aftermath of the retreat. Ahmadinejad has defied the West and sent them packing. Exposed the emptiness of our military rhetoric, for when it comes down to it, they know, and we know they know, that we will not go to war with Iran. President Bush might, but we won’t be joining him.

That was the message conveyed by last week’s episode. We Brits aren’t in the business of trying to remake the world in our image. We are too old and too wise a nation to have imperial ambitions, and we know the limits of force. Far better to laugh it off, as the British sailors did - smile and shake hands.

Armchair generals may have been squirming in their seats at the sight of a British woman paraded in her hijab, chain smoking on television. There has been much muttering about how this confirms that women should not be placed in the front line because they cannot expect to offer much in the way of resistance. But surely the presence of Leading Seaman Faye Turney’s presence helped civilise the crisis and made the revolutionary guards behave. Perhaps there should be more women in the front line.

Surely, the lesson of this hostage crisis is surely that it is best to humour excitable Islamists and do your best to make them behave decently. Contrast the peaceful outcome of this episode with the bloody end to the American hostage crisis in Iran in 1981. In its own way, the resolution of the crisis - like the deal done with North Korea over its nuclear weapons programme - was a kind of victory disguised as a humiliation. Better Monty Python than Quentin Tarantino.

Sunday, April 01, 2007

Sorry, but Brown isn't to blame for the pensions crisis

Of all the stealth taxes dreamed up by the Chancellor Gordon Brown in his decade in office, the pensions tax was by far the most obscure. It wasn't a tax for a start, but a tax break, a loophole. Ten years after closing it, the Chancellor is now in the dock for wrecking the pension prospects of a generation.

However, while the Chancellor must share the blame for the collapse of the pensions industry, this particular measure was only a small part of the problem. It's always tempting to blame the politicians when things go wrong, and the Brown has allowed himself to acquire a reputation for dodgy fiscal manipulation. But there is more to this story than treasury sleight of hand.

The ending of dividend credits on advance corporation tax baffled most hacks - this one included - when Brown announced it in 1997, alongside measures like the windfall tax on the privatised utilities and the national minimum wage. Few financial journalists even appreciated its significance.

The dividend relief appeared to benefit wealthy people with big pension funds rather than the little people in public sector jobs and so scrapping it seemed to most Labour MPs to be acceptable in the context of a tight spending round.

Even the civil servants who are now said to have been warning Brown against scrapping dividend relief were divided about its impact. Treasury papers released under the Freedom of Information act reveal that officials at the time thought that the measure might cut the stock market by 20%.

This was quite erroneous. The FTSE collapsed three years later, but not because of the removal of dividend relief. It was the dot-com madness of the late 90s that led to that.

The anonymous treasury mandarins also warned that final salary pension schemes might be at risk, and personal pensions would lose out, both of which forecasts were correct - but for the wrong reasons.

The collapse of occupational pensions arose largely from the restructuring of the corporate private sector, under the pressure of globalization, and the ending of the life-time career.
Firms no longer valued their long term employees enough to want to pay for them indefinitely.

Private companies have been dumpng occupational pensions so rapidly that soon it will only be the public sector that offers them, which is one reason why graduates in Scotland are shunning the private sector.

As far as the collapse of personal pensions is concerned, this again was largely a result of factors outwith the Chancellor's control. A decade ago a #100,000 fund would have yielded a pension of #9,000 a year; today you would be lucky to get half that. But this is largely because people are living longer and because the private pension funds never fully recovered from the 2000 stock market crash.

The main reason they never recovered was the high commissions charged by the insurance companies that sold them in the 1980s and 90s. Back then, it was not unusual for 30% of the annual premiums paid into a personal pension to be taken out in charges in the first three years. This was the infamous system of "front-loading" commissions.

Like endowent mortgages, with-profit funds and other financial "products", personal pensions gave very poor value. They promised unrealistic long term returns of 9 or 10% which assumed that share prices would never go down.

But this was the roaring 90s, and with the FTSE rising 10-20% a year, hefty commissions appeared justified. It was only after the stock market collapse of 2000-03 that companies and individuals noticed that their pensions had been underfunded all along.

Brown was a victim of the bull market just like everyone else. In 1997 he calculated that the big pension funds could live with losing dividend tax relief. Most were rolling in cash, and many large companies were awarding themselves pension contribution "holidays". Until the roof fell in.

Since then, the financial services industry and impoverished pensioners have been looking for someone to blame. The Chancellor's face fits and he certainly contributed to the problem by withdrawing 5 billion in annual dividend tax reliefs.

But it's not clear that it would have made very much difference had the money stayed put. It was the 'irrational exuberance" of the financial services industry that destroyed the credibility of pensions. As a result, millions face poverty in retirement and two thirds of of people in work now are not saving enough for the future.

The Tory party call for an inquiry into the so-called pensions tax is disingenuous. They were themselves largely responsible for the encouraging growth of private pensons through thatcherite policies in the 1980s. They have no real answer to the pension crisis.

Most middle-aged people today are looking to their houses to provide their pensions. Hardly surprising since in the decade of disaster for pensions, house prices have tripled. People have piled into bricks and mortar in the belief that house prices always go up. They don't of course, and there will have to be a reckoning at some stage.

This is where the Chancellor's culpability becomes much more apparent. By allowing the housing market to get completely out of control, the Chancellor has stored up the mother of all problems for the future.

Yes, it is the independent Bank of England that set the low interest rates that have pumped up the housing bubble. But the Bank is only charged with keeping inflation under control, and the measure of inflation that it uses, the consumer price index, excludes housing costs from the inflation figures.

This means that interest rates are lower than they would have been had the old retail price index been the Banks guiding star.

Brown's response to the affordability crisis has been to subsidise private sales rather than build more houses. The effect of government shared equity schemes like homeshare has been to push prices up even higher.

The question now is where we go from here. The Turner Report called for the government to set up a national pensions saving scheme, but the problem as always is getting private financial serviecs industry to run it. Lord Turner said should the pension providers should only be allowed to charge a maximum of 0.3% per annum, but the pensions industry won't move until they get more. They killed off stakeholder pensions, which charged a maximum of 1%, by simply not telling their clients about them

With a rapidly ageing population, pensions is one of the great issues of the age, and one which will dominate Gordon Brown's era as prime minister. Very soon, those under-funded pensioners are going to be throwing themselves on the mercy of the state.

Brown has been damaged politically, even though he was only a part of the problem. if he doesn't do something to restore saving in this country and make pensions worth investing in, then he really will be guilty of impoverishing a generation now in work.