What do our leaders say about the economic "catastrophe"? Nothing

Britain's economic problems are getting worse. It's time the government took notice.

I have read my old friend Bill Keegan's column at the Observer for so many years. He started writing for them in 1977, first as economics editor and latterly as their senior economics commentator. He was previously at the FT and even had a short spell at the Bank of England, poor thing! Every Sunday, I turn to his column for his take on the current economics scene. This week was a real shocker. Bill, as he admitted this week, is not prone to hyperbole -- unlike some I could mention, perhaps including yours truly -- but, this week, he used the word "catastrophe" about the economy. He claimed he didn't relish using that warning but had to: "things are getting serious" because of the collective view of policymakers around the world that "simultaneous deflation is the answer to all problems". It's time to sit up and take notice when Bill starts to panic. I agree with him.

It seemed a good time to check out what our great leaders had to say about the coming "catastrophe" -- zippo, it turns out. First, on 14 September, there was Deputy Dawg Nick Clegg's fatuous speech on the economy at the LSE on the day that unemployment jumped by 80,000. Presumably, a number of LSE students, who, from my experience, are extremely astute, will not have failed to notice that of that increase 77,000 were of youngsters aged between 18 and 24.

Cleggy started off pretty well with this claim, which cheered me up, thinking that something of substance was coming:

The reality we face is stark; there is now little margin for error. But that does not mean we are helpless. It does not mean we intend to sit on our hands while the global economy falters. Our critics say that all this government is capable of is cuts. That, beyond lowering a few business taxes, reducing a bit of red tape, there is little else we are willing or able to do. That is absolutely wrong. We can do more, we are doing more, we will do more.

Great, at last some action.

Sadly, my hopes were quickly dashed, when shortly thereafter he claimed there will be "no deviation on deficit reduction". He made it clear that this government had every intention of sitting on its hands while the economy falters.

Then, on 16 September 2011, Slasher Osborne made a speech to the Daily Telegraph Festival of Business conference. He also showed that he had thrown in the towel, arguing that there was nothing he could do, as everyone else was to blame for Bill's catastrophe. There were a couple of choice quotes though:

Our plan was designed for both good times and tough times. Flexible enough to let the automatic stabilisers work. Strong enough to command the confidence of world markets. If we abandoned it now, there would be a collapse in that confidence and a surge in interest rates. Look at our neighbours. In Greece, market interest rates are almost 23 per cent. In Italy, 5 per cent. Our market interest rates this week were the lowest they have ever been in our history. Below 2 per cent.

The automatic stabilisers are simply increased spending that occurs in a downturn when unemployment rises. To argue that his policy was "flexible enough" to let them work is absurd. They kick in when economic policies fail. This week, the latest data release from the ONS on the labour market showed that the number of public-sector jobs fell 111,000 on the quarter, while private-sector jobs were up 41,000 on the quarter.

Let me repeat for the umpteenth time: Greece and Italy are stuck in monetary union and cannot depreciate their currency or do more quantitative easing. There has already been a collapse in confidence, from the moment this government took office, and bond yields are as low as they are because the markets believe the growth prospects of the UK economy have been so decimated by the wilfully inept austerity package that interest rates will have to remain at 1 per cent or lower for many years. Note also that when the US debt was downgraded by S&P, bond yields fell, and are much lower than in the UK. Osborne is for the birds.

The quote that made me LOL was this one: "Government helping business to help business. That is our agenda. It's an agenda for jobs. For business. For growth." The reality is, it's an agenda for no growth and no jobs.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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Is it true that a PR firm full of Blairites is orchestrating the Labour coup?

Portland Communications has been accused of conspiring against Jeremy Corbyn. It's not true, but it does reveal a worrying political imbalance in the lobbying industry.

The secret is out. The Canary – an alternative left wing media outlet – claims to have uncovered the story that the lobby missed. The website has discovered “the truth behind the Labour coup, when it really began and who manufactured it”.

Apparently, the political consultancy and PR firm Portland Communications is “orchestrating” the Labour plotting through its extensive network of Blairite lobbyists and its close links to top media folk. Just when we thought that Tom Watson and Angela Eagle might have something to do with it.

Many Canary readers, who tend to be Jeremy Corbyn supporters, have been lapping up and sharing the shock news. “Thank you for exposing this subterfuge,” said Susan Berry. “Most helpful piece of the week,” enthused Sarah Beuhler.

On Twitter, Mira Bar-Hillel went even further: “It is now clear that @jeremycorbyn must remove anybody associated with Portland PR, the Fabians and Lord Mandelson from his vicinity asap.”

The Canary's strange, yet popular, theory goes like this: Portland was set up by Tony Blair’s former deputy communications chief Tim Allan. On its books are a number of Labour types, many of whom dislike Corbyn and also have links to the Fabian Society. The PR firm also has “countless links to the media” and the BBC recently interviewed a Portland consultant. Err, that’s it.

The author of the piece, Steve Topple, concludes: “The Fabians have mobilised their assets in both the parliamentary Labour party, in the media and in the sphere of public relations, namely via Portland Communications – to inflict as much damage as possible on Corbyn.”

To be fair to Topple, he is right to detect that Portland has a few active Blairites on the payroll. But on that basis, the entire British lobbying industry might also be behind Labour’s coup.

Rival lobbying firm Bell Pottinger employs paid-up Blairites such as the former prime minister’s assistant political secretary Razi Rahman and his ex-special adviser Darren Murphy. Bell Pottinger also has former News of The World political editor Jamie Lyons.

Are Rahman and Murphy also telling docile Labour MPs what to do?  Is Lyon busy ensuring that his old mates in the lobby are paying attention to the Labour story, just in case they get sidetracked or don’t fancy writing about the official opposition imploding around them?

And what about Lodestone Communications, whose boss is a close pal of Tom Watson? Or Lexington Communications, which is run by a former aide of John Prescott? Or Insight Consulting Group, which is run by the man who managed Andy Burnham’s recent leadership campaign?

Having tracked down the assorted Blairites at Portland, Topple asserts: “It surely can be no coincidence that so many of the employees of this company are affiliated to both Labour and the Fabians.”

Indeed it is no coincidence – but not in the way that the author suggests. Since the mid-1990s, Labour lobbyists have tended to come from the pragmatic, Blairite ranks of the party. This is largely because Labour spent the 1980s ignoring business, and that only changed significantly when Blair arrived on the scene.

Whisper it quietly, but Portland also employ a few Tories. Why don’t they get a mention? Presumably they are also busy focusing on how to destroy Boris Johnson or to ensure that Stephen Crabb never gets anywhere near Downing Street.

What is certainly true is that Corbynites are incredibly hard to find in public affairs. As one experienced Labour lobbyist at another firm has told me: “I know of nobody in the industry  or indeed the real world – who is a Corbynite. All of my Labour-supporting colleagues would be horrified by the accusation!”

David Singleton is editor of Public Affairs News. He tweets @singersz.