The Irish verdict George Osborne would like to forget

The case of Ireland is a cautionary tale, not an instruction manual.

RIP Ireland's economic miracle. A combination of tax cuts and increased public spending -- coupled with the credit crunch -- has left Ireland with a budget deficit of 32 per cent of its GDP this year. The credit-inflated bubble has now well and truly popped, the draconian austerity measures have failed -- as many predicted they would -- and the Irish government appears close to being bailed out by the EU.

Along with Greece, the Irish experience from the nineties into the noughties seems to be a perfect example of how not to do things. But in 2006 -- at the very apex of the Irish bubble -- one economic sage decided that Ireland was actually a fine example of how to run an econmy. His name?

George Osborne.

Writing in the Times (pre-paywall, folks), the then shadow chancellor declared:

Ireland stands as a shining example of the art of the possible in long-term economic policymaking.

Long-term, eh, George?

There was little "long-term" about the artificial housing and banking boom that Ireland underwent in the late 1990s and early 2000s.

Despite Osborne's claims, Ireland did not surge ahead because of its highly regarded education system or increased research and development at universities.

Ireland boomed instead on a toxic mix of cheap credit, lax banking regulation and by becoming a borderline tax haven.

Slashing corporation tax -- a move continually hailed by Osborne as the way forward -- simply weakened Ireland's tax base even further, making the recovery that bit more difficult.

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.

The case of Ireland is a cautionary tale, not an instruction manual.

UPDATE: Alphaville over at the FT points out another cautionary tale from the Irish experiment.

"Sovereign bailouts involve a certain quid pro quo.

For a start, there's been talk that Germany is pushing for the country's low, low 12.5 per cent corporate tax rate to be hiked.

...

Awkward. And perhaps not least for a certain tax-avoiding search engine."

Which tax-avoiding search engine could that be? Why, the one that George Osborne bragged about speaking to in his Times op-ed: "I will be asking Google executives today why they set up in Dublin, not London." Alphaville explains exactly why Google set up in Dublin:

"Google Ireland sends the earnings on a tax-lite journey to the Netherlands, whence a shell subsidiary passes it on practically untouched to a Bermudan holding, basically. They call it a 'Double Irish'.

Jammy stuff. Until your tax haven files for a bailout from some very angry Germans, that is. And 26 per cent of your earnings is a lot to put at risk..."

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As crime moves online, the police need the investment in technology to follow

Technology offers solutions, not just threats.

It’s perhaps inevitable that as the world becomes more digital, so does crime. This week Alison Saunders, director of public prosecutions, recognised that online crime is as serious as face-to-face crime. “Hate is hate,” Saunders wrote referring to internet abuse, and the police should protect people from it wherever they are. This will add demand to under-pressure police forces. And it is only the tip of the iceberg. 

Forty-seven per cent of crime involves an online element. Police recorded 30,000 instances of online stalking and harassment last year. People are 20 times more likely to be a victim of fraud than robbery, costing businesses an estimated £144bn a year. On a conservative estimate, 2,500 UK citizens use the anonymous dark web browser, Tor, for illegal purposes such as drug dealing, revenge porn and child sexual exploitation.

The police need new technology to meet demand, a Reform report published today finds. Some progress has been made in recent years. West Midlands Police uses an online portal for people to report incidents. Durham uses evidence-gathering software to collect social media information on suspects, and then instantly compile a report that can be shared with courts. Police have benefited from smartphones to share information, and body-worn cameras, which have reduced complaints against police by 93 per cent.

Yet, Theresa May’s 2016 remarks that police use “technology that lags woefully behind what they use as consumers” still stand. Officers interviewed for Reform’s research implored: “Give us the tools to do our job”.

Online evidence portals should be upgraded to accept CCTV footage. Apps should be developed to allow officers to learn about new digital threats, following the US army’s library of knowledge-sharing apps. Augmented-reality glasses are being used in the Netherlands to help officers identify evidence at digital crime scenes. Officers would save a trip back to the station if they could collect fingerprints on smartphones and statements on body-worn cameras.

New technology requires investment, but forces are reducing the resources put into IT as reserves have dried up. Durham plans to cut spend by 60 per cent between 2015-16 and 2019-20. The government should help fund equipment which can meet demand and return future productivity savings. If the Home Office invested the same as the Department of Health, another department pushing “transformative” technology, it would invest an extra £450m a year. This funding should come from administrative savings delivered through accelerating the Government’s automation agenda, which the think tank Reform has previously calculated would save Whitehall £2.6bn a year.

As crime moves online, police must follow. Saunders is right to point to the importance of meeting it. But technology offers solutions, not just threats. Installing the next generation of equipment will give police the tools to do their jobs, addressing online hate and more. 

Alexander Hitchcock is a senior researcher at reform