George Osborne once again suffered at the feet of his economic policies last month, the so called ‘downgraded Chancellor’ had to announce that estimated growth for 2013 was half the 1.2% he had predicted just three months ago, with the OBR announcing there is a 30% chance of the UK slipping into a triple-dip recession; this being through austerity which has resulted in the deficit remaining static from 2011/12 until 2013/14, not falling. Another month of misery for the Chancellor, but March was not exactly a time of joyous celebration for the Labour Party either, as they lost one of their most influential and talented figures to the clutches of the Big Apple, leaving Ed to travel alone on the Milibandwagon of UK Labour politics.
A voluntary decision to exit to the United States may be one which many members the coalition Treasury department may be envious of however, especially after March’s budget announcement; although this may not be a completely voluntary decision if we continue to see similar economic woe over the coming months. Does Osborne seem to be producing inspirational policies to ensure that this is not the case however? Well, it doesn’t appear so. One of the premier announcements in his budget was a scheme to create £130 million worth of mortgage credit to help about 75,000 people buy their own homes through shared equity, mortgage guarantees and interest free loans. On the surface this seems a very good policy; get people buying homes, create confidence in the housing market again and meanwhile attempt to recover a rapidly dying construction industry. But, although the housing market has been a crucial source of economic growth during the past twenty years, it has also been a fundamental cause of economic disaster. Indeed, as seen in the USA, this newly available finance may result in borrowers paying too much to take advantage of their opportunity to buy property, leading to subprime lending and potentially another housing bubble. This is an economic policy which must be managed carefully, if Osborne creates a deadly housing bubble then he will be regarded as much worse than merely a ‘downgraded’ Chancellor.
In fact, it seems that the Conservatives have generally forgotten the causes of the last global economic crash. The EU are proposing to cap bankers’ bonuses to 100% of the individuals’ annual income, or 200% if shareholders approve, something vehemently opposed by the Conservatives. This stance, taken by Cameron and Osborne, is designed to ensure that the financial service sector (accounting for 10% of GDP) is protected. Our over-reliance on the banking sector has meant that we have not only failed to punish bankers for their role in the economic crisis, but are continuing to support their claims to unreasonable and extortionate pay. Consequently, we must, as Osborne has failed to do thus far, diversify our economy. We are a nation which puts too much emphasis upon the past in order to determine our future, for example, the implicit argument that because we were the strongest economy in the world 200 years ago, we can compete with China tomorrow. The simple fact is that we cannot, and a similar case is true for financial services; we cannot assume that because they have boosted GDP in the recent past that they will continue to be the best route for our economy in the future, we need to invest in other options and create a multi-skilled economy. It is much like business; a company seeks to have a wide product range so that if one product is not performing then the business can still make a profit. The same must be true for the UK economy; we must not let the performance of a few industries dictate our economic fortunes.
Talking of fortunes, Labour MP for South Shields and former Foreign Secretary David Miliband announced last month that he will be withdrawing from UK politics to become chief executive of the International Rescue Committee. He stated that he did not want to become a distraction from his brother’s leadership of the party, ending the hope of many members that he would join his sibling on the front bench in 2015. Without dwelling upon the details too much, is this clearly a politically selfish act from David? He may have been a distraction to his brother, yes, but it is equally as likely that he would have been tainted by being in government with Ed. This way, David has given himself the greatest chance to lead the party in the future, separated almost completely from the actions of Ed and the potential Labour government in 2015.
On a different note, David’s earnings since leaving government have been approximately £1 million, and his role at the IRC is expected to earn him around £300,000 a year. Now, do not be fooled here, I am not going to voyage on a Daily Mail-style rant about how he is leaving to the US in search of dollars to line his pockets, even if that were the case, that is his choice. What is actually significant about his earnings is that they demonstrate the market value of individuals of the calibre of David Miliband, and how this figure is vastly more than he is paid as an MP. Is there consequently a case to be made for the salaries of MPs, especially cabinet members, to be increased? I understand that this may not be the best time to highlight an argument in favour, with a nationwide petition currently circulating for Iain Duncan Smith to live off £53 a week, but nonetheless it is a worthwhile discussion.
Indeed, when considering MP’s wages, many people look comparatively to their own, or those of other public sector workers, such as nurses, doctors etc. and say that MPs are paid far too much for the contribution they make to society. This is the wrong comparison to make. What we should actually be doing is comparing the wages they are currently earning to what they could earn in a different job, which, as shown in the case of David Miliband and Tony Blair, is far higher. As a result, are we putting off some of our brightest individuals from entering politics? Yes, of course being a politician is not merely a job, it is a mission to help the population, but with MP’s salaries so comparatively low, are we not creating doubt in the minds of some of the brightest people who may want to take up that mission? Because, as David Miliband has proven by heading off to lead the IRC, you can still fulfil this altruism, and yet see personal economic benefits greater than those of an MP.
No matter what your opinion, it is an interesting topic, and one which I am sure will rear its head regularly in forthcoming years. Moving on to the Article of the Month award for March however, and I have decided to award it to Robert Walmsley and his article, ‘David Cameron, Master of Hollow Rhetoric?’The piece fluently analyses the problem we currently see regarding political rhetoric, and appeals to politicians to make politics more relatable to ordinary people, stating that, ‘for politics to matter, it must feel like it belongs on the streets, not in Westminster.’ It is a problem which most people see in our modern political system and one which has a variety of potential solutions- from limiting the number of terms an MP can serve, to altering our voting system in order to give more influence and attention to smaller, potentially more relatable parties. Other standout work during the month came from Lily Summers and her economic analyses, covering the build-up and reaction to the budget in a great deal of depth, and posing potential economic alternatives for Mr Osborne. Furthermore, also the articles of new Commentators Harry Goodwin, Justin Lines and Joe Massarella, who have all demonstrated great potential in their early work for Backbench.
I would just like to finish by reminding all Commentators that applications to the second Backbench Cabinet close on Sunday 7th April. The Cabinet itself will be announced the following week on Sunday 14th, when their dissection of the government’s policies will begin in earnest. Hopefully our reshuffle won’t be as bloody and merciless as those performed by governments of the recent and not so recent past, but we will have to wait and see.
By Sam Bright