When stimulus fails to stimulate

Beats him

Last week’s news that US GDP had shrunk by 0.1 percent presented some with a problem. The United States, with its apparently indefinite commitment to trillion dollar deficits, has been held up by Ed Balls among others as the Keynesian poster boy in comparison to the ‘austerity’ which, it is claimed, is ravaging Europe’s economies.

In December, John Cassidy of the New Yorker wrote: “It’s official: Austerity doesn’t work”, contrasting the growth in US GDP with the miserable stagnation of Britain’s. And here it was shrinking.

Duncan Weldon, the TUC’s resident economist, took to Twitter to explain that the “Primary reason for US GDP fall is govt spending cuts…This enhances rather than disproves case for stimulus.” Does it?

The first thing to note is that GDP is a measure of spending which is used as a proxy for measuring the much more elusive concept of economic wellbeing. As such, getting it to rise or fall is child’s play; a fool could do it as Gordon Brown proved. As Cassidy writes:

“Before the last election there, which took place in May, 2010, the U.K.’s economy appeared to be slowly recovering from the deep slump of 2008-09 that followed the housing bust and global financial crisis. Just like the Bush Administration (2008) and the Obama Administration (2009), Gordon Brown’s Labour government had introduced a fiscal stimulus to help turn the economy around. G.D.P. was growing at an annual rate of about 2.5 per cent.”

Indeed, but that was achieved simply by the spending of 160 billion borrowed pounds in one year. To repeat, if you borrow and spend lots of money you will see an increase in a measure of spending, GDP. This is not rocket science.

And just as this should be obvious, so it should also be obvious that such a strategy has limitations. Governments cannot keep adding to their debts indefinitely especially when, as the Labour government did in Britain, they were doing so during the growth years as well.

Secondly, let us ask what the point of ‘stimulus’ is. It is, as obviously as anything else, to stimulate economic growth, as measured by rises in GDP. Think of it like stabilisers on a child’s bike, they exist to keep the economy upright until such time as it can cycle off on its own.

But what if stimulus doesn’t actually stimulate anything?  What if, even after years riding his bike with stabilisers, your kid still can’t keep his balance unaided?

That is what the US GDP figures showed. Four years of unprecedented trillion dollar deficits have boosted GDP, an effect a sufficient level of spending is guaranteed to have on a measure of spending. But reduce government spending and GDP drops. The economy is still incapable of standing on its own two feet. The stimulus has failed to stimulate.

This suggests two things. First, the extra six and a bit trillion dollars of debt the Democrats have gleefully piled on their kids has failed to achieve its stated aim. Second, those Europeans with their ‘austerity’ might not be as daft as people like Cassidy say. After all, what’s the point in stimulus if it doesn’t stimulate?

This article originally appeared at The Commentator

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Your cut out and keep guide to how Labour wrecked the economy

The Golden (Conservative) Years

* When Labour came to office in 1997 they inherited falling debt, inflation, and unemployment and rising GDP. They were committed to Conservative spending plans.

* The budget deficit, which had fallen from £51 billion in 1993 to £29 billion in 1996, continued to fall and surpluses were recorded in each of the years from 1998 to 2001.

* Government debt fell from 42 percent of GDP in 1996/1997 to 30 percent of GDP in 2001/2002.

* Unemployment fell from a little over 2 million in 1997 to 1.5 million in 2001.

The Spending (Labour) Years

* In June 2001 Labour were reelected with a barely reduced majority. Two weeks later Gordon Brown says

“Every time in recent decades when the British economy has started to grow, Governments of both parties have taken short-term decisions which too often have created unsustainable consumer booms, let the economy get out of control and sacrificed monetary and fiscal prudence”

Brown ignored this advice himself.

* Between 2001 and 2007 tax receipts rose by 40 percent.

* This was still not enough to fund Brown’s new found passion for spending; in the same period government spending increased by 54 percent in real terms.

* The number of British households receiving more in benefits than they paid in taxes rose from 43.8 percent in 2000/2001 to 48 percent in 2007/2008.

* Even though the economy was growing Labour ran deficits in the fiscal years ending 2002, 2003, 2004, 2005, 2006, 2007 – all before a single banker needed bailing out.

* Between 2001 and 2008 Gordon Brown added over £200 billion to British government debt.

* British government debt increased from 30 percent of GDP to 35 percent on the eve of the crisis.

* Between 2001 and 2008 British government debt payments rose from £21 billion a year to £31 billion.

Then, in 2008, came the worst economic crash since the Depression. 

Seumas Milne’s mad wealth tax

And in year two? Er…er…I’ll get back to you…

When the government closes its books in April 2013 it is estimated that it will have borrowed £119 billion in the financial year. That works out at about £326 million pounds added to Britain’s national debt every single day, £13.6 million every single hour, £226,000 every single minute, or £3,766 every single second of fiscal year 2012/2013.

Colossal as that is it represents an improvement on the £4,946 per second that Labour was adding to the debt upon leaving office.

There are some who see no problem with this. And there are those who acknowledge the problem, but think the solution to runaway government debt can be found not in cutting government spending but in raising government income; massive tax rises, in other words.

But where will we find the goose who will be content to sit still and not only be plucked but stripped to the bone to fund our government, without hissing the house down?

Seumas Milne, the Guardian’s resident, privately-educated Stalinist, thinks he has an answer. “The richest 1,000 people in Britain have seen their wealth increase by £155bn since the crisis began”, Milne observes, “more than enough to pay off the whole government deficit of £119bn at a stroke”. Phew, that’s that sorted then!

Except of course it isn’t. For someone so expensively educated Milne appears unable to tell the difference between assets and income, something any first year finance student would be expected to know by the end of their first term.

That £155 billion increase in wealth will be, as the Bank of England reported recently, mostly down to rising asset prices. This will be the increase in value of property, stocks, bonds etc., which are mostly held by the better off.

But how do you tax the increase? Bear in mind that you can only pay tax with cash. If your house has risen in price by, say, £10,000, and, as Milne suggests, a tax of 100 percent was levied on that asset price increase you would need £10,000 cash to pay the tax. But your house increasing in price by £10,000 does not mean that you have £10,000 more cash lying around.

If you do not have the cash to pay Milne’s wealth tax then you will have to swap your asset for cash. You sell your house for cash and pay your £10,000 tax. Then you go and find a new place to live.

There are two glaring problems that follow. First, if everyone tries to swap their assets for cash at once by selling them then their prices plummet. You would see house prices fall and an increase in negative equity; you would see share prices fall and companies have millions wiped from their net worth. Some portion of the asset price increase you intended to tax away disappears.

And, secondly, what do you do next year? Even if Milne’s mad asset tax covered this year’s deficit by expropriating the assets of the rich, those assets are then gone; they won’t be there to tax again next year. But the deficit will still be there.

It doesn’t take much thinking to figure this out, a couple of minutes or so. Is it too much to ask that people like Milne expend a little mental energy before making such stupid proposals?

This article originally appeared at The Commentator

Crisis of statism, not capitalism

In search of that magic money tree

t might not have been the ‘crisis of capitalism’ which some have been waiting so long for, but it is widely thought that the last few years certainly represent a “crisis of capitalism”. But if you think of capitalism as a system whereby profits and losses acting unhindered by the hand of government guide capital to its most productive uses, this is difficult to sustain.

The sectors which blew up and took the rest of the economy with them were riddled with intervention. Banks have their capital adequacy rates set and their bad investments covered by government. The housing market is kept inflated with all manner of tax breaks and politically motivated distortions like Fannie Mae, Freddie Mac, and the Community Reinvestment Act. Behind it all interest rates are set by a small panel of political appointees, much as the price of alum keys was set in the Soviet Union.

But as we see violence on the streets of Athens and Madrid, the Occupy protests in the United States, and unadulterated rage on the pages of The Guardian’s Comment is Free (Cif), there is certainly some sort of crisis afoot. It is, however, a crisis of big government.

Over the last few decades governments throughout the western world have made extravagant spending commitments. In Ireland the welfare budget was tripled. In Greece pastry chefs, radio announcers, hairdressers, and steam bath masseurs were included among 600 professions deemed so “arduous and perilous” that workers could retire at 50 on a state pension of 95 percent of their final salary.

But it wasn’t just small basket case economies doing it; big basket case economies were doing it too. France decided that its workers could work no more than 35 hours a week and still generate the wealth to pay for everyone to retire at 60 and spend a third of their lives as state pensioners. In the United States the Bush administration launched the largest expansion of Federal spending since Lyndon Johnson’s Great Society program of the 1960s. In Britain the Labour government increased spending by more than half in six years.

As long as you didn’t look either too closely or too far ahead, these massive spending commitments looked just about affordable as long as there was plenty of money to spend. And there was. In Britain tax receipts rose by 40 percent between 2001 and 2007. In the United States, Federal tax revenues rose by 30 percent between 2000 and 2007. French tax revenue increased by 30 percent between 2002 and 2008.

But these were the effects of the bubble. These were taxes swelled by property values, house sales, and bank profits on those house sales and the myriad ancillary transactions such as securitisation. With the bursting of that bubble that wealth is gone, if it was even there in first place, and it is not coming back. Nor should it.

That does mean, however, that lots of the extravagant government spending promises made before the bust now stand revealed for what they are; unaffordable in the absence of bubble taxation. And given the undesirability of bubbles, that just makes them unaffordable full stop. No amount of general strikes, protesting, occupying, or posting on CiF will change that. We do not have a mighty oak of a money tree, but a bunce bonsai and, in truth, that’s all we ever did have.

Since the crisis hit we have seen both the unavoidability of this truth and the reluctance of electorates to accept it. In the last few years the voters of Greece, Spain, and France have voted out ‘austerity’ governments only to have ‘austerity’ visited upon them anyway by their replacements (at least they were asked, unlike the Italians). There is a very good chance that this November and in May 2015 the voters of the United States and United Kingdom will discover that reality doesn’t just disappear because you tick a box marked ‘Obama’ or ‘Miliband’.

The amount of money spent by the government has grown inexorably. We have reached its limit. In Britain, since 1964, whether top rates of tax have been at 83 percent, as in the 1970s, or 40 percent, the percentage of national income paid in taxes has never exceeded 38% of GDP.

Whatever the designs of the politicians, the social democrats, the Labour party, the Guardian, or Polly Toynbee, the British people, collectively and unconsciously, seem to have decided that they are not willing to fund a state sector any bigger than this. When the share of state spending as a share of GDP reaches 45 percent or 50 percent, as it has recently, the only way is down. That is where we are now.

If the extravagant spending promises of politicians outstrip both the capabilities of even a well-functioning capitalism to generate the necessary wealth and the public’s willingness to pay for it, that is not capitalism’s crisis, but a crisis of big government. Its time is up.

This article first appeared at The Commentator

Cheering? For Gordon Brown?

Boo who?

Paralympians work hard for years to overcome incredible obstacles. The Paralympic Games is their moment of glory, the payoff for their amazing effort. So it was sad when three Paralympians had their moment spoiled last week when a boorish crowd decided that booing George Osborne was more important than honouring the athletes.

But what elevated this sad, selfish incident into the realms of the bizarre was that Osborne’s predecessor, one Gordon Brown, was cheered by another Paralympic crowd the very same day.

I have written the following or variations of it so often over the past couple of years that it’s depressing that it needs saying again. But the behaviour of the Paralympic crowds indicates that it does. We must hope that if truth doesn’t blast away ignorance like dynamite it may erode it like water, one drop at a time.

When Labour took office with Gordon Brown as Chancellor in 1997 they inherited the most benign set of economic circumstances since before World War One. When they left office in 2010 they bequeathed the worst set of economic circumstances since World War Two.

In 1997 Labour had committed themselves to Conservative spending plans, so ruined was their reputation for economic management. A budget deficit which had fallen from £51 billion in 1993 to £29 billion in 1996 continued to fall and surpluses were recorded in each of the years from 1998 to 2001. Government debt fell from 42 percent of GDP in 1996/1997 to 30 percent of GDP in 2001/2002. And all this happened as unemployment fell from 3 million in 1993 to 1.5 million in 2001.

So far, so good for Brown, even if he had been following Conservative policies. But when re-election was secured in 2001 hubris set in and Brown began going round telling anyone who would listen that we’d seen an end to “Tory boom and bust”. Worse, he actually seemed to believe this and embarked on a historic spending spree.

Between 2001 and 2007 government spending increased by 54 percent in real terms. The economy was booming, tax receipts rose by 40 percent, but this was still not enough to cover Labour’s mammoth spending binge.

In every year from 2001 until 2008, before the first banker was bailed out, the Labour government spent more than it received, applying fiscal stimulus to an already growing economy. In these years of economic growth Gordon Brown added over £200 billion to British government debt which increased from 30 percent of GDP to 35 percent on the eve of the crisis.

If this doesn’t sound like much consider that, if Brown had maintained the downward trend of his ‘conservative’ years, government debt would actually have been below 20 percent of GDP when the crash came.

It came in 2008 with the biggest bust since the 1930s despite what Brown had been telling us all those years. Faced with collapsing tax revenues and feeling the need to engage in some (highly dubious) stimulus spending with an election due, the deficit rocketed from £35 billion in 2007 to a peacetime record £153 billion in 2009.

This unprecedented binge of borrowing and spending generated growth of 1 percent of GDP. It wasn’t enough to save Brown from richly deserved defeat in May 2010.

This was the coalition government’s inheritance courtesy of the Labour Party. British government debt was increasing at the rate of £420 million per day, or £5,000 per second, on its way to a projected figure of almost 80 percent of GDP, a figure not seen for fifty years as Britain paid off the costs of World War Two.

The coalition does not, in fact, propose to bring this debt down. Instead it is simply reducing the deficit, the amount by which the debt increases each year. In fact, by the end of this parliament the national debt will actually be 60 percent higher than when the coalition took office.

Despite what you may have heard, there is no austerity. Since taking office the coalition has cut spending by just 1 percent in real terms. True, we have seen cuts to departmental budgets and we will see more. But this is not because government spending is falling but because government is having to reallocate more and more money to debt repayments as our debt rises.

During the boom years of 2001 to 2008 British government debt payments rose from £21 billion a year to £31 billion as Brown piled up debt. Since the crash they have shot up to £48 billion a year, more than on defence or law and order. By 2015 this is projected to have reached £70 billion a year. And this, remember, is with record low interest rates on British government debt. Imagine what would happen if those interest rates rose.

To meet these rising costs spending is being switched away from nurses, teachers, and welfare recipients, and towards holders of British government gilts.

Increasing interest payments are the inevitable, unavoidable consequence of increasing debt and so, equally obviously, are cuts in spending elsewhere. So if people want to boo someone about ‘cuts’ they should boo the guy who ran up the debts. And while they’re at it, boo the people who voted for him.

It has now become de rigueur to roll one’s eyes, maybe groan a little, and profess boredom when told that Labour and Gordon Brown are to blame for our current dire mess. But it’s true. And it doesn’t become less true because someone is bored of hearing it.

A joke was quickly going around about the Osborne incident;

Q) Why did 80,000 people boo George Osborne?

A) Because that’s the capacity of the Olympic Stadium.

It would have been more accurate to say

A) Because they are utterly ignorant of public finance.

This article originally appeared at The Commentator

A profligate president

“C’mon, let me drop you home”

Bearing epithets such as “prudence”, “capability”, and “the Iron Chancellor”, there was once a time when Gordon Brown was taken very seriously indeed. Now, an economic collapse later, his reputation is shot and his book about the global economy after the credit crunch can be found at the bottom of bookshop bargain bins for a distinctly deflationary £2.99.

George W. Bush, by contrast, was rarely taken seriously. Bush himself was aware of his limitations (and to preempt the obvious jokes, that’s something more politicians could do with) and gave a longer leash to subordinates like Dick Cheney and Donald Rumsfeld than either his predecessor or successor.

The same applies in The 4 per cent Solution: Unleashing the Economic Growth America Needs. Bush has not written a book about the global economy after the credit crunch; instead, ever the CEO, he has assembled a collection of leading economists and got them to write one. So we have Nobel Prize-winning economist Robert Lucas on economic growth past and present, fellow Nobel laureate Gary Becker on immigration (and Standpoint contributors Amity Shlaes and Michael Novak on, respectively, Calvin Coolidge and the moral superiority of free markets).

The puzzling thing is why Bush ignored all this when he was in office. There is a chapter on sound money when, with White House encouragement, base money in the United States grew by more than 33 per cent between 2001 and 2005, fueling the housing boom. There is a chapter on sound government finances when Bush turned Clinton’s budget surpluses into deficits with the largest expansion in Federal entitlement spending since Lyndon Johnson’s Great Society.

The irony is that Brown, a man once taken so seriously, produced such a squib of a book, while Bush, a man widely seen as a nincompoop, has produced something much more substantial. If only he’d acted on this wisdom before the event.

This article originally appeared in Standpoint

Time for an economic Nuremberg for the last Labour government

The guilty men

ike an iceberg, the extent of the damage wrought by the last Labour government is still becoming apparent.

One of the wheezes Labour used to camouflage its vast spending spree was the Private Finance Initiative. These had been brought in by John Major’s Conservatives (to criticism from the then Labour opposition) and involved a private sector entity building something and then selling it or leasing back to the government over a number of years, usually decades.

Upon winning the election in 1997 however, Labour performed a volte face and embraced PFIs. They appealed to Gordon Brown because the liabilities taken on under PFIs would not show up on the government’s balance sheet. In other words, they wouldn’t be included in the national debt figure.

Labour signed up to an estimated £229 billion of PFI projects. That’s almost two and a half times the entire projected budget deficit for 2012 – 2013, or 16 percent of GDP.

And all of it was off the books. This enables Labour supporters to argue that “Public sector net debt (as a percentage of GDP) FELL from the start of Labour’s time in government until the beginning of the global financial crisis”. But, if you include the PFI liabilities the Labour government signed us up to, any fiscal improvement during their time in office vanishes and this already thin argument does likewise.

Perhaps Brown was stupid and/or hubristic enough to believe he really had banished “Tory boom and bust”. Perhaps he calculated that he would be long gone before the bills for PFI landed on the mat. Either way, while in the long run Brown is (thankfully) politically dead, we taxpayers are not.

Last week it emerged that six NHS trusts were facing bankruptcy thanks to the PFI deals struck by the Labour government. As the Telegraph reported

The total value of the NHS buildings built by Labour under the scheme is £11.4bn. But the bill, which will also include fees for maintenance, cleaning and portering, will come to more than £70bn on current projections and will not be paid off until 2049…Some trusts are spending up to a fifth of their budget servicing the mortgages…Across the public sector, taxpayers are committed to paying £229bn for hospitals, schools, roads and other projects with a capital value of £56bn”

Indeed, like the cat who leaves little ‘presents’ around the house for you to discover when you return from holiday, the Labour government of 1997 to 2010 is the gift that keeps on crapping on your carpet. We will be discovering fiscal turds left by Labour for literally decades to come.

If you were being charitable you would ascribe the fiscal incontinence of the Blair/Brown governments to some sort of Keynesian economic theory, though that fails to explain why they applied fiscal ‘stimulus’ for seven years to an already growing economy.

If you were being slightly less charitable you might ascribe it to incompetence of a quite staggering degree. The last Labour government, after all, were probably the biggest set of mediocre idiots ever to govern this country.

And, if you were being even less charitable, you might ascribe it to something more sinister – Brown poisoning the wells when he heard opposition tanks at the end of his strasse.

The architects of this national disaster have moved on. Blair is swanning around the globe earning millions. Brown is off brooding somewhere and probably enjoying it. Ed Balls, Brown’s right hand man through all this, is now, incredibly, Labour’s shadow minister for the economy!

We will have to live with the consequences of their mismanagement for years, why should they get away scot free? When we look at the continuing harm the Blair/Brown governments did to Britain shouldn’t we consider some sort of economic Nuremberg for these people? To punish them, Blair, Brown, and Balls, for the harm they have done to the British public?

Of course, you could argue that the electorate is responsible for electing these dangerous cretins. After all, every single majority Labour government in history has left office (in 1931, 1951, 1970, 1979, and 2010) with the economy in meltdown. Assuming that Labour voters aren’t so stupid that they don’t know this you have to conclude that they simply don’t care if the economy collapses.

In the wake of the Barclays rate fixing scandal, Ed Miliband has called for a full public inquiry into the banking industry, saying, “If you go out and nick £50 from Tesco, you are punished, at least we hope that you are punished – if you fiddle, lie, cheat to the tune of millions of pounds, you should also have the full force of the law brought against you.”

As Britain’s economy continues to smoulder isn’t it time for Miliband’s former colleagues in the wretched Labour government of 1997 to 2010, Tony Blair, Gordon Brown, and Ed Balls, to face a reckoning for the continuing damage they wrought upon the nation?

 

How Labour fiddled while Britain burned

“When you’ve got a minute I suppose we should give this running a country lark a go”

The news in today’s Telegraph that Ed Balls was involved in a plot to remove Tony Blair as Prime Minister in 2005 will have come a complete shock to precisely no one. The only awkward thing is that back in 2005, when all this plotting was going on, Balls kept going round telling people, often people with recording devices, that no plotting was going on. It’s certainly a fresh embarrassment for Labour that the guy who wants to be put in charge of the nations finances has been revealed as a barefaced liar.

If anything more can come of the revelation of something we all knew already it is yet more evidence, if it were needed, of just what an epically useless government this country had between 1997 and 2010. As we hosed money at creaking public services, as we sank deeper into debt on the back of seven straight years of borrowing before the recession hit, as we embarked on an experiment in mass immigration totally unparalleled in British history, and as we got embroiled in two protracted wars, our government was busy sizing up each others offices.

The truth is that we didn’t have a government, we had a third rate daytime soap opera. The memoirs and diaries of the key players in this sorry period in British political history; Blair, Mandelson and Campbell, read like they were bashed out by some third rate hack writing for Days of Our Lives. The endless drivelling stream of bitching, tittle tattle and gossip would make Ena Sharples, Hilda Ogden and Dot Cotton look like paragons of tight lipped rectitude. And in Peter Mandelson we even had the greatest resurrection since Bobby Ewing. Twice.

In 2005 Blair, according to his memoir, had “an interesting debate, not quite a contretemps” with Brown over runaway government spending. “My view was that we had reached the limit of spending…Even with the economy still growing I could sense that enough was enough”

A little later, Blair writes, he sought to

“[M]ove beyond the catch-up investment in public services and instead focus on a smaller, more strategic government. This was, in my mind, right in itself but also critical to dealing with the ‘big state’ and ‘tax and spend’ arguments that I was sure, in time, would pull apart our coalition in the country, and therefore our ability to win. It went back to the argument, already described, during the 2005 election. Unfortunately, the FSR was fought every inch of the way and was the one element I was unable to put in place prior to departure, it being the one that really did depend on Gordon’s departure.”

But nothing was done, the opportunity lost amid Blair’s miniscule attention span and the swirling passions of a government more interested in itself than governing.

Looking back it might all seem seductively fun, big characters doing big things and forget the consequences, like Phil sleeping with Sharon or Jim McDonald breaking up his sons wedding. But unlike the last Labour government we do not live in la la land, where Ed Miliband’s party seem still to be comfortably ensconced, we live in a real world with consequences, such as having to cut back on spending after a colossal binge. We now have to face up to the consequences of the last government and there is nothing fictional about those.

Gillian Duffy strikes again

“We must stop meeting like this”

A year after being called a ‘bigoted woman’ by Gordon Brown and dealing a massive blow to Labour’s reelection chances Gillian Duffy faced off with Nick Clegg yesterday.

Rochdale is a long way from Westminster yet it seems Mrs Duffy cant walk to the shops without bumping into the leader of a political party. Of course, it helps that she was driven there by a local Labour party activist in a scheme dreamed up by local Labour MP Simon Danczuk who, one suspects, can expect a telling off from Ed Miliband, admittedly not a terrifying prospect.

Why so? Well, as wheezes go this one backfired badly. Whereas Brown was unpleasant and anti social and didn’t like people very much, Nick Clegg is quite a nice chap and was perfectly polite to Ms Duffy, even if calling her ‘Gillian’ was a bit over familiar. When faced with a woman of clearly limited intelligence who insisted on asking him the same question he’d just answered, Clegg showed admirable coolness in the face of a pretty obvious set up. Still, with the practice he’s had you’d expect him to be cool under fire.

But something of interest emerged from the meeting and that was Labour’s attitude towards Mrs Duffy and people like her. The lesson of ‘Bigotgate’ was that the Labour party is run by people who don’t like Labour voters very much. The open door immigration policy operated by the last Labour government was, no doubt, a boon for the likes of husband and wife Ed Balls and Yvette Cooper who could get a nanny on the cheap. And besides, how many immigrants could afford to live in Highgate? Surely, as they looked out of their bedroom at their neighbours million pound houses, they wondered what all the ‘immigration’ fuss was about.

It was rather different for the low paid people who traditionally make up Labour’s support. They faced competition for low skilled jobs and saw stagnant wages as a result. They saw their public services stretched to breaking point. They saw their communities change beyond recognition. And when Mrs Duffy dared to question the leader of the workingman’s party about all this she was called ‘bigoted’.

And Labour haven’t changed. When David Cameron made a perfectly sensible speech on the failure of ‘state multiculturalism’ Sadiq Khan popped up to accuse him of “writing propaganda for the EDL”. When the coalition put forward the well intentioned but probably ineffectual immigration cap, Labour suggested sticking to their failed old policy.

For all the schmoozing of Mrs Duffy Labour have been doing it is all totally false. They don’t care about her issues and they probably think she is a nutcase. Using her for the failed ambush of Clegg is a low and cynical political stunt.

My dad speaks

My dad sent this in to a national newspaper. It didnt get printed so I thought Id give it an airing

Dear Sir,

I hope you will permit me to take issue with the views expressed by R. Bunting in your Letters column of 6 April, in which he said, “The real division in Britain is between those who believe in ‘profit before people’ and those who think ‘people before profit’ is how the country should be run.”

It is a mantra of the left that there is somehow a choice to be made between people and profits, and it is one that reveals the stupidity of those who chant it. If, like me, you have worked in the private sector all your life, you will realise that job security and future pension prospects are absolutely dependent on the profitability of the company that employs you. Loss-making companies go bust and jobs go with them.

If you work in the public sector it is worth pausing to reflect that the tax revenues that pay for your job, and your final-salary pension scheme, come from taxes on company profits. Loss-making companies have nothing to tax.

Mr Bunting is in error in blaming our troubles solely on the banks. The Brown-Balls policy of hosing the public sector with borrowed money did that, though some banks subsequently gave an extra twist to the knife.

It is essential for the future of our country and its inhabitants that we all realise that our very survival depends on the profits made by the businesses of this country, large and small. A belief that money comes from the tooth fairy and a fondness for repeating adult nursery rhymes will only drive us deeper into the hole we have been dumped in.

Yours faithfully,

Phelan Snr,