As previously advised (refer to Categories/Chairmans Blog/ Federal EU/ EU & Euro Survey in the right-hand index column) on 20th June, the British Conservatives in Paris (BCiP) held a lively and stimulating debate chaired by Paul Thomson on the motion that Britain should join the Euro.
Given the current financial crisis facing the Eurozone, the dice seemed already loaded against the opening speaker Gregor Dallas who, however, proposed the motion in feisty style. He spoke of the Euro and the UK as being an enormously emotive issue steeped in politics that lots of people preferred to avoid talking about, including some members of the Conservative party. Yet some 60% of our exports go to the European Union of which two-thirds are to Eurozone countries. The political aspects can be traced back to the aftermath of the Second World War and the ambitious ideal to maintain the peace through the stabilizing influence of trading links developed within a single European market. Today this presents Britain with a market of around half a billion people, a major part using a single currency, and to compare this with the US our largest, single trading partner, the latter represents only 16% of our exports.
He elaborated that the single European market acts to stamp out the extremes of nationalism on the far right and socialism on the far left, with terms such as economic sovereignty or national sovereignty essentially blown out of the water by the collapse of the Bretton Woods system in 1971. Prior to that in November 1967 we had The Pound (£) in your pocket of PM Harold Wilson when the Pound was devalued by 14.3% and which seemed to change nothing for anybody living within Britain. However, Britain lost the trust of its important trading partners not only in 1967 but also in 1949 and after flotation in 1971. Now we have floating exchange rates and so-called hot money speculating on the highest return currencies and there is still no major improvement in exports for the UK.
Of course given the current financial crisis in the Eurozone, Germany is concerned about the so-called Club Med-countries but the Euro is a German invention and it tracks the former Deutschmark. It would be a disaster if Greece was forced to quit the Eurozone but in fact no such exit plan exists. There is no way back for national currencies, all members of the Eurozone want it to work and it is significant that China has already adopted it as a reserve currency. The UK must, therefore, join the Eurozone because it brings a strong, stable currency for a 21st century economy.
Michael Webster who opposed the motion saw the current economic situation as making it impossible for the UK to join the Eurozone. The Eurozone is also too dominated by Germany with e.g. the French economy suffering as a result. The market economy of the UK is completely the opposite of the dirigisme found on the Continent of Europe. In referring to the effect of interest rates and exchanges rates, he saw the need of the German economy for low interest rates as leading to cheap money and the resulting economic ruin of Eurozone countries such as Ireland, Portugal and Greece. At least the UK can only blame itself for the results of its own economic policies. Now Germany wants higher interest rates with its economy booming and this leads to the euro being overvalued in the money markets. As far as exchange rates are concerned, the UK has essentially devalued the Pound (£) in order to improve export trade, whereas its imports from Portugal have been reduced by some 50% due to the strength of the Euro.
A Swedish government minister has been quoted as saying that a reason for its successful economy is that it is not a member of the Eurozone. Indeed, the financial situation in the Eurozone is so bad that Greece will never be able to pay its debts, with e.g. ?45 billion owed to German banks and ?65 billion to French banks all under threat of default. Britain has already taken steps to withdraw some ?12 billion in bonds from the Eurozone as one step in trying to avoid the Greek debacle. Sterling is, therefore, still rated AAA in the financial markets by the rating agencies while the current credit rating of France is under threat, and French manufacturers are trying to relocate their production sites to lower cost countries. There is no possibility of the UK joining the Eurozone.
Seconding the proposer of the motion, Robin Baker quoted two traditional views of the Conservative party as 1) a belief in sound money and 2) a natural distrust of governments which manipulate the affairs of the country for their own, short-term electoral advantage. Sound money acts to counter the cancerous effects of inflation on the economy, with governments as major borrowers taking benefit from the effects of inflation, by being able to pay back their debts to lenders in devalued currency. The current UK inflation rate of 4.5 % would double prices in 16 years if left unchecked, whereas within the Eurozone France has inflation of only 2.0 %, Germany 2.3 % and even Italy only 2.6 %. The Eurozone, therefore, shows the benefit of taking the power to devalue away from national governments and also being able to dampen the effects of inflation through sound money.
Being able to devalue has also not helped the UK to grow relative to the 27 states in the European Union (EU). In 2002, the UK economy represented 17.2 % of the EU but by 2009 this had fallen to 13.3 %, while the share of the 16 Eurozone countries had increased by more than 2 %. During 2010, growth in Eurozone GDP was 30 % greater than that of the UK, and currently France is growing at twice our rate and Germany three times. Devaluation also does not seem to have helped our exports. In 2010, the Eurozone had a balance of payments deficit of ?30 billion but the deficit of the UK was 30 % worse for an economy only one sixth of the total Eurozone. From 2002 ? 2009 our share of total EU exports fell from 12.8 % to 10.4 % while total Eurozone world market share increased, our intra ? EU share also having fallen from 9.6 % to 6.4 %.
Our exporters suffer the commercial disadvantage of not sharing the same currency as 40 % of their customers and are forced to price higher to offset adverse currency movements or ask the customer to take the risk. In short, without the security of sound money and no benefits to growth in our economy or trade in being able to devalue compared with our European partners, Britain should join the Eurozone.
To close the formal part of the debate and confessing to being no economist, Evelyn Joslain the seconder of the opposition to the motion, chose to speak more passionately on behalf of the people of Europe in asking why the Brits would want to drop the Pound (£) for the Euro. The Euro is dying; you need to look more at defending what is left of your sovereignty and the problem of your soaring deficit is more pressing. She asked the audience to consider the success of countries outside the Eurozone such as Switzerland and Sweden which are doing much better. Germany is also very unhappy with what has become of its Deutschmark in the guise of the Euro and is faced instead with a Greek tragedy. Behind the Eurozone lies more European integration ? before it was to avoid war but now it has gone too far. We must avoid the excuses of the former Soviet Union that it only failed because the correct ideological measures were not sufficiently applied.
The Euro is a favourite of the currency speculators to short and coupled with excessive welfare payments and bail-outs is a recipe for disaster. It is easy to get into the Eurozone but hard to get out and there could also be a two-tier system between the north and the south. The Euro was forced on the population of Europe in an undemocratic way and the people are being ignored in a march towards a centralized super state. On the 100th anniversary of the Titanic, it is appropriate that the UK should reject the disaster of the euro.
The comments from the floor which followed the formal part of the debate touched on the emotional (all we have left is the Pound and our Royal family), lack of proper financial rigour (Germany & France were the first to press for relaxation of the 3 % limit on budget deficits), lack of transparency (surely they must have known what was happening in Greece?), a disaster for Europe if the Eurozone collapses, it is more a question of political will to hold Europe together than a financial problem, the euro is now one of the most important currencies but failure of the political cycle matched by failure of the financial cycle has changed the Euro, the Eurozone has steadily abdicated its responsibilities since its launch, as Conservatives we must balance ideology against pragmatism and now is not the right time to join and if the UK had been allowed into the EU earlier, it could have had more influence but it is too late now.
A vote was taken and the motion was defeated with 5 votes for but 15 votes against.
Archive for the ‘Chairman »s blog’ Category
Euro Debate: That Britain should join the Eurozone
jeudi, juin 23rd, 2011British Expatriate Voting Rights
lundi, juin 20th, 2011Those of us British expatriates who have been non-resident in the UK for more than 15 years are thereby denied the right to vote in our country of origin, even though we might remain British citizens and the UK our country of domicile for tax purposes.
There is now more encouragement for those who still value this basic human right to vote, however, from the launch of a new website www.votes-for-expat-brits.com in support of a campaign to enable all British expatriates to be able to participate fully in the political process in their home country, by giving them unrestricted voting rights in national elections.
Click on the above link to browse through the issues of the legal position, how other countries treat the voting rights of their expatriates, the view of the European institutions concerned, British parliamentary discussions on voting rights, media buzz about denying British expats the right to vote and how two concerned British expatriates – James Preston and Harry Shindler – have legal cases on their voting rights before the courts.
All you then have to do on the website is to add your vote to an on-line poll to show your support for this campaign.
National Health Service (NHS) Reform Setback
jeudi, juin 16th, 2011So the Coalition government has had to step back from its proposed reforms for the NHS, having considered it best to accept the recommendations of its independent commission. This has the benefit of keeping the Liberal Democrats happy and saves the face of Nick Clegg their leader and Deputy Prime Minister. The main concessions then appear to be to:
? Limit competition from the private sector.
? Involve hospital doctors and nurses together with the original General Practitioners (GPs) on commissioning panels for care and managing the associated budget.
? Have no fixed deadlines for implementation of changes.
The government is spinning the outcome as positive saying that health professionals are now back on board (where they should have been before launching the initially proposed reforms of course!) with the proposed changes having the support of patients and professional bodies, as well as back-bench Tory and Liberal Democrat MPs. The legislation is said to have been improved by such scrutiny with the Liberal Democrats claiming a lot of the credit, despite the Coalition only trying to build on what the previous Labour government had started to try and do i.e. to involve the private sector to meet demand over and above what the public sector could support.
One Liberal Democrat back-bencher commented that their efforts had mitigated the effects of untrammelled competition and if local communities did not want competition, they would now be able to call their local health commissioner to account. However, other feedback from the medical profession saw it as now more like a dog?s breakfast!
After all this we are now left with the situation as Nick Robinson the political correspondent of the BBC put it, if the general public did not know before how the NHS worked, they certainly do not understand now:
? how the NHS would have worked with the originally proposed reforms or
? how the NHS will now work in the future with these changes.
If the general public does not understand the problem of the NHS, it becomes an almost impossible task to convince.
The main issue seems to be a broad public unease about profit-making by the private sector in the provision of public services and this includes the Liberal Democrat partners in the governing Coalition, with Nick Clegg calling on Monitor, the health regulator, to promote collaboration among providers rather than competition. However, the UK is unusual among rich democracies in how little private involvement there is in public service provision with e.g. only 4% of acute-care beds provided by private companies. Given that the German economy is held up as a successful example and driver for the European Union of Member States, it is instructive that (according to The Economist of 21st May, 2011) the proportion of for-profit hospitals at 32% already exceeds the 31% of publicly-run ones, with the rest operated by charities and voluntary organisations.
It is ironic that the original idea of putting the care budget of the NHS in the hands of GPs (such family doctors being private operators since the foundation of the NHS in 1947), was aimed at reducing the high cost item in the NHS budget of hospital care by their also finding lower-cost solutions sometimes only involving primary care and not always hospital beds e.g. for elderly patients.
EU and Eurozone Membership Survey
vendredi, juin 10th, 2011On 20th June we are having an internal debate on whether the UK should join the eurozone.
We are, therefore, interested in the opinion of visitors to our website who are concerned by this issue and other such issues impacting the UK as a Member State of the European Union (EU).
Your participation would be much appreciated in our on-line survey.
NHS Funding Crisis.
jeudi, juin 2nd, 2011The National Health Service is facing a £20 billion-a-year funding black hole that will threaten its founding principles unless the Coalition?s controversial reforms are brought in to prevent it, the Health Secretary Andrew Lansley has warned in the Daily Telegraph of 2nd June.This is a sobering message but is anyone listening?
Perhaps Minette Marrin writing in the Sunday Times (minette.marrin@sundaytimes.co.uk) has it right when commenting on what she describes as the horrifying findings of the Care Quality Commission report of last week, on the frequent abusive neglect rather than care of old people in National Health Service (NHS) hospitals. She thinks that the British public has got the NHS it deserves and sees it as the fault of the British voter and the British medico-political establishment.
As the current impasse between the government and entrenched interests within the NHS indicates, reform of the NHS seems almost politically impossible due to what Ms Marrin considers the inflexible, deeply held, quasi-religious beliefs of the public about the NHS. Nigel Lawson, a former (Conservative) Chancellor of the Exchequer, is widely quoted as having once said that the NHS was the religion of the British people, which perhaps explains why Tony Blair, a former (Labour) Prime Minister has said he believed in the NHS. David Cameron, the current (Conservative) Prime Minister in the Coalition government has also said that he believes in the NHS.
However, as Ms Marrin sees it, religion can be dangerous when based only on faith and not taking due account of evidence. On one side then we have the main article of faith of the NHS quasi-religious belief system that all medical care ought to be run as a state monopoly. At the other so-called right-wing extreme, it is argued that nothing should be run by the state. In between, there are for example the health systems of France and Germany where medical care is rated better. Perhaps as Ms Marrin suggests, the lack of constructive critics or whistleblowers among NHS employees is because there is largely only one health employer in the UK i.e. the NHS.
French Health Service
vendredi, mai 27th, 2011In the previous article (refer to Categories/Chairmans Blog/NHS Reform Problem in the right-hand index column) the point was made that, using the example of the French health service, which has been highly rated by the World Health Organisation (WHO), the introduction of private sector competition in the British National Health System (NHS) is not necessarily a change for the worse. The Prime Minister has also made the case that modernization is essential to save the NHS from rising costs leading to a funding gap of some £20 billion by 2015. In addition, serious concerns have now been raised by the Care Quality Commission (CQC) about the way some NHS hospitals treat elderly people. The CQC has said that three hospitals had broken the law by failing to meet essential standards of care on dignity and nutrition. We will see how the increasing number of elderly people requiring care is already of concern to the French state when we address the French health service further below.
However, the British Medical Association (BMA) representing the medical profession has already called for scrapping of the government proposed Health Bill, saying that required changes can be achieved without legislation. The Deputy Prime Minister & Liberal Democrat party leader Nick Clegg, has added a call for collaboration rather than dog-eat-dog, open competition, in the provision of health services.
Taking the standard of excellence given to the French health service by the WHO, it is instructive to look at the health and other dependency problems also facing the government in France (Les Echos Mercredi 18 Mai, 2011). The number of elderly people dependent upon state care is expected to double by 2060 (+35% by 2030). This is anticipated to result from an increase in life expectancy amongst the elderly which will be accompanied by similarly increasing problems of incapacity whether e.g. with respect to their health and/or ability to look after themselves. From 2025 the problem will worsen when the population bulge from the baby-boomer generation born at the end of WWII will begin to reach 80 years of age and require increasing care.
The French health service itself is considered by the French Health Insurance association to have worsened over the last 30 years and requires rapid structural reform. A protocol agreed on 15 October, 2009 allowed for the opening up of an optional, intermediate level of fees between the sector 1 state level and the higher sector 2 level of private practice. This applied to specialists such as surgeons, anesthetists, gynecologists & obstetricians who would in turn commit to a minimum 30% of their work being charged at the rate reimbursed to their patients by the French state social security. For their remaining work, their fees should not exceed the state social security rate by more than 50%. The association of complementary health insurance would then have encouraged its members such as not-for-profit mutuelles, health insurance companies and institutions to cover these excess charges over and above the state level, the objective being to gain the support of the great majority of practitioners to remain within this optional intermediate level of fees.
However, the net result by 2010 is that the excess fees charged and not reimbursed by the social security already represent ?2.5 billion (17% of total specialist fees) and the average excess charged has reached 54%, compared with 52% in 2009 and ???25% in 1990. The Health Insurance association, therefore, considers the current market for health services a sham in which the main aim of resetting the tariff structure seems to be only to produce fees increasingly in excess of the social security level. Further, the data for 2010 shows that within certain areas of expertise the great majority of new practitioners have opted for the private sector 2 :
? 87% of new surgeons
? 82% of gynecologists
? 66% of anesthetists
On average 58% of the medical profession (excluding general practitioners) have chosen sector 2 in 2010. For surgeons, their excess fees already represent 32% of their total remuneration. Over the last 10 years the most rapid progression within sector 2 has been observed amongst anesthetists and radiographers even though for the latter this only represents 14% of their total practitioners. There is also a regional effect with the average excess fees of private surgeons already reaching 150% above the state level in Paris & its surrounding areas, 110% in the Rhone region and 90% in Alsace.
The question for the Coalition government in the UK is whether it can rely on the BMA to do any better amongst its members to secure change on a voluntary basis i.e. through collaboration and not legislation?
NHS Reform Problem
mardi, mai 17th, 2011In the previous article on this blog (refer Categories/Chairman?s Blog/Constitutional Reform in the right-hand index column), we quoted the point made by Bill Emmott , writing in The Times, that before proposing a solution first define the problem that must be solved. The reform of the NHS (see also Categories/Chairmans Blog/NHS Reforms in the right-hand index column) proposed by the government is another case and point.
Polls show that satisfaction levels with the NHS amongst those who use it are currently the highest they have been in recent times. This makes it difficult for people to understand the actual problem that requires this government reform as a solution. It is also a matter of people in general being resistant to change preferring instead e.g. to be grateful to wait in the queue for health care available to all, rather than taking a risk on a change for the worse. This is despite the World Health Organisation (WHO) concluding that France and Holland offer a much better health service through a mixed system of public, private and charitable funding.
The non-profit-making, health insurance companies (Mutuelles) in France, provide insurance complementary to that of the State social security and are often are set up for particular professions e.g. students, teachers etc. Since they then cater for a much larger segment of the population over which to spread their risk than the private insurance schemes of the UK, their charges are proportionally lower and more widely affordable. Private sector competition in the NHS is not necessarily by definition then a change for the worse. Nor should there be necessarily a great fear encouraged by political opportunists, of ending up with something akin to the American health system which supposedly would refuse to treat someone too poor to pay for life saving treatment. President Obama has also already used up a lot of political capital to ensure improved access to health insurance for poorer people.
The Prime Minister has added authority from his successful No campaign in the Referendum on The Alternative Vote (AV) but here it was easier to lobby against change, and indeed also essential if reports are true that the Conservatives had concluded that they would lose out under a system of AV, with significantly more Liberal Democrats likely to give their second preference vote to Labour than to the Conservative party. He now has to convince the public that not only is the NHS safe under a Conservative?led government but that improvements are also necessary and can be implemented while still ring-fencing its finances against the current budget cuts. As it is, with professional staff associations and unions accusing the Health Secretary of trying to destroy the NHS or privatize the NHS, his reform bill has been halted and a consultation process is underway to find allies in the medical profession but likely to result in heavily diluted legislation (as also was the case with President Obama who finally had to compromise).
Yesterday, the Prime Minister was already making the case that modernization was crucial to save the NHS from rising costs that pointed to a £20 billion funding gap by 2015. The only option as he put it, is to change and modernize the NHS, to make it more efficient and more effective, and to focus more on prevention, on health, not just sickness. These are fine words but there are still quite raw memories passed down of what it was like before the advent of the NHS for those who could not afford to pay for treatment and this fuels fears of a similar outcome in the future. However, there are still major problems to be resolved such as the increasing costs of treating the elderly as this proportion of the population continues to expand with improving life expectancy. It is also not acceptable in a developed country in Europe that people are forced to pay privately just to get an appointment with a GP or a dentist within a reasonable time or that for non-emergency treatment they can wait months to see a specialist, for the results of medical tests or for a follow-up operation, indeed for the latter in the past sometimes years.
Constitutional Reform
jeudi, mai 12th, 2011According to Bill Emmott writing in The Times, Monday 9th of May (Memo on Reform), a difficulty facing all advocates of constitutional reform is that without some crisis facing the country it is difficult to convince people that there is a constitutional problem that needs to be solved.
This then explains in a way the heavy defeat of the Yes campaign for the Alternative Vote (AV) in the referendum of last Thursday (Refer also to articles under Categories/Chairmans Blog/Alternative Vote in the right-hand index column). Here the difficulty in presenting a case for electoral reform was that the need for governments to be properly representative of the people as argued by the Liberal Democrats, seems to have already been met by the existing first-past-the-post voting system, which resulted in a Coalition government consisting of two parties supported by more than 50% of the voters in the 2010 national election. As indicated by the referendum results, an AV system that then just results in a coalition containing more Liberal Democrats than now seems not worth changing the voting system for the vast majority of people.
Having lost the AV referendum, therefore, Nick Clegg the Liberal Democrat party leader and Deputy Prime Minister, should tread carefully with his proposals for direct election by Proportional Representation (PR) to the House of Lords, possibly the biggest constitutional and cultural anachronism in the country but the latter by itself not sufficient argument for change. He would do better instead to make the case for a stronger check on the House of Commons, by a legitimate, elected and stronger Upper House.
Electing peers to the House of Lords could then change the balance of power in Parliament with PR in turn making the Lord essentially more representative of the people and, therefore, more legitimate than the Commons, the latter currently unchecked by any constitutional role for the Head of State (The Monarch) and little restrained by the current House of Lords (notwithstanding e.g. the 11th May rejection by Peers of the Government Bill for Elected Police Commissioners).
In a similar way, Alex Salmon with his Scottish Nationalist Party (SNP) now a governing majority in the Scottish Parliament, should think carefully about what problem he is aiming to solve with his plans for a referendum on Scottish independence from the UK, given that most Scots seem currently against it, they can fly the Scottish flag when they want, have a strong sense of national identity, control e.g. their own health care, legal and education systems and could not have afforded the recent British taxpayer-funded bail-out of their major banks i.e. RBS and HBOS.
Budget: Aims & Achievements.
mercredi, mai 4th, 2011To support MPs debating the Finance Bill (developed from the Budget) in the House of Commons on the 3rd May, and to establish a system of monitoring yearly progress towards improving the longer term growth prospects for the UK economy, the Treasury Select Committee has established certain criteria. Such criteria include:
? Fairness
? Growth
? Competition
? Certainty & Simplicity
? Stability
? Practicality & Coherence.
Tax experts from the professional associations and institutes for accountancy and taxation were then invited to evaluate the Budget against the above criteria which are considered important for good tax policy.
Now the Chancellor in his Budget has emphasised his twin aims of e.g. ensuring fairness in taxation and encouraging growth in the economy and the tax experts in general support the cut in corporation tax, the increase in entrepreneur tax relief and the limiting of tax haven status for foreign subsidiaries of UK multinationals.
However, the increased tax burden on middle-income (£40,000 – £50,000) households when also withdrawing their tax credits and child benefits is viewed as unfairly taxing them (The Squeezed Middle?) proportionally more than those on higher incomes. Again, the surprise windfall tax on North Sea oil companies although considered simple and clear does not on the other hand support the need for tax policy stability and growth in the economy. The unexpectedness of the tax rise could also impact competiveness. In addition, the changing level of the bank levy, the latest change in force from 1st January, adds instability and uncertainty to the long term tax regime as far as the banks are concerned. Further, to reduce capital allowances to offset the effects of corporation tax cuts on the overall tax take, introduces incoherence within the business tax system when this also results in e.g. unincorporated businesses being penalised by this capital allowance reduction.
It will be interesting to see if the Treasury Select Committee succeeds in this Budget monitoring role which is similar to the Congressional Budget Office in the USA but without proportionally similar resources.
Alternative Vote (AV): Coalition Tensions
mardi, avril 26th, 2011The upcoming May 5th Referendum on the Alternative Vote was always bound to create major tensions between the Conservative & Liberal Democrat governing Coalition partners, the two parties in fundamental disagreement over the Yes/No referendum issue which leaves no room for compromise. The rather lacklustre campaigns of both sides up to now have suddenly burst into life with each attacking the other, whilst still seemingly not exactly engaging with the possibly even more confused voting public, whose turnout in turn could remain at the normally low levels of the local council elections taking place at the same time.
Certainly the No campaign claim of only Papua New Guinea, Fiji and Australia using the AV system could be considered misleading when at the same time this fails to mention the around 30 countries, including France with its presidential elections, that use the 2-round (run-off) system which is a variant of AV. Also the additional costs associated with electronic counting and validation of the successive rounds of counts required for AV, might only be necessary if final results were still expected on the Friday after the 10pm Thursday closure of polling stations. Otherwise, the current manual counting system could suffice if results were instead declared over the weekend, with additional costs involved only from the increased counting staff hours involved. This of course tends to contradict the assertion of the Chancellor, George Osborne, and which is also disputed by the Energy Secretary, Chris Huhne, that expensive new machines will be needed to count the votes in an election under AV.
However, both sides need to appear to aggressively differentiate themselves from each other within the Coalition, to appease their traditional voters whilst accepting that it is in the interests of neither party for the Coalition to collapse after 5th May. With their tough deficit reduction programme, the Conservatives need the 5 years of a fixed term parliament to allow time for sacrifices now to make way for later benefits in the mind of the electorate. Similarly, the Liberal Democrats know that a general election now would lead to heavy losses and they need a 5-year plan for recovery of their identity, to prove that they are not only distinct from both Labour and the Conservatives but also fit to govern.