FU? What next...

This blog called it right on Cameron. It suspected he would have a u-turn on the Fiscal Union and it was proved right.

Cameron has been two-faced by stating that the EU could not use the facilities of the European Union in November and now doing an about u-turn on this position and is now actively allowing them to use the institutions of the EU.

Much like the V for Vendetta sketch with the domino's I can tell you what will happen next.

The remaining 25 EU states will now negotiate a new binding Fiscal Union compact which Britain will tacitly allow through the use of EU bureaucrats and institutions which you, the UK taxpayer will fund.

The Fiscal Union compact will be agreed in mid-late 2012 and will form a binding compact with all the states involved.

Over the next 2-3 years Brussels will either use 'ratchet clauses' already written into the Lisbon Treaty to add a fiscal union requirement into the existing Lisbon Treaty; Britain will win a concession to the Tobin Tax. Alternatively, and more likely it will form a simplified revision procedure to get it through without Cameron seeking the consent of the public.

The ratchet clause is where EU policies that require unanimous backing amongst member states could in future be carried by a majority instead. But already under the Lisbon Treaty, all member states have to agree to switch to majority voting in a particular area before it can happen. I suspect this will not happen because it would trigger a referendum.

Alternatively, and more likely, it will form a simplified revision procedure which Cameron can sign up to without fear of a referndum. The simplified revision procedure, which applies only to part three of the Treaty on the Functioning of the European Union and cannot increase the powers of the EU, sees changes simply agreed in the European Council by a decision before being ratified by each state.

Cameron can therefore claim he is not subject to a referendum lock as per Conservative-sponsored legislation in Parliament.

If I were a Europhobe Tory tonight i'd accept that you either work for a federalist Cameron leadership or you join a party which is truly anti-European, UKIP.

Euroland could be worse

Another Tory flipflop on Europe as they reneged within 2 years. Not as if we have seen opportunism from them over Europe before have we...

Particularly interested to read the latest blog piece 'Euroland is not working' from John Redwood; the arch Euroloon and as many will remember from the 1990s the 'bastard' behind the Tory leadership election in 1995.

It is particularly interesting and worrying to note now that John Redwood's position in the Conservative Party is now accepted as mainstream; such is the drift towards the right in the current crop of Conservative MPs.

Of course the argument positioned by John is utterly one-sided and I would suggest dangerous for UK jobs and our future economic interests. They must be ignored by the government; I hope they will, but these days you can never be sure...

Firstly he uses the argument that because unemployment is high the Eurozone it must be failing; whilst on the face of it this is compelling argument it totally ignores the fact that the crisis in unemployment is global. John knows as well as everyone else that unemployment is also very high in non-Euro countries in the EU - Latvia (16.2%), Lithuania (with flat tax - 15%). Bulgaria (12.1%), Poland (9.9%), Hungary (9.785) and UK (8.3%). These unemployment rates are broadly comparable, whether in the Euro or not, and are more related to the relative designs and strengths of domestic tax and spend policies then currency.

Secondly he argues that the weakness of the management of the Euro has caused the problem but then argues against further controls by rejecting the treaty. He is correct; the lack of central control over those in the currency from the centre allowed nation states to engage in debt-binges over the last 10 years. The Euro creators saw this early on which is why they tried to limit the budget deficits of the nation states involved, but it was (and this is crucial) watered down by the individual governments of the Eurozone at the time. The cause of the problem is not the Euro itself but the fact that individual nations tried to get out of the rules. Germany is therefore absolutely right to require sovereign capital monitoring and tighter fiscal control not because they want to 'take over' other countries but because it will keep stability across all the states using the Euro. Stability incidentally which will help all those in Europe whether in the currency or not, including the United Kingdom, in growing our economy because stability means growth, and growth means exports.

Cameron I believe was wrong to veto the treaty and that is why; the guff over the City of London was never on the table... and that is also why he will go back to the table to help push through a fiscal compact.

Thirdly, John targets the loss in equity value on banking stocks. There is always a risk of jumping on such fluctuations in stock valuations and some would say just a tad opportunistic. The decline in bank stock is related to cross-border loan exposures to in-debted economies and the capital implications on the bank balance sheets. Currency valuation is important but French banks investing in Greece would be just as exposed to loan implications were it in the Euro or not; however and I would juxtapose that the fact these countries remain in the Euro does give some form of underlying guarantee that payment will be received; albeit one that currently has little confidence.

It would be far worse believe me if these countries were kicked out of the Euro not only on its short term impacts but the markets would have zero confidence in these countries in extracting themselves from the problem (remember they have distorted the truth on economic performance / tax / spend for years). There would be a flight on capital like we have not seen and this would impact UK banks as well; we have huge exposure to Italian debt. Returning to the dracma or lira would have undermined Bank capital balance sheets across Europe even more...

John then talks about bond yields which he fails to mention are decreasing. Gilts are high and that happens when any national government is overly exposed; irrespective of its currency. The fact is gilt yields are not solely related to currency and is actually related to government balancing its books; exactly the treaty solution which John opposes and Cameron veteod. Incidentally if a country were to de-value its currency the gilt repayments would skyrocket... creating an even larger risk to surrounding states and those banks John is talking about.

The last mistake John makes is on currency valuation. Now there is a truth to the fact that had Greece been allowed to leave the Euro that it could have revalued its currency so making exports more attractive - and therefore magically improving jobs. This assumes though that other countries are fiscally stable and that there is a demand elsewhere in the global economy; neither is true currently. I would suggest it would be worse for the countries kicked out because unemployment would still go up, gilts would go up and this would spread instability. it is also likely the Eurozone would have introduce tariffs on imports to prevent wholesale destruction of nationalised industries in Euro-land economies; leading to fiscal nationalism and the undermining of the common market itself.

And that is what these Tories want.

The break up the Euro would lead to major instability in the European Union. The end result in my mind a round of fiscal nationalism and tariff impositions across Europe as nation states compete to be the best value; not only would this have been self-destructive but also immensely damaging to employment prospects in the UK, which has a relatively high wage bill and which could never compete on a 'race to the bottom.' Fiscal nationalism of course leads to jingoism and the election of extremist governments and so the political implications mentioned by Merkel are entirely accurate.

Incidentally the fact that Greece, Spain, Ireland and Italy can remain in the Euro does confer stability. The markets know that the Eurozone nations are acting, albeit and I agree, not quickly enough. They also know that politics in these countries is subservient to the wider economic interest; the imposition of Mario Monti in Italy may be anti-democratic but no one is suggesting it has not been a necessary solution.

The Euroloon Tories state that imposing policy on government is anti-democratic but ignore the fact that IMF has been doing this for years by the backdoor. In an interconnected world to be utterly niave to this fact is playing games for populist appeal. Of course the ideal solution would be the election of a government that has a mandate (e.g. Spain) but this is not always the case in countries with a very pluralistic system of political engagement; sometimes difficult choices need to be imposed and I believe the President of Italy acted correctly in selecting Mario Monti.

And for those who dont think there is precedent in the UK; you'd be wrong. The formation of a national government of all parties happened in the 1930s where the King led the creation of a joint Labour and Conservative government. I refer primarily to the government of Ramsay MacDonald.

It is all very easy for the Euroloons to moan from the sidelines but the basic premise of fiscal union and currency union is sensible. Free trade, no tariffs and open movement of Labour increases wealth in all countries and reduces conflict; it is the basic premise of capitalism. For it to work properly we all need to balance the books and for the hypocrites to claim this at home whilst opposing measures for it abroad are playing a dangerous game with our jobs for a principle.

The Euroloons are posturing to the national-flag to gain grubby votes out of people's natural response in a crisis which is to protect one's own. Pandering to prejeudice whilst ignoring the end result of their political argument which is essentially nihilistic and regressive.

The destruction of the Euro would be immensely damaging to our economy and for anyone to claim otherwise is living in laa-laa land.

Focus on Jobs, Focus on Economy

Despite the rather cras attempt by the right wing to talk about anything but jobs it is worth remembering that today marked a dark day for Medway and the United Kingdom. The Tory plan for economic recovery, the too-far too-fast plan, has failed and failed utterly.

Tories and their 'right-leaning' supporters simply dont care. It is all about partisan posturing and who performed well at PMQs. It really does show how utterly out of touch Conservatives really are.

No apology today from Mark Reckless, Rehman Chisthi or Tracey Crouch to the thousands of Medway residents who are jobless, who are being evicted from their homes, suffering from negative equity, worried for their futures.

No apology at all. Almost erased from the mind as they huzzah'ed the Etonian tonight. All mutual back-slapping am sure.

We can all see that the Euroloon extremist wing of the Conservative Party - which is now in charge - is riding on a high because they have promised the unpromisable; they have given the proverbial two nuggets of gold to their base and have seen a very temporary poll bounce. They are gleeful that UKIP voters; the 'loonies and fruitcakes' have joined them on their cause.

Some more moderate Tories are talking too; and they know that Cameron's position is now untenable on Europe. An embarrassing volte-face is now all but necessary. The City also knows it too...

According to Specator Editor who was talking with the Channel 4 Economics spokesperson Faisal Islam ""My gut feeling we'll end up back in the room, and even agree Treaty, after a facesaving 'Safeguard' >> my gut feeling too.""

The loons are high now; but they will soon feel a Euro-induced relapse.

Of course whilst the Tories talk Europe they utterly ignore unemployment which has now risen to a 17 year high. A record amount of lost talent as a direct result of Conservative economic failure.

Let the Tories talk about Ed Miliband; tomorrow's election result in Feltham & Heston, a Tory seat between 1979-1992 should have fallen to Cameron in 2010. Now, they are all but written-off in a seat, that had Cameron performed lasy year, would have been a Conservative seat. They had everything... but still could not deliver.

Cameron is not performing since he fluffed the election that was a gift-horse in the mouth... and deep down they know that his Etonian out-of-touch haughtyness is un-nerving to those voters who simply did not trust the Tories with power last year.

Unsurprisingly for a looser, he is now isolated in the world and derided by his own Deputy Prime Minister. He now oversee's a dysfunctional coalition government. This image will outlast the temporary poll fillip; and the damage done in Cabinet when Lib Dem dummies flung the toys out of the pram cannot now be undone.

Tories should be very worried that only a fortnight ago they were talking about kicking Cameron if he did the wrong thing in Europe; now you just have to laugh, they have the nerve to claim Labour is wobbling and should do the same with Ed Miliband. Too busy playing partisan games whilst the public demand better.

Our membership are not as fickle as yours; we are wedded to reasoned and sensible moderate policies. That will mean sure electoral gains once the public gain confidence; and that takes times, whoever is in charge.

Ed Miliband is actually doing well given the task. After 13 years of government, the worst recession since the 1930s, an unelectable leader (in Brown), the expenses scandal. Under his leadership polls have moved from the lower 20s to a consistent 40+. It is now interesting that many of the betting agencies put it odds-on that Labour will win in 2015.

Labour need to calm; continue to make the economic case and work at that niggling feeling that the Tories are making a poor job on the economy and actually focus on the issues that matter; namely employment.

At yesterday's Regeneration Overview & Scrutiny Committee I specifically raised the 'red-flag' markers all Councillors are reading on employment. The Conservative move to scrap the Future Jobs Fund was a massive mistake and we will not see the results of the Work Programme for another quarter. Tories scoffed in derision; Cllr Chitty was living in la-la land when she claimed in full throttle (as only Cllr Chitty can) that Medway is well positioned!

Lets just look at the Conservative failure:

More people looking for work than jobs available

Over 6% of young people unemployed for over 6 months, higher than UK average and South East

Medway higher overall rate then Kent, South East and rest of UK. [Kent is at 3.2%]

If you want to know what matters more than Europe; It's jobs.

Medway MPs move to right

Two Medway Euroloony MPs put ideology before economy.

A good piece on two of our Eurorebel MPs who have been tacking to the extreme right over Europe over the last four weeks as a result of probable membership pressure.

We know the membership is actively lobbying MPs to tack to the right after a motion was passed in full council, submitted by Cllr Jarrett, over the European budget this year. The motion compelled MPs to vote against a reasoned relationship with Europe.

Rehman Chisthi has taken a reasoned position and was the only Councillor to vote against his own group. His position is marginalised.

Contrary to media speculation the fact that MPs have voted against the whip is nothing to do with people putting party first. It is certain MPs using a crisis in Europe to pursue an opportunist agenda; it is clearly not the in the national interest and is purely a factional agenda pursued by those who care little for Britain and its economic interest. The creation of the '81 Group' highlights this case clearly.

We know the Medway Tory membership is comprised of the extreme Thatcherite right in Medway. Many deny climate change and are rabidly and dogmatically anti-Europe. So much so members of the English Democrats have felt at home in the local Conservative Party. UKIP - a party described as full of 'loonies and fruitcakes' - also pulled there General Election candidate in 2010 because they felt the Tories were on the same page politically.

Extreme right wing MPs locally are not good for the area. They are marginalised in Westminster and unable to secure or lobby for resource as a result.

Labour locally is continuing to focus on the priorities for residnets; jobs, police, education, NHS and working for our constituents.

Poor timing for EU debate

It is with bewilderment that I note today that whilst Medway residents are worried about simply staying in the black, about jobs, schools, hospitals and the economy our MP is once again banging on about Europe.

It's like one of those broken records... we have heard this all before... time and time again.

There are times and places for these things and a vote on whether we leave or stay in the EU, whilst we are embroiled in a full Eurozone crisis is not only baffling but also positively foolish.

It is a massive economic risk if politics were to be put before the economy at this crucial time - but dont let that stop the right wing opportunists - who sense an opportunity to rubbish Europe at a time when closer fiscal integration must be considered.

The focus for our local representatives should be stability and jobs. The Office for National Statistics (ONS) reports today that consumer price inflation in the UK was 5.2% in September, up from 4.5% in August. Increases in gas and electricity prices were largely to blame but - although these were well known about - the jump in inflation was bigger than anticipated.

The surge in inflation was driven by a rise in utility bills, with gas and electricity costs increasing by 13 and 7.5 per cent respectively following price hikes from Scottish & Southern Energy, E.ON, British Gas and Scottish Power. The retail prices index (RPI), which includes housing costs, rose from 5.2 to 5.6 per cent in September, while the consumer prices index (CPI), used to set benefit levels, increased from 4.5 to 5.2 per cent.

With unemployment hitting a 17-year high of 2.57 million in the three months to August, the benefits bill is increasing, which is putting further strain on the public finances as the chancellor wields his axe.

The people of Medway are really feeling the squeeze at the moment; but instead of articulating that concern we have another vote on Europe... and we all know it will be totally rejected by the same Conservatives who promised a referendum in the first place.

You think we should be talking about Europe?

Thought not.

eU wasting our time?

It seems like the rebellious right-wing Medway Tories are still banging on about Europe.

They are restless, largely because Cameron has decided to position the Conservatives as the most pro-federalist party, with wholesale support for bail-outs of Ireland, EU takeover of financial regulation and the creation of an EU standing-army.

In all but name this Conservative government has been a dream come through to pro-Europeans. Cheers guys.

UKIP are edging up in the polls and the local membership is restless about the amount of Conservative spin on Europe. It is clear that the national party and local MPs are not living up to their pledges, or are simply unable to.

All the Medway Parties (Labour included) agreed to cutting the EU budget in full Council. But this blog would contend this issue should not the priority for Councillors at this time.

If you wanted change. Why not raise this issue 3 months ago?

The boat has been missed!

Of course they do have better things to do - Perhaps managing the largest cuts programme in Medway history, a total of £23.5m, which is expected to decimate services. Perhaps also, managing the redundancy programme in Gun Wharf in a fair and transparent manner.

Meanwhile, shall we read what the Tory grass roots thought of the Medway Tory-led scheme

One Conservative stated that:

"have the greatest sympathy with the aim, but the methods attempted here are wrong. Councillors have a job to do in running their respective councils and representing their constituents in that respect. It is not for them to start trespassing on the territory of our MPs and MEPs, any more than it ought to be for MPs to try to run councils from Westminster. By all means, outside their role of councillor, they can campaign on whatever they wish. Going down this route, of councils commenting on things outside their role, leads to them becoming glorified student unions, first European Parliament spending, then fox hunting, next Palestine, rather than doing the job they were elected to do - provide services to the public."

Or perhaps another probably summarises it better:

"Let's see if the Lib-Con Government do that shall we? Oh, there is a pig flying over Westminster!"

Lukewarm

So why?

Despite the statement, there was not total agreement at Council.

Conservative, Cllr Rehman Chisthi MP opposed the motion and voted against his colleagues and supported the EU budget increase. He stood alone in opposing the budget increase, though he cumulatively represents over 80,000 residents across Gillingham & Rainham.

His position on the motion makes his position difficult for re-selection in 2015.

Its the factions again.

Many residents will also feel however that given the times, our Tories should be spending time concentrating on issue they actually have influence over.

Like getting our roads moving, keeping our paths and parks clean, like working a recycling programme which has introduced straw-bags that are considered a running joke. Like sorting out the gritting fiasco and managing regeneration projects.

Medway residents should not be used as pawns in some Medway Tory power-play and given the times of austerity and cuts it is clear the Conservatives are once again concentrating more on faction fighting then on the real issues which impact our residents.

UKIP Voter? Got what you wanted?

You may remember from May 2010 this pledge by your Rochester & Strood MP, Mark Reckless.

A pledge to hold a referendum on Europe.

In the speech Mark Reckless stated

“We want an independent Britain with its own taxes, its own borders and its own laws.

“But we don’t want this EU racket. At every election I have pledged to fight to get back our country’s independence.

“I repeat that pledge tonight.

“We are a free people and a free nation and we should chart our own path.

“No-one under the age of 55 has had the opportunity to vote on how our country is governed.

“It’s time to have an in our out referendum on Europe.”

So lets look at the Conservative record on Europe since May 2010

- Agreed to move governance of financial regulation to the European Commission so undermining the City of London and power of UK regulator

- Agreed to give prisoners the vote

- Agreed to increase the budget of the EU by 2.9% despite Cameron pledge to cut the budget. No budget rebate secured.

- Agreed to a Rome treaty change on fiscal compliance of the nation state with no trigger referendum

- Agreed to further consolidation of defence policy with the European Union, including a shared policy on defence with France. Shared nuclear testing and carrier capability in a binding treaty with no Parliamentary vote

- Agreed to increase budget to European Foreign Department

It has to be said, as a 'New Labourite' this is an impressive list and more than Gordon Brown could ever have achieved.

Cameron has even silenced the pro-European suspects by giving Europe everything they could have wanted!

Not only have the Tories ceded more power to Europe to regulate the City of London but also the principle of sovereign defence, the treaty lock on the Rome agreement and have agreed to increase the budget to the EU.

The Conservative leadership have also scotched any idea of a European referendum on membership. There will be no referendum.

Glad you got what you voted for? I doubt it.