Cameron's half-baked economics

Having chided the Shadow Chancellor yesterday for focusing too much on trendy social psychology and think-tank-esque ideas rather than getting on with his day job, I guess I have to comment on David Cameron's economic strategy as outlined today in a speech to the CBI. I didn't hear the speech just read it so I can assume that he didn't say the following with any hint of irony:

The more you look at [the Government's economic plan], the more you realise that it isn't an economic strategy, it's a political strategy."

Good one David. His speech is actually more interesting for its political meaning than as an expression of economic policy. Not because it could in any way be described as an economic strategy. It's not. It's a rag-bag of loose ideas that are chucked in the economic sack and fail to meet the challenges they set themselves. What marks the speech out though is a wicked sting in the tail. The Spectator has been spitting feathers at the proposals to introduce a British version of the US bankruptcy protection, Chapter 11. So Cameron has given up on creative destruction. He might well get another visit from Margaret Thatcher soon.

That's not the real sting in the tail though. What The Spectator did not comment upon was the policy of massive state intervention that Cameron appeared to sneak in under the radar.

"Businesses need the infrastructure to succeed. And I mean infrastructure in the broadest sense of the word. Transport. Education. Skills."

Wow. That seems to imply major intervention. Are the Tories finally reconciled to post neo-classical endogenous growth theory? Governments do boost economic growth after all. This is a complete accommodation of the economics of new Labour. Perhaps that's something for Gordon Brown to celebrate?

I'm afraid on the specifics, the speech was sorely lacking. Just some examples:

- His welfare to work policy is basically a copy of Labour's with public sector providers excluded. Why, for example, would you exclude further education colleges from provided basic skills? It's what they do, it's what they have expertise in delivering, and they are trusted by local communities.

- Taking first time buyers out of stamp duty. Fine at the margins. But surely David you've read about the credit crunch and its impact on the mortgage market? Stamp duty is not what is holding people back in the housing market, it's the availability of affordable mortgages. You've missed the point.

- On the cost of living, he says, "Of course, many of the problems families face come from abroad." You may be revealing your little Englander instincts there David. We are part of the global economy. Our demand contributes to global demand as does our supply.

- Funding corporation tax reductions by reducing complex reliefs and allowances. Well, (i) firms are interested in their overall tax burden not necessarily just the headline rate; (ii) Does this mean abolishing measures such as R&D credits and how does this sit with promoting hi-tech investment?

- Shire Pharmaceuticals and United Business Media have not left because of the 'burden of regulation.' Most regulation is European so applies pretty much anywhere they HQ.

I was sceptical about the fair fuel stabiliser but I think it's worth having a closer look at for one major reason. It would have an impact on inflation which would mean that interest rates could be more focused on the real economy rather than the price of oil. Though notice that the oil price has increased relative to other EU nations due to the depreciation of the £ vis-a-vis the Euro. There is something you could do about that David......

So this is not an economic strategy at all. There are some good ideas, many just copied from the Government (did I mention underwriting all deposits up to £50,000? There are others....), and there are some largely irrelevant ideas. There is nothing in it to reduce the cost of living in the long-term as his conclusion claims. It confirms my view that George Osborne needs to spend less time on extra-curricula activity and more on economic policy. If you really believe that you are going to form the next government, time to get serious about economic policy, Dave and George.

Climate change- the issue of our time

96% of respondents disagreed with the statement, "my home energy bill needs to rise to help combat climate change," in a Yougov poll reported in The Independent today. The same piece reports an Ernst and Young estimate that bills will have to rise by an average £213 to meet the Government's targets (though, given that it's bad news, the E&Y report says 'the EU's'- that's just the formula I'm afraid.)

There is no further political advantage to be gained from being green for either of the two main parties. Green politics played a central role in the de-toxification and re-brand of Cameron's Conservatives. It wasn't the issues in and of themselves. It was that they served a semiotic function. This was a new party that could talk about new politics- specifically the environment- in a refreshing way. Job done. No further advantage to be had.

Similarly, the Government's renewable energy policy announced last week will not secure it political advantage. It simply neutralises the Tory surge in this area. It is the right policy and it has rightly received a positive reaction in the liberal press. That's it. No further advantage to be had.

It is ultimately going to be one or both of these parties that has to confront that 96% figure. So why try to grab minuscule political gains in this area when there is bigger prize on offer? What is the bigger prize? Doing the right thing. The Prime Minister and the Leader of the Opposition need to say in clear terms, perhaps on the same platform (gosh, aren't we grown up!):

"Climate change is deadly serious, we know that you are hurting from increased energy prices, we have different ideas about how to make it easier for you, but let's be clear, we are stood in absolute unity on this, we have a stark choice that is no-one's fault, it's just that the earth's resources can't keep pace with the current rate of economic expansion. That choice is to make the adjustment now and see energy prices increase, or don't and they will rise anyway to unimaginably high levels AND we will continue to trash the environment which will lead to millions of deaths, disease, starvation, who knows what it will do to our climate, and will lead to wars and untold human suffering. That's the choice, we all need to do our bit. There are some things that are beyond politics and this is one of them. It's not all bad though. If we make the adjustment we'll create lots of jobs in green technologies and that will make us a more prosperous nation. We stand united on this issue. Thank you."

This may all seem crazy but that 96% figure is terrifying. It can only be confronted on the basis of a genuine, cross-party, political consensus. Unless we enter into a proper national dialogue politicians of all different colours will have to bear the periodic and volatile consequences. The need for national and international consensus has scarcely been more important than it is on this issue. Climate change is the issue of our time.

Looking for gold in a coal mine

Why on earth is Jeremy Heywood trawling the Civil Service for a good speechwriter? I doubt there's a single Civil Servant who can write decent political prose. It's rather like looking for gold in a coal mine.

If you want a good speechwriter, look no further than Phil Collins, Blair's man with the golden pen. See the wonders that he did in a brilliant speech he wrote with James Purnell last week. Blair's final conference speech is one of the best political speeches I can remember in recent years if not the best.

Yes, I know he stuck the boot in a few times in a recent article in Prospect. But if Labour is still a Government of all the talents, then Phil is the guy. Carter, get Collins.

Mr Cameron, are EU for real?

Today's Prime Minister's Question Time was one of Gordon Brown's strongest performances and one of David Cameron's weakest, if not his weakest to date. It is clear that David Cameron has got himself into a complete mess over his European policy- a mess that is difficult to see getting anything other than worse. The clip is below:



The major weakness in David Cameron's position, populist Europe-baiting to one side, is that on so many issues it is impossible to devise effective solutions without genuine and enforceable EU cooperation and commitment. On climate change, crime prevention, justice, counter-terrorism, jobs, investment, and growth, as well as migration, equality, and quality of life, it is hard to imagine truly effective domestic policies without the binding strength of an effective European Union. These issues are all things David Cameron claims to care about. Yet his European policy has been a calamity from the moment he put his name forward for the leadership of the Conservative party.

As Patrick Hennessy argues in his Telegraph blog today, David Cameron's approach to Europe and his pandering to the euro-sceptic wing of his party demonstrates that his modernisation project falls woefully short.

In the Tory leadership campaign, David Davis had the courage to stand up to the euro-loonies by refusing to countenance severing the party's ties with the moderate European People's Party. David Cameron showed no such conviction or good political sense and capitulated.

On this area more than any other, we are getting a glimpse of what a Cameron Prime Ministership could be like: ineffective, vacillating, unprincipled, doused in gesture, and doomed to collapse under the weight of its own rhetoric. His inability to properly address the European issue highlights the shallowness of the entire enterprise. It is modernisation without purpose and that will ultimately harm the nation's interests. The stakes are rising.

Credit to Steve McCabe

Steve McCabe MP, who ran Labour's campaign in Crewe and Nantwich, has written a very straightforward and very honest article for this week's Tribune. Credit to him for not hiding and, instead, taking it on the chin.

Reading between the lines, McCabe actually describes a pretty fundamental challenge for Labour. He describes a really tough environment where defence of the Government's record is a blunt instrument and 'don't risk a Tory Government' no longer works as a rallying cry. The ideological debate that is raging is all well and good. But what is the recovery strategy?

Steve's job was mighty tough and you have to respect the fact that he stood up to be counted.

Cut fuel tax?

Alice Miles argues in the Times that the scheduled 2p increase in fuel tax should be deferred this Autumn. I'm not so sure this would have much impact. If petrol companies can profit from selling it at this price, may they just pocket any tax deferral or reduction? There would have to be a solid way of ensuring that any tax change finds its way to the end consumer and I'm not sure that can be guaranteed. It is bad enough having belt bursting price rises without just contributing more to petrol profits. So it's not the right way to go.

Besides, if we are now seeing the start of a response to global conditions of expanding demand as countries such as China rapidly develop meeting limited supply then we are just slightly mitigating the inevitable. Let's leave OPEC out of the argument for now as I'm sure that its impact is to accelerate or slow price changes but they can't fundamentally alter market conditions which suggest a step increase in the price of oil over time. Diplomatic pressure will either work or it won't but best not to factor it into the equation. If it does work, then it's a short term bonus, that's all.

A note of caution. We can't throw the environmental argument completely out of the window though it does carry less weight in circumstances such as these. Alongside whatever policy is pursued on petrol prices, there needs to be a greater consideration about how the state can better support market-driven environmental technologies so that their introduction and dissemination is accelerated.

Of course, petrol price rises are a (severe) short term hit and the volatility of the price, i.e. rapid price rises currently, hit the consumer hard. So is a better approach not to give the cash directly to people in the form of enhanced tax credits for the least well-off or a one off tax rebate? Mexico is currently doing a similar thing to offset food price rises.

Such a policy could make counter-cyclical economic sense as economic conditions harden. The impact on interest rates will need to be carefully considered- there's no point giving more cash with one hand if the response is going to be interest rate rises or rates falling more slowly (though as we've discovered the relationship between interest rates and mortgage rates are uncertain at the moment for many if not most mortgages.) Then there's the fiscal rules....we are dangerously close to the 40% national debt ceiling. This limitation, it should be said, applies to both fuel tax cuts or increased tax credits. Who'd be Chancellor?

The calls to reduce fuel tax and/ or excise duty will rise to a cacophony over coming months. There are better ways of reducing the pain of price rises. If we go for the tax credits/ tax rebate route for goodness sake say why it is being done that way. Then explain and communicate why time and time again. There is no point having the right policies if they are matched with duff communication.

Freedom of the Underdog

Great piece this morning by Johann Hari in The Indy. I agree- now is the time for Gordon Brown to free himself from electoral concerns and do all the things he's wanted to do in politics. Underdog status could be the making of Gordon Brown. Clear the diary and spend the next few days writing a list of ten things you've ever wanted to achieve and spend two years trying to achieve them.

It's a wonderful position. American Presidents have a recalcitrant Congress to deal with in their second terms when they could be at their boldest. But in the UK there is no such constitutional check. Ironic, given that constitutional reform is one example of New Labour's unfinished business that could be tackled in the next two years.

And what's more, this freedom could be really enjoyable. You can have an idea on Saturday and within a few days you can be doing it without lengthy political naval-gazing. Leave the business of administering the British state to your colleagues. Remove them if they are incompetent but otherwise just leave them to get on with it. Don't save the British economy, leave that to Alistair Darling.

And the best thing? People will see you enjoying yourself. People will see what you stand for. Your opponents would be placed on the back foot- have a little giggle at them. And who knows, your underdog status might just win you the game.

Clegg riding the tax waltzer

Nick Clegg describes the tax regime under Labour as a 'tombola tax system.' Good line. But the tax system he proposes is akin to a waltzer tax system, just as you think it's spun one way, it spins back again. The whole thing ends up in a dizzying mess.

Let's leave aside his claim that some people on low incomes are paying 'effective' tax rates of 90% (did he mean 'marginal' rather than 'effective' by any chance? Are you telling me that someone on £10,000 pa could be taking home just £1,000 pa? Nonsense.) The mishmash of proposals will have all sorts of bewildering effects. Let's just take those on low incomes:

- Basic tax down to 16%. Good.
- Tax shifted to pollution (the poorer you are the higher proportion of your incomes in consumed by energy costs and the like). Bad.
- Reducing taxes further after tax avoidance clamp-down. Goodish. If tax avoidance was so easy to cease someone else would have done it by now so probably won't happen. Remember the non-doms saga?
- Scale back tax credits. Bad- Clegg is right that it would be simpler to take people out of tax altogether. Simpler but I'm afraid more costly and less targeted.
- Introduce a local income tax system. Good or bad. If you are single and working could be good depending on the rate. If you are a working couple would be bad. If you are on a fixed income, undeniably good.

So overall, if you are on a low income I think you would rightly be concerned about the overall Lib Dem tax package. The most amazing thing is that having castigated Gordon Brown for the complexity of the current tax system, it would be just as difficult if not more so to calculate whether you were better or worse off under the Lib Dem proposals.

The one thing that the Lib Dem tax waltzer isn't is simple. Dizzying, quite fun, politically opaque, yes but simple, no.

Istanbul

As will be obvious from my half-hearted and rather superficial post about Frank Field on Monday, I am currently enjoying a break. Though I had good intentions to maintain a daily blog and could easily do so given that I have wi-fi access in my hotel, I just haven't been able to motivate myself to do it.

In fact, I'm going to indulge in this mesmerising city, Istanbul instead of writing about how Hillary Clinton's win in West Virginia changes nothing or how it is fascinating that Obama has moved his campaign to general election footing signalled by his decision to speak in the swing state of Missouri rather than West Virginia last night or how the draft Queen's speech contains some really good measures not least a cheeky little proposal on buying up surplus housing for redistribution or the welfare reform measures and a strong idea on the introduction of an NHS constitution.

The reason I'm here is quite simple. Orhan Pamuk. I've been a fan of his writing for some time (I would particularly recommend 'Snow' and 'My Name is Red') and his 'Istanbul: memories and the city' has been on my bookshelf for a while. Cheesy but what better than to read it in Istanbul?

The threads of Turkey's identity crisis, East and West, Kemalist and Ottoman, flow through Pamuk's literature just as the Bosphorus and Sea of Marmara collide and separate in Istanbul. In 'Istanbul', Pamuk becomes curator, poet, archivist, social historian, and autobiographer. Istanbul becomes his history, his canvas, his personality. Like Hugo, Dickens, and Joyce before him he allows himself to be defined by a city and in turn hooks us into accompanying him on an archaeological dig of the soul of place.

Pamuk's personal history and that of his family has an uncanny entanglement with that of his subject. His family's fortunes turn upon the death of his paternal Grandfather, a 'magnificent man', whose fortunes are frittered away by the hopelessness of his father and uncle's business acumen. A decaying family fortune reflects the decaying seat of the Ottoman empire, a city neglected, bellowing up nothing but darkness and painful memories of past greatness.

He never met his Grandfather just as he never saw Sultanate Istanbul, but each is omnipresent in his upbringing. His Grandmother, wise and charismatic, never surfaces until after midday, rarely leaves the family home, waiting for their family greatness to return (she sees omens of this in little Orhan, the 'crow') and Istanbul is gripped by huzun, a kind of collective melancholy induced by dispossessed greatness, power, and wealth.

The embers of this melancholic shabbiness remain in modern Istanbul but this is not the same city that Pamuk grew up in. It had just about reached a population of a million when Pamuk began school, its population now stands at ten million. The old city, Pera, and Bosphorus communities have been swallowed in mass migration and development. Romantic as the crossing from the West to the Asian side sounds, the Asian side is nothing of the sort. Rather it is a sea of modernist medium rise tower blocks. Rather than a bridge from West to East or vice versa, the trip across the Bosphorus is more akin to crossing from 1920 to 1965.

There is much discussion about whether Turkey can ever be part of Europe. Istanbul is not typical, I'm assured, but on the evidence of this city it absolutely can be. It has the feel of a modern, European city with an Islamic hue rather than an Islamic city. Islamic architecture (sometimes subsuming Orthodox Christian architecture as in the spectacular Haghia Sofya) provides the city's best moments. However, much as the Sultans left for the hills and then extinction quite a while ago, Ottoman Istanbul remains as a relic rather than a threat. Even Haghia Sofya is now just a museum (though I can't remember being in a more breathtaking structure.)

So where does Turkey's destiny lie? The Government of Tayyip Erdogan seems to want have its cake and eat it, supporting a fusion of modern economic reform and conservative Islam. It is patently obvious that the only way to combine these two things is hypocrisy- liberalism will leave religious conservatism in its wake. The only question will be if and what kind of backlash this approach will provoke. For now, the EU's most sensible course of action is to continue an engagement with Erdogan. The mono-creed vision of European politicians such as Valery Giscard d'Estaing needs to be challenged just as areas where Turkey falls short, freedom of speech, Cyprus, and the potential entanglement of religious with secular law need to be tested. It should be noted that despite the approach of Erdogan's AKP, Turkey is perhaps more aggressively secularist government than any in Europe with the possible exception of France.

Orhan Pamuk's city of black and white has been replaced by a sparkling city, self-confident in its future, released from its past. It is as Europoean as Napoli, Athens, or Seville. Old Istanbul, the city of Pamuk's youth was given its energy by the Bosphorus. New Istanbul, this city of new train lines, stadiums, affluent housing developments, and high-rise office blocks, has an energy of its own. Ataturk has won- in Istanbul at least. Is the EU to reverse the city back to its history or allow its destiny to be European? On the evidence of Istanbul at least, Turkey is already well on its way to a European destiny.

Postscript: Pamuk collects some newspaper columns that he has read over the years (see what I mean about being a curator?) Two quotes particularly amused me:

From 1946:

"We're tired of seeing every square in the city flooded every time it rains. Whoever is supposed to fix this, should fix it soon."

From 1927:

"Yesterday it snowed and did anyone in the city board a tram from the front or indeed show any respect to their elders? It is with regret that we note how quickly the city forgets the polite rules of society that so few of our inhabitants knew in the first place."

Anyone who has been here will be able to vouch for that!

Frank Field

I'm getting very bored of Frank Field now. He's over-stepped the mark with his criticisms of the PM today.

And now Bryan Gould is being given a platform as well. Didn't he bugger off to New Zealand after being humiliated in a Labour leadership election by getting less than 10% of the vote in a two-way fight? Some voice of authority that.....

Compass event

Compass put on a sizzling debate last night on Labour's future direction. Two contributions in particular stood out- those of Steve Richards and a devastating but completely constructive contribution by Jon Cruddas. Actually, I left the meeting feeling that if we don't win the next election it won't be because we lack ideas, conviction or talent.

First to Cruddas' contribution. He counselled that the Conservatives have changed, not just in terms of style but in terms of philosophy as well and Labour underestimates that at its peril. Moreover, and anyone who followed the London Mayoral elections can vouch for this, they have adopted a new emotionalism to their political language. Labour's language by contrast is managerial and aloof. Cruddas has read and absorbed 'The Political Brain' (which is emotional rather than rational) by Drew Westen and 'Words that Work' by Frank Luntz. He also pointed to Danny Kruger's article in Prospect on 'fraternity' and the new conservatism. I will re-read today but what it all amounts to is that Labour is confronting a formidable and new challenge which has to be fought with new tools and a new narrative (I'm going to ban myself from using this word soon.)

Cruddas explains how the new Labour coalition is fracturing. As someone who spent election day ward hopping in a typical English marginal seat, Rugby, I can vouch that he is right. The suburbs are moving away decisively. More worrying was the core Labour ward where I was knocking doors last Thursday afternoon. My colleague and I got to the end of one street and looked at each other in horror as we realised just how soft our vote was. We won the ward but only having put in an unprecedented amount of work over the previous six weeks (we normally just tread water there but this year we treated it as if it was a marginal ward.)

But Cruddas' analysis was by no means a counsel of despair. Labour can re-connect (another word I'm going to ban myself from using....) It needs to acknowledge the insecurities that people are feeling. Another American book that is worth a read is the 'The Great Risk Shift' by Jacob Hacker who explains how it is not just those at the bottom end of the income tree that are facing insecurity, it is the majority. A similar situation could well be happening in the UK but that will require further analysis. If my impression is right then therein lies an opportunity for a strong Labour argument.

There is no doubt that these insecurities exist and that is a natural corollary of globalised finance and corporate investment. And that is why, as Steve Richards eloquently argued, the prevailing political mood actually offers an opportunity for Labour. When your job, household income, housing costs are inherently unstable you then need active and interventionist government to counter-balance wider and unpredictable economic forces. Richards argued the fact that Northern Rock has been nationalised without obvious political cost demonstrates how the mood has changed. He's right and there is a discussion to be had about the appropriate level of regulation of financial markets and the need for consideration of how we can create more proactive financial watchmen.

Richards and Cruddas were on to something last night. Most importantly, the overarching messaging was that there is no clever set of tactics that will get Labour out of this. There needs to be a more fundamental re-think. And fast.

Wandering away from the event through Westminster Hall with a spring in my step, who should march in my direction? None other than the Leader of the Opposition, David Cameron. If there was any danger of running away with the enthusiasm of the moment, this brought me quickly back down to earth. Game on.

Postscript: I also went to listen to James Purnell's lecture to the Fabian Society. His dismantling of the Tory argument on poverty as expressed in their 'Making British Poverty History' report was incisive and clear. His articulation of a more personalised, coordinated and responsive approach to eradicating child poverty was powerful. His analysis of where Labour is following last week's local elections was slightly optimistic about the current situation, resting as it did on the 'it's the economy' line but much of what he said chimed with what we heard later at the Compass event. There really is a way out of this.....over to you, Gordon.

It's not just the economy, stupid

So much, so much. Following the local election post mortem is like standing in the middle of the climax of a firework display. Every angle, every axe, every agenda is whizzing and fizzing around the pages of the Sunday press and TV studios. Gordon Brown must be reflecting on something wise that Tony Blair once said (not the only thing...) As you gain more experience, you learn to trust judgement over intelligence.

But the disagreements seem to be not just about 'where next?' but over 'what happened?' Two points to anyone who campaigned on Thursday are obvious:

i) It is not just suburban voters that are beginning to taste what it's like to vote Tory. It is traditional Labour support as well- in smaller numbers then their more affluent neighbours but significant nonetheless. Jon Cruddas' analysis in the Sunday Mirror is right. Ivan Lewis is optimistic in describing the elections as a 'suburban revolt.' Labour losses may have been concentrated in areas that had suburban characteristics but the quiet but significant switching of the traditional, working class could be just as corrosive to Labour's chances at the next election. Labour ignores this at its peril.

ii) It's not just the economy, stupid. Pocket book issues are hurting Labour, one of which, the abolition of the 10p tax rate, was self-inflicted. But this is more fundamental than that. The Government's achievement over more than a decade are tremendous but people are confused about the direction in which Labour is heading and they still feel that their lives and communities should be better. They are not wrong and the Government needs to answer their fears and insecurity.

So the best advice of the day? I think that has to go to Matthew Taylor, former Number Ten strategist. Define competence, tell people how it can be measured then focus exclusively on meeting the challenges that you've set for yourself.

Big policy documents and 'meeting long term challenges' are not the order of the day. Labour has two years, it is about reminding people what a Labour Government is about, why it is different to the Tories, why it is important, and showing that it can lead and deliver. So it's not just the economy, stupid. It is about showing that it is Labour that will make people's lives and communities better.

Some of the mist clears?

There's quite a bit of 'down and out' analysis this morning and there will be more of it over the weekend I'm sure. Martin Kettle and Matthew Parris both come to an apocalyptic conclusion.

John Curtice in The Independent offers a more sanguine view. It's not over yet but boy does Labour have a job of work to do. My only quibble with his analysis is that he takes the economy as perhaps the overriding and predominant factor in voting motivation to the exclusion of almost everything else. There are broader factors at play here that Labour has to address.

One final analysis on the optimistic side by Hopi Sen is worth a read. Valiant and swash-buckling, Custer had nothing on Hopi. Cheered me up immensely. On one point in particular, I absolutely agree with Hopi- organisation is critical. In Rugby we were hit by the same factors as elsewhere (and yes the 10p tax abolition was an issue with white, working class voters in particular and, yes, many of them did vote Tory) but we didn't lose a seat as a result of some pretty keen targeting. That sort of targeting won't enable us to win back the Council but it keeps the Labour Group in tact and ready for better times. It was the equivalent of a defensive 0-0 away in the Champions League. But that is what was needed.

Local election aftermath

So the blood-letting begins. And already it has got off to a false start (and Mayoral results haven't been announced yet.) It has been characterised as the Progress line (don't forget the southern, middle-class) versus the Compass line (it's the core vote, stupid.) The reality is that if you read the Progress and Compass responses to last night's appalling results, they are basically arguing a similar and rather superficial point. Apparently, we have to assemble a winning coalition to win. Get it?

As Neal Lawson of Compass concedes, Labour has the to retain the support of both the working-class and middle-classes. The genius of Blairism is that it unified the interests of both. Now I don't see how a political strategy that achieved a majority of 64 in some the most trying of circumstances just three years ago can be described as 'dead' as Neal declares in his piece. My experience on the door-step yesterday is that Labour is hemorrhaging support from both the middle classes and the (white) working class. More worryingly than Neal Lawson suggests, the white, working class was often jumping straight to the Tories. The BNP were a fleeting concern and they have flatlined in this election with some local exceptions but it is the Tories who pose the major threat to Labour's core vote now.

Politics moves on and the priorities of the last ten years are not necessarily the same priorities of the next ten years. There is no doubt the Government has reached an impasse and only a new appeal will induce a recovery. This appeal can not be about sprinkling goodies on this group and that group as a desire to secure their allegiance. Instead Brown needs a clear vision, consistently and clearly communicated, and backed up by a political sensitivity.

What is that vision? Nothing I have heard so far is in any way convincing- 'big challenges', 'on your side', 'unlocking talents', it all sounds hackneyed and wan. We know we have to build a winning coalition. But how?

Brown's choice: re-erecting the tent v the strategic strike

Labour is poised for a period of internal reflection no matter what the results are like tomorrow. You can speculate endlessly about what the outcome will be but in low turnout elections (and with rain on the day turnout could be affected further- the forecast for Rugby where I am campaigning is here.) The reality is that a great deal depends on local factors such as the effectiveness of local organisation when you are looking at turnouts in the low 20s. That is difficult to judge in advance. So I'm not going to make a prediction other than to say that the London count will be very exciting indeed.

So there will be a weekend of hysterical reaction when actually the results mean very little from a national perspective. Next week, a fierce internal debate about how Labour should begin its recovery will swing into action. Tuesday sees a Compass 'what now?' event and it's the Fabian's turn on Thursday with a talk on Labour's appeal in the south by the thoughtful John Denham MP.

Jonathan Freedland clearly defines the terms of the debate. The Compass approach of 'recovering the lost Labour vote' of public sector workers, ethnic minorities, "urban intellectuals" and the traditional working class versus the strategic strike approach of targeting a small number of swing voters in a small number of constituencies. Freedland describes this as the approach of the centre-left Progress Group.

This strategic discussion is all very well but in practice what will it mean? Instinctively I tend towards the broad Compass approach but until we see what it means in black and white it is difficult to conclude that they have the answers. We will see over the coming weeks.

Nothing I have heard yet is a convincing platform for halting Cameron's march onto Labour ground. Some of that can be undone tactically- i.e. undermining the credibility of Cameron by challenging the substance or effectiveness of what he is saying on the NHS, the environment or poverty. But there needs to be something broader also.

I will cover the debate as it evolves over coming weeks as this is a key moment for the Labour Government. These debates will be critical in determining the outcome of the next election. Just one comment is worth making at the outset. The Government is going to have to get itself in a position where it is assessing the politics of its decisions not just the administrative merit. This is where it went wrong over the 10p tax issue. This is not government by focus group but it is a more sensitive form of government. If it gets the politics wrong then the strategic discussion becomes an irrelevance. Instead, Brown's administration will simply be playing back-foot politics. The damage will be limited but victory will be denied.

10p or not 10p?

The Institute for Fiscal studies has been furiously providing the egg-headed analysis of the Government's 10p travails. The irony of this political row is that the 2007 Budget was actually redistributive:

http://www.ifs.org.uk/budgets/budget2007/distribution.ppt

There are losers and they are some of the lowest paid. As ever in politics, the symbol assumes an importance that is greater than the substance. So while row reaches fever pitch (see here for a taste of the tone) it is probably worth remembering that this Government has been consistently redistributive over the years. It is also important to factor in non-fiscal policies such as the national minimum wage and the New Deal which have helped the lowest paid families without children.

Indeed, the 10p tax rate was actually introduced by Gordon Brown in the first place! Disagree with the abolition of the rate. Make a good case but please make it in the context of all the changes that have taken place both in Budget 2007 and over 11 years of Labour Government.

And please make it in a restrained fashion. This is not the Poll Tax. It is more similar to changes to lone parents' benefits made in the early part of the Labour Government which were equally clumsy. But look what happened subsequently. If you look at the IFS chart it shows that Brown's Budgets have increased the income of lone parents who are out of work by over 10% and of those in work by over 15%. That's a hell of a record of betrayal!

My guess is that the Government has got the message on the 10p rate abolition as well. The Pre-Budget report will take significant action to compensate the losers of this tax change I am sure. So ask yourself, is it worth handing a huge political victory to the Conservative Party because of this singular, politically clumsy (albeit mildly harmful) measure?

Gordon Brown: creating a truly global society

The Prime Minister's Kennedy memorial lecture has been getting quite a bit of attention and not without justification. It is one of the most formidable speeches given by a British politician for quite some time. In it he articulates a vision of a global society where reformed international institutions work to alleviate poverty, combat environmental degradation, defeat international terrorism, and work to eliminate treatable disease. As an articulation of liberal interventionism it has been compared to Tony Blair's Chicago lecture in 1999. But it is even better than that.

This is the second intellectually impressive speech that Brown has given in recent months. The other was his discussion of liberty and Britishness. Where that speech left the policy thinking strangely incomplete, the Kennedy memorial lecture proposes formidable solutions: a new IMF to concentrate on early warning of financial turbulence, a World Bank constitutionally established to tackle poverty and climate change, a UN with resources and a mandate to state-build, stronger regional cooperation such as in the EU and the African Union, and a new fair global trade deal amongst other suggestions.

Historically grounded, inspirational, purposeful, and visionary, the Brown that we hear in this speech is a different Brown to the media image that is becoming established. Whatever the criticism aimed at the Prime Minister, if the voice we heard yesterday is heard again and again then a political recovery is very possible indeed.

Postscript: Given that the Prime Minister mentions the frontierless power of the internet in his speech, you would have thought that it would be available as a video or podcast on the Number 10 website, no? Time to raise the game Number 10 web geeks....

Citizenship

What does it mean to be a British citizen? For Gordon Brown, it is about values: liberty, civic duty, fairness, and internationalism. Certainly, it does comprise those things but, as many have pointed out, just because these values have such a strong association with our history, it doesn't make them peculiarly British. So it's something more than values. It is also about identity or rather identities (because diversity is intrinsic to Britishness- in fact diversity has been essential to Britain's survival as a nation and political community.)

The English language, understanding of British society, appreciation of the history of Britain and its empire, associating oneself with a British 'way of life' would all seem to be part of it. All these things can be easily demolished intellectually. They are real but very tricky to define. In a complex world of multiple and overlapping commitments, questions of identity are breathtakingly complex. That does not mean that identity does not exist.

John Major's risible idyll of warm beer (yuk!) and cricket on a village green on a Sunday afternoon is just as compatible with 'Britishness' as Philippe Legrain's hysterical plea for a cosmopolitan Britiain in today's Guardian. (As a quick aside, as part of their training every journalist should have to spend at least a year outside of London with top-up sessions of 3 months in every subsequent year- it would certainly do Mr Legrain some good.) But as a snap-shot of culture in today's UK or even any of its constituent parts both are completely wrong. Major's ossified notions of identity are a nonsense. Legrain seems to deny that Britishness even exists which is equally nonsensical.

While obviously Britishness is not a racial or ethnic concept, it still conveys an identity but what is that identity?

Yesterday's announcement of a process to citizenship is an interesting one. It seems, on first reading, like a good approach- a period of residence, followed by a short probationary citizenship, then full citizenship with the rights and benefits that come along with that. There has to be a pathway to full citizenship and it has to mean something.

But this is not just about immigration. We all need to consider what modern British citizenship is, the duties that we have, the benefits that citizenship confers and what it means to be British. And actually, these are more important questions than who's in and who's out. So Britishness and citizenship both matter but they matter to us all.