Inflation and hypocrisy

In the budget today, the Chancellor announced that inflation this year is expected to be between 4 and 5%, and that it is hoped that it may come down to around 2.5% next year. Even if you believe the Chancellor (and I don't), and the prediction for 2012 is achieved, it is still above the level requiring Mervyn King to report to explain himself.

The Tory party like to portray themselves as the party of those who are self-reliant, who want to contribute to society rather than only take from it, and who want to make the most of themselves. Self-reliance means saving for difficult times. This includes making provision for old age. But the Chancellor's willingness to inflate himself out of the national debt is confiscatory with respect to just those people. Ordinary savings offer rates of interest which are way below the rate of inflation, and what meagre income that is received, even though much below the amount necessary to match inflation, is still taxed. Similarly, capital gains on savings investments are taxed even though, because of inflation, the gains may be entirely illusory: this is because the Chancellor is not prepared to index capital gains against inflation.

The Tories were supposed to raise the inheritance tax threshold. They haven't done it. They were supposed to replace the Barnett formula with a needs based grant distribution system for the UK. They haven't done it. On the last of those, this was also matched a Liberal Democrat manifesto commitment, so there is no excuse.

As it happens, for reasons explained in earlier articles in this blog, I do not support replacing the Barnett formula. The Barnett formula has the great advantage that it operates, so to speak, without human input: find out how much is voted in the annual Appropriation Acts for functions relating to England in any year on matters devolved elsewhere, and you then know exactly how much is to go to Scotland, Wales and Northern Ireland in that year. On the other hand, a needs based formula will be subject to annual arguments about relative assessments of need (which over time is likely to act to the disadvantage of those in England, because if the UK government acts neutrally as it ought to, there is no one to stand up for their interests).

Equally I do not support raising the inheritance tax threshold: I see no reason why children should expect to inherit their parents' wealth as a matter of right.

The point arising from this is not that the Tories' policies are necessarily wrong (they are on inflation, not on the others), but that the Tories are untrustworthy. They knew the economic condition of the country perfectly well at the time of the last election. If they didn't think something could be afforded then they should not have promised it. The Labour party, if in government, would probably have followed all the same steps on these issues. However, they would not have (and did not) promise anything different.

To make matters worse, some Tory policies seem to me to be bound to fail. The NHS reforms if implemented as intended will lead to unaccountable decision making by people it will be impossible even to identify - but it is doubtful those reforms are implementable. The Big Society as explained so far seems to have turned out to be a means of confiscating dormant bank accounts in England to make up for shortfalls in local government spending. I think that the policy on student fees for higher education is wrong and I think the Tories misunderstand the resentment at grass-roots level about the unfairness caused by only those students living in England having to pay the higher fees. The single policy which may have beneficial impacts and go some way to meeting manifesto commitments is the Localism Bill (in which I think there are some genuinely good things).

If the Tories end up with a reputation of being untrustworthy, as it seems to me they deserve, this will store up trouble for them for the future. The plan may be that as the next election approaches a pre-election budget will issue enough goodies to the Tories' natural supporters as to cause them to overlook their failure to meet their past commitments. That calculation may be wrong. Their natural voting supporters may not be fooled twice, and if AV were to arrive UKIP may well steal part of the Tories' lunch box. (Again, to avoid misunderstanding, readers of this blog will know I am opposed to UKIP policies on the European Union, but they are a threat to the Tories.)

Libya

I have been listening to the debate in Parliament on Libya this afternoon and one could almost have gone back to debates of 150 years ago. There are echoes here of France and Britain's past involvements in Africa. Neither country could it appears resist the opportunity to appear on the world stage one last time. Given that both are now much less important (and capable) militarily than they used to be, it felt quite odd. And given that the need to reduce the deficit has been the reason given for many of David Cameron's government's domestic policies, what exempts this latest appearance on the world stage from the same deficit-led restrictions? No one in the debate in the Commons appears to question the assumption that Britain's tax payers must play a leading role in events in Libya.

At least this venture is probably legal so far (on some reasonable definitions of "legal"), but I have other practical misgivings. These stem first from my gut feeling that no one has a monopoly on morality (why Libya, which at least makes some attempt to promote its own version of equality so far as gender is concerned, and not, say, Saudi Arabia or Bahrain which are just as dictatorial and whose police states are equally without democratic credentials?); secondly, from my suspicion that the UN mandate to protect civilians is bound to lead to "feature creep" and is even now becoming seen as a mandate for regime change; thirdly, from my feeling that transitions to democracy have to come from within rather than from the outside; and fourthly, from doubts that there is a properly formed strategic view about the long term.

On the first and second points, Gadaffi probably is a criminal and probably did authorise implicitly or explicitly the bombing of the aircraft which crashed at Lockerbie. He probably did implicitly or explicitly lay down the ground rules which led later to the death of PC Yvonne Fletcher. He has very probably been responsible for many other deaths. But these are not the bases for the current intervention, and were they to be there would be an even stronger stench of hypocrisy given Tony Blair's and Gordon Brown's subsequent cosying up to him.

So, what is the sub-text to this? Is it to see that the provisional government at Benghazi takes over the mantle of government in Libya, and if so to what place will that lead and by what means have Britain and France acquired the right to decide that (it certainly falls outside the UN mandate)? What if the provisional government does not succeed militarily and the UN mandate to protect civilians just leads to a stalemate and a long drawn out civil war? Are there to be elections, and if so what will secure them and what will follow them? At what point will David Cameron think that the objectives have been achieved, and what will he do if it appears that an Islamist government may succeed Gadaffi: does he think that in that eventuality he has the right to intervene further to prevent that and, if so, does he think he will succeed, and what happens if the UN just cuts him off at the knees at that point?

And what happens if the UK's current floating military capability of one and a half aircraft carriers, two months' supply of paper darts and a few assorted support warships isn't enough to deal with the problem?

If one is optimistic, maybe the provisional government in Benghazi might quickly succeed in conquering Gadaffi's forces and Libya might end with a national government that is uncorrupt, respects the human rights of its citizens and makes some moves to democracy. A successful operation by Britain and France together may lead to the emergence of workable foreign policy structures within the European Union and the emergence of a military establishment to serve it. Any of those optimistic hopes for the Libyan situation could fail to eventuate, which could in turn derail such optimistic hopes for the European Union.

Census forms

Like many others I have just received my census form to complete, or rather to keep until I know my circumstances on 27 March. It is a while since I last filled in one of these, and maybe my memory of the last occasion is clouded, but it seems quite intrusive.

What to make of the ethnicity questions? If you think of yourself as "White" you have four options (if you are in England at any rate, I have no idea what happens in other parts of the UK). These are (1) "English/Welsh/Scottish/Northern Irish/British", (2) "Irish", (3) "Gypsy or Irish Traveller" and (4) "Any other ...".

Leaving aside the point that as I last understood it England, Wales and Scotland are all in Great Britain (Northern Ireland technically is not) so the juxtaposition between the two seems somewhat odd, what are these descriptions supposed to mean in terms of ethnicity? These are after all ethnicity-specific questions, as there is a separate question about how you would describe your "national identity" which includes similar choices.

The easy option, the first one, seems a bit of a cop out and lacking in romance. Family folklore has it that as well as coming from the then indigenous population in Sussex, we have Huguenot input (from which the family name derived) and also some North African (Berber) pirates who happened to land and settle in the south-west of the country after one raid too many. It is said that everyone has an Irish great grandmother and that is probably also the case of me, and it is certainly true of my children via my wife.

Like 90% of the rest of the population, to fulfil my duty to truth and completeness to Her Majesty's Government I will probably have to put an entry under "Any other" as "Mongrel". Faced with these intrusive questions, I encourage others to do the same.

Come to think of it, a new "English Mongrel Party" sounds quite attractive, as a kind of ethnically inclusive party that most other UK parties seem to lack, with their post-imperial echoes. We could have St George as our patron saint, one of legends surrounding which is that he came from North Africa and therefore might be a distant relative, although if he existed at all I accept that it is more likely that he came from Palestine but, hey, there is probably some of that in me and most others as well. St George is suitably ambiguous on ethnicity.

At any rate, Archbishop Sentamu has been banging on about it again and he has always seemed quite a cool dude to me, and refreshingly unpredictable.

Law making for Wales

So people in Wales have voted for the Welsh Assembly to have law making powers under Part 4 of the Government of Wales Act 2006 similar to those of the Scottish Parliament, and the UK follows its rudderless voyage to ever greater fragmentation.

With Wales, Scotland and Northern Ireland now with their own parliaments, it probably makes it impossible for there to be another Welsh or Scottish Prime Minister until the position of England is dealt with (there has never been a Prime Minister from Northern Ireland): although how much of that is the lingering memories of Gordon Brown, which will fade over time, or a permanent feature, could possibly be argued about (I suspect it is a permanent feature). It also makes it inevitable that the UK Parliament will become ever more England-centric, given that that is now the geographical unit with which the large majority of its business will be concerned, and their is little point in some of the politicians in the devolved nations making the snide remarks about that which have been emanating from those such as Carwyn Jones, who is unfortunately not a Welsh leader in the same league as Rhodri Morgan. The people in each of those devolved nations have after all voted for the arrangements now in place.

It also throws into focus the self-serving arguments of the Labour Party last month, that people in Wales should have greater representation in the UK Parliament per head than people in England, notwithstanding that around 80% of the legislation in Parliament will in the future relate to England only.

As a unionist I have to say I fear for the future of the United Kingdom. We have a ramshackle constitution, one of the main foundations of which now appears to be the maintenance of structures which will enable those in the current main UK parties to hang on to power in England, even if they have now lost power on domestic matters elsewhere. There seems to be no blueprint for the future, no plan as to where this is all leading us. Devolution may be a process and not an event, but there needs to be some common understanding amongst those in the UK about where it is taking us.

A propos of which, where is Nick Clegg's commission on the West Lothian Question, which was originally intended to be established last autumn? Well, at least the commission, if it is set up, will now have a position with respect to Wales to work on.

Localism

The government's Localism Bill was introduced earlier this week and is to receive its Second Reading in the House of Commons shortly after the Christmas recess on 17 January. It is a big Bill and this article is not going to deal with all of it (in particular it is not going to deal with most planning issues). Instead it just gives an impression or overview.

Although showing signs of having been put together at speed (the explanatory notes only became available yesterday) Eric Pickles clearly has retained clout within the cabinet, as he has resisted the pressure that would have arisen within his department for them to be watered down. Some of the provisions are pleasingly radical, and others less so. This is the kind of Bill that can only be introduced comfortably in the first year or two of office.

Powers of local authorities

In my article on the Royal Prerogative I explored the difference between the powers of a natural person on the one hand, which includes the Crown, which in summary allow an ordinary person or the government to do anything not explicitly or impliedly prohibited by the common law or statutory provision, and the powers of a creature of statute such as local authorities on the other hand, which are limited to doing the things which statutory provision has authorised them to do (whether explicitly or implicitly).

Under the Bill, local authorities will be given power "to do anything that individuals generally may do": they would therefore acquire at law similar powers to those of the Crown.

This is subject to certain caveats, including one relating to "overlapping" powers. If the local authority has power to do something apart from these new powers, the exercise of which is subject to conditions, then the new power cannot be exercised except in accordance with those conditions. In that respect, it is a re-enactment of the rule applying to the exercise of the natural powers of the Crown set out in Attorney General v De Keyser's Royal Hotel [1920] AC 508 and explored in Shrewsbury and Atcham Borough Council and Others) v Secretary of State for Communities and Local Government [2008] EWCA Civ 148.

This is a very substantial new power for local authorities. It makes them first-rank public authorities on a par constitutionally with government departments.

However, just as the broad powers of the Crown are in practice limited by the requirement that government departments may only spend what is appropriated to them from the consolidated fund by an Appropriation Act or some other consolidated fund Act, so local authorities can only spend what they are given or can raise, and this brings us to referenda.

Referenda

Local authorities, and their cousins the police and fire authorities, will still be subject to government control of expenditure, but in a marginally more hands-off way than in the past. Governments may still set council tax ceilings, but these can be exceeded by the local authority on a referendum of all registered voters in the authority's area.

The key issue here is the extent to which the government will set unnaturally low ceilings with a view to driving down local authority spending through local voter reluctance. The fact that, under the Bill, expenditure which exceeds the ceiling is described as "excessive" expenditure rather than a more neutral expression such as "locally determined" expenditure (or even "supplementary" expenditure) perhaps gives the game away here: that the driver is expenditure reduction rather than an interesting experiment in practical local democracy.

Referenda also feature in another proposal. Any local elector can petition the local authority for a local referendum to be held on anything relevant to its functions, provided that it is signed by 5% of the local electorate (or a higher precentage stipulated by the Secretary of State) or submitted by a councillor. If the local authority then decides that the referendum should be held, it must take place between two and twelve months after the receipt of the petition. The local authority does not have to implement the result of the referendum (it is not binding), but it must consider it and give its reasons for the decision it makes in response to the referendum.

There is a further referendum-based idea, under which development to be carried out for, say, rural housing and community facilities can be carried out, without planning permission from the local authority, if it is mandated by a vote of more than 50% of the local residents on a referendum.

Abolition of the Infrastructure Planning Commission

I was never a great fan of the Infrastructure Planning Commission. From time to time the issue is raised by those lawyers who are not strong on the need for democratic accountability in decision making within a law-based society, whether the pre-IPC regime was consistent with article 6 of the European Convention on Human Rights. Article 6 provides that "In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law."

When the ECHR was drawn up, the original drafters would I suspect have been surprised at the idea that this applied to planning decisions, but the jurisprudence of the European Court has held that the right to develop land as an attribute of the ownership of that land falls within the category of a civil right. Lawyers being lawyers, English jurisprudence has also managed to persuade itself that because Secretaries of State set national planning policy, they cannot of themselves be an "independent and impartial tribunal" in determining how their policy applies to particular cases. (That is in my view a serious logical error, but that issue is now beyond recall.)

The early Labour government was rather more sound about this than its successors, and they stood their ground in a series of cases comprised in R v Secretary of State for the Environment, Transport and the Regions ex p Holding & Barnes plc [2001] UKHL 23 and the other conjoined appeals known collectively as "the Alconbury appeals". Their Lordships came to the rescue against the legal technocrats, drawing on other jurisprudence of the European Court to the effect that in determining whether the requirements of article 6 of the Convention are met it is necessary to look at the whole of the process, and that it is not necessary that a court or some other independent body should be available to consider the matter afresh by way of a rehearing on an appeal on the merits. It was held that the then current principles of judicial review, coupled with the rules of natural justice as applying to the fact-finding processes of public inquiry, were sufficient to meet the requirements of the Convention.

Some of the gut thinking behind this view is illustrated in the words of Lord Nolan who said -

"In the relatively small and populous island which we occupy, the decisions made by the Secretary of State will often have acute social, economic and environmental implications. A degree of central control is essential to the orderly use and development of town and country planning ... to substitute for the Secretary of State an independent and impartial body with no central electoral accountability would not only be a recipe for chaos: it would be profoundly undemocratic".

Similarly, Lord Clyde said –

"One possible solution which is proposed is that in the cases where at present the Secretary of State is himself the decision maker, the cases for the most part which are likely to give rise to issues of widespread or even national concern, which may well have a wide impact on the lives of many and involve major issues of policy, the decision should be removed from the Minister, who is answerable to Parliament, to an independent body, answerable to no-one. That would be a somewhat startling proposition and it would be surprising if the convention which is rooted in the ideas of democracy and the rule of law should lead to such a result".

I was therefore somewhat surprised and disappointed when the later Gordon Brown administration set up just such a body to determine major infrastructure projects in England.

I am glad to say that the Tory government is of the Nolan/Clyde persuasion. Where you have a decision for, say, the major redevelopment of a town centre which will impact the lives of its inhabitants for the next 30 or 40 years, or a major new high speed railway line likely to be used for many years ahead, in my view it is quite wrong that such decisions should be taken under some dry forensic process by a body of people not answerable to the voter, or to anyone else for that matter. So full marks to Pickles on this one.

Other matters

There are numerous other provisions in the Bill, including some dealing with the right of local groups to take over defunct community assets, the security of tenure of public sector tenants, the abolition of regional housing targets and the abolition of home information packs (HIPs) on house sales. One remaining initiative which may have a beneficial impact is the proposal for the introduction of executive mayors, on the Mayor of London model (albeit with less powers), for the cities of Birmingham, Bradford, Bristol, Coventry, Leeds, Leicester, Liverpool, Manchester, Newcastle upon Tyne, Nottingham, Sheffield and Wakefield. There would be referenda on this in each of the cities concerned in 2012.

I hope these executive mayor referenda succeed. Such a collection of "English Barons" may have a moderating effect on subsequent attempts to claw back some of this local divesting of power.

As to what I would like to see in the future? As mentioned above, I would like to see local council tax accountability used not just as a means of driving down expenditure, with pejorative references to excessive expenditure measured against government targets, but have this transmuted into a form of local tax devolution. I would also like to see the powers of the new directly-elected mayors extended so as to be comparable to, and indeed go beyond, those currently held by the Mayor of London. However, that may be for the reforming zeal of a different government before the deadening hand of a number of years in office has taken its hold. The problem with this hopeful thinking is that such devolution in England is likely to be beyond the stomach of any incoming Labour government, so I am likely to be disappointed.

The separate government proposals for elected Police Commissioners (not in the Bill) contains within it a similar idea: bringing local accountability to decision making affecting areas of life in a community not at present adequately subject to such accountability. (The proposition put forward by some present and former chief constables, that the way law breaking is dealt with in a local community is a special operational matter that only a trained chief constable acting in accordance with his professional training can decide, is in my view wrong.)

Student debt

It is sad when the only way it is possible to get politicians to respond to the concerns of ordinary people is to have a good rampage; but sadly, that is how disconnected we and they are. Our Labour politicians would no doubt have done roughly the same if they had managed to keep in power: they set up the Browne committee review in the first place, and a graduate tax is the same beast wearing different clothing.

Two points. First, after extensive research in pubs of my acquaintance I have yet to find anyone who thinks it is a good idea to saddle graduating students with between £30,000 and £50,000 of debt, before they have even got their foot on the first rung of the ladder. Camilla may not like paint being thrown at her car; but most families don't like their young adults being treated this way either. And this is before they have to battle with trying to buy their first house when they do find a job.

Secondly, compare the wall-to-wall coverage on BBC news of the demonstrations with the amount of coverage given to the issues at stake.

Anyway, here is some music for the moment .

The West Lothian question rumbles on

I watched Question Time last night. It was the usual mix of politicians following their party lines (including Nadine Dorries tying herself up in knots) and John Sargeant arguing an implausible apologia for the BBC, to the effect that it would have been improper to delay the showing of the Panorama programme about FIFA until after the decision on the venue for the 2018 World Cup. Possibly one or two people might believe that.

The thing which drew my attention was the extent to which people are obviously getting concerned about increased higher education fees for students coming from England. John Sargeant was good on this (he said what he thought when not having to stand up for his former employer), pointing out that having a well educated citizenry is the key to future success, and that this country has managed to afford to educate its young people in the past when it was poorer and there seems no reason why it should not do so in the future. It is just a matter of priorities.

What interested me is the wedge this seems to be beginning to drive between people in England and Scotland. Outwardly it is unconscionable that students in England should pay large sums of money for their higher education when those in Scotland will not. A Scot and a person from England with similar qualifications may sit in adjacent desks at the same place of work in future, doing the same work at the same rates of pay, with one having to pay deductions against her income once she finds employment for as much as 20 years into the future, and one not. The Liberal Democrat proposals for a graduate tax do not seem any improvement on that: it is the same inequality in a different form, and indeed would be a form of double or super-regressive taxation - if it is true that graduates in general earn more, they pay more anyway through the existing income tax system

However this difference between England and Scotland, and now Wales also, is what devolved decision making is about. The overarching point on this is that every pound the Scottish government pays for higher education is a pound less that it can spend on something else within its devolved competence. There seems no reason, applying devolution logic, why this should cause friction within the UK, but the practical workings of devolution in this case, no doubt aided by the rantings of the Daily Mail, is doing so because the differential policy-making on higher education is, at the end of it all, simply unfair. And unfairness breeds resentment. The SNP must be loving it.

During the Question Time programme, Ken Livingston brought up the West Lothian question on this. Like it or not, it is a fact that student fees in England were only introduced in 2004 on the votes of Labour MPs for Scottish constituencies (and even worse, on a vote taken after the Scottish Labour party had decided against higher education fees for students in Scotland). Tom Harris MP, member for Glasgow South, has apparently taken exception to this, describing it as "anti-Scottish". Perhaps he has a guilty conscience as one of those responsible in 2004, but if not he should have. He has gone on to say that the West Lothian question has no answer and the Labour party should not get involved in considering it.

If it is really the case that there is no answer to the West Lothian question, then the Labour party in general and Tom Harris in particular should never have proceeded with devolution in the first place. If that is really the case, it is only a matter of time before the the current constitutional arrangements collapse. Let us image that Labour had managed to stitch together a deal with the Liberal Democrats, SNP and Plaid Cymru to form a government after the last election: it would have been wholly reliant on its Scottish and Welsh members to enact its legislation affecting England only on matters devolved elsewhere, such as education. The current angst over fees for English students would surely be dangerously magnified if the current proposed disparities for students from England were to have been imposed by MPs for Scottish and Welsh constituencies not subject to the additional fees. Arguments that there are knock-on effects on Scotland and Wales via the Barnett formula, while that formula lasts (it is due for replacement), would have cut little ice.

There are answers to the West Lothian Question, some of which I explore here, here, here and here . The Tory pledge to deal with it was, as part of the Coalition agreement, shunted to a Commission to be set up by the Deputy Prime Minister, Nick Clegg. He was supposed to have set one up during the Autumn, but will now apparently publish proposals for one "by Christmas". It would be foolish for the Labour party to follow Tom Harris's advice and fail to engage, if and when Nick Clegg can manage to muster the energy to proceed with it. They created the current devolution arrangements, and they must help to resolve the problems it has created.

Internet censorship

The Serious Organised Crime Agency have put forward a proposal to Nominet, the quasi-private body which administers internet domains with the .uk suffix, for an issue group to be established to consider enabling SOCA to cause nominet and its UK ISP members to take down any internet domain on request of "an identified UK Law Enforcement Agency", that is, the police. The proposal can be found here. The proposal would set out the grounds for UK internet service providers to do this without breaching their contracts with their customers, or as the SOCA draftsperson puts it:

"Nominet does not currently have any clear obligation in its registrant Terms and Conditions that a domain name should not be used in connection with any activity that would constitute an offence under UK Criminal law. The group will discuss whether proposals should be put forward to change Nominet’s Terms and Conditions to give a contractual basis to suspend domains where Nominet has reasonable grounds to believe they are being used to commit a crime (e.g. a request from an identified UK Law Enforcement Agency)."

This is a classic misdirection attack. It is hard to argue with the initial proposition that criminally operated internet domains should be taken down where there are "reasonable grounds to believe they are being used to commit a crime", at least where the crimes are serious ones, although the really obnoxious and nasty ones set up masquerading as, say, bank sites which proceed to extract login details for online bank accounts and then loot them, will not operate from a domain formally allocated to the criminals anyway.

But this outwardly reasonable introductory proposition is then followed by the remarkable suggestion that any request from the police for a take-down would, ipso facto, comprise such reasonable grounds: so, no need for any inconvenient independent supervision or validation of such requests by, say, an independent tribunal or court warrant. It could be used to circumvent, for example, what limited protections there are in the previous government's yet-to-be-implemented "three strikes and you are out" copyright infringement proposals for those running a personalised internet domain, since such copyright infringements will often also comprise offences. A letter or telephone call from the police would be enough to get the domain removed from the internet, unless the ISP concerned decides to stand up to the police.

It is highly unlikely that this suggestion will be accepted in the terms in which it is put. It would put UK internet domain purchasers on a similar footing with respect to the police and internet censorship as those in the People's Republic of China. What is surprising is that SOCA thought it appropriate to make this suggestion, and it shows what myopic vision organisations such as this possess.

This illustrates the aphorism that if a state allows the police to dictate public policy, it will end up as a police state.

The link above tells you how to make your views know to Nominet, should you wish to do so.

Don't blink

This article strays a little off the normal topic of this blog, but the current turmoils of the Eurozone require some comment.

These are worrying times both for those at the younger end looking for employment, and those at the older end who are not employed in the public sector and who hope to retire on pension policy savings which actually still have some value when they come to retire. From that point of view the question for those in the UK is whether there will be another global meltdown similar to the one of two years' ago, or whether it will be confined to the weaker Eurozone members. Who knows?

However, the current issue concerning Ireland is interesting as well as (in that wider context) alarming. I am reminded of the adage that if you owe your bank manager £100 you call him Sir, but when you owe him £1m, he calls you Sir. So it is with the Ireland: from the negotiating point of view the Irish government is in a strong position, possibly made even stronger by the doubt about whether it can actually pass its austerity budget at the beginning of next month. It seems difficult to believe even Eurozone ministers think the proposed bail-out package for Ireland will deal with the current situation faced by Ireland, notwithstanding what those ministers say, and certainly the markets don't believe it. The problem with Ireland is not an inadequately performing economy, but the fact that the Irish government has guaranteed the debts of the Irish banks which are in turn so large that the Irish economy cannot finance them. The flagrantly imprudent behaviour of the two Irish banks concerned, left uncontrolled by the Irish government, has brought the Irish economy to its knees.

Any further loans are just not repayable. Ireland either needs real rather than pretend capital to refinance its banks, that is gifts and/or equity stakes not loans (no private investor is going to put equity in), or for creditors to take a discount or 'haircut' on the banks' repayment obligations, by perhaps as much as 50%.

I would be surprised if the Irish government doesn't manage to achieve this in due course: that depends on whether other Eurozone ministers place a higher price on keeping the Eurozone in its present form intact, or on saving their own taxpayers' money, and in particular at what point German ministers lose their nerve when faced with a forthcoming election and electors unhappy with financing the deficits of Ireland, Portugal and Spain. We will probably have a combination in a year or two of both these new loans being written off or turned into notional equity, and compulsory creditor discounts.

Predictably, the Scottish bank RBS features prominently amongst those creditors who have made some of the past loans which are now likely to have to be discounted, as also does to a lesser degree Lloyds-HBOS. This is one of the reasons why the UK government is keen to help.

We also need the European Central Bank to stop accepting Eurozone sovereign debt at face value and start including a risk element in any further loans, so as to re-establish discipline and begin transferring sovereign debt funding (and the providing of equity to the banks concerned) back to the markets. I simply don't believe those who say the Eurozone is unsustainable. It is only unsustainable in the form in which it has so far been allowed to operate: and I fully expect that the UK in future decades will, or at least should, find its home in a reformed Eurozone.

The Irish government already knows how to play this: don't blink first.

The Woolas election judgement

On Friday, an Election Court composed of two judges of the High Court found Mr Woolas guilty of illegal election practice during the May general election, contrary to section 106 of the Representation of the People Act 1983. The automatic consequence of this, under section 159(1) of that Act, is that Mr Woolas's election is void and a by-election will have to be held to fill the vacancy. In addition, under section 173 of that Act as amended by section 136 of the Political Parties, Elections and Referendums Act 2000, Mr Woolas will not be able to stand again for 3 years.

Much has been said, some of it it must be said of a self-serving nature by politicians, that this judgement will stifle honest political debate at election time. That is unlikely. Very few matters are covered by section 106 of the 1983 Act, and none of them are concerned with things that could reasonably be described as political.

The relevant parts of section 106 provide as follows:

"(1) A person who ... —

(a) before or during an election,

(b) for the purpose of affecting the return of any candidate at the election,

makes or publishes any false statement of fact in relation to the candidate’s personal character or conduct shall be guilty of an illegal practice, unless he can show that he had reasonable grounds for believing, and did believe, that statement to be true."

The important point here is that not only must the candidate concerned have attacked a rival's personal character or conduct in order to affect the outcome of the election, but he or she must also either have not believed or had no reasonable grounds to believe the subject matter of the attack. In short, it is concerned with smearing opponents by telling lies which go to matters of fact and conduct rather than to politics and political views. The reasonable assumption behind section 106 is that we would not want to be represented by people who think that that kind of behaviour is acceptable.

The things done by or on behalf of Mr Woolas which the election court considered fitted this description were the distribution of an election leaflet called The Examiner, in which the court held Mr Woolas "made a statement of fact, the meaning of which was that the petitioner attempted to woo, that is to seek, the electoral support of Muslims who advocated violence, in particular violence to [Mr Woolas]", and the distribution of another leaflet called the Labour Rose, in which the court held that "he made a statement of fact the meaning of which was that the petitioner had refused to condemn extremists who advocated violence against [Mr Woolas]".

The election court considered that alleging that a rival candidate sought support from those who advocate violence against another candidate and refused to condemn such violence comprised an allegation concerning personal conduct and character, and that Mr Woolas neither believed these allegations nor had any reasonable grounds for believing them.

The election court also found that a third illegal statement had been made by Mr Woolas against his opponent, namely that in "an earlier election address the respondent had made a statement in fact, namely, that the petitioner had reneged on his promise to live in the constituency. ... It suggests that [the opponent] is untrustworthy. The statement was false and [Mr Woolas] had no reasonable ground for believing it to be true and did not believe it to be true."

The last matter (Mr Woolas's allegation that his opponent had reneged on a promise to live in the constituency) does not seem the most egregious of acts, even if it were to be a lie told in the heat of battle, and the first two falsehoods referred to by the election court were perhaps on the borderline of the distinction between illegal character assassination and robust political argument. Mr Woolas yesterday applied to the High Court for permission to proceed by judicial review against the election court's decision but this was rejected by the judge considering the application on the ground that the election court, constituted as it is by judges of the High Court on the election panel, was not subject to judicial review. It appears the matter will now be headed for the Court of Appeal.

However, the quashing of the election court's decision will be difficult to achieve. The findings of fact by the election court are ordinarily conclusive (section 144(1) of the 1983 Act), and the extent to which the Court of Appeal would be willing to consider this is unclear. Applying the principles of Anisminic v Foreign Compensation Commission [1969] 2 AC 147, Mr Woolas would probably have to persuade the Court of Appeal that either the election court erred on a substantial question of fact (about which it should be noted that the election court had access to the local labour party's e-mail records, so that is going to be a considerable ask) or on a substantial question of law, or that it reached a view on the facts concerning the illegal nature of the matters done by or on behalf of Mr Woolas that no reasonable election court could reach. This is going to be hard to do.