On Chancellors, and PMs

We were talking over lunch the other day about the decline and fall of George/Gideon Osborne, his dimming prospects of getting to Number Ten, and wondering how far back you had to go to find a Chancellor who subsequently made a successful Prime Minister. A long way, I reckon.

Almost by definition, unsuccessful Chancellors do not get promoted to the top job. While some of the best Chancellors since the war, say Rab Butler, Nigel Lawson, Ken Clarke, Roy Jenkins, never got to move next door or may never have wanted to do so

 Of those that did, James Callahan presided over the Winter of Discontent, national humiliation at the IMF and “crisis, what crisis?” (Which I know he never said, but he might as well have done.)

John Major had Black Wednesday, the cones hotline, Back to Basics and a truly calamitous election defeat. Then there was Gordon Brown…

The two most successful relatively recent Prime Ministers, Margaret Thatcher and Tony Blair, were never Chancellor. You have to go back to Harold Macmillan to find one who successfully made the transition.

Perhaps we did well to avoid PM Osborne.

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On The Minimum Wage

A while back one of our offspring found themselves in a part-time holiday job in the services industry. It swiftly became obvious that the employer was not only not paying the legal minimum wage, he was not even paying the amount his employees had been promised.

Said employer operated a business in one of the most affluent areas in the country, and was charging customers accordingly. Our offspring did not need the money to stay afloat; some colleagues, though, were supporting families on that sub-standard wage.

Let’s just say the authorities became involved, and a degree of back pay was handed over.

There is a wonderful row raging back and forth this week, with some bosses of big quoted companies saying the requirement to pay, to over 25s only, a living wage will impact on their profits and require them to put up prices. This view is also held by the employers’ organisations. Oddly enough.

Some also claim it will put upwards pressure on wages generally, because employees slightly up the food chain will not want to be paid the same as those at the bottom.

Business supporters of the Government are in a bit of a quandary, though, because the measure was brought in by Prime Minister In Waiting George Osborne. Therefore other employers say, grudgingly, that it will put pressure on profits but it can be absorbed.

My take: if your business model requires you to pay poverty level wages, possibly topped up by tax credits, your business model is unviable. Threatening to put up prices is the equivalent of putting a gun to the customer’s head and saying, give us the money or he or she gets it.

Osborne’s move shows why he will be in charge by the 2020 election. One, it scuppers Labour’s claim to be the only party of the poorly paid.

Two, it chimes with people’s feelings that, as they get more prosperous, that prosperity should be spread around. And their guilt that the person serving them with expensive drinks, coffee, meals, consumer goods, whatever, that they can increasingly afford is being exploited. Or on a zero hours contract.

Bear in mind that many of us are launching our offspring onto the jobs market, whether part time or at the start of their career, and are equally concerned that they are being exploited. See our experience, above.

Four, it sends a dog whistle message. Don’t think unscrupulous employers can import appallingly paid migrants, exploit them and do you out of a job. We won’t let them.

Pure genius.

Lies, EU Lies, And Double Counting

It is not often I find myself agreeing with Ken Clarke. I sat next to him at dinner once and, without breaking any confidences, he did not strike me as someone tortured with self-doubt, shall we say.

But he has been on the radio about this absurd political row over Britain’s £1.7 billion “bill” to the EU. Examine the precise sequence of events, and this is nothing but a cynical ploy by Cameron to appear tough on Brussels, and take some much-needed votes from UKIP. The “bill” was leaked to the FT by someone presumably close to the UK in a carefully timed move. You don’t have to be a conspiracy theorist to understand why.

Cue Cameron: “Can’t pay. Won’t pay.” Cue the EU, slightly puzzled: “It’s the rules and you signed up to them. What is your problem?” Cue Osborne, this week: “I’ve halved it. It’s a victory for the UK.” No you haven’t, you’ll pay it in two tranches. Not the same thing.

Let’s examine the facts. Britain’s annual contribution to the EU, from the most neutral source I can find, is about £12 billion a year. This is a net figure, taking into account what we pay and what comes back.

£1.7 billion might seem like a large increase on this. But it is an adjustment to earlier payments, taking account of the different performances of the relevant economies, and it dates back to 2002. This means the payment is actually less than £170 million a year. This may sound a lot, but in the context of that £12 billion, it is a minor rounding error, as accountants put it.

Plus, these are the rules. The EU, and God knows it hurts to defend it even more than it does to agree with Ken Clarke, is a common market, first and foremost. The individual contributions to running it are judged according to the size of the individual economies, and plainly, if one grows more than another, its contribution increases. I am simplifying here, but not by much.

As Clarke points out, if the numbers had stacked up to give the UK a £1.7 billion payment back into our coffers, do you think we would have been complaining? And for this to have happened, our economy would have had to perform much worse than it has over that period.

A cynically manufactured row, then. Mind you, if the actions of Farage, that Dulwich-educated former City bonds trader who markets himself as a man of the people, and his delightful crew threaten to hand Ed Miliband the keys to Number Ten, any number of cynical, underhand ploys might seem justified.

Bloody politicians.