The Promise of Avalon

Promise of Avalon has moved

2009-04-27T11:41:00.002+01:00

Please note that this blog has now moved to here. If you have subscribed in any way to this blog, I am afraid that my computer knowledge does not extend to transferring your subscription. Please resubscribe through the new link if you would like.

The Civil Servants are the Professionals, not the Politicians

2009-03-30T15:40:00.004+01:00

Iain Dale gives a good explanation here as to why the expenses issue needs to be addressed now. But, who could possibly think otherwise? He is surely right that 'the overwhelming majority of MPs put the hours in and when Parliament isn't sitting, they are to be found doing constituency work," but, this is not really the main point.

The reason why greater swathes of the public appear to be less willing to give them any respect is because they increasingly see themselves as belonging to a 'profession', a tag which Iain also gives them. Technically this might be so, but conceptually politics in a democratic state is not a profession. This implies exclusivity and a requirement for expertise. Of course they need to be capable people, but what they really need is judgement and integrity, characteristics possessed by many ordinary people.

MPs are there to represent us, the people, who afford them the privilege of legislating and governing on our behalf. The professionals are the Civil Servants. They are the ones who implement policy, they are the ones expected to provide the professional expertise required in government. This separation of functions was once sacrosanct, but it has been grievously weakened by the professional pretensions of our MPs who are too busy seeking validation of their worth to govern properly.

It is this conceited, vain and misguided attitude that needs addressing. Do this and the other bits will follow.

The Real Culprits

2009-03-30T14:20:00.003+01:00

Politicians will always tend to do two things when faced with things going wrong: Firstly, they will plead innocence and pretend that there was nothing they could have done about it. And secondly, they will do all they can to create a narrative that pins the blame on others, preferably their own traditional enemies. This is why Gordon Brown is pathologically incapable of admitting any error. It is also why he continues to pretend that the Americans caused the problem, in cahoots with rabid free marketeers in this country, allied to the bankers.

It is, therefore, refreshing to read this briefing paper from the Adam Smith Institute, that attempts to look at the problem afresh. The real culprits are, it argues: 1. loose monetary policy; 2. hubristic social engineering in housing policy; 3. the failure of the Basel protocols on core capital; 4. banks that were 'too big to fail; and 5. the effects of oligopoly on auditors and ratings agencies.

PM lashed by Daniel Hannan MEP

2009-03-25T13:58:00.004Z

I've been away for a while, but this blast from Daniel Hannan MEP has cheered me up no end. If only the rest of his Party were so forthright, I could be entirely happy in supporting them. But as they are not, I am not. Thanks to Iain Dale for bringing this to our attention.

Final salary pensions on the way out?

2008-11-27T12:39:00.001Z

Although much has been going on recently, there has been little I wanted to comment on; until now. Whilst not a particularly interesting subject, it is one of great significance: pensions.

The Financial Times reports today that an incoming Conservative Government will phase out public sector final salary pension schemes. This is great news. Whilst the private sector have been ditching them as fast as Gordon Brown ditched his Golden Rules, the public sector has been sailing on as if nothing is wrong.

In short, the final salary schemes are an unsustainable burden on the British economy and hold future generations hostage to the greed of the present. The Treasury estimates the liability to the tax payer to be at £650bn. It cannot be right for our children and grandchildren to be forced to meet this liability in the future. A system more emblematic of modern profligacy, greed and conceit is hard to find.

money supply, balanced budgets, reduced debt and living within our means

2008-11-16T12:28:00.002Z

Suli Shah, on CentreRight, has an interesting plea to save the economy by bold action. As I mentioned in the comments, it has the right tone but I am not so sure about the policy suggestions. I think it fails to recognise that, as Charles Moore says, "everything is different now," and that we need to change the system rather than save it as it is. Here is why:

1. He wants to reduce "the base rate to zero." - This is an option, but it does not address the underlying problem of bad debt that remains in the system. Interest rates at zero might encourage more lending, but inevitably it will perpetuate the lending of money to people and companies that should not be borrowing - this is the problem not the solution; we need to purge the system of bad loans and that takes pain. I would even advocate a self regulating interest rate tempered only by a stable money supply; how do you know that zero is the right cost to put on money? You do not and neither does anyone else. A zero interest rate will also encourage more borrowing from idiot consumers who will merely get themselves into more debt storing up greater problems in the future. We need level heads and stout hearts, not knee-jerk panic and perpetuation of the underlying weaknesses of our system. It will hurt, but if you stick your hands in the fire, expect to get burnt.

2. He also wants to send every tax payer a tax refund cheque and to double the tax free allowance? - Fine, but who pays for it? If he wants to do this by funding it through compensating reductions in other government spending then great; we should be doing that anyway. But if it is funded through more borrowing then we merely perpetuate the problem of reckless levels of debt. Debt, used in the right way for capital investment is useful but the way we use it today to hide balance of payments deficits and let people have things they cannot afford is obscene.

3. He also argues that "Labour did not cause the largest global economic crisis in living memory." - Yes they did, but in concert with other governments (who took a lead from the UK and US) running loose monetary policies and ignoring errors in the banking system. This vicious cocktail of expanding money supply and rogue banking practices was catastrophic. The inflationary bubble it caused, most keenly observed in the property markets, burst all over us and it was Labour that was on the end of the pump. If the public doesn't understand this then they need telling again and again and again until they do. Anything else is to capitulate to the bludgeoning Labour narrative that shifts the blame onto anyone and anything other than itself.

4. Finally he talks of telling "the hard truths," and how we are "going to limit the damage and eventually recover." - Quite right, but what does this mean? The hard truth is that we have been living beyond our means and a recession is inevitable, even necessary if we are to get it through our thick heads that if we want something we must pay for it from real wealth, not the fictitious wealth we call debt. And we can only limit the damage by not doing stupid things like vastly increasing government debt and reckless lending.

He is absolutely right in that "we are fighting for the very survival of our economy as we know it," but I do not want to preserve this deluded, fantasy economy. Indeed, the events of the last year are the reality telling us that it cannot be saved; as Charles Moore said: "everything is different now." We do need to take action, but not to save the economy as it is, rather to change it. All we need is a stable money supply, balanced budget, reduced debt and the humility to live within our means, and everything else will take care of itself.

God save the Queen and preserve Britain from stupid people.

Pupil premiums in education will perpetuate educational failures

2008-10-28T12:08:00.002Z

Policy Exchange is all the rage in Westminster at the moment, "for mainlining eye catching new policies to the Conservative shadow cabinet", apparently. One of their latest proposals is the pupil premium where schools are rewarded with extra funding if they take pupils from poor backgrounds. This fits the current social narrative where the imperative of every government - that wishes to bask in the approving sunshine of the leftist-establishment - is to cancel out the advantages of a prosperous, stable and responsible home-life in the pursuit of equality. And allocating a disproportionate amount of money to those perceived as disadvantaged is the way to do it, apparently.

Of course, there are many pupils that have a poorer - culturally as well as financially - upbringing and so are less likely to do well at school. Indeed, how is a child meant to do homework properly if their home is a war zone of bile, profanity and neglect. But, the logic that takes this to mean that more money will solve their problems misses the point; more money at school will not affect their home life. The problem is that leftists see every social ailment as one of money. Give anyone more money and everything will be OK. No room for ethos, culture or morality.

One of the reasons for this premium is apparently to give schools an incentive to attract children from poorer backgrounds and thus prevent middle class enclaves and lower class ghettoes from developing. This makes perfect sense if you view the world through a prism of leftist thinking, but what it actually does is distort the way schools and parents interact to provide education for children. Ultimately it prevents the party with the greatest vested interest in good schools - parents - from influencing the education system for the better, thus making it harder for all schools to improve.

As harsh as this may sound, the real effect of this policy is to reward failure and penalise success. If we take failure to mean poverty and social neglect, and success to mean prosperity and social responsibility, then we have the opposite system we should be seeking.

Critics will undoubtedly denounce this viewpoint as anathema to civilised society , but the reality is that this view, in a Darwinian sense, promotes and strengthens that civilised society. If schools are penalised for educating pupils from wealthy households, these households learn a salutary lesson in the futility of responsibility and success - or the more likely lesson is that if they want their children educated well, they need to go private. Conversely, the lesson poorer households learn is that it does not matter what they do because the state will always compensate them.

The pupil premium is a false prophet in the pursuit of educational improvement. In the long run it will make all schools worse. The solution is to allow schools and parents to determine where children are taught in a constructively competitive environment where funding is solely determined by the number of pupils they teach, irrespective of how poor their home life is. To perpetuate the politicisation of education by leftist social ideologues is simply to perpetuate the failings already present in the state education system.

Morale is not just about welfare

2008-10-27T13:36:00.002Z

It is often difficult to work out exactly what a politician means when his words are parcelled up and inserted, piecemeal, into newspaper articles to make a specific and discrete point. John Hutton, as the new Defence Secretary, will no doubt come under scrutiny in the following weeks and months, but one thing in his favour is his interest in Military History. Of course, this does not make him infallible, but at least it means he has thought about military activities more than most of his recent predecessors.

The issue of an EU Army is an old one and certainly needs a great deal of scrutiny, but his words about morale reveal an important distinction that needs to be made on the nature of morale. It is becoming more and more common to believe that satisfying material needs in the form of healthcare, compensation, pay, welfare and other similar things is the route to high morale. In a sense they are right, but only partially.

Military thinking understand morale as being the product of the moral and physical components of fighting power. Taking the latter component, the physical, it is recognised that decent equipment, good pay, first class healthcare and more contribute to high morale. But, when people contrast poor welfare with high morale, they become confused. Surely if welfare is not as well provided for as possible then morale should be commensurably poor?

Not so, morale is also dependent on the moral component which is the bit that gets the man to fight in contrast to merely giving him the means to fight. Through excellent leadership, motivation and management, soldiers believe they can be successful on the battlefield. In turn this induces high morale. So when we contrast high morale with poor physical provision, we should understand that the British soldier, although reliant on the physical component, derives his determination to fight not just from his equipment but from his courage and motivation.

Business failures are not always bad, except when its recession

2008-10-26T13:05:00.002Z

Over the last couple of years we have come to believe that normal laws of economics no longer apply. We began to believe that boom and bust really had ended, that growing public and private debt was not a problem, that monetary expansion merely offered benign growth, and that property prices - and stock markets for that matter - only went up. It became a sort of disease and the most serious case was none other than Gordon Brown, our Chancellor of the Exchequer and now Prime Minister.

But, we succumbed to his contagion willingly because, like the siren, he played the enchanting music we wanted to hear. And that he could play the all powerful human architect fitted our anthropic experience. This role is one he always wanted, craved. If he could provide endless prosperity and perhaps end poverty, then his slightly unhinged lifelong ambition to be Prime Minister would be amply justified.

Another reality of economic and business life we forgot was the understanding that business failure is an essential and cleansing action of the market. Not only that, but it can be a good in itself. Without the failure of some businesses, resources cannot be freed up to be allocated where they can be better employed. It is this constant reallocation of resources that enables progress.

This can, of course, go too far. When the economy goes into recession, more and more businesses go bust and because of the nature of recession, resources are not reallocated elsewhere. And this is a major problem of the credit crunch. As banks cease giving loans to businesses they believe are less viable than others, the money is not lent out to others. This is the imperative of recapitalisation. The banks have lost money on bad loans so it is not there for them to finance other businesses.

Business failure, up to a point, is an essential precursor to advancement. It is how the market works, but when other, usually government induced, errors are made, these failures come too thick and fast. Exacerbating this reduction of economic activity is the accompanying contraction of banking investment in new and expanding companies. Under such conditions, the economy ceases to regenerate itself, rather contracting to fit a more pessimistic age. This is where we are today. We cannot reverse this trend, all we can do is not make it worse than it need be.

Brown should be careful of blaming the US too much

2008-10-25T10:56:00.003+01:00

Further to my last post on the economic situation, it appears that Gordon Brown really does believe his own rhetoric. "This is a global financial recession", he says on the BBC, "and we are fighting it every way we know how", he continues. "We know this is global", he reasserts. Gordon, please. You are the Prime Minister of a supposedly advanced democratic country and you insist on treating us like idiots. Why?

His contempt for us on this issue is only surpassed by his contempt for members of the Armed Forces. Do they risk their lives so people like him can have a free hand in vandalising our country? Does he ever give them his "undivided attention", and does he know that the Army is not only breaking its harmony guidelines for tour intervals of no less than 24 months, but is also undermanned by over 3,000 soldiers?

Still, that is another story, so back to Brownian economics. In the interview, he later demonstrated a classic Brownian technique: the answering of a question with a work-shopped response to a completely different question: you were a bit off the mark in claiming to have ended boom and bust were you not, Mr Brown?. The naive might have thought a comment on the nature of boom and bust was the logical next step, but, if so, they had clearly not seen Brown in action before.

So, Brown's default response was no surprise: "It's a global financial recession." Wasn't this exactly what he said earlier? And, what exactly does this have to do with boom and bust in Britain? To give him the benefit of the doubt, I suppose he could have been saying that the bust was not his fault, rather the fault of global forces no-one can control, but most commentators know that busts and recession can be internally or externally induced. They are still a bust and they still result in unemployment.

As if to emphasise the point, he went on to say that "everybody knows it started out of America, we are having to deal with the fall out." Do they? We do know that the US sub-prime toxicity has seeped across its border, only a fool would argue otherwise, but does Brown really expect us to believe we had no hand in it, too? I suppose we never gave out 125% mortgages, loans to people that were a credit risk (self certification mortgages). I suppose we did not expand the money supply, induce a lower than optimum interest rate, or fail to supervise our banking system so they did not become exposed to the American toxicity.

However, I suppose he is right in one respect: it is global now. And, in this, Brown seeks refuge, cowering amongst the rubble of US mistakes, unable to take any responsibility for his part. But, if he goes on blaming the Americans in such a blatant way he should not be surprised if a reckoning comes his way once the next President is installed in office. Given a show down, I know who my money is on.

Labour continue to rewrite history

2008-10-24T13:12:00.002+01:00

They keep pushing the line. Ram it home and eventually people believe them from fatigue alone. That is the way Labour do their business and they are doing it with a ruthlessness we have now become accustomed to.

Purnell uses the language of the politician trying to rewrite the narrative to alter the interpretation we all make. He says that " there was no way Britain couldn't be effected by these (credit crunch and rising oil prices) very significant international developments." Of course, in a sense he is right, but he fails to recognise that it was Britain as well as the USA who did so much to create the credit crunch in the first place. That the credit crunch, so fuelled in the USA and Britain, then contaminated the rest of the world was inevitable but it does not mean the crunch originated in the international system.

The credit crunch was fuelled by a growth in the money supply, government encouragement of bank lending to poor credit risks, and inadequate supervision of the financial system. All these came from the UK government as much as foreign governments. Just take a look at Banco Santander for a way to escape the credit crunch. Because of simple rules being followed it is now in a position to buy up many sick banks across the world.

Purnell also reminds us that "the UK is well prepared to deal with what is a global phenomenon." Global? It is now, but we fuelled the crunch as much as anyone else.

Governments have always spun their line but it is now becoming really quite annoying. As they convince the public that our problems belong to a broken global system, they avoid taking responsibility for the impact their own policies and actions have had, not only on the UK but the rest of the world. Still, what do we expect from this shower?

Even Brown the Magnificent cannot sort this mess out

2008-10-24T10:41:00.002+01:00

It seems that the philosophy of John Maynard Keynes has made a triumphant comeback, sweeping monetarist and any other economic thinking into the rubbish heap of contemporary conceit. Brown and Darling, it seems, want to 'pump-prime' the economy by engaging in grand projects that will kick the UK juggernaut back onto its tracks and demonstrate how indispensible Brown and his brand of leftism really are to the progress of not only the UK but the entire world.

A new world view, shaped by the man who presided over this mess, is a sobering thought, indeed. We should remember that part of the problem is that Brown has already engaged in a grotesque form of 'pump-priming', but because it took place in an already expanding economy, it merely fanned the flames. During his tenure in the Treasury, this 'firestarter' presided over the gradual expansion of the money supply (over 10%), the pouring of billions of borrowed pounds into the state sector, and massive expansions of private credit. The results, as Milton Friedman so clearly explained, are clear to see. This, combined with a structural bias in favour of land speculation, created the whirlwind we now find ourselves at the mercy of - which many argue is inevitably going to befall us again in another 20 or so years unless we make substantial changes.

But, for Government to always and forever inject economic activity via centrally planned projects is not the only option. The problems businesses now face are these: lack of money (cashflow and capital investment finance) and lack of demand because the public are now skint and unable to finance their credit profligacy; both resulting in bust businesses and unemployment. Therefore, the solution is to target these two things. Government projects create a demand but it is focussed too much on supply induced demand; the government will provide and we will consume like the grateful little minions we are.

The government has done much to preserve access to money, and we should be thankful that the banking system has been saved from complete collapse, but they have still not addressed the fundamental problem the banks have. This is the sea of overpriced assets (mostly housing) that have now lost value, leaving the liability the banks face far in excess of the current value of these assets. Is it any wonder they are reluctant to lend to each other in such a climate.

Demand, however, is far better induced by giving money back to people and businesses in the form of tax reductions - even if they are only temporary. Reduce employer NI contributions, we save jobs; reduce VAT, we save jobs and put more money in the hands of consumers; reduce income tax and we put money in the hands of consumers. There is, of course, the danger that consumers will merely save this extra money and so fail to induce economic activity by consumption, but we should remember what people do with money they do not spend: they save it, usually in banks. If they do this, they improve the capital base of the banks, who then have more money to lend out to struggling businesses.

We may be heading for a Keynes induced spending spree, and the jury is still out on whether we want to be piling on even more debt, but if we must then there are other ways to allocate that money than through government directed activity.

In fact, any utopian remedy is probably a fiction of political hubris. The reality is that after a drink fuelled party there is always a reckoning. We are facing this reckoning and we are going to have to deal with it. No magic wand and no Brownian solution.

4.73% undermanning of British Army Regulars

2008-10-19T14:50:00.002+01:00

Defence Analytical Services and Advice (DASA) report, as at 1 September 2008, that the British Army is 3,330 (3.27%) undermanned. Were it not for the drafting of 950 Reservists and 530 extra Ghurkhas, this shortfall would, in fact, be 4,810 (4.73%).

One ray of light in the Credit Crunch might well be a reverse of this trend. Tougher economic conditions have routinely eased recruiting difficulties, but it would be nice to think more people were prepared to risk a little for the benefits of living in this country. Then again, should we be surprised that people are not so keen to serve, considering the reckless assault successive governments have made on the patriotic nation?

Cash deposits in banks were always at risk

2008-10-10T20:18:00.002+01:00

As we hear how local authorities have got up to £1 billion stuck in Iceland, we are led to believe that we have a right to that money back. Not knowing the exact details, it is difficult to say whether depositors have a case against the Icelandic banks, but it appears that some people are slightly confused about the nature of cash deposits in retail banks.

Cash deposits are not an absolutely safe way to invest. What do we think the banks do with our deposits to earn enough to pay us interest? Yes, they lend it out and by definition that is a risky business. It just happens that under normal conditions, for every loan to a commercial enterprise that goes bad, there are plenty of other loans that earn enough interest to cover losses and a little interest for us. There is nothing in this financial transaction that says there is no risk whatsoever.

If the bank takes our deposits and loses it all on bad loans then that is surely the price we pay. If we wanted the cash deposits to be absolutely safe, a bank would have to hold 100% of deposits in the bank. Under such a system they would not be able to make loans, they would not be able to earn interest and they would not be able to pay us interest. In fact, we would have to pay them to hold and protect our money.

Cash deposits are a loan to a financial institution to enable it to carry out its business operations. Therefore, it is just a variation on other ways to raise cash for business: equity, bonds etc. They are risky. That's just the way it is. Mind you, this doesn't mean we shouldn't be angry about any losses we incur and fingering the right culprits.

The Left is winning the economic argument - we should all be worried

2008-10-10T12:04:00.002+01:00

Coffee House informs us that "Just three weeks ago, the Tories had a 17 point lead on economic competence (YouGov/Telegraph). After more news cycles dominated by the financial crisis this had narrowed to 3 per cent (ICM/Guardian) and in the marginal seats it's a 7 point lead (ICM/News of the World)."

This should worry people who still have a semblance of regard for this country and a modicum of economic nous. Why? Because it is evidence that the Left Wing, Fabian narrative that the markets are inherently evil is gaining traction. Is it any wonder that Gordon Brown is happy at the moment?

If the public continue to swallow his stupid rhetoric that he had nothing to do with the problem and it is all down to some fundamental flaw in market economics itself then he will be happy and take public approval as a mandate to further entrench his big state, redistributive plan for Britain.

Let's rehearse the causes of the credit crunch again: a housing boom financed by an expansion of the money supply induced by Left wing expansionary economic policy to make society 'fairer'. By stoking the housing market in the UK, Gordon Brown thought he could stave off a recession and provide the finance to get the poorer into home ownership. The result: people unable to pay back loans and the banks getting jittery.

P.S. Just seen this far more impressive explanation of why politicians and regulators are at fault, rather than the system itself.

Governments are more to blame than markets

2008-10-09T15:24:00.004+01:00

As the anti-market rhetoric gains in volume, we are reminded that there are people who cast a slightly more critical eye on the present financial crisis than others who prefer knee-jerk, prejudiced responses.

Indeed, we should not be surprised that the anti-market view is gaining traction when we recognise that many of our politicians have always been suspicious of freedom and free markets. What they prefer is the vague notion of 'fairness' that by definition seeks to limit the freedoms of some to remedy the perceived injustice done to others.

But whilst the financiers have, indeed, made some grave mistakes, we must look beyond the easy target represented by some greedy, City buffoon. If he was alive today, Milton Friedman would surely have recognised the credit crisis as being primarily, but not exclusively, governmental rather than of the market itself.

We are rightly concentrating on the current crisis of liquidity by trying to get the money flowing in the banking sector once again, but if we are to find a lasting solution we must surely identify the real causes: excessive government debt, excessive personal debt, expansion of the money supply and government responsibility for sub-prime lending induced by the false objective of 'fairness'.

Is it fair that these same poor people are now saddled with a house worth less than the debt they hold on that house? Is it fair that the government is still encouraging the poor to enter a falling housing market? No, of course it is not, but then if we elevate 'fairness' over freedom, we inevitably manipulate how people and markets behave. It caused the Great Depression and it has caused this Credit Crisis.

Should we still be giving India Financial Aid?

2008-10-03T23:56:00.003+01:00

So, let's get this straight, the United Kingdom, through DFID, gave £275,000,000 in Bilateral Aid to India in the financial year 2007/08. Yes, India, the country we are told is going to eclipse us economically pretty soon.

Why?

This is a country that spent £15 billion on defence in 2008 and is reported to be increasing expenditure to overtake the UK within 5 years.
This is a country with an Indian Space Research Organisation spending US$1 billion, of which US$312,500,000 is for "manned space missions".

Now, I have no problem with India spending money on these two things; indeed, I would encourage her to do so, especially as she is most definitely an ally and friend. But, why on earth do we spend £275,000,000 on Aid to a country with such budget priorities. It is almost grotesque.

The bizarre way Britain spends money today is difficult to explain. Is it Imperial guilt or an overwhelming sense of righteousness? In the big scheme of things, this might not seem like much money at all, and I am sure it is going on extremely good causes, but it only serves to corrupt the purpose of Aid - to help those that cannot help themselves.

Given the current economic crisis we face, the government should send our best wishes to India, suggest ways to improve bilateral involvement, and politely inform her that this Aid will no longer be forthcoming.

Milton Friedman - Free to Choose Videos

2008-10-03T10:49:00.005+01:00

In 1980, Milton Friedman made a series on the free market. He called it "Free to Choose". The links to all 10 Volumes (less Vol. 6 which does not seem to be available) are shown below. Whilst government remains essential for proper and effective leadership, vital when a people need to act collectively in defence and the upkeep of law and order, this series clarifies the limit we should put on the power of those governments, especially in the way they are permitted to impact on the free operation of markets.

Volume 1: Power of the Market
Volume 2: The Tyranny of Control
Volume 3: Anatomy of a Crisis
Volume 4: From Cradle to Grave
Volume 5: Created Equal
Volume 6: What is Wrong with our Schools (Not available)
Volume 7: Who Protects the Consumer
Volume 8: Who Protects the Worker
Volume 9: How to Cure Inflation
Volume 10: How to Stay Free

What are the viable options for Defence Policy?

2008-09-26T11:00:00.002+01:00

Menzies Campbell is right to say "there are no easy options for the future of British defence policy – but there is no choice but change", in the Guardian today, and he makes some interesting and pertinent observations of current defence policy. However, for a politician, he is a little too reluctant to suggest in which direction that change should head; we can all highlight weaknesses, but politicians need to be a bit bolder when it comes to proposals.

There is, indeed, an incoherence in a defence policy that, on the one hand, knowingly underfunds key areas like housing, injury compensation and manning levels (units routinely break the 24 month harmony guidelines between operational tours) whilst, on the other, presiding over a defence budget that will never allow significant improvement in these areas. The conclusion from this is clear: we must either reduce commitments and capability or increase spending. I have mentioned before how strange is our willingness to underwrite £100 billion for Northern Rock whilst not finding an extra £5-10 billion for defence. After all, no-one died over Northern Rock, did they?

We should, also, be well past the understanding that "fighting on two fronts in Iraq and Afghanistan is unsustainable and threatens to break the back of the army". We know this because of what we hear in the Select Committee on Defence about planning assumptions: "In December 2003 the Revised Scales of Effort required the capability to mount, without overstretch, one medium and two small operations (the medium and one small being peace support operations, the other small being an intervention operation) but with the ability also to reconfigure rapidly to two medium and one small (where one of the mediums is an intervention operation)."

With Afghanistan and Iraq, we are firmly in the two medium and one small if you include other commitments in Yugoslavia, Cyprus, Falklands and more. Although we are pulling back in Iraq, there are still (May 2008) 4,000 troops in theatre. If anyone is unsure, this is still at least a brigade deployment. With only 8 operational brigades, including 3 Cdo Bde, I fail to see how we can sustain even 2 brigade deployments and remain within harmony guidelines. The implication is clear: we are over committed and our planning assumptions are not matched by defence capability. With 6 month tours and a need to have 24 months away from operations between tours, we clearly require 10 brigades, not 8. And this does not take into account the small scale operation.

In this, Menzies Campbell is surely right to notice that "it is the nation's most valuable defence asset – the men and women of the armed forces – who bear the brunt of these failures" and it is "strategy" that needs to be sorted out. All this is true but we are where we are, as they say.

On present structuring, we can maintain one brigade and one small scale operation or a single short term large scale deployment for about 6 months, and that is all. Therefore, until the Armed Forces gets bigger, we should never, ever have agreed to increase commitment in Afghanistan whilst we were still in Iraq. that we did, is symptomatic of the weakness of our political masters who cannot bear to be seen weak in refusing to "punch above our weight"; surely one of the most conceited political slogan of recent times.

The four options he highlights are all, indeed, pertinent:

Carry on as we are. He is right to rule this out. Our current attitude and posture is unsustainable and has been since SDR first came into effect.
Increase defence spending to bring capability in line with SDR assumptions. This option is indeed valid and if our politicians want to keep us committed, and we have to assume that they do, we must have more money spent on defence, especially on increasing the number of formations and procuring more and better equipment (vehicles and helicopters). "Is the British tax payer ready to pay that much more?", he asks. Well, they have not kicked up too much of a fuss over Northern Rock so why not and who seriously doubts that some efficiencies and spending reductions cannot be made elsewhere?
Stop liberal interventionism. This is the other viable option but one that is not going to happen. We are committed to NATO and NATO has decided it wants to do liberal interventionism. I see no politician that has the courage to stand up and advocate a change to NATO policy. They should, but they will not (at least in the near future). There is, also, uncertainty as to what liberal interventionism means. Did Iraq and Afghanistan fall under this description? I don't think they ever did but whilst politicians want to intervene in far away lands then it is necessary to equip the Armed Forces properly.
Reconfigure the Armed Forces to fight the wars of today. This is as ill advised as option 1. He makes a valid point that attack submarines, aircraft carriers and combat aircraft add little to military effectiveness in Afghanistan, but is he forgetting the grand standing of Miliband and Cameron over Russia and Georgia? The only operation we should be scaled for is warfighting; all else cascades from this posture. We need kinetic energy to defeat the most potent threats and it is easier to scale down than up. Anyone who argues otherwise is either an idiot or someone who has no understanding of war. The whole point of a deterrent is that it deters by demonstrating a capability and willingness, albeit reluctant, to fight the worst kind of war You would not want to be caught out without an "insurance policy" on your home so why suggest that we don't need it for our country?

The conclusion we must draw is that there are only two serious options on the table and we must in truth blend the two. First, we must spend more on defence capability that enables us to fight the type of wars our politicians seem to want to fight, and, second, we must think hard about the commitments we make. Who seriously thinks the USA actually needed us in the Iraq war? No-one. Bush even told Blair he could do without him but he decided to commit our troops anyway - whilst standing in for striking firemen, it should be said.

Politicians, Menzies Campbell included, have to get serious about defence. It is not a Westminster game but a serious business of life and death. And it is the best this country has to offer that are doing the dyeing. If they must commit troops, then they have a moral and political duty to see that they are best equipped for the job.

So Menzies, you have written a thoughtful and perceptive article but what we want to hear is not an outline of the issues but your proposal for a way forward. That is what you are in Parliament for.

Help for Heroes Rugby Challenge Match was a triumph in more ways than one

2008-09-20T22:26:00.002+01:00

It is difficult to imagine that anyone who attended the Help for Heroes Rugby Challenge Match at Twickenham, today, could have left with anything other that a feeling of warm approval. Not only did the sun shine bright all day but the announcer reported that the event had raised a total of £1.1 million in aid of the Defence Medical Rehabilitation Centre at Headley Court. A fun day out and a sack load of cash for a superlative cause; what more could one want?

Although the 82,000 capacity ground was not sold out, there were over 52,000 people present, including The Prince of Wales and The Duchess of Cornwall. For those that know the layout of Twickenham, the entire ground tier and three sides of the middle tier were full. The South end of the middle tier, behind the posts, was left empty along with all of the top tier. But, this did not detract from an otherwise perfect day where the Help for Heroes XV ran out 29-10 winners against the International XV.

In the stands, there was clearly a large military contingent, past and present, considering the number of shirts brandishing Royal Navy, Army and Royal Air Force emblems. This was, of course, to be expected, but there were also a large number of plain old rugby fans, itching to see some legends run out onto the pitch just one more time. Lawrence Dallaglio, Martin Johnson, Jason Robinson and Will Greenwood were all there for the H4H XV, and Scott Gibbs, Kenny Logan, Colin Charvis and Shane Byrne provided the celebrity names for the International XV. Jonah Lomu would have, also, caused a stir if he had been able to take to the field; he had picked up an injury in training. A sprinkling of military players and youthful professionals completed the line ups.

One thing that strikes you on entering the stadium is how immaculate it is. The newly completed stadium has everything in its place and the pitch surface is as manicured as a Test Cricket outfield. To see a fully fledged international would be an awesome experience, the stadium being full to the rafters and the atmosphere electric with competition and civilised tribalism.

This particular game, however, exemplified the power of voluntary acts of support and welfare. Some have wondered why such an event should be needed in the first place: surely rehabilitation is the sort of thing the defence budget should cover? But, the specific need for a new swimming and rehabilitation pool has enabled the general public and sports stars to do their bit, even in a comparatively small way.

We tend to talk of the military covenant in terms of healthcare, accommodation, bereavement welfare and injury compensation but for the nation to fully keep with its side of the bargain, it must transcend the physical and connect with the Armed Forces and their sacrifice on a moral and intellectual level. This emotive and thoughtful connection is as important to Servicemen as hard cash, often more so. And events like this, do just that.

Debate the Military Covenant at the Conservative Conference

2008-09-19T10:42:00.005+01:00

Frances Done CBE, Director General of the Royal British Legion,has taken the opportunity to publicise the importance of the Military Covenant on ConservativeHome ahead of the Conservative Party Conference in Blackpool next week. She plans to hold a fringe event to discuss the Military Covenant and how better to honour it. It should expand on the Legions own campaign to Honour the Covenant.

Any publicity for and discussion of the Military Covenant is most welcome as it serves as a useful reminder of its importance. But, in our criticism, we are in danger of making some false assumptions about the complaint over its perceived dishonouring.

Compensation, health care and bereavement support were key issues when I joined the Army in 1997 and remain key to this day. The issue is not that the Army and MOD were oblivious to their importance, and have only started to look at them recently. That is just not the case. The real issue is not whether any attention has been paid to these three things at all but whether or not the Army and MOD are paying them enough attention and dealing with them in the most appropriate way, today.

And here is the crux of the matter. The Army has been trying, after all it is the Army's people that are directly affected, but it has found it difficult. And this is significantly down to political leadership.

Money is also a factor and we know that the defence budget is under severe pressure from extended operational deployments above planning assumptions. If asked the question, any soldier would prefer adequate ammunition and weapons to an extra appointment with the Doctor. They are the ones that pay the opportunity costs and so their opinion is paramount.

But, with extra funding or better funding - some areas of the budget are indeed wasted and spent on inappropriate things - it is quite possible to do both. And this comes down to government. If they can commit £100billion to underwrite Northern Rock then why not a few extra billion to defence?

Therefore, it is worth remembering that it is not that these key aspects of the Military Covenant are being totally ignored but that they can simply be improved with a little bit of will, a little bit of empathy and understanding from politicians and, of course, a little bit more money.

Another danger is this: although material benefits like health care, compensation and lawyers for bereavement are important, we are in danger of seeing the military covenant, too much as a physical thing. The relationship between a soldier and the nation should not just be a crude, monetary contract but a deeply moral and intellectual compact that expresses citizenship, selflessness and sacrifice for a common good - the common good of the nation. We must not forget that.

Final Salary Pensions are a dead weight around the necks of business

2008-09-18T19:14:00.001+01:00

If you needed any more persuading that Final Salary Pension Schemes (Defined Benefit) were a ludicrous invention then read this. How can it make sense for a company to waste time managing a pension fund when it is trying to run a business at the same time; it is nothing but a distraction. And how can it make sense for a company to commit to making payments to employees who have long stopped working. These pensions are dead weights around a company's neck.

But, until the government takes the lead and scraps all Final Salary Pensions in the public sector and moves to a Defined Contribution system, then major companies will continue to find it difficult to get the change past a reluctant public. Still, as more and more companies go to the Contribution system, the competitive edge of the UK will improve.

Trading on the Russian Stock Market has been suspended

2008-09-17T14:38:00.002+01:00

It would appear that Russia, attempting to ignore international forces and forge her own way in the world, has been given a shock she cannot, and indeed, has not been able to ignore.

Down 60% since its May peak, the trading on the Russian Stock Market has been suspended. To put this slump in perspective, the FTSE has fallen by about 16% since its peak and we think that is bad. Crickey!

It would appear that Russia is suffering from the Global fallout we are all suffering from but what has made things far worse is the pull out of global investment since the conflict with Georgia. With global finance in a delicate state all around the world, it seems that potential Russian aggression has been a risk too far for fickle investors.

Perhaps those that say a globalised world is a safer world have a point. Even Russian Presidents are more likely to check their behaviour when faced with financial meltdown. But then, we don't know what Medvedev or Putin will do next. Watch with interest.

Is Islamism more dangerous abroad than at home?

2008-09-14T12:31:00.006+01:00

Kevin Myers writes a typically excellent article in the Irish Independent and it is well worth a read from start to finish. In fact, the entire portfolio is worth a read. The robust style he adopts is refreshing for obvious reasons but it is his willingness to enter debates that most others are too afraid to enter that makes his stand out.

In this one he concentrates on staying the course in Afghanistan. Whilst we can certainly do a lot of damage to Islamism there, it is worrying how the preoccupation with operating in Afghanistan, treating it as the 'good war', can tend to divert us from what is happening at home. There is more, much more, to the fight against Islamism than just its conduct in Afghanistan.

First and foremost there is the acceptance that we are in a deadly serious struggle against Islamism, both for our lives and more importantly for our culture. We in the West, generally, do not accept this point, preferring to think that Islamism will stop causing trouble when we evacuate 'their' lands. Apart from the dispute historians might have over what constitutes their lands, this seems like wishful thinking for the simple reason that the Caliphate is not constrained by geography; the world is Allah's and his people are on the march, just as they have been throughout history.

Second, if we accept that they will not stop if we leave Afghanistan then we must ask the question: can we defeat, or significantly inhibit Islamism across the globe by fighting it in Afghanistan? It would seem that the answer to this is no to the first but yes to the second. However, to inhibit them is not to defeat them. Afghanistan is merely the focal point of their anger and rage, as was Iraq a few years ago and parts of the Balkans before that. If Afghanistan was eradicated from existence, the more violent elements would just reappear elsewhere.

Third, If we accept that Afghanistan is not fundamental to the fight against Islamism, we must look elsewhere for solutions. We in the West are preoccupied with the terrorist dimension to the Jihad, seemingly ignorant of the peaceful, cultural, political and colonial jihad going on around us. If a particular Imam does not have a bomb strapped to his body, it is assumed he belongs to the moderate cohort of Islam. But, his preaching and aspiration for Sharia to unify the secular and religious dimensions is just as destructive, if not more so. There used to be an offense called subversion; where did that one go?

Fourth, if we accept that peaceful Jihad is undermining our societies just as much as violent Jihad, we are left with the conclusion that the fight must take place at home and not abroad, or not just abroad. What is the point of defeating Islamism in someone else's country when it defeats us at home?

The point is that, whilst we can cause them attrition in Afghanistan and any other foreign land we choose to fight them in, we convince ourselves that the military operations abroad will defeat the entire threat. It will not. We must defeat them by understanding what they are doing in the peaceful, colonial Jihad as much as the violent one. Now what was that phrase? Ah yes, the Armalite and the ballot box. It is happening again. Only we should hope that our politicians do not kowtow to the method this time as they did before.