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Thursday, 25 May 2017

Campaigning to Resume: The State of the Parties

Today UKIP will launch its manifesto for the upcoming general election, and the party's implausible leader will have considerable media coverage: much of it unfavourable. Then UKIP will sink to a low rating in the opinion polls, with no prospect of being represented in the House of Commons.

The other parties will re-start their campaigns tomorrow, though local leafleting will resume in some areas today.

In the limited time on the media that has been allocated to Jeremy Corbyn in the past two days, he has spoken sensitively and sensibly about the Manchester tragedy. Labour has certainly not lost ground during the shut-down of the campaign.

Mrs May has had a big opportunity to appear to be 'prime ministerial', and has not overplayed her part. However, her campaign was faltering before the suicide bomber shut down partisan discussion, and the Prime Minister can have had little time to review the mess that she had made for herself, particularly on the costing of social care and how that bill is to be met. Like all Conservatives, Mrs May has the dilemma that the policies pursued by her party - in power for the best part of seven years - has largely stifled real economic growth. A government that is hemmed in by obsessions with austerity and the [probably notional] elimination of the deficit on state spending can only contemplate shifting some fragment of the already-existing national wealth into the state budget to meet the cost. Thus people are being asked to accept that the inflated 'value' of their homes can be raided to meet the costs of their personal care, at need.

One significant aspect of the situation is that the management of social care lies with local authorities. Therefore local authorities, whose budgets have been squeezed very hard by the Osborne-Hammond policy of cuts, are to be expected to create mechanisms for valuing property, and further mechanisms for funding the care of property-owners [whether in care homes or at home] over periods of several years until the supposed 'value' of the property is realised in a sale. To maintain the 'value' of the property, it has to be maintained properly: which is a further element of cost that the local authority will have to meet. The implication is that local authorities will have to become massive borrowers: if anyone will lend them the money.

The segment of the massive complex of financial markets that led to the crisis of 2007-8 was the exposure of 'sub-prime mortgages' in the USA. Financial institutions were bullied by the Clinton regime into allowing people with no successful record of paying their bills, often with no secure employment, to buy houses on mortgage. When economic conditions tightened, in 2005-6, thousands of people simply handed the keys to their properties to the lenders and drove away. The 'value' of those houses in the books of the lenders - who had now become, will-nilly the owners - were the prices at which they had been bought. They could not be sold on for the same prices, as thousands of such houses were dumped on the market at once.

Thus one can expect lending institutions to be very cautious of advancing large sums against properties whose 'value' will be incalculable on the unforeseeable future dates when they will be available to be sold. If the government becomes the lender, or the guarantor, of the loans that local authorities will need to fund the care that has to be given to the owners of the properties that will be drawn into the scheme on the death of the owners - or of their partners [who may, obviously, also need years of care in the further future] - that guarantee must be added to the national debt: which obviously blows away any hope of reducing or eliminating the the deficit. The more this question is emphasised in the last fortnight of the election campaign, it will be clear that the Tories' plans are no more 'affordable' than are Labour's.

At the least, Labour is claiming that their plan, especially borrowing to fund infrastructure investment, will stimulate growth of the material economy. Mrs May offers no such prospect.

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