The Budgetary Pantomine

The media have given a generous response to the Chancellor's Budget, emphasising that the grim assessment of the prospects for the British economy supplied by the 'Office for Budget Responsibility' gave the Treasury team very little leeway to take any risks.

The torrent of publicity and public pressure that must have made the Chancellor's life quite unpleasant ever since he accepted the job came to a peak in the days before the Budget was announced; and many 'leaks' and hints and briefings had already made it clear what the principal elements in the speech would have to be. If no more money had been allocated to the National Health Service the fuss would have been intolerable for the whole government: though exactly how much more is being given than had previously been announced is obscured by the possibility of double counting. The relative regression of the British educational system, compared especially to those in emergent countries, has been shaming for many years; so small steps to tackle the issue are the least that could be done.

As founder of a housebuilding firm, Mr Hammond can be assumed to have a direct and personal grasp of the issues about housing which had to be addressed. While still fiscally cautious, the measures announced to increase construction and to begin to restore the dream of a 'property-owning democracy'.

The intrinsic theme of the Budget, as had long been foretold, was the desperate state of the British economy: most especially the deplorable level of productivity and the yawning north-south divide. In the past year, plans to electrify the main line to Sheffield and a transpennine route have been axed, thus the lie is given to the words about redressing regional inequity. Still the government is pressing on with HS2 and Hinckley Point, which will do no good for anybody but will take up both engineering capacity and money.

Nothing will be done about productivity until radical change is introduced to the economy at large. That will be my theme for the next few days, when I will be based in Derbyshire and thus can probably have a better perspective on things.

Mrs May's Brexit: from Chaos to Catastrophe

Mrs May and Mr Hammond - her Finance Minister - are represented by various sections of the media as being in a serious conflict about making provision for a 'no deal' outcome from the current negotiation between the UK and the EU. The Chancellor [who is wedded, as tightly as if he were welded] to the concept of 'austerity' has told a Commons committee that he has contingency plans, but does not want to release any funds until the very last moment. He could not make that statement if staff time and some expenses [notably consultancy] had not been applied to the planning: so what he obviously means is that he is reluctant to release funds on implementing such a plan until that should appear to be the [utterly disastrous] inevitability.

Mrs May seems to be saying the same things, when she indicates that £250 million has been set aside for implementing a 'hard Brexit'. Yet the press, notably the Daily Mail, has become hysterical about the 'dispute' and the 'disloyalty' - even 'sabotage' - attributed to the Chancellor.

This stupid scenario shows that the minority of extreme Brexiteers are dragging the Tory party to its destruction; which would be no bad thing [in view of the appalling inadequacy that is apparent right across the government] if there was an opposition that combined honesty and competence over the board. But that is not the case. Labour is led by an unreconstructed Marxist who is as good as the late Comrade Suslov [the chief exponent of Leninist-Stalinist orthodoxy as the USSR was heading for destruction] at avoiding direct or evidence-based questions. The Momentum group show a dangerous revival of the 'entryism' that undermined the Labour government in the nineteen seventies, and thus opened up the way for Thatcherism and the dissipation of all that remained of the legacy of the first industrial revolution.

If May or Hammond was serious about managing a really 'hard' Brexit their first decision - however covertly it was taken - would be the abandonment of 'austerity'. Government spending far in excess of £250 billion would be needed to install a full customs border with the EU. The recruitment and training of hundreds of thousands of officials would need to begin now: somehow, the IT systems would have to be provided - almost instantly - despite the fact that even modest government schemes for computerisation are always over-cost and excessively delayed in implementation [to the extent that they often have to be abandoned].

British firms that still make things - there are many, often high-tech companies developed or reconstructed since 2008 - are almost all integrated into just-in-time Europe-wide supply chains [both in getting their necessary inputs and in selling components to EU companies]. Such businesses are making contingency plans that would require them at least to double the manpower and computer availability just to manage the 'paperwork' that would be involved in trying to maintain the flow of business after a default Brexit. Many such firms are already finding that their European customers are looking elsewhere for contingent supplies. Furthermore, insuring trade and the goods traded in a crash-Brexit situation will become massively more complex and thus expensive.

The clowns on the Tory right, with their airy assertions that all will be well 'under WTO Rules' [which they certainly do not understand:cf my many references to point protectionism], are driving an amazingly weak Cabinet towards the destruction of the national economy.

There must a popular movement, of Leavers and Remainers united, to avoid national economic destruction.

What Brexit? What Price?

The future of Mrs May as the Prime Minister is being much discussed this morning, while her distress in delivering her conference speech yesterday was so awfully exposed on television and excessively discussed on all the media almost as soon as the coughing began. She was 'escorted' from the platform by her husband, and one could pause to ask how she would have been able to walk without his immense support. The scene was one of extreme [and most unfortunate] personal stress, exacerbated by the security failure that allowed the 'prankster' - as the media all-too-quickly dubbed him - to hand her a sheet of paper. Boris Johnson could have secured his future as leader by grabbing the man by the collar and frogmarching him towards the exit, but in the stress of the moment he merely [weakly] tried to wave him away.

The whole episode was sad.

But it was also shameful.

If Mrs May and Mr Hammond have agreed to spend £2 billion on more social housing [of what kinds, where, when?] they must have an idea how much they are going to offer to the European Union in the next round of Brexit talks. Mrs May should have told us. Just as she should have made her 'Florence speech' in the House of Commons last spring, she should have regarded her speech yesterday as the very final chance to share her thinking with the electorate on the uppermost issue of the day. The reaction of the EU Commission, Council and Parliament to the imprecision of the Florence proposition should, surely, have impressed even on Johnson and David Davis [though perhaps not yet on Liam Fox] the understanding that waffle never had its day, and is now deeply irritant to the rest of the European Union.

It is legitimate to say that resolving the question of the Irish border is inseparable from the resolution of the question what sort of economic border it is going to be; which can only be decided when the question of Britain's membership of the European Economic Area is determined. But the Irish question would be much easier to set aside until a later stage in negotiations if the British government would clearly articulate its hopes in that area.

On the other two questions that the EU insist must be close to resolution before the wider issue of trade is discussed, the answers must be simple. Davis has implied his acceptance of the two-year transitional period, Johnson has specifically agreed to his version of that, and Philip Hammond has advocated it consistently and strongly.

For two years after March, 2019, the existing rights of EU citizens in the UK will remain as they are, with the European Court as the ultimate arbiter. After March 2021 a new relationship must be agreed; and here Mrs May - as a 'failed' Home Secretary - apparently has a serious hang-up. The UK has been willing to make laws which allow US courts to require the extradition of British citizens to the United States to stand trial for alleged offences committed while the Brit [usually, but not always, a geeky young male who has developed perverse software or algorithms] was safely located back home; usually in the back bedroom. This has always seemed to me to be an amazing concession, which puts the British courts in the role of part of the supply chain to the US Justice System. Surely, something similar can be devised for EU citizens in the UK, and for UK citizens in the EU, after we leave the political union?

This then leaves the most basic issue. Does Brexit automatically mean that the UK MUST leave the single market, and must leave the customs union, and must leave all the agreements on drugs, nuclear control, civil aviation,. research co-operation and a long catalogue of other working agreements whose abrogation would desperately hurt the UK [and which would take decades to replace, once abandoned]? These issues were not specified in the referendum question, which referred solely and specifically to membership of 'the European Union'. The extreme Brexiteers who have taken up the negative position are relatively few in number; and for that very reason, as empty vessels, they are making most noise. They will be opposed massively in the House of Lords; but the Commons is the forum in which the debate will be focused in the end. And here one man can ruin the country on his own: Jeremy Corbyn has been viscerally against the 'club of capitalist states'  for decades; and although his party has adopted a sensible stance, he could undermine it on the basis of his antediluvian Marxism. He must be corralled.

Meanwhile, Mrs May's total failure of leadership is now apparent to all. Let the agony end, soon.

QE: The Social Cost

The Labour governments of Tony Blair and Gordon Brown [1977-2010] progressively moved from following their Tory predecessor's conservative budgetary policy to creating a deficit on government spending [the amount by which the government spent more than their income from taxes, tolls etc]. As Chancellor of the Exchequer, then Prime Minister, Gordon Brown made a very quaint use of the word 'investment'. It has been normal for a couple of centuries [at least] to use the word 'spending' [or expenditure] to mean the amount that is spent on pay-as-you-go government activity, and the word 'investment' to mean spending on projects that have a net cost as they are undertaken, but which it is hoped will yield an economic or a social dividend - ideally, both - when they have been completed. Under Labour, this distinction was eliminated. 'Investment' was just part of current spending: it just sounded better to make it seem as if some future return was in mind.

Alongside this abuse of words [and of common sense] the Labour government introduced the wildly irresponsible PFI concept, by which a school or a hospital building [which could be seen as an investment for the long term, in the conventional understanding of the term] would be built by a private contractor who could then charge a rent for the building while it was in use. This crazy system meant that the contractors, and the funders with whom they formed consortia, would be able to take a high rent from the health service or the school governing body. In addition, many such contracts gave the builder the right to undertake all maintenance work - at their own 'costing' - for several years, at the expense of the user of the building. This obviously provided a massive drain on the income of the user organisation when the premises came into use. As the premises had often been designed many years before they came into use, the designs were often very much less that state-of-the-art when they became operational. Thus taxpayers were involuntarily having to meet these charges.

Thus, when the Tory-LibDem coalition came into power they were horrified at the 'out-of-control' public spending obligations that they confronted. They decided that the burgeoning annual deficit on the national budget must be reduced: then they experienced their own brainstorm, and decided that they must cut future spending projections by the state. Hence began the regime of 'austerity'. Under that regime, public spending has been held down; almost as a matter of faith.

This policy was imposed in 2010, just after the Bank of England had become used to administering its programme of Quantitative Easing, as explained in the previous two blogs. The orderly queue of bankers was allowed each to encash approved securities for new credit, which they could then spend as they wished. This meant that they could keep in being the securities whose existence had been threatened by the market crash of 2007-8 until they came to their term dates; and an increasing proportion of them could be sold once their face-value had been restored [more or less] within the highly flexible wholesale finance market. So while people running public services were increasingly constrained by what they could spend - including on wages and social benefits - the banks could lend more money to firms and to individuals. Not many firms needed to borrow from the banks: the successful among them could derive all the investment they needed from their profits and from share issues; the unsuccessful drew in their horns and hoped to survive. Furthermore, the government provided modest funds to help some classes of start-up and developing businesses [although most of the more successful of them fell prey to overseas takeover, whereupon the technological innovation that they embodied was alienated].

In both the public and the private sectors, wages were constrained; in the public sector by the austerity rules, which included either nil or 1% increases each year. The private sector was able to import staff from less high-wage countries, and a consensus of commentators accepted that the combination of immigration with the appallingly low level of skills among the indigenous British population kept wages low; in both cash terms and real terms. Hence after 2010, most people found that the only way to increase their spending on consumption was by borrowing. Loans and credit card debts were freely available, so people borrowed; largely to buy imported commodities. So the balance-or-payments deficit burgeoned, while the government struggled to keep public spending within the limits that Osborne and then Hammond vainly aimed to enforce. Unsecured household indebtedness increased, alongside the debt that the UK owed to the rest of the wThen it became apparent that QE had another perverse effect on ordinary people. After the financial crisis, new starts in house building had reduced to a record low level; and virtually nobody was building social housing. Thus the resale prices on existing properties increased: but with interest rates set at their lowest ever level by the Bank of England the cost of borrowing [per pound] seemed affordable. Cassandra-like warnings that people who had mortgaged their property heavily might not be able to maintain payments when interest rates rose received scant attention.To get a new home, people had to borrow the money to buy expensive new properties on terms that profitable to their constructors. Mortgages were freely available for house buyers with even modest incomes, thanks to QE and government schemes to enable a minority of first-time buyers to enter the market. The majority of would-be first time buyers could not find the cash deposit they needed to enter the housing market; and anyway their incomes, especially for those burdened by student loan debt, could not support the ongoing cost of house purchase. In addition to the existing poor, there was a growing cohort of nearly-poor, including many graduates. In the next blog I will examine the pattern of poverty in Mrs May's Brexit Britain, and relate it to QE and to austerity.

Brexit: Trouvez la Femme

So now we know, for sure; definitely.

As on the previous Sunday, when I went to get a copy of the Mail to check on the context of remarks by Vince Cable, so yesterday I bought the Telegraph so that I could read exactly the piece attributed to Philip Hammond and Liam Fix. It was cited on the radio as representing the formation of a joint strategy for Brexit, and thus the conclusion of a cabinet spat that has been reported over this year's 'silly season' by much of the media.

It was a short piece, attributed to the two men [and doubtless accepted by them] but indubitably crafted in 10, Downing Street, and polished by party professionals. It represented what had generally been understood to be Mrs May's position ever since she made her sublimely idiotic remark that "Brexit means Brexit". Since it was coined, derived from 'Grexit' which meant the threatened departure of Greece from the eurozone, the term Brexit has simply meant "the departure of the United Kingdom from the European Union, in response to the referendum decision of 23 June 2016". Mrs May was asked how she interpreted the terms: did it mean withdrawal from the European Common Market and the Customs Union? Did it simply require departure from the political institutions only? What mix-and-match of possible options did she favour?

None of this has been clear: either in her much-cited 'Lancaster House Speech' early this year or in her disastrous election campaign. Nor has it been any clearer whether she favours a 'hard Brexit' [undefined] or some 'softer' version. Two things that do appear to be consistent in her few and often oblique remarks on the matter are:
1. Her proclaimed determination to reduce net immigration: the great 'failure' of her six year tenure of the Home Office which she apparently thinks she can achieve from Number Ten. If she does achieve it, she will alienate industry and commerce, the universities, and the immigrant communities from the Commonwealth who had seen a reduction in EU immigration to the UK as a chance for them to bring more friends and family members into the country.
2. Her equally definite declarations that there is no place in the UK post-Brexit for the European Court are equally likely to make for an extremely difficult negotiation with M Barnier on trade matters that should be straightforward.

Lewis Carroll, in one of the most brilliant satires on society, has a character declare that they can think of six impossible things before breakfast. Mrs May, without saying anything on those lines, has made it abundantly clear that she has one impossible thing on her mind all the time: the removal of the British economy from its European Economic Community context without significant damage to Gross National Product or to the standard of living of the mass of the nation.

It now appears that Fox and Hammond have accepted that they must both support this point of view, at least publicly and for time being. This is a consensus that cannot last. The crisis in British politics will continue: well done, David Cameron, Nick Clegg and Odious Osborne!

Odd Ministers at Odds

Dr Liam Fox is a non-practicing physician, which means that he might have some advantage over a person with a doctorate in Economics when it comes to diagnosing the mind of the British population. But for him to suggest that it would be some sort of breach of faith for the government to seek a 'soft Brexit', or a period of transition from membership of the common market to some other status, because a small majority of the voters in the 2006 Referendum voted to "leave the European Union", would be too far to stretch credibility.

I voted to leave, partly because I thought that we 'leavers' would loose but that a strong marker could be put down against the continentals' nonsense of developing an "ever closer union" with its own military capability. When my side won, I hailed the narrow victory as a licence to negotiate a rational settlement with the remaining states of the European Union that would get the United Kingdom out of the morass of the Brussels and Strasbourg institutions but keep this country in the close European free-trade pact that pre-existed the Union. That Dr Fox is now putting up his version of what the vote means is in some ways helpful; because it shows that the Tory 'hard Brexiteers' are truly dangerous for this country.

The rhetoric around the time of the last general election, that both Labour and Conservative parties accepted the majority decision in favour of [undefined] Brexit, masked the underlying fact that most Members of Parliament from both parties who were to be returned in the election had voted to remain in whole shebang of the Union in the referendum. It would now appear that most Members of the Commons do not know how to interpret the referendum result, while an overwhelming majority of the Lords are opposed to the whole concept of Brexit but recognise that they cannot blatantly overturn the decision of the electorate.

The present constitutional position appears to be that referendum result stands as an historic fact, but the sovereignty of parliament was not abandoned by that result. Thus any resultant agreement with the European Union - as with the USA, or Australia, of Belarus - will be made with the assent of the Queen, the Lords and the Commons.

The present political fact appears to be that a small group of headbanging Brexiteers have been given licence by Mrs May to discuss half-baked promises of potential free-trade agreements with various governments that all have the common purpose of clinging on to power by not upsetting too large a proportion of their electorate. These tentative discussions about trade treaties appear to be understood to mean that the hardliners can simply effect a British exit from the European Union with no comprehensive draft treaty with the EU in place. This is infantile absurdity. If such a cliff-edge Brexit were to be undertaken, in a world characterised by point protectionism [as defined in this blog: do a word-check], it would be a recipe for economic devastation in this country.

Mrs May seems to have been flattened by references to her past 'failure', as Home Secretary, to reduce net immigration to a few tens of thousands of people annually. She seems to be caught in the headlights of a juggernaut that is bearing down on her, terrified lest she would be seen to oppose those few party colleagues who assure the electorate that they can keep out mass migration without detriment to the health service or the wider economy. The spectacularly dull Chancellor of the Exchequer is bringing some sense to the discussion, and thus earning the odium of those parts of the press that enjoy the power to press for reckless policies simply because they cannot be held responsible for any outcome. Those same media constantly carry stories to the effect that before the election Mrs May wanted to get rid of Mr Hammond, and can not now do it because of the precariousness of her own position. If the sort of sense that Hammond is promoting is swept aside by the 'hard Brexiteers' the country will be brought to a point of crisis which Mrs May shows no sign of  a capability to control.

 What Liam Fox was reported to have said over the weekend is gravely alarming: so the sooner the Democratic Unionists abandon their contract with Mrs May to sell her their votes, the better. The collapse of the government into backbiting is the harbinger of collapse; so let it all happen soon.

The Tories' Dilemma: 'Hard Brexit' or Continued Austerity

Mrs May appeared to think that she could do three impossible things on becoming Prime Minister: now she has come to realise that not only is each of them unfeasible in itself, but that they are mutually exclusive.

First, she did not even consider an alternative to the continuance of the Cameron-Clegg-Osborne austerity, so that had to be maintained, as near intact as possible.

Second, although she had been an unconvinced remainer, she was prepared to embrace the idea of a 'hard' Brexit: though she had no idea what this might mean, so she appointed not one, not two, but three Brexiteer Secretaries of State to come up with the policies that would be needed.

And thirdly, she wanted to be a 'compassionate conservative': at zero cost [because finding any 'new money' would, by definition, breach austerity].

Then she called an election in which she thought that she could defeat Labour purely on the grounds of the intellectual and moral deficiencies of the party's leader. Because he had decades of experience of not being a conformist or conventional politician, Corbyn almost won: and Mrs May had to clear out her inept kitchen cabinet and begin to respect ministers who she was reported to have wanted to dispense with.

Meanwhile Philip Hammond as Chancellor of the Exchequer was becoming buried in 'The Treasury View', a centuries-old tradition which insists that any new expenditure is unnecessary and any unnecessary expenditure must be opposed; regardless of the social and moral benefits that the expenditure is predicted to deliver to taxpayers. Thus he learned that stopping the free movement of people from the EU into the UK, and movement the other way, would cost billions of poundsworth of new expenditure in frontier police recruitment, training and salaries, and in the construction of immigration and emigration control points and the IT backup that would be needed to make such controls achievable at all. Add to that the cost of building modern port controls that could prevent smuggling and validate the contents, provenance, ownership, insurance and compliance with health-and-safety requirements [et cetera] of every item in every cargo and every private piece of luggage - and staffing them with men and women as tough as eighteenth-century revenue officers, in sufficient numbers, adequately well-trained and remunerated and backed up by the most advanced IT - that would be more billions.

A 'hard Brexit' would not only interrupt much trade with Europe, and permanently end more - it would thereby cause massive unemployment and demands for billions more in social payments. Most firms that trade significantly with Europe would experience catastrophic falls in sales, which would force some to cull their workforces and many to declare bankruptcy and their inability to pay their debts and their taxes. The government's income would plummet as the demands of a desperate population became clamorous. Not only would austerity have to be abandoned: government would become untenable in the context of democracy.

Thus minsters have been running around, meeting groups of representatives - particularly from the business communities - whom the May team had ignored in their first year in office. Now the government is indicating that Brexit will be 'soft', and nobody or no firm will find themselves at a 'cliff edge'. There will be a 'transition period' as long as Mr Barnier will be allowed to concede; followed by a shoddy compromise which lets the Treasury maintain at least the skeleton of austerity in place. On that basis of squalid surrender to the ghosts of Clegg and Osborne, a sort of exit from the EU Commission and Parliament, and a limitation of the powers of the European Court 'of Justice' [sic] will be found; and Britain will remain within the EU otherwise. Any alternative is unaffordable in the context of Treasury thinking: and The Treasury Rules: OK?

Textures of Brexit

I am deeply suspicious of whether the three 'Brexit Ministers' - Fox, Davis and Johnson - have a shared view as to what a 'soft' or a 'hard Brexit' means; or even implies. I am certain that even if the three were to be agreed on this, their mental picture does not match that of Mrs May or of Philip Hammond. Just looking at what those five individuals have said, and trying to discern what they have not said, it is apparent that not all of them want Britain to make a 'hard Brexit', were that term to acquire a reasonably precise definition.

There is clearly open debate within the Parliamentary Labour Party, where the Corbyn-McDonnell line appears to be in favour of some sort of 'hard Brexit', characterised by formal departure from all the European institutions [but somehow staying attached to them] and a group of at least 40 MPs who favour a 'soft Brexit' that would leave Britain within the institutional framework of the 'European Economic Area' but not in the political structures of the European Union [the Commission and the Parliament and all their subsidiary bodies]. The 'hard' and the 'soft' supporters are left high-and-dry on the question of the European Court of Justice, for which a residual role would probably remain under any form of Brexit at least in respect of EU citizens in the UK and vice-versa.

In the nineteenth century there was much debate, much of it of a frivolous nature, about the 'Schleswig-Holstein Question'. Schleswig-Holstein was the southernmost region of Denmark, which Prussia took over in the same sort of way as Putin recently took over the Crimea; though the Danes made more of a fight over the issue than did the present corrupt Ukrainian state over the Crimea. There was endless debate about the historical veracity of Prussia's claim to the territory and [as with Crimea today] in the end the argument that 'might is right' won the day. Lord Palmerston, the British prime minister dismissed a discussion of the rights and wrongs of the case with the remark on the lines that "Only three people have ever understood the answer to the question: the Prince Consort, who is dead; a German professor, who has gone mad; and me: and I've forgotten the answer."

Would that any of us could be so flippant about the texture of Brexit that Britain needs, or can afford!

It is quite clear that a government of highly fallible people has no settled idea of how 'hard' or 'soft' a Brexit the British people wants, what sort of Brexit parliament would accept [after how many more elections]; or what sort of Brexit the European Union will let us have. Meanwhile, the clock is ticking down to the two-year deadline in March 2019.

Whilst ignoring the nuances summarised above, the glorious Tim Martin the creator of JD Wetherspoon and his pub chain uses the forward of his Summer Magazine to make a simple, true and alarming point. The majority of Brits voted to leave the EU, but the remoaners don't want it to happen. The opponents of any Brexit are Oxbridge graduates and other categories of citizens who separate themselves from the 'real' ethnically-sound British people. Martin does not use the term, but he refers to 'the Establishment'.

There is a widespread fear that if the discussion haver on for two years without any conclusion and with a hung parliament that is heavily weighted towards a 'soft' Brexit, the 'Establishment' - a term that has not much been used for the past generation - will stitch the nation into a sort of relationship of helotry to the European Union: like the Helots in ancient Athens, we will be a subject people of the EU without the rights of full, free citizens of the EU. You just watch!

It will suit the 'softies' to prevent any conclusions being reached within the time frame, in the hope that the EU will then close down the discussion with an offer of terms that the UK will not be able to refuse. Meanwhile, uncomprehending quibbling politicians will take us nowhere.

Not a squalid little deal!

Mrs May's agreement with the Northern Irish DUP has a 'headline' cost of £1billion in extra cash to be available for the Northern Ireland Executive to spend. But that is not even the beginning of the cost [and I refer to the cash cost, leaving aside the reputational damage that is being done to keep  this weak and wobbly government in office, but not truly in power]. Retaining the 'triple lock' on state pensions and retaining the free winter fuel for all will cost billions more, and the deal may well last for the five years for which the parliament could remain in being. Given that some demands from Scotland, Wales and English regions will have to be met if the Tories are to have any hope of winning future election, estimates of the ultimate total cost of the deal seem to be running upwards of fifty billion pounds in the next few years. This drives a coach and horses through the residue of Osborne's austerity which Philip Hammond's Treasury Team was seeking to maintain. Thus it will be necessary for the government to increase its borrowing while the Tories negotiate with the DUP on the possible increases in taxes that Mr Hammond already knows will be necessary. Since the DUP-Tory agreement is on the basis of 'confidence and supply' the DUP will have an effective veto on any tax increases: so the overwhelming probability is that state borrowing in the coming year will be several tens of billions of pounds more than had been foreshadowed in any of Mr Hammond's [actual or imagined] spreadsheets.

I am sure that Mrs May's grasp of economic reality is slight, and that she has not yet comprehended anything of the hydra-headed monster that she has attached to her government. Austerity was becoming intolerable to the electorate as its effects on policing, schools and hospitals became apparent. The departure on sea trials of HMS Queen Elizabeth - the biggest ship ever assembled in Britain - was accompanied by comment that she went without any aircraft, amid rows about how many 'planes could ever be afforded to fly from her. Almost all the other areas of the armed services are being robbed of funds to make some sort of show of fitting out Queen Elizabeth properly, which means that Britain's power of self defence is significantly diminished at a time when perceived threats are increasing. Mrs May's new monster, that she will not be able to control, is the myriad demands for more money that will come from every sector of the public services and every region of the country. Ryedale in North Yorkshire has been given press coverage as one of the two areas on England most deprived of reasonably-fast broadband, and that part of the country has a special plea that may become irresistible if Scotland and Wales are allocated extra money for communications: and so it will go on, inexorably, for longer that than Mrs May can hold on to power.

Should Mr Corbyn come into power, he would find that all the key-turning jobs have been done for him, by default. The military are virtually prostrated. Austerity is being overcome by sectoral and regional demands that will become irresistible. Government borrowing will be high, and Mr Corbyn and his clique would have no compunction in 'taxing the rich' to fund even more state spending. In those circumstances the stock market will collapse and the pound will decline rapidly in external exchange: so a radical government could claim justification for radical measures to establish control of a 'socialist' economy.

The Tories will remain desperate to prevent Corbyn having access to the electorate. So they will have to try to control the monster that they have released. How they do this will be fascinating to watch: or perhaps the Tories have finally lost that ruthless determination to survive that has sustained then for centuries?