£Sterling: Looking rocky, very rocky


In recent months, the £sterling has been under formidable pressure. Against the $US, the £sterling has fallen by c10% since October - despite the unparalleled size of the US budget deficit. And, notwithstanding the serious currency travails of Greece and others Euro members, it has also fallen against the Euro.

While international trade movements are obviously key, the size of public sector net debt (PSND) is also very relevant. To fund it, unprecedented levels of gilt-edged stock – of c£200 billion this year and next – are being issued. Now that the leading buyer of UK gilts – the Government itself through its Quantitative Easing programme – has retired from the fray, perhaps temporarily, failures of gilt auctions seem increasingly possible. As such, the £sterling would be under even greater pressure.

Whilst no longer constrained by ERM obligations nor subject to previous forms of currency management, such as the long-forgotten ‘snake in the tunnel’, the next few weeks will be challenging for the £sterling. Above all, the result of the forthcoming General Election is becoming increasingly uncertain. Last autumn, a substantial Conservative Party majority was anticipated. More recently, a ‘hung Parliament’ has become a real possibility, with Gordon Brown conceivably remaining as Prime Minster within a Coalition.

Only serial Labour Party optimists expect the Government to be re-elected with a majority. However, such a scenario cannot be totally discounted – as economic pessimism dissipates and Labour strategists up their game. Remember, too, that the Conservative Party needs a near record swing to secure a workable majority. The one near certainty is that the polls will be volatile during the campaign - with the inevitable rogue poll emerging.

And if this uncertainty creates a full-blown £sterling crisis, would the Bank of England’s Monetary Policy Committee have to raise interest rates prematurely to prevent it sinking any further?

Catholic Care wins in High Court


Mr Justice Briggs, sitting in the Chancery Division of the High Court, today allowed an appeal by Catholic Care against a decision of the Charity Tribunal. The question was whether an exception in the Sexual Orientation Regulations would allow charities, like adoption agencies, to discriminate against gay couples that wish to adopt.

Catholic Care acts as a last resort option for ‘hard to place’ children, and has a much better record than those adoption agencies run purely by local authorities. They only offer this service to straight, married couples, in accordance with their religious beliefs. However, they did not, as some in the media have argued, try to justify their selection policy on the grounds of their right to religious belief, and nor should they have.

Rather they seek to justify it because they cannot continue without the financial support of the Catholic Church, and they will therefore have to close, rather than change their policy. Therefore, but for Catholic Care, those children would likely not be adopted at all. It is also important that Catholic Care’s service does not prejudice those with a different policy – plenty of other agencies did not adopt the same stance as the Catholics. This is what will have to be argued before the Charity Commission, now that the High Court has rejected the original analysis that no justification was possible in law.

In that regard, this is quite a narrow decision, being based entirely on an interpretation of the relevant regulation. It will require further litigation by Catholic Care before they are allowed to continue with their goal of housing needy children.

Despite this, it is something of a moral victory for those who feel that a government that would rather see adoption agencies close, in a crusade against any form of discrimination by anyone anywhere, really shouldn’t be so overbearing. For once, the government should try to consider the effects of the law it passes – in this case, on the children who would not be adopted if agencies like Catholic Care had to close, rather than merely the good intentions behind the legislation. Opponents of today’s decision have definitely got the wrong idea – the existence of Catholic Care does not mean that homosexuals cannot adopt. It just means that they cannot force Catholic charities to help them. It is on those ‘freedom of association’ grounds that the moral or ideological battle should be fought, even if the legal battle is waged piecemeal on technicalities.

As an atheist, I have no affinity for the Catholic Church, and don’t agree with Catholic Care’s stance on the issue, but this is the right decision for allowing them to potentially take that stance and provide good homes for needy children.

Balls vs. Johnson vs. Parents


Boris Johnson says that he’d like to give "one almighty head-butt" to Ed Balls over the Minister's refusal to give more support to Latin classes in state schools. At its core, this spat is a case of two politicians fighting over what other people's children should be taught, and it demonstrates the folly of having a state-designed national curriculum.

Boris might have a point about Latin – it is central to European history and the basis of some of the world's great languages. It’s possible that Ed Balls might be right that his children would benefit more from spending their time dancing and learning about technology. But who is either of them to impose his beliefs onto how other people's children are taught?

We cannot know for sure whether Boris or Balls is correct. By imposing a one-size-fits-all plan in the shape of the national curriculum, the decision affects children across the country, often against their parent’s wishes. The only fair solution is to give parents a choice and giving schools the freedom to decide their own curriculums. This would encourage experimentation and take some power over other people’s children away from the government.

If Boris is right and children learning Latin do well, other parents would demand Latin classes for their children and the practice would spread. If Ed Balls is right and learning Latin is harmful, the practice would decline with much less damage having been done than if every student in the country had been forced to learn it. People like Boris Johnson would be free to choose Latin classes for their children, and people like Ed Balls would be free to choose dance and technology classes.

Both Johnson and Balls are wrong to think that they know how to educate other people's children. The debate around the national curriculum should centre one question: Who knows best for children – their parents, or Ed Balls and Boris Johnson?

Mephedrone: Dealing with the facts


Following the death of two teenage boys this week, the papers were awash today with knee-jerk calls for the banning of the legal high mephedrone. The Tories have promised an urgent review into all legal highs, while the National Association of Teachers has branded the drug as dangerous as heroin and cocaine, and called for an outright ban.

It is infuriating to see that, despite years of failed policies, public figures refuse to accept that the prohibitionist ‘war on drugs’ has caused much more harm than good. One particular problem is that prohibition breeds ignorance. Little is known about any new drug, and under a system of prohibition there is no incentive for suppliers to offer a 'safe' product and no mechanisms in place for consumers to demand this: in essense, there are no market mechanisms. Because of this, the ‘man on the street’ knows very little about important things such as a dangerous level of dosage, or drugs that mephedrone definitely shouldn’t be taken with.

It is ironic, therefore, that mephedrone’s popularity is a direct result of the government’s drug policy. In a study by Professor David Nutt on the danger and damage caused by various drugs, ecstasy was ranked far below substances such as tobacco, alcohol and even cannabis. Despite this, it is categorized as a Class A substance. Police crackdowns on the suppliers of the popular club drug MDMA, which is pure, powdered ecstasy resulted in its street price rocketing while its quality plummeted. Enter mephedrone; a component of plant fertilizer with effects similar to ecstasy and cocaine, but which comes with a smaller pricetag and is legal to possess. People can now purchase vast quantities of mephedrone with ease, and consume a substance they know very little about.

In a few months the Advisory Council on the Misuse of Drugs will report its findings on the danger of mephedrone. However, to ban the drug if it is potentially dangerous would most likely lead to another obscure drug emerging to take its place, and a rise in drug-related criminal activity.

Instead, the death of these teenagers should be used as a catalyst to examine how, and why, prohibition is ineffective. In this case, the absurdly punitive classification of a relatively harmless drug has turned clubbers in to criminals, and encouraged them to take greater risks with their health. This is, however, just one of the UK drug policy’s many, many failings.

Healthcare: No need for a vote


US Congressional Democrat leaders are looking desperate to save Obama's healthcare plan. House Speaker Nancy Pelosi even seems to have worked out a way to pass the measure without bothering with the inconvenience of a vote (and the threat of a Republican filibuster in the Senate. Under this cunning plan, the House simply 'deems' the Senate version of Obamacare to have been passed by the House. Representatives would simply be voting for a procedural motion – so they can't be pinned down as voting one way or the other on the Obamacare measure itself. Much easier all round. Indeed, the Congressional Record would not even have to show who voted which way. All very convenient, especially to those who want to support Obamacare without admitting it to their electors. Citizens can hardly get annoyed at how you voted, if you didn't actually get to vote.

Of course, the Republicans are not shy of using procedural tricks themselves, and used precisely this tactic in order to raise America's debt limit. The Democrats then took them to court for subverting the legislative process. (But no doubt they think it's different this time.) Alas, the court action was unsuccessful, so now the Republicans can hardly take the moral high ground.

The result is that, without anyone in the House of Representatives voting for it, Obamacare will be signed into law with great flourish and fanfare, and about a sixth of the US national income will be diverted into socialised medicine – exactly the sort of bureaucratic monopoly that we in the UK are trying to unravel.

Is this sleight-of-hand all a betrayal of the constitution by a self-obsessed political class that is estranged from life beyond the Beltway? Interesting question: let's take a vote on it.

Eamonn's DIY manual for fixing Britain – The Alternative Manifesto – is now out. Get it here.

Blowing smoke, third-hand


cigaretteI tend to stay away from the 'health 'sections of newspapers, mainly because I am rather bored of being told that I am a chronically unfit binge-drinker with a lifestyle leading unavoidably to obesity and depression. However, I'm surprised that I managed to miss hearing about the newest public health terror: third hand smoke.

According to new research done by Berkeley scientists, there is just no escaping the toxins of cigarette smoke (which the New York Times hastens to point out includes the spy-killing, radioactive, polonium 210.) Apparently, smoke residue on clothes, furniture and wallpaper can react with the common indoor pollutant nitrous gas to cause the wonderfully sinister sounding 'tobacco-specific nitrosamines', or TSNAs. And it seems that nowhere is safe. A Berkeley spokesperson points out that "nicotine residues will stick to a smoker's skin and clothing. Those residues follow a smoker back inside and get spread everywhere." Indeed, the smoker's selfish behavior will particularly harm young children, who will innocently touch, suck and even breathe in close proximity to the infected materials.

The finding of this research has lead to the Berkeley scientists issuing a dramatic conclusion: buildings, rooms and public places should be 100% smoke free, and nicotine-laden furniture, carpets and curtains replaced to prevent any further toxic leakage. In any circumstance this is a rather hysterical course of action to take, but what makes it so ridiculous is that the BBC reports the very same scientists are "doing more research to better understand what threat, if any, TSNAs pose." Yes, that's right: it's not just that the danger hadn't been proven – in fact, it hadn't even been studied. As FOREST's Simon Clark put it, this is "propaganda dressed up as science."

Of course, the fact that there is no evidence to prove that TSNAs are actually a health hazard hasn't stopped UK ideologues and campaigners giving their twopenny's worth. Action on Smoking and Health insist "this study adds a new dimension to the dangers associated with smoking and provides further evidence of the need to protect...from exposure to tobacco smoke", while Cancer Research add the importance of making homes and cars smoke-free.

Despite contributing nearly £10bn a year to the public purse, smokers are increasingly treated as lepers by the government and by scientists with a holier-than-thou attitude. Any attempts to further ostracize smokers would be authoritarian and unnecessary at the best of times, but for scientists and lobbyists to push an agenda with no scientific backing is simply crazy.

P.S. Over at thefreesociety.org, Chris Snowdon looks at 'third-hand smoke' in a little more detail.

Land of the bureaucrats


In the Spectator magazine's 'How to Save Britain in Ten Easy Steps: A Manifesto', Ross Clark asks a very pertinent question. How is that the UK's public sector is larger now (as a percentage of GDP) than it was in 1979, when it was still controlled vast swathes of industry? The answer is bureaucracy:

What are public sector workers doing if they are no longer mining coal, driving buses or making steel? A huge and growing number of them are engaged in regulatory activities. We have gone from a blue-collar public sector to a white-collar one. The state does not work on the shop floor; it is employed upstairs in the compliance department, in health and safety and in human resources. Nowhere demonstrates the change more than Castle Morpeth in Northumberland; once a coal-mining district, it has developed an economy which revolves around state bureaucracy. Government employers, most significantly the local authority and the Inland Revenue, account for 57 per cent of all jobs in the district.

That statistic is an eye-catching one, but even the nationwide picture is depressing. According to the ONS, there are now more than 6 million public sector workers, which is equivalent to more than 20% of the workforce. How many of them provide a service you would willingly pay for, I wonder? And how many represent nothing more than a vast paper-shuffling payroll vote for the advocates of ever bigger government?

As I've written before, you could cut public spending by £118bn overnight, just by making a reasonably extensive list of government's necessary functions (and I mean necessary in an immediate, political sense rather than a philosophical one) and getting rid of any area of spending that doesn't appear on it. A further 15-20 percent efficiency savings on what remained is not out of the question either. The trouble is, with so many people dependent on big government for their livelihood, and such strong lobby groups to protect those special interests, it's going to take a very brave politician to do the right thing.

If anybody finds one, let me know...

Enough is enough


Check out this excellent new video from the Drinkers' Alliance. Punitive taxation on alcohol is often justified on the grounds that alcohol (and in particular 'binge drinking') causes enormous social problems, or negative externalities, which ought to be 'priced in' the initial cost of a drink. But the key point to remember here is the one Tom Papworth made recently in relation to dangerous dogs: "It is a sign of extremely bad law-making that, rather than target criminal activity, the legislator seeks to make the wider community compensate for the bad behaviour of a few. It smacks of collective punishment: somebody from your village breaks the law, so your whole village is burnt to the ground." Law-abiding Britons have put up with this approach for far too long as it is - now is the time to fight back, and resist the onward march of the bully state.

What works in education reform


At lunch yesterday I met Anders Hultin, CEO of Gems Education in the UK, which is associated with the highly successful Konskapsskolan school chain in Sweden. So I was getting some good tips about what makes Sweden's school voucher system work. I thought I might pass on a few of them to the Tory schools spokesman Michael Gove MP, who wants to engineer the same supply-side revolution here. Though he probably knows it all already, but just can't say it because of political correctness.

In Sweden, the average cost of a municipal education follows the choices of parents. Even if they send their kid to a private school, that budget – about £6,500 – follows. To get the money, private schools are not allowed to charge top-up fees, and there is no academic selection. But it's easy to get a licence to enter this system, and 1,100 new schools have sprung up because of it. Most, about 800 of them (Gove please note), are profit-making. Many are small schools but in big chains (some with turnovers of £100m and more), which actually have a successful model for organising and running schools, and take that successful brand to one school after another.

Nor surprisingly, this supply-side revolution, a deregulation of the school sector, has brought plenty of new investment. In the UK it might cost £25m to set up a new school. In Sweden, it costs the state nothing, because parents, teachers, companies and others raise the money they need – and usually work out ways to do things far cheaper than the state can. And it works. the new schools have 20% better educational outcomes.

There seem to be four lessons from all of this. (1) Make it easy for new people to come in and provide education. Standards, yes, but allow people to start small, maybe renting empty office or warehouse space, rather than insisting that everything has to be built and run as the state builds and runs it. (2) Allow profit making, because that is what drives the investment and the risk-taking. (3) Don't keep subsidizing failure, but reward success. (4) Let people spread their success. That is what makes the Swedish system work: it's about knowing how to deliver education effectively, and taking that expertise far and wide.