Anthony Browne

Anthony Browne

Posted on 13 Dec 2011 09:54:31 by Anthony Browne

Anthony Browne: Europe: nothing to see, move along now

Do you believe the politicians or the markets? The power brokers and the money brokers have reacted in diametrically opposite ways to last week’s summit. To the politicians the summit was a major event, seeing a step change to the creation of “Two Europes” (Sarkozy), with “pygmy” England (Clegg) dangerously isolated on the sidelines, and the British Prime Minister showing Churchillian (most right wing papers and Conservative MPs) resolve in wielding the British veto for the first time. The markets on the other hand have reacted as though pretty much nothing has happened – long term interest rates remain punishing, the value of the euro slumped against the dollar, and the wolves continue to approach the doors of Spain and Italy. This “comprehensive solution” certainly didn’t instantly solve the crisis. 

Despite all the political fireworks, it is difficult to see what this fiscal accord really achieves. It certainly fails to deliver any short term relief for the euro, since its provisions wouldn’t come into effect until the middle of next year. Even longer term, it seems a bit of a damp squib – it is pretty much just introducing mechanisms to try to enforce the Maastricht Treaty, which countries were meant to abide by anyway. “Ok guys you remember this treaty we all signed and solemnly declared we wouldn’t break? Yes, well now let’s all agree again that we are not going to break it – and this time we mean it!” You can easily imagine a scenario where this accord could have been brought in without anyone noticing very much; EU politicians are starting to express their unease that it doesn't do the job. There were certainly no big bazookas or Eurobonds. Nothing else really changes. As Olli Rehn, the young Finn who is the European economic and monetary affairs commissioner, pointed out yesterday, we are still going to have a tidal wave of financial services legislation. What does happen is that ministers from the fiscal accord countries will have monthly meetings, but unless they deliberately use those meetings to undermine the Council of Ministers (where all 27 countries are represented, including the UK) by discussing issues that are the clear remit of the full EU, they will soon have a pretty thin agenda. The explosive politics suited both David Cameron and Nicolas Sarkozy for their own domestic reasons, and this sort of political drama can have long term consequences, but it blinds us to the reality that this summit itself didn’t achieve very much.

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Posted on 9 Dec 2011 15:37:58 by Anthony Browne

Anthony Browne: The creation of a 26-member Fiscal Union will make it much harder for Britain to stay in the European Union

Could this be the beginning of the end of the UK's membership of the EU? The Prime Minister definitely did the right thing in refusing to sign up to a new EU treaty unless the UK got safeguards for the City. It is possible that in 24 hours the deal looks totally different (EU negotiations, and I have covered many, are like that). But assuming that the proposal we have now - where 23 to 26 EU nations go for fiscal union (let's call it "FU") outside the EU treaties - is what we end up with, then this is where the fun and games really start.

As Nick Robinson has pointed out, there is going to be an inevitable and almighty bust up about the use of EU institutions to run the FU. The Prime Minister ruled out the use of the European Commission and European Court of Justice to run the new FU, which he has every right to do, but it is certain that the EU countries in the FU - that's pretty much all of them - are going to strongly resist haveing to create a parallel European Commission, a parallel Court, and a parallel European Council to run the fiscal side of affairs, just because of resistance from the UK. And if it's the Commission and 20-plus EU members against the UK on this, who would you put your money on? 

Fiscal Union is the massive new project, which are are not part of, that will bring the FU members so much closer together than monetary union ever did - this involves shared sovereignty on such politically charged issues as tax and spending (rather than the rather technocratic conerns of monetary policy - you never get riots about exchange rates). The UK will be outside this, almost totally isolated, fighting battles on use of EU institutions with almost all its EU partners, with many of them - not just France - seeking to get their own back on the UK. The UK will be in an extremely difficult position. There will be endless crises and battles, and throughout it will be far easier for eurosceptics to make a positive case for leaving the EU - portraying the UK as a sort of free-market Hong Kong off-shore from socialist China. Even Dennis MacShane, the highly Europhile former Europe Minister, has just said there is now little point of the UK remaining in the EU. With enemies like that, Eurosceptics hardly need to bother having friends.

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Posted on 9 Dec 2011 15:37:58 | Permalink | Comments (33)

Posted on 9 Dec 2011 09:04:43 by Anthony Browne

Anthony Browne: France and Germany could have had their treaty, but they wanted control of the City instead

Well, the cat really is out of the bag. Like closet athiests in the 17th century wondering behind closed doors, away from the ears of the priests, whether God really exists, so British political leaders have long wondered behind closed doors whether the French and Germans really do want to take control of the City. It's the crown jewels of the European economy, and they want it, was the secret fear. No mainstream politicians ever dared say it in the open, although many thought it. Whispering quietly, ministers have said to me that they believe the French are determined to do down London.

One very senior French financier now based in London once came to me and asked why the British couldn't see what was happening - it was called Project Spartacus, and it was an attempt, co-ordinated across French government departments, to do down London and make Paris the financial capital of Europe. Because he was French, he spoke about it openly with French officials and ministers, but he said they never speak about it in public because the didn't want to arouse the British - although President Sarkozy occassionally let slip his ambitions. In the wake of the financial crisis, the French and Germans did in effect take control of regulation of the City away from the British government - there are now 49 different bits of financial services regulation coming from the EU to London, and pretty much all designed to clip the wings of the City. And last night we saw how much it really matters to France.

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Posted on 9 Dec 2011 09:01:51 | Permalink | Comments (67)

Posted on 7 Dec 2011 07:19:24 by Anthony Browne

Anthony Browne: National pay bargaining is already fraying at the edges

Should a nurse in Morecombe be paid the same as one in Manchester? Should a policeman in London get paid only slightly more than one in Lancashire? Potentially one of the biggest announcements that came out of the Chancellor’s Autumn Statement was the review of national wage bargaining. Amidst all the doom-mongering, there was little discussion of this new proposal, other than to note the outrage of the unions. Obviously we don’t know what the review will recommend, or whether the government will implement its conclusions. But the effects of dismantling national wage bargaining are potentially very far-reaching (and were explored some time back by my old think tank, Policy Exchange).

 About 80% of public sector workers are covered by national wage agreements. This means that roughly one in five employees in the UK have their pay set without regard to local labour market conditions, but rather as a result of what the government decides to pay across the country. That might not matter if the UK had a single labour market, but we don’t – it is a myriad of interconnected markets, with some areas of the UK having labour shortages, and some suffering very high unemployment. The private sector adjusts to that by varying wages to ensure supply and demand are better matched – in 2009, the median weekly wage was £436 in the North East, and £627 in London, a difference of 44%. Strip public sector jobs out of that, and the difference would be even greater. Public sector workers in London do normally get a London weighting uplift, but it doesn’t match the normal income premium for working in London.

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Posted on 7 Dec 2011 07:19:24 | Permalink | Comments (12)

Posted on 5 Dec 2011 18:48:50 by Anthony Browne

Anthony Browne: It is in our interest to quietly support the cause of EU treaty renegotiations

Open Europe’s report today makes a compelling case for the government to spend what political capital it has in the EU defending the City from the barrage of EU regulations. Financial services makes up 10% of UK GDP, whereas fishing makes up 0.05%. However disastrous the Common Fisheries Policy – and it is difficult to think of any policy that has been more of a complete and catastrophic failure (please feel free to suggest any!) – it just a matter of numbers that it is more in the UK’s interest to try and protect financial services rather than resuscitate fishing, or reform farming. At the All Party Parliamentary Group on European Reform meeting today, at which the report was presented, there seemed to be genera l consensus on this among MPs and Peers (indeed, the report seemed very well received).

There are three other reasons why the government should focus on financial services.  Firstly, it is being subjected to a far greater legislative tidal wave than any other sector – with 49 EU regulatory proposals in the pipeline that would affect the City (including the disastrous financial transactions tax, and the ban on short selling). This regulatory deluge is almost exclusive aimed at trying to clip the wings of financial services, rather than help them grow. Indeed the meeting today heard several first hand accounts of European politicians apparently being determined to do down financial services.

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Posted on 5 Dec 2011 18:48:50 | Permalink | Comments (17)

Posted on 30 Nov 2011 05:30:23 by Anthony Browne

Anthony Browne: George Osborne is a good Chancellor in the worst of times

Is George Osborne having a good war? It is a critical issue for the country and its economy - and the future of the Conservative Party.

The Chancellor is in an extraordinary position. He has been dealt the worst hand of any chancellor since at least Geoffrey Howe after the winter of discontent in 1979, and possibly since Philip Snowdon in 1929 (he ended up at war with his own Labour party over its "Bolshevism gone mad" response to the great depression, and ended up leaving the party to serve in the national government). George faces the national debt crisis, out of control public spending, a UK recession, the collapse of the euro, probably double dip recession caused by Europe, the coalition government restricting his room for manoeuvre, and – oh yes, entrenched unions calling national strikes defending the indefensible today. To have any one of those would be a problem; to have all at the same time is a perfect economic storm.

There are two theories about how this can play out: cometh the hour, cometh the man; or we are all victims of circumstances.

In bridge (which I used to play competitively) it can sometimes be difficult to distinguish between bad playing and a bad hand - if you get a good hand you can seem like a master sweeping all before you even if you are playing clumsily; if you get a bad hand, you can fail to win anything, however crafty and skilful you are being. And as it is in bridge, so it is often in politics. It isn't so much a question of Macmillan’s much dreaded "events, dear boy, events", but "circumstances, dear boy, circumstances." Very often, the reputation of characters is merely a reflection of the circumstances they find themselves in.

The only reason that Gordon Brown succeeded in persuading the country for about a decade that he was the best chancellor in history was that he had the good fortune to inherit an astonishingly healthy national economy in a time of stable, low inflationary global economic growth. His reputation was a reflection of the previous Conservative reforms, and the entry of China into the global market. He took the laurels, and basked in the glory, of the achievements of others. In the end, of course, he was found out, and we now know that actually he was probably about the worst chancellor in history. You have to be a really bad chancellor to ruin the golden legacy he was given, and turn a country like the UK to the brink of bankruptcy (to give credit where it is due, his greatest achievement was undermining Tony Blair's attempts to take us into the euro).

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Posted on 30 Nov 2011 05:30:23 | Permalink | Comments (32)

Posted on 28 Nov 2011 19:13:03 by Anthony Browne

Anthony Browne: The financial transaction tax will be a tipping point for many British people

The mood in Europe has taken on an ugly tone, which has had a possibly counter-intuitive outcome: the EU's cheerleaders in Europe have become the best recruitment sergeants for British politicians who want to withdraw from the EU. The more bullying the rhetoric from French or German politicians, the more the British public are likely to conclude that the EU really is against us, and decide we should pull out.

Today, in an interview with the FT, Algirdas Semeta, the European Commissioner for taxation, tells the UK to join the financial transactions tax, and if it doesn't the tax will be designed in such a way that London will still lose out (it will be imposed wherever the transactions take place). Mr Semeta is a Lithuanian economist who no one in Britain has heard of (let alone voted for), who has been appointed to a position of great power, and is now telling us that the we have to accept something that is bad for us even though the democratically elected British government is totally opposed to it. This is disastrous for British public support for membership of the EU. The financial transaction tax shows the EU at its worst - just as the EU is fighting the deepest economic crisis in its history, it proposes a tax which the Commission itself admits will reduce european GDP. Just when the EU is seriously struggling to remain competitive with the rising powers of Asia, let alone America, it wants to impose a tax that will even by its own admission seriously damage our competitiveness.

But that doesn't matter - Mr Semeta says we should support it because it will be popular with voters. This is back to the 1930s - where a recession was turned into a depression because politicians imposed economically-runinous but electorally-popular policies (notably import tarrifs, slowing down world trade). The financial transaction tax is not just economically destructive, it is also very unfair - it will almost entirely fall on London, the EU's financial capital, while leaving the rest of Europe unscathed. Mr Semeta's native Lithuania, not a known financial centre, will barely pay at all. What joy there is in pushing taxes that only fall on other countries! Financial services aren't popular even in the UK, but people will I am sure still rally round if the EU is seen to be picking on Britain.

The danger from the EU's point of view is that the financial transaction tax will be a tipping point for many British people, pushing them over from irriration with the EU to wanting to pull out entirely. If the EU really do push it - and it could still prove a decoy to soak up all the UK's political capital - then it could prove the trigger that pushes the UK's withdrawal from the EU. It isn't what EU leaders want - or what I think is really in the UK's interest. But the costs of our membership of the EU are going up, while the benefits going down.

Posted on 28 Nov 2011 20:17:44 | Permalink | Comments (30)

Posted on 25 Nov 2011 18:30:31 by Anthony Browne

Anthony Browne: An employers' NI holiday would be simpler and more effective than handouts for companies hiring the jobless

Nick Clegg’s announcement of £1bn worth of programmes to help the young unemployed is more than welcome. I have made the point on this site several times that the government has to be on the front foot on the battle against unemployment. It is obviously (as Tim pointed out) unfortunate that the Lib Dems briefed that getting the Tories to agree to job subsidies for the young unemployed was like getting a vegetarian to eat a kebab. The leak was clearly aimed at making the Tories seem like the nasty party, but I suspect that many senior Tories did indeed have reservations about the scheme – not because they don’t support the principle of it, or don’t want to help the unemployed, but because they are worried about the effectiveness of it. When Labour introduced their Future Jobs Fund - paying the entire cost of giving unemployed people a job for six months in the public sector – many leading Conservatives (and indeed business groups) were scathing, because such job subsidy schemes have previously proved futile. Non-jobs are invented to put the jobless in, who are then back on the dole when the subsidy finishes. The coalition’s Youth Contract, by contrast, is far better designed, for two reasons – the government will only pay at most half the cost of giving someone a job, and it is in the private as well as public sector.  Private companies are less inclined to invent non-jobs than the public sector, and if they are paying half the wages, they will certainly be keen to ensure the new workers are doing something worthwhile – which means they are more likely to want to keep them when the subsidy finishes.

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Posted on 25 Nov 2011 18:30:31 | Permalink | Comments (10)

Posted on 24 Nov 2011 16:01:04 by Anthony Browne

Anthony Browne: The government needs a powerful message that it is giving help to the unemployed: an employers' NI holiday would fit the bill

Imagine young James, out of work for a year, and almost giving up hope for the future. He applies for a job paying £15,000 a year at a small company, Smiths, that is just managing to tread water in these difficult times, and to his great joy gets it. This is economic motherhood and apple-pie, with everyone a winner: the company gets a new worker to help it survive, James get off the dole and gets a future, society gains from an alienated youth being turned into a productive worker, the government and taxpayers save thousands of pounds in benefits payments they no longer need to make to James. This is such good news all round, surely the government should encourage this sort of thing to ensure more of it happens. But no, the government actively discourages this: its response is not to help, or say thank you to Smiths for taking James off the dole and giving him hope, but to present them with a demand to pay £1,094 in employers' National Insurance contributions, on top of the thousands in tax and NI that James must pay himself.  The economic laws of supply and demand mean that employers' NI – a tax on jobs – reduces the number of unemployed who are given jobs, even though it saves the government vast sums in benefits.

I recently urged on ConservativeHome that the government should introduce NI holidays (or a share of benefits saved) for companies that give jobs to people claiming Jobseeker's Allowance. The good news is that the government have been actively considering this policy; the bad news is that they have decided they can’t afford it. This is to misunderstand the policy. As I pointed out, it can be designed to reduce the deadweight costs (of giving NI holidays to people who would be getting jobs anyway). Designed right, it could save the government more in benefits than it would cost in tax breaks. If the government just wants to dip its toe in the water, it could give the NI holiday only for three months to companies that give a job to 18-24 year olds who have been unemployed for over two years. We know that those who have been unemployed for over two years are very unlikely to find a job without help, and so the deadweight cost would be little; limiting the holiday to three months will reduce its cost to the Treasury (but the Treasury still retains the entire benefits saved). The benefits saved are so much greater than the value of the tax break given, that I reckon that even if the deadweight was 80% (ie 4 out of 5 would have got jobs without the holiday anyway, and only 1 in 5 given a job because of the tax break) then this would still be a money-making policy for the government. The government should evaluate the policy after a year of operation, and gradually spread it out  until the NI holiday is given for a year to companies that take on anyone who has been unemployed for more than three months.

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Posted on 24 Nov 2011 16:01:04 | Permalink | Comments (17)

Posted on 23 Nov 2011 14:02:56 by Anthony Browne

Anthony Browne: In the build-up to the Autumn Statement, the announcement of Osborne's growth strategy is growing in importance day by day

Next week’s Autumn statement by the Chancellor - and announcement of his growth strategy - is growing in importance almost by the day. At the beginning of the year, it was just going to be a fairly run-of-the-mill attempt to get the economy to accelerate faster out of a recession that had ended. Now, it has turned into a question of saving the UK from being engulfed in Europe’s financial collapse: the fate of the nation depends on it. For many outside government – including MPs and commentators – it has also become a critical test of the coalition, and whether it can deliver. It will be critical to the public deciding whether this unusual two-headed government is a success or not. Matthew Parris – followed as so often by others – said recently that the prime minister (and the Conservatives more generally) are at a tipping point, where the public make up their mind about what they actually think about him – is he a deliverer or ditherer - and they will then hold that view from then on. The huge anticipation and timing of the growth strategy, and the enormous coverage it is bound to get, is likely to mean it is instrumental in helping form this public view. For the Chancellor himself, it will be the most important performance of his career. It was thought until recently that the debt reduction strategy would be the thing that defines the Chancellor – the success of that is what he would be forever remembered by, and judged against. But the growth strategy has now overtaken the debt reduction strategy in importance, in the eyes of the media and other politicians. As a political journalists I always resisted the endless fatuous claims that this budget or that by-election were the most important ever, so I don’t indulge in this thinking lightly. But it is quite likely that the growth strategy next week – and whether it is seen as a success or not - will define the future of the government, the prime minister and the chancellor. It might also save the country. So there’s no pressure, George!

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Posted on 23 Nov 2011 14:02:56 | Permalink | Comments (6)

Posted on 18 Nov 2011 10:35:55 by Anthony Browne

Anthony Browne: Give a job to the unemployed and get half of the benefits saved

The Chancellor is getting flooded with proposals to revive the economy (see ConHome's 'turbocharge series'), so he should be able to create some fireworks during his growth review. Most of the proposed reforms aim to boost businesses, such as reductions in taxes and red tape. But the Chancellor should include some measures to more directly help the unemployed get into jobs, not just because it is the right thing to do, but because otherwise the headlines about youth unemployment being the worst since the last Conservative government will start to draw political blood. He needs to help people find jobs, and to be seen to be helping them. Clearly the government is already doing a massive amount - I am a big supporter of Ian Duncan Smith's welfare reforms, and the Work Programme should prove very successful. But there is another reform I think the government should make.

One of the best ways to help the unemployed would be to give employers an incentive to take them on. I don't mean subsidising jobs for the unemployed, like the Labour government's future jobs fund. Such job subsidy schemes are notorious for not working - they encourage public or private employers to invent non-jobs, and then people are back on the dole when the subsidy finishes because the job no longer exists. Instead, the government should attach subsidies to unemployed people, to make them more attractive to employers who are recruiting for real jobs.

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Posted on 24 Nov 2011 15:21:11 | Permalink | Comments (25)

Posted on 16 Nov 2011 07:48:27 by Anthony Browne

Anthony Browne: Who will win the £250,000 prize for designing a €uro exit plan?

A little over a decade ago, the rage amongst economists was predicting the impact of the launch of the euro. I remember a study came across my desk predicting a slump in world nickel prices because euro-coins contained no nickel in case it irritated the sensitive skins of Finns.  Another favourite report was that the euro would cause a bonanza for organised criminals because the high value 500 euro notes would make it easier to smuggle cash across borders. Then there was the heady stuff, such as euro replacing the dollar as the global reserve currency, and Britain being finished as an economic power for refusing to ditch the pound.  But, alas, it wasn’t to pass. The hot topic amongst economists now is the break up the euro. How times have changed.
Euro meltdown
The recently-launched Wolfson Prize for Economics, offering £250,000 for the best submission on how to handle a country leaving the euro causing least economic chaos, has been inundated with over 600 expressions of interest, with many from the top institutions of the world. Indeed, a couple of the world’s most famous economists declined invitations to be on the judging panel because they wanted to submit their own entries. The prize – the brainchild of Lord Wolfson, the chief executive of Next – has still managed to attract a  topflight panel of judges, being unveiled today. It is chaired by Derek Scott, Tony Blair’s former economic adviser, and also includes Charles Goodhart, former member of the Bank of England’s Monetary Policy Committee; Professor Jean-Jacques Rosa, former economic adviser to French prime minister Lionel Jospin; Professor Francesco Giavazzi, former economic adviser to the European Commission; and Professor Manfred Neumann, a former adviser to the German Bundesbank.

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Posted on 16 Nov 2011 07:48:27 | Permalink | Comments (23)

Posted on 14 Nov 2011 15:31:30 by Anthony Browne

Anthony Browne: The European Commission's proposal to regulate credit rating agencies is simply shooting the messenger

It is astonishing that the European Commission is responding to the European sovereign debt crisis by proposing to regulate credit rating agencies. Its proposals, leaked in Brussels, include silencing the rating agencies – such as Standard & Poor and Moody’s – in exceptional circumstances. I don’t think those circumstances will include those where the rating agencies are saying governments are solvent, but the governments themselves are insisting they aren’t.

This plan to muzzle the rating agencies is troubling for a number of reasons, and highlights much that is flawed about the EU’s approach. For a start, it is obviously an attempt to shoot the messenger. It is similar to someone who is failing to lose weight blaming the scales for not telling the truth, or a drunk driver blaming the breathalyser. Don’t like how you look in the mirror? Simple – just smash the mirror up with a hammer. Attempting to silence critics or harbingers of bad news has been the approach of dictators through the centuries. There are serious issues around free speech – what right does the EU have to tell a company it can’t publish its own research, or circulate it amongst its clients? It also leads to bad policy making: it is clearly better to put out a fire than to switch off the fire alarm and pretend all is well. Silencing the alarm bells of credit rating agencies will encourage governments to think they can live beyond their means, but will also push up the cost of borrowing in Europe. By making the risks less visible, they clearly make EU governments riskier to lend to, which will push up bond yields. The EU shouldn’t be targeting the credit rating agencies, it should be targeting the cause of the crisis.

There is a wider point here, which is ultimately the most worrying. It is highly unlikely that European leaders will blame themselves, or their inherently flawed policies for the euro crisis – they will do everything they can to shift the blame onto someone else. Greece is obviously a prime target, but as the contagion spreads they will search for a wider scapegoat. The perfect target is obviously financial markets, and not just the credit rating agencies. It is the markets that are holding the governments to account for their inability to live within their means, pushing bond yields up. The news over the weekend that various London-based hedge funds have done well out of the euro crisis will only fuel the desire to blame financial services – and indeed London. The UK went through the same when we fell out of the ERM, and responded at first by demonising George Soros for breaking the Bank of England - when in fact it was the flawed policy that was to blame. I make a confident prediction: the EU will react to the euro sovereign debt crisis with a renewed wave of legislation aimed at “taming” financial services.

Posted on 14 Nov 2011 15:31:30 | Permalink | Comments (27)

Posted on 9 Nov 2011 07:31:00 by Anthony Browne

Anthony Browne: Conservatives must join the debate about the morality of capitalism

If you chose not to take part in a debate, you can’t complain when it doesn’t go your way. It is the reason why I have long urged those who believe in science, aspiration, markets and modernity to engage in environment debates, otherwise they will be won by default by those who don’t believe in science, don’t want people to better their lives, support socialism and want us all to go back to the past. And if you start off the argument by insisting there is no problem, you are not engaging in debate, but excluding yourself from it.

So it is important that those who support free markets engage with the current debate on the morality of capitalism. We shouldn’t just say there is nothing to talk about, and then leave all the talk to the St Paul’s anti-capitalism protesters, their fellow travellers in the Church, and cheerleaders in media. If we do, we will only have ourselves to blame when we find capitalism and free markets have finally lost the support of the British public. That would be a good day for socialists - and a terrible day for the rest of us.

So I very much welcome David Cameron’s heavily trailed speech tomorrow on moral markets, which is likely to draw upon Matthew Hancock’s and Nadhim Zahawi’s recent book Masters of Nothing: the crash and how it will happen again unless we understand human nature. The phrase moral markets has a catchy ring to it, but is rather awkward – markets are a series of transactions, and so rather amoral in their nature. “Ethical Business” is more appropriate, but less catchy.

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Posted on 9 Nov 2011 07:31:00 | Permalink | Comments (50)

Posted on 8 Nov 2011 15:35:34 by Anthony Browne

Anthony Browne: Why is the Home Office cutting the Border Agency - which is meant to pay its own way?

The current immigration furore is an unwelcome return to the sort of headlines we came to expect under Labour, and had been largely avoided until now by the Coalition government (and it will clearly push immigration up the political agenda). Debate will clearly rumble on about the details, but there is one aspect that no one seems to have addressed: why was the immigration service facing such big budget cuts in the first place? The immigration service raises considerable income through issuing visas, and various other fees for services to immigrants and visitors - indeed, immigration groups often complain about the rising costs. The aim used to be that the service is self-financing - that the charges to immigrants and visitors pay for the cost of border control (with some exceptions, such as asylum). This is under the general principle that immigrants and other visitors should cover their own costs, and not expect to be subsidised by the taxpayer. The Home Office obviously needs to make cuts, but it seems non-sensical to make them to a service that is meant to be paying its own way. The Home Office always had the more politically digestible alternative of closing any funding gap that exists by raising fees.

Posted on 8 Nov 2011 15:35:34 | Permalink | Comments (14)

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