I'm an Obamanite, I think.

I have a confession to make. Silently, by stealth, almost unconsciously, I seem to have become an Obamanite. I just can’t help wanting Barack Obama to win the American Presidential elections. This is all the more curious because I hadn’t really been taking a great interest in the US presidential primaries, which come to a dramatic climax this week in Texas and Ohio. And what I knew about the youthful Democratic contender didn’t inspire me.

His slogan “Change you can Believe in” struck me as one of the worst political mission statements since Labour’s “Forward not Backwards” at the 2005 UK elections. “Change you can Xerox” as Hillary Clinton put it in one of her more elegant put-downs, after Obama had been exposed for plagiarising speeches. His waffling about the “audacity of hope” seemed like the same old vacuous flim flam.

Much of what Obama has put on the table since Iowa at the start of January, is fairly predictable when it isn’t actually platitudinous - apart from his alarming penchant for economic protectionism, and his refusal to go all out for universal health care in a country where 40% of the population lack proper cover. He is opposed to the war in Iraq, which is good, but he once said he might bomb Pakistan, which isn’t. And he’s not entirely clear on when he would pull out of Baghdad.

Obama also has a rather messianic approach to politics. He speaks with the hypnotic cadences of Martin Luther King; remains a long-time member of a rather dodgy church - the Trinity United Church, with creationist and black nationalist tendencies; and tends to inspire a kind of wide eyed devotion from his followers that isn’t conducive to rational debate. Finally, I found it hard to warm to a politician who is being described as the Democrat’s answer to Ronald Reagan.

So, plenty of reasons not to fall under the spell of Obama - but I think I have, nevertheless. Perhaps it’s a function of advancing years, or just too much exposure to Obama’s speeches and interviews on Youtube. But after a week immersed in the warm bath of Obama’s personality, I can only say that I that if I were an American I would vote for him. I simply couldn’t see any reason not to.

Yes, I know it is personality politics, but that’s the only game in town, and he has a personality which is bigger than the state of Texas. He is a remarkable communicator. I can understand the comparison with Ronald Reagan now, and I no longer find it offensive, because Obama’s ability to convey solidity, humility and warmth is wedded to impeccably liberal principles. Yes, he may turn out to be a black Tony Blair - but I supported him as well.

And Obama is much more radical than Blair - something the American Right has only recently fully appreciated. On the climate, for Obama - if he goes the distance - will be the greenest president in American history. He has promised to cut greenhouse gas emissions by 80% by 2050 and wants to turn America into a powerhouse of renewable energy. Unlike his Republican predecessor, George W. Bush, Obama is not an oil man, and sees America’s reliance on foreign oil as economically, environmentally and strategically damaging.

Obama has fudged the timetable for the withdrawal from Iraq, largely because of the tactical success of the Bush ‘surge’ in Baghdad. But there is no doubt in my mind that he intends to pull out completely, and that he will not be invading any other countries. With Barack Obama American has an opportunity to atone, and to return to the internationalist principles of Woodrow Wilson. If America elects a black president, who was partly raised in a Muslim country and has the middle name of “Hussein” it will be a potent message to the world. There will be a clean out of the security services and the removal of the neo-conservative networks who have done so much to distort and debase US foreign policy. The project for a new American century will be a thing of the past.

Obama has also promised to halt the development of any new nuclear weapons and is committed to reviving international disarmament. He might be the man to shake Gordon Brown out of his nuclear torpor, and generate some serious momentum towards dismantling weapons of mass destruction. Obama may ultimately be captured, like his predecessor Bill Clinton, by the military industrial complex - but it’s a chance worth taking.

He may also be captured by the Wall St banks who have dominated American economic decision making for the last three decades. However, with America plunging into recession, repossession and bank failures imminent, there is a space here for a radical politician. If America is headed for depression who better to revisit the New Deal of Franklin D. Roosevelt?

Sadly, Hillary Clinton, Obama’s faltering Democratic adversary, is too compromised by her initial support for the invasion of Iraq, and also for her years in as a linchpin of the US political establishment. It is tragic for her that she has come so near to becoming the first woman president, just as the first black president hove into view. But in this contest of minorities colour wins.

This is partly down to Obama’s secret weapon - his wife Michelle. She is a campaign manager’s dream: a highly intelligent, highly attractive political. partner, with a real sense of style, but without any sense of social inferiority. She is a black Jackie Kennedy without a doubt. She would be a ideal post-feminist First Lady, who doesn’t need to make an issue of her sex because she is so manifestly her own woman.

The Republican blogs seized on her comment during the primaries that “For the first time in my adult life I feel really proud of my country”, but that is exactly what the white majority should want a prospective black president’s wife to say. There has been a lot of talk about how Mr Obama could unite America and finally put an end to the politics of racial difference. That is too much to expect. But Mrs Obama really could be the beginning of the end for the gnawing sense of racial grievance among American blacks. A role model who isn’t a gangster, singer or athlete.

Of course, as a hack, I am attracted to the Obama ticket because a black president would be such a good story. Imagine Obama walking to the podium at the United Nations and apologising for America’s belligerent behaviour in the Middle East. Imagine him with joining hands with Nelson Mandela and announcing a quadrupling of US aid to Africa. Standing among the Palestinian masses in Gaza, and looking just like them. Sitting down open necked with President Ahmdinejad in Iran, to talk about nuclear non-proliferation.

Yes, of course it’s a dream - a realisation of fantasy West Wing politics. But it’s a bloody good one. And there will be time enough for disillusion.

News blackout lifted on Liberal Democrats

Newspaper editors and their readers have reacted angrily this weekend to the lifting of the media blackout on Nicol Stephen. A voluntary understanding between the media and the voters had led to news outlets observing an almost complete silence on the Liberal Democrat leader since the party lost power in the Scottish elections last May.

It’s feared that following his ‘outing’, Mr Stephen could become a “bullet magnet” for his political enemies. Already opposition parties are saying that he is a total liability and that he shouldn’t be let out alone. An internet website, thought to be linked to the Scottish Liberal Democrats, broke the news that Mr Stephen was going to go into action on the front-line at his party’s conference in Aviemore this weekend.

In his first interview since the reporting ban was lifted, Mr Stephen said: “It’s very nice to be sort of a normal person for once. I think it’s about as normal as I’m going to get”. He went on: “Lucky there’s no civilians around here because it’s a no man’s land. If I go up north, I have to keep my face slightly covered on the off chance someone will recognise me”

Away from the public eye, the Liberal Democrat leader has in recent months seen front-line action on a number of fronts. Skirmishing at First Minister’s Question time, Mr Stephen has been hitting the nationalist forces of Mullah S’al-Omand where it hurts, using live ammunition. However, because of the blackout, these have received zero coverage in the press.

It is claimed that in the autumn Stephen led his troops into a major offensive in the hotly disputed Trumpland province in the badlands of the North East. However, after initial success, it appears that this offensive was beaten back by nationalist forces supported by local tribes who wanted to increase their income from the lucrative international trade in the illegal drug ‘golf”. Stephen’s forces are now thought to control less than 10% of the country.

Stephen has also attempted to reconstruct an alliance with forces loyal to the opposition leader Wendi al-Xandr. His supporters have agreed to participate in the setting up of a new power-sharing constitutional convention. However, this received a set back when al-Xandr’s foreign backers insisted that the convention was a means of taking powers away from Scotland. Wen-di al-Xandr’s militias have now targeted Stephen and hope to destroy him politically now he is out in the open.


A spokesman for the Society of Editors, said that he was “very disappointed” that a website had broken the voluntary agreement not to report anything about the Liberal Democrats. “This is in stark contrast to the highly responsible attitude of the UK print and broadcast media as a whole who have entered into an understanding over coverage of Stephen”. Normal disservice will be resumed at the earliest opportunity.

It's socialism for the banks

Gordon Brown is getting his excuses in early. In his new year address he warned Britain to prepare for "global financial turbulence" in 2008, declaring that: "the global credit problem that started in America is now the most immediate challenge for every economy". Funny how, when things are going well it is all down to the government, but when things aren't going well it is the fault of 'world market conditions'.

I think we can see how the PM is planning to handle the economic downturn that now seems inevitable. 'Nothing to do with us, mate, we just work here'. Well, the impact of the credit crisis has certainly been most marked in the US where millions face the loss of their homes. But this is as much a British-made problem as an American one. Remember Northern Rock? The first run on a British bank in over a century? The debt explosion, which is the root of the problem, is very much our own work.

As the former head of the US Fed., Alan Greenspan, reminded Brown last year, the inflation in house prices, fuelled by reckless lending, has been far greater in Britain than in America, and prices here have a longer way to fall before they become sensible again. Gordon's economic miracle was built on this shaky foundation, so he can hardly blame America for blowing it away.

He's right about the turbulence though. The world is becoming more unstable, as power and wealth shifts from West to East. America's loss of military prestige following the debacle in Iraq is being
paralleled by a decline of the dollar, which is no longer unchallenged as the
world’s reserve currency. Countries like China, now the world's second largest economy, are beginning to feel their strength and looking for a better deal. Their overflowing sovereign funds are now buying into western banks desperate for capital to meet their immense debts.

Why did the mighty Wall St banks suddenly discover they had no money to cover their loans? Well, as everyone now knows, dodgy US mortgage debts had
been “securitised” - packaged up and sold on to other
financial institutions as “collateralised debt obligations". This
was supposed to spread the risk, but it also spread the contagion,
and when the American housing market caught a cold, the rest of the
world caught pneumonia.

But British bankers were in the forefront of the "securitisation revolution". The City of London made a fortune out of trading CDOs. The Bank of England helped by slashing interest rates whenever the house of cards looked unsteady, or when British mortgage payers got into difficulties. Moral hazard begins at home.

It’s easy to blame nasty foreign bankers for these problems,
and they are certainly guilty of creating complex financial
instruments,
which they didn’t really understand. However, the root problem
was very simple: too much borrowing.
And we, the people, have to take at least some responsibility for this - for taking out the loans in the first place. The British housing market became infected by a gold-rush mentality, where everyone hoped to get rich by borrowing to buy. We all wanted something for nothing. Families used their houses as
if they were cash machines. The government played its part by allowing tax breaks to buy-to-let speculators.

So we are all implicated in this insidious self-delusion, and we clearly haven't learned. British consumers spent and spent over Christmas, adding more billions ta debt mountain that already stands at a record £1.4 trillion. Britain is the most debt-ridden country in the world and we have more on our credit cards than the rest of Europe combined.

The government has been as profligate as the rest of
us, despite Gordon's "golden rules" , and is currently spending around 9 billion a month more than it is
receiving in taxes. Britain’s balance of payments went
into the red by record £20bn in the last quarter,
equivalent to 5.7% of national income.
Britain is worryingly dependent on the financial services sector - largely as a result of the government's neglect of manufacturing - and now that the goose is cooked, government tax revenue is sinking as the City prepares to axe literally thousands of jobs. Expect tax rises in the coming months as the treasury tries to make up the taxation gap.

Economics is always a dismal science, but it’s hard not to be
alarmed by this situation. The world really did change in August
when the banks stopped lending to each other, suddenly realising that they'd created a financial Frankenstein.
The reaction of the Anglo-Saxon
countries - essentially Britain and America - has been to fight debt
With debt. Central banks have tried to resolve the credit crisis by
pouring public money into the cash-strapped banks and by cutting interest rates. The consequence of this last desperate financial fix of cheap money will almost certainly be the return of inflation as a major political issue in 2008.

Real
Inflation - the RPI which includes housing and energy costs - is
already over 4%, and the central banks should arguably be increasing interest
rates rather than cutting them. Inflationary pressures are hard to ignore, with oil over $90 dollars and world food prices
rocketing. But inflation is seen now as the lesser evil, and everything
is being thrown at a rescue of the corrupt financial system which got us into
this mess in the first place.

It's socialism for the banks. A cash rescue not just for Northern Rock, which has absorbed some 25bn of our money, but for the likes of Morgan Stanley, Citibank, Merrill Lynch. Central banks are handing out loans of such magnitude now as to beggar belief. Before Christmas the European Central Bankers handed out a credit line of 500 billion - half a trillion dollars!

In any other era, this might have been seen as an
irresponsible use of public funds, but we live in an era in which there is precious little questioning of the financial system. The political influence of the financial institutions
is so great in America and Britain that they can
largely dictate economic policy. It is
as if democracy has ceased to function, and the interests of the
banks have come to be seen as synonymous with the interests of the nation.

But we know they aren't synonymous. The banks have an imperative to lend, because their trade is in debt. The nation needs to save - now more than ever. Before we throw yet more money at the banks we need a thorough review of the economic policies that brought about the "global economic turbulence that the PM says is about to hit us. That should be Gordon Brown's New Year resolution, not passing the devalued buck.

2007 - year of porn.

2007 was, for me, the year I discovered internet porn. Well, I’d obviously seen some of the stuff before, but I had never actually, well, examined it. But I thought the time had definitely come, if you’ll excuse the pun, because my children are now at the age where they are becoming hardcore internet users. I want to see what they’re going to see before they do.

Be in no doubt: your children will see internet pornography. No filter in the world is going to stop young people looking at this stuff, and the more parents try to lock it off, the more attractive it will become to them. I can recall myself as a fourteen year old, with an insatiable appetite for anything that parents didn’t want me to see. There was simply no way that I would have been stopped.

The internet is saturated with pornography, and it’s estimated that four million people in Britain alone are addicted to it. I’m not sure how they define addiction, and I’m not sure how they calculate the numbers. But it has always been known in computer circles that the growth of the internet has largely been driven by pornography. It is everywhere. The sexual habits of professional footballers - with their roastings and bukkake (don’t ask) - have been conditioned by internet pornography.

Which means this: that our children are going to be taught about human sexual relationships by some very dodgy teachers - like Ass Traffic and Penisbot. I urge everyone to look at these sites without delay. For you will find something that I found incredible. That pornography on the internet is now largely free. There are credit card sites of course, and some where you can pay through your phone bill, but it doesn’t take much dexterity with a mouse to find loads of stuff that doesn’t cost anything at all. Mostly it is in the form of edited highlights of longer films. Bit like Match of the Day, where you see all the goals but none of the foreplay.

This means that internet porn is quite brutally graphic and obscene in a way you could not possibly believe unless you go and look at it. I’m not going to describe the activities, but gang bangs and anal sex seem to be regarded as the norm. The men are hugely muscled and improbably well endowed, while the women - increasingly - seem to be slim and small breasted. The days when pornography meant huge breasts appear to be long gone, like my youth.

Now, accepting that our children are all going to see this stuff, should we be concerned? Are we happy for children to think that it’s normal to ejaculate in a woman’s face? I am no prude, and I don’t believe in censorship. But this is a problem which has to be discussed.

I can’t understand why there isn’t more discussion of this issue. I suspect that parents are all in denial because there is no excuse for not knowing what is out there. Schools should start introducing sex education much earlier than at present, and it should be set in a context of ubiquitous pornography. Something has to be done to persuade children that this is not how adults are supposed to behave. And that mechanical sex is ultimately self-defeating.

How the SNP accentuated the positive - and won.

Do lighten up. There I was sitting and thinking about what to write about: the collapse of trust in politics; the climate change challenge funked again; the tidal wave debt sweeping the economy away; Wendy Alexander’s prospects for 2008. But I said: no. Enough wallowing in negativity.

So I’ll start with the most interesting thing a politician said to me all year. It was that the success of the SNP in the May election arose of a training weekend held for party figures on how to be positive in politics. The politician in question - it was SNP minister Mike Russell since you ask - told me that, before attending this New Age colloquium, he’d been highly sceptical about the tree-hugging approach to politics. As were most of his colleagues, being products of the get-your-pit-boots-on-and-wade-into-them school. They didn’t see much to be gained from letting your enemies off the hook while you wandered around saying: “Hello sky; hello clouds”.

But apparently the party was so impressed by the event that it changed its entire approach. The SNP dumped adversarialism and negativity, or tried to. Alex Salmond was taken into a padded room and reprogrammed not to go for the goolies in political debate - no small task this since Salmond is one of the best exponents of knee-in-the-groin politics Scotland has ever seen. But he got the message, and with a heroic effort of self-control, learned to make nice. Well, except to Nicol Stephen.

The nationalists won the Scottish election by contrasting their own message of optimism with Labour’s dismal inventory of gloom. They talked about how Scotland could build on its strengths, become a proud nation taking responsibility for its own destiny, while Labour ministers just warned about how the loss of London subsidies would turn Scotland into an impoverished and isolated country cast out of Europe and becoming a haven for terrorists. No contest really.

When you think about it, the most remarkable thing about the last year is how little the SNP has indulged in its traditional vices of triumphalism and tribalism and how successful it has been in government as a result. Clearly, accentuating the positive can work, and it’s not just the SNP who have realised it. The new Tory leader, David Cameron’s, surprising success this year has been largely down to the abandonment of traditional forms of adversarial politics. He even abandoned the aggressive and vain leaders speech at conference.

But you have to be sincere about it. This has been the problem with Gordon Brown’s “Britishness” campaign during 2007, supposedly a celebration of the 300th anniversary of the Act of Union. There always seemed to be something slightly bogus about it, as if Brown was only banging on about the Brits so that people would not attack him for being a Scot. People are highly sensitised to inauthenticity, and cant, and Brown has a tendency to sound as if he his only saying what focus groups say he should say.

Similarly, there is nothing more sick-making than hacks like me who ‘ve been forecasting doom and despair all year suddenly going weepy at Christmas over babies and carol singers. Not that I have anything against carol singers, you understand. So, I will say that my children are doing very well, I have had a great year and can’t believe how lucky I am. And that it seems to me that we all have something to learn from the SNP’s embrace of optimism.

What 2007 established beyond any shadow of a doubt is that climate change is the most important issue facing humanity. The fact that this is almost a cliche merely confirms it. The consequences of global warming, already clearly evident at the polar ice-fields and deserts, will come to dominate politics, economics, international relations, conflict zones in the coming years. The scientific debate is over; and there is simply no doubt that our profligate use of fossil fuels is making the planet uninhabitable. And yet, we do absolutely nothing about it. Why?

Well, it seems that have a psychological inability to respond to extinction level threat. This may well be a trait inherited for very good evolutionary reasons. Before civilisation, primitive man faced extinction on almost a daily basis from any number of causes, from wild beasts to starvation. If we spent our time wallowing in fear, nothing would get done. Babies would not be born. So we developed a kind of Pollyanna gene which keeps our minds off apocalypse. Religion may be an extension of this psychological trait, by creating the myth of the afterlife and giving us a reason to - as Churchill put it - “keep buggering on”.

The Pollyanna gene may explain why we don’t do anything about climate change, even though we know it is happening and is going to land our children’ s children with a crisis too awful to contemplate. Which is precisely the point. Planetary extinction is a hard thing to get your head round, and if you did, then you would probably sell the house and go off round the world, or on a long bender. Which wouldn’t do anyone much good.

So, perhaps we have to find a way to look more positively on the task ahead. By some curious alchemy, we can already see anticipations of the future in the work being done by modern architects, nutritionists and even by some large private corporations like Apple. The minimalist aesthetic is everywhere - in fashions, eating styles, modes of exchange and work. People are already experimenting with a low-consumption lifestyles. Uncluttered buildings which require virtually no energy, containing people who live longer by moderating their appetites, who telecommute using ultra-low energy technology and regard the consumptionist lifestyle as something old and a little sad.

Yes, I know, people are still buying 4 by 4s - but already these things are looking like dinosaurs. And I know that obesity has taken over from heart disease as the greatest cause of premature death. That China is building a new coal fired power station every week and our government is still planning more roads, bigger airports. ...But as I say. Stop. We simply have to find a different way of approaching this problem, because merely emphasising the risks is only promoting further apathy and denial.

The psychological change that is necessary is going to have to be something like a religious conversion, without the doctrine. It is going to require a kind of mental reprogramming to see the positive aspects of moving to a low energy lifestyle. I mean, what’s not to like? Less hassle, less travel, less stress, less waste. It might be hard to imagine our lazy, dirty, fat consumerist ways changing. But just look at the SNP. If they can do it, anyone can.

2007 - not the year of the Union afterall.

“Looking back on 2007, it seems amazing that no one seriously expected the SNP to win the May Scottish elections..” Or so I wrote in this column twelve months ago in a piece imaging how Scotland would look in a year’s time. Truth is I genuinely didn’t believe that the SNP would win Holyrood, even as I was forecasting it. The group think among the Scottish political classes was that, whatever the polls said, in the end the voters would turn back to Labour on the eve of the election. Many did, of course, but not enough. And the history of Scotland, and the UK, has been rewritten as a result.

May 3rd 2007 was an extraordinary night, and no one who cares about Scottish politics will ever forget it. As Labour and the Nationalists fought it out, hour by hour, seat by seat, the election nearly descended into chaos. Ballot boxes got washed away in the isles, computers went awry and in Edinburgh a man with a golf club attacked a number of ballot boxes. Then there was the ‘re-engineered’ ballot paper, which bamboozled over 14O,000 voters.

It wasn’t until 5.32 pm the following day that Scotland’s new political landscape finally emerged from the fog of war. For the first time in eighty years the SNP had actually won an election - at least, that was what most of us thought. But within the hour, the Labour First Minister, Jack McConnell, announced that, no, this was a “magnificent result for Labour”, and that it was going to be business as usual in the Scottish Executive.

With hindsight, this looks like the most monumental arrogance, and Labour has been punished for it, but at the time it didn’t seem so daft. After all, the SNP had only returned 47 seats out of 129. Labour had 46, the Tories 17, Liberal Democrats 16, the Greens 2 and Independent 1. If the Tories had abstained, Labour and the LibDems could have formed another government. In fact, looking back on the last nine months, the remarkable thing is that the SNP are in government at all, let alone driving events so confidently.

When the LibDems rejected any coalition talks most of us thought that the SNP would be blown away by what Labour MSPs were calling a “pan-unionist grand coalition”. The numbers just didn’t add up. How would the SNP get any legislation with only a third of the MSPs and no partnership agreement? But paradoxically, it was rejection by the Liberal Democrats which made the success of this first nationalist administration possible.

It was Alex Salmond’s political genius to recognise the opportunity presented by minority government and to build a moral case for it in a series of speeches which will go down in history as definitive statements of the new politics of devolutionary consensus. The First Minister elect insisted that the ‘founding fathers’ of Scottish devolution, the Scottish Constitutional Convention, had argued for minority government in the Scottish Parliament as a matter of choice. He would oblige. Salmond promised to govern, not in party interest, but “wholly and exclusively in the national interest” and to “appeal for support policy by policy in the parliament”.

In the end, for all the talk of appealing, Alex did pretty much as he pleased in the next hundred days, using the executive powers of his office to drive through an astonishing range of initiatives and reforms with no particular consensus sought. Saving hospital A and E departments, abolishing prescription charges bridge tolls and student fees, freezing council tax, cutting business rates, axing government departments and quangos like Scottish Enterprise, rejecting nuclear power, opposing Trident, replacing PFI, ending private involvement in the NHS. It was impossible to keep up.

In the process, the Salmond has created a new form of progressive nationalism, unlike anything seen in Europe in the last three decades. The image of nationalism as a backward and narrow-minded political force, preoccupied with ethnicity and hostile to foreigners, has finally been dispelled. The SNP has made a reverse take-over of the Scottish social democratic consensus which Labour has presided over over for the last half century.

Instead of the SNP being blown away by the unionist majority, Labour were almost blown away by the sheer verve of Salmond’s hyperactive administration. Labour end this annus horribilis in a terrible state, with a leadership crisis and a donations scandal. The new Labour leader, Wendy Alexander, has failed to offer any intellectual challenge to Alex Salmond’s populist nationalism, and the party organisation is disintegrating. Labour have been in denial about the scale of their defeat, for they not only lost office, they lost their hegemony over local politics as well.

Labour have feigned opposition to SNP initiatives on things like to bridge tolls, prescription charges, graduate endowment, and then ended up supporting them. In fact, it is hard to find much that the nationalists have done in the last nine months which Labour really opposes as a matter of principle. They even support Donald Trump’s blessed golf course. The truth is that the SNP were doing a lot of things that Labour MSPs would have liked to do, but couldn’t because of the London connection.

Despite being only one seat behind the SNP, Labour have yet to come to mount any coherent opposition in Holyrood, and have ceded the initiative on many key issues - like police numbers, trams, class sizes - to the Tories and the Liberal Democrats. Even on the constitution, the Labour Party has now joined with the SNP and the Liberal Democrats and - incredibly - the Tories to campaign in a constitutional commission, for more powers for Holyrood.

Even now, I still have trouble believing that this constitutional alliance has actually happened, and I await with interest the first meeting of the new body. But what it means is that, for the first time, ALL the parties in the Scottish parliament are now committed to further constitutional change, including taxation. Nothing could better demonstrate just how much things have changed in Scotland in the last year than the fact that there is now no one arguing for the constitutional status quo.

And who could possibly have forecast, twelve months ago, that nationalists would not only be in power in Scotland, but also in Northern Ireland, where Sinn Fein share office with Ian Paisley, and in Wales, where Plaid Cymru are in coalition with Labour. Progressive nationalism is now the most potent political force in Britain. Perhaps Tam Dalyell was right all those years ago when he said that devolution would be a “motorway to independence with no exits and no u-turns”. Except that it is too early to pronounce the death of the United Kingdom.

Alex Salmond may have been radical in office, but in one sense he has been profoundly conservative. He has honoured the Queen with his presence on at least six occasions, become a Privy Counsellor, and insisted that Queen Elizabeth 11 will remain head of state of an independent Scotland. The SNP are now talking about the “social union” with England remaining even when Scotland wins political independence. This is a recognition, I believe, that formal separation is no longer a realistic option for Scotland, that the UK still has a future, and that the SNP has come to terms with the modern world. Whether the modern world has come to terms with Alex Salmond remains to be seen.

Bad year for Broon.

“Macavity’s a mystery cat. He’s called the Hidden Paw - for he’s the master criminal who can defy the law”. Well, not quite. The Hidden Paw, or Clunking Fist as we know him, hasn’t quite given the boys in blue the slip this Christmas. The Electoral Commission has yet to rule on Labour’s various fund-raising scandals north and south of the border, and a police inquiry seems inevitable. But we can be sure that when PC Plod comes to call, Macavity will not be there.

The Prime Minister will be in Lisbon not signing a treaty, or disappearing to Basra on a flying fact finding visit, or following his moral compass to some obscure neo-conservative get-together with Rupert Murdoch and Gertrude Himmelfarb.Indeed, one suspects that if and when Gordon Brown finally calls an election, we’ll find him absent on polling day if things are look bad. Perhaps taking up the option of a postal vote from Bruges.

There’s no doubt that Brown’s reluctance to face the music has had a lot to do with his difficulties in this extraordinary year. The Prime Minister’s evasiveness and infirmness of purpose turned out to be the biggest surprise. It has even become a national issue, now that even the Bank of England is saying that he’s paralysed by indecision.

It certainly has a tragic quality. Here is a man who waited in the shadows for over a decade, plotting and hoping. Then he takes over in a wave of popular relief at the departure of King Tone, only to fall flat on his face within weeks. Brown is even in danger of losing Scotland, if the opinion polls are any guide, and his own ally, Wendy Alexander, will likely be sacrificed in the New Year.

It is quite extraordinary, even in our set-em-up-and-knock-’em-down political culture for the fortunes of a politician to fall so far so fast. In late September, on the eve of the Conservative Conference, Labour had a double digit lead over the Tories in UK opinion polls, and David Cameron’s critics were preparing for a funeral. Now, the Tories have a double digit lead over Labour, and David Cameron is already choosing his first Cabinet. What happened?

Well, first of all, Brown bottled the election. After being flattered into contemplating an early poll by his coterie of young admirers, the Prime Minister called a halt to the juggernaut after late polling returns suggested he might lose key marginal seats. It’s impossible to say whether this would have lost him the election. The late surge had a lot to do with David Cameron’s promise to abolish inheritance tax below £1m - a shameless tax bribe to middle England. Had there been an election campaign, Brown might well have been able to neutralise the policy by consolidating the existing reliefs which allow couples to shelter up to £600,000. But we’ll never know. ‘Who dares wins’ isn’t Gordon, and the election was cancelled.

Unfortunately, ‘events’ were not. A remarkable change took place in public attitudes after the election funk. The press may have turned against him and his youthful ministers, like Douglas Alexander, in large part because the hacks had been deprived of a story. But almost immediately you started hearing people from all backgrounds suddenly attacking Brown personally - for his flickering smile, his contrived humility. There seems to be something about Brown that a lot of people just don’t like. The self-righteous ‘moral compass’ sits uneasily with a politician as calculating as the PM, who appeared to use a visit to the troops in Basra to upstage David Cameron’s conference speech.

A politician who has a tendency to let other people take the knocks. Like the hapless chancellor, Alistair Darling, who found himself landed with the first run on a British bank in 140 years when Northern Rock, Britain’s fifth largest bank, collapsed under the weight of its own debt. Macavity was nowhere to be seen as the queues ran round the bloc and the Bank of England and the Financial Services Authority scrapped. It wasn’t until a deal was struck to guarantee deposits in Northern Rock that Brown finally surfaced to congratulate himself for the soundness of the banking sector.

Northern Rock was, however, a turning point. As people began to reflect upon the state of our debt-ridden society, with £1.4 trillion in personal loans, erected on the shifting sands of an unsustainable house price boom, suddenly the ten years of economic success didn’t seem quite so rosy. With the sub-prime meltdown shredding the profits of banks, people started to worry about the security of their homes and jobs for the first time since the Tory recession and the ERM debacle in 1992.

Of course, this wasn’t so bad as Black Wednesday - at least on the surface. Interest rates didn’t rise to 15%; they actually fell, and are expected to fall again in the New Year. But no one is under any illusions about the seriousness of the problem. Everyone realises now that the housing bubble, inflated by Brown, has to burst eventually and the financial services sector, on which he bet the future, has turned out to be made of straw.

After Northern Rock, everything started to go wrong. We had the lost revenue computer discs, immigration figures that didn’t add up, the illegal donations row and the rather sad Macavity act over the signing in Lisbon of the EU treaty. But even with all these manifest difficulties, it is still hard to understand quite things went quite so disastrously wrong fro Brown.

My own view is that the problem was essentially political. Brown came into office with expectations of change, radical change. His conference speech announced it thirteen times. But for all the promises, Brown changed very little from the previous regime. He got out of Iraq, certainly - though Afghanistan has now taken its place. But apart from a few rhetorical changes, and a promise to reform the constitution which he hasn’t delivered, Brown has continued with the policies of his predecessor. Persevering with ID cards, detention without trial, nuclear power and Trident.

For all his child-friendly pronouncements, Brown has not acted decisively on child poverty or Britain’s dismal social mobility as noted by the OECD recently. Brown’s pronouncements on immigration have shocked many on the Left, who could hardly believe their ears when he called for “British jobs for British workers”. Brown’s economic policy seems almost entirely driven by the City and the big finance houses. Few expected Brown to be socialist, but most expected something different.

It’s hard not to draw the conclusion that Brown is really Blair without the charisma. The former PM turned out to be the biggest Macavity of all in 2007, when he disappeared without trace without trace after he stepped down in June. But perhaps the master of disguise had just merely changed his face.

Trump isn't nice, but it's not sleaze.

Oh no. Do I have to? I suppose that there’s no way to avoid writing about Donald Trump this weekend, now that Alex Salmond’s dealings with the hirsute property tycoon have landed him - we are told - in the nationalist government’s first “sleaze scandal”.

Hmm. Even given the elastic nature of that term, I think it is stretching it to suggest corruption here. Favouritism, perhaps, ; indecent haste, maybe - but improper behaviour? I don’t think so. The affair does, however, betray a certain naiveté on the part of the SNP, and a want of good taste in leaping to the defence of a rather tacky real estate development as if it were a national treasure.

Trump is a big mouth and a bully - just look at his books and tv show. He is drunk on his own vanity and his own dubious charisma. The SNP would be advised to use rather longer spoons in future when they sup with casino developers who appear to have made a career out of averting bankruptcy. The Finance Minister, John Swinney playing golf on Trump’s Westchester development in New York State two days before he called in the Aberdeenshire planning decision was unfortunate - though the trip was paid by VisitScotland not Trump. But the supping began with Jack McConnell, and all the main parties support Trumptown in principle. The pong of hypocrisy in Holyrood was rather stronger than the whiff of sleaze last week.

But what really offends me is how Trump has made Scotland look like a country of parochial, small-time bumblers in awe of high-rollers with big mouths. A cross between Local Hero and The Long Good Friday. Top of the list must be Aberdeenshire council who have made complete fools of themselves through their prevarication, their incompetence and their procedural dyslexia. Here is a council which was overwhelmingly in favour of the development on the Menie Estate, but somehow managed to vote against it.

To deflect attention from their serial cock-ups - and their vindictive sacking of Martin Ford, the infrastructure committee chair who acted quite properly in using his casting vote against Trump - Aberdeenshire tried to dump on the Chief Planner for Scotland, Jim McKinnon. Council chiefs informed the Liberal Democrats that they’d had to drive Trump’s men, George Soriel and Neil Hobday, out of McKinnon’s office during a telephone conversation about the future of the development on the very day the planning decision was called in. The implication was clear: the Chief Planner was in the pockets of Trumpers.


Whether McKinnon was right to telephone the council when Trump’s representatives were in the room is a matter for him. However, you must at least give this experienced senior official the benefit of the doubt, if only because he cannot respond to the implied charges. McKinnon had been ordered by his SNP political masters to call in the planning decision as a matter of urgency, since Aberdeenshire were clearly incapable of getting their act together. Having Trump’s people around was probably unavoidable. However, it would’ve been nice if Scottish Natural Heritage had perhaps been in the room too, and some of the other objectors like the RSPB, but there you go. Money talks; and with people like Trump it bellows and blusters.

Why did Alex Salmond meet the Trumpeteers the day before the unprecedented decision to call in the planning application. Well, again, it is quite in order for the local MP/MSP to meet with the people responsible for a billion pound housing development with a nice golf course attached. Was he showing favouritism? Well, if you mean did he favour the development, the answer is manifestly ‘yes’.

Did he know when he met Trump’s men that the planning decision was going to be called in the next day? Probably not, though I’m sure he knew it was going to be called in soon by his colleague John Swinney. Had he known the exact timing of the action I suspect he would have rescheduled his meeting with the Trump gang for appearance’s sake.

But there is no doubt that entire energies of the government, from the top down, were devoted to one thing; dissuading Trump from taking his development across the Irish Sea. After Aberdeenshire’s infrastructure committee had rejected his development on November 29th, on the grounds that it was illegal under the area plan, Mr Trump had thrown a tantrum and instead of seeking to compromise or appeal against the decision, threatened to walk away in 30 days. This is typical of his robust style.

The government decided that the loss of this venture would give Scotland a reputation as a country which was not open for business. So they tried desperately to short-circuit the planning process to appease he Great Quiff. This was clearly favouritism since they certainly weren’t calling it in to save the local environment from destruction. Objectors claim this was an abuse of the planning system, though the government acted within the law.

You can understand the economic imperative. But I would question whether allowing yourselves to be bounced by this man is really a good advert for Scotland. He is regarded in the business world as a colourful character, and self-publicist, who sails close to the wind. This episode sends a message to every wide-boy property developer from Manhattan to Mumbai that the Scots are so weak and befuddled, that you can run rings round them. That you can walk into the office of any top civil servant and browbeat them into getting you want you want.

As I say, I intend no slur against the integrity of the Chief Planner, Jim McKinnon, who is an innocent bystander here. But the Scottish political classes as a whole have shown themselves to be out of their depth when it comes to dealing with difficult people like Trump. It was not unreasonable to expect him at least to negotiate over the Site of Special Scientific Interest that he intended to defile with his golf links. Maybe in the end, the development is worth the damage to the environment. Almost certainly a compromise could have been reached over fate of the sand dunes in question. But negotiation is something the Trump people prefer to engage un through duress - when the other guy is on the back foot.

However, to accuse Salmond of behaving improperly is wide. The First Minister has been around much too long to get caught out in something like that. The only apparent breach of the ministerial code involves using his official car to attend a constituency engagement with the Trumps which, if it is an offence, is trivial. He hasn’t been accepting, for example, secret donations from the Trump organisation. Nor has the SNP been accepting undisclosed loans, or receiving cash through proxy organisations. There is no suggestion that any laws were broken and none of Salmond’s people had misrepresented their relationship with Trump.

Which might go some way to account for the dog that didn’t bark last week. Curiously, Wendy Alexander chose not to home in on the Trump affair at First Minister’s Question Time, choosing instead the worthy topic of benefits to carers of the disabled. I’m sure this has nothing whatever to do with the fact that she faces a police investigation over her admitted breach of the laws on party fund-raising.

Who would sell me a sub-prime mortgage? Northern Rock actually

Now that the various bidders for Northern Rock have been falling by the wayside, the smart money is on the stricken bank being nationalised in the New Year, as this column forecast last week. If so 800,000 mortgages will land on the desk of the Chancellor, Alistair Darling, making him potentially the biggest landlord in the land.

Of course, the government will not formally own the houses on Northern Crock’s loan book, but it will own the debts on them. And if the Northern Rockers start to default, and they very well might, then the government will be in the business of widespread repossessions. Yes, Darling’s debt-collectors will be banging on doors across the land, calling on householders to hand over their keys or hand over their money.

No one knows how many of Northern Rock’s mortgages are sub-prime, since this is very much in they eye of the beholder. But the spectacular growth of the bank - it now has a fifth of all mortgage lending - was based on aggressive sales techniques. It was one of the banks, Abbey is another, which started selling 125% “suicide” mortgages - which meant that the borrower was in negative equity before they moved in.

The most iniquitous practice was self-certification, which means that the borrower is invited to make up their own salary. Now, the company denies that its sales staff connive with borrowers to misrepresent their true incomes. But I have direct experience of the kind of practices employed by Northern Rock and its agents.

In October, not long after the bank went under, I telephoned Northern Rock’s website to ask for a loan. I said that I was earning £30,000 a year (not my real salary) and that after tax and maintenance deductions, I had £18,000 to buy a £240,000 flat. A broker said they’d have to think about it. Then came back saying that I could have a variable-rate, interest-only mortgage on a ‘self certification basis’ of £1,130 a month. This would have left me with £370 a month to live on and was plainly unaffordable. But the broker was unconcerned and advised me simply to add on possible future earnings to boost my salary level.

I don’t know how many people will have taken on these mortgages, but the spectacular growth of Northern Rock suggests a lot. In the New Year, these could end up on the government’s books if, as seems increasingly likely, the the government has to take it over to secure the £25bn of our money that has been loaned to Northern Rock. Gordon Brown could become the biggest sub-prime mortgage lender in Britain.
It’s not quite what the PM had in mind when he promised a return to affordable housing.

Oh, and by the way, in case you thought that NR might have been chastened by the recent travails, think again. Last week, the same broker phoned me back last week to see if I was still interested.

The Constitutional Commission is important, even if it is incomplete.

For once the hype was justified. “The most important debate the Scottish parliament has ever engaged in” said the Scottish Tory leader Annabel Goldie during last week’s debate on setting up a Constitutional Commission to extend home rule. She could be right. All the major forces in Scottish politics are now united as never before on the need to give Holyrood more oomph - to turn it into a proper parliament with full domestic powers and its own tax base. Even the SNP is part of the consensus, though Labour is trying to lock them out.

For hacks like me who have watched the battle for Scotland for over twenty years, this is hard to believe. Ultra-unionists like the Scottish Tories joining forces on the constitution with the ultra-devolutionist Liberal Democrats? Surely not. Michael Forsyth would be turning in his grave, were he dead. Annabel Goldie as a tartan revolutionary, a blue rinse madam Ecosse? Well, she delivered a powerful speech in last week’s debate, admitting past mistakes and conceding that home rule is a process that “dwarfs party politics”.

But Labour’s conversion is equally remarkable. Eight months ago it fought the Holyrood election with Gordon Brown ruling out any further powers for the parliament, let alone giving it a new tax base. Perhaps if Labour had proposed a cross party constitutional commission - as this column urged - before rather than after May 3rd, it might still be in power. It confirms everything we suspected about the Labour campaign - that it was driven by London Labour priorities rather than Scottish ones. Labour activists could be forgiven for asking why they had to lose the election to return to the mainstream.

But credit where it is due: Wendy Alexander boldly faced down her own boss, the Scottish Secretary, Des Browne, in her speech last week by declaring that devolution is indeed “a process not an event”. Browne had insisted in August that it was the other way round, and he even denied that Donald Dewar had ever used the phrase. She has also directly contradicted Gordon Brown’s pre-election veto on new powers.

This change has of course been inspired by Alex Salmond’s own “national conversation”, launched in August, which unlike the proposed Constitutional Commission is genuinely non-party, consensual initiative. At its launch, Salmond welcomed the participation of all strands of Scottish opinion, and pledged to work with any party which sought to extend Holyrood’s powers. “A government should never be afraid”, said Salmond, “to test its own preferred policy against the alternatives”. Unfortunately, this is a test the opposition parties have flunked.

Labour has drafted the terms of the proposed Constitutional Commission specifically to exclude any consideration of independence. This really doesn’t make any sense and undermines the credibility of the entire exercise. It really isn’t possible to discuss constitutional future of Scotland without considering one of the leading constitutional options. Their commission is to be funded by the Scottish Parliament yet it has barred the party of government. What are they afraid of? Surely the SNP has more to fear since only around 25% of Scots favour separation.

Wendy Alexander invoked the spirit of the original 1988 Scottish Constitutional Convention last week, but she really isn’t entitled to claim legitimate descent. That convention was a genuinely non-party body which invited the nationalists to the table; Wendy’s convention is a political device for marginalising the SNP. This is the reverse of what happened in 1988 when the SNP, under deputy leader Jim Sillars, boycotted the original Scottish Constitutional Convention, and opted for political irrelevance for the next decade.

Nor is it possible to take seriously an exercise that seeks radical constitutional change without consultation. The Liberal Democrats rightly see the starting point of the Constitutional Commission as being their own report on the constitution conducted by Lord Steel two years ago. It called for Scotland to gain powers not just over broadcasting, drugs and firearms, but also over things like welfare and immigration. In his speech on Thursday, the LibDem leader, Nicol Stephen, called for Holyrood to be given the power to raise personal and business taxes. It is inconceivable that the creation of a federal state - for that is what this amounts to - could happen without some test of Scottish opinion - without seeking the consent of the people of Scotland in a referendum. I can see no way that Westminster would allow it otherwise, and MPs are to have a say on the proposed Constitutional Commission.

Indeed, the participation of Westminster Labour MPs does also rather raise questions about the opposition parties’ sincerity. Many Scottish Labour MPs loathe Holyrood, don’t accept Wendy as their leader, and are hardly likely to endorse the kind of “devolution max” proposed by the Liberal Democrats. It is only a matter of weeks since the Scottish Secretary, Des Browne, was talking about taking powers away from Holyrood. Is he going to be part of the process he denies the existence of? The suspicion is that Labour’s real ambition is to indulge in a metaphysical debate about constitutional options which eventually endorses the status quo.

But that is no longer an option. The idea of a parliament living on a handout is now totally discredited. Labour’s own performance in office has been ample confirmation of that. The argument for tax-raising powers is now unanswerable, as Wendy Alexander has conceded. So is the case for powers like broadcasting to be repatriated to Holyrood. Merely by aligning the opposition parties behind these propositions, Labour has made them inevitable.

They may think they have outmanoeuvred the nationalists, but in reality they are playing into Salmond’s hands. He will simply welcome anything the commission comes up with. Indeed, SNP ministers haven’t ruled out participating in the convention in some way or other, for it presents no downside for them. They will embrace its findings as a constructive step on the road to self-government, furthering the case for a referendum.

As Annabel Goldie rightly observed, there are forces at work here which are above party politics and which Labour only dimly comprehends. Scotland has changed. The opposition parties have started something here which they cannot control, any more than the SN can. The collapse of the old unionist consensus will drive Scotland down the road of autonomy.

The only obstacle to this process is, paradoxically, the political parties themselves. We now have two parallel constitutional initiatives underway now - the SNP’s conversation and Labour’s convention - which may be going in the same direction, but which will spend much of the journey bickering and fighting with each other. This tribalism cannot ultimately stop the home rule process, but it could significantly delay it.

It is time, perhaps, for civil Scotland to come to the aid of the parties. To help them work together, at least to the extent that they agree change is necessary. The Sunday Herald will be hosting its own non-party conversation this week with civic bodies representing the major strands of constitutional opinion in Scotland. No options will be barred from this forum, and the only people not invited are politicians. Hopefully, through initiatives like this, a way may be found to save the political parties from themselves, and ensure that the process doesn’t become a non-event.

Dodgy donations - a Labour disease

Every day we learn more about the elaborate ways in which Labour has been raising funds illegally from private donors. There hardly seems to be a businessman in Britain who hasn’t been tapped for a grand or so through some obscure conduit.

From wee Charlie Gordon harvesting “995s” from property developer chums from his cooncil days - “unintentionally” of course - through to bigger fish like Northern businessmen David Abrahams infiltrating £600,000 through elaborate, and Labour-sanctioned networks of proxy donors. The illegality is clearly systemic and ongoing. There were reports yesterday that Abrahams had been approached, again, by Labour for funds as recently as this autumn. It was also alleged that the Glasgow businessman, Imran Khand, donated more than £300,000 to Labour through a front organisation, Muslim Friends of Labour.

Wendy Alexander hasn’t resigned yet, but her donors are considering their position. Willie Haughey, the Glasgow businessman who has bankrolled the Scottish Labour establishment to the tune of £1m says he is cutting them off. He told a Sunday newspaper that he’d been assured his money had not been used to finance Wendy Alexander’s campaign, when of course it had. The Scottish Labour leader is still insisting that she knew nothing of the crazy antics of her fund-raisers. Unfortunately for her, she can’t escape legal liability.

All this has happened since the cash for honours scandal revealed that Labour had been raising secret loans from millionaires, who subsequently were nominated for knighthoods and peerages. “a k or a big p”. All of which raises the question: has Labour lost, not only the plot, but also the will to survive? For the party to be breaking its own laws on party funding in the aftermath of a scandal in which the former prime minister was interviewed twice by the police over sleaze simply beggars belief. It suggests that Labour has become so dependent on dodgy donations it’s incapable of functioning without them.

In a hilarious aside, it also emerged that the Labour Party actually received £180,000 in public funds to educate itself about the new funding rules. This money was provided under the Political Parties, Referendums and Elections Act, 2000., which set up the Electoral Commission and the rules against foreign and proxy donors. Clearly, Labour is a slow learner, or perhaps the cash was just trousered as if it were just another donation.

Now, I’m not saying that dependence on businessmen is a uniquely Labour phenomenon. We learned last week just how much the SNP relied on the £625.000 from the Stagecoach tycoon, and Keep the Clause activist, Brian Souter - though, crucially, his donation was entirely legal and open. It seems that billionaire golf developers like Donald Trump have an open door to the First Minister, Alex Salmond’s, office. The Tories are dependent on two big donors, Lord Ashcroft and Lord Laidlaw, both of whom appear to live abroad. Lord Ashcroft, has given £2.6 million to the Tories since 2003, and influence can be gauged by the fact that his office in Tory headquarters is larger than the Tory leader, David Cameron’s. The Liberal Democrats also found itself handling money donated an international fraudster, Michael Brown.

Clearly, when the dust settles, and the boys in blue have finished their inquiries, there will have to be further action to stop money talking so loudly in politics. Now is hardly the time to be talking about state funding - there would be a riots in the streets if we started throwing more taxpayer’s money at this lot. But it is surely time to demand that the political parties at least obey the existing laws to the letter.

Labour has, of its own admission, repeatedly broken its own laws on political donations, and it keeps doing so. Surely the least that the public should expect is that those who have been involved in this, however “unintentionally”, should be required to step aside from public office until this is all cleared up. It is much too serious a matter, now, for pleas of “it wisnae me” and “I didnae ken”. Our entire political system is in the dock here, and if Gordon Brown does not act with firmness and purpose - and, yes, a little ruthlessness - then the public will conclude that the prime minister is content to be on the wrong side of his own law.

It is a matter of moral hazard. If no one pays any penalty for these egregious mistakes, it will send a message to the entire political world - and to businessmen and ethnic groups - that our politics is indeed for sale, as it is in many other countries. The Electoral Commission, set up by Labour to police the laws on funding, has an onerous responsibility here to act firmly and decisively. If it appears to be under sway from the political establishment then it will lose all credibility and our politics will descend into the mire.

Beyond a cleansing of the stables, there needs to be greater institutional distance between the state and the business world. For there is worrying evidence that money talks at the very highest levels of government. The big finance houses, the Citi’s, Merrills, Morgans involved in the sub-prime affair don’t deal in 995s or proxy donations. Instead they operate a revolving door with the higher reaches of government, both here and in the USA.

Last week, Jonathan Powell, Tony Blair’s former chief of staff, joined Morgan Stanley’s UK investment banking division. It’s a two way street. Gordon Brown recently hired Jeremy Haywood, co-head of Morgan Stanley, as his head of domestic policy. This kind of crossover happens so frequently, that no one seems to be bothered about it. The Tories were far worse, but that isn’t the point. In 1961, Dwight D. Eisenhower warned America about the growing influence of what he called the”military industrial complex”. What we have now is a financial-political complex, an oligopoly of global banks and investment institutions which have started to exert undue influence over government and other arms of economic policy.


Last week, the Bank of England came under intense pressure from the mortgage lenders and the banks to bale them out of the debt crisis by cutting interest rates. Had Mervyn King not done their bidding, he risked being crucified, as he nearly was over Northern Rock.
In fact, there was very little justification for cutting interest rates right now, with inflationary pressures only too evident in the explosion of food and oil prices.

The Bank is not only reneging in its own mission to combat inflation, it is encouraging a revival of the irresponsible bank lending which got us into this mess in the first place. It is like trying to help an alcoholic by giving him another drink. The public interest is being squeezed out of this new nexus of financial influence. To paraphrase Harold Wilson, just because we’re paranoid doesn’t mean there isn’t a conspiracy going on.

Financial madness

Now, let me get this straight. The credit crisis which is supposedly engulfing the civilised world is a result, everyone agrees, of too much debt brought about by low interest rates. So, the last week the Bank of England has moved resolutely to stem the crisis by, er, cutting interest rates.

The mission statement of the Bank of England is to combat inflation by raising the cost of money. Inflation is currently running out of control in oil prices, food and commodities. So, the Bank of England has moved resolutely to combat this by cutting the cost of borrowing. This will lower the value of the pound, increase the cost of imports and therefore boost inflation.

Now, I’m no economist, but I can’t help thinking that something’s not quite right here. The Bank has acted in precisely the reverse of the way it is supposed to. It seems to think that the best way to combat an inflationary debt spiral is to encourage it just a little further. Just as we seem to think that the way to create affordable houses is to make housing more expensive.

But who cares. Happy days are here again. The stock market is jubilant, the banks are grateful and everyone is looking to cash in on their houses again. To hell with the future, lets remortgage and live for now! The Bank of England has decided that we can all go to hell in a handcart just as long as house prices don’t fall. For that is really what last week was all about.

What forced the hand of governor Mervyn King was a report from the Halifax showing that house prices had fallen for three months in succession. Shock! Horror! Prices are still rising at about 9% a year, but the merest possibility that houses just MIGHT become affordable again was enough for the Bank to panic.

We’ve been here before. The last time the cut interest rates was in August 2005, when it last looked as if house prices were about to decline. They never did. But that cut sent a disastrous message to the housing market and led to a boom in sub-prime mortgage lending by greedy banks like Northern Rock. Gullible first time buyers were sold 125% mortgages they couldn’t afford on the basis of dodgy “self-certified” incomes.

Clearly, the main purpose of interest rate policy is to protect house-prices rather than combat inflation or debt. The Bank is a misnomer. Is should really becalled the Building Society of England. Perhaps we should just recognise reality, and hand the nation’s finances over to the Nationwide.

Actually, it’s going that way anyway, now that the Bank has loaned the basket case building society, Northern Rock, £25bn. of our money. City commentators think the government is ultimately going to have to nationalise the Rock, which means that its thousands of mortgagees will effectively be living in council houses. Well I suppose that’s one way to get social housing figures up.

Wendy toughs it - but for how long?

Brian Taylor, BBC Scotland’s political editor didn’t mince his words: “Wendy Alexander has broken the law”, he announced on the Politics Show yesterday as Wendy’s no show continued. No one was around to contradict him. Not only was the Scottish Labour leader hiding from the media, so was everyone in the party of any significance.

What a desperate situation: was no one in the Labour Party prepared to step up to the plate and defend their own leader? Labour appeared to be in denial, unwilling or unable to face up to the enormity of the situation. This isn’t any old law we are talking about, but one of Labour’s own flagship statutes: the Parties, Elections and Referendums Act 2000. This makes clear that any attempt to conceal the identity of a political donor is against the law, as is acceptance of a donation from anyone who is not on the electoral register.

Not some obscure piece of redundant legislation but a fresh and potent statute designed by Labour to drive sleaze out of politics altogether. Breaching this law carries an unlimited fine or one year in jail. The way things are going, a number of senior Scottish Labour politicians face losing their political careers and gaining a criminal record.

What possessed them? How could they have played such a dangerous game for such paltry stakes - a mere 950 quid in the case of the illegal donation from the tax exile property developer, Paul Green? This was the great unanswered question yesterday as the full implications of the Sunday Herald’s dramatic revelations were absorbed by the political establishment. The paper’s Political Editor, Paul Hutcheon, had acquired a secret internal memo dated November 5th identifying the dodgy provenance of the Green donation and exploding Ms Alexander’s claim that she had not known about it until Thursday lunchtime. Here at last: a smoking gun. Still no word from Wendy.

When a response finally came late on Sunday afternoon, there was no attempt to deny the story or the authenticity of the document. Her statement said that she expected to be “exonerated of any intentional wrongdoing” and that she continues to work to “improve the lives of fellow Scots”. Well, one fellow Scot at least. The view among Labour insiders is that the prime minister, Gordon Brown, had instructed Wendy Alexander that it was her solemn duty was to remain at her post, to the bitter end, rather than leave the great Broon exposed at prime minister’s question time.

If Wendy had taken the long walk the Tory leader David Cameron would have savaged an already weakened Gordon Brown on Wednesday and demanded that other Labour ministers, like Harriet Harman, should also fall on their swords. That would be too much for the great man to bear.

But I wouldn’t like to be Wendy in the coming few weeks and months as she toughs it out for Gordon. Last week in Holyrood there were extraordinary scenes as she was pursued by the press pack up and down the parliament. She had better invest in a pair of good running shoes because she’s going to have to sprint across the Garden Lobby half a dozen times a day to avoid a media which is in ugly mood right now. “Ms Alexander, did you break the law?” “Er, yes. But no. But yes”. Or perhaps she will just sit in her room, like last week, and not come out at all. Can a party function with a leader who is unable to face the press, opposition or the general public? We are about to find out.

Can Labour participate in the process of making laws in Holyrood when their leader, and half the shadow cabinet, have admitted to breaking the law? I don’t know, because we have never been in this situation before. I cannot think of any historical precedent of a party leader admitting to lawbreaking and yet remaining in post. Tony Blair never conceded anything illegal in the cash-for-honours inquiry, and that was bad enough. But it has always been assumed in British public life that if someone actually admits to acting illegally, they simply have to resign. Yes, this looks like another first for Scotland.

Alex Salmond will of course have a field day at First Minister’s Question. He has carefully avoided any obvious gloating over Ms Alexander’s difficulties, in part because the nationalists couldn’t believe their luck. They had been hoping that in some way Wendy might carry on in office despite being horribly damaged. But they didn’t think it was possible after the Labour leader’s savaging in the Sunday press. Now they will be able to ridicule her as a human shield who is only remaining in post to save Gordon Brown’s backside.

Then there is the loyalty of her own party lieutenants to consider. Tom McCabe, David Whitton, Charlie Gordon are all in the dock and potentially facing a spell at Her Majesty’s Pleasure. If Wendy Alexander is insisting on her own wrongdoing being unintentional, does that not mean she is pointing the finger of guilt very much in their direction as the ones responsible? This is a heavy price to pay, and I wonder if they will all be prepared to pay it.

We know that all is not well in the Labour leader’s inner circle, since this story has been driven by a series of damaging leaks from people with access to the most sensitive inside information. The Sunday Herald document for example could not have been widely circulated within Labour, but it found its way into the public domain. Someone somewhere harbours a very deep grudge against Wendy Alexander and is prepared to go to extraordinary lengths to settle accounts.

I’m afraid this has been the Scottish Labour story since devolution - factionalism, cronyism, incompetence and personal vendettas. They can’t seem to help themselves. The party seems to have lost the will to live. Wendy Alexander was their best hope in years for a clean break from the old numpty machine politics, but it has broken her instead.

No one takes any satisfaction in seeing her reduced to this state, certainly not this columnist. She is a politician of integrity, intelligence and honesty. She enjoyed a lot of goodwill in the Scottish press, the academic world and in civic Scotland. She was on the point of transforming Labour’s entire approach to home rule in a way which could have brought the party back into the political mainstream. But mad party disease has struck again. Labour seem determined to hand the keys of Scotland to Alex Salmond.

Donor-gate shows Labour has lost the plot in Scotland

There has been a strange synchronicity to the dodgy donations affairs north and south of the border. At first it looked like me-tooism, as if Holyrood just had to have a paltry tartan version of the scandal raging in Westminster. But it is becoming clear this weekend that the Scottish situation is the more dangerous one for Labour now that serious questions are being raised about the future of Wendy Alexander.

If Labour’s Scottish leader has to resign, would Harriet Harman, the party chairman who also received an illegal donation, have to consider her position? The Tories will say she should. And where would that leave Gordon Brown?

It seems incredible that Wendy Alexander’s job could be at risk over 950 quid raised for a leadership election which never took place, but stranger things have happened. Henry McLeish had to resign as First Minister over a financial muddle which not only didn’t break the law - it didn’t even break the allowances rules in Westminster under whose jurisdiction the offence occurred. He sublet rooms in his Fife constituency office, you may recall, and failed to declare the revenues raised. But no one suggested Henry was corrupt or had acted illegally.

The dangerous thing for Wendy Alexander is that law breaking is now tacitly accepted in the wake of the resignation of Labour fund-raiser Charlie Gordon, who we now know accepted two illegal donations from the tax exile property developer, Paul Green. Moreover, it is clear that Wendy Alexander was fully involved with the arrangement and even wrote a letter of thanks to Green. This paper’s revelations today that there was another dodgy donation, and that Wendy Alexander almost certainly knew about the questionable provenance of the Green donation a month ago, must surely be the final straw. You can’t claim to be an intellectual “master of detail” and not notice that your own election campaign is systematically breaking the law.

The Scottish press believe they were sold a pack of lies about the donation last week, and are in unforgiving mood.
The atmosphere in Holyrood on Thursday was like a cross between Watergate and the Devil Wears Prada as Wendy Alexander, highly dressed as usual, was quite literally chased through the Garden Lobby by a posse of journalists. I’ve never seen anything like it before in Holyrood. They even camped outside outside the office of the transport minister, and go-between Charlie Gordon, until he emerged to resign.

Not even Henry McLeish’s officegate caused such fevered excitement. This is because the stakes are higher. With an SNP government now in office, the implosion of the main opposition leadership becomes a very serious matter indeed. The Union itself could be at stake, not just one politician’s job.

Alex Salmond has been wearing a smirk the size of the Forth Bridge, and with cause. All the pressure has been taken off his government at the very moment when his honeymoon with the Scottish voters, and the Scottish media, seemed to be wearing off. Only six weeks ago people were talking about how a combination of Gordon Brown in Westminster, and Wendy Alexander in Holyrood, could be enough to halt Scottish nationalism in its tracks. With Blair history, the war in Iraq effectively over, and Wendy’s mentor in Number Ten, how could she possibly fail?

Well, she has. Since she became leader she has lost two spin-doctors in as many months; serious questions have been raised about her temperament and her leadership skills; and she has been on the losing side of parliamentary encounters with Alex Salmond. The SNP is getting away with budgetary murder, scrapping pledges and muddying the spending figures across the board. Her fight back speech, calling for a constitutional commission on more powers for Holyrood, was totally eclipsed by the donation row. It doesn’t get much worse than this.

Though they differ in financial scale, the donations scandals in Westminster and Holyrood are essentially the same, for they centre on the party’s curious relationship with businessmen. The expat property developer Paul Green, who made the illegal donation to Wendy’s fighting fund, was a mate of Charlie Gordon’s from his days as Glasgow council leader. Green had made a mint from shopping developments around Glasgow.The man behind the Westminster proxygate affair, David Abrahams, possibly acting for another shady business interest, was also involved in highly lucrative business park project in the North which needed special government approval to be granted planning permission.

No one is saying that there is anything corrupt in these dealings. However, Labour’s own attempts at a cover up suggest that the party itself felt there was something faintly indecent about these arrangements. Why were the donations for Wendy’s campaign raised anonymously? Why were they kept under £1,000 limit, so that they did not need to be declared? Why was David Abrahams allowed to donate, illegally, through proxies? Why the secrecy?

Since before it came to office, New Labour has shown a combination of naiveté and duplicitousness in its dealings with the private sector, Bernie Ecclestone, cash for access, cash for honours. But everyone thought it had ended with the departure of Tony Blair. Gordon Brown made absolutely clear when he became leader that Labour had to wake up and smell the sleaze - root it out, zero tolerance, get the house in order. This is why Wendy Alexander’s donations scandal is so damaging for the Prime Minister. This has all taken place since Brown came to office, and she is his protégé. This cannot be laid at the door of his predecessor, Tony Blair, in the way the Abrahams proxy donations arguably could be.

What is emerging is a systemic failure in Labour to police its own regulations. Everyone makes mistakes, but not like these. It is truly astonishing that more than a decade after the Nolan inquiry into standards in public life, we are still discovering new dimensions of sleaze, and that it should be Labour who is responsible for them. Labour created a whole raft of new rules against abuse of political donations, and the sale of public honours, and then broke them. The UK party general secretary, Peter Watt, allowed a situation to prevail where Labour was taking donations from businessmen through proxies, some of whom didn’t even know they were involved. Why did Gordon Brown’s top fund-raiser - Jon Mendelsohn - not warn his boss about what was going on? How could one Brown aide reject one of these dodgy donations and then suggest to the party chairman, Harriet Harman, that she should accept it?

The fact that these practices were also taking place in the Scottish party should - I suppose - not surprise us. But given the Holyrood history of expenses scandals you wonder how they could have been so irresponsible as to fail to observe due diligence. And all over a few paltry hundred quid? The tragedy is that two politicians of impeccable integrity - Wendy Alexander and Gordon Brown - may have had their careers destroyed by the very practices they promised to end.

The most perplexing thing about the entire donations affair is its witlessness, its pointlessness. This has been an exercise in wanton self-destruction by a party which has lost the capacity to think and act responsibly. I’m afraid the only conclusion is that north and south of the border, Labour has simply lost the plot.

Devolution Australian style.

Imagine the reaction if anyone were to suggest in the debate about fiscal autonomy that all the tax revenues from house sales in Scotland should be handed to Holyrood. Then imagine the further row if (say)Wendy Alexander ? who keeps hinting about more powers but never seems to come up with any ? were to suggest that, in addition, Scotland should get the receipts from indirect taxation in Scotland ? for VAT. It would no doubt be condemned in Westminster as nationalism blue in teeth and claw. An attempt to create a degree of fiscal autonomy incompatible with the maintenance of the UK.

But what if someone were then to take leave of their senses and suggest that, on top of all this, there should further be a version of the Barnett Formula to provide further funding from the central government in addition to locally-raised revenue. Shock, Horror. Fiscal madness?How could anything so ridiculously complex and fraught possibly work?

Well, in the Australian state government of Victoria they don?t seem particularly mad. Indeed, in the sober, dark wood-lined state parliament chamber in Melbourne, political life seems to go on pretty normally despite the fact that, on top of sales taxes and stamp duty, there is a needs-based equalization formula of such complexity no one could explain it to me. But this is just the way things are in Australia. And it seems to work ? or it has up until now. The state government has, in one way or another, been raising its taxes for most of the last century, but no one would suggest that this made it a separate country from Australia. No worries, mate.

Following Kevin Rudd?s landslide election victory in Australia, the country is now bracing itself for the expected battle over their version of the West Lothian Question. It is an upside down version of our own. Not so much a question of regional politicians ?interfering? in the affairs of the central state as the centre running roughshod over the rights of the provincial parliaments.

Defenders of devolution in Australia ? who unlike here tend to be conservatives ? argue that the federal government in Canberra already has quite enough power and that Rudd has no right to challenge the autonomy of the state parliaments like Victoria. For his part, Rudd is adamant that standards in schools need to be improved across Australia, and if there is to be more federal funds to do this, the federal government is going to want to have a greater say.

It?s the mirror image of the debate taking place in the UK about the future powers of the devolved parliaments. Here, politicians in London complain about Scottish MPs having too much power in the UK parliament; down in Australia they are asking why politicians in Canberra should feel they have any right to tell the state what to do in areas where the provincial parliament has sole legislative authority. In the end ? as in Britain ? it all comes down to money, and who gets to tell the piper what tune to play.

And we really could learn a lot from looking at the debate in Australia, where I have been traveling for the last few weeks. Viewed from the southern hemisphere, our endless, inconclusive debates about tax raising seems pretty juvenile, unhistorical and ill-informed. We talk in hushed terms about fiscal autonomy as if it were a matter of constitutional life and death. It isn?t. It is a practical problem addressed by countless devolved constitutions around the world.

Indeed, across Australia, politicians and journalists I spoke to were surprised to find anyone should be interested in the mechanics of tax raising and the separation of powers, which are ? to them - the stuff of school text books; dry constitutionalism, not living and breathing politics. They were astonished that anyone in Britain could seriously propose that a parliament could be expected to rely on handouts from the central government, which is what happens under our beloved Barnett Formula. ?But why would anyone bother trying to govern responsibly if they don?t raise their own revenue?, was the response whenever I described our own constitutional arrangements. But what really caused their jaws to drop was that anyone would seriously suggest that handing fiscal powers to a provincial parliament would amount to separation, to independence.

The Australian state of Victoria is comparable in size to Scotland with just over five million people and a GDP of some 34 bn. The state government in Melbourne has extensive tax raising and legislative powers but remains very much a part of the Australian federation. Victoria has responsibility for all legislative functions excluding defence, foreign affairs, macro-economic policy and immigration, which are handled by the federal government in Canberra. This is in line with federal constitutions across the world.

Victoria also has a wide array of tax raising powers. The main revenue raisers for the Labor-led administration in Melbourne are stamp duties and VAT, all of which goes to the state coffers. It can also raise its own revenue through bond issues and loans, and can run a current account deficit if it needs to, but these are expected to be kept to under three percent of the state budget.

Now, as I say, this is all largely non-controversial,but it doesn?tmean there isn?t controversy ? far from it. Things can get very tense indeed between the various levels of government, especially when the states are running large deficits, as they have been in Australia in recent years. Finance is a complex business and involves endless haggling between the centre and the periphery. But this is simply how politics works in any decentralized political arrangement, whether asymettrical devolution or full frontal federalism.

My perambulations across this vast country confirmed that no constitution which involves devolution can be conflict free ? indeed, the conflict must be seen as a vital part of the process of decentralization of power. Rows between London and Edinburgh show that the system is working, not that it is failing, for this is the process by which regions express their interests in the face of centralized power.

It has also confirmed that a formal federation would not be appropriate for Scotland. In the UK we do not have a collection of states of roughly equivalent size, but one very big state ? England ? and three very little ones. You could not design a federation in which the states could be properly balanced, and Britain is condemned to ?asymettrical devolution?, unless or until the English regions decide they want a measure of autonomy themselves.

But this doesn?t mean we are condemned to dependency. The debate about fiscal powers in Scotland is ridiculous ? it is silly. It must end; and we must grow up. Of course, the Scottish parliament should have a wide array of tax powers and the sooner the better. It doesn?t mean Scotland becoming independent, but it would make Holyrood make sense.

Downunder it's upside down as Rudd reinvents Blairism

You travel to the other side of the world and still all they're talking about is house prices. Even in Australia, where they're supposed to be interested in sport and barbecues, they've succumbed to the planetary obsession with real estate, that has ruined dinner table conversation and debased politics.

The Australian election, which has been won by Labor after over a decade in the wilderness, was supposed to have been about the environment, but the big issue on the ground was mortgage payments. The victorious Labor Party leader, Kevin Rudd, is youngish and personable in a Blairite sort of a way and he has a range of New Labourish policies from the environment to broadband. But what killed the Liberal leader, John Howard, after eleven years in office, was the shock rise in bank interest rates at the start of his campaign. Howard's warning to voters not to let Labor back because they were the party of high interest rates, exploded in his face as home payments rose. Shockwaves spread across the swimming pools faster than a kangaroo pursued by a dingo.

Home panic was compounded by insecurity in the workplaces of Middle Australia, brought about by Howard's "Work Choices" programme, a down under version of our own flexible labour market, which allows employers greater freedom to hire and fire. Australia may not have much in the way of trades unionism these days, but a history of labour shortages has left workers here - by hand and brain - a lot of residual power, and pay rates are as high as in the UK even though the cost of living is significantly lower. In his only obvious gesture to His party's socialist roots, Rudd has promised to scrap Work Choices and restore workers rights.

Attempts by Howard to buy last minute votes by offering financial help for private school fees and new tax-free housing loan accounts (surely coming soon to a Tory party near you) were to no avail. Nor were the countless Liberal attack ads warning that Rudd was a self-professed "Christian socialist" (shock) and that his cabinet would be filled with "trades unionists" as if that was synonymous with Stalinist commissars. The Liberal campaign sounded like John Major's in 1997, complete with the taint of sleaze and dirty tricks, so it was hardly surprising Howard was defeated by a clone of Tony Blair.

But in the end it was house prices wot lost it. The polls showed that the "battlers" as they're called here- people earning less than gbp 35,000 - deserted Howard because they were no longer sure they could afford their homes at a time when job security is becoming tenuous. Interest rates here are nudging 7percent and expected to rise further, possibly to 9percent as the federal treasury grapples with an overheating economy based on an unsustainable boom in house prices, latent inflation and huge personal debt.

Sound familiar? the similarity with Britain is uncanny and perplexing. This vast Australian continent is a very different place to crowded and cramped Britain, but they've somehow managed to have the same housing shortage. In the past decade house prices have risen to seven times earnings and average debt repayments are now over that critical level of 30 percent of household income beyond which home ownership becomes unsustainable.

Travelling across this vast country around the size of the USA with only a 12th of the population, you can only ask: why? There is no shortage of land here, and the construction industry doesn't have to deal with Nimby planning regulations. It's like having a sand shortage in the desert. The crisis clearly has less to do with physical characteristics of the housing market than with years of cheap money. Years which are now over - there as here.

Indeed, looking at Austalia you realise just how much this global debt cycle has been driving policy and politics in western democracies almost irrespective of whatever party happens to be in government. The Australian Liberal Party, their equivalent of our Tories, has been riding a decade long wave of apparent economic success, presided over by their answer to our iron chancellor, treasurer Peter Costello. As in Britain, the Aussie boom has been based on inflated house prices which have created a "wealth effect" and kept consumers spending beyond reason. Costello claimed to have ended boom and bust, and has been warning the voters not to risk going back to the days of negative equity and unemployment. Change the names and this could be our Labour government and Gordon Brown talking.

Indeed, you wonder if the election result in Britain - had Gordon Brown actually called one last month - might not also have led to a change of government. John Howard's record of apparent economic success didn't save him - even though looking around Australia you see evidence of it everywhere in the shiny new cars and new restaurants. Unemployment is non-existent and cities like Melbourne are booming as never before.

But to Howard's dismay the voters refused to stick to the script and decided it was time for a change even though, as Costello kept telling them, they'd never had it so good. The Australian voters have concluded that the new post-sub prime financial world needs a new administration in charge - one not drunk on its own hubris and dazzled by its own supposed economic competence. They see new problems ahead and they want new heads to tackle them.

The coming of Kevin Rudd will probably be a good thing - for the world at least. The Labor leader has promised to reverse Howard's hostility to Kyoto and to take global warming seriously. And since he may need the support of the Green Party in the Senate, there is every expectation the he will deliver. However, Rudd has his work cut out taking on the immense vested interests in Australia's colossal coal and mineral extraction industries. Australia is in the midst of its worst drought in a hunded years, but one of the solutions put forward by Howard was a desalination plant which would be coal-fired. Solar power is not being developed despite sunlight so intense that Australian mothers are afraid to let their children be exposed to it.

Australian citizens love their country and are intensely protective of the natural environment here. Many are probably instinctive environmentalists. But there is a huge battle ahead as the country awakens to the enormity of the challenge presented by climate change and discovers the commercial interest vested in the carbon economy. Can Kevin Rudd really grow the economy enough to pay for costly health and education reforms, not to mention 30 billion in tax cuts, and slash carbon emissions? He has promised to halt fuel price increases when the pump price is a third less than in Britain.

Otherwise, the victorious Rudd has promised to withdraw Australian troops from Iraq by next year, ending the involvement of the only remaining US ally with the stomach to fight there. It means the end of the line for George W. Bush's coalition of the willing. But like Gordon Brown, Rudd will remain broadly pro-American. And he will arguably be more conspicuously pro-British than the supposedly monarchist John Howard. Rudd wants to ally himself to the New Labour project and Gordon Brown will be happy to oblige.

It will be useful for the PM to have a new ally in the environmental debate, and in Afghanistan, a fight which Rudd says he still wants to fight. The danger for both of them is that they may sink or swim together, and things aren't looking too buoyant on either hemisphere right now. Both Rudd and Brown have been waiting a long time for the top job, but they may both have taken over just at the moment when the boom has finally bust.