Author Archives: Jon

Could student loans turn America into the next Greece?

You saw Obama slow-jam the news, right? Ha, funny, he’s the President. But what was he talking about?

Obama has asked Congress to block a proposed doubling in the rate of interest on US “Stafford” student loans. These subsidised public loans make up a significant proportion of US student debt – over a third in 2011.

The President’s intervention is electioneering, and he stands no chance of blocking the vote. The Republicans control Congress, this will pass, and the rate of interest on these loans will increase from 3.4% to 6.8%. We have no way of knowing whether Obama would actually block the increase if he were able to, so let’s not dwell on it.

Obviously, this is a pain for US students. But it’s also likely to have unintended consequences: it could speed up the coming of another global financial crisis. This is because the US student debt situation is starting to worryingly resemble the US subprime mortgage housing crash that tipped the world into the 2008 crisis.

The US student loan situation is unsustainable, and it’s increasingly clear that the mounting pile of debt will never be paid back. The proportion of borrowers defaulting on their loans in 2009 hit 8.8%, the latest figures we have. This was up from 7% in 2008.

For comparison, default rates in the US subprime mortgage market topped out at 21.9% at the 2007 peak of the crisis, up from 7% in 2002. But even in 2007 the safer prime mortgage loans maxed out their default rate at 4.8% – student loans have gone way beyond that. While student loans aren’t quite at subprime level yet, they’re also not in a completely different ballpark, which is worrying.

These numbers are relevant because the subprime crisis was triggered by defaults reaching an unsustainable level. What the US Congress is about to do in doubling the interest rate on a third of all loans is make it a lot harder for people to pay back their loans, increasing the rate of default further. If the market is driving itself off a cliff, this is like putting your foot down on the accelerator pedal.

This is against a backdrop of falling US real wages – a 2% fall in 2011 – and so reduced means of paying back loans. And of course, US tuition fees are soaring, with inflation busting fee rises of 4.6% a year on average, meaning the gap between the cost and the ability to pay is rising. That can only drive the default rate up further.

The US student loan market is estimated to have $757 billion of outstanding loans. This is under half the size of the 2007 subprime mortgage market’s $2 trillion, but again, it’s not a completely different ballpark, it’s bigger than the total US credit card debt, and it’s growing at about $112 billion a year.

But if the market goes nuclear, there’s a big difference between the student loan book and the subprime book: the vast majority of US student loans are underwritten by the US government, with only 7% coming from non-federal sources. If borrowers default, the state pays – an automatic built-in bailout. The good news is this means it would be difficult to see how private financial institutions could collapse if out of control defaulting started, which means financial market shocks like the Lehman Bros. collapse aren’t as likely.

But someone has to pay. The entire US federal budget deficit for 2013 is $901 billion, with total expenditure of $3.8tn. A hypothetical mid-decade  market worth $1.5 trillion with a subprimesque 20% default rate would be a very big deal indeed.

The Work Programme might actually increase unemployment

Chris Dillow’s lament that productivity growth can lead to an increase in unemployment reminds me of something: The Government’s Work Programme might not just ‘not work’ – it might make unemployment worse.

We know what causes unemployment, because we know what causes jobs.

Jobs – posts, positions, or more abstractly ‘demand for labour’ – are created by investment. This can be by business, the state, or anyone. Deploying capital through investment creates a certain level of demand for labour to ‘work’ it.

Increasing or decreasing that investment is one way of increasing or decreasing the demand for labour, and therefore the number of job posts that can be filled in the economy, and therefore the number of people who can be employed. The remainder are unemployed.

Apart from this, other thing that determines how many jobs there are is the productivity of labour itself.

If increases in productivity mean that one person can do a job that it previously took three people to do, the particular capital investment that led to that job will now create one job instead of three. In this sense labour productivity is like a multiplier (or more accurately, a divider) of the number of jobs created by any given capital investment.

I’ve written before about how New Deal style programmes (including the Work Programme) don’t overall create new jobs, and just displace existing workers with different workers.

But when you take into account labour productivity things look even worse. The training the unemployed are made to do is supposed to make them more attractive to employers by ‘instilling them with a work ethic’ or ‘teaching them skills’.  In economic terms, this is an increase in their labour productivity.

So, depressingly, if the Work Programme is successful in raising productivity, fewer jobs will be created overall by any investment.

And it’s not actually far fetched to argue that programmes like the New Deal and the Work Programme actually increase total unemployment by reducing the overall demand for labour. Why hire two people when you can hire one person who has no other option but to work twice as hard?

You might say that labour productivity growth is good in the long run, and it is. But that doesn’t mean it doesn’t increase unemployment, making it a weird focus for a programme sold as a cure for unemployment. Particularly when that programme is ministers’ only response to the accusation that they don’t have a plan on unemployment.

In reality, though, I suspect the effect I’ve outlined in this post will be minimal. This is because from my experience the training offered as part of schemes like the Work Programme is a complete joke, and is unlikely to actually significantly raise anyone’s labour productivity.

But if that’s true, then you have to ask yourself: what is the point in it?

You can blame enthusiastic Thatcherites for the petrol crisis

What possessed the Government to provoke the panic buying of petrol? Who in their right mind would tell the public to hoard as much petrol as they could?

I suspect there was more than a touch of Margaret Thatcher in there.

The Thatcher government is well established as this generation of conservatives’ role model for disputes with trade unions. One main rule: crush them.

This was more than evident in Francis Maude’s statement where he first recommended the public fill up jerrycans of petrol and cart them home as a reserve supply.

The idea seemed to be that the more petrol people had, the longer they could hold out at against the shortage of fuel caused by the strike. It makes sense in theory.

Whether or not Maude was consciously aping Thatcher, the similarities to the miner’s strike are interesting. Then, the Government famously stockpiled weeks’ worth of coal outside powerstations, building huge black mountains in preparation for the big show-down.

The plan worked well, and there’s little doubt that the extra stockpiles of coal made a difference to the class war effort.

The central irony of the result is that Thatcher’s plan to stockpile coal to hold out against the striking miners only worked because the system of delivering coal to the power plants was a centrally planned command economy managed by the state.

As the current Government has just found out, try that kind of macro-level forward planning in a free market, and you end up with individually rational consumer panic buying the supply chain into oblivion, even when there is no strike to speak of.

Let it never be said that economics doesn’t have a sense of humour.

Labour’s 10-point poll lead: The lasting damage to the Government

There’s much debate about what’s causing the sustained 10-point Labour lead in the opinion polls.

The first thing to make clear is that this isn’t so much a Labour bounce as the first instance of an erosion of the Tories’ previous floor on their vote.

Labour are doing as well as they have done this Parliament – and previously fluctuations in their fortunes have been the main determining factor in the gap in the polls. Meanwhile the Tories have trundled along between 36% and 40% – roughly what they got at the 2010 general election.

What’s new, and what separates these 10-point leads from the 5-7-point leads the party enjoyed during the phone hacking scandal is the new dimension of the Conservative vote consistently dropping below 36% for the first time.

YouGov’s tracker has very consistently shown a solid 36% for the Conservatives, roughly their general election score. But the figures since the Budget have been lower: tonight’s score is 33%, with the first post-budget poll showing 34%.

Two phone polls from yesterday showed the same story, with a 33% (-4 from last poll) Conservative score from ComRes and a 34% (-3 from last poll) score for the Tories.

That isn’t to talk down Labour’s score – Consistent 40%+ scores are perfectly respectable for a party that has just come out of a historical defeat at a general election and has had their leader subjected fairly consistent media abuse.

But recognising this it does help us look to the causes.

Most obvious is the granny tax, which erodes the Tories’ support in the staunchly Tory and high-turnout 60+ age-group. Cash-for-access will also have a direct effect on whether people feel they can vote for the party, as it makes them look corrupt. Other people have covered these subjects well.

But one big effect of the cash-for-access scandal hasn’t been mentioned so far. Its main effect isn’t direct, but indirect. It means that, for the first time to many people, every single policy the Government puts forward will be considered in light of the fact that policy is open to be bought by vested interests.

You, dear reader, may be savvy to the role of the funders of political parties in our political system, and might ask what all the fuss is about. But the difference to someone who was only recently introduced to the inner machinations of the establishment by irrefutable video evidence of a party treasurer outlining to a businessman how much influence their cash would buy them will be striking.

Try and think through the Coalition and Labour’s arguments about the NHS when you know that private companies can buy influence in policy – and when you don’t know it. It makes the difference between plausible-deniability-in-the-national-interest and the-executive-of-the-modern-state-is-but-a-committee-for-the-management-of-the-common-affairs-of-the-ruling-class. The same is true for most Government policies: from the 50p top rate of tax, to road privatisation, to planning deregulation for developing on greenfield sites – it’s the missing piece of the puzzle.

I won’t make rash predictions about the poll lead sticking around forever – lots of things will determine poll scores. But what I am fairly sure of is that criticism will start to stick to this Government now in a way it didn’t before.

If you can enforce a ‘Tycoon tax’, just enforce all our taxes

The ‘Tycoon tax’ begs a question – if you can enforce it, why not enforce our existing taxes?

Nick Clegg and other Lib Dems have called for a tax rule which will see people on high incomes paying a minimum rate of 30% on their income. This is as opposed to the current situation where many of the super-rich pay very low tax rates compared to salaried individuals on lower incomes.

But the elephant in the room is that we already have a set of minimum rates on personal income – it’s called the income tax system. Incomes over £35,000 pay a 40% rate, and incomes over £150,000 pay a 50% rate. So what’s all this about a 30% minimum rate?

It’s not clear yet what technical form the Tycoon tax will take yet – or whether it will even be announced by the Chancellor later today. Reception to the idea seemed luke-warm from both within the Lib Dems and the public at large, so it may not happen.

But if it does, and it does what it says on the tin (I suspect it may not) it will have to close loopholes regarding having income paid to a holding company. It will also have to effectively increase the rate paid on capital gains, which is a lot lower than income tax and doesn’t have progressive bands.

Fortunately, equalising Capital Gains Tax with income tax was a policy pledged in the sacred coalition agreement – so this shouldn’t be an issue for a government that wanted to make the tax system work entirely as was intended, not just sometimes. And closing corporation tax loopholes is something the Government should be doing where possible anyway, whatever the tax rate.

Either we can’t get people to pay the rate of tax we set, or we can. Either Tycoon tax is not enforceable – or it is enforceable. If it is, we should enforce the taxes we’ve already agreed on.

I suspect that if a Tycoon tax does make it into the Budget it won’t quell anger about the regressive structure of the tax system when the very highest earners are considered. Rather, an unintended consequence of it will be to highlight the absurdity of the situation that will exist.

Thankfully, flat taxes are very unpopular

Today’s ComRes poll for the Independent on Sunday has one particularly badly worded question in it. People were asked whether they agreed or disagreed with the following hypothetical budget measure:

“Introduce a minimum income tax rate of around 30 per cent, that everyone should pay, regardless of tax reliefs and schemes to reduce tax liability”

 Agree: 12% Disagree: 63%

According to the ComRes press release, this was meant to be a question about the proposed “Tycoon Tax” or “Buffett Rule” as it is known in the US.

Where the question went wrong is it neglected to mention such a tax rate would only apply to people earning over a certain high threshold – say, £150,000.

Because ComRes didn’t mention the threshold, they actually asked whether people would support a flat income tax rate of 30% for “everyone”.

While this is useless for telling us about support for the Tycoon Tax, it does accidentally poll something else: support for a flat income tax rate of about 30%. Depressingly, this is actually relevant, because such a tax has been proposed in the recent past by none other than George Osborne.

This is the first polling I’ve seen on the tax, which is advocated by the Adam Smith Institute, the Institute of Economic Affairs, Forbes, and a lot of US libertarians and conservatives.

It’s also a favourite of the Tory grassroots: Nigel Lawson told a roomful of beaming Conservative Future members last year that his ultimate aim were he to have continued as Chancellor after dropping the 60% band to 40% was to move to a flat tax system at about 30%.

With the ComRes poll showing 63% against and only 12% in favour, the proposal is reassuringly unpopular.  Despite this, something tells me we haven’t heard the last of this appallingly regressive idea (PDF).

Five reasons Germany isn’t innocent in the Euro crisis

I actually agree with European Commissioner Olli Rehn when he says there’s no point apportioning blame for the Euro crisis – a lot of people have messed up. It can also be counterproductive. But since you can’t move for tripping over caricatures of lazy Greeks, for the sake of balance here are some reasons why Germany isn’t quite the prudent and innocent victim of dastardly southern European profligacy it is frequently painted as.

Eurozone monetary policy is tailored to suit Germany at the expense of the Greece

The Eurozone countries all share a single monetary policy, set by the European Central Bank in Frankfurt. Any policy set will necessarily be an aggregation of the interests of the member states in Europe.

But for most of the 2000s, the ECB followed a very loose monetary policy of low interest rates, which benefited the north European countries like Germany and France at the expense of Greece, Spain, and Portugal. To policymakers at the time it would have been clear these countries were at risk of overheating from the massive supply of cheap credit this was supposed to create (Any half competent national central bank would have likely set different rates.) But they still did it. Had this not been the case, it’s very likely that the private half of the debt crisis would not have been possible, or as severe.

The monetary policy problem hasn’t gone away either. If Greece had its own currency, it would at this point likely devalue it to make its exports cheaper, shrinking its trade deficit and kick-starting GDP growth. This is what Iceland has successfully done, and its what Argentina did successfully after its severe 2002 crisis. But there’s not a chance in hell of the ECB devaluing to save Greece, because it would have negative consequences for consumers in northern Europe, making their imports and foreign holidays more expensive.

The ECB refuses to use the two policy tools that could ameliorate Greece’s crisis, on the basis that they would harm Germany. This has prolonged and deepened the crisis.

Germany ‘defected’ in the prisoners’ dilemma that is the European common market

The EU is a project of regionalisation. Though multi-faceted, part of its purpose is to shield capital in European countries from competition from abroad with high external tariff barriers, while at the same time providing a large enough free trade bloc to give access to a strong pseudo-domestic market. The idea was that French farmers and German manufacturers wouldn’t have to directly compete with people willing to work for a dollar a day, only people with a similar lifestyle; and so a race to the bottom could be avoided.

But German industrial policy has been to hold down wages and undercut labour remuneration and costs compared to other European countries to make its capital more competitive:

This is a perfectly legitimate thing to do, but in one important sense it is defecting in a prisoners’ dilemma: were all the countries to collectively agree to raise workers’ living standards at the same rate, everyone would be better off. This is arguably the point of regionalising rather than globalising. German capital wouldn’t have gained that competitive edge, but it was partly that edge that led to huge trade imbalances.

You might not have a problem with this: in a market, actors compete. But if you’re okay with countries competing in a market, you have to accept the logical conclusion of markets, which is that some actors will eventually go bust.

There are two consenting parties in any financial transaction

The story of imbalances in the EU is by now well established – at its most simple, prudent German savers and lenders lent to southern European spenders, both state and private. But what was the nature of these transactions? They weren’t charity, or gift loans to an unreliable friend. They were loans by people hoping to make a profit by charging a rate of interest; they were investments. They also turned out to be bad investments.

If there was no risk of Greece defaulting then investors could have just lent Greece the money for free, but seeking to make a profit, they charged a rate of interest (now a 34% return). Charging interest is supposed to ‘price in’ the risk of default – on aggregate, if you set your interest at the right rate you’re not supposed to make a loss. Investors clearly priced the risk wrong.

For anyone genuinely committed to the principles of capitalism, the response ought to be the same as to anyone who bought some stocks or shares that then plunged in value: ‘Tough, you made a bad investment. Better luck efficiently allocating your capital next time.’ Some of the blame for the negative externalities caused by these bad investments must surely lie with the people who made the investments.

Dragging the crisis out to makes sure north European lenders don’t get hit has been expensive

Each time Greece gets another infusion of bailout cash tied to counterproductive austerity measures, the can just gets kicked down the road. The crisis isn’t permanently solved, the bailout money goes to service the mountain of debt until it runs out and another round is needed, and the forced fiscal contraction shrinks Greece’s economy further, reducing its income and ability to pay back its debt.

This has been quite obvious to many observers for a while now, so why would you do it? Because the longer it drags out, the less the impact on lenders there is. The market can price in losses, more bonds can mature, political wrangling can resolve itself, building ‘firewalls’ (bailout mechanisms) for banks. This is explicitly the Mekozy policy.

But ensuring the financial sector doesn’t get hit too hard has hurt everybody else. Every day the Euro crisis hangs over the economy is another day of rock bottom business confidence for capital in real sectors of the economy, tipping countries into recession. The bailouts themselves are very expensive and essentially massive transfers of European taxpayers’ money to non-Greek banks. And Greece itself is being pillaged beyond the point of comprehension.

These are policy decisions made disproportionately in the interests of German (and to be fair, French) lenders, but they have had significant downsides for everybody else.

Germany was actually the first country to break the Eurozone fiscal rules

This isn’t so much a cause of the crisis, though it is relevant. One of the accusations often levelled at the southern countries is they ignored fiscal rules set by the Eurozone. But Germany was just as guilty of this as anyone – in fact, Germany was actually the very first Eurozone country to break the rules of the Stability and Growth Pact: the agreed limit on yearly borrowing of no more than 3% of GDP.

Interestingly, Spain was the only country to keep the Eurozone’s deficit rule all the way up to the 2008 crisis, and even managed to keep within regulations on public debt (keep it lower than 60% of GDP) until 2010 (!) – a rule which Germany actually broke at the same time as Greece, in 2003.

The Government can’t have its cake and eat it with quantitative easing

MPs were on the radio today defending the Bank of England’s decision to launch another round of quantitative easing. The main accusation being made against the move was that it would cause inflation.

Responding to former Monetary Policy Committee member Andrew Sentance, Tory MP Matthew Hancock said that in the past QE hadn’t produced inflation, and that there was no reason to think that it would this time.

“Inflation is falling, it fell very sharply over the last month, the bank predicts that it will continue to do so over the coming months, there are some very good reasons for that,” he told Radio 4.

He’s probably right, as well.

 Velocity 

The inflation that newly created money causes is determined by the so-called ‘velocity’ of that money. This is effectively the rate at which money repeatedly gets used in transactions once it has entered use.

The reason for this is quite simple if you think about it – if the Governor of the Bank of England secretly created a trillion pounds of money but held it in a locked (virtual) room in the Bank and never alerted a soul to its existence, it would not cause inflation. It may as well not exist, it has no contact with the wider economy.

But if a trillion pounds were created and used to pay workers to build a (bloody big) high speed rail network, those workers would probably have spent most of the money they had received in wages by the end of the month.

The businesses that they had spent that money in would be exposed to a massive increase in cash coming into their coffers. They would in turn use that money to expand, pay their staff, spend it on capital goods, and it would filter through to the wider economy.

To everyone there would be more money around, the amount of money actually being used in the economy would increase in comparison to the real goods and services, and each pound would represent less real wealth. Inflation would occur.

Not quite a locked room 

Back in the real world, what the Bank is doing is not quite locking the money in a secret room never to be used, but it doesn’t filter through to the wider economy at anywhere near the same rate as paying it to workers.

The effects of purchasing Government debt are broadly limited to lowering yields on government debt – because buying up the debt raises effective demand for it, hence record low interest rates on Government bonds. This may have a knock on effect in terms of investors who deal in government bonds (pension funds, etc) but for the most part, the transaction stops after the bank has bought the debt and does little else.

The banks don’t necessarily go on to spend the money again like a worker would because banks spend (lend out) their money when they see a profitable opportunity – and at the moment they don’t see profitable opportunities

 Flipside

So inflation is unlikely to happen after another round of QE. But there’s a flipside to this – because money that enters the economy isn’t actually being spent, the money supply to businesses hasn’t actually increased as it did in the contrived High Speed Rail example. Because no one but the state is really exposed to the new money, and the state doesn’t really care, there isn’t really a stimulatory effect.

So the Bank of England isn’t quite secretly printing money and keeping it in a locked room on Threadneedle Street – it’s printing money and carting it down the road to the other banks in the City, where banks will keep it in a locked room there for a bit.

The people crying about inflation are wrong; but this also means that any suggestion that QE is likely to stimulate the economy beyond raising the confidence of the misinformed is wrong as well. Likewise, calls to spend the money on real projects would probably stimulate the economy as the money entered the wider economy, but would probably be inflationary as well as the money would be of a higher velocity. If, though, as the Bank predicts, we’re entering a period of deflation, that might not be such a bad thing in moderation.

The Liberal Democrats and Lansley’s NHS privatisation

 Remember how the Lib Dems couldn’t vote against raising tuition fees because they had agreed to abstain in any vote on the subject in the coalition agreement?

Here’s something else from the coalition agreement:

“The Liberal Democrats have achieved one of their manifesto pledges by getting a commitment to elected members of PCT boards.

The coalition policy document this morning said ‘directly elected individuals’ would take some places on boards with the rest appointed by ‘the relevant local authority or authorities’.

There are no details on the relative proportions yet but at his speech to the Royal College of Nursing Congress last month Nick Clegg suggesed two-thirds of a board could be elected with one-third appointed councillors.”

May 2010, Health Service Journal

Of course, Government policy is now to completely abolish PCTs and replace them with the much-criticised Clinical Commissioning Groups – a way to get NHS commissioning into the hands of private companies.

The Liberal Democrats have never given any reason why they’ve abandoned support for PCTs.

On Wednesday Shirley Williams reaffirmed support for them on Radio 4’s Today Programme, saying “I myself am dubious about whether it was wise to break up the Primary Care Trusts, which I think were just becoming really effective.”

And yet none of the nearly two hundred amendments to the Health Bill that have been proposed look to retain PCTs.

Presumably the Conservatives will be whipped to vote against the Health Bill since it breaches the Coalition agreement? Ha.

 

UPDATE: It has been pointed out to me by Mark Pack that Paul Burstow, the Liberal Democrat Health Minister with responsibility for social care has called for PCTs to be abolished.

 He first did this two months after the coalition agreement was signed, going against both Liberal Democrat policy and coalition policy.

His argument was that social care and health should be commissioned together, which isn’t actually happening under Lansley’s proposals for CCGs, so this is fairly irrelevant other than to highlight the selective enforcement of Government policy by the Lib Dems.

‘In the Black Labour’ and budget deficits

Hopi Sen insists that In the Black Labour (ITBL) is a Keynsian project. He explains that “fiscal conservatism does not entail short-term fiscal stupidity” and compares ITBL’s publication now to writing a paper in the winter telling people to prepare for spring.

The message is that once the need for fiscal stimulus has passed, the principles of ITBL – not running a budget deficit – can be enshrined through the proposed measures; though not before. For as long as a stimulus is needed, it should be applied.

This seems like a reasonable position. But there is a problem: when will the need for fiscal stimulus pass?

Mainstream predictions now suggest that the economy will be facing a Japan-style lost decade.

If you have an hour, Richard Koo, Chief Economist at the Nomura Research Institute, explains the causes of the eastern economy’s prolonged period of stagnation very well.

In very basic terms, what happened in Japan was that a huge build up of private sector debt has had to be paid down by firms who had borrowed to invest, but not seen adequate initial returns on their investment.

This has meant that now even for firms turning a profit, any surplus generated does not get reinvested into expansion, but rather goes into paying down that existing debt.

Here is a graph of Japan’s debts: private in blue, public in black.

Image

You can see firms paying down their debt. But you can also see public debt increasing.

Why this happens is simple if we remember that:

GDP = C + I + G + (X-M)

Because firms are paying down their debt, investment (I) is low. Consumer spending (C) is unlikely to be making up this gap when everyone is trying to pay down their credit cards with stagnant wages. And the balance of trade (X-M) is less likely to be moving in a positive direction if domestic investment is low.

So state spending (G) makes up the output gap in order to keep GDP positive, avoiding a recession. It’s worth noting that between the years 1995-2002 Japan’s annualised growth rate was as low as 1.2% which means it would have have been routinely negative without the extra public spending, which increased by more than that amount each year. And so the black line on the graph above soars – in fact, Japan’s public debt to GDP ratio outstripped that of all other nations before the crisis hit in 2008:

 Deutsche Bank has even forecast Japanese public debt reaching 300% of GDP by 2020.

And the thing is, when economists say that the UK is in for a lost decade, they don’t just mean in terms of symptoms. The same things are happening here.

The UK now has more private sector debt as a % of its GDP than Japan:

 

And as a result of that, UK investment – here measured in gross fixed capital formation – has declined as a proportion of GDP since the recession and stubbornly refused to come back up.

Image

How does this relate to ITBL?

In short, it may sound alright in principle to be talking about “preparing for spring”. But spring might be a much longer way off than the authors of ITBL seem to think.

The lessons learned from Japan suggest that consistently high budget deficits might be the only policy tool we have to prevent a decade of stagnation turning into a decade of recession  – a tool to fill the output gap while our private sector pays down its debt.

This suggests that deficits might need to be a fairly permanent feature of the UK’s economy for some time to come.

Of course, Hopi and Anthony could merely respond that if that’s when spring comes, that’s when spring comes, and that ITBL will still be valuable then.

But if spring is at best two elections away, is it really sensible to be talking about building the Labour Party around it now?

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