In the FT, Osborne and Sachs write:

In the recent duel of macro-economists, one camp has called for early budget consolidation, followed by further measures over five years. We agree. Others want more fiscal stimulus, delaying deficit reduction. We believe delaying the start of deficit reduction would put long-term recovery at risk. Such an approach misjudges politics, financial markets, and underlying economic realities.

Blaming our predicament on financial markets, as some in the second camp do, ignores the awkward truth that governments have enabled, if not enthusiastically promoted, recklessness, through chronic deficits and lax financial regulation.

But before the crash, George Osborne believed there was too much not too little financial regulation. For example, at a Chamber of Commerce event in April 2006, Osborne said:

“Regulation too inhibits enterprise. For example, speak to any business in financial services – from the largest investment bank to smallest independent financial adviser – and the threat of future regulation from Whitehall and Brussels is now their number one concern.”

Meanwhile, in August 2007 – as subprime mortgage backed securities started causing a worldwide credit crunch – David Cameron endorsed a report by John Redwood outlining plans to cut £14 billion in in red tape and regulation for UK businesses. According to the Sunday Telegraph, Mr Redwood’s plan outlined that:

“A vast range of regulations on the financial services industry should either be abolished or watered down, including money-laundering restrictions affecting banks and building societies. Mr Redwood’s group also sees “no need to continue” to regulate mortgage provision, saying it is the lender, not the client, who takes the risk.

A recent report by Madano – which analysed the background of parliamentary candidates primarily from the Conservative party – found, according to the Times, that, “The number of candidates running this year with experience in finance has doubled to 10 per cent from the 1997 intake of MPs.”

Mr Osborne is on one side of a legitimate economic debate about the speed of deficit consolidation. But he has no right to make political capital out of financial regulation.

You judge a set of tax proposals by who gets what money. It sounds obvious, doesn’t it? Who could possibly object to that? Well, for a start – me.

The reason is highlighted by Will Straw’s analysis yesterday of the key policy goals laid down by Nick Clegg. Looking at the Liberal Democrat proposals to raise the basic threshold to £10,000 and so take millions out of the income tax system all together, Will judged it on the basis of who gets what in their pocket (or rather, a promise of a shortly to be published analysis of that). But that’s not the whole story.

There is a major benefit which doesn’t get counted in pounds and pence in your pocket from being taken out of the income tax system – if you are the sort of person who struggles to handle complicated bureaucracy, who moves in and out of jobs through the year, who doesn’t have the financial cushion to see them through while tax takes are adjusted and over/under payments come and go. Or indeed, if you’re the sort of person for whom all of that applies.

Among the millions who would be taken out of income tax all together with a £10,000 threshold are many who fall into those descriptions.

People who will benefit from having the hassle of struggling with the tax system lifted from them. People who will benefit from not having to worry about how tax is under or over-paid if they move between jobs or different pieces of part-time work. People who will benefit from not struggling to make ends meet because, while there is a tax adjustment coming down the line, they aren’t getting the money in their bank account right now. People who just don’t have the financial resources and bureaucratic experience to see themselves through dealing with an at times complicated, unforgiving and slow moving tax system.

Making bureaucracy simple for individuals is a much under-rated policy goal. Business and red-tape hogs the limelight in this respect – with the result that we end up with well intentioned policies such as the Office of the Public Guardian mired in over-complicated, expensive bureaucracy that turns what should be a great service for the most vulnerable in society into a service for those with money to spend on lawyers.

So when judging a tax policy – and above all, when judging it by the progressive yardstick – don’t just look at the theoretical implications. Look at the bureaucratic reality too.

Dale writes today:

“I did a short turn on Sky News yesterday alongside Will Straw of Left Foot Forward. Incredibly, he seemed to be advocating that far from cutting public expenditure, we should be borrowing and spending more. He reckoned there was some sort of ’slush fund’ available to pump money into various sectors because unemployment hadn’t reached the heights many people thought it might. So just because the government hadn’t spent money on unemployment benefit, it could now spend this money on other, as yet undefined, things.

“And there you have the difference between the left and the right. If it were me, I’d use the money to reduce borrowing, whereas Will would spend, spend, spend. And we all know where that gets us.”

Yes, we do, Iain. The economic stimulus of autumn 2008 – opposed by the Tories – has dampened the worst impact of the recession, particularly on the labour market. And yet, the British economy “remains very depressed” according to the National Institute of Economic and Social Research.

And far from Dale’s claim, I was at pains to suggest that there wasn’t a “slush fund” (Martin Stanford’s words) and that any additional economic stimulus should be spent on essential investments. The point here is not to borrow further but to ensure that money not spent on unemployment benefits is used for investment – a point on which I was happy to co-sign a letter in today’s Guardian organised by Colin Burgon MP. For the record, here’s what I said on Sky:

Straw: And of course because the impact of the recession has been less severe on unemployment than previous recessions, there is some money that’s been saved and that can be used for really important projects like infrastructure investments and so on, particularly in green industries.

Sandford: So there’s a slush fund essentially to try and woo the voters?

Straw: No I don’t think we should see it as a slush fund to woo the voters. I think economic times are much, much, much too serious for that. If this money emerges, it should be used for investment purposes for the good of the country.

As for Dale he appears to be in cloud cuckoo-land on a number of fronts. On Sky he said:

“I’ve never expected massive cuts in the first year. So I think it’s a convenient scare tactic for Labour to say that there will be massive cuts which will lead to unemployment and all the rest of it. But I think it’s a false argument.

“I think the more interesting argument is whether this is going to be Gordon Brown’s budget or is it going to be Alistair Darling’s? Because I think Alistair Darling actually understands the seriousness of the situation. He himself has predicted a deficit of £178 billion this year. But we see from tax revenues which are plummeting that it could be much more than that. So any govermment which comes after May 6th will have to make clear what their plans for cutting the deficit are going to be.

Three questions for Iain Dale (I won’t hold my breath):

1. Why do you think cuts in 2010-11 are necessary when they are opposed by the 67 economists who wrote to the Financial Times, the Confederation of British Industry, the Institute for Fiscal Studies, and the IMF?

2. Why is it a Labour scare tactic to fear the pace of cuts from an incoming Tory government when David Cameron has accused the Government of “moral cowardice” by failing to promise immediate public spending cuts?

3. Which economic report have you read which suggests that the deficit will be above £178 billion?

But this is not because women have intrinsically higher job security. In many sectors, such as manufacturing, finance and hotels and restaurants, men and women have been equally likely to lose their jobs. The reason is that women are more likely to work in the public sector (as TUC analysis shows), and so far there have been fewer job losses in the public sector than the private. Indeed women make up the majority of the public sector workforce, with around four in ten working women having public sector jobs.

Widespread public sector job losses would have a disproportionate affect on female employees and their families. The effects would be worse in the regions that already have high male unemployment rates; the three regions where over 10 per cent of working age men are out of work – North East England, Yorkshire and the Humber and the West Midlands - are also all areas where over 40 per cent of female employees work in public sector jobs.

Pensioner poverty is far more prevalent among women than men, with women’s average income in retirement just 62 per cent the level that the average retired man will have to live on. However public sector pensions improve women’s overall level of pension provision. Because more women than men work in the public sector they have nearly two-thirds of public sector defined benefit schemes – not all of which are final salary. Large-scale redundancies, as well as attempts to level down public sector pensions, would increase the number of women facing poverty in retirement.

While no one can oppose improving public sector efficiency, public sector job cuts are more likely to be unplanned job reductions that leave the same amount of work to be done by fewer people, leading to stress and pressures to do unpaid overtime. As women are much more likely to be carers – with many facing a double burden of care, housework and paid employment – they have much less scope to absorb these extra demands and are more likely to pay the price as services are reduced.

Thanks to bold action by government and the Bank of England, both women and men have seen their employment rates fall by far less than in previous downturns, and as yet levels of inactivity have hardly risen (with what rises there have been mainly due to an increase in the numbers of students).
But real challenges also remain - involuntary part-time work is an increasing problem for women and men.

We can be pretty sure that the recession will not lead to positive changes in our working culture that will give employees more choice of working hours through more flexible working schemes and the creation of high quality part-time vacancies. It is more likely that a better than expected headline rate of unemployment hides continuing underemployment and consequent low wages.

The alternative would be positive action to create a fairer post-recession labour market. But sweeping cuts with consequent rising female unemployment rates, higher pensioner poverty, and even more pressure on women trying to juggle work with other responsibilities are no place to start.

The debate, hosted by Policy Network, examined growing public scepticism over whether climate change is manmade and what should be done by the scientific community in response. Mr Rapley questioned the title of the debate and outlined his disquiet with “the appropriation of scepticism by those who oppose the science.”

Professor Chris Rapley, a former Director of the British Antarctic Survey, said he was concerned by the dwindling number of experts who can talk “authoritatively about the big picture” suggesting that the number of ‘T-shaped people‘ with both broad and deep knowledge on climate change was overwhelmed by “people willing to prognosticate”. He quipped that he would not mention Melanie Phillips, who has been criticised for her outbursts on climate change.

In response, Benny Peiser, a social anthropologist who heads up the sceptical Global Warming Policy Foundation, said:

“You painted a picture that is slightly one side of the honest scientist on the one side and the polemic campaigner on the other. The other part of the debate is that there are honest and eminent scientists on the other side who have been silenced for 10 to 15 years. That is part of the perception that part of the scientific community has been excommunicated. Unless there is a new dialogue, there will be this problem.”

Rapley replied:

“It’s always healthy to have that open debate but it can be bedevilled by passions outrunning logic … I have not been convinced by your eminent scientists … some of whom are very flaky.

“There is a tyranny at work here. My impression is that where scientists know there are big uncertainties, they are afraid to emphasise them because people will misunderstand them. The evidence is that when they confess to them, they are exploited.”

Anthony Giddens, Professor Emeritus at the LSE and author of ‘The Politics of Climate Change‘ said:

“Scientists don’t know anything about politics and are bruised and amazed by the discussion in the wider world. Most people who write about politics don’t know anything about the scientific community – a new dialogue is needed.”

Peter Luff, CEO of Action for a Global Climate Community, asked:

“How do we regain that word scepticism? There is an overlap between climate sceptics and Eurosceptics who tend to see a conspiracy.”

Joss Garman, a regular contributor to Left Foot Forward, told me afterwards:

“The thing that struck me most was that there was a real consensus in the room (amongst those who accepted the scientific consensus view that fossil fuel polluting is driving global warming) that it would be helpful to reframe the argument to one about risk and probability and away from the view that the science is all settled.

“Since we know that the vast majority of scientists – literally thousands of humanity’s greatest minds – are of the view that there is a staggering chance, of 90 per cent, that climate change is caused by fossil fuel burning, and since we know that would increase the sum total of human suffering and drive millions of plant and animal species to extinction, its not an unreasonable expectation that, put like that, most reasonable people will want to take out an insurance plan – in other words for there to be a reduction in the amount of carbon dioxide we emit.”

This will come as a blow to those looking to the export sector to strengthen the UK economy’s recovery from recession.

Sterling’s effective exchange rate fell by 25 per cent in 2008; this was supposed to make UK industry more competitive and boost overseas sales of British goods. So far, there is little evidence that this is happening.

The January data are probably a blip – trade data are among the most erratic of all data releases. More worrying is the underlying trend, which shows only modest growth in export volumes over the last year.

Of course, this is due in no small part to the weakness of demand in the UK’s main export markets, particularly in the rest of Europe, and it should be that export growth will improve once Europe’s economic recovery picks up speed.

There are also some grounds for optimism in the latest business surveys. The Bank of England’s agents’ report and the CBI’s survey of manufacturing both show a steady improvement in optimism about the outlook for exports in recent months.

However, the Bank of England does note that some companies are taking advantage of sterling’s weakness to push up profit margins, rather than allowing it to feed through into enhanced competitiveness.

Depending what happens to these higher profits, this probably means some of the potential benefits of sterling’s fall – in terms of more exports, more output and more jobs – are being lost.

Controversies surrounding renewable biofuels have emerged afresh in recent weeks. First came a leaked EU document proposing changes to European Commission sustainability standards which would enable palm oil plantations to be categorised as natural forests.

This was swiftly followed by rumours of an internal memo in which a senior EU official allegedly concedes that taking account of the total carbon footprint of biofuels would “kill” the EU’s budding green fuel industry.

The EU has a keen interest in the ongoing debate on green energy fuels, not least because it subsidises production to the tune of £3 billion each year in order to deliver on a legal pledge to source 10% of transport fuels from renewable sources by 2020.

In the UK, liquid biofuels accounted for 2.7% of transport fuel supplied between April 2008 and January 2009.

However, the EU legislation has been met with stern criticism from environmental campaigners and development groups, who argue that green fuels force up food prices and, contrary to popular belief, do not deliver greater greenhouse gas emissions savings than their conventional fossil-based counterparts.

The environmental community is particularly concerned by carbon emissions caused by “indirect land-use change” – where farmers are forced to clear carbon-rich rainforests and drain peatlands for agricultural harvest because existing land has been swallowed up for energy crop cultivation.

They also point out that fertilisers used to grow industrial energy crops are rich in nitrous oxide, a harmful pollutant with a life span of approximately 100-120 years, which threatens soil and plant ecosystems.

These new revelations coincide with the release of a new report by ActionAid which argues that large-scale biofuel production has led to land grab and the displacement of local communities in developing countries.

The NGO also says that if all global biofuel targets – including the EU’s 2020 pledge – are met, the resulting depletion of maize, wheat and soya bean stocks would raise global food prices by 76%. In Africa, where 80% of household income is spent on foodstuffs, a small hike in food prices could have devastating humanitarian consequences.

The tendency then to condemn the expansion of biofuels and tar industrial producers with the same ugly brush as the major oil conglomerates is unsurprising and in many ways justified. Yet for all the many flaws of liquid fuels, the wider debate over bio-energy warrants a more nuanced approach.

First, there are alternatives to the industrial monoculture of liquid biofuels. In particular, there needs to be greater exploration of, and innovation in, advanced algae and waste-based biofuels, which do promise clear carbon emission savings but are currently underdeveloped and commercially unviable.

The latter, which are due to be trialled by British Airways to fuel Boeing jets at London City Airport, could significantly cut the amount of UK household and industrial waste that goes to landfill.

Other nascent innovations such as the compact FuelPod 2 which blends used cooking oil with methanol to produce up to 50 litres of bio-diesel every day are already on the market.

Yet if, as the Department for Transport estimates, up to one third of UK transport fuel is to come from home-grown green fuels in the future – and if we’re not going to rely wholly on conventional energy crops – then these types of devices and other new technologies will need to become a whole lot cheaper.

Second, more needs to be done to promote sustainable forestry and land management in countries like Indonesia and Malaysia. Instead of proposing highly suspect changes to sustainability standards in order to stand a better chance of achieving its 2020 target, the EU and others should be supporting developing countries to establish better local monitoring and accounting systems for biofuel generation.

Regulation is also needed to ensure that multinational green fuel firms investing in developing countries conform to minimum standards of consultation with local communities and build domestic profitability and environmental impact considerations into their operational plans.

Although biofuel expansion has been blamed for the 2008 spike in food prices, culling bio-ethanol production in Brazil and the US – which together accounted for 89% of production in 2008 – could potentially lead to greater worldwide demand for oil.

Escalating oil prices would likely hike up food prices, while the queues at the pumps could be as long as in 2000.

Can we say goodbye to biofuels once and for all? Probably not.

Policymakers are still some way off catalysing the mass ramp-out of commercial hybrid and electric vehicles and if we are not to rely solely on fossil fuels, bio-energy is perhaps the best alternative for powering transport in the short term.

At the launch of their report, fittingly hosted by the British Transport museum, Action Aid’s Tim Rice rightly called for measures to curb demand for transport fuels, including investing in better public transport and incentivising walking and cycling.

However, discouraging car travel remains an uphill battle so long as Jeremy Clarkson commands the ears of a large proportion of the British electorate.

In the meantime, we need to work out how best to balance the sustainable, certified and small-scale cultivation of biofuels with the paramount need to counteract mounting world hunger and cut carbon emissions.

George Osborne is widely quoted today responding to new reports by the Confederation of British Industry and Institute of Directors. He crows:

“The voices of British business are now saying what we Conservatives have been saying: earlier action on the deficit is a key to securing the recovery. It is a huge vindication of our approach.

“There is an emerging consensus that Gordon Brown’s economic approach is simply not credible.”

But is this the case? The Confederation of British Industry’s letter to Alistair Darling talks only about the time period over which the budget should be returned to balance, not when the cuts should start. Could this be because in September, the CBI’s Director General, Richard Lambert, told the Today programme:

“the economy is too fragile right now for massive cuts in public spending so we think that the government should be giving a credible plan for getting fiscal conditions into shape.”

Meanwhile, as the Independent reports, a key economic adviser to the Tories, Sir Alan Budd, has criticised the Conservative’s approach:

“If you go too quickly then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean what the Americans say, ‘Remember 1937′.”

And Madeleine Bunting in today’s Guardian writes that:

A group of economic historians argue that the public debt is not historically high, or even particularly high compared with other developed nations. They even got support from a very unlikely quarter when two Goldman Sachs economists argued in a report that the public debt is not as “cataclysmic as some commentators suggest”.

While Ruth Sunderland in yesterday’s Observer devastatingly shows the failings of the private sector:

A paper from the Centre for Research in Socio-Cultural Change (Cresc) at the University of Manchester* has found that despite a decade of apparent economic boom, private-sector jobs were not generated in sufficient numbers to fill the gap left by traditional manufacturing.

This leaves only the Institute of Directors wholeheartedly supporting the Conservative’s desire to start the cuts in 2010-11. The IoD is, of course, an elite organisation for “business leaders” and hardly a voice for all of British business. But their “supply side” agenda could not be clearer. As well as cuts in 2010-11, they also want:

• a new corporation tax rate of 15 per cent

• a new fiscal target to reduce spending to 35 per cent of GDP by 2020-21

• abolishing Sure Start and Education Maintenance Allowances as part of £50bn of savings

These policies would leave Britain with corporate tax rates lower than any country in the OECD aside from Switzerland, and the basket cases of Iceland and Ireland. The fiscal target would see spending fall below the 39 per cent reached by the Thatcher government in the late-1980s. Perhaps the Conservatives should be tell us if this is their true agenda.

Today the Resolution Foundation publishes two reports exploring the financial health of the UK’s “low earning” households.

The latest Low Earners Audit takes an overview of how the 7.2 million households living below median income but broadly independent of state support are faring in the recession, and our second report – Behind the Balance Sheet – digs deeper and reveals how this group are the real “squeezed middle”, living right on the very edge of their means and surviving on an average earned household income of £15,800.

They lack the safety nets and savings of better-off households, and yet are being hit harder than workless households by the double whammy of unemployment and underemployment in the current downturn.

While for some, reduced working hours might be a welcome shift in gear, for others it represents a real threat. The number of low income households who say they are struggling to keep up with bills because of a drop in hours has doubled since 2008.

The TUC shows that involuntary part-time and temporary work is on the increase during the recession, and our analysis shows that four million low earners reported a drop in income last year.

Put this alongside a higher rate of inflation for low earners (thanks to increases in food and fuel costs), together with £1.9 billion of unsecured debt across 3.6 million of the most economically fragile households, and it’s little wonder that the optimism of low earners about their personal economic futures has dropped 20 percentage points since 2001.

We do not think that the solution to such poor financial health rests in more money-education alone; our research shows that low income households are often better budgeters than other income groups.

We argue instead that the focus should be on providing more responsive support via the tax credit and benefits systems. We want to see the development of banking services (particularly savings products and affordable credit) that deliver for low-earner households without exploiting them.

More fundamentally, our reports point to the fact that the financial health of low income households is determined by a whole host of “hidden” assets and liabilities, such as skill levels, housing tenure and caring responsibilities.

Growing inequalities in terms of asset-ownership, and the stratification of the labour market risk leaving low earners stuck, unable to advance at work or build up their financial resilience.

The underlying problems faced by this real middle – and highlighted by the recession – need to be at the heart of any future government’s priorities.

Speaking from New York, business secretary Lord Mandelson said the proposals were over-ambitious:

“Trying to apply sweeping rules about the structure, content and range of activities of banking entities is too difficult to do.”

He instead argued for greater focus to be placed on securing an effective international regulatory system co-ordinated by members of the G20.

The so-called “Volcker rule” is the brainchild of the former US Federal Reserve chairman and now Whitehouse economic policy adviser Paul Volcker. At its heart is the plan to stop retail and commercial banking from being exposed to speculative financial markets.

This will be achieved through limiting the size of banks and separating their investment banking ‘casino’ activities from day-to-day depository banking. Banks in future would be barred from engaging in ‘proprietary trading’, which involves firms betting on financial markets with their own money, rather than simply carrying out a trade for a client in which their money is only at risk.

Mandelson’s gentle critique of these measures was correct for several reasons:

Firstly, they detract attention and focus away from global efforts in agreeing a regulatory framework for the financial system. A multi-national approach is already being considered and debated by the G20. Any possible agreement that can be secured by the biggest and wealthiest nations in the world must be the main priority.

Secondly, the Volcker proposals will not necessarily “de-risk” the financial markets. They will succeed in safeguarding the financial integrity of retail depository banking, however despite the separation, “casino2 style investment banking will still take place and be an integral part of the financial system.

And with the volume of trading of these firms remaining high, the financial markets and thus wider economy will still be at risk. Effective regulation, firewalls, and “living wills” are the key to shielding the markets. These measures are currently being pursued by the government.

Also, a serious practical consideration that has been neglected is the current state of the banking world. Many countries, at the height of the financial crisis, poured in billions to rescue and save their biggest banks. Taxpayers all around the world have large stakes in their nations’ banks. Profitable trading operations underpin large parts of their activities.

To separate these divisions has the potential to seriously de-value shares, and thus taxpayers’ equity. Questions remain too, whether Obama’s measures would have fully protected even the US economy during the financial crisis, with Peter Morici of the University of Maryland arguing:

“Smaller US banks got into trouble buying mortgage-backed securities and putting them on their books – this isn’t prevented by a ban on proprietary trading.“

As one can see, the jury is still clearly out on “Volckers law”.