"Mission accomplished" in Afghanistan? For the Tory Party, yes.

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Aaron Ellis

On Monday, the Prime Minister declared that Britain had accomplished its mission in Afghanistan. A “basic level of security” had been achieved there meaning our troops could come home with their “heads held high”. Mr. Cameron has a weakness for hyperbolae (e.g. GCHQ searching for online paedophiles is comparable to the Enigma code-breakers…) and he was criticised for making such a sanguine statement. The conflict is far from “mission accomplished” – though as far as the Tories are concerned, it has served its purpose.

Afghanistan is more important to David Cameron than most people, he included, probably realise. It is the source of his contradictory foreign policy and it was crucial to the rehabilitation of our Party as a responsible alternative government to Labour.

In his handling of foreign policy, Mr. Cameron is torn between idealism and realism – and Afghanistan is the source of these conflicting impulses. He believes that al-Qa’ida used the country as a base because it was a failed state and it was a failed state because the West abandoned it after the Soviets withdrew in 1989. For him, it “is a great example of a country that if we walk away from and if we ignore and if we forget about, the problems will come visited back on our doorstep.” Had the West somehow ended the civil war and helped it with development assistance, then ‘just think what might have been avoided.’ This conviction lay behind the interventions in Libya and Mali. When justifying Mali, the Prime Minister argued that if Britain did not “make the world safe all over the place”, then the threat from militant Islamists would only grow and “we will face it” eventually. Yet this limitless interventionism jars with his efforts to portray himself as a prudent realist.

We are running a global race for power and influence, according to Mr. Cameron, necessitating a strategic foreign policy which focuses on our national interests. “If our influence is under challenge,” as William Hague believes it is, then we must “make the most, systematically and strategically, of our great national assets.” This is especially true when it comes to the military. Whereas Labour “made too many commitments without the resources to back them up”, the Conservatives would be more discriminating. Afghanistan is the perfect example. In 2006, Tony Blair authorised troops to go into Helmand in insufficient numbers for the goals he had set them. Just a few years later when Gordon Brown wanted to send in more, Tory support was conditional on a “tightly defined” strategy “backed up by extra equipment”. In Mr. Cameron’s view, we simply can’t afford anymore these wars to build perfect societies in inhospitable places. “Every battle we fight” must help Britain “rise” amidst the decline and fall of other Great Powers.

Underpinning this contradictory foreign policy is the way he thinks about globalisation; it justifies both his idealism and realism. For almost two decades now, many in the West have been in thrall to an idea which I call ‘the internationalisation of the national interest’. It is the belief that the world has become so interconnected that crises in developing countries threaten our own security and therefore we must resolve them pre-emptively. Mr. Blair once argued that if governments are ultimately concerned about protecting their own people, as realists argue, then “the new frontiers for our security are global”. The Tory leadership buys into this idealistic worldview, but it also believes that globalisation has created the global race, which demands a realist response. Mr. Hague once tried to square the circle: “We should never be ashamed of saying we will promote our own national interest,” for it “is no narrow agenda”.

Even though the Prime Minister thinks about international crises like Libya and Mali in Blairite terms, as Leader of the Opposition he often attacked Labour for its allegedly idealistic and astrategic foreign policy. These criticisms, especially those about Afghanistan, helped rehabilitate the Conservatives as a party of government.

By supporting the war in principle but attacking Labour’s handling of it, David Cameron could portray himself as a responsible and “hard-headed” statesman, dispelling fears that he was not up to the job of running the country. Since the mid-1990s, the Tories had been dogged by a widespread belief that they were too irresponsible to hold office. Britain is in an era of ‘valence’ politics, it is argued: voters value ‘competence and credibility over commitment to a cause or class’ according to Tim Bale. It was essential, therefore, for Mr. Cameron to portray the Party as ‘a proficient alternative administration’. When it came to Labour and Afghanistan, he used a tactic that has always worked well for us in the past: claiming our opponents were too weak or incompetent to be trusted with the serious business of war. This tactic was an important part of the long campaign to force out Gordon Brown.

It is strange to think now just how tough an adversary Mr. Brown was, especially when you examine the popular image of him as ‘substantial’ in the context of the Tories’ perception problem. Labour capitalised on this with the ‘Not flash, just Gordon’ advertisement campaign. His popularity proved short-lived, as we all know, but the financial crash could have been for him ‘what 9/11 was to Blair.’ These crises engaged their respective skills, ‘fitted into [their] worldview, and saw [them] acting in a bold and confident fashion’, writes the politics scholar Stephen Dyson. And just as the War on Terror strengthened the image of Mr. Blair as a responsible guardian of Britain’s safety, Mr. Brown’s handling of the crash had the same potential. If he was to be forced out of office, the Tory leadership would have to play on an alternative perception of him – an incompetent leader whose actions were motivated by concerns that had nothing to do with the national interest.

The Conservative critique of Afghanistan reinforced this perception. Labour had insufficiently ‘realist’ aims (“creat[ing] Switzerland in the Hindu Kush”) and they lacked the commitment needed to fight, denying the military the resources it needed to win. In July 2009, Mr. Brown was thrown off guard when the then Chief of the Defence Staff claimed that more helicopters in the country would save lives. Mr. Cameron took advantage of the subsequent uproar, arguing Labour “have got to realise we are fighting a war”. It was not simply about money, but “about commitment. About rolling up your sleeves and realising we need more of what we’ve got actually on the frontline.” By focusing on these arguments the Tory leadership maintained their overall support for the campaign, while also playing on both popular mistrust of Blairite interventionism and a belief that the worsening military situation was entirely Mr. Brown’s fault. “We always support our troops, but we have not shied from criticising the Government’s conduct of the war,” William Hague once explained, “when we have felt we must speak out.”

Of course, the critique was only partially true; some of it downright misleading. Mr. Brown framed the campaign in the same ‘realist’ terms used by Mr. Cameron: “We are in Afghanistan as a result of a hard-headed assessment of the terrorist threat facing Britain”, he once stated. Success would be achieved by “enabling the Afghans to take over from international forces; and to continue the essential work of denying [their] territory as a base for terrorists.” Yet he had lost perhaps the most important asset of any politician, the right to be heard, as the Conservatives had already managed to portray themselves as the party of the national interest.

The historian Hew Strachan has argued that the Tory leadership were ‘reluctant to join the dots’ between the public’s support for the military and ‘the lack of [it] for the missions’, but withdrawing from Afghanistan may not have led to a landslide. They had to not only win votes, but also appear to be responsible. Michael Howard revoked the Party’s support for Iraq, one of the most unpopular wars in Britain’s history, but it was seen as opportunistic and irresponsible. However, the problem that David Cameron and William Hague created for themselves when they inherited Afghanistan was maintaining their “hard-headed” rhetoric at the same time as pulling out the troops.

Mr. Cameron’s announcement, just a month after becoming Prime Minister, that we would be out by 2015 caused a disparity between his words and his actions. Those fighting were “defending our freedom and our way of life as surely and as bravely as any soldiers” in our history. Britain could not abandon the Afghans as we had to save them “from a return to the brutality of the Taliban, who handed the entire country to Al Qaeda [sic] as a base for logistics and training”. If they came back, then “the terrorist training camps [would] come back”, which would mean “more terrorists, more bombs and more slaughter on our streets.” The rhetoric suggests Afghanistan is a war of necessity, but the deadline implies it is a war of choice. As Tory backbencher John Baron once pointed out to the Foreign Secretary: If we want to “deny al-Qaeda a base from which to operate and pose a threat to [our] streets”, then “surely we should stay there until we have achieved that objective”?

When he was pressed on whether or not British combat troops would be out by 2015 regardless of the conditions on the ground, Mr. Hague emphasised: “I do not want anyone to be in any doubt about this: we will be fulfilling the Prime Minister’s commitment.” Given that ‘the war will be lost’, according to one study, if the development of the Afghan National Security Forces is rushed ‘beyond what is possible’, the deadline contradicts Mr. Cameron’s claim that we would only leave once the job was done. The situation today is far from “mission accomplished”.

As far as the Tory leadership is concerned, Afghanistan has served its purpose: the Conservatives can now demonstrate their fitness for office by actually governing. Yet its continuing influence on David Cameron’s foreign policy has the potential to undermine his hard-won image as a prudent, responsible, strategically-minded statesman.

If the clamour for intervention in Syria continues, as well as for action in any other country that descends into civil war, the Prime Minister will be increasingly torn between his limitless doctrine of preventative action and his ‘realist’ ambitions for British foreign policy. One of these will have to be sacrificed eventually or the Party will make the choice for him – as happened when MPs rejected his call for airstrikes against Syria. Like his old Labour adversaries, he may come to be seen as a weak leader frittering away Britain’s scare military resources in idealistic wars-of-choice. 

Follow Aaron on Twitter.

4G spectrum failure hardly surprising, but what is Ofcom playing at?

Nik Darlington 9.58am

When George Osborne said the Treasury would raise several billion pounds from the upcoming 4G auction, I along with many others feared (or even expected) that wouldn’t be the case. Some technical and financial reasons for why, but largely an informed hunch.

So it has come to pass. ‘Only’ £2.34 billion has been raised by Ofcom, despite the OBR’s forecast of £3.5 billion.

A couple of observations about the reporting of all this: first, £2.34 billion is still a useful fillip not to be sniffed at; and second, this mini embarrassment has given journalists a perfect excuse to ignore the good employment figures also released today.

Yet a mini embarrassment it is. Perhaps Mr Osborne should not have brandished an outcome ahead of time, but auctioneers tend to set target prices with little impact on bidding behaviour other than to focus it around said target. It isn’t a patch on Gordon Brown selling our gold reserves having already announced to the world his intention to do so.

On the subject of auctioneers, however, something odd happened on BBC Breakfast earlier today. Ed Richards, Ofcom’s chief executive and unsuccessful candidate for BBC director-general (despite being the bookies’ favourite), was on talking about the auction. Mr Richards stated that Ofcom’s priority - as auctioneers - was straightforwardly to hold a fair and proper auction and “ensure that a valuable economic resource was brought into productive commercial use”. Ofcom’s priority - as auctioneers - was certainly not to maximise revenue.

Whether or not this was on instruction from the Government doesn’t matter. It is still odd. Tell auctioneers at Christie’s that the whole point is just to shift stuff and not to maximise revenues, you’ll be laughed out of the room. These are, as Mr Richards also said, “very different times” compared to the 3G spectrum auction, which raised £22 billion in 2000. But it doesn’t mean you shouldn’t at least have a go at it.

Follow Nik on Twitter @NikDarlington

Inflation targeting, or what Arsene Wenger and Mark Carney have in common

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Matthew Robertson 1.36pm

  • May 2004: Arsène Wenger hailed as Arsenal go entire season undefeated to win the Premier League
  • December 2012: Arsène Wenger under increasing pressure as Arsenal lose to League Two side Bradford City in the Capital One Cup
  • October 1992: for the first time monetary policy in Britain would be based on an explicit target for inflation
  • December 2012: Mark Carney, the incoming Governor of the Bank of England, has suggested abandoning inflation targeting


"When the facts change, I change my mind". A quote that has long been attributed to the father of modern economics, John Maynard Keynes. It is a belief that policy should be implemented to tackle the world as it is today, not as it was yesterday.  

The position of an English football team and the comments of the Governor of the Bank of Canada may not seem interlinked but they do shed light on whether it is beneficial to adapt to changing circumstances or to maintain the current strategy in total belief that it is the correct way.

One of the great success stories of modern economics is the taming of inflation. As Mervyn King, the departing Governor of the Bank of England, stated in a speech in October:

"Over the previous twenty years (1972-1992) inflation had been the single biggest problem facing the UK economy, peaking at 27 per cent a year in 1975. Over the subsequent twenty years (1992-2012), inflation, as I mentioned earlier, would average only 2.1 per cent."

The key to this success was controlling inflationary expectations and the key to that was inflation targeting underpinned by an independent central bank. Exiting the European Exchange Rate Mechanism freed Britain to set their own monetary policy, which culminated in Bank of England independence in 1997.

A target would be set and it would be free of political interference. As long as the target over the long term was met, the expectation was anchored as any deviation would be expected to return to the anchor. This was the case for most of the past twenty years.

This policy was a reaction to the economic difficulties of the time and has been reproduced in many countries over the world. Inflation is well above expectation at the moment but inflation between 2.5 per cent and 5 per cent is low by historical standards and the reason is that the inflationary expectation is still around the 2 per cent mark.

The footballing philosophy of Arsène Wenger when he first arrived in England was equally as successful. His devotion to ‘pass and move’ football led to five trophies in six seasons as well as the first team in 116 years to go a league season unbeaten.

However, times have changed both for the economy and for English professional football. The financial crisis of 2007-2008 precipitated a new thinking in central banking theory. The Bank of England ignored concerns about inflation and reduced interest rates to almost zero per cent in an effort to enhance liquidity and reduce borrowing costs. The greater concern for the Bank at the time was economic output and preventing the economy stagnating into a long term liquidity trap. There were numerous inflationary concerns regarding world food prices at the time but the Bank, quite rightly, decided that the crisis needed urgent, unorthodox central banking. This was further reinforced by a period of quantitative easing where the Bank of England purchased financial assets from commercial banks to inject money into the economy.

In a speech on 23rd January, Mervyn King argued that pursuing a two per cent inflation rate target throughout the financial crisis, would have worsened the recession:

"To bring inflation down ‘would have meant driving down wages by creating a deeper recession, even higher unemployment and lasting damage to the job prospects of many young people."

The question now is whether inflation targeting should be abandoned for nominal GDP targets, something the new incoming Governor, Mark Carney, has suggested. A deeper question is whether the economic circumstances of the economy have altered significantly to warrant a change in approach.  Are the economic conditions so benign that there will be insufficient demand to produce growth without active interference from a central bank?

Central bankers will need to factor in these conditions along with inflationary expectations to assess which approach to take. The history of the 1970s suggests that active GDP targets don’t work but that might have been for a different time with contrasting conditions.

Whatever route is taken it raises the question of whether to change one’s mid when the facts change. The arrival of Roman Abramovich and latterly Sheikh Mansour altered the nature of English football completely. Chelsea and Manchester City have the ability to outbid and outspend any club to attract the best talent from around the globe. There is growing doubt as to whether Mr Wenger’s prudent approach of developing youngsters and buying affordable players can be successful in today’s Premier League. Despite constant criticism, Arsenal’s manager has remained dogmatic about what he considers the correct method.

Is this appropriate when the facts change? We shall see when Mark Carney takes over the helm in the summer.

By that time there may even be a trophy in that Arsenal cabinet.

Follow Matthew on Twitter @FlatFootTory

Autumn Statement 2012: A lot of Balls and a bleak midwinter?

Nik Darlington 2.57pm

I was on BBC Radio Scotland earlier talking about the Autumn Statement and just before I was due on air with the Daily Record's political correspondent, the weather report told tales of snow drifts, icy condition and road closures - painting a generally bleak midwinter picture.

In isolation, that report could’ve been about the British economy. Those heady summer days of Olympian achievement and a return to growth seem ever-more distant. This is the backdrop to what the Chancellor had to say to Parliament today, and the inclement economic weather should never be forgotten.

Indeed, Mr Osborne is set to break his own fiscal rules. Yet Gordon Brown also did that, but in the boom years - a symptom of the budgetary misbehaviour that characterised the Treasury under the feckless oversight of Mr Brown and Ed Balls.

The former Prime Minister might have lost a stick insect, but his former lieutenant was not grieving. Cheeks puce and puffed out, he berated, bewailed, gloated and tore into the man who’s office he might have had if only Alistair Darling were a lesser man.

When Ed Balls is good, presentationally at least, he is very, very good. Yet George Osborne is rarely better than when sparring with his opposite number (one gets the impression they enjoy it). I’m as unconvinced about the ‘blame Labour for all the economy’s ills’ line as I was at the time of the 2011 Budget, however Mr Osborne continues to play the card strongly, persistently and - judging by the looks on the faces of Eds Miliband & Balls - effectively. How well it plays with the public is another matter.

Former Tory whip Michael Fabricant relayed to the Chancellor the instantaneous thumbs-up from the bond markets, stating “it is the markets that matter”. Apt, to the point and certainly good news - though what voters think cannot be taken lightly either. I know what someone as acutely political as Mr Osborne will be thinking about first thing he wakes up in the morning.

Conservative MPs will be pleased with the scrapping once again of a 3p rise in fuel duty. Harlow’s MP Rob Halfon has led backbenchers on a spirited and tireless campaign against the duty, though one has to question how much gas is left in that tank. Can fuel duty rises be fought forever?

The lower threshold for income tax continues its rise towards £10,000, as expected. The personal allowance shall be £9,440 come next April.

Also to be welcomed is the further cut in corporation tax to 21 per cent. Let us not forget that it was as high as 28 per cent when the Coalition took office. Businesses can invest a greater proportion of their profits into the likes of expansion and employment. This is very good news.

The hit on working-age benefits will not play well, of course. Shrieks of unfairness can already be heard around the tenured ranks of social policy think tanks, the opposition and the like. And indeed it doesn’t look good. However, there is also the moral argument that at a time when wages are struggling to keep up with inflation, if rising at all, should welfare handouts continue to outpace? It’s a tough call, but I think it is the right one. It shall save nearly £4 billion. We can slice and dice this, that and t’other bits of public expenditure but until welfare payments are properly addressed, that ruddy old deficit shan’t budge much.

Those are my two-pennies’ worth. Plenty of ink shall be spilt and trees felled elsewhere in pursuit of explaining today’s Autumn Statement. I shall just finish with a brief thought on shale gas. I’ve had my concerns in the past about fracking for shale gas. I’m still not convinced of the safety record but I’m open to being so; and if it is the energy panacea some claim it to be, then by all means it should be pursued. Though not at any environmental cost.

Follow Nik on Twitter @NikDarlington

Scotland’s unionists have to spell out what a ‘No’ vote means for devolution

Nik Darlington 11.25am

Today in Edinburgh, David Cameron, Prime Minister of the United Kingdom, meets Alex Salmond, First Minister of Scotland, to sign off the terms of an independence referendum to be held in autumn 2014.

Some are calling it historic. Not quite. The referendum itself shall be historic. Nonetheless, the occasion demands more gravity than it is being given. Britain’s summer of all summers has neutered the separatist cause; the polls consistently suggest a comfortable victory for the unionists. But with two years until the vote, the dangers remain.

Alistair Darling is right to favour next year. It is just one of the regrettable oversights of the Prime Minister’s negotiations. Though on balance, despite my criticisms of Mr Cameron on the radio yesterday (approx 1hr33’ in), presentationally speaking today has been well-handled. He has largely got what he wanted to achieve, and done so in a way that does not look like an overbearing Englishman - indeed, he has even permitted the appearance of his kowtowing to Mr Salmond.

Yet we are where we are. There shall be a vote, it shall be a straight ‘yes-no’ gunfight, and it shall take place approximately seven hundred years after the Battle of Bannockburn.

Over at the Spectator, Alex Massie worries about the absence of a second question - that outlet for the majority caucus of Scots who desire more devolution within the Union. This was put to me on the radio yesterday and I have to say that I agree. I’m not necessarily in favour of a second question because that could result in a close and indeterminate outcome, and subsequent re-match. However, like Alex, I worry about a unionist campaign that offers a bit more devolution if Scots vote to stay, but doesn’t spell out what it looks like.

Mr Cameron is guilty of making such a fudged offer; his Scottish party leader, Ruth Davidson, is guilty of making little such offer at all, as I have said on these pages before. Refusing to countenance further devolution within the Union is not so much drawing lines in the sand, as putting one’s head in it.

Principally here we’re talking about taxation. Holyrood currently spends money that it hasn’t raised. Until Scottish politicians have to raise taxes as well as spend them, there will be no fiscal impetus for a Tory revival. That much is simple. The Devo Plus campaign ought to be considered.

But putting party concerns aside, now that we have the terms of the referendum campaign, the unionists have to make a case for a better Union settlement once Scots have voted to stay.

Also putting party concerns aside, I do believe that there needs to be a more prominent role for Gordon Brown. Alistair Darling is an excellent choice to front the unionist campaign. Yet if the former Prime Minister desires a central role (and I understand that he does), one should be found. Fraser Nelson dismisses the notion entirely, though for reasons that seem to me discontinuous. Whatever his image down south, Gordon Brown retains a certain following and respect in Scotland.

Follow Nik on Twitter @NikDarlington

Big game week on Lord Justice Leveson’s savannah

Nik Darlington 9.28am

The Leveson sideshow is on its way out of town after a stage run of more than 6 months. The press, to varying extents, has afforded the inquiry an importance it probably does not deserve, which is odd considering Lord Justice Leveson’s quarry is the press itself.

This week is ‘big game’ week, when the elephants, rhinos and other titans of the animal kingdom sit in the cross-hairs of the wooden inquisitor, Robert Jay QC.

Yesterday brought a rare sight indeed. Pine martens are seen in public more often these days than Gordon Brown, hidden away as they are in their Scottish refuge. I can drag this analogy further still. Pine martens are said to be reducing Britain’s population of invasive grey squirrels. The Murdochs are not grey squirrels, but for many they have an invasive characteristic; and Mr Brown grumbled into the hearing yesterday with one thing in mind, to eradicate the miserable memory of the Murdoch press.

I have enormous sympathy with Mr Brown for the coverage of his son’s cystic fibrosis. It was a reprehensible and unprofessional act by the NHS worker(s) who passed on the sensitive information to the Sun. And it was a despicable editorial decision by Rebekah Brooks’ to publish the story. On the front page. We have no reason to disbelieve Mr Brown’s assertion that he and his wife were presented with little more than a fait accompli by the Sun's editor.

But an innocent bystander in the vicious briefing wars that beset Tony Blair’s premiership and his? Gordon Brown is pulling a fast one of the highest order.

The Chancellor, George Osborne, also appeared yesterday, with an air of such relaxed insouciance to be bordering on blasé. The only moments of uneasiness centred on questions to do with his relationship with Andrew Coulson, whom Mr Osborne had a big hand in hiring, though even then he was let off lightly.

Today we have an appearance from the Leader of the Opposition, Ed Miliband, who I’m sure shall enlighten Lord Leveson with his sycophantic tailcoat trailing at smug News International cocktail parties.

We will also be hearing from another, greatly more respected, former prime minister, Sir John Major. If Gordon Brown is the leopard that never changes his spots (he might look like a grey elephant these days, but on yesterday’s evidence his memory is not up to a pachyderm’s exacting standards), then Sir John is the august old lion, long retired but still surveying the field.

You don’t have to be much in the know to know that Sir John Major has some very strong views about the role of the press. Who wouldn’t after the treatment unfairly dealt to him during the 1990s? It is unlikely to add anything of material note to the Leveson Inquiry’s proceedings - more colour than censure - but it could be one of the more fascinating sessions of one of the more miserable political inquiries.

Follow Nik on Twitter @NikDarlington

PMQs review: Score draw but the Prime Minister’s arsenal is worryingly bare

Jack Blackburn 2.08pm

The Government’s fortunes and the composure of its ministers have crumbled over recent months, though it is worth noting that the Leader of the Opposition’s polling numbers have still not managed to match his party’s.

So as we arrived at the first PMQs since April we found a leadership vacuum, created by a Government in disarray, a Prime Minister under pressure from all sides, and a Labour party leader seemingly unable to act like a leader.

This PMQs also took place in a very different context to the last. Disastrous local election results (London’s Mayor aside) for the Coalition parties still sting. The national economy seems to have tumbled into a double-dip recession. We are being badly buffeted by continuing turmoil in the Eurozone, where an anti-austerity Frenchman has just taken up residence in the Élysée palace and Greece is crippled by political upheaval.

To use a recent (and for me painful) sporting illustration, the leaders were level on points going into today’s match, with Mr Miliband ahead on goal difference. This was a mid-term fixture rather than an end-of-season cliff-hanger, but it as was scrappy, messy and confused as the Premier League’s climax, if nowhere near as exciting too.

Mr Miliband has plenty of arsenal at his disposal at the moment. Dreadful growth figures, unhappy nurses, protesting police officers, the controversial Leveson Inquiry, electoral reverses and the seemingly changing political breeze in Europe should have meant that Mr Cameron was in for a torrid time at the Despatch Box. Nevertheless, there was a crumb of comfort for the Prime Minister today in the form of falling unemployment.

Mr Cameron began by using this to his advantage, welcoming a question from his own backbenches, but stressing (as all the Cabinet has done this morning) that the Government is not complacent. There is more to be done. Etcetera. And for once, Mr Miliband also welcomed good economic news, but was quick to try to press home some advantage by questioning what discussions the PM had taken part in with President Hollande about growth plans for France and Europe.

The answer could have simply been, “Well, haven’t really spoken to him since he was elected.” So Edward suggested a text message with “LOL” in it would probably be sufficient. Uncharacteristically funny, and well delivered.

In fact, Mr Miliband’s entire style of performance has improved immensely. He is calm, considered and no longer whiny. Nonetheless, Mr Cameron remains an adept performer himself, and responded strongly: “I may well have used my mobile phone too much, but at least as Prime Minister I know how to use one rather than just throw it at those who work with me”. The Rt Hon Member for Kirkcaldy was, as usual, nowhere to be seen.

Mr Miliband was indeed more impressive today, though still blew it by failing once again to capitalise effectively on the Prime Minister’s all-too-evident woes. He left the economy debate too quickly, so eager was he to cram in questions on policing and nurses, while also failing to pose a question on his sixth time of coming. The eyes were bigger than his abilities.

Yet Mr Cameron also fumbled the ball today, particularly with his final response to his opponent, when he attempted to criticise Labour’s new policy supremo John Cruddas as someone too close to the trades unions. At moments such as those, one realises just how little ammunition the Prime Minister has at his disposal.

Another example of a politician not understanding how small businesses work

Craig Barrett 10.45am

I was fascinated as ever to read yet another article about rescuing businesses by a politician seeking to depict banks as villains and distressed entrepreneurs as martyrs. Though I agree with the sentiment - namely that we should encourage entrepreneurial spirit - the overall framing is flawed.

The article in question, by the Tory MP George Eustice, appeared yesterday on ConservativeHome. Mr Eustice seems to have a fundamental misunderstanding of the nature of business rescue in this country, commenting unfavourably on the provisions of the Enterprise Act 2002 and the administration regime. The legislation has its flaws but it has been been to operate effectively by participants in the insolvency sector.

Making the same mistake as Peter Mandelson did when concocting the regime, Mr Eustice has gazed dewy-eyed across the Atlantic towards Chapter 11 of the US’ Bankruptcy Code and decided therein lies the solution. The debtor retains the right to retain control of their assets once a business has begun to fail, and has the luxury of court protection against interference.

Yet the best comparison I can think of would be for us to have allowed Gordon Brown to remain as Prime Minister in perpetuity until he had turned around the economy, without fear of interim challenge.

In fact, UK businesses have always enjoyed a flexible rescue culture, irrespective of legislation.

Working on the correct basis that it is rarely in anyone’s interest - including that of the bank - to see a company fail, the London Approach (as it used to be called) pioneered debt restructuring so as to make it possible for a business to survive and often without entering an insolvency process.

Mr Eustice comments that the terms attached to debt often become more onerous as part of a restructuring but omits to mention that these new terms are often a trade-off for write-down of total debt and/or an extension of the term of the debt. A business is given some breathing space but in exchange for ensuring that a bank does not make too much of a loss. Banks are commercial organisations that need to turn a profit - and they will only do so if they are allowed to strike deals on commercial terms (particularly as so many people seem to howl with grief when state-owned banks lose money).

For a bank, appointing an administrator or a fixed charge (LPA) receiver is a last resort - either the business or asset is a basket case or, more rarely, management has adopted the ostrich approach and only an outsider could rescue the situation.

In either case, it is not as straightforward as Mr Eustice might believe. An administrator owes a duty to all creditors and a fixed charge receiver - while being under a contractual obligation to the mortgagee - also owes a wider duty in respect of value of the asset over which he as appointed.

To suggest that a fixed charge receiver is tantamount to an old style administrative receiver is to stretch a point somewhat - fixed charge receivers have no ability to trade, which was the keystone of administrative receivership.

Yes, the costs of receivership are borne by the borrower but only in the sense that they become part of the overall debt. Why should a bank bear the cost of enforcement in order to recover what is owed to it? Mr Eustice appears to be suggesting that borrowers who default should somehow escape paying for the recovery costs relating to their own breach of contract.

I also fail to understand why Mr Eustice suggests that an insolvency practitioner would be required to seek permission from a court before selling a business or an asset. Mr Eustice is clearly unaware of the pressures the courts are currently under. It takes several months merely to get a date for an initial hearing. How would a business trade during this time? Who would fund it? The only way to keep a business going while an administrator waits months for a court hearing would be to ask the bank to fund it - the same bank that Mr Eustice seems hell-bent on attacking.

These proposals also pay no regard to one of the prime considerations of Britain’s business rescue culture - that of rescue. The flexibility inherent in the system means that businesses are often sold on without interruption to service - the uncertainty of awaiting a court verdict on a sale proposal would cause most customers of a distressed business to trade elsewhere, thus eroding whatever value remained. By being able to act quickly, an insolvency practitioner can maintain value to the benefit of all creditors.

Finally, to suggest that administration protection should be extended to sole traders or partnerships misses the key point that as these businesses have no requirements to make public filings, counterparties would have no visibility of their financial position. If a businessman wants the protections available, incorporation is the only way to ensure that protection. Widening the administration protections for sole traders and partnerships would actually result in more abuse of the system than any measurable overall benefit.

In fact, had Mr Eustice done a bit more digging, he would probably have concluded that the retail banks are currently being very supportive of businesses. It is possible to argue that a recession is good for the overall economy as it assists with trimming dead wood and streamlining and strengthening sectors.

Currently, the most pressure on SMEs comes from HMRC’s seeking to ensure prompt collection of taxes. If Mr Eustice is concerned about business survival, might I suggest that he has a quiet word with officials at HMRC?

Britain’s small and medium-sized businesses are what will return the country to prosperity. Therefore we must do all we can to encourage them. However, banks who lend to such businesses share a similar entrepreneurial spirit and we must ensure that an appropriate balance is maintained between the interests of creditors and the interests of debtors. Sadly, Mr Eustice has, like so many others, chosen simply to attack the creditors.

Follow Craig on Twitter @mrsteeduk