By Mark Hillary.

In addition to the economic meltdown, there is another political story in Europe at present – Belgium.

I’m not referring to the recent release of Steven Spielberg’s ‘Adventures of Tintin’ movie – though it might be argued that Captain Haddock bears a passing resemblance to several much-missed British political figures, thanks to the trademark slur.

I mean the government. Or lack of one. As I write, it is now 530 days since Belgium actually had a functioning Cabinet making decisions and showing political leadership – or actually doing anything.

They didn’t need an Occupy movement to destroy the government in Belgium. They just needed a general election where the votes were spread so thinly across so many political parties that it became impossible to form a coalition that could then appoint Cabinet representatives.

At the election in June last year, 11 parties won a place in the Chamber of Representatives, and since then the horse-trading over who will take seats in Cabinet has continued. It was June this year when Belgium passed the previous holder of the dubious honour of being the slowest country to ever form a government – Cambodia.

Without digging too deep into the background of the Belgian problem – and speculation over partition – I am surprised that failure to form a government in a western European nation has sailed under the radar of most people commenting on the European economic and political maelstrom.

Economists are now presenting unified European bonds as the answer to the euro zone crisis. A joint currency project should also require a much closer union on the ability to borrow – something the British pointed out years ago when they passed up the opportunity to join the euro. Hindsight is a wonderful thing.

The Occupy protestors are vocally trying to draw attention to a myriad of issues; the lack of affordable housing, the growth of slums in major western European cities, the unfairness of executive pay, job insecurity, the greed of bankers… it’s a kind of no future agenda that has no real answer.

If only we could blow up the world in the style of Lars von Trier, sending an Ark of fine human specimens to Mars to start all over again. Would this society of the future ever choose to rebuild finance and politics in the present image we see in Europe?

It is worth remembering that the English word ‘politics’ derives from Greek, meaning of, for, or relating to the people. It once meant the process of collective decision-making that politics used to be about. This is becoming more and more important to the people of Europe, and the U.S. where their dysfunctional political system keeps ever more stand-up comics in business.

Many ordinary hard-working people don’t like the Occupy protestors and their greasy hair. My mum doesn’t. But even the people who don’t like the children of Swampy have to confess that they are not feeling good about the way Europe is being governed.

The latest British wheeze is to reduce worker rights. If it is easier to hire and fire in the UK then we won’t have any of those pesky unions or employment tribunals – goes the government mantra.

But some rights – such as discrimination – apply from day one in British jobs. Does anyone want to bet that age and race discrimination claims will soar once the regular employment tribunal route to justice is removed? If the biggest problem in the economy is a failure of consumers to spend, because of a perception that their job is insecure, then this could be the single worst policy of the administration.

There seems to be a perfect storm developing. Ordinary people are on the streets protesting in a way we have never seen before. The bankers – and senior executives in all industries – are still giving themselves bonuses that don’t reflect achievement or contribution to society. The economies of Europe are lining up like dominoes and the politicians are hopping around like the Keystone cops, ready to try anything that will preserve life as we used to know it.

Perhaps Belgium really is the role model for the rest of Europe. No government. No way to argue about the euro. No way to legislate. No worries.

Image — Empty seats are seen before a plenary session of the Belgian Senate in Brussels October 21, 2010. REUTERS/Francois Lenoi

Labour leader Ed Miliband used a column in last weekend’s Observer newspaper to suggest that it is time for politicians to listen to the protestors at the Occupy London protest camp next to St Paul’s Cathedral.

In a clunking attempt to align the Labour party with the views of the protestors, Miliband seems to have lost the plot. He might want to cast aside any party allegiance, just for a moment, as he reads the home page of the protesters in London.

In stark contrast to the glossy flyers and gushing prose handed out to Labour party campaigners in the run-up to an election, the manifesto of the protestors runs to just 52 words:

“Occupy London stands together with occupations all over the world; we are the 99 percent. We are a peaceful, non-hierarchical forum. We’re in agreement that the current system is undemocratic and unjust. We need alternatives; you are invited to join us in debate and developing them; to create a better future for everyone.”

Two important statements leap out from this text: the system is undemocratic and unjust and you are invited to join us in debate.

The protestors don’t believe that the present system of parliamentary democracy, stuffed with lawyers and Bullingdon Club alumni arguing the toss in Westminster, really represents the country anymore. And they freely admit to not having all the answers.

This latter point has been the stick used to metaphorically beat the protestors by many. Not only is there no list of demands, but any normal person with a family, job, and mortgage to pay wouldn’t be loitering around the City pavements for weeks on end.

It is easy for Ed Miliband to make conference speeches that talk of ‘producers’ and ‘predators’ — veering to the left of the New Labour project and bringing back some of those who felt excluded when Labour went all centrist. But does the real world care for alliterative metaphors when they have no job security, no opportunities to improve, and basically no future?

And anyway, who attends party conferences these days? I’ve been to a few in my time and found them just a whirlwind of parties and irrelevant debates sponsored by lobbyists and big business. The predators have already eaten the producer’s lunch and left for sunnier climes.

What the Occupy movement is trying to say to the politicians is that their time is drawing to an end — they are the dinosaurs of society. It is not conference speeches bashing the policies of the Prime Minister and his deputy that are needed. It is not tinkering about with the constitution of the House of Lords that is needed. It is not even newspaper columns pledging allegiance to the protestors that is needed.

The people of Britain started to make their views known very clearly this summer when the cities boiled over into riots that had apparently no cause — and were spuriously blamed on career criminals.

The style of politics we have shaped over the past century and the shady business practices that ensure immense wealth for a few are all going to have to change. The people have had enough.

The Harvard dropout Mark Zuckerberg may well have done a lot more than just invent an incredibly efficient way to share information and monitor what your friends and family are up to — better known as Facebook.

Perhaps he has built the initial framework on which twenty-first century democracy is going to be based. Social networks have enabled political change across several intransigent Arab and North African states. Our own ideas of how representative democracy should work will not last much longer if our elected leaders are so far removed from the life of their electorate – and Occupy has already realised that transparency and information sharing is what the people want.

Are we moving from the Arab spring to a new English winter of discontent?

In 1998, the Japanese government was ridiculed for giving away almost $6bn (at 1998 value) of shopping vouchers. The plan was that consumers would spend more of this ‘free money’ and help lift Japan out of the seemingly endless malaise it suffered in the nineties – as many other developed economies were enjoying a roaring decade.

One of the major faults in the Japanese plan was that the vouchers could easily replace the need to spend actual money. If my groceries cost me $100 then why would I still spend $100 of cash on groceries and buy a nice meal in a restaurant with my voucher, when I could just use the voucher for those groceries?

But the Japanese may have been onto something by focusing on demand rather than monetary supply, contrary to most received wisdom at present.

The Bank of England’s Monetary Policy Committee has restarted quantitative easing (QE) in the past week, much to the surprise of the markets and leading some commentators to ask what they might know that the media and financial analysts don’t.

Former MPC member David Blanchflower even used his column in the Guardian to say: “The MPC argued that tensions in the world economy ‘threaten’ the UK recovery. I am unaware of the MPC ever using this word before. Given that a lot of care goes into the exact wording of such a statement all nine members would have had to sign off on this, then things must be pretty bad.”

Perhaps I am over-simplifying the complexity of the British economy, but if the man on the street senses that the economy is not improving then he will reduce spending, luxuries are forsaken, and unsecured credit is paid down.

This is all rational behaviour. If you are not sure about the stability of your present job, or the likelihood of finding a similar job if this one disappears, then you are not going to be making major purchases or commitments. Millions of people are battening down the hatches and hoping the storm blows over in a few years – as we have all done when recession has struck in the past.

For the man on the street, whether the central bank is purchasing gilts or selling groats really doesn’t matter. A lack of confidence in having a job tomorrow is what matters.

Professor Steve Keen of the University of Western Sydney believes that a Great Depression is all but inevitable because of this mismatch between classic monetary policy and public behaviour.

After listening to a lecture by Keen at Oxford University last week the writer George Monbiot commented: “If Keen is right, the crippling sums spent on both sides of the Atlantic on refinancing the banks are a complete waste of money. They have not and they will not kickstart the economy, because M0 [base money] money supply is not the determining factor.”

Keen proposes a write-off of private debt, regardless of what that does to the banks that lent to consumers. This will be music to the ears of consumers struggling to service credit card debt, but will any government really propose such radical measures?

I doubt it. We will see a depression and more civil unrest before anyone listens to ideas like this. But Keen does have a track record of predicting major economic events. He sounded the alarm predicting the 2008 crash a full three years before it happened.

This brings us back to the Japanese solution. If quantitative easing is to be continued then why not deliver some of those billions direct to consumers, avoiding the need for money to trickle through the banking system? If even just this most recent QE effort went straight to consumers, that would be a bonus of over £1,000 for every man, woman, and child in the UK.

If lessons can be learned from what Japan attempted back in 1998 – conditions to ensure the vouchers are spent – then why can’t a similar plan be applied to Britain on a much grander scale?

Image — A woman poses with a Bank of England twenty pound note bearing the image of Edward Elgar in Edinburgh, Scotland June 29, 2010. REUTERS/David Moir

By Mark Hillary.

Once again German Chancellor Angela Merkel has had to dig deep to ensure that the euro zone can limp along for a little longer without any single nation defaulting.

And this story changes day by day. No sooner has Germany rescued the euro, Greece apologises and says they can’t meet the deficit targets – no more savings can possibly be achieved through austerity.

But as economists chart the course of this rollercoaster ride of expected default and the potential catastrophe of the entire European single currency project unwinding, is anyone paying attention to the social effect of all this uncertainty?

I don’t mean the pain of the middle classes ruing the days their house would increase in value week by week, I mean the potential for a completely different system of politics.

The political answer to the crisis in Europe is austerity. Public sector jobs are being slashed, taxes are being increased and more widely enforced, and state services normalised over decades are suddenly being cut.

Yet faith in centre-ground politicians is possibly at its lowest ebb since the end of the First World War. The general public has a very low tolerance for their elected leaders at present and non-economists generally view austerity packages as the wrong approach for repairing damaged economies.

This is not an argument focused on spending our way out of trouble. Forget the politics for a moment and consider how many unthinkable truths have become normal in the past few years.

Most of us had previously only ever experienced a run on a high street bank when watching Christmas repeats of ‘It’s a Wonderful Life.’ Ex-government ministers have been jailed for fraudulent expense claims and dozens have been forced to repay public money used for their own convenience. The housing market is no longer a secure investment for the future, and now most young adults cannot even dream of owning their own home. And to cap it all, The News of the World is no more.

If anyone had predicted these events in 2007 they would have been dismissed as a fantasist, yet as we watch enormous amounts of public money being used to prop up the banking system, those same bankers are posting profits in their annual reports and awarding themselves fat bonuses.

On the surface it would appear that all the maxims we once held about economic growth being healthy, and leading to jobs and prosperity, have been swept away leading to something that feels like post-war austerity. The only thing we don’t have yet is the ration books, but with soup kitchens now being overwhelmed with demand, it feels like a vague possibility.

A general discontent has already sparked riots in the UK. Greece has daily violence contained by a riot squad that is now on permanent alert. Wall street has been occupied in the U.S. and this week protesters are ready to occupy the London stock exchange. The people have had enough and are now ready to oppose the state mechanism – and figures of authority – that caused this mess in the first place.

Ordinary citizens are now ready to break the law and even to swear at police officers, much to the chagrin of London Mayor Boris Johnson, but this doesn’t feel like law breaking any more, it feels like a cry for justice.

The danger is that extremists will be the ones who shout loudest and clearest. The centrist politics of Europe, and even the British coalition, will be seen as useless in times that demand a more direct response. And given all those unthinkable changes in society since 2008, who could rule out a complete overhaul of the democratic process because the people have had enough of the present system that is no longer seen as representative?

In 1933, Adolf Hitler became Chancellor of Germany based on three principles; Lebensraum, or expanding the nation to include other German-speaking countries, anti-Semitism, and anti-communism. The wealthier European states of today, such as Germany, France and the UK, are not actively seeking to establish new empires, but it cannot be denied that people are withdrawing into their own indigenous tribes and fearing the outsider.

The free movement of labour across Europe is blamed for reducing wages and enhancing structural unemployment – footloose foreigners can flit to where the work is located and live twenty to a house, but the jobless of Tyneside cannot just relocate their family to Berkshire. Though the British National Party were roundly defeated at the 2010 general election, various elements that would encourage greater extremism seem to be falling into place.

As we remember the seventy-fifth anniversary of the battle of Cable Street this week, it would help if some of our present day political leaders thought longer and harder about shackling themselves to austerity. Economic engineering is needed to help create a genuine recovery, but who is going to monitor the social engineering that will also take place during this lost decade?

Image — German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso (R) address a joint news conference at the European Commission headquarters in Brussels October 5, 2011. REUTERS/Francois Lenoir

By Mark Hillary.

The Dale Farm barricades are being dismantled and all political eyes are now focused on the party conference season. Just yesterday, Nick Clegg managed to impress the Lib Dem faithful in Birmingham, though convincing the voters that all is well with the good ship Lib Dem might be a bigger challenge for the Deputy PM.

But as the dust settles on Dale Farm, have we learned anything from the fiasco where Basildon Council attempted to evict 52 families from their homes, with no option of staying in the area due to there being no other local authorised sites for travellers?

It would appear not. Some travellers are now dispersing to other illegal sites throughout the south of England and the council is fighting tooth and nail to get the injunction preventing eviction quashed – so they can carry on.

The issue for the council is simple. A group of travellers on an authorised site purchased some adjoining land and started expanding their site into the new area. They own the land, but had not been granted planning permission for the extended site.

It’s an open and shut case – no planning permission means no building and any buildings that have been erected without permission need to be destroyed.

The general public has a lot of sympathy with this no-nonsense approach. Travellers are generally seen as scroungers who want to avoid the normal structures of society – taxes and planning permission – yet they squeal about the Human Rights act when challenged. The man in the street could for forgiven for asking why there is one set of rules for travellers and another for the average law-abiding citizen.

But the situation is rather more complex. Travellers and the Gypsy community suffer prejudice because of their itinerant lifestyle. When they do settle into a site and attempt to follow the rules, many interactions with local government are coloured by councillor attitudes to travellers.

The BBC reported that nine out of ten planning applications made by travellers is rejected, and two out of every three appeals also fails. Many of these planning applications will have failed because the council is desperate to keep a lid on the size of the traveller community, perhaps hoping that if there is not enough space they will just move on to become a problem in another county.

The reality is that if planning applications are almost certain to fail, then travellers won’t even bother applying and a situation such as that at Dale Farm emerges.

In an ideal world it could be argued that councillors need to drop their prejudice for travellers when reviewing planning applications – somehow leaving their preconceptions at the town hall door. But this is unrealistic. Even anonymous planning applications would not work because who else would be submitting a planning application inside or adjacent to a traveller community, but travellers?

With central and local government under intense pressure to slash budgets, the outlook is not good for the travellers. Councils are under an obligation to offer sites to the travelling community, but nobody will be offering more places in the present climate of austerity.

But shifting them from one county to the next and preventing them from ever putting down roots, or expanding their community beyond the confines of a legally approved ‘traveller zone’ does not help the travellers or the ‘regular’ communities they buffet against.

It’s time for local governments to start proposing alternative solutions. Every councillor would prefer a settled community paying council tax to the difficulties of offering basic services to travellers. It’s time for both sides to start talking, without the bailiffs at the door.

Image — A sign is attached to a gate post on the Dale Farm traveller site, near Billericay in southern England September 19, 2011. REUTERS/Luke MacGrego

This change in how services are delivered has become a part of everyday life. For many companies – such as banks – it went too far in the past decade. Many banks found that their customers were uncomfortable dealing with an agent in a far-flung location and it soon became a source of competitive advantage to answer calls locally. But those same banks advertising that ‘we answer your calls in the UK’ are all sending their IT systems offshore. The ‘offshoring’ continues, it is just less visible.

The man on the street would say that by sending skilled service-sector jobs to lower-cost economies we are hollowing out our own skills. People don’t start their careers in skilled roles — they graduate up to those jobs through experience. If the lower level clerk roles have all been outsourced offshore then we are storing up big trouble for the future.

That’s the theory of the heart, and perhaps it is what most people would call common sense too. But economists argue the exact opposite; that a country can build wealth in many ways and a UK-based company that is successful because it manufactures products at a low cost in China and customer calls are answered in India, can bring wealth to the wider economy.

But what happens when the risk profile of the countries these major international companies have been working with suddenly changes?

Companies such as Vodafone, Hewlett-Packard, Oracle, and Microsoft all have major facilities in Egypt. When the government there recently pulled out the Internet plug where did all those British Vodafone customer service calls go? Or the Xbox gamers calling for help with their console? Where indeed…

All these major firms will have considered the need for some backup facilities, in case of a technical breakdown in their remote facility, but how many have considered the chances that a government would just turn off the Internet, and even the telephone system?

In the early days of offshore outsourcing of services, political risk was very high on the agenda of corporate decision-makers. If you were going to send your customer service centre thousands of kilometres away then you needed a lot of confidence in the local political and commercial environment.

But it seems we have become used to services being delivered remotely, and political risk – though still a consideration – has been weighted as less important. These days it’s the local cost, expertise, and labour supply that most companies are looking at, because they have just got used to spreading their internal functions all over the world. University of Strathclyde academic, Professor Philip Taylor, believes that companies have become habituated to certain environments that used to be seen as challenging or dangerous places to do business.

Just last month several industry analysts were suggesting that Egypt is one of the most attractive locations to send your company back office and IT function. One even ranked Egypt as the fourth best place in the world for this.

They were all wrong. Though Egypt has many underlying benefits, such as a young and well-educated labour pool, many corporate decision-makers will feel wary of sending new functions there too soon.

And this applies not only to Egypt, but every nation that has jumped onto the outsourcing bandwagon in an attempt to secure high-value international services in the same way that India has been so successful. Many of those countries are spread across North Africa and the Middle East, areas now experiencing a wave of political unrest. But it’s less than a decade since foreign nationals were being advised to leave India because of tensions along the border with Pakistan, so even the giants of the international services industry are not immune to doubts over stability.

It is not possible to predict where the next wave of political instability will spring – it could even be in the western developed nations. All eyes are on the Middle East, but Belgium has had no recognised government for almost a year. How long will the people tolerate that situation? The next political crisis may be on our own doorstep.

For the companies that now operate globally with manufacturing plants in China and customer service centres in Africa or South Asia, a challenging time lies ahead – how best to balance the right of citizens to claim their right to representative democracy with the need to operate a stable multinational business.

- Mark Kobayashi-Hillary is the author of several books, including ‘Who Moved my Job?’ and ‘Global Services: Moving to a Level Playing Field’. The opinions expressed are his own. –

Deputy Prime Minister Nick Clegg is on a mission to shore up support within his own party for the tripling of university tuition fees. The Liberal Democrats campaigned with a manifesto pledge claiming they would axe fees if they ever got into power. They got the power, but only via a coalition with the Conservative party, and though they claim that some Lib Dem pledges survived the coalition talks, the policy on tuition fees actually went the other way.

MPs will vote on the tuition fees policy tomorrow. Clegg has stated that all his ministers will support the government line, but though the ministers have been whipped into line, it looks like a large number of Lib Dem backbenchers are unhappy with their new reputation as the ‘Fib Dems’. Potentially a large number of them will vote against their own policy or abstain from voting altogether.

This rebellion over a key piece of legislation could be the beginning of the end for the coalition. A coalition government requires compromise, some favoured policies will be axed so that others survive and the result is a curious blend of the pledges made by two parties – often neither party will be entirely happy with their joint proposals.

But if the Lib Dems rebel on tuition fees now then one might expect the Conservatives to rebel over the tidbits thrown to their coalition partner, such as voting reform. If there is no agreement and the constituent parties rebel against the ideas their partner brought to the table then we don’t really have a coalition – just two warring parties. And if this forces an early election then Nick Clegg will see his party reduced to a tiny rump of MPs aimlessly wandering the backbenches, because even their own supporters have lost faith.

Clegg knows this, so he clings on to the lifeline of making the coalition work even though it positions him and his party as the opposite of what they campaigned for. Meanwhile he has to suffer the indignity of watching as the general population circulate YouTube videos of him promising to scrap tuition fees.

The Lib Dem leadership argues that tuition fees are not all that bad, because they are not charged up front. Students only need to start repaying once they are in work and earning a good salary. It’s true that this could be argued as a better system than forcing parents to open an education fund the moment their child is born – rather like the USA. But is not bad good enough?

Beyond the fog of party politics, broken promises, and coalition deals in dark rooms there is the bigger picture. What kind of nation does the UK want to be? How do we reposition ourselves in a post-banking-boom world where the lustre of Empire, Commonwealth, and traditional British influence has very little meaning any longer?

Due to their huge populations, China and India alone generate around nine million university graduates every year. The UK cannot blunder through this century continuing to think that we have a monopoly on banking, advanced engineering, and innovation while these far-flung nations all remain focused on stitching together our clothes and testing our software. It doesn’t work like that any more. The Brazilians have some of the most innovative banking technology in the world, the Indians now lead the world in hi-tech services and software development, and the Chinese are moving into every area where their sheer size and scale allows.

Prime Minister David Cameron recently claimed that the bailout of Ireland made clear commercial sense because the UK exports more to Ireland than to Brazil, Russia, India, and China combined. He made the point as a defence of the cash British taxpayers are handing over to support the Irish banking system. To me it sounded like an admission of failure – that the UK is not engaging in any depth with the new global superpowers. I asked the Cabinet Office and Number 10 to verify the export numbers used by the Prime Minister, but nobody got back to me.

The backdrop to the parliamentary vote tomorrow will be national civil unrest. London students are already circulating their ‘London Calling’ protest details on Facebook and other social networks. It’s going to be noisy on the streets as the students make their voice heard. But remember this, the students are largely protesting about the duplicity of the Lib Dem leadership, yet the real fight is how to make our education system fit for purpose in the twenty-first century – is anyone out there thinking of the long-term or are they all fixated on tuition fees alone? As Joe Strummer once said ‘London is drowning, and I live by the river.’

Some benefits, such as the winter fuel payment and free entry to galleries and museums, had been considered low hanging fruit, almost certain to go, but the Chancellor surprised the gallery by throwing out a few spending commitment trinkets as he wielded the axe elsewhere.

Based on these figures, it looks like 490,000 public sector jobs will have to go in the next four years. As I mentioned in my last blog post, that will have a knock-on effect to the private sector, so you can probably double this to a million jobs vanishing from the UK over the next few years. I’ve already seen some commentators suggesting that the private sector has the ability to mop up any public sector jobs losses, but these are often the comments of recruitment consultants trying to talk up their own market without foundation to get their talking head appearance on the TV news. The Sky news team, based in Merthyr Tydfil today, don’t seem to be interviewing many private sector firms creating jobs in South Wales – the jobs so desperately needed to replace the Newport passport office earmarked for closure.

The opposition says that the government is going too far, too quickly. It’s hard to call who is correct yet, but the department for Business, Innovation and Skills is finding their own budget cut by 28.5%. That’s not really sending out a strong message of private sector regeneration and I heard precious little today that would be helpful to entrepreneurs.

One of the main focus areas that the rolling TV news channels have picked up on is the 25.2% cut to the Home Office budget, which includes policing. The Home Office already said they are ‘hopeful’ that bureaucracy can be cut so frontline officers remain out on the street. I’m surprised to hear the Home Office sound so indecisive on this when they should be aware that just three months ago, Cleveland was the very first police service to entirely outsource their back office to the private sector. Cleveland contracted with Steria, and I met Sean Price, the Cleveland Chief Constable, at the time so you can hear what he said to me on their decision to privatise their administration by clicking here. [http://www.youtube.com/watch?v=a4crU9LWItM]

I’m not suggesting that Steria is the only company offering a back-office admin function, but Cleveland is certainly the first police service to enter into this kind of deal – perhaps the Home Office needs to get up to Middlesbrough to take a look at what is going on in their own backyard?

But it’s not all doom and gloom. In many places, the public sector is being revived and regenerated. Reducing administrative jobs does not necessarily lead to a decrease in service to the citizen. SOCITM is the main trade association representing technology professionals in the public sector. I just called their president Jos Creese and asked him if these budget changes can be interpreted in a more positive way. He said: “We are creating a strong willingness to change that will be, in many respects, good for public services, so it will force us to question what we should be doing and what we don’t need to do. It will force us to modernise and transform – particularly through technology. Enabling the public to do more for themselves is also a very positive move, not just for cost, but a lot of the public can – and want – to look after many government transactions themselves – like renewing a library book online rather than needing to go the library.”

I think Jos is right, but he is talking about a channel shift, a complete change in attitude in our relationship with government services. In the long term, saving money in the public sector is not about slashing jobs or outsourcing to private sector suppliers, it’s about questioning how the citizen interacts with the government. If there are new ways to deliver important services then that’s where our future focus needs to be.

But spare a thought for the private sector too. These cuts will have an enormous effect on private companies that work for the government, and those companies employ many thousands of people too.

Even the exciting high-tech sector is not immune. Last July the Cabinet Office called in the Chief Executives of the 19 leading hi-tech service companies to the government. They trooped up to Whitehall and were asked – in no uncertain terms – how they could help the government, given that times are hard.

The implication was that all suppliers to the government should cut their rates, and stop any non-essential work. The companies could have kicked up a fuss. They all have long-term contracts and agreed rates, but all of them could see that it was a good idea to do what the Cabinet Office wanted. To point to the contract and call in the lawyers might signal the last time they ever work for the British government.

Since then, another thirty or so smaller suppliers have been called in and asked to help the ‘national interest’.

This has created an interesting dynamic because the Cabinet Office, and Francis Maude in particular, are digging deep into the supplier relationships and leaving no stone unturned in a quest to save money. We can all remember old media stories of how much the government used to spend on management consultants and ‘advisors’ – with all the major suppliers being questioned and forced to reappraise their relationship with the government, there can be no doubt that those headlines are a thing of the past.

And yet, all this activity is masking the fact that maybe the issue is with the government as a disorganised procurer of services, not with shady suppliers charging outrageous fees. Regardless of the fact that Francis Maude is riding through the suppliers on a white charger with his trusty sidekick Sir Philip Green advocating a return to centralised procurement, most of the suppliers think that the Office of Government Commerce (OGC), bears much of the blame for government procurement becoming disorganised.

I’ve spoken recently to all the major government suppliers and one of the most senior figures told me: “OGC are a significant part of the problem for everybody. It’s very easy to just cut stuff. Make things cheaper, or remove some specifications. It gets the job done and is quick and easy, but it doesn’t take real brains to do that. The key thing is that if you want to look at real reform, then how do you get genuine cross-departmental support for new procurement models, new delivery vehicles and all that when it relies on permanent secretaries who have no interest in change.”

Quite. If the civil service is not incentivised to relate to suppliers in a different way, then why would anything change? Suppliers to government follow the lead of their paymaster, so they won’t produce new ideas and innovative ways of delivering services to citizens unless the government says that they really want new thinking. The present approach is just more of the same – only cheaper.

The big 19 will probably be OK. They are big enough to ride out the cuts, seek work from other clients, and expand internationally if they have not already done so. They will survive, but smaller firms with the new ideas are unlikely to stick around if the sole strategy for the new couple of years is just cut, cut, cut.

To watch innovative British companies go to the wall in the next year or so is one of the tragedies you won’t hear about today.

Appendix: The original 19 firms called into the Cabinet Office in July were: Hewlett Packard, British Telecom, Capgemini, Fujitsu, Capita, IBM, Telereal Trillium, Atos Origin, CSC, Logica, Steria, Oracle, Siemens IS, C&W, Microsoft, Accenture, Serco, G4S, Vodafone.

Prime Minister David Cameron has loaded a 747 full of British business leaders and government ministers, all on a charm offensive aimed at securing deeper trade ties between the two nations. But what is he offering the Indians?

The Prime Minister is appealing to the ‘special relationship’, the centuries-old tie of the British Empire and Commonwealth. It’s true that many links remain. The Indian accounting, legal, and parliamentary systems all maintain similarities to the British systems, because the British were instrumental in creating these institutions.

But for how long will the old ties bind us? When will the empire strike back?

Many supposedly British brands are actually owned by Indian firms. Jaguar Land Rover cars, the steel manufacturer Corus, the Tetley tea you may have enjoyed over breakfast this morning. India is already a pervasive part of British life, and not just in the form of chicken vindaloo on a Friday night.

India was relatively untroubled by the global economic slowdown. Instead of hyper-growth, the economy grew at a gentler rate, but there is the difference. Their economy is still growing, and now at an accelerating rate. India is one of the famed BRIC nations, the bloc of Brazil, Russia, India, and China lumped together because of their fast-growing economies and huge populations.

And size does matter. There are 1.1bn people in India, and the labour force is approaching half a billion. The potential for more Indian companies to work with the UK is enormous, as is the market opportunity for British firms that can find a way to take their goods and services to the Indian people.

The British retailer Tesco has spent five years building up a store support facility in Bangalore, now supporting their stores all over the world from India, and there is no doubt where Tesco bank will be operating from once it rolls out across our own high streets. But Tesco has spent years creating jobs for people in India and taking the long view that if they ever want to roll out a network of stores over there, allowing the Indian middle class to sample the delights of Tesco Finest, then they need to build a deep relationship with legislators and business leaders in the region first.

But despite the opportunities, there are the complexities too. Any visitor to India cannot fail to notice the slums, often propped up against the gleaming offices of multinational companies. Over forty per cent of the population lives below the poverty line, which in that part of the world means about $1.25 a day.

The last British government acknowledged the need to develop closer links to India, and other fast-growing nations. There was even a parliamentary group launched to something of a fanfare in February 2009, aimed at giving a kind of ‘favoured trading nation’ status to India. The intention appeared to be to create better long-term relations, by commissioning government projects from Indian service companies.

These good intentions died quietly as the British public remains wary of seeing taxpayer-funded projects creating jobs in far-flung locations. Will David Cameron manage to square the circle of asking Indian companies to create more jobs in the UK, yet legislating for immigration caps, making it harder for Indians to come and work in the UK? Even the thousands of Indian students coming to British universities are going to find life harder as the new government places further restrictions on their working hours in a bid to weed out bogus students.

It’s going to be a real challenge to convince the Indian people that their old master is now a great place to do business when so many other nations are welcoming their expertise.