Tag Archive | "uk economy"

Punch and Judy Politics

Tags: , , , , , , , , , , , , , , , , , ,

Punch and Judy Politics


Prime Ministers Questions was yet another example of the Punch and Judy style of politics that is so prevalent today. It is reminiscent of two schoolboys arguing over who’s dad is bigger or stronger, yet, these grown-up children in Parliament are the very people we are supposed to rely on to represent our interests. We are slowly becoming a laughing stock as our politicians consistently fail to represent our interests, whilst many are guilty of taking the public for a ride in terms of their expense claims. Even the Ayatollah Khamenei believes that he is entitled to sit in judgement of the people of this country based on his views of our political leaders.

Yesterday, Brown and Cameron swapped blows regarding the level of capital spending in the UK over the coming years. Brown is quite clearly guilty of a deliberate attempt to mislead the public. It is self-evident that capital spending is being reduced, even if this is as a consequence of this government bringing forward capital projects from future years, which inflates the current spend, but has the effect of reducing the amount available in future years. Some would argue that this is quite a reckless policy, especially given Brown will almost certainly not be in power when someone else has to deal with the fact that there is nothing in the kitty. Mind you, that has become a fairly common trait with Labour government, their spend, spend, spend policy invariably leaves a Conservative government to clean up the mess.

Meanwhile, whilst Cameron has Brown on the ropes, he lacks the courage to state the bloody obvious and that is, we have no choice but to reduce public spending. Tax receipts are down, public sector spending is out of control, the economy is contracting and more and more people are becoming an economic liability, rather than an asset as a consequence of increasing unemployment. I would have more respect for David Cameron if he was to demonstrate that he has the courage and moral rectitude to come clean with the public. Instead of highlighting Brown’s lies ( after all we all know that he is a stranger to the truth), Cameron ought to be outlining why there is a need to reduce public spending and how they intend to do it if elected. Instead, he is allowing Brown to dictate what the “10% Tory cuts” amount to, using the classic New Labour trick of emotional blackmail, less for pensioners, less for the NHS, less for the Police etc.

Apart from the fact that most people already understand that we are in for a tough few years, Cameron also has the OECD stating that the Treasury figures for the UK economy are at best optimistic, but more likely completely wrong. He has the rating agency Standard & Poor making veiled threats to reduce the UK Plc credit rating unless the government gets it’s house in order and puts in place a concrete plan to reduce public debt. And, now, he even had the governor of the Bank of England stating that “scale of the deficit is truly extraordinary” and usggesting that the government should be more ambitious with their debt reduction plans. In other words, Cameron has some very powerful people or organisations supporting the notion that our economic situation is dire and we need to reign in public spending, yet he still lacks the courage to take the bull by the horns. It is this lack of backbone, even when the odds are in his favour, that leads me to doubt Cameron’s ability to offer the strong leadership this country needs to get itself out of the mess created my New Labour’s social engineering project.

Apart from public spending cuts, there is also a need to look at whether we are getting value for money from our public services. For example, in spite of the fact that we have record numbers of police officers, the number of front line bobbies (I have excluded PCSO’s) is but a tiny fraction of the 156,000 officers that are employed. Crime is rising not falling and police openly admit that they consider their job to be the investigation of crime, rather than the prevention.

The NHS has received a massive increase in spending. To fund this all UK workers were surcharged an extra 1% on their entire earnings and employers were charged an extra 1% of their wage bills. This added £billions every year. This burden on employers and employees will increase by a further 0.5% shortly. Yet, in spite of the enormous amounts raised to invest in the NHS, new build was financed using PFI, a hugely expensive way of funding new hospitals, and much of the money went into higher wages, not improved services. Now that the NHS have identified that there may be a real term reduction in the NHS budget, we are threatened with ward closures and increased waiting lists. In other words, the NHS are holding us to ransom, instead of investing the money wisely, they simply spent it. There is a subtle difference in my terminology, but a huge difference in practice.

Take the money being wasted on spy databases. £billions have been committed to IT infrastructure projects, most of which have not been thought through, many have contracts that amount to a blank cheque in terms of costly overruns and to be frank, most are simply not needed. This is not a wise investment of our taxes at a time when the country can least afford a spendthrift policy. It is also worth noting that many of these contracts do not benefit UK companies.

The list goes on and on. That notwithstanding, it is so bloody obvious to most people what we need to do, that to tell us different is patently insulting. Unfortunately, our politician’s still believe that we are not grown up enough to be able to handle the truth, so instead they either lie to us, or avoid being candid. My message to politicians of all parties is to stop treating us like idiots. They must tell us how they see the situation in unambiguous terms, what they believe needs to be done and how long they expect the pain to last. They must tell us how they will ensure that we get value for money and what they will do to ensure that tax increases are only be considered after all other areas have been exploited. If the people of this country and its politicians are not to be looked on by other countries as a bit of a basket case, then we need a man (and a party) with a plan.

Posted in Conservatives, General, Lib Dems | Comments (3)

Budget 2009: New Labour have lost the plot

Tags: , , , , , , , , , , , , , , , , ,

Budget 2009: New Labour have lost the plot


New Labour has brought this country to the brink of bankruptcy and yet, even now, when everyone else can see it, they remain in denial. How on earth can any pollster find people that are daft enough to believe that Darling and Brown are best placed to get us out of this mess? Never have I felt such utter despair. Up and down the country, people are having to tighten their belts and reign in their spending, only then can they hope to get themselves out of debt or survive a period of reduced income. Ask anyone and they will tell you this is simply commonsense, anyone that is, other than a ‘New Labour’ MP or the recipients of New Labours redistribution of taxpayers money. New Labour believe that they have discovered the secret to dealing with reduced income and spiralling debt, just borrow more! If that were not enough, they elect to lie to themselves and their masters, by suggesting that things will get better by the end of this year and by 2011, we will be in the money again as a consequence of a boom, the like not seen since the ‘dotcom era’.

Our government tells us that the economy will shrink by 3.5% this year, whereas the International Monetary Fund suggests that it will be 4.1% and the the Centre for Economic and Business Research, 4.5%. Even taking account of the Governments hugely optimistic and unlikely forecast, they will have to borrow £175bn this year. In my view, the governments forecast is a lie and I believe they know it is, but rather than give it to us straight, they would sooner treat us like idiots. If the governments figures are wrong and most economists believe they are, then borrowing will be even higher, something our government, your government, doesn’t want you to know until it is too late to do anything about it. Even when it was announced that the economy shrank by 1.9% in the first three months of this year, the government still insisted that their figures were accurate, in other words, we (the government) are right and everyone else is wrong. Early estimates suggest that if the IMF figures are more accurate that those of the Government, then borrowing will increase by around £30bn per year, no wonder this Government doesn’t want us to know the truth.

Next year, the government is forecasting growth of 1.25%, yet in spite of this, they still need to borrow another £173bn. Once again, others, such as the IMF, suggest that the growth figures are vastly optimistic, suggesting instead a contraction of 0.3%. In spite of this, the government then tell us to expect a dotcom like boom in 2011, with a forecast growth figure of 3.5%. Utter fantasy, but even with this spectacular figure, the government will still need to borrow £140bn. Followed by £118bn in 2012 and £97bn in 2013. In other words, even taking this governments completely unrealistic contraction and growth figures, we still need to borrow more than £700bn over the next 5 years. Even to a Cabinet simpleton, this has to indicate that we, as a country, are living well beyond our means. It is also worth noting, that even before the property slump and the recession, we were still borrowing well in excess of our income, with further fancy footwork taking place to move other government debt, such as the Private Finance Initiative (PFI) off the government balance sheet. So, no matter what Gordon Brown will have us believe, we were heading for a fall even without the recession. If he denies this then he is either a fool or a liar..perhaps both! We must not be surprised that this government is lead by liars either, after all, it was they who made a manifesto commitment not to raise the higher rate of income tax and they who promised a referendum on the European Constitution and then denied us the right by falsely claiming that the renamed treaty was not the same. Two manifesto promises, two out and out lies, why should the electorate ever trust any party again over manifesto promises?

The government has decided that anyone earning over £113,000 per year must lose all of their personal allowances, which will cost them around £50 per week and anyone earning over £150,000 per annum, will face a tax rate of 50% on all earnings above the threshold. This governments justification is that these people have gained most during the boom years and should, therefore, pay more now. The truth is somewhat different. Over the past 11 years, the people that have benefited most from the boom, in relative terms, is the lower paid, funded in no small part by those on middle and higher incomes. This was as a direct consequence of the governments programme to redistribute wealth. The government has also said that those that earn more must pay more. But they already do. Someone on £113,000 per year pays, in cash terms, seven times the tax that an individual earning £25,000 per year does.

It is also worth noting that anyone lucky enough to earn over £100k per year has not been gifted it, they have earnt it through promotion, success, hardwork and/or entrepreneurial risk taking. No employer would pay someone over £100k per year if they weren’t worth it. It is also worth remembering that these people are resident here, which means that they spend the majority of their money in the UK, therefore, they will be contributing substantially to the economy in the form of other indirect taxes as well as helping to create employment through the purchase of goods and services. The money that the government takes from these people won’t be handed straight over to the poor as they imply, instead, it will be used to plug a huge gap in government finances…which has become something of a bottomless pit. I would sooner have the taxpayer keep more of their money which, if they spend on goods and services, will be the best natural stimulus this country could possible have. If the government could not fleece the taxpayer so easily, they would be forced, as the rest of us are, to ensure that available funds are spent wisely and are only used on what is necessary, rather than desirable.

The bottom line is, that the only way we are going to get ourselves out of this mess is if we reduce our spending, this is basic economics and most 8 years olds could tell you that. Increasing taxes reduces the amount of money in the economy and it is this that will prolong the recession. The government is asking us all to believe that it can spend our money better and more wisely than we can, is there anyone out there, other than those that do not contribute, that would agree with this statement? For those that believe this government has its priorities in the right place, then they should consider the following; According to the government, the increase in tax announced for higher earners is worth up to £7bn per annum, although other experts believe the actual figure is much, much lower, but taken at face value, this tax increase pales into insignificance when set against government spending on databases. The government intends to spend, in spite of the recession, some £105bn of our money over the next 5 years on databases and other largescale IT projects, that is equivalent to over £20bn per year, or half the defence budget. These databases are designed to allow the government to drive a coach and horses through our civil liberties, monitor our every move and spy on our every deed. How can that be a priority at anytime, let alone during a recession, the databases are far from an essential spend?

The government has failed to grasp the nettle of public sector pension schemes which now costs us £2.7bn every year and rising. Even though the government has hammered private sector pension schemes with a tax take amounting to more that £100bn over the past 10 years, they have done nothing to deal with the public sector pensions, where the gross liability has been estimated to top £800bn. This abdication of their duty is simply breathtaking. For those that are not aware and, in the interest of putting things into perspective, 20p in every £ of our council tax goes directly towards funding local government pensions (source: Taxpayers’ Alliance). With public sector pay now above the levels of those in equivalent jobs in the private sector and better job security, little wonder that questions are being asked. Some MP’s have been whining in recent days that they should not be expected to vote for less money in relation to their lavish expense allowances. Why not, the rest of us have not been given a choice?

Alistair Darling noted in his budget speech that there will be £15bn of “efficiency savings”. Note, these are not cuts, but efficiency savings. What I don’t understand is why they have only noted them now, any well run business would have an ongoing programme of efficiency measures designed to save money. If they are genuinely efficiency savings, then the government must hold its head in shame, because that is the equivalent of admitting that this government has presided over a massive programme of excess and/or waste. But lets call a spade a spade, it is not just efficiency savings that are needed, but cuts, real cuts. The Conservatives lack the courage to outline what they would cut, which leaves them open to any charge the Labour government wants to send their way, such as cuts in health and education. They (the Conservatives) should have the courage of their convictions and tell us what they will be, we know they are necessary, but scrapping the ID Cards system, whilst wholly sensible, does not cut the mustard. By contrast, the LibDems have highlighted some 8 or 9 areas they would cut. We all know that the LibDems won’t get enough support to form a government, but based on the fact that they are willing to put their stake in the ground and then fight their corner, they are demonstrating considerably more moral courage and conviction than their Conservative counterparts.

Because I don’t want to be accused of highlighting the problems, but not putting forward any solutions, the following would be my first port of call in terms of saving money. And, for the record, I would not be looking to increase direct taxation, since as I have already argued, the best stimulus this country could get, is the natural one provided by people spending their own money in the way they so choose.

  1. Scrap all database/unnecessary IT projects, including, but not necessarily limited to; the Communication Database, ContactPoint, the Travel Database, the NHS Database and the ID Card Scheme. Saving £105bn over the next 5 years. It is worth noting that over-runs on this Governments 8 largest projects total a staggering £18.6bn (source: Times & Computer Weekly). That’s right, this is just the over-runs, not the total cost!
  2. Scrap the ‘Tax Credit’ system and return to a simplified tax and benefits system that does not see people pay a higher rate of tax simply so they can fill a form in a claim it back as a tax credit. The same objective can be achieved by using personal allowances and a simple tax system. Minimum savings of £4bn per annum as a result of less fraudulent claims and errors (currently £2bn per annum), plus savings in process and administration.
  3. Can local council’s publicity machines, saving £430m per annum.
  4. Cancel the Child Trust Fund (Baby Bonds) programme, saving £470m per annum.
  5. Reduce International Development Aid budget by half. At this time, we can ill-afford to offer £billions in aid to other countries. Saving of £2.5bn per annum.
  6. Close down the Regional Development Agencies that have delivered little, if anything, for businesses in the UK. Annual saving of £2.1bn
  7. Reduce funding to the Scottish Assembly, the current ‘Barnett Formula’ is outdated and the amount paid allows people in Scotland to benefit from services that those in England cannot, such as free prescriptions and free care for the elderly. This is neither fair, nor equitable. The budget should be trimmed by at least 10% saving £2.6bn per annum.
  8. Withdraw automatic right to ‘sick pay’ for public sector workers. Savings £1.7bn
  9. Reduce the number of consultants used by various government departments by half. Saving £1.5bn per annum. Use the balance to recruit the skills that are necessary rather than pay inflated costs to outside companies.
  10. Reverse the increased cost of Quangos in the UK, which has risen by £41bn to £123bn. Saving £40bn per annum.
  11. Close tax loopholes which cost the UK Exchequer £8.5bn from High New Worth Individuals, £3bn from large companies and a further £7bn as a result of tax evasion and other activities. Total: £18.5bn

There are, of course, many other areas where our money is squandered, my particular suggestions would save approximately £70bn. Any halfway competent government, or government in waiting, could come up with a set of plans that could easily trim 5%-10% off government expenditure without necessary affecting front-line services. This could lead to savings of up to £60bn per annum. In fact, the European Central Bank found that if the UK’s public spending was as efficient as say, the USA or Japan, we could realise a saving of 16% without any cuts in front-line services, that is a whopping saving of £93bn per year. Throughout government there is duplication, waste, excess and abuse, this area should be tackled well before cuts in essential services are considered and this is what the opposition parties should be focusing on.

Posted in Conservatives, General, Labour, Lib Dems | Comments (4)

George Osborne outlines spending priorities

Tags: , , , , , , , , , , , , , ,

George Osborne outlines spending priorities


Not before time George Osborne has outlined what the spending priorities will be if the Conservatives win at the next election. Although in traditional Tory style, his comments lacked any detail, but there there was at least a clear statement of intent, one which I could subscribe to. He said that The Conservative party will prioritise spending cuts rather than tax rises to address the atrocious state of the public finances. George Osborne said “You don’t want to kill off the recovery with heavy tax rises that bring you back to square one.”

Osborne stated that health, schools, defence and international development would be protected from cuts in 2009/10, but beyond that, would only commit to real term increases in health and to match Labour’s commitment on overseas aid of 0.7% of GDP. These cuts are likely to amount to £5bn, not nearly enough, but it is a start. For me there are a number of positive aspect to this statement which I find encouraging.

A politician has finally understood that you cannot simply take the easy way out every time their is a funding gap and fleece the already hard-pressed taxpayer. The Conservatives have made a great play of all the stealth taxes we have had to endure over the past 11 years as well as the increased tax burden. To then add to it, whatever the economic circumstances, would be hypocritical, at least until they have exhausted all other options. There is a huge amount of waste and excess in the public sector and it needs to be brought under control. Personally I believe a saving of £5bn is small beer and this could be much higher, without necessarily impacting on front line services.

I am also encouraged that the Conservative’s are finally willing to open themselves up for Labour party attacks along the lines of “a vote for the Conservative Party will lead to public sector cuts”. Anyone with an ounce of commonsense will know that our current public sector investment is unsustainable, it would have been if there had been no economic downturn, so it sure as hell is now. Increasing taxes will mean there is less money in the economy and therefore it will take much longer to come out of this recession. The best fiscal stimulus in a natural one and that is by allowing people to keep more of the money they earn, not less.

Labour jibes that a vote for the Conservatives will lead to cuts in schools and health are designed to be emotive, but it is clear that the current spending is not sustainable in the short or medium term and, deep down, the electorate knows that. No matter what party is in government, real term cuts are inevitable.

The voters of this country are also shoppers and they know that when times are hard, they have to make their money stretch further, this means cuts in non-essentials, reducing debt and making every penny count. They know that if they are prepared to shop around, money can be saved without necessarily compromising quality, for example buying supermarkets own label products, frequenting discount stores, utlising the intenet to research prices etc. This is because most people do not have the luxury of boosting their income by simply helping themselves to someone else’s money, as is common with governments when they get their sums wrong. The taxpayer always has and I suspect always will be the easiest target for spendthrift governments such as New Labour.

I am also heartened that the Conservatives are prepared to take a position and then defend it. So far they have promised to fix our ‘broken society” and as we all know that is an intangible that they couldn’t be accurately measured on. But a commitment to cut wasteful and excessive public spending is tangible, we will be able to judge them on their deeds, not their words. In fact, the Conservative party, if true to their word, is at risk of becoming a party of conviction and in my view at least, that makes them more electable. I would like to see George Osborne and his team put more work into this commitment and identify some of the areas where they will make cuts….yes, I say cuts, because we will inevitably have to make cuts in real terms. They could make a start with the £20bn a year that the Labour party have committed to spend on new databases that achieve nothing other than infringe the civil liberties of the people of this country, then move on to complete a wholesale review of the unfunded public sector pension schemes which are crippling the public sector finances. For example, it was reported last week that 20p in every £ collected in Council Tax, goes directly towards paying local government pensions.

It is worth reminding ourselves that the vast majority of our taxes go to support or subsidise those less fortunate, therefore, £1 in tax does not mean £1 in benefit to the taxpayer, as all government’s past and present would us believe. And, to help those less fortunate than the majority (soon to become the minority), we need an army of civil servants, many of whom are now better paid than the private sector and have much better pension schemes.

My best guess is that for every £ paid in tax, the average taxpayer will receive no more than 20p in benefits, now that IS a number the Tax Payers Alliance should try and calculate. The bottom line is we, as taxpayers, must insist that we get value for money. If my estimate is right, then for every pound that is taken from us, we get only 20p of value, is there any justice in that. I think not, it is taking social responsibility too far and I suspect that if the true number was ever published, there would be a massive backlash from the taxpayer. 

This is only one solid policy statement offered by the Conservative party that I fully concur with, I hope that in the coming months, we will have more sensible, tangible and worthwhile policy commitments. You never know, they may actually become a party that is worthy of our vote, rather than one which wins the election as a consequence of the electorate voting against New Labour, rather than for the Conservatives.

Posted in Conservatives, General, Labour, Lib Dems | Comments (3)

Gordon Brown needs to Get a Grip on MP’s Expenses

Tags: , , , , , , , , , , , , , , , ,

Gordon Brown needs to Get a Grip on MP’s Expenses


Hazel Blears has suggested that Labour MP’s should “get a grip” in relation to gossip about those seeking to take on the top job when Gordon Brown steps down. Like that is going to happy any time soon!

However, in my view it is Gordon Brown that must get a grip, of MP’s expenses. At a time when everyone is tightening their belts to ride the storm that for the most part has been created by this government, its policies and Gordon Brown’s mis-management, many MP’s are filling their pockets with tax free expenses. These expenses are funded by the hard pressed taxpayers of this country. I am not suggesting that MP’s are not following the letter of the rules, but they are quite clearly not following the spirit and that in my view this is an abuse. To make matters worse, people right at the centre of government are also abusing a set of rules that were introduced to assist MP’s in their out of pocket expenses, not enrich their lifestyles.

Take Jacqui Smith for example. She claims that the decision to call her sisters home her main residence is within the current interpretation of the rules and that may even be the case. But this woman is the Home Secretary, surely someone that sits at the top of the food chain in terms of law and order should act strictly within the rules, not simply in the spirit of them? She, with her fellow cabinet ministers, must set good examples, not simply sit with their noses in the trough. Members of Parliament are in the unique and privileged position of bring able to claim expenses quite freely that those in the private sector could only dream of.

It is estimated that Ms Smith has been able to claim as much as £116,000 tax free as a result of this interpretation of the rules. If an ordinary member of the public were to be asked how they would determine someone’s principle place of residence, they are likely to state that it would be where the rest of their family reside, where the kids go to school, where all the household accounts are held, where your banks and credit card statements go to etc. So why is it, that MP’s are given so much latitude? Simply this, that instead of MP’s expenses being a method of reimbursing out of pocket expenses, it has become a ‘perk’ of the job and that is completely and utterly unacceptable. The Jacqui Smith debacle follows, of course, directly on the heels of the uproar over Ed Balls and Yvette Cooper’s interpretation of the rules that allowed them to elect which property was their primary residence (subsequently upheld by the watchdog). The bottom line is MP’s cannot and should not be trusted to vote on and determine their own allowances or expenses.

MP’s expenses must be further simplified, instead of a second home allowance, they should be provided with a ‘fixed’ overnight allowance. That is to say, if they elect to stay in a hotel then the maximum allowance is, for example, £120 with a receipt, if they stay ‘with a friend’ etc., then this would be reduced to £50 per night, for which no receipt would be required. All other second-home allowances must cease, they are an unnecessary expense. In terms of travel expenses, MP’s should follow similar rules to most private companies, flights under 4 hours, they must travel economy class, using the cheapest possible airline. Another very generous allowance is vehicle mileage, instead of MP’s maximising the benefits of this perk, the reimbursement should be limited to what the cost of a standard fare train ticket would cost for the same journey. In other words, if it costs £100 for a return ticket from Nottingham to London and the mileage allowance for using a car pays £260, the MP can only claim £100.

Unless or until members of parliament start to live and operate to the same standards that everyone else does, the public will continue to view  them with mistrust and scepticism. That is not in the interest of our democracy, nor is it in the longer term interests of our MP’s. Gordon Brown needs to stop protecting his cabinet colleagues and instead, start to ensure that they operate to the same rules and standard as ordinary members of the public. Because, in my view at least, there is little difference between failed bankers of publicly owned banks paying themselves bonuses out of public coffers and MP’s who have failed to protect the interests of the electorate claiming massive expense allowances, especially.  In all of these cases, the final bill is paid for by hard-pressed taxpayers. Gordon Brown needs to understand, that at a time, for example, when he is going to fail to meet his reduction in child poverty targets, his MP’s are filling their own pockets with the same money. How does he expect the general public to view such duplicity?

Posted in Farcical Regulations, General, Labour | Comments (0)

Government shirks responsibility for RBS bonuses

Tags: , , , , , , , , , , , , , , , , , ,

Government shirks responsibility for RBS bonuses


Despite all the political grandstanding surrounding the proposed bonuses to be paid to RBS staff, there is little that can be done about it and the government knows it. Don’t get me wrong, I am completely against the payment of bonuses to staff when the very fact that they still have a job is down entirely to the intervention of the government with taxpayers funds.

However, the fact remains that the vast majority of the staff will have some form of contractual entitlement to a bonus; the senior bankers know this and so do government ministers. For example, it is estimated that some £500m is due to be paid to ABN Amro staff and this was a pre-condition of the original sale of the business to RBS. If senior managers don’t honour their employment contracts, then they could very quickly find themselves in breech of contract and you can rest assured that there will be a massive queue of lawyers offering to take up their cases.

Gordon Brown is reported to be “very angry“, well, bully for him,  what difference will his temper tantrum make? None! Treasury minister Yvette Cooper said any contractual or legal obligations on banks to pay bonuses at a time when they were making huge losses must be “challenged“. Yeah right Yvette, you know that there is little or nothing that can be done about it, which is why you squirmed so much when John Snow put some eminently reasonable to you on Channel 4 News last night. Alistair Darling is quoted as saying “I have spoken to the chief executive of RBS, and made it quite clear, and he agrees, that no-one associated with these huge losses should be allowed to walk away with large cash bonuses.” Quite right Mr Darling, but this is a legal issue, not a place for political rhetoric.

Even David Cameron demonstrates how out of touch he is by stating “As the principal shareholder, you are able to say what is and what is not acceptable.” True Mr Cameron and that is precisely the point, but you cannot do it retrospectively, if you had any business experience you would know that, unless of course, you are simply taking us all for fools.

The truth is this government rushed into “saving the banks from collapse” and in doing so, they left any commonsense back in the office. So keen were they to be seen as the saviors of the banking world, they did not complete any form of due diligence. I know that ministers and civil servants can often be accused of rank incompetence, but this goes off the scale. No experienced businessman and I mean not one, would blindly invest into a business, however urgent the need, without completing a full review of the business. As one contributor stated on one of my recent posts on the RBS fiasco;

Due Diligence is only half of the required formula for meeting the requirements under “Standard of Care” or “Due Care”. Due care is the second half of the diligence formula and equally as important. For without it, the standard of care can not be measured.

Performing Due Diligence identifies where investment risks or exposures lie, due care is exercising the requirements discovered under due diligence to protect or mitigate exposure from those risks.

Not only has the PM missed the first but importantly government has neither the resources, skills, or initiative to deal with the second which is what ultimately leads to failures.

In the normal course of events, due diligence would have uncovered that there were, amongst other things, contractual liabilities to pay bonuses; this would have included an estimate as to the likely cost. Had the government and its advisors acted with a reasonable level of care, arguably, this whole situation would have been avoided. Government could, for example, have included conditions which required staff to sign a waiver in relation to their bonuses. Alternatively, they could have been made redundant and re-employed on new contracts, the business after all was likely to collapse. Those that were expecting large bonuses, but had been party to significant losses, could have been warned that if they attempted to exercise there ‘bonus guarantees’ they could expect to be dismissed with immediate affect and could face a claim if they had acted recklessly or without a reasonable level of care.

I am not an employment lawyer, but I am convinced that there were (‘were‘ being the operative word), any number of imaginative ways in which government ministers could have avoided this massive kick in the teeth to hard pressed taxpayers if they had acted with foresight and were in receipt of legal advice. Instead, once again, the rank incompetence of government ministers has cost UK taxpayers £billions.

There have been justified cries for the bankers to pay back their bonuses and even suggestions, quite rightly in my opinion, that traders should be sued for bonuses paid on what have subsequently turned out to be ‘questionable or toxic’ investments. These are perfectly justifiable initiatives, but what about the government ministers, surely they are equally culpable? Leaving aside the issue of regulation and so on (pre-bust), government ministers ordered a massive injection of taxpayer cash into banks without fully understanding the liabilities and obligations therein. At best, it demonstrates incompetence of the highest order and at worst, that they do not appear, based on the evidence currently available, to have demonstrated a reasonable standard of care.

This current political grandstanding and rhetoric is nothing more than a smokescreen designed to divert attention from the incompetent management of the whole banking crisis by members of this government. New Labour ministers have proven themselves to be incapable of humility, unable to accept any form of personal responsibility and aggressive towards anyone who would question their intent. That is arrogance in its most basic and crude form, the people of this country must not let them get away with it, government ministers must be held to account and accept moral and legal responsibility for their actions. Anything less would be an outrage to the people that will have to pay the price over the coming decades.

Posted in Conservatives, General, Labour, Lib Dems, World | Comments (4)

Gordon Brown’s PMQ Depression comments

Tags: , , , , , , , , , , , , , , , ,

Gordon Brown’s PMQ Depression comments


At prime minister’s question time, Gordon Brown told MPs: “We should agree as a world on a monetary and fiscal stimulus that will take the world out of r…, depression.” David Cameron did not immediately pick up on the use of this word, but when challenged later by George Osborne, the PM’s spokesperson said that it was a slip of the tongue.

Perhaps so, but it must have been on his mind, otherwise he would not have used such emotive terminology. Particularly given he had just finished lecturing Cameron on talking the economy down. It is however, precisely this sort of ‘slip’ that must give the people of this country cause for concern over Brown’s capacity and ability to see us through this downturn coming, as it does, hot on the heels of his ‘saving the world’ comment. When Gordon Brown makes errors like this, I cannot help but be reminded of Vince Cable’s comments referring to Brown as “Mr Bean”. Gordon Brown seems to go from one crisis to another in the spectre of a battering ram, rather than a well practiced, experienced politician. In my opinion, even his outbursts at PMQ’s are reminiscent of a spoilt child having a temper tantrum.

Little wonder then, that Gordon Brown has had problems, by his own admission, in getting Obama and the Indian Prime Minister to take his calls. Could this be because they are sick and tired of him lecturing them on economic fixes, when Gordon Brown and Labour Party policies have actually lead to the UK being in the worst position of any developed country to recover from this recession? From an outside observers perspective, I see Gordon Brown as a man of conviction, however, this appears to be offset by a man incapable of humilty, one that is unwilling to answer direct questions and a man who looks as if he will explode if anyone challenges him, so long as there are no members of the public or cameras present. Little wonder then that he appears to have surrounded himself with weak, self-obsessed people. Classic signs of a schoolyard bully.

In my view, Gordon Brown has few, if any redeeming features. I have never considered him to be a good chancellor, even when most of the newspapers, desperate for a scoop, kept pandering to him and what were the New Labour spin doctors. I also thought he would make an appalling prime minister, but in that respect, he has outdone himself, because I cannot find any adjective that could accurately describe his term…other than, perhaps, Mr Bean without the comedy. Time to go Gordon, do us all a favour!

In the meantime, David Cameron should prepare for office. By that I do not mean he must send all his friends details of his new address, I mean he needs to get some quality, experienced, heavyweight people behind him, ‘real’ people, not toffs or Oxbridge cast-off’s. Otherwise he will never shrug off the label ‘lightweight’ nor will he ever convince the people of this country that he knows what he is talking about. As I have said before, I believe that New Labour will lose the election, it will not be Cameron winning it, therefore, once in office Cameron must ensure that his key advisers and the people around him are ‘real’ people, because otherwise a man who has not experienced a recession, belt-tightening or poverty will find that whilst he may hold the office, he cannot claim to lead the people.

Which means that Cameron will just end up talking at us and continuing to use new phraseology that only he and his Conservative cronies fully understand.  Cameron has a real prospect of becoming PM, but I so hope he has the ability to understand that people will be voting New Labour out, his chance will come as a consequence of Labour’s failure, not his engaging personality, depth, sincerity or policies. It doesn’t really matter how he gets in, so long as Cameron listens, surrounds himself with people that will engage and challenge him, rather than blindly follow him. It is a strong leader, not a weak one, that is confident enough to surround himself with strong people and that is the BEST way to get rid of the lightweight tag.

Posted in Conservatives, General, Labour | Comments (6)

Open letter to Gordon ‘Blank Cheque’ Brown

Tags: , , , , , , , , , , , , , , , , ,

Open letter to Gordon ‘Blank Cheque’ Brown


During yesterday’s press conference to announce the latest banking bailout you demonstrated your true colours. When asked by a reporter if you were offering the banks a “blank cheque”, you turned on him saying that he needs to be careful about what he was accusing you of. I don’t know about the reporter, but I felt your response was menacing, bordering on threatening. Just who the hell do you think you are? Whilst you may surround yourself with yes men and women, the public of this country have to rely on reporters and the odd MP to ask searching questions.

The bottom line is you have offered a blank cheque. Please feel free to threaten me, because I will not be intimidated with your schoolyard bully antics, which can serve only to demonstrate that you are a weak or a vain man. Lets look at the accusation that you are issuing a blank cheque. You have refused to put a number on the cost of the banking insurance scheme, which implies that you don’t know the cost. This smacks of a blank cheque, furthermore, if you are not even prepared to put an upper limit on the exposure, this is another clear indication that you are providing the banks with a blank cheque. So blank cheque it is, if it look like a dog, barks like a dog etc, etc…

The truth is, when the original banking bailout was conceived, insufficient thought was given to it, instead a huge amount of taxpayers money was thrown at the problem and it has had little or no affect. Banks are not lending to each other and the high street banks have not significantly increased their lending to consumers or businesses. All the £37bn has achieved is, that it has allowed ailing banks to shore up their balance sheets. In other words, it was a complete and utter failure. In addition, the advisers that your government appointed, clearly failed to identify the extent of the questionable or ‘toxic’ debt within the banks that you invested our money in. That is hardly the sign of a competent government or leader.

What I find most galling is your abject failure to admit any responsibility for something that happened on your watch, principally as Chancellor and subsequently as Prime Minister. What you need Mr Brown, is more people around you that tell you how it is, not people that continually blow hot air up your backside. If you surround yourself by people that keep telling you, at least to your face, that you are brilliant, then there is an inherent risk that you start to believe them. Well let me put you straight Mr Brown. In my view, you were the most inept Chancellor in history, you knew that the entire economy was being driven by cheap and plentiful credit, in part because of historically low interest rates and more specifically because of the boom in house prices, allowing people to release and spend their equity. Some would call it fools gold. But, the bottom line is, many, many warnings were being given by economists and the like that the bubble would burst. You ignored them and we are now paying the price.

Granted Mr Brown, the housing crisis started in the United States, but as you well know, if we ourselves had not had an unsustainable housing boom, we would not have been so badly affected as we were. Remember, you were the one that promised and end to ‘boom and bust’, how hollow those words are now. Remember also, that you have claimed all of the credit for the so called boom years, but did you put anything aside for a rainy day, no you did not. Instead, you went on a massive spending and borrowing spree. For example, in spite of the fact that you increased employers and employees national insurance contributions by 1%, ostensibly to allow further investment into the national health service, you then used PFI to finance the building of hospitals, regardless of cost to the taxpayer. For example, to build a new hospital would normally cost around £60m, using PFI, the cost over 30 years in £300m. Little wonder that PFI contracts were traded on the open market with £millions being made on each trade.

Each time I hear you say that you are acting in the best interests of the public it makes me cringe. In my view, if you were as honest and sincere as you would have us believe, you would step aside and let this country decide who they want to lead us out of this enormous mess. You have made massive mistakes and ignored many warning signs, instead of taking appropriate, if unpopular decisions at a time that they would have made a difference, you ignored them in favour of the Labour Party’s populist approach. Don’t you dare try and tell us you didn’t see the warning signs, it was your bloody job, some of the people of this country placed a great deal of trust in you and you let us all down. You may be angry with the banks for embarrassing you, but trust me Mr Brown, we are very, very angry with you.

The last banking bailout may have prevented the banks from collapsing, but, for all intents and purposes, it failed on every other measure. Moreover, the recent report that your advisers failed to identify a potential £2,5bn write-off of a debt until recently is shameful. This should have been evident before you spent our money investing in a bank that is expected to report losses of up to £28bn. What happened to due diligence and warranties? Your current plans appear piecemeal and with respect Mr Brown, the whole thing smacks of a desperate man placing the last of his money on a horse in the vain hope that he can win big. Shit or bust as my father used to say! But, of course, it is not your money, it is ours and most of us, thank god, are not high stakes gamblers. If you cannot tell us how much it is going to cost, how can you claim that your response is measured? If the previous bailout failed, how can you convince us that this one will not follow suit?

The fact is Mr Brown, you lack credibility, if you fail to achieve your objectives, you simply move the goal posts, when asked a difficult but relevant question, you bluster, ignore them, or once again, refer to what the Conservatives have done in the past, ignoring the fact that we have heard it all before and they haven’t been in power for 12 years! Your party is a spent force and if I may be so bold Mr Brown, I was perhaps one of the few people that never believed you had the ability or nous to be a good chancellor, oh how I wish I had been wrong.

Your reputation for prudence Mr Brown is in tatters, your credibility as a prime minister has been in question almost from the outset and your ability to lead us out of this mess is simply too far fetched to imagine. So please do the decent thing and step aside. Let the people of this country decide who is best to lead us out of this financial mess. We deserve no less!

Posted in General, Labour | Comments (2)

Did the government complete due diligence on RBS?

Tags: , , , , , , , , , , , , , , , ,

Did the government complete due diligence on RBS?


Gordon Brown has taken a great liking to decribing the Conservative party as the “do nothing party” and he may well have a point, because until recently, they (the Conservatives) have preferred to paint an austerity picture rather than coming up with something tangible or credible. But what of the Labour government? Rather than doing ‘something’, their motto could be described as ‘do anything’, so long as they appear to be doing something.

As part of the government banking bailout in October last year, the taxpayer ended up with 58% of the Royal Bank of Scotland. However, whether this was a bailout, rescue or a necessary evil, the fact remains that the government, through its advisors, were obliged to act diligently and with care. Particularly given it is our money, not theirs. But did they?

There are reports that Gordon Brown is furious that Treasury officials have only just discovered that ABN Amro, the Dutch bank taken over by the Royal Bank of Scotland in 2006, will write-off a £2.5bn loan to LyondellBassell which is reported to be teetering on the brink of bankcuptcy with £18bn of debts. Given the government was taking a controlling interest in RBS, it was right and would have been expected that whatever the circumstances, there would have been a process of ‘due diligence’ to ensure that there were no surprises in store. Furthermore, the taxpayer would have been right to have expected the government and or their advisors to have secured warranties against any undisclosed liabilities that the bank had. Was this done, if not, why not? Anywhere else this would be standard practice.

If these reports prove to be accurate, then at best, this government has demonstrated that they acted in haste and at worst, that they have been negligent resulting in a further cost to the taxpayer of £2.5bn. Furthermore, it could be argued, that if they missed a debt of this magnitude, how many other, ‘smaller’ questionable debts have been missed? In my view, this government has already demonstrated a flair for acting recklessly with taxpayers money and a culture of blaming someone or something else. However, from my perspective, there can be no excuse, when spending so much of the British taxpayers money, for not acting responsibly and demonstrating best practice whatever the circumstances. The bottom line is, had this transaction been competed properly there should be no surprises unless there was a failure to disclose and if the latter was the case, then the government should be able to claim against warranties.

This banking bailout involved huge sums of money and the public is entitled to know that the government, ministers, civil servants and advisors all acted appropriately and with due care. There needs to be an independent public enquiry into what measures the government employed to protect the public purse when this government pledged taypayers money to the banks. This should be wide-ranging and at the very least, include details on what level of due diligence was employed, whether warranties were sought and received and what other commercial conditions were placed on the banks. Given, unlike many other countries, this government did not need the approval of parliament to invest these vast sums, evidence must be provided that the taxpayers interests were protected at all times. If it should subsequently be proven that individual government ministers, civil servants or advisors have acted negligently, then they must be prosecuted.

Gordon Brown likes to say that this governments’ intervention is measured and appropriate. To me it looks as if this government has little or no idea of what it is doing, opting to do anything, rather than something. More akin to a gambler having his last throw of the dice, rather than a government in control or one which knows where we are going. I literally shudder when I consider the damage that has been done to the British economy by this excuse for a government and it juts gets worst, when reports of undiscovered liabilities, on a majority owned state asset are discovered 3 months after the deal has been concluded.

Posted in General, Labour | Comments (8)

How to condition taxpayers into Billion pound mania

Tags: , , , , , , , , , , , , , , , , , , , , , , , ,

How to condition taxpayers into Billion pound mania


Is it just me or are we are all becoming a little blasé about money, or to be more accurate, the number of noughts that follow the £ sign? Let me explain. Ever since Gordon Brown announced a massive £500bn plus bailout of the banking sector, commentators and politicians have been talking about £billions in the same way as they used to talk about £millions. In other words, everyone seems a little punch drunk. In the sales arena, the constant mentioning of large amounts of money was known as conditioning, if you keep talking about £65k BMW’s, then when the salesman mentions ‘just’ £15k for a new Vauxhall, it sounds like a bargain. However, in my little world, a £million is still a lot of money, especially when you consider how long it takes us to hand that amount of money to successive governments.

At a time when everyone is having to tighten their belt, this government has announced that they will increase spending from £620bn to £650bn, the conservatives tell us that they will “only” increase it by £25bn. Forgive me, but this sounds like an awful lot of money! In my personal life and indeed my business life, I have always understood and accepted that there are excesses, in other words, there have always been things that I want, rather than need. Therefore, when times are hard, I am obliged to deal with my excesses, to reduce my outgoings and I suspect, that this will be going on in the majority of homes and business up and down the land. This is a painful but necessary evil when times are hard. Not so for the government. No, instead, they tell us how they are going to spend more money, not how they are going to provide better value. The conservative are no better, because they say that they will just spend less (£5bn), but their proposals still amounts to an increase of £25bn!

By spending our money more wisely, buying what we need, rather than what we would like and curbing our wasteful habits, I suspect that most of us could, conservatively, reduce our outgoings by around 10%, possible considerably more. I didn’t say it would be easy, nor did I say all of us, so please accept that I am referring to most, not all of us. If this is a reasoned argument, why is it that the government cannot reduce their own waste, surely they are not going to argue that they are lean and mean or that all of our money is spent both wisely and without excess? Not a cat in hells chance. Surely, it would be better to reduce government waste and excess to channel the savings into more relevant or deserving causes, rather than just borrowing more money. The government is effectively condoning living on the never, never. Failing to practice what they preach. What angers me most, is that the conservative party, petrified of being accused of being the party of cuts, has failed to talk convincingly about value for money, getting the most of each taxpayer pound collected or borrowed.

With an election likely to be just around the corner, now is the time for the other parties to get tough. I am not talking about an austerity speech, nor a doom and gloom scenario, as has become the conservative party mantle. No, I am referring to a party, any party, that offers realistic hope, leadership and direction. One that refers to government money as taxpayers money, borrowings as future liabilities and above all, the use of taxpayers money in terms of value, not numbers to be bandied about. The people of this country do not need to see doom and gloom whenever they turn on the TV or read a newspaper, the majority of us know that times are tough and that they will be for the foreseeable future. What we need to witness, are politicians that appear to know what they are talking about (a very rare bread) and political parties that truly demonstrate that they know how to run a country and a good start would be how to spend taxpayers money wisely in order that we, the taxpayers, receive maximum bang for our buck.

Politicians and government must stop ‘conditioning’ the British people by constantly bombarding us with numbers most of us simply can’t envisage or picture. Instead, they must do what most normal people managing household budgets do when times get tough. Ensure that we are getting value for money. It is, after all, possible to spend more money on a holiday if someone gives up smoking, or to buy a better car if we shop at Aldi’s instead of Sainsbury’s, buy tea instead of coffee, drink tap water instead of bottled or even to survive the recession if we cut our cloth to suit our circumstances. It is a question of priorities. Government, whoever they are, have a responsibility, in fact a duty, to ensure that they spend or invest taxpayers money wisely. They must not be allowed to pour more money into a bucket which is already leaking taxpayers money.

Posted in Conservatives, General, Labour, Lib Dems | Comments (2)

SuperBrown saves the World

Tags: , , , , , , , , , , ,

SuperBrown saves the World


A slip of the tongue for Gordon Brown at today’s Prime Ministers’ Question time, when he inadvertently said that “we not only saved the world”. Or was it? Yes, yes, I accept that he probably didn’t mean to say what he did, but I truly believe he thinks he is something of a financial guru and that is very dangerous. This is a man, who is in a position to further damage this country and yet so potentially deluded, that he believes he has all of the answers and somehow other world leaders are watching and then following his example. If they do, then the people of their countries have my sympathy.

The bottom line is whilst the president of the United States had to do to the Senate and Congress to get permission to fund a banking bailout, our prime minister was able to commit this country without refernce to parliament. The Prime Minister of the UK has immense powers and as we all know, power in the wrong hands can be disastrous, especially one that is deluded enough to believe he has all the answers. This is a prime minister that doesn’t listen, one that repeatedly fails to accept personal responsibility and one that is willing put this country further into debt so long as it doesn’t have to be repaid during his tenure in office.

What is truly worrying, is according to the latest polls, when it comes to the economy, Gordon Brown is streets ahead of David Cameron retaining an enormous amount of public confidence. Now granted, Cameron does not help himself by consistently painting an austerity picture, but really, how can anyone have any confidence in Gordon Brown? The mess that we are in happened on his watch, it was he that promised no return to boom and bust, yet we are entering one of the worst recessions of our lifetime. Moreover, everyone, other than Gordon Brown, accepts that we are in one of the worst possible positions to ride out the storm. Truth be told, when we do come out the other side, whether we like it or not, this country will be a shadow of its former self.

Our manufacturing business has been in decline for decades, our balance of trade has been propped by the financial services and banking sectors and as we have all witnessed, the latter has collapsed in spectacular fashion. It will never be what it was. Therefore, unless somone comes up with a brilliant new concept, we will not be able to rely on our decimated manufacturing sector, nor will we be able to look to the financial and banking sectors to plug the gap. Add to this, the governments commitment to an 80% reduction in carbon emissions together with the increasing tax burden on business and it is self-evident that businesses small, medium and large will struggle to prosper or perhaps even survive in this country. On top of all this, this country has a massive debt mountain that needs to be repaid through taxation, further burdened by a huge ongoing liability in terms of public sector final salary pension schemes, rising healthcare costs, education, PFI’s, government pensions and millions of people in receipt of tax credits, disability benefits, Job Seekers Allowances, unemployment benefit or other forms of income support.

In my view, far from saving the world, Gordon Brown has single handedly done more damage to this country than any previous minister in history. Still, he fails to grasp the extent of the problem or the active part he has played in this whole sorry state of affairs. For his legacy is only that our children shall have to pay for his mistakes, those of his government and yes, the excesses of many of the people of this country.

Posted in Conservatives, General, Labour | Comments (11)

Advertise Here