British Politics’s Blog

The ravings of an individual, UK voter frustrated with our politicians

Posts Tagged ‘chancellor

Bradford & Bingley nationalisation, is it a good deal?

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As I have said, not for the first time, I am no financial expert, but I am a little confused about the ‘part nationalisation’and ‘part sell-off’ of the Bradford & Bingley deal. I accept that there is probably still more detail to come about, but from the little that is available, I find myself wondering, whether the government, on behalf of the hard-pressed taxpayers of this country, worked out a good deal.

In the past, building societies received deposits, in order that they could then use that money to offer mortgages and loans to others. The saver would receive interest on their money, the mortgage payer would pay interest on their borrowings and the building society would take a commission in return for the introduction and managing of the arrangement. Although this model has been turned on its head, with the wholesale trading of these mortgages, the principle should still be sound.

Therefore, if the government have taken on all of the mortgage debt of the Bradford & Bingley, estimated to be some £50bn, why not retain the deposits as well? Instead, they “sell”, the ambitious Spanish conglomerate, Santander, some £20bn of saver deposits (2.7 million people), for the miserly some of £612m. How can this be a good deal for the taxpayer? How can the government be so sure that the savers interests are protected, given we don’t really know that much about Santander. In fact, if the government were responsible for the sale of these customer deposits and something were to happen to Santander, would the government be culpable or liable, given it was they who negotiated the deal?

This particular arrangement can’t be good for the employees either, because Bradford & Bingley employed some 3,000 people and operated 197 branches. Does anyone imagine that a foreign owned bank, will give a toss about these employees? No, from what I can see, the UK government has passed over the profitable side of Bradford & Bingley to the Spanish owned bank ‘Abbey’, whilst leaving the British taxpayer exposed with just the bad mortgage debt. What was the point in getting rid of depositors money which has traditionally been used to offset mortgages? Looks like a very poorly thought out deal to me and somebody needs to explain why? Santander must be rubbing their hands with glee at the at the apparent naivety of the UK government.

I would not normally be a supporter of nationalisation, although in this case, as in the case of Northern Rock, there was probably no palatable alternative. However, I do believe that the government is responsible for driving home a decent deal for the taxpayers, they have a duty of care to the public purse and a responsibility to the taxpayer. No matter how urgent the problem, they should not lose sight of this. Yet here, from what I can see and perhaps against the views of many other observers, I fail to see how anyone, other than Santander would be considered to a be a winner.

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Gordon Browns own words come back to haunt him

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Over at political website Power to the People there has been analysis of some of the statements made by Gordon Brown in Labour Party Conference speeches or, as Chancellor in his budget address. Oh how, in the current climate, these words are coming back to haunt him.

Specifically, Gordon Brown, promised there would be no return to “Boom and Bust” and that he would not permit “instability, speculation or negative equity” in the property market whilst he was in charge of the UK economy. That notwithstanding, he has of course, also claimed credit for our economic growth, which I guess he can, but of course, his flawed, naive strategy allowed this to be achieved “on tick”. Surely, even a basic understanding of economics would have made clear, even to a “prudent” chancellor, that this boom would have to end (“bust”) and then, when the dust had settled, we would all be expected to repay our debts.

Gordon Brown may be prime minister now, but he cannot simply wipe away his 10 years as chancellor, during which he presided over a consumer boom financed on credit as well as a massive spending spree by the government, much of which was poorly invested. Today the Daily Mail suggested that there should be an end to Labour Party in fighting, to allow Gordon Brown to get on with the job of getting the UK economy back on track. Now here’s the thing, if Gordon Brown is so deluded, so removed from the real world that he cannot see where his policies have added to and fueled the current economic situation we are facing, how on earth can we trust him to do what is right for this country now? Maybe the tabloids are concerned that they, almost without exception, were also the very people that lauded Gordon Brown as a prudent and wise chancellor?

 

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Gordon Brown, economic competence and his Legacy

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Most politicians worry about their legacy, Tony Blair for example seemed to be permanently preoccupied with how his tenureship as prime minister would be viewed by future generations. No doubt, it sometimes pal, Gordon Brown will have similar thoughts. So I have taken a moment or two to list some of his ‘achievements’ which will hopefully act as an aide-memoire when he comes to having his autobiography written. No doubt I will have missed one or two, so please feel free to fill in the blanks, he may need all the help he can get.

  1. Raided private pension schemes to the tune of £100bn over 10 years, whilst allowing public servants to retain their gold-plated, index linked, early retirement pensions.
  2. Introduced more stealth taxes than any other chancellor in history, equivalent to an extra 10p in the Pound on the basic rate of tax (source: Grant Thornton).
  3. Sold the UK’s gold reserves at the bottom of the market despite expert advice not to.
  4. Introduced ‘green taxes’ knowing full well that the revenues gained would not be spent on green initiatives, another successful stealth tax to add to the collection.
  5. Successfully achieved goal of becoming prime minister without going through the inconvenience of being elected by the people.
  6. Sold out the UK’s sovereignty to unaccountable, foreign elections, in spite of a promise to allow the public to decide through a referendum.
  7. Destroyed the union and in the process, ensured that his countrymen received more money per head than those in England and Wales.
  8. Missed virtually every financial growth target announced in each successive budget without so much as a murmur from the press.
  9. Successfully managed to dupe and the press into believing that he was an iron chancellor driven by prudence, when in fact he was a spendthrift.
  10. As the architect and driver of the revised PFT initiative proposed by the conservatives, saddled the country with a bill of £170bn which must be paid by 2032, without having to include the figure as part of the public sector balance sheet.
  11. Managed to keep the £780bn public pensions deficit off the books, even though this is equivalent to over £30,000 per household and must be paid out of future tax receipts.
  12. Managed, without any consideration of the irony, to lecture people on their level of borrowings, whilst building up nearly £500bn of dept of the governments own ‘credit card’.
  13. Introduced a complicated tax credit programme that managed to lose £2bn every year through fraud and errors.
  14. Left the taxpayer saddled with £1.7bn of Metronet’s debt having been the person that pushed through the Private Public Partnership initiative for the London Underground.
  15. Managed to convince the public that local authorities are responsible for the doubling of council tax, whilst actually placing responsibility for all additional services firmly with the local councils.
  16. Managed a real blinder, by camouflaging the inflation rate by changing the measurement from RPI to CPI.
  17. Underwritten £17bn of debt for Network Rail, without having to include it on the public balance sheet.
  18. Survived the embarrassment of claiming in March 2006 that 31,000 government employees had been trimmed off the payroll, whilst the Office for National Statistics claimed one month later, that the headcount had actually increased by 62,000 a difference of 93,000!
  19. Managed to introduce such a complex set of rules and regulations, designed to extract maximum tax take, that the annual Finance Act  (summary of tax changes in the budget) has increased from 300 pages or so in the 1980’s to over 10,000.
  20. At a time when businesses are struggling and people are having to tighten their belts, presided over a government that has some 78 acres of empty space if office buildings and grace and favour homes.
  21. Managed to push another 3.5m people into the higher income tax bracket, using a favoured trick of ‘fiscal drag’, where the tax threshold is raised more slowly than earnings are rising, so that workers end up paying a higher proportion of their income in tax
  22. Twice shifted the timing of the ‘economic cycle’ in order that the so called “golden rule” would not be missed, resulting in a brazen massaging of the figures.
  23. Ensured that there are now twice as many tax collectors as there are nurses, demonstrating firmly where the government’s priorities lie.
  24. Managed to convince people that they are “better off under Labour” even though each family pays more than £5,000 in extra tax, compared to 1997.

I could continue, but there is a real risk that this page would just take too long to load. Perhaps I should keep a copy for Gordon Brown’s ghostwriter!

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OECD UK Recession Warning and the future for MPs

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The OECD have now confirmed what everyone else in the UK could ‘feel’, but our own government was keen to deny, that the UK is about to enter a recession. Darling and Brown simply had to know the truth and it is unforgivable that they could not be straight with the electorate, many of whom, entrusted New Labour with the future of our economy. That abuse of trust is shameful.

Instead of worrying about our economic situation, all Gordon Brown seems to be concerned with is his future as leader, instead of worrying about the people of this country, all New Labour seem to be concerned with is whether they can retain their seats. They are all spending so much time looking inward, for self-interest, that they are ignoring what is happening in the outside world, or more specifically, in the UK.

Contrary to Gordon Brown’s assertions, the UK’s fundamentals are not strong, in fact, it takes the highly respected OECD to tell us that the UK is in trouble. However, not only is the UK economy predicted to shrink in the next two quarters, but the UK is also the only economy not expected to see a recovery this year. The OECD said that Britain would fare worst amongst the Group of Seven leading economies. This is in spite of the assurances from Gordon Brown who has regularly claimed that the UK is the best performer among the G7, which includes Canada, France, Germany, Italy, Japan and the United States. The OECD expects the UK to grow by 1.4% in 2009, against the government forecasts of 2.5%. Okay this government has missed most of it’s previous growth targets, not something they brag about, but in the current climate, wishful thinking is not appropriate. There is also a prediction of some 200,000 people being added to the jobless total, which is already at a record high when you consdier that thatere are estimated to be some 2.5m on some form of long term disability.

The OECD have even given some of the reasons behind our weak position, most noteably that the Government’s policy of spend and borrow has left this country ill-equipped to deal with this economic slump. Interesting, that the average man in the street could see this wasn’t sustainable, but our elected officials could not, or perhaps, would not. The truth is Gordon Brown, as chancellor, borrowed in a boom, leaving us with the largest budget deficit of any industrial economy. Now we are all going to have to pay the price.

Aside from the fact that New Labour, as guardians of our economy, should have been able to predict much (not all) of what is happening and tightened their fiscal belts, what is most disappointing is the other parties. The opposition parties are keen to criticise, but if they want to show that they are fit for government, then they should tell us what they would do. It doesn’t matter if New Labour steal their ideas, it is the well-being of our country that matters and the electorate will know who came up with the answers and demonstrated true leadership skills when we needed them most.

David Cameron and the conservative party are running scared, they are shouting from the sidelines, rather than getting stuck in. In other words, they are basking in the failures of this government, they are gloating, but, above all they are failing to demonstrate that they could do any better. There is no time like the present, for Cameron and the conservative party to show their mettle, air their policies, demonstrate their competence for government and show leadership under pressure. If Cameron cannot see that this is his chance, then he does not deserve the highest office in this country. If he continues to say nothing of any value or substance, then we are entitled to believe that he doesn’t know what to do and therefore, he and his party would be no better.

New Labour in general and Gordon Brown in particular have lost all credibility in terms of economic confidence and they have long lost the integrity that is essential to govern long term. This is not helped by the fact that they have patently denied any personal, or policy culpability, electing to blame everything on other factors such as the credit crunch and oil prices. We know that it had as much to do with this governments policy of spend, tax, borrow and spend, leaving nothing in the kitty for a boom period. 

Cameron on the other hand is demonstrating a lack of courage, an absence of policies or ideas, poor judgement in a time of trouble and little depth or gravitas. Charm and fancy words simply do not wash at a time like this. Cameron and the conservative party are so worried about getting it wrong, they have been paralysed with fear. We expect far, far more from the conservative party, which in the past has invariably been the principal bastions for economic competence, but under the leadership of Cameron, they seem to lack bottle, confidence and spirit.

In fact, if we look around, never has this country been so poorly served by its members of parliament. Most of our MP’s are more interested in playing up to the cameras and preening their feathers with statements to, and interviews with, the press, the editors of which, in turn, attempt to set the policy agenda and influence public opinion. Never before have we all felt so removed from our politician’s, who don’t talk like us, act like or or think like us. Our whole electoral system needs a good shake up, no longer should we be represented by career politicians who have rarely held down a proper job, no longer should we be represented by union activists who, however they may try and convince you otherwise, have little in common with the public. We need a system where real people, those with life experiences, families, mortgages, business experience and integrity, can be elected to represent us. In other words, people that look like us, act like us and speak like us.

All too often, as our elected MP’s enter parliament, they immediately go native. Corrupted by power, position and prestige. They forget why they were put there and start to believe that they are ‘different’ from the rest of us. For the most part, our MP’s are just good salespeople, yet once they are put to the test, they appear superficial. What we need is depth, all parties, but particularly the conservatives, should be selecting their candidates based not on gender or race, but whether or not they can make a contribution to society, to government. Not based on whether or not they went to school with them, but based on life experience, how grounded they are and whether they are likely to be seduced by membership of this exclusive club called parliament.

The British people are no longer as politically naive as they were in the past. The Internet means that they can communicate more easily with like minded people, no matter where they reside in the UK. They are more vocal than they have been in the past and they have more information at their fingertips than they have had in past decades. By comparison, parliament is firmly rooted in the past, it is crusty, old fashioned and inward looking. Newly elected members should be looking to modernise parliament, not simply fall in line, they should be looking to use their time in office to pass more control back to the people, rather than entrenching their grand and priveledged positions, by gaining more and yet more state control. Most importantly of all, they should be listening to their trustees, the people that elected them. Placing the electorates’ interest’s first, before their own and before that of the party.

This recession is likely to be different to previous ones. Not because of the suddenness, not because of the depth, or the expected duration, not because our government has lied to us about our true economic position. But because, this time, there is a very real risk that the groundswell of public opinion will not only impact on the government, but also on the lacklustre opposition, and the weak ‘other’ parties. If people have time on their hands due to lack of employment, an easy method of communicating with like-minded people and a desire to see change, we could well see another, formidable political party formed, this time with real people, who have genuine feel for what needs to be done, the energy and the desire to be part of this change and above all, new ideas and a commitment to follow them though.

Political parties take note, members of parliament take note, the public have had enough of micromanagement, of state control, of tax and spend government, of mortgaging our future through uncontrolled borrowing, of manipulating the figures to make things look better than they actually are, of being treated like fools, of lies, of ever rising taxes and above all, of you! In this time of need, we still have an overseas aid budget of £5bn, yes, £5bn, when there is a very real prospect that some of our pensioners will have to choose between heating and eating to use that over used, but insightful term. Where are our priorities?

Opposition parties take note, you need to stop gloating while the people of this country are suffering, you need to stop looking so weak, when we need strength, you need to demonstrate the courage of your convictions, to show us what you would do to make things better. You need to show your true colours (if you haven’t already). Above all you need to lead by example, be confident and at the same time remain grounded and in touch with the people that matter.

Imagine what would happen if the people of this country decided to vote, not for the principle 3 parties, but independents? If we have nothing to lose, this could happen. Yes it would be chaos, but it could be a precursor to a new political force, one that included the voters, rather than career politicians, then the boot would be on the other foot. Just 650 people rule 65m people, this is by consent, not as an automatic right. Our colonial past demonstrates only too clearly what happens when so called leaders consistently let down the people, when they are removed, remote or aloof from the mood of the public and when our leaders start to think they are better than everyone else.

In the UK is will not be a military coup, it won’t be a work to rule, it will be through the ballot box. Once the public recognise that it is possible to make a stand, buy choosing not to elect anyone from the main three political parties, then there will have to be change. When we, your trustees, have little to lose, expect the unexpected. Members of Parliament, you have been warned!

 

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