Month: April 2009

Dear Shareholder,

I am delighted to report our most successful year ever. We made more progress to achieving our twin goals of increasing our losses and building up our levels of debt than ever before. Indeed, I am especially proud to be able to announce that in just two years we will be able to borrow more than all the previous managements of UK PLC and its predecessor companies over 1000 years. I think you will agree with me that this is a magnificent result.

As I can reveal in the formal papers attached to my announcement, the gross borrowing for the year just ended worked out at an impressive £181,600,000,000 – well above the £78,000,000,000 some mistakenly had been using as a forecast. Next year we can promise at least £237,000,000,000, an all time record which warms true hearts behind our strategy. We reveal this on page 246 of our famous Red book ( called this year Budget 2009), on the principle that we leave the best to the end.

That is £419,000,000,000 of gross borrowings in just two years. I trust people making their living out of selling government debt will be overjoyed at this big increase in what they have to do. If they will not buy it, then we will instruct the Bank of England and the nationalised banks to buy more. We have already asked them to buy substantial quantities to make the project feasible.

We could not have done it without the huge energy and commitment of our outstanding CEO. The whole Board have also played their part in finding so many ways to expand the workforce, dream up non jobs to advertise in the Guardian, hire consultants, send out glossy brochures, add red tape and complexity, put through over the top legislation, increase top public sector pay, pensions and expenses, and write uneconomic contracts. It has been a herculean labour to waste so much and spend so much in such a relatively short time. I would like to thank them all on your behalf.

I know some of you are concerned about the proposal to put prices up for the rich using our services. Might this not damage the build up of lossees and debt you ask? I can reassure you. This will only bring in 0.5% of the running deficit next year, and remains tiny thereafter. We have more than offset this increase in revenue by big increases in announced spending, so the deficit will go up, not down, compared to the previous forecast. It was however, a necessary decision to deal with our competitiors in the political marketplace. It will be warmly welcomed by our hard core of shareholder supporters who are worried that the company might face unwelcome management change despite all the success in implementing our agreed strategy.

What can I do for an encore, you might ask? Well you will be reassured to know that the apparent reductions in the deficit in future years is based upon optimstic forecasting of growth rates. Many think that these will not be achieved, so we can continue with the high borrowing path that has been our hallmark in recent years.

We do have to report the loss of one of our Shareholder relations specialists, Mr Mc Bride. I would like to confirm that his importance was exaggerated by some when he departed. It will be business as usual, as we have many more Shareholder Communications specialists who can help me with these letters and with our 7 x 24 briefing of the media. The house style of using company announcements to attack competitors will continue, as my Statement made clear yesterday.

Yours in debt

Finance Director

Click here to read John’s budget speech in the House of Commons yesterday.

Yesterday in the House I renewed my proposal to scrap all unelected reigonal government in England. I did so as one of several proposals to start cutting the deficit by cutting out unliked and wasteful spending.
I also did so because I want our country back. England is still the country that is not allowed to speak its name or to be represented on a European map. I am an Englishman, not a Rest of the South Easterner as they want me to be.
Stop balkanising our country at our expense. If the governemnt would announce the end of artifical regions and their government apparatus it would indeed be a happy St George’s Day. It would also mean we would face a little less debt in the future.

Last week the BBC asked me to give a pre budget interview on the Daily Politics on Tuesday of this week. I accepted and reorganised my Tuesday morning to fit it in. They rang to cancel mid morning on the Tuesday.
Yesterday the BBC asked me to step in as they had need of me to comment immediately after the budget on the World At One. I said I would and started to make the necessary adjustments to my plans. They cancelled the appointment later that morning.
Clearly they do not want hard htitting analysis from someone who has been a long term forecaster of recession and a debt crisis. Is it because the government doesn’t approve?

Just as I feared, they have learnt nothing.

It was budget of posturing . A tax on the “rich “to test the Tories – which won’t raise much revenue and may even reduce the revenue. More public spending for Labour areas under a cloak of “doing what it takes”. And enough red ink to launch an aircraft carrier, if they ever get round to building one.

In my post budget speech in the Commons I concentrated on the three forces that have wrecked the public accounts – Bank nationalisation, a violent cycle, and grotesque excess in public spending.

The trick was to conceal some of the borrowing, and then to claim the economy will be off to the races in 2011, apparently bringing the deficit down.

Dream on. We will paying these bills for years. They plan to borrow more in two years than all previous governments combined have borrowed in 1000 years. That is going to be painful to repay.

The Chancellor should begin by saying sorry.
He should say sorry for the deepest and longest recession since the Thirties of the last century.
He should say sorry for their regulatory system which did not see banks and building societies were going bust.
He should say sorry to all the people out of work or about to lose their job.
He should say sorry for the huge damage caused to many pension funds, leaving people with little or nothing for their retirement.
He should say sorry for heaping so much debt on the British people.
He should say sorry for the wild conduct of monetary policy in recent years, which stoked the boom and then plunged us into the crash.

Instead, he will probably play silly and dangerous political games, seeking to use the budget to vilify the Tories and set them policy traps. He will wrongly say Tories wish to do nothing, and wish to damage crucial services.

The Chancellor should then give us an honest account of the dire state of the public accounts.
He should tell us they may lose us £200 billion through the banks they have bought and guaranteed, as the IMF have warned. That’s more than £3000 for every man, woman and child in the country. Even his own rumoured figure of losses of £60 billion means he admits he has lost every one of us £1000 on his bank nationalisation madness.
He should tell us the build up of debt has been too fast and too great, and poses us a big threat to our future growth rates and living standards.
He should tell us that his forecasts a year ago were wildly optimsitic, and his forecasts last autumn were so wrong as to verge on the mendacious. He should give us a sober assessment of the extent and duration of the downturn

Instead, he will go for too low a figure for banking losses, continue to be relatively optimistic about the extent of the downturn, and continue to understate the debts by a huge margin. He will grow a forest of recovery out of his tiny green shoots, all based on surveys showing the rate of decline may be slowing.

Finally, the Chancellor should say that he intends to start getting the UK public sector to live within its means. He will not delay this until after the next election, and not treat reducing public spending as some kind of imaginary game or political challenge to the Tories. He will instead this year make large reductions in undesirable, wasteful and not strictly essential expenditure. Schools and hospitals, nurses and teachers will be safe. ID cards, centralised computer systems, unelected regional government, more subsidies to banks and other large companies, increases in regulation and public adminsitration will all go. He will require all MPs to cut their costs and the costs of Parliament by 10% to show a lead.

Instead, the cuts will be delayed, political, and often not for real. This will be a fantasy budget and a very political budget. It could turn out to be the McBride memorial budget.This government not only divorced Prudence, but continues to hold a drink and drugs party on her grave. That is bad news for all of us.

The UK budget has been well advertised in advance. Gone are the days of budget secrecy followed by the drama of the Chancellor’s presentation in the Commons. I do not expect Mr Darling to resign over all the leaks, even though I have heard media commentators say particular leaks came from the Treasury. We receive some of the Budget in the Autumn Pre Budget Report. Now in the week before the budget the jobs package, the housing package, the green cars initiative, the extra £10 billion of spending cuts and the other main runners for inclusion are briefed to the press.

There may be the odd surprise tomorrow, but it is unlikely to be anything of a magnitude that will have much impact on the economic outcome. A £1 billion housing market package is hardly going to be decisive after all the billions already tipped into housing finance through the public sector programme and through the bail outs of the mortgage banks. A few billion here and there to help jobs, green growth and the like are not going to have much impact. This is a £1,500 billion economy so the odd billion is small.

The economy’s progress will be determined by three things. The first, the large cuts in interest rates announced in recent months, points to economic recovery by 2010. This will be reinforced by printing money, or underfunding the government’s spending. The second, the poor state of the banks, will hold back the recovery as it did in 1990s Japan. The more the government subsides them to delay sorting out the problems, the longer it will take to have a strong recovery. The third, the state of the public finances might not give the boost the government imagines. The budget needs to persuade the markets that there is a way out of the very large deficits the Chancellor will have at last to recognise. He needs to convince us that they can be financed in the short term at sensible interest rates, and will be controlled in the medium term by some combination of lower spending and more tax revenue. If he cannot, then we face higher longer term rates of interest early in the cycle. Quantitative easing is not having much impact on longer term rates, and cannot continue indefinitely.

The Chancellor will probably adopt his predecessor’s tactic of giving some of the following years’ budgets at the same time as 2009-10’s. We will probably hear plans to rein in wasteful spending more in later years, and plans to increase taxes more after April 2010. Given the likelihood of an election in May 2010 none of this will cut much ice.

The Treasury will need to produce some more credible forecasts of economic output for both 2009 and 2010. We should expect them to say there will be slow growth in 2010 after a bigger drop in 2009 than they have so far admitted. The size of this drop will have a marked impact on the level of the public deficit, as the numbers are very sensitive to levels of output. If they admit to say a near 4% GNP decline in 2009, that will boost benefit spending and cut tax revenues substantially, driving the borrowing requirement higher. They are likely to go for a more modest forecast of GNP decline, hoping that the action taken to date will cushion the fall, and wanting to keep the public spending and borrowing figures down a bit.

The reality is slower growth for some years to come, once recovery does belatedly get underway. Four of the turbo chargers on the UK economy in the decade up to 2007 may no longer apply. The rapid growth of credit and the fast growth of property prices is unlikely to be repeated soon. The high level of inward migration is likely to reduce as a result of fewer jobs on offer and tougher immigration policies restricting numbers. The lead sector, banking and financial services, will not be able to sustain its own heady performance of recent years. Public spending will need to be restricted, after years of rapid growth.

On the positive side there can be more growth in exports and import substitution on the back of a weaker pound and better control of wages and salaries. The UK needs to save, invest and export more, and spend, borrow and import less.

The truth is domestic policy has done huge damage to this economy, first making it lop sided then bringing it crashing down. The government has been way behind the curve in responding, and its forecasts have been lamentable. Mr Darling may claim to have thrown the rose tinted spectacles away, but he will still be on the spend and hope strategy to try to get him through to the election. This, after all, is a government which thought house prices were rising because they were not building enough houses, which clearly had no idea just how much credit they were pumping in to the system. Or maybe it was just a government who thought they could borrow more than all previous governments combined and get away with it.

The Today programme this morning told us that scientists report a “dim” (as opposed to a “cool” ) sun. Apparently sunspots and flares are not what they used to be.

Is this the beginning of a U turn? Is the BBC about to tell us it is our patriotic duty to generate more carbon dioxide to offset the collapse of the sunspot? Are we about to have warring scientists on the airwaves, with the astronomers in the cooling corner and the climate specialists in the warming corner?

I doubt it. That’s why they said “dim” not “cool”. The warmers still control the BBC and have the bulk of the public research money.

Some of us still want a big drive to cut the use of fossil fuels. We want a greener and cleaner environment with much less dependence on imported oil. There are still good reasons for that.

Chris Grayling, the Shadow Home Secretary, writes:

Good Government is about achieving a sensible balance. We need to protect our society against those who would destroy it. But if we throw away the founding principles of a democratic state to do so, then we are doing the terrorists work for them. So I think that whenever we look at security issues, and potential new weapons for the fight against terror, we should ask one simple question – will this improve the protection of our citizens without undermining our core freedoms? Too often this Government has failed to find the right balance. Indeed, they seem to have lost any sense of proportion about the things that they are doing. The terrorist threat has become an excuse for introducing draconian new powers, and those powers have developed mission creep which means that the intrusion of the state seems to be spreading across our society.

We will seek to restore that balance.

So we will continue with the introduction of biometric passports – but we will scrap the compulsory ID cards that this Government seems to determined to pursue.

We will retain the electronic systems that will record who enters and leaves our country – but we will end the situation where the Government plans to store full details of the holidays, companions and payment details of every citizen for a decade.

We will end the mission creep for anti-terror laws, and limit the use of surveillance powers to the investigation of serious crimes. There is no place for the use of intercept evidence in council tax enforcement.

And there will be no giant big brother databases established under a Conservative Government.

It really is time for a change.