Month: May 2009

Yesterday the Speaker’s remarks triggered another wave of bad press for Parliament. Last night there was a meeting to discuss what to do next about MPs’ expenses. I would like the Speaker to give us another Statement, based on whatever took place at that private meeting for a few MPs on the relevant committee. Ideally he would say:

” I am conscious that Parliament’s standing has fallen badly. I recognise that many in the House and many more outside wishes to see us rebuild the stature of our democratic institution.

“Last night we began that task. Immediate measures will be taken to tighten the audit and control over MPs’ expenses, to ensure that MPs only claim what is necessarily incurred to carry out their Parliamentary duties. I would ask members to ensure that in their own interests they only claim items which sensible constituents will think reasonable. We all need to realise that the public in this period of economic difficulty will expect us to be more cautious than in the past about what we can claim. It is not fair to seek to pressurise the arbitration of junior officials in the Fees office in substitution for a member’s own judgement of what is right and defensible. We will await the Kelly Report later this year before determining on a major reform of the system, designed to lower its cost and to increase the transparency of the whole process.

“The public are not convinced that this Parliament is doing a good job or providing value for the large sums spent on it. We need not only to control our costs, but to be more successful at examining the conduct of public administration. We need to demonstrate that the scrutiny we provide to legislation is sufficient and produces better law. With that in mind I am holding talks with representatives of the government to see how we can ensure that major changes of government policy are always announced first to this House in oral Statements and that less important matters are always reported in writing in a timely way. I will ask how we can manage the timetable more effectively to give Parliament the time it needs for the important issues and for the most contentious items.

“I will point out to the government that this is Parliament’s wish, as many Labour backbenchers join with memebrs of other parties in wanting Parliament to have a proper chance to consider the government’s measures and actions. I will remind Ministers that they too,as Parliamentarians, should want that. Government Ministers will be given plenty of time to set out their case, so they should have nothing to fear from such changes. Government Ministers should remember they too, one day will return to being backbenchers.

“I have asked the police not to continue investigation of any leak of the expense details to media outlets who observe the need to avoid publication of sensitive information affecting members’ security. “

The first thing you do when trying to control spending in a near bankrupt company is to stop hiring people.

Looking at the Jobs pages this week-end, the public sector still thinks it can hire as many as it likes to do as little as it likes.

Take the case of Aberdeen City Council. They advertised for a:

Director of Enterprise, Planning and Infrastructure £107,000
Project Director, Economic and Business Development £90,000
Director of Housing and Environment £107,000
Director of Corporate Governance £107,000
Director of Education £107,000

That’s more than £500,000 in salaries, before you add on the NI, benefits in kind, pensions, secretaries and the rest and before they put in their expenses. You could certainly take 20% off that lot by amalgmating two of the posts into one. The first three will be tripping over each other one many a project and making it slower and dearer. Can’t they make do with the people they have already got, promoting the odd one if they need to fill a major post?

Or take the case of the Environment Agency. They are advertising for regional Directors on packages of up to £110,000 each. They dare not tell us how many they want to hire. Most of us would like them to spend the money they have earmarked for that on some work to ease the flooding problems. Let’s have none of these.

At a time when manufacturing comapnies in the West Midlands are having to sack many people to be able to pay the rates and the other mandatory taxes, is it a good idea for Advantage West Midlands to be recruiting a Corporate Director Resources for a six figure salary, or for the West Midlands Manufacturing Advisory Service to be offering more than £90,000 a year for a Chief Executive? Manufacturing companies need orders, not advice paid for out of ever rising taxes. Stop this waste.

According to the polls which modern politicians normally follow slavishly, the public wants a quick 20% off public spending, so we get back to living within our means.

The public are right that that is the order of magnitude if we wish to curb the borrowing. 20% off this year’s spending – or next year’s – would not quite get us into the black, but it would eliminate most of the growth of the national mortgage.

The politicians are still far behind the public. They are unlikely to do this, preferring on this occasion to argue with the public and the polls because they will not like the message.

The politicians are unlikely to come up with anything so radical. The government is still in spend, spend , spend mode. They are still telling us that it is all essential, and that cruel cuts would hurt. Any MP who has the audacity to say to us now that all public spending is necessary should be greeted with a chorus of two words – “MPs expenses”.

MPs expenses are just the visible small top of a massive iceberg of wasteful and needless expenditure. The CEOs of Councils, quangos and Whitehall departments preside without the same scrutiny over collosal self serving and wasteful expenditure of a kind no competitive company would support.

I will be setting out in further “Wasteline” pieces what can be done about this. The first 10% off public spending could be painless for the public and popular. The tragedy is the government still does not get it. They still have not even offered to cut their own MPs expenses, let alone get to grips with the rest of the monumental waste. We need a recovery team to move in, versed in the skills of company turnround, to control spending before we hit national bankruptcy.

Dear Shareholders,

I am writing to explain the remuneration practises of UK PLC towards its Board and senior executives. It has been designed not just to give them incentives to meet our goals of increasing spending and borrowing, but to make a direct contribution to those objectives by increasing the costs of our senior employees. I am quite frankly dismayed that we should now be criticised for undertaking so much investment in public services. I am surprised that shareholders should begrudge people who have successfully led so much investing, their own small share of it. These people have thought out how to increase costs by massive computerisation schemes, how to fill the jobs pages every week with unheard of new roles, have taken on many a consultant to help them spend the money and have set up a large number of new activities in our ever more popular “quango” subsidiary.They have excelled themselves at finding new ways to regulate us, and have been most productive at creating new laws.

I would expect you to thank both me and the Board for how successful this has proved. I am pleased to report that it is not just the senior people we read about that have been able to increase their expenses. They have by their leadership encouraged a spend more claim more culture throughout our organisation. At a time when we are all fighting recession, surely it is good news that there are spenders of last resort throughout the public sector that can provide some purchases to keep the economy going?

I am proud to remind you that never have state employees been as well paid as they are today. Never have they been able to undertake so many foreign trips, or go on so many seminars and courses, never have they been able before to claim so much to help them carry out their jobs. We have encouraged a great culture throughout the senior levels of our local subsidairies and our specialist “quangos” division. It was the leadership of the Board which made this possible. Where would be today if we had not undertaken so much investment in our future? Some of these people are now paid several times what Board members receive, showing how flexible we are in our approach to remuneration.

I did recently suggest a better way of getting the money into the pockets of our Directors and senior staff without the need to fill in so many forms and provide receipts. Unfortunately, and to my amazement, people were not impressed by these proposals. I thought if we gave them an Allowance for just turning up, it would increase the total spend and speed the process up, at a time when we need to spend more. Sometimes you cannot help people to help themselves. I suppose they are now so into the complex systems of form filling and box ticking which have successsfully raised costs throughout the UK that it was asking a lot to get them to exempt themselves from such a system.

We will return to reform of the kind we have pioneered elsewhere in our large organisation. We will have to propose more auditors, more box ticking, more form filling. Rest assured we will come out of this situation with spending higher and borrowing higher, as you would expect. Nothing will deflect us from our long term goal of giving UK PLC the fastest growth rate in both spending and borrowing.

Some have suggested our main competitor company has also been able to increase the expenses paid to its employees. I can assure you we are better at it than they are. Their CEO made a big mistake when he sacked his most talented expense claimer for what he did. That is no way to behave if you wish to be the best at this.

I am sure you will be delighted to learn that two bank subsidiaries expect further losses this year.I do think RBS has done us proud, being able to lose more in the first quarter of 2009, after such great figures in 2008 when they lost £24 billion. Their CEO’s salary of £1.2 million is rightly well above mine. We are working on getting the rest of our trading subsidiaries into such fine form.

Yours exhausted

Chief Executive

The government is struggling with its new interventionist industrial strategy.

So far it has failed to come up with terms to help Jaguar Land Rover. This has triggered a blast from Tata, their Indian owner, at their failure to support manufacturing. Apparently the government wants too much say and influence, when the company thinks it just needs a loan. The government was wrong to offer them false hope. They need more customers for their cars. Buying every Minister a Jag in this climate would not be a smart political move.

A major steel plant teeters on the brink of closure, as the government promises to do whatever it takes to try to keep it open. Their promise falls short of taking delivery of the steel itself, when someone buying the steel is the only thing that will save it. Let’s hope the government can help the company’s lawyers and salesmen secure the customers and enforce the sales contracts, although it is difficult to see what the government can bring to that task.

Meanwhile we learn today that when the government is on the other end of the potential deal as seller or seeker of assistance, it finds the demands of buyers for influence and control too great! Apparently TNT want real influence and seats on the board of Royal Mail in return for their money to buy a 30% stake. I thought that was one of the attractions to the government of selling such a shareholding. We also are told that maybe TNT is not offering anything like enough money. They have clearly read the books and are not persuaded that a 30% stake in a business with such large employee responsibilities and costs is worth the £3 billion which the government has pencilled in.

The potential sale of a 30% stake was always a bad idea. Of course any company buying such a stake wants effective management control – and in a way the government wants them to have that, telling us Royal Mail needs new management and new directions. Yet a minority stake is always worth less, proportionately, than a controlling stake, so taxpayers are bound to be short changed for our asset.

Selling 30% means trouble with trying to sell the remaining 70% to anyone other than the new minority shareholder. At a stroke it greatly reduces the value of the remaining 70% and puts a future government in a weak bargaining position to sell the shares. Taking on the full pension liabilities for the taxpayer is bad news. The fiddle of bringing £24 billion of pension assets into the national accounts will not wash, as the liabilities are £9 billion more than the assets.

I would like to see the sale of the entire Royal Mail shareholding, as part of the sales we will need to start cutting the public deficit. I would offer some free shares to every postal employee, and give management and employees the chance to buy more if they wish. I would find more bidders prepared to pay more per share by offering the sale of the whole, than under the government’s half baked scheme. I would also take action to sort out the pension scheme.

Is there no end to the silly spin. I cannot believe that Labour think the MPs expenses leaks are “Tory dirty tricks”.

Why “Tory”? Why would any wellwisher of the Tories leak these documents, when doubtless they include some claims from Conservatives which will also prove to be embarrassing, reflecting claims for items which may well be within the rules but will be thought wrong by the electorate?
Why “dirty”? Dirty implies the allegations are fabricated or twisted. As far as I can see the main allegations all rest on the signed claim forms of the Labour MPs themselves, so there is nothing “dirty” about the charges. Where the media has misinterpreted the documents, that has not come from the Tories.
Why “tricks”? A trick is something underhand or unreasonable. Most people think it entirely reasonable that the public should know how much money MPs have claimed and what they have claimed it for. That is not a “trick” but a right in a democracy.

If you go and buy something in a shop you have a right to know what you are buying and how much it costs. Parliament has to behave in the same way.
If an employee of the Commons has leaked this material then of course they should face disciplinary action. If they sold it they should give the money to the state.
Parliament should not have sought to prevent the release of this information. Parliament is damaged by the way it has handled this, as well as by the system of expenses it has sanctioned.
David Cameron is right to call for cuts in spending on MPs expenses, and to identify the categories of spending that MPs should no longer be allowed to claim.

Compare three different situations.

1. A Tory frontbencher leaks documents which embarrass the government but are not related to national security. Police sent in. The authorities eventually conclude there was no crime.
2. Someone leaks price sensititive information abut the financial position of the leading banks and the Regulator’s responses to them. Police not involved. Some banks were unable to raise money on the markets following the Regulatory information revealed so the state nationalises them. Many think something serious occurred which should have led to disciplinary action and possibly to prosecutions. The law says the relevant information should have been revealed by the banks to the markets by formal statement and the rest should have been a private matter for the Regulator.
3. Someone leaks information about MPs expenses which are embarassing to MPs. Most of the information was going to be published anyway. Police sent in.The public thinks the information should have been released.

This behaviour towards information is unacceptable. Most information the government possesses is public property and should be revealed openly and in a timely way. Privileged information and opinion about private companies and indviduals should not be released where it is held for regulatory or law enforcement purposes. The government is placing the police in an impossible position by calling them in on a such a selective basis. These matters should usually be sorted out by Parliament and civil service.

I was pleased last night with Peter Lilley and Edward Leigh to be on the winning side at the Cambridge Union. The motion taking pride in Margaret’s period in office was carried.

It was no stroll in the park. There were plenty of neo Marxists, left inclined thinkers and some Labour supporters who seemed to think Margaret Thatcher was allied to Pol Pot, Stalin and other nasty autocrats, as their lead speaker himself seemed to imply. Some thought the Falklands victory an exercise in xenophobia. Some seemed to think Margaret Thatcher rather than Aurthur Scargill split the miners’ Union. A few seemed unaware that Margaret Thatcher had won three elections in a row and had never been defeated by the electorate. They had bought into the myth that she was some kind of class warrior foisted on the British people by forces unseen from multinational companies or the Establishment.

I said five things that I felt needed saying.

1. Margaret in office was always most concerned personally about people around her, supporting them in difficulties, writing notes to them at times of trouble and showing great courtesy. She would always ask what could the UK do to help whenever she heard of a tragedy anywhere in the world. She was the best boss I ever worked for.

2. She helped Ronnie Reagan win the Cold War. Surely it is good news that Eastern Europe has been liberated from the grip of communism? That was only possible because the Western alliance was resolute in the 1980s.

3. At home she introduced demcoracy to the Unions. She wanted Aurthur Scragill to ballot his members about a strike. His failure to do so split his Union, and represented a challenge to the legal authority of Parliament.

4. She allowed many more people to buy their own home, and shares in the business they worked for. She believed in empowering more people through ownership. She championed the worker and the saver against the vested interests of the establishment.

5. She taxed the rich more . She knew that if you set lower and more realistic rates of tax, the rich will come here, stay here, create jobs here. It worked. Mr Blair kept those rates. Mr Brown is changing them in a way which will damage both the country and his party.

We conceded that mistakes were made and some things could have been done differently and better. That may be a topic for another day and another place.

I am asked to confirm that MPs invested in Equitable Life through their pension arrangements. Yes, Equitable Life was the preferred company for MPs making Additional Voluntary Contributions for their pensions. It means that many MPs in the Commons are not allowed to request compensation for the company’s clients as they would be themselves direct beneficiaries. Sensibly House rules prevent that kind of special pleading related to a particular company.

I am able to raise this issue because I opted out of the Equitable Life arrangement, not myself trusting the company. MPs could if they wished opt to do something else. I placed my pension savings elsewhere.

After losing us £24,000,000,000 last year, our very own RBS has managed to keep its losses down to a modest £850,000,000 in the first quarter of this year. Barclays made money for their shareholders.

You might have thought that after such whopping losses they had allowed for the kitchen sink and the basin plug. Apparently not. This is a Labour government bank, and like the rest of the government it carries on spending regardless of how much income is coming in.

We learn that LLoyds/HBOS is also likely to stay in loss this year, after HBOS’s losses of around £10,000,000,000 last year. At least these banks are consistent losers.

So what does that mean for everyone in the country? It means that these two monster banks lost every man woman and child more than £550 each last year, and will lose us some more this year.

They still dare to tell us every penny of this public money is well spent. If only they had listened. These banks could have been prevented from bankruptcy without any taxpayer loss, and could have been made to sort themselves out more quickly.

Why does the government tolerate these losses? Why aren’t the people in charge being sacked? Or if they have to stay, why don’t they at least get a big pay cut until their banks make some money for us? I bet that would concentrate their minds.