Category: Blog

On Monday, after too long an Easter break, MPs wanted to hear from the Home Secretary.

We wanted to know why Damian Green had been interviewed and his office and papers searched, why he had been told he faced lifetime imprisonment, when after a long delay no charges were brought. I would liked to have asked that if Labour ever found itself in Opposition, would it expect a Conservative government to allow or to instruct the police to investigate every embarassing leak of documents by Labour MPs not relating to national security as a criminal matter?

We wanted to hear the Home Secretary’s view of the G20 policing, and to find out what she thought of the scenes we have all witnessed on TV. We would like to know if kettling is the best way of handling things, and if so what rights people have to food and drink, to comfort stops and to going home if they are caught up in the kettle without being a demonstrator.

And some MPs did want to hear about the resignation of Mr Quick and details of the anti terror raids carried out shortly after the press read Mr Quick’s papers.

Under the rules of Parliament, the government decides what it will give Statements on. Oppositions can only huff and puff if we disagree about what is important enough to warrant a Statement. This Home Secretary had just enough political nous to realise she had to make a Statement on something. She opted for what she thought was the soft option, of just making a satement on the third of these items. That meant we could not ask her questions about the other two. It was to be Hamlet without the Prince, and without Ophelia.

She presented an upbeat view of the anti terror action. She argued that Mr Quick’s mistake had done no damage to the operation. The arrests went ahead just a little earlier than planned, but thyere had been no other difficulty. She implied that a most dangerous terror plot had been foiled. The House was naturally pleased to hear that.

I asked if she at the time of the decision to go ahead was persuaded that the people to be arrested were likely to face serious criminal charges, and asked if that was likely to happen. She was very guarded in her answer, implying some doubts. 24 hours later I learnt form the media that none of the people involved were going to be charged with serious terrorist offences.

The Home Secretary did not return to the Commons to explain what had happened. Clearly something important changed between her statement and the next day, otherwise I assume she would have told me that charges were unlikely. And no, to the disappointment of many of you, no MP wanted to ask her about her expenses. We did think the policing issues were far more important. Expenses were always going to be discussed and changed at a different time and in a different way.

The BBC headline today says the CBI thinks we are past the worst of the recession.,
I thought this unlikely so I read their press release.
Its headline states “UK manufacturers suffer worst fall in demand”. It went on to say they “expect the pace of decline to moderate slightly”.
The other words were in there, but set in the context that the CBI thinks the recession will get worse, with further falls in output and jobs. What spin!

Some of you are asking what my thoughts are on the Prime Minister’s latest wheeze, the daily attendance allowance for MPs who make it to their main place of work.

Last night I was asked to speak at a Saint George’s Day dinner held in the magnificent surroundings of the HAC headquarters in the City. Also present were the Secretary of State for Defence and the Master of the Rolls. I felt in such mixed company I should steer clear of the Credit Crunch and the Debt crisis. Instead I tackled the only perennially fascinating part of public spending, MPs’ expenses.

I set out my general view of the Attendance Allowance. It can best be summed up in nuanced and technical terms as “barking” – for this is a family friendly site based on moderate language.

The Prime Minister seems to have in mind every MP from outside London being able to claim maybe £175 a day for every day they make it to Westminster. The only evidence needed to support the claim would be to swipe their ID pass into a Commons entrance at some point during the specified day of the claim.

The many details which have not yet been worked out or divulged include:

1. How many MPs would not be allowed to claim anything? There are rumours that they are trying to draw a ring around London that minimises the number of Labour MPs who would lose the right to claim, and maximises the number of Conservatives who would be excluded. Is this true? Are they looking at actual journey times, which vary depending on public transport patterns more than distance?
2. How much would the claim be each day? Would it end up with the taxpayer paying more than under the second homes allowance, which surely is completely unacceptable?
3. What transitional arrangements if any would there be for MPs who have in recent years committed themselves to large rents or mortgages on second homes? Ms Harman implied there would be transitional cash for some. Who? How much?
4. Do MPs undertaking Parliamentary business elsewhere qualify? There was some suggestion from Ms Harman yesterday they might. Why? In what circumstances?
5. Why does the PM think this could be introduced as early as 1 July? We have only just received all the new rules and paperwork for the new system that came in as of 1 April this year. The PM’s proposal would require a lot of systems change, and more expense.

The Prime Minister clearly thought this back of the envelope proposal was clever. He thought he had found a quick way to tip substantial sums to MPs avoiding all need for invoices, embarrassing revelations about personal items they had bought for their second homes and arguments over what was their second home. Were he to go ahead with the vote and win it, I suspect he will disovcover great public anger and continued press fascination. The press might well then do all of the following – and more besides:

1. Follow particular MPs thought to be abusing the system , to see not only when they clock in but also when they leave on any given day
2. Seeing what the MPs do with the money they receive as Attendance Allowance
3. Trying to find cheap skates who despite the Allowance sleep on office sofas or end up in very cheap hotels
4 Seeing if any rackets are running – like one MP swiping another MP in so he or she can claim the Allowance for a day when they don’t make it to Westminster
5. Alleging that any attempt to delay proceedings or to demand an extra day’s debate is just a demand for more Attendance Allowances.

It is by no means clear the PM can win this vote. He has blundered into a Commons matter, where governments are usually wary of whipping a given answer, preferring a consensus or majority view to emerge. My best advice to him is to do his U turn early, before the revolt gets out of control. Parliamentary hothouse rumours that Labour MPs are already being threatened with de-selection from their seats if they do not do the government’s bidding is a sign of how unpopular this is with Labour MPs. Worse still would be if he wins this vote and ends up with another unsustainable and indefensible system.

You have to say one thing for Labour. They still have an icy grip over journalists on their papers and in the BBC. During a very busy day yesterday my phone did not stop ringing from journalists acting as Labour’s poodles, wanting me to condemn the Tory leadership or to say things on top tax rates that they could use to condemn the Conservatives generally or create a “Tory split” story.

Sorry boys. That Labour game doesn’t work. This budget should be a time for strong and positive measures to get the UK out of the economic black hole this government has taken us into. It should not be about playing stupid political games and trying to paint the Tories into a corner. I want David Cameron to win the election, and I want an election as soon as possible. We cannot afford to go on like this. Clearly Number 10 has learnt nothing from the Mc Bride affair and think it is business as usual. The Chancellor has demeaned himself and the budget by seeking the 50p tax headlines and anti Tory story in the way Labour’s spinners did this week.

What is my view? That must be obvious from everything I have written over the years. I did advise Margaret Thatcher to both increase the amount of tax the rich paid, and increase the proportion of income tax paid by the rich when she was in government. Her excellent reforming Chancellor, Nigel Lawson, did so by cutting the top rate of tax from Labour’s penal 83% on earned income and 98% on savings income to 40%, a competitive international rate for those days. As a result of their lower rates the amount of tax paid by the rich rose, and rose as a proportion of the total.

If Labour were serious about getting more tax from the rich, instead of playing class war games, they might like to ask themselves what rate of income tax will maximise the number of rich people here, and the amount of business and investment they undertake. That should be the only important question at this time of national financial crisis. The UK’s tax rates cannot be settled in a vacuum. We need to become more successful as an international trading economy, and that means competitive tax rates on personal as well as company income and gains. Meanwhile for those Labour poodles still in doubt, I support the Conservative leadership against these juvenile Labour antics.

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.