Category: Blog

Last week the Opposition wanted to use one of their days to choose the business of the House to have a debate on the economy. They were told the Chancellor was not available.

They agreed to debate something else, and to debate the economy today instead. The Chancellor I hear still refuses to come.

Meanwhile, today is the chosen day to feed to the media the dreadful news of the Staffordshire NHS.

If the government is really proud of “doing what it takes” to tackle the economic crisis why will it not do what it takes to put the message across in the Commons? And why is it so reluctant for their conduct of economic policy to lead the news today?

I have been sitting by my phone waiting for the BBC invitation to give an interview on the state of the economy, but so far it hasn’t rung!

When I asked the Chancellor yesterday in the House if there is some limit to how much the UK government can prudently borrow and print, he was reluctant to answer.

I pointed out that if we flex the state credit card too much, we could face another run on the pound, or a buyers strike on public debt, or need a trip to the IMF or some other international money lender.

I was giving him an opportuntiy to reassure us all that he was in control of the build up in public debt, and that he had worked out the maximum limit that was safe. I would have welcomed a number in his answer as well as some reassuring words.

Instead he decided to answer only half the question, the bit about how much he could safely print, and ignored the other half about how much he could safely borrow. He confirmed that the current printing programme was reasonable, without specifying if that was just the first £75 billion or the whole £150 billion. Treasury sources, I am told , don’t have a clue how much it will take.

I suspect, along with many other commentators and the markets, that debt is running well above the levels set out in the Autumn Statement. We should also remember that the Chancellor on that occasion persuaded most people that he was just borrowing £78 billion this year, when the figure hidden at the back of the FBR was twice that. Come the budget he will have to give us more plausible updated figures, revealing the true horrors of the position.

The Prime Minister we read is keen on yet another fiscal stimulus for the economy at Budget time. That’s code for printing and borrowing more. Yet even he has chosen some more careful words for his Guardian interview. Maybe the Chancellor is at last showing some independence and is trying to warn the PM that there do have to be limits to how much they can borrow.

It is mystifying to see people roundly condemn too much borrowing by the private sector in the past, only to do the same on an even larger scale in the public sector and think there is no price to pay.

Click here to read the exchange between John Redwood and Alistair Darling from Hansard.

I have always been more interested in how we get out of the present mess than in how long it will take to wring an apology from the saviour of the world.
The Guardian interview is, we are told, a kind of apology. The PM accepts he was responsible – well that’s progress. He regrets that he did not “mount a popular campaign ten years ago to demand more responsible regulation of the world’s financial markets”.

There’s a clever wriggle. In one bound the apology becomes part of the spin to tell everyone that this is a global problem, with the implications that the problems lay elsewhere and to underline that the PM himself was right all along in his thinking.

It’s too clever by half. It won’t wash. It shows he still does not understand.

Let’s try once again to explain it.

Northern Rock, RBS and HBOS were all British banks, controlled by British Regulators.

The British regulators had the power to require those banks to hold more capital and cash if they thought that necessary. They did not do so. The British Regulator signed off on the Northern Rock business plan.

The damaged Bank of England, undermined by the Brown reforms, the very same bank that is now printing fivers in desperation at the shortage of money, was lecturing the banks that it was their fault the money markets had no money in August and September 2007, when they helped bring on the crash. The British competition authorities could have stopped the mergers which created mega banks. The size of RBS made it an especially difficult case to handle, and the merger of LLoyds with HBOS damaged LLoyds needlessly and badly.

This crisis was brought on by bad regulatory calls as well as by greedy senior bankers. The supervision of banks, as the Chancellor reminded us yesterday in the House, is primarily a matter for the host country of the headquarters of a global bank. In the cases of RBS and LLoyds/HBOS that was and is the UK.

The Prime Minister today is proposing to help Iran build civil nuclear power stations to tackle global warming.

I wonder how he will find the money to do that, given the tightness of budgets? I also wonder why he thinks the the way to tackle global warming is to build nuclear power stations in the Middle East, when he could build them here at home instead.

He has told us – just as his predecessor did – that he wants a big debate on nuclear power before we have any more of it. Is that debate now over, as I must have missed it? When will we see them building new ones here, if he is so keen on them?

There used to be a welcome consensus on charities in the UK. We all knew a charity when we saw one. If you were doing something to further education, or the welfare of animals, or looking after children, you were running a charity and you could claim tax exemptions.

Like much else which was traditional, lightly regulated and worked, this was not good enough for Nulab. Under them they pushed the envelope in two directions. Educational charities were challenged for being elitist, and had to jump through new hoops to keep their tax status. New charities sprang up, which some of you are calling bogus. Some of these new “charities” spend considerable sums on what looks like political campaigning, some through detached political wings and some in other ways.

Clearly there needs to be a new charity settlement which is fair and which works. I would like to hear from you about what types of things should and should not be qualifying activities for charitable status. Please don’t make the editing job too difficult by too many libels against existing institutions, however tempting it may be!

One of the most wasteful features of the modern life of an MP are the endless standard postcards and standard emails sent by well meaning constituents to get you to sign an EDM. On some EDMs you may receive dozens of exactly the same form of words, each one needing a reply. Constituents often do not realise how many of the same card you may be getting, and how futile the EDM game can be.

This has become an industry all of its own. Well paid lobbyists or charities design an EDM on their pet subject. They find a tame MP to table it for them. They then persuade as many people as possible to send exactly the same form of words to their own MPs, demanding they sign the lobbyist’s EDM. They imply to the constituents that if enough MPs sign all will be well, as if signing the EDM will resolve the problem or is in it itself an answer.

They never explain that there are thousands of EDMs in any Parliament. They are a kind of Parliamentary graffitti. They never explain that EDMs languish undebated, and are never voted on. Unless an MP sends the form of words to a Minister, no Minister need even read it , let alone respond.

A sensible MP takes the concerns of constituents seriously. That concern is is best expressed in the constituent’s own words, and best pursued in the MP’s own way. The EDM merry go round is all part of the spin world, where big money is raised to pay lobbyists salaries, who then play the EDM game to show they are busy.

If you want something changed you need to persaude the government to change it, as they control the business of the House and have the votes to decide the answers. MPs can help influence governments to do the right thing, but it takes more than an EDM to do it.

MPs and even Opposition parties do use EDMs from time to time – sometimes out of frustration that there isn’t a better way of raising the issue and getting some action, sometimes to congratulate the local football team.

This government does not know how to spell “freedom”, let alone understand it.

They now tell us they wish us to fill in details everytime we wish to travel abroad, as if were suddenly all locked into the USSR – or the EUSR as many of my correspondents would have it.

This would, they suggest, allow them to levy their parking fines, unpaid Congestion charges and any drink supplements they get round to imposing after the initial row has delayed it for a bit. They will use the cloak of anti terrorism to justify it, and their over the top anti terror laws. They fail to explain how they will be able to recognise a terrorist when they decide to leave the country when they failed to spot them on the way in, or failed to arrest them whilst they were living here.

This government has done more damage to freedom than any I can remember. They hold a referendum on regional government then ignore its result. They refuse to hold the referendum on Lisbon which they promised. They amalgamate the Revenue and Customs, so all parts of the tax raising bureaucracy can proceed on the basis that your money is theirs until proved otherwise. They impose huge volumes of stifling regulation on everything, then each time something does not work claim it is because there is not enough regulation.

From the government which brought you selective schools only for the rich, and driving in London only for the rich, we now might end up with drinking alcohol only for the rich.

The government presumably sanctioned their adviser to demand higher prcies for alcoholic drinks. Is this being nice to the rich – letting them have first choice at the off licence – or being nasty to the rich, by letting their livers rot first?

Presumably the government will just borrow more to stock the Ministerial drinks cupboards at the higher prices. Doubtless they will still be able to afford a snifter in the back of the Ministerial limo as the taxpayer takes care of their Congestion Charges.

So there we have it. After millions of pounds, after endless drafting by spin doctors, after a good lunch and thousands of airmiles, the Finance Ministers conclude they will “do whatever it takes” to end the recession.

When will that be then?

And could we know “What does it take”?

I suppose it is a kind of wisdom that the UK government has now twigged that each of the G20 countries is in in a different position, and maybe needs to take different action. They have certainly worked out now that there are very different views of what might help, ranging from the absurd Franco-German idea that more regulation will end the slump to the risky US idea that the way out of a borrowing crisis is to borrow more. Some wiser heads in the UK government team have worked out that the rest of the G20 do not see themselves as a Gordon Brown fan club, prepared to let him star in his own drama for political advantage at home.

What a pity there were no practical moves to start working through the bad and doubtful debts and the over extended leverage of the broken banks, without saddling taxpayers with the bills. And what a pity there was no break through on rising protectionism,and no mention of the present wish by many of those present to devalue their currencies at the expense of their fellow Finance Ministers.

What a pity as well, that no-one there was prepared to question the wisdom of the huge build up in government debt we are witnessing worldwide. Do none of them stand up for taxpayers, and for future generations now being born into collosal debt?

The government just does not get it.

Today we learn they are proposing new and much more extensive mortgage regulation, and regulation of everything else in the financial sector that they think should be regulated more.

I remember Labour introducing massive amounts of new mortgage regulation before the crash. I wrote explaining that their style of regulation would not stop a disaster, and that what they needed to do instead was make their regulation of banking cash and capital effective. They latched on to my former remarks and misrepresented them endlessly. I presume they did this because they realised their very intrusive mortgage regulation had comprehensively failed and I had been impolite enough to mention it.

The UK’s banking crisis could have been prevented by just one senior Regulator. That could have been someone senior at the Bank of England, if Mr Brown had not taken the powers away from the Bank in 1997. All that one senior person had to do was to say some years ago they would not allow banks and mortgage banks to go beyond a specified limit for the amount of money they could commit for a given amount of capital.

Instead, a large number of regulators all ticked boxes, carried out audits, intruded into huge amounts of detail on transactions, and looked the other way on the one thing that mattered. None of them noticed the huge increase in leverage, and none of them called time on it.

Employing an even bigger army of useless regulators after this crisis will not prevent another one. It will add layers of cost and complexity, but will not prevent extreme events.

Let’s just find one good person to be the banking regulator at a newly strengthened Bank of England, and cut out a load of the nonsense. Regulating mortgage process did not stop a single bad loan to someone who now cannot repy the mortgage. Controlling banks cash and cpaital would have stopped a lot of loans. It would have taken just four phone calls to the four main banks, a day’s work for someone who knew what he was doing. On the next day the senior regulator could have made a few phone calls to the Shadow banks to tell them that because he was controlling the main banks capital there would less borrowing for them too, as they got some of their excess leverage from the main banks as well.