Category: Blog

If the government now wishes to get tough on leakers, there is plenty for it to do. It might also help to start targetting the people with access to privileged information about important issues who leaked it in the first place.

The government should open enquiries into two very important sets of leaks that moved markets and made it more difficult to handle the Credit crisis. These were much more serious than a few immigration figures. It also happens to be an offence to pass on price sensitive inside information, and to divulge it before it has been properly declared to the Stock Exchange.

The first are the leaks to Robert Peston concerning the private talks between the banks, the government and the regulators over the adequacy of their capital, when the authorities perversely decided to increase their capital requirements in the midst of a serious lack of confidence. These leaks pushed down bank share prices, and made it much more difficult for banks to raise extra capital from the markets at a time when the government was threatening nationalisation if they didn’t immediately raise more money.

The second were the copious leaks of the budget proposals before the misnamed Pre Budget report this week. Chancellors used to have to resign if any tax proposal from a budget got out before it was announced in the Commons. How times have changed with this regime of the spinners.

The trouble is I don’t expect any strong aciton on these matters any time soon. It just goes to show how this government has no sense of justice and fairness. It wants to blame an Opposition spokesman rather than investigating where the leaks came from within its own organsiation and taking approrpriate internal disciplinary action.

What of course the government will discover is that in a democracy it is not unreasonable for information other than secrets important to our security to become part of the public debate. They may also discover that some of the most active leakers are Ministers themselves, who seem unable to keep to the rule that they should announce things first to the Commons. It is quite wrong to use anti terrorism legislation for any of this.

Yesterday in the very short Budget debate we were finally allowed, there were signs of a sensible agreement across the House. Labour, Conservative and Liberal Democrat MPs united to tell the government it is more important to sort out the banks than to borrow more to reflate.

Today in the Telegraph I have set out how the government should re-open the banking support package, to cut the risks to the taxpayer and to help it work better. I have also pointed out that the government and the regulators are forcing the banks to be ultra cautious with their new regulatory requirements, at the same time as lecturing them on the need to be less cautious and to lend more at a time when too many people will find it difficult to pay the interest and pay back the capital.

I am still livid that there was “no time” for me to make these comments in the Commons, owing to the government’s stubborn refusal to allow us to debate the Budget for long enough yesterday. It certainly shows that this Budget, which Labour claim is the answer, is not something they are proud of or wish to defend. Labour speakers yesterday found it difficult to warm to the VAT cut, and turned for comfort instead to bashing the “rich”, people on more than £19,000 a year who will have to pay more tax on Labour plans for 2010 and beyond. So Parliament gets another holiday!

The BBC struggled this morning with the Royal Chemistry Society’s Report claiming that modern science students at 16 do not have anything like the mathematical and scientific grounding their parents and grandparents had if they studied the O level syllabus. They accepted the evidence that the brightest modern students achieved very low marks when faced with 1960s style questions, but opined that 1960s students would probably have fared equally badly if faced with a modern paper. They did express one truth – children are taught differently and taught different things these days.

The issue is, which is the better system? This year in the Wokingham Schools debating competition I set one debate topic on green issues. One floor speaker told us that she had been taught general global warming theory in at least four subjects at the same time – Chemistry, Biology, Physics and Geography. She felt she had been taught it in one or two other subjects as well just for good measure. She argued that this had taken up time which could have been much better used in teaching her the basics of Chemistry, Biology and Geography. Global warming could have been handled successfully in one subject syllabus. Interestingly, although all the pupils had been offered large helpings of global warming theory, some expressed a scientific scepticism about some of its claims and the evidence base, showing that you cannot prevent bright pupils from asking critical questions, the most important foundation of scientific advance.

I look forward to receiving my copy of the Society’s Report. Of course many modern pupils work hard and many achieve good results. That is not the issue. The issue is, are we stretching them and educating them in the best way? Isn’t there more need for them to understand more of the basics of science, rather than so much emphasis on the social, environmental and economic context of science?

The collapse of both Woolworths and MFI on the same day was no great surprise. The timing was unhelpful to the government, coming just two days after their announcement of the 2.5% cut in VAT that they presented as the way to stimulate retail spending before Christmas and beyond.

Sage retail analysts have been invited in to studios to tell us it is just the weakest store groups going down, and to imply some inevitability about it. It is still not good news. There is a Woolworths on most High Street. If they cannot find a buyer quickly there will be fire sales on the High Street, doing damage to shops near by, followed by more blank frontage as the shops are closed. It’s bad news for the retail market generally, and for all those who make their living out of promoting shopping in our Town centres and offering us goods there. These are casualties of the Credit Crunch.

The following press release has just been sent out by Conservative run Hammersmith and Fulham Council in London:

Council tax to fall by 3% — third year in a row

COUNCIL tax bills are set to tumble by three per cent for the THIRD year in a row at Hammersmith & Fulham Council as a major help to residents suffering as a result of the credit crunch.

After three years of tax cuts residents in H&F are expected to be £175 better off compared to the average London borough — a major help when residents are struggling with the cost of living.

While cutting tax, the Council is improving services AND cutting debt. More than £13 million of red tape is being cut in 2009/10 by reducing staff numbers, office space and making better use of IT.

The news comes as the Government today announces its Revenue Support Grant settlement (RSG) which sets out central government funding for local authorities in 2009/10. The level of funding is a major factor in determining council tax bills next year.

Cllr Stephen Greenhalgh, H&F Council Leader, said it is up to councils like H&F to offer the best possible services at the lowest possible cost. H&F has received the highest rating of four stars from the Audit Commission for the quality of our services while resident satisfaction has increased nine per cent in the last year… to one of the highest levels in London.

While reducing bills, the Council is:

* Improving schools, with £200 million worth of investment through Building Schools for the Future
* Putting more bobbies on the beat by spending £750,000 on extra police in town centres following the ground-breaking 18-month pilot for 24/7 neighbourhood police in Fulham Broadway and Shepherds Bush Green.
* Improving parks to the tune of £6.3 million on parks and open spaces, including £3 million for London’s iconic Shepherds Bush Green
* Retaining weekly bin collections, while having a single recycling and refuse collection on the same day to make it easier for residents

Meanwhile the Council is:

* Reducing our headcount and agency bills – Staff numbers have fallen by 566 through efficiency measures and agency spend has tumbled from £24 million in 2005/6 to £21 million in 2007/8
* Cutting our debt by nearly £20 million, producing annual savings in borrowing costs of around £1.7 million a year
* Market testing £90 million of services, producing savings of £1.3 million in 2008/9
* Promoting smarter working – cutting accommodation costs is saving £1.1 million
* Improving customer access while saving money – for example by allowing people to renew parking permits online. Overall the council’s award winning Customer Access Strategy has delivered £4 million in savings while substantially improving our service to customers.

Councillor Greenhalgh continues: “At a time of great financial uncertainty for many families we are once again taking the lead in Britain by cutting council tax for the third year in a row. It essential councils like ours do all we can to help hard working families struggling to make ends meet, whilst ensuring we still deliver quality services.

“At the same time we are providing quality local services that people expect, spending money on things that matter. We are improving schools, cutting crime and making our parks better. We are retaining weekly bin collections while making it easier for residents by ensuring that refuse, recycling and street cleaning happen on the same day.

“This is a commonsense council that is leading the way in delivering quality services at the lowest possible cost. Our tax cuts are affordable and do not increase our debt burden. Instead we are cutting debt. I invite politicians of all parties to come to Hammersmith to see how it is done.”

Other examples of cutting bureaucracy over the last two years include:

* Cutting communication costs by £300,000 to the lowest levels in London
* Cutting personal advisers to Cabinet Members – at an immediate saving of over £300,000 a year.

Councillor Greenhalgh concluded: “This shows once and for all that you can reduce the tax burden on residents while improving the way the council runs vital services.”

When Us taxpayers are committing $6 trillion already already to banks and the mortgage sector, another $800 billion is almost petty cash. This crisis has changed attitudes towards sums of money and borrowing levels so fundamentally. Unfortunately, there does have to be a day of reckoning. Borrowing does have to be repaid and guarantees have to be met if things go wrong.

Let’s hope this time the US authorities have found the way to put this cash into the system so that it will stabilise the main banks and allow more normal commerce to resume. Even the mighty US has to be careful of just how much risk and borrowing it heaps on the broad shoulders of US taxpayers.
There is a certain irony on both sides of the Atlantic that governments and regulators who wanted to bring an end to easy credit are now resorting to the biggest government credit binge we have ever seen to try to put it right. I still find it difficult to grasp that a so called right wing Republican President should end up nationalising and buying stakes in so many banks. We call that socialism over here, and it has never worked in the past.

Well done to George Osborne for carrying the case for a debate to Parliament and getting us one. Now today we need to show the government how wrong they are to propose a further large increase in borrowing to cut VAT.

I am expecting lots more Labour lies, as this budget is not a serious economic policy statement but a trap for the Tories that has misfired. It is a silly political manoeuvre that has gone wrong. Labour thought they could damage the Tories by getting us to oppose borrowing to pay for a tax cut, and then lying about our motives for doing so. Instead, they are left defending an ill judged tax proposal which most of the public is cynical about, which will not suddenly lift us out of recession. People do not welcome a tax cut which they have to pay for with huge tax rises after the election. Meanwhile they have spurned more modest but more helpful Conservative proposals to assist small business, Council taxpayers and home buyers as they lose out in the downturn. Labour’s temporary VAT cut, far from being a comfort blanket in a crisis, will prove to be a borrowing noose round all our necks.

Labour are still using the lie that I wrote a deregulatory report about the mortgage banks. They refuse to look at the part of the Report which forecast banking problems ahead and urged better and tougher regulation of banks capital and cash. Instead, the government implemented that part of my Report a year too late, in an over the top way which is making the problem worse. They lurched from being too lax to being too tough after the banks were badly damaged.

Labour think they are clever, and can use budget proposals and legislation as part of their spin campaign to portray opponents in a bad light and themselves in a favourable one. They will learn to their cost that people mainly judge governments by what they do rather than by what they say. This latest budget unpicks three of the more foolish and unpopular measures of previous budgets (car tax, 10 p tax abolition, small business profits tax). This latest budget itself will need unpicking, as it is borrowing too much and delivering too little help to a country torn by recession.

Days after it has become fashionable for national governments to launch reflationary packages, the EU is drawing up a list of recommended ways of doing it. This may include the ever popular cutting taxes, and the preferred continental route of increasing spending. I wonder how much high cost brain power it has taken to deliver this show stopper?

More significantly, have you noticed how the EU’s main economic policies have been suspended now there is a crisis? The Competition policy clearly no longer applies to banks, which are able to merge at the drop of a hat with no investigation. The state aids policy has been abandoned for banks, and maybe soon for autos as well. Governments can put any amount of cash they like into banks without a thought for the EU economic policeman or the competitors. Now we also learn that budget discipline has been abandoned. Apparently member states of the EU and of the Euro can now borrow more than 3% of GDP with no new limit.

I do not lose any sleep over the abandonment of policies and powers by the EU, but it just goes to show that the rules of the EU do not apply if France and Germany come to find them inconvenient. Northern Rock was not allowed to trade for new business, we were told, owing to EU rules. That was before big continental banks got into public difficulties. The banks that came after continental problems are allowed state rescue without it affecting their ability to offer new business.

As I awoke from my slumbers this morning I heard the Agriculture Minister, Jane Kennedy, stumbling to tell us she could not recommend that we buy British. She did ,however, tell us our purhases of certain foods from the UK was rising and she did at least seem pleased about that.

At a time when we are in debt and running a huge balance of payments deficit, when we are worried about future job losses and too little demand, why can’t our Ministers recommend that we buy British? More importantly than their words, why can’t we stick a Union flag on the packaging and be proud of it? If they get on so famously with our competitors on the continent, why can’t they tweak the rules? As the EU wants the Uk economy to be in better balance, surely they see the need for us to buy British bacon instead of Danish and British beef instead of continental?