Category: Blog

Wrong, wrong, wrong.

The latest decision to guarantee most of the liabilities of Northern Rock is a clanger.

There is no statement to Parliament, no statement of how much is now at risk, and no statement on how long our money is to be at risk.

Why cannot the government understand that it has to be tough bank manager to Northern Rock, lending the least it can get away with, imposing strict repayment timetables, and monitoring cashflow daily to ensure that all surplus cash is used for debt containment or repayment?

This government seems to think the taxpayer is made of money. Although Northern Rock is not a huge bank by international standards, judged in relation to the size of the Bank of England it is a collosus, and in relation to the UK public sector it is large.
Guaranteeing maybe ??100 billion is the equivalent of one fifth of stated total public debt, the same as the annual NHS budget, and almost one fifth of total public spending. They are crazy to do that.

Every one percent of error or loss on the whole Rock balance sheet is ??1 billion! Before this move 1% of taxpayers exposure was a mere ??250-300 million, already large but just about within the government’s command.

Northern Rock is too large to nationalise, and too large for us to guarantee all its liabilities. Unfortunately you cannot help some people – they are just determined to get it wrong.

Additional comment: we are now learning that maybe so far we are “only” guaranteeing ??60 billion. It is outrageous that Parliament and markets cannot be told how much is being guaranteed, and on what basis. The authorities lecture other banks about the need for transparency, and then commit the taxpayer to these large risks and vast sums without any proper explanation of how much, for how long, and on what basis.

I hear that today’s papers have a misrepresentaion of my blog on crime from no less a figure that Vernon Croaker, Home Office Minister for Crime Reduction.

He wishes me to apologise for comments which merely reported what is happening in courts on his watch, and fails to quote the balancing comments in my piece.

That is par for the course from Labour. No wonder we have such a crime problem, when the Minsiter charged with the task of reducing crime spends his days reading my blog – and presumably other Conservative blogs, and then sends out a press release and talks to journalists based on a misrepresentation of what I was saying.

I cannot recollect anything Mr Coaker has done to bring down crime in this coutnry – yet he has the power to act. In opposition we only have the power of words to try influcence those who can act, which is why I blog. Ministers should do, not blog.

Instead of playing silly media games, Mr Coaker, why not start tackling crime seriously.

Today’s news that the Bank of England is making liquidity available to the markets is a sensible move, but we should not expect too much of it. The mismanagement of the Northern Rock liquidity crisis has made UK based banks very worried about borrowing from the Bank of England, at the very time when they need to without fear of anyone concluding they are in difficulties because they are so borrowing. This is a tight year end for most banks, which accounts for their reluctance to lend to each other when they need to conserve cash to show stronger balance sheets in their December 31st Reports.

The Bank’s traditional weapons to fight a credit squeeze of cutting interest rates and offering liquidity in money markets have been blunted by the Northern Rock disaster. The Chancellor and Bank need to take other action at the same time as easing money to rebuild confidence. Without confidence, offering liquidity and cutting rates will not be enough to end the squeeze.

The first thing the Chancellor should do is to convene a meeting with the FSA and the Bank and work out a new regulatory structure for the money markets and main banks. We read in the press that the government thinks the right answer is to set up a Cobra type crisis committee chaired by the Chancellor the next time there is a run on a bank or some such similar problem. Far from rebuilding confidence, this type of irresponsible briefing to newspapers undermines it further.

We do not want to hear they are planning to handle a run on a bank better next time. We want to hear they are taking regulatory action to prevent a run on a bank. We do not want to hear that the second most important politician in the government is to be given the job of day by day supervision of money markets and banking as well as all his other duties. We do want a thought through response to the crisis, set out in a Statement to Parliament and followed promptly by whatever institutional reform is necessary.

I would suggest that the government does the following:

1. Give management of government debt back to the Bank of England, so the Bank sees all the government transactions in money and debt markets and influences the timing of them.
2. Give day by day supervision of the main banks back to the Bank of England: not because the FSA did badly, as they alerted the system to the crisis weeks before it became critical, but because the Bank of England needs to see day by day the positions of each bank in money market and debt instruments to inform its decisions about the needs of the system.
3. Reaffirm the Bank’s central role in ensuring a liquid and functioning money market, as the complement to its role in inflation fighting and establishing interest rates
4. To remind people that the Chancellor needs to be kept informed on a regular basis of general progress and urgently if there is a major problem as he has to explain the Bank’s actions to Parliament and has to make the decision on appointments to the top of the Bank.

Items 1 and 2 recreate the more powerful Bank before Brown’s reforms. The misnaming of these reforms as creating an independent Bank of England? has been particularly damaging, as they did the opposite in the crucial areas of debt management, bank supervision and running effective money market activities.

The government then needs to sort out Northern Rock. Some transparency would help. Taxpayers and markets need to know how much has been lent by the Bank to the Rock, when it will be repaid and what security has been taken to protect the taxpayer. If the government offers us more transparency of its own actions, it then has the moral authority to demand the greater transparency it says it is seeking from clearing banks over the valuation of their off balance sheet items. It should not nationalise Northern Rock, but act as its tough but concerned bank manager.

Restoring confidence does require market participants to be able to assess the damage done to the financial system by the decline in asset values on both sides of the Atlantic. The government must not kid itself that this is just a sub prime US crisis. UK market participants also want to know what impact the decline in UK commercial property values already well underway will have on bank balance sheets and the collateral they have taken for loans. They also wish to form a better view of how far residential property prices in the UK might fall, and what impact this could have ?along with job losses and the personal income squeeze on UK mortgage assets and loans held by banks.

There is a lot to do to relax the squeeze. It may be that once the year end is out of the way for the banks, and we have seen their year end balance sheets, things will start to loosen. To be sure they do the government needs to make that statement on the future regulatory position, and needs to get on with leading the market to greater transparency by explaining its own ?and the Bank’s complex and large transactions in markets since the Northern Rock run began.

Gordon Brown’s case for signing the Treaty without the referendum he promised was based on the proposition that he was relying on Parliamentary approval.

When I and others asked for a debate and a vote in Parliament before he went to Lisbon to sign, we were refused.

The Prime Minister went ahead and signed without either the promised referendum or a vote in Parliament. So much for democratic accountability, and for involving people and their elected representatives in the main decisions.

Today I asked him the simple quesiton, what will the government do if either the Commons or the Lords votes to modify the proposed legislaiton to implement the Treaty he has signed? He refused to answer.

The truth is, Parliament will be told it has to accept the Bill as drafted, because it has to accept the Treaty it is implementing lock stock and barrel. Gordon Brown is not going to go back to the partners in the EU to renegotiate any part of it which Parliament does not like.

The 20 days or so of promised debate on this Treaty in the Commons next year will be a farce. It is happening too late, as the Treaty is a done deal. We will not be told to take it or leave it, but to take it or take it. Doubtless the massed rank of Lib/Lab MPs will oblige, and the massed ranks of Lib/Lab peers.

No wonder people are fed up with politics. This government is playing silly games with such crucial matters. They spin they want Parliament to have more power, yet by this Treaty they have just given away a lot more of Parliament’s power, without a single vote that matters before they did so.

As a legislator I have a confession to make. I do not read all the laws that are rammed through Parliament – there are too many of them. I do try to read all the Acts of Parliament brought before us for debate, but these days those Acts of Parliament are just the beginning. Once passed, they allow the government to go off and legislate in detail about that topic, pushing through Statutory Instruments that often are not debated at all in Commons. Many of them are put out in the summer when Parliament is not allowed to be in session, and many of them go through without a word in anger being said against them. Reading the Acts themselves does not leave me well informed about our law – I would need to read all the secondary regulation, sometimes put through a year or more after the original Act.

Many MPs do not even read the primary legislation we are putting through, because it is often abstruse, and vague, leaving much to be decided in the regulations that follow. Because this government limits the time available for debating all Bills automatically, the Commons these days tends to concentrate on a few items or controversies over each bill which might make it onto the media. The detailed work of scrutinising each line of legislation is left much more to outside lobby groups, consultants and advisers. Bill committees can only get so far in the time available, and only by considering the original text. Very often the government ends up with large numbers of amendments at the very end of the Parliamentary process, as by then the outside interest groups have woken up and explain why the law as originally conceived will not work.The Bill we agree to on Report and 3rd Reading may be very different from the Bill considered in Committee.

If even the legislators themselves have not read all the laws, let alone know their contents, it is expecting a lot that busy people trying to lead their normal lives should also know all the laws. There is simply too much law, and too much pettifogging law. Time was when Acts of Parliament were shorter, when there was less regulaiton on top of the Act, and when the principles that underpinned the Act were understood by many.

Today it is more difficult to guess what the law is from first principles, because so much of the law is bureacratic and silly, often achieving the opposite of what it sets out to achieve.

It is still the case that ignorance of the law is no defence, but I have increasing sympathy with generally law abiding people who simply had not got round to reading the reams of legislative paper being churned out by Brussels and Whitehall which might affect them and their businesses. It is easier for large companies, because they can afford expensive staff and consultants to alert them to relevant changes. It is a nightmare for small businesses, where entrepreneurs have better things to do with their time than become experts on EU directives and UK Statutory instruments.

The legislative factories are too efficient at churning out lots of law, but useless at producing good law which is clear, simple, and meets with general support. One of my main grievances with the EU constitutional Treaty is that is designed to make it easier for 27 countries to produce more laws. It is called institutional change to allow decisions to be made. Why one earth do we want more laws? Isn’t everything wicked – and quite a few things that are not – banned and regulated already?

If legislators are to read the laws they pass, and if the public is to have some chance of knowing what the law is, we need to get back to less law and better law. The EU model is based on ever more complicated controls and needless interference.

Too much law means a cowed people, unsure of what the law says, and hesitant about doing things and making decisions. Too much law is the enemy of enterprise and risk taking. Too much law means the talented go into the law and bureaucracy, where the easier returns can be made. Too much law makes life a misery.

Better government means less government, concentrating on those things that matter where a sensible law fairly enforced can make a difference.

Some papers tell me the world has changed, that giant steps have been made to saving the world.

Meanwhile, this morning the frost is so cold I will have to run the heating for longer. It’s 8.47 and I still need the electric llights on as it is dark.

I have not heard from Mr Benn about how the UK will suddenly turn from increasing its carbon output – as it has been doing in recent years – to cutting it. Maybe he hopes the credit crunch will get out of control, for a recession would lower our collective carbon footprint.

The Bali people could have saved their journey and waited for a meeting attended by a new President of the USA who may like them enjoy such junkets and be prepared to sign up to all sorts of cooling words.

The issue is, how does any of this change our behaviour?

Although Labour in so many areas has been all spin and no do, they have been revolutionary in their approach to crime and policing. They set out to greatly increase the number of criminals, by widening and deepening the criminal law, creating many new offences, and changing police priorities.

When they came power they inherited a world in which the public thought there was a hierarchy of crime that should be tackled by the police and prosecuting authorities. These included:
Murder (including terrorism),
Stranger rape,
Other violent attacks on people,
Break-ins and burglary, and
Criminal damage to property.
People expected the authorities to share their concerns about these crimes, and to order their priorities for investigating, charging and prosecuting accordingly. The vast majority of homeowners and people in work saw the police as their allies and wished to help them do a difficult job. There was a trust between the police and most citizens.

Labour set out to change all that. They decided to criminalise the hard working and the law abiding. They decided to set death in accidents alongside murder, seeking to inculpate drivers, railway executives, construction managers and others as similar criminals. They hassled to introduce corporate manslaughter as an offence, although they were reluctant for it to apply to parts of the public sector. All sensible people are worried by the large numbers of people who die on the roads, who might die in a train crash, or who are killed at work. We all welcome steps to reduce the numbers. We do not, however, think private sector Directors and managers regard deaths in such circumstances as just part of the price of delivering shareholder value. The company leaders I know want to prevent accidents like everyone else as most of us share that common human instinct to prevent harm. Such a feeling is reinforced by the fact that it could be their loved one or relative involved, and it is not good business to kill your customers. It is therefore strange for Labour to try to create some kind of equivalence between such deaths and murder, the thing people fear most.

They decided to set date rape alongside stranger rape. Again, none of us want men to rape women, but there is a difference between a man using unreasonable force to assault a woman on the street, and a disagreement between two lovers over whether there was consent on one particular occasion when the two were spending an evening or night together. Labour’s doctrine of equivalence has led to jury scepticism about many rape claims, in situations where it is the man’s word against the woman’s and where they had agreed to spend the evening or night together. Young men do not want to have to take a consent form and a lawyer on a date, just as young women have every right to go on a date and to say "No", having it respected.

They decided to elevate speeding into the role of serious crime, on the false grounds that speeding is the main cause of accidents. Their own research shows that speeding is a factor in under 10% of all accidents, and that deaths and serious injuries on the roads are much more likely to be caused by acts of dangerous driving, by drivers using stolen vehicles, and by drivers under the influence of drink and drugs after a night out. Speeding brought two advantages for them. It could be policed by machines, as Labour put speed camera after speed camera into place, and it was bound to catch a very large number of otherwise law abiding people. Simple observation showed that most people drove at well over 70 on a motorway, and many at more than 40 on dual carriageways where the speed limit was set. It was an easy way of collecting more revenue from fines, and bringing in a whole new army of criminals.

They decided to create a range of new white collar crimes by regulating more and more. Ironically they also decided to bring in similar new regulations for the political class themselves, exposing politicians to the same kind of risks as managers and administrators in pensions, financial services, and a whole range of other services. They have succeeded in making many normally law abiding people worried sick about whether they have complied with everything they need to comply with, and have ensnared some into violations through ignorance or oversight.

They decided to elevate thought crimes to a more serious position than some crimes against people and property. I agree with the government in condemning racial abuse, religious intolerance and incitement to discrimination or violence. I still think that crimes of racial and religious hatred are far worse when violence is added to unpleasant words. The development of a much more extensive law code seeking to control what people say does not necessarily control what they think and do, but it has made the largely law abiding majority very nervous about saying what they think. It has also made intelligent political debate about issues like religion and immigration at times impossible.

Now that Labour has decided to rat on the police pay settlement recommended by the arbitrator there is ill will between police and government. I have sympathy with the police. If you join a no strike profession, and agree for your part to abide by an external body to decide your pay, you should expect the employer to do the same. It is unpleasant to see that someone is briefing, presumably from the government side, that the police are currently unpopular, as if that were a justification to pay them less. Any sensible analysis would show that what is unpopular are the priorities this government has set for our criminal justice system, and the wide increase in the number of offences and the number of potential criminals that has resulted from these changes.

To restore trust in the system we need a government that pays the police whatever the independent review body recommends, and reflects public priorities for policing in its law codes.

To Labour who have deliberately misrepresented this piece, let me repeat: I wish the law to protect women from rape, as all sensible people do, and made it clear that any woman has a right to say "No" which should be respected. I have drawn attention to the large number of cases where courts decide no rape has been committed. These are clearly not the same as rape and must be harrowing to all involved. As some people seem as determined as a silly Labour Minister to misrepresent this piece let me again make it clear that I condemn all rape and wish to see all rapists successfully prosecuted. No force should be used in any circumstances. The issue is so-called "date rape" where the courts judge there was no rape at all.

The reporting by the BBC has hit a new low of idiocy. To them there are good guys who want targets and bad guys who do not want targets. They seem to rely on EU spin, out to portray themselves as the new powerful good cops, taking on the bad guys, the US.

So let us examine what has in practise happened. The world currently has targets under Kyoto. Some of the EU good guys? who signed up failed to hit their targets, but strut the stage with moral rectitude because they agreed to targets years ago. Some who signed targets to cut their carbon output have done so, partly by closing down heavy carbon producing industrial activities and importing the goods from India and China instead. Some of the bad guys who did not sign up to targets have controlled their carbon outputs better than the good guys in recent years. Last year, for example, US carbon output was under better control than the EU’s.

All this implies that targets themselves are not the answer. Ultra greens conclude that therefore the targets next time round must be made binding with sanctions. A lot of countries, including Japan, Canada, India and China will say No? to that, as well as the USA. It would be surprising, therefore, if the mandatory target approach is adopted, and if it is adopted by only some countries by definition it cannot work for the whole world.

Even if the whole world could be made to sign such a proposal, for an individual government in 2010-14 it might still be better not to impose draconian measures to cut energy use in order to hit a target for 2020, as many of the measures that would be needed will be very unpopular with electorates. Some governments in such a regime might decide ignoring the problem and leaving any fine to a successor government was the least bad way of matching the public mood.

Nor do targets deal with the problem that the richer countries accepting them can meet them by exporting energy intensive activities elsewhere. This is likely to happen anyway, and explains India and China’s reluctance to accept any target reductions, as they will be the places producing the exports. Without India and China in the deal it is a nonsense. Nor should we expect developing countries to forgo the pleasures of using more energy per capita that the west takes for granted, as they succeed in generating more exports and more income.

When you look at the problem like this, you understand that it is not a simple case of EU right, US wrong. If the EU had its way and imposed targets, it will not reduce the world’s overall output of carbon, because the developing world will take up the slack from cuts in the developed world, and some of the developed world will fail to hit targets, as EU countries have proved during the Kyoto period.

Instead of dividing the world into good guys and bad guys, the EU should grow up and try to understand the problem. Instead of trying to unite the world against the USA, the EU and others should seek to harness the power of the US to taking action to cut energy dependence (a concept even the Bush administration understands and could support).

This long, bitter and carbon intensive conference has made the world’s CO2 problem a little worse as a result of all the extra flights, and the all night lighting and cooling in the conference centre and hotels. It was only a conference about another conference. It was sherpas preparing a way for a summit, but a conference of very numerous and rather grand sherpas. It is difficult to see why more of the preparation could not have been achieved on the emails and the phone, less carbon intensive technology. It all goes to show that our political masters still love overseas travel at our expense.

If the world wanted to do something positive to curb carbon output, it needs to concentrate less on targets and more on technology and incentives. There was discussion of that at Bali. We are not allowed to hear much about it from the BBC, unless it can be fitted into the good guy EU versus the bad guy US script. Fortunately the Indian proposal for technology sharing came along which filled the bill.

The good news is the conference is now over. Once the jet fuel has been burned to get these delegates home for Christmas, we will not have to watch or listen to more BBC people complaining of how late they are working, and telling us that the US is the only country out to wreck the planet. The truth is that if carbon does wreck the planet we are all doing it, not least all those BBC journalists burning the oil in the early hours to send us their distorted portrait of what is going on. The truth is that nothing important has happened at Bali. It will all look very different when they do it all again with a different US President. The so-called deal on technology sharing, presented as a victory, is just a few words on a piece of paper. The reality is different, as most of the technology is owned by private sector companies who will need incentives to share it.

EU members have shown their worst features at Bali.

The EU lectures the rest of the world on the need for targets, whilst several of its members will not hit their own Kyoto targets. Others like the Uk are allowing their carbon to rise after a good start at reductions years ago.

It thinks it is better to sign up to targets it has no ability to hit, instead of being honest and refusing to sign up to the targets in the first place.

It personalises its disagreements to the USA, when Japan and Russia are also against new tough targets, when Australia appears reluctant, and when India and China are standing apart from any idea of mandatory targets.

The EU should grow up, and learn that if the world is to reduce its carbon output it requires goodwill and understanding on all sides, not a combination of bullying and vain posturing. We will not cure the world’s CO2 problem unless India and China, Japan and Russia are involved as well as the USA.

The problem surrounds the belief in targets. There is a target to cut hospital acquired infections in the UK. I am sure all involved want to hit it. They do not stamp the diseases out, because they have spent all their energies on posturing and target setting, and not enough time working out how to solve the problem.

The world is in danger of being forced into the same nonsense over carbon output. Journalists should ask the people who want tough targets how they think they are going to be hit? Then they should ask why the things needed to hit the targets are not already been done anyway, as these same governments always tell us this is the most serious crisis facing mankind.

If we are to curb our carbon output we need to incentivise countries and people to do so. We need to sit down and discuss how we can share technologies and apply new ideas to cutting carbon output. Governments need to provide a lead, showing how they themselves can cut their own carbon footprint. I have had little response from the UK government to the long list of energy saving proposals I sent them. I recommend energy efficiency because it saves money and reduces our dependence on imports. The UK governemnt is well behind best practise in industry.

These governments also need to show some humility about the limits to their powers. They do not yet control every pensioner’s thermostat and every family’s oven. Until they do so they cannot guarantee to deliver a given figure by a given date.

They will not win the carbon war by going off to exotic locations by plane in large numbers, staying in classy air conditioned hotels, and having flaming rows with each other. Why should the rest of us have to pay for that? Why should we cut our own travel, heating and use of electric appliances, when our political masters do exactly the opposite? Why should we regard Al Gore as a role model, when we have seen his own large personal carbon footprint planted on the world?

I would take all these posturing governments more seriously on this subject if they showed some restraint. If they looked as if they were trying to get on with each other, to shorten the meeting and avoid the need for another carbon intensive junket, they would have more chance of getting the rest of us to follow. If they practised what they preached they would command more respect.

The BBC of course as part of its daily climate change propoganda just assumes the EU is right and the USA is wrong on all this. Even if that were true, it is not the way to get the world to an agreement. They should stop rowing about targets and get on to discussing what practical changes could be made so that people would be willing give up their carbon generating activities, or replace them with better technology to do the job.

It is never easy when you are double booked – you can end up satisfying no-one.

Of course the Liaison Committee of the Commons would have changed its date to question the PM if asked. The fact they were not asked implies that Gordon Brown planned to leave signing the EU Treaty to Miliband. When pressure was applied, he decided he had to do both. The EU was insulted because the PM did not appear at the official ceremony, and Eurosceptics were angry because he gave in without seeking the approval of either people or Parliament.

I am all in favour of the PM taking the Commons seriously. I am glad he turned up to answer questions from Committee Chairmen. I would think he meant he takes Parliament seriously if we had enjoyed a vote on whether he should sign the EU Treaty before he signed it. What is the point of Parliament debating it and voting on it now he has committed us? We know we will be told we are not now allowed to alter any part of it. We know the government’s majority will be used to steam roller it through, with the Lib Dems helping drive the roller. All those who voted UKIP or stayed at home because the Conservatives were not proposing immediate withdrawal from the EU should be kicking themselves now. The Conservatives are the only party voting against this Treaty and for a referendum. Pity there are so few of us.

The PM would have made himself a hero with many if he had refused to sign the Treaty and had demanded the retention of vetoes or a better deal for Britain when he took over from Tony Blair. He had spun that he was far more Euroscpetic than Blair. He told the press he hated these grand EU gatherings, and saw much of the EU back slapping as a needless diversion from important matters at home. It is a pity he did not remember this when he became PM. That explains the savage change in press attitudes towards him.

The most revealing answer he gave to the Liaison Committee was when he said he now spent more time reading the newspapers but less time enjoying them. That tells us that he is just as much a slave to the media as his predecessor, thin skinned and concentrating on the wrong reading materials. He should remember Margaret Thatcher’s advice to senior collegeaues – "Don’t read it" – when the press wrote unpleasant things. She was told daily what the thrust of criticism was in the press, but did not usually spend her time pouring over different editions. She did not hold meetings to deal with press stories – only meetings to deal with real problems which sometimes might also be appearing in the press.

As a Minister myself I spent little time reading newspapers, as I had so many official papers to read and write, and so many people to talk to. If I was doing my job properly I knew more about my subject than the press knew, so I did not need to waste my time catching up with the newspapers. If the newspapers ever knew more than me about something within my government remit, then I had to make sure we caught up quickly! This bunch of politicians are too reactive, too slow, and spend too much time on dealing with the media. By the time it’s in the media it is usually out of control. That’s why the departments are so badly run. Whilst Ministers read newspapers, officials put data on discs and send it through the post, and lend ??30 billion to a bank without setting proper repayment and security terms.