The criticism this morning of our hapless Prime Minister is a typical media one. He is condemned for arriving in New York on the day the Pope arrives in Washington, for the Pope will take the headlines. It is all part of a world where presentation triumphs over substance, where the media can mistake the image in their distorting mirror for what is going on. What matters is how well the Prime Ministerâ€™s meetings go with Wall Street bankers over the credit crunch and with the UN over a range of international issues. Tomorrow he moves on to Washington to meet both the President and the next President, where he has an opportunity to shape the foreign policy views of all three serious candidates for the Presidency.
In the early days of the Prime Ministerâ€™s tenure the media gave him rave reviews for no good reason. As a long standing critic of his changes to the Bank of England in 1997, I was expecting financial problems. As a critic of his high spend policy, recklessly expanding the public sector without getting value for money for the spending, I anticipated economic problems ahead. The media told me when he had to handle the flooding and farming problems of 2007 that he did so well. They meant he looked serious on TV and seemed to be taking a proper interest in the difficulties. I wrote that the government had to take a lot of the blame for the crises â€“ it was their laboratory complex which let out the disease, and their lack of preparation which left people vulnerable to floods. Worse still, there was no evidence that after the floods the government put in place the necessary measures â€“ cleaner and bigger ditches and drains â€“ to protect many people. None of this mattered to the BBC. The new PM was just fine, and the polls were holding up.
How different it looks nine months on. Now the fact that the Pope today meeting the President will get more US publicity than the PM arriving in New York is levelled against Gordon. The media should understand that this is a clever set of meetings by the PM. He will get plenty of publicity here in the UK for his trip, where he needs to get some messages across. The reason for the meeting with Wall Street bankers is to try to persuade us that the financial and economic problems in the UK have their origins in the US, and he is boldly trying to help sort them out. The reality is somewhat different. The UK has its own version of the western worldâ€™s credit crunch difficulties, and has so far been much less bold and positive in trying to combat them. Gordonâ€™s stewardship as Chancellor has left the UK too heavily borrowed to cut taxes, and left UK consumers too heavily borrowed to maintain their living standards. The present squeeze in the UK owes a lot to the â€œsubstanceâ€ of Gordon, based as it has been on excessive public waste, excessive public borrowing, and a raft of unpleasant stealth taxes.It was during Mr Brownâ€™s tenure at Number 11 that Northern Rock overstretched itself, and it is Gordon Brown who has foolishly decided to nationalise the Rock with all the adverse consequences readers of this site will know about.
I hear said that yesterday bankers in the UK think they at last got through to the PM the seriousness of the situation we are in. If they did, then maybe some of the ideas I and others have put around for tackling the banking crisis can now go onto the government and Bank of England agenda. The government this week has started talking more like the public â€“ doubtless they have spent another fortune on polling and focus groups to find out the blindingly obvious and are now putting the language of the public back to the public. One cheer for the fact they now share our pain. They now recognise just how intense the squeeze is, and how serious the difficulties in the housing and mortgage markets are. If they had listened when Barker first reported to those of us who warned them that the UK housing market was driven mainly by mortgage finance, not by the supply of new houses, they would be in a better position today. If they had paused to try to answer the obvious question to their account of a shortage of homes, by how much do you want house prices to fall, they might have avoided the worst of the present crisis.
If they are now going to do anything more than just empathise with our pain they need to take strong action. The Conservatives official criticism of the government, that it did not mend the economic roof when the sun was shining is correct. We now need crash repairs on the roof, which include:
1. The Bank of England to make more cash available in money markets, and to accept a wider range of instruments as collateral for loans (with a suitable margin to protect the taxpayer)
2. Further cuts in the Bank lending rate
3. Reductions in stamp duty on buying homes.
4. Reduction in the rate of petrol and diesel tax, to get the forecast revenue back down to the original budget forecasts following the price increases
5. Reductions in wasteful public spending, and a general efficiency drive throughout the public sector
6. Early repayment of the Northern Rock money to the Bank and Treasury through encouraging refinancing of Rock mortgages
7. Abandoning ID cards and regional government, and imposing an administrative staff freeze throughout the public sector .