Tuesday, 23 November 2010

Time To Name & Shame

With the cuts about to hit the fan, the blame game is in full swing.  The unions blame the Tories, the “Left” here in Scotland blames the SNP, the Lib Dem’s blame, well everyone but themselves, while the Tories blame the last government, despite agreeing with everything it did, untill the Westminster Elections came into view.   So, for everyone, including “the left” who seem to have found some sort of money tree which hands out free money (why else do you explain their osterich like Anti-cuts campaign?), here’s a sort of cut out and keep guide as to why UPplc is in such a hole.
Brown: Tending the Garden,
When New Labour took office in 1997, New Labour decided to keep with Thatcherite economic policy, despite having a mandate to change direction.  This put in place the foundations of the current recession in two ways.  Firstly, when Gordon Brown announced the new tri-partite regulatory arrangements, primarily in the Mansion house speech of June 1997, he directed the new Financial Services Authority to adopt a “Light Touch” to the regulatory process.  Whatever the intention, this sent the message that financial companies could do as they pleased when they pleased – essentially that it was business as usual.  The second mistake that Brown made was in relation to closing the small black hole that the Tories had left New Labour to deal with.  Instead of putting up the top rate of income tax from 40% – this would have put a brake on consumer spending and on house prices.  Brown taxed the shares & managed funds ie pension funds.  As a result, this destabilised pension funds up and down the country, causing them to lose value.

Thanks to the lasiz faire attitude to financial companies, as long as the money continued to roll in, no one cared where it came from.  As a result, companies started to offer 100%+ mortgages, with minimum reference & financial check’s, and little adherence to salary multipliers.  Northern Rock were chiefly involved in this market, but others moved into this area too.  However, Northern Rock became the symbol of “Sub Prime” mortgages in the UK. 

The guy who broke “The Rock” was the BBC’s business reporter Robert Peston (left), who reported that Northern Rock had asked for a loan from the bank of last resort.  This seemed to send millions of people in a panic, as they worried about their savings – causing the first run on a bank in living memory.  The report would have been fine, but for the two vital bits of information which was missing.  Firstly, banks had received loans from the “bank of last resort” in the past – it was used to alleviate a shortage in liquidity in the banking system, so The Rock were not in as bad a situation as they would be.  Secondly other banks had money loaned to them at the same time as “The Rock”, Barclays were rumoured to be one.

This data protection breech meant that banks and financial institutions were now going to be more reticent in lending to each other.  Which meant that financial institutions that had bought into the supposed financial goldmine of “sub prime” were finding that it was now a mine field.  One such company was the Bank of Scotland, who had become exposed to Sub Prime in the US as well as here, through it’s merger with Halifax.
Another company exposed to Sub Prime was the Royal Bank of Scotland.  However what brought RBS down was the aggressive programme of takeovers overseen by their CEO Fred Goodwin (pictured right (on the left) with his chairman Robert McKillop).  In 2007, Goodwin saw the takeover of the Dutch bank ABN Amro as crucial to the growth of RBS, and was very keen to land the bank, especially as there was a rival to win the bank, Barclay’s (with rumours that Santander were also monitoring the situation).  Scottish politicians were also particularly keen to see RBS land ABN Amro, despite the growing awareness of sub prime and doubts surrounding ABN Amro’s exact debt position.  Goodwin & RBS won the race when Barclay’s pulled out of the race (did they find out about ABN Amro’s position, or did they already know?).  However Goodwin had not read his debt reports, as ABN Amro was heavily exposed to US sub-prime, and as a result was heavily in debt.  With liquidity drying up in the wake of Northern Rock, RBS found itself on the critical list, alongside HBOS, Bradford & Bingley's, Alliance & Leicester and Northern Rock.

By September 2008, the situation had become so serious that the government had to act.  Northern Rock, Bradford & Bingley, RBS and the newly merged Lloyds TSB/HBOS group were either fully taken into government ownership, or majority government ownership, as Alistair Darling baled out the banking sector, thus creating the current government debt.  Interestingly, at no point did Her Majesty’s opposition query the course taken by the government.  They did not question the lack of regulations, the bank bale out, the “nationalisations” of the bank’s, or did they press for criminal action against the heads of the banks that were brought down.  Indeed, George Osborne was pressing for even less regulation in 2007, and Osborne was nowhere to be seen when Paul Myners gave Goodwin his pension.  Since the start of 2010 though, the Tories & the Lib Dem’s have decided that New Labour caused the deficit with their policies and that it should be tackled.  Tosh, utter tosh.  New Labour caused the deficit by not reigning in the financial sector in this country.  The real legacy for Gorgon Brown is that he created the conditions for the current government to come along and turn the clock back 50-100 years, and let others take advantage of the diminished conditions many people now, and will, live under.

Tuesday, 16 November 2010

Person Gets Engaged Shocker!

So let me get this one right, we are maybe going to see the beginning of the end of the Euro, or the beginning of the end of Ireland as an independent economic country, less capable of taking economic decisions than…  well Scotland.  We are still in the middle of the worst economic crisis since the 1930’s, which our government have taken as a sign to enact the scorched earth policies they strenuously denied they would enact pre-election – egged on by the Lib Dems.  So what has been dominating the news today.  Why today’s the day that the engagement of William & Kate was announced.

It is good news, if you are a fan of the Royals.  For the rest of us (who think that the most real depiction of the Royals is a cross between “The Borgia’s” and “Spitting Image”), any goodwill will have evaporated within five minutes of hearing the news with the already unbearably awful fawning coverage.  For fear of loosing my DAB, I switched off the radio at lunchtime after 10 minutes of the stuff.

And what about all that “Bringing the Nation together” rubbish, what nation exactly are you talking about?  It shows an ignorance of the make up of the UK when “The Nation” is normally wheeled out, normally at World Cup time.  When it was wheeled out at lunchtime, it showed an ignorance of the  deep grindingly black pit many people face regarding their future and their families future thanks to the scorched earth policy pursued by the current government and their cheerleaders.

I do hope that, on a personal level, William & Kate do enjoy their time together.  If only because I would imagine being at the centre of the sort of media scrutiny they are about to be put under, will not be pleasant.  Particularly with The Firm as the in-laws.

Thursday, 11 November 2010

After Minimum Pricing…

Minimum Pricing finally hit the wall  yesterday as it was voted out by the Holyrood parliament.  While the fallout & acrimony continues, there are two points to be made.

While Minimum Pricing was undoubtedly the flagship policy of the SNP’s Alcohol bill, a policy which deserved to fall because it wouldn’t work (as has been discussed here & here).  There were two other proposals which deserve closer scrutiny, partially because they too failed to make the Alcohol Bill (Trebles all round Scottish Labour!!!), but also because i think they would have had more chance of working than Minimum Pricing.  The Tightening of Licensed premises would have set a higher standard for public houses, while the rise in the age where alcohol could be purchased from off-licences would be able to give shop owners a better chance to assess whether someone was over or under age.  Of course this regulation would be nullified if underagers got an older adult to buy alcohol for them, however some sort of sanction against this act should be looked into.

The second point is that Scotland’s alcoholism is talked about as a disease to be cured.  However there is another point here, that the love of Mr Booze is a symptom of something else.  Whether it’s an inability to cope in our dark, damp (and currently very windy) country, our need for a “prop” after working long hours or just that…  well there’s nothing else to do.  Our Booze culture is very heavily ingrained into Scottish culture.  Right down to the lack of coffee shop’s open late into the evening, public houses & king Booze dominate the Scottish mind-set.  Perhaps a way is to provide alternatives, to incentivise restaurants & coffee shops to open late on into the night.  For young people, the alternatives would be to provide amenities and places to gather.  As well as that, and this is a local point, public transport could be made an awful lot more accessible at night (try getting around Paisley at night).

Or is Scotland’s booze culture so ingrained that any attempt to dilute it is doomed to failure?  The Chewin’ the Fat sketch (“Gauny have a drink”) is spot on about the relationship many people have with alcohol.  Minimum Pricing might have been stifled at birth (which some of us think is a good thing, even if the motives are nebulous to say the least).  It does look to have started a discussion on how best to proceed.

Tuesday, 9 November 2010

Every Little Helps: How Labour Could Still Loose Next May

In our corporate world, brand trust is everything.  Companies & organisations fight for trust.  In Scotland if the last Westminster elections are anything to go by, Scottish Labour is the most trusted organisation in Scotland.  It looks as well, if the (single) poll is correct that Labour will be in the box seat to set up the next government of Scotland.

Reservoir Dogs, schemie style
Pollsters believe that the SNP are now clearly second favourites to retain power next May.  While the SNP have their own problems, which if they iron them out could still put the SNP in the mix.  Scottish Labour might have sown the seeds of their own downfall next year.  And not just with the robust/offensive attitude shown towards their political opponents (“Ginger Rodents” and calling Salmond’s life story “Run Fat Boy… Run”)

The highest profile policy announcement at their conference in Oban was the commitment to scrap the Council Tax freeze.  You may remember the high profile campaign by COSLA and by the leader of Glasgow City Council Gordon Matheson a couple of months ago to have this measure scrapped by the current administration.  Scottish Labour have committed themselves to scrapping this measure, but have said that they will put a cap of 2% on council tax rises.  In a funny way Iain Gray (above, right) has produced a policy which pleases no one.  Hard pressed people will see their council tax rise by 2% for every year of the next parliament, at precisely the moment where the Scottish economy needs people to spend money to put needed liquidity into the economy.  Scottish Labour councillors are not happy either, they did not want a cap – it cannot have escaped their notice that Council Tax for Band D homes is 20% lower here than it is down sarf.  The argument will be that this is to ensure the survival of frontline services, but surely there are enough examples of Labour largesse to torpedo this idea (just please let it not be the Tories supporting TPA that exposes it).  The recurring theme of Grey’s ideas is that they really do not go far enough and smack of being stuck between two stools.
A classic of this stance is his pledge that he and his ministers would take a 5% pay cut if he was elected.  While a cut of £5000 is not to be sniffed at, the First Minister still takes home around £130,000, which in Recession Scotland is somewhat exorbitant. If Gray really wanted to make a statement, he should have announced a cut of around 20-25% in his and his cabinet’s salary.

While the proposed cuts to the amount of Police services looks good on paper, this is a proposal which will cost money in the long run… as will the proposal to amalgamate all of the health boards.  A much better proposal would be to get rid of the majority of middle management of the NHS.  And what of “Education, Education, Education”.  There are pledges to help to deal with illiteracy and numeracy problems, and to re-employ teachers “thrown on the scrapheap”.  However there are no proposals as to how to pay for this.  The last time Scottish Labour were in power, councils up and down the country signed up to renovate their school buildings using PFI.  Today, PFI repayments take an estimated £800 million out of education budgets up and down the land.  I would think that would have more relevance to our ailing education system than the current government.

Gray’s pledges do not have the look of the next Scottish government, and they still have the legacy of Jack McConnell about them – do less better.  The policies do appear plausible enough to the hard core Labour voter, who will trust Labour more that they trust the SNP. However they have given something for the SNP to attack, particularly on Council Tax.  They have also given un-costed pledges on Education & Health.  They may well be favourites to win on May 5th (and I think that they will win) but they have given the SNP several lines of attack.  Let the spinning commence.

Monday, 1 November 2010

The Assassination of Consumer Focus by The Taxpayers Alliance

*before starting, can I make a declaration of interest.  My Beloved is a board member for Consumer Focus Scotland….

One of the casualties of the so called “Bonfire of the Quango’s” is the consumer organisation “Consumer Focus”, which was the offspring of the merger between Postwatch & Energywatch (the Scottish organisation also incorporated the old Scottish Consumer Council).  It costs the tax-payer £5.2 million a year, it produces policy initiatives, It has the right to demand commercially sensitive information from the companies they are investigating (thanks to an Act of Parliament) and has secured high profile victories against Npower (securing a refund of £70 million) and on ISA’s (securing a refund of £15 million).  It’s communications have been clear & concise (TCF anyone?), and generally Consumer Focus looks like a success story in protecting consumers from bad business practice, having been set up 2 years ago, but with a long, credible, evidence based history of looking after the interests of consumers.

So why has the Tax-Payers Alliance mounted an ultimately successful attempt to have this organisation scrapped?

The TPA believes that “it duplicates the work of many companies, charities and campaigns who advise and represent consumers.”  Which companies exactly does it duplicate?  The TPA is also guilty of not doing it’s research.  Consumer Focus encompasses the sterling work of the watchdogs Postwatch & Energywatch, and the wide spectrum of work carried out by the Scottish Consumer Council.  The new organisation was given statutory powers to be effective in their new position as a ‘consumer champion’ Where exactly are these powers to go? They cannot be given to a charity. How can you get an advice charity to do the work of a quango?  And no offence to Citizens Advice, but they are seriously stretched as it is. How will they be able to take on the sheer magnitude of work currently carried out by Consumer Focus?  I have no experience of using Citizens Advice, mostly because it was impossible to actually contact the Paisley office (there was a voicemail message to contact them in office hours – not the best message to leave in todays timeshift society).  CAB must be having the same doubts, there are rumours that they were reluctant to take on their new role before being “persuaded” to by the government.

This is not the first campaign built on poor research, as Subrosa mentions here with TPA’s ignorance of Devolution and the concept of Holyrood running the NHS independently of Wesminster – while complaining about free prescriptions.  Then of course, there was this campaign where TPA couldn’t wait on the facts before getting the boot into lobbying.

The ‘modus operandi’ of the TPA though is “Together we can save taxpayers across the country millions of pounds.” – they are essentially a body standing up for tax-payers. So how can they effectively torpedo an organisation which has saved consumers (tax-payers) millions of pounds, and has an extensive evidence base of the many ways in which they have made things better for consumers!  Of course the question which should occur to everyone is who asked them to stand up for me or you?  I am glad that someone is standing up for us poor repressed tax-payers, but have serious concerns  about this less than transparent organisation.  The TPA somehow doesn’t quite go after the targets that it should.

While targeting an organisation which only costs overall between £5-12 million to run, where is the TPA campaign against the Commonwealth Development Corporation, which has been revealed by Private Eye to be a deeply corrupt organisation, more concerned by the enrichment of it’s own backers.  Oh and where are the howls of protest over the inept HMRC, who failed to protect people’s personal data, who’s computer systems were giving people inaccurate tax-code’s and who recently dropped their court case against Vodaphone over the takeover of Mannesmann (which people were protesting against this weekend), and have not to date, started any litigation against Tesco.  As well as depriving the country of the use of £6 billion, the dropping of the Vodaphone case gives the red light to tax avoidance from big business, squeezing even more the hard working honest tax payer.  So much for standing up for the ordinary tax payer.

The jibe about the TPA is that it has always been a front organisation for the Tory party.  It is notoriously reticent about publishing where they get their money from, publishing abbreviated accounts since 2006. Yet this is an organisation which has gained a reputation for being fair and standing up for ordinary tax payers, even though one of it’s directors refuses to pay tax to HMRC, preferring to live in the Loire instead. 
I may be wrong but i remember during the 2004 US Presidential elections that organisations that kept their political allegiances quiet while taking part in the hustings began to gain traction in the media across in America.  The success of the Tax-payers Alliance has shown that this is one trend which has made it’s way across the water.  The challenge for the general public/the blogosphere/whoever is to challenge the voracity of these organisations, and to uncover their motives as quickly as possible.  Perhaps it is time to seriously scrutinise this organisation, and see what skeletons they are hiding, and at the very least advise them to do proper research before they shoot their mouths off about things they are ill-informed about? The fact that the Tax Payers Alliance has gathered credibility among the UK media so quickly with so little scrutiny of their arguments should really be a lesson for us all.