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.

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.

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.

You’ve Never Had It So Bad

The Tories don’t like New Labour, New Labour don’t like the Tories, but really can’t stand the SNP.  The feeling from the SNP is mutual.  Everyone thinks the Lib Dems are a bunch of pious tossers.  No body cares what the Lib Dems think, but for the record they think they are the only ones whiter than white.  In the meantime, the electorate are waiting for the battle of ideas to emerge, and glad that politicians have temporarily stopped going into the television studios to say you yes you, I'm going to sack you (or words to that effect).  Can’t think why politicians are so mistrusted myself but there you go.

The moment that really killed MP’s reputations, and to be honest they aren’t really doing anything to repair that reputation, was of course the Expenses Scandal.  The police announced that 3 New Labour MP’s and a Conservative Lord would be charged for this on Friday.  It was not surprising the identity of the MP’s, featuring Livingstone MP Jim Devine who more and more looks like someone who has had a sign saying “Kick Me” attached to his back.

What is surprising is that firstly the Expenses 4 have been stupid enough to quote Parliamentary Privilege in their defence. Privilege has always been about freedom of speech, as witnessed with the furore surrounding the parliamentary question involving the oil trading firm Trafigura and their activities in Ivory Coast. 
The second surprising thing is that only four people are to be prosecuted.  The Former ministers James Purnell, Geoff Hoon and Hazel Blears did not pay Capital Gains Tax on house sales (hilariously, and with no sense of irony, Purnell was behind this little ad…), While the Ball’s flipped their homes 3 times.  Makes Boy George’s claim for £100,000 look like small beer. The examples highlighted (and there is more I could have picked) are probably as bad as those of the Expenses 4, yet there is not a sniff of a prosecution case against anyone except the four charged MP’s.  It could be that fraud is not specifically a criminal offence (which explains the lack of a prosecution against the Four Horsemen of the Economic Apocalypse, we don’t really take white collar crime seriously here, do we?).  Or that the police are living up to their Private Eye name of Inspector Knacker, and are just not doing their job.

Up here though the papers have been full of another type of scandal, one which has Scottish Cringe written through it.  The SNP auctioned off lunches with Alex Salmond and Nicola Sturgeon at fundraising events.  These lunches were to be held at Holyrood.  Yes it is seedy, and it is creepy to see our leaders press the flesh for cash, but for the other parties to complain at Holyrood, well isn’t this the sort of grubby, creepy fundraising they get up to?

The papers and the comentariat have missed a story here, after all why exactly are the SNP having a fundraiser just weeks before the General Election?  I suspect that their bid to put their golden boy, the controversial chairman of the Scottish Islamic Foundation Osama Saeed, into Westminster representing Glasgow Central is in a degree of trouble.  The SNP needed a swing of 16.7% from 2005 to take the seat.  Up against a party sitting on a majority of 8531, with deep pockets, the SNP probably feel up against it, though the threat of losing face probably is the stronger emotion.  They don’t meant to but i suspect the SNP have signalled that they will not win their target of 20 Westminster seats at the General Election.

As I mentioned at the top, this mud slinging  is for the time being the only campaigning that is going on.  What we are waiting for is the battle of ideas to begin.  Some of us are beginning to think our politicians are as clueless about the real world as they appear.  Someone should tell them that the best thing to do when you are in a hole is to stop digging.

Carrying on As If Nothing Has Happened...

It’s worrying for the workers of Cadbury that they have been bought over by Kraft, and is also worrying for consumers who enjoy their products. As another part of the shared “British” heritage is sold to overseas hands, who we doubt could ever understand our needs and desires, we really should be used to our businesses being bought by foreign companies, shouldn’t we? Well, no because the sound of silence from our elected leaders is deafening.


What is worrying though is that this take-over was facilitated by a huge loan, with the Cadbury’s business as the collateral. If memory serves, there are 3 main examples of these “leveraged take-overs”, and none of them have been stunning successes. In June 2006 Ferrovial bought BAA for, at the time, the highest leveraged takeover for £10 billion. Cadbury went for £11.5 billion. BAA hasn’t really endeared themselves to the public by capitalising on the captive customers they have by selling overpriced food & drinks airside of security.

The other main example of a leveraged take-over was Malcolm Glazer’s takeover of Manchester United in May 2005 for £790 million, which in the wake of the recession is now having an effect on Manchester United’s competiveness. Leveraged takeovers do seem to be rather like asking for some money from someone and then killing them.

The age of borrowing money against thin air is clearly not over yet.

Must I Paint You A Picture...

In the rush to play my cut is bigger than you or my tax plans are more secretive than yours, which is all very primary school playground, the anger of the voters towards the greedy grasping bankers has been largely ignored by our political leaders.

In an interview on Jeremy Vine’s programme in Radio 2, the musician and left wing activist Billy Bragg disclosed that he would be withholding his income tax as a protest against the excessive bonuses paid to what Bragg referred to as the highest rewarded public servants in the country. He claimed that the bonuses would be paid to the bankers the month after collection of Income Tax, and as a result he would be withholding his tax until bonuses were curbed at £25000.

Arguing against Bragg was Heather McGregor from the firm Taylor Bennett, who completely misunderstood the argument by trotting out the now worn out argument that these people deserve their bonuses, and that bonuses were needed to incentivise workers (bankers). Bollocks. Ms McGregor unsuccessfully defended the indefensible, that the people who crashed the economy should have the right to incentives, even if they do not deserve those incentives. In any case these people get bonuses whether they do a good job or not. That’s not creating an incentive, that sounds more like a tax dodge or something far worse.

The truth is that with no criminal proceedings in the offing (unless Inspector Knacker knows something else) for the four horsemen of the economic apocalypse, our politicians rolling over whenever these bankers threaten to take their economy destroying skills abroad and more worryingly the contenders in the forthcoming General Election wanting to sweep the bankers bonuses under the carpet, alongside their own examples of largesse, Bragg felt that he had no option. Unfortunatly the rest of us have to take it… at least until the General Election.

The interview can be heard here until the next Monday (25th January), and starts about an hour and 36 minutes in…

UPDATE: 19/1/2010, 19:53 - there is a link to the BBC story, which has now been posted, here...

Meet My Friend Pain

See, the problem with blogging hiatuses, enforced or not, is that when events happen, an outbreak of itchy fingers follows soon after. I’m typing this the evening after the pre-budget report where Darling did himself no favours by targeting the low paid (once again) and everyone else. Except the villains of the piece, our friendly, greedy bankers and MP's.



What do you mean they got hit with a huge tax hike? Have they not got clever accountants who can evade paying their share? Darling’s proposals in this respect were like a blunt instrument, designed to appeal to the “Labour” constituency, rather than put forward proposals which will be a proper disincentive for the excessive “bonuses”. This won’t work, especially amongst those of us who remember New Labour’s refusal to condemn greedy bonuses until Obama came along, while seeming to be content to put taxes up for the low paid. This week's Private Eye features a reminder of Brown's treatment of Non Doms being different when they were giving money to New Labour.

In any case it’s not the well off who will pay for the greed and vanity of the City, it will be the ordinary person in the street, VAT will go up again and an extra 0.5% will be put on to National Insurance contributions, with the possability of tax hike's further down the road. That of course does not mention the game of my cut is bigger than your cut that Darling and Osborne have been rather tastelessly playing with each other in front of fearful public sector workers.

While Darling was busily giving with one hand and taking away with the other, George Osborne was convincing absolutely no one that he is the Chancellor in waiting. Yes New Labour have driven this country close to bankruptcy, and yes their handling of the economy is questionable, but Osborne has not said that he disagrees with the bale-out of the banks, the light touch regulation regime or the various PFI/PPP schemes. All of whom have contributed to the black hole at the heart of UK plc’s finances. I suspect that true Thatcherite’s would secretly have rather let Northern Rock, RBS and HBOS go to the wall rather than prop them up with billions of pounds of public money, but then their friend’s would have been up to their necks in the brown stuff.


Osborne went on and on about Darling and Brown driving Britain into recession, but the truth be told, Brown and Darling drove Britain into recession with Tory policies. Millions of pounds disappear each year into the second mortgage scheme originally known as the Private Finance Initiative. Used with such zeal by New Labour to fund the refurbishment of Schools and Hospitals up and down the country, the current SNP/Lib Dem administration in Cotton Street are extremely reticent in discussing PPP’s role in Renfrewshire Council’s financial woes. PFI was originally the brainchild of the former Conservative Chancellor Norman Lamont. The Thatcherite wing of the Conservative party always pride themselves in believing in little or no regulation for business, no surprise that Brown’s policy of “light touch” regulation raised not one complaint from the Conservatives, at least until the Banks started to fall. Conservatives also always believe in low taxation, and cutting taxation, whether it was in the interests of the country or not. Yet they have been stony-faced when Brown cut taxes when times were good, even going so far as introducing a starter rate of 10%. The Tories did not complain about fixing roof’s at this point, and they certainly did not complain when the 10% tax rate was abolished, the New Labour MP Frank Field lead the rebellion against that folly.


During the initial responses, the most impressive voice was that of Vincent Cable, who hit the nail on the head once again with his analysis that New Labour had not learned from their mistakes and were intent on building the UK economy on sand once again. It’s a pity the SNP representation at Westminster was so ordinary and anonymous, they had to roll John Swinney out for the news. The SNP MP that was brought on to Newsnicht seemed to get caught up in the debate without making his mark. John McFall the New Labour chairman of the Treasury committee trotted out the already worn out slogan for the next election, that there was only two choices between a Tory government and a “Labour” government. On the evidence of this week’s Pre-Budget Statement, that’s a choice between a red Tory party and a blue Tory party, both sides seem incapable of telling us the truth or do not have the necessary proposals in place to cut the deficit while keeping the economy moving. Time to hear about a third way methinks.

Don't Mention the Recession

There is an exacerbation among SNP supporters about the inability of (New) Labour voters to see the mess left by the pink Tories. That these voters are somehow happy with their lot. To be honest, and I speak as someone who shakes their head when their parents parrot the New Labour line, there is still an element of distrust towards the SNP within the Labour Party constituency, that the SNP are really tartan clad Tories.

There are reasons for the stance which the SNP government has taken on certain policies, cutting Business taxes for example is designed to stimulate growth, and not to reward big business (like for example the corporation tax cuts Brown has made). The freeze on Council Tax is there to help hard working people, rather than an excuse to cut services. Etcetera etcetera…

An example of how New Labour have twisted the Scottish governments policies into being against the common 5/8th’s comes from Monday’s Paisley Daily Express, which featured local MSP, and Count Dooku lookalike, Hugh Henry. According to the wit and wisdom of Mr Henry…

“The latest report on deprivation in Scotland from Alex Salmond’s administration shows the number of most deprived area’s in Renfrewshire has increased between 2006 and 2009. The SNP Government’s statistics show that, over the last couple of years, more area’s in SNP-controlled Renfrewshire are amongst Scotland’s poorest.

There is a problem in two respects. The First is that Renfrewshire had just about the worst financial settlement in Scotland. This is because the SNP is trying to shift money to the better-off areas which normally vote SNP. And yet our SNP council sits silently and refuses to complain.

The second problem is a lack of action locally. In Glasgow despite it’s many deep rooted problems, progress is being made. We need a similar determination to Glasgow’s to start addressing the problem. We need to demand more money from Alex Salmond’s government. If we fail, we should not be surprised when we see a rise in the social costs and problems which come from increased deprivation.”

I think the most striking thing about these comments is that Mr Henry seems to have not noticed that… well… we are in the middle of the worst recession since World War 2… at least. Money is tight, no one has money. 2006 probably marked the start of things going wrong, while 2007 saw the first signs. Both Barclays and Northern Rock went to the bank of Last Resort for loans, guess who kept their name out of Robert Peston’s reports then. Oh and Fred the Shred was about to make a critical blunder.

The other thing that Mr Henry seems to have missed out is his proof that the SNP are moving money to their pet areas. When Renfrewshire was run by New Labour, they would never do such a thing… apart from all the spending showered on Ferguslie Park… and Johnstone… oh and Shortroods. Sure houses in Glenburn had nice canopies installed and double Glazing put in, followed by Central heating. But that was all in a period between 1998 and 2000. Did I mention that Glenburn was represented by 2 SNP councillors during this period? Of course New Labour promised a re-generation fund of £50 million before the 2007 elections. Has this money disappeared into the great big PFI hole in Cotton Street, or was this more New Labour spin with no substance?

Mr Henry mentions Glasgow as making progress. Where? It’s still a horrendously backward city in places with health problems which read like the 1801 census. At New Labour led Glasgow has trumped Renfrewshire Council in one respect, it has closed more than one school, and certainly knows how to waste public money in parting with high ranking officials.

Yet when we were more prosperous, New Labour failed to close the gap between rich and poor. We have no money because Gordon Brown gave all our money to the bankers, so that they could congratulate themselves with big bonuses for failing to regulate themselves. Will Mr Henry ask for more money from Brown?

I thought not.

Scratch the surface and New Labour’s bluster is exposed as little more than that. For the SNP though, their fortunes are not helped by the economic blunders made by Brown. Equally the SNP’s claims are tainted by their association with George Mathewson (who was on the Royal Bank board that employed Fred Goodwin) and Brian Souter (he of the Keep the Clause campaign). It seems that the SNP are finding the task if defending their record in office difficult at this moment.

Some Quotes on G A R L's Scrapping

“Common sense has prevailed. This is the right decision for the local area.
It is good that the Scottish Government realise that the rail link was simply a case of the emperor with no clothes. There was no economic case for the project” – Archie Anderson, Chairman – Paisley North Community Council

“People in this part of town spoke out strongly against the rail link from the start. The most important thing is that this would never have taken more traffic off the roads” - Lib Dem Renfrewshire Councillor Mike Dillon

“With the airport link facing significantly higher costs and at a time when public funding is under serious pressure, I understand the decision, although of course there is some disappointment.

Renfrewshire has secured lasting benefite from the projects early stages, such as the development of new pitches and we’ll continue to press for the completion of the planned new changing accommodation at St James Playing Fields.” – SNP Leader Renfrewshire Council – Derek MacKay

“The Scottish Government has a clear anti-Glasgow agenda. They are investing billions of pounds in the east and north east of Scotland, with projects such as the new Forth crossing, and giving Glasgow the crumbs off the table” – New Labour Leader Glasgow City Council, Stephen Purcell

Anti-Glasgow

Let’s be honest, anything the SNP announced today would have been shouted down by the swivel eyed experts in selling their granny for political gain, but by axing the Glasgow Airport Rail Link the SNP have really got the backs up of many of the West Coast New Labour MSP’s.

Half of the reason for this is of course this was something of a vanity project for New Labour. All along there was something quite distasteful with the speed this was being rail-roaded through parliament, and the patronising fashion in which dissenting voices were dismissed by the powers that be. We’re building a world class transport link, who cares about some football pitches? Quite a lot of people did actually, which is why New Labour in Renfrewshire lost some votes in the council elections in 2007. As distasteful was the SNP’s acceptance of the project.

In the wake of this decision, what is needed is to look at the project and see if there are any better proposals that can be put in place, with possibly the emphasis on value for money. I have never understood why alternatives were not discussed or dismissed out of hand, these alternatives should now be looked at. For example, a train line to the Airport via Renfrew and Braehead Shopping Centre was mooted by the SSP, while another proposal was a monorail from Gilmour Street to the Airport.

What is not needed is finger pointing and acrimony isn’t that right Purcell?

Diageo: A Warning From History

Things I missed in the last few week’s while working late number one…

James Robertson was a grocer in Paisley, who in the 1860’s started to make marmalade and jams, particularly the “Golden Shred” brand of Marmalade. It is now more famous for adopting the “Gollywog” as a trademark in the 1920’s. However, in the 1970’s Robertson’s decided to leave their Paisley home in Stevenson Street.

Arguably it has never really been the same since they left Paisley, as other companies went past Robertson’s in the sales stakes. So much so that last year, Robertson’s owners announced that the Robertson’s brand would be discontinued.

So what are the lessons for Diageo, owners of Johnny Walker, who have announced their intention to pull out of Kilmarnock and Port Dundas, merging operations into their Shieldhall plant. It should be mentioned, since it appears absolutely nowhere on the BBC website, that Diageo made a profit of £1.63 billion last year. The main one would be not to turn your back on the people who make your product. I’m sure sales of Robertson’s dive-bombed in the wake of the move. I’m sure as well that other products who left Scotland in an acrimonious manner, have not recovered sales here. Timex springs readily to mind.

The other lesson would be to ensure that the quality of your product remains intact. Robertson’s Jam had apparently never been the same since they left Paisley. As I said earlier, other rivals took over. Notably Hartley’s, who Premier Food’s are going to concentrate their energies on. Scotland has more than Johnnie Walker, in terms of fine Whisky.

No-one has come out of this situation well, apart from the Diageo employees who continue to set the standard for dignity which our elected representatives failed to do… once again. The finger pointing and blame game, simmering away between the SNP and New Labour does no-one any good. Time to find your spine chaps.

The Missing Villians

While the country and the blogosphere appears to have set about the crooks and fraudsters currently residing within the House of Commons, there seems to be some sort of trappist silence regarding the people who killed our banks.

Fred and Tom, Andy and Dennis appear to have vanished into thin air with their (unearned) pensions, while Paul Myners, the minister who’s failure to sack these people should have seen… er Paul Myners sacked, is still the City Minister. It seems that the Daily Torygraph’s 3 week assault on the Common’s expense system has let these people exit the public stage, stage right.

Now Private Eye (dated May 29) is reporting that a report into “UK International Financial Services – The Future” written by Win Bisschoff – a former Citibank chairman – which is for Alistair Darling, is set to recommend that no change to the UK financial industry is necessary and that the report “even pretends nothing has really gone wrong – its all just a matter of perception”. The report also recommends that “regulation should not stifle responsible financial innovation”. I have heard buying bad debts from British and American companies (or as the report called it – “collaterised debt obligations”) called many things but “responsible financial innovation”… ummm... nope sorry that’s a new one, even for me.

Meanwhile our banks have been continuing to show their unwillingness to lend money. This is nothing new, mortgages have had £1000 arrangement fees added to them for no apparent reason other than naked greed. These fees have been in place since last year, but nothing has been done despite their obvious role in blocking new homes being bought.

The New Labour MP Tom Harris asked a question about the banks reluctance to lend money to small and medium sized businesses at Prime Ministers questions a couple of weeks ago. The response from Brown was essentially to tell the constituent to try again, there’s nothing to see so move along. Except there is something to see.

One of the key weapons in the recovery is a liquid economy, which is an economy where, according to my partner, people need money in their pocket to buy things, where shops need money to buy more products and to pay wages. Essentially, according to Ange’s theory, money need’s to circulate in the economy to keep the economy running. Our banks have been somewhat negligent in facilitating this process, and the government have been standing back letting this happen. There is no indication that this will change under Cameron.

While Cameron has been taunted as the “Do Nothing” party, New Labour has shown that they are the “All Talk and No Trousers” party. They are unwilling to crack down on our errant financial services, and have stood back while the banks we own suffocate lots of businesses. It’s this scandal which is proving to be the iceberg under the sea.

More on the Toothless FSA...

I’ve been really busy this week, and thought that other bloggers had covered the Dunfermline Building Society scandal, particularaly SUBROSA, Paisley Expressions and er... Terry Kelly. The scandal originaly being that the FSA did not bother to loan DBS money, but called in the administrators straight away, forcing a shotgun marrage with Nationwide.

However, the current issue of Private Eye has an interesting take on the situation, which is incredibly damming for the FSA, which as I’ve posted before seems content to go after the small fry but let the Goodwin’s, the McKillop’s and the Hornby’s of this country off the hook.

According to the Eye the FSA “had always regulated building societies but had paid little attention, considering them a low risk area.” The particularly damming section though talks of coercing building societies into markets that they have no knowledge of.

“Confronted by ever-greater competition from the mutual’s turned banks and “shadow banks” such as the big US owned sub-prime/non conforming loan originators GMAC, GE Money and Lehman Brothers, the old line building societies were effectively encouraged by the FSA to “diversify or die”. The old model of boring residential mortgages no longer worked. The new model was to go into the exciting commercial property loans, loans to housing associations and buy-to-let and self-certified mortgages. All businesses that building societies like Dunfermline knew next to nothing about. But that didn’t stop them piling in.

The result? Over £1bn of high risk or bad loans built up in three years or less… Meanwhile the Fundamentally Supine Authority did not seem to understand or insist that Dunfermline needed more capital or bigger reserves for the greater risks it had taken on at the wrong price until it was too late.”

Bearing in mind the does-what-it-says-on-the-tin name of the FSA, the Financial Services Authority. This shows that they should have been called the MANTSA (Move Along Nothing To See Authority). Under the FSA’s watch we have seen their failures result in near collapse for Northern Rock, Bradford and Bingley, Alliance and Leicester, HBOS, The Royal Bank of Scotland and the Dunfermline Building Society. I am sure that this list will be added to in the coming year. Come to think of it, reading that last part about taking on risks at the wrong price, echoes of the Royal Bank and ABN AMRO - Goodwin's folly. Hopefuly that's just coincidence and not the start of a pattern.

Of course, in the light of this lates failure of the FSA, this blows a rather large hole in the Government’s “light touch” regulation policy. Unfortunately, the question that should be posed is, what would the even more business friendly Conservative’s do?

Fred Goodwin: Not The ONLY Scapegoat

Fred Goodwin it seems is feeling a bit picked on. You create a banking monolith, which becomes the pride of your country. You get ennobled… then all of a sudden you go for that big deal too far, and everything crashes all around you. Now everybody is trying to disown you, even those people who encouraged you in the good times.

Don’t get me wrong, Fred Goodwin deserves the vilification that he is getting, he almost sank a Scottish Institution. He deserves to be stripped of his knighthood, and deserves to be charged for Gross Negligence. He certainly doesn’t deserve his huge pension, when he has destroyed the lives of many others.

Problem is, there are others who deserve EXACTLY the same treatment, and they aren’t getting it. Those equally, and maybe more culpable, in sinking the UK’s economy. There were another 3 horsemen at the Treasury select committee 2 weeks ago, one of them Tom McKillop had the power to reign in the boy from Feegie, but decided not to.

This brings us to Brown. While the country burns, he fiddles. He accuses Cameron of doing nothing. Brown is all talk and no trousers, fumigating against tax dodgers and city spivs (I’m paraphrasing, of course), but really doing nothing. Brown is of course the very person who sold the Inland Revenue offices to a company (Mapely Steppes) based in a tax haven. The Treasury, under Brown, employed more advisors with agenda’s and conflicts of interests than even the Tories did under Thatch. That’s not even to mention the toothless tiger he created with the moniker FSA, gee that’s really going to scare them into doing the right thing.

Brown though still has time to do the right thing. The first thing he can do is sack Paul Myners, the guy who gave the RBS board the assent to pay Goodwin his obscene pension. For someone who was employed because he “knows” the city, he was either stitched up by the RBS board or knew what he was doing. Either way, he is as much use to the British taxpayer as a chocolate fireguard, and should be sacked because of his incompetence.

The End Of New Labour... In Office.

It’s so very difficult to describe how much Brown and Darling have completely flunked the PBR. Unless you are a parent, or a pensioner (though that warm feeling won’t last very long if you are either), what really did the Pre-Budget Report do for you.

VAT has been cut to 1992 levels, which would be great… if anybody had money to spend. Assuming of course that our shops and retailers passed on the 2.5% decrease. None of the tax cuts will create the necessary stimulus to create the needed liquid economy. In a sense, this is the perfect New Labour budget, the illusion of actions being taken, with ther reality of rearranging the deck-chairs on the titanic.

That’s before I touch on the pain to come, with the announcement of Ni and income tax rises. National Insurance is set to rise by equivalent of 0.5% from 2011. There are also proposed income tax rises, set to come in after the next general election, should New Labour win that election. Darling announced that the top rate of tax will go up to 45% for those earning £150000 and over. It is this measure which has seen commentators and columnists claim the end of New Labour, which is nonsense. They should have either set the threshold at £100000, set the new top rate at 50%, or both.

To announce a tax raising measure, to pay off an estimated half a trillion pound debt, which would only bring in £650 million in its first year, really is defeating the purpose. In any case, there should have been a raft of tax avoidance issues announced, as people who find themselves in the higher rate of tax are more likely to adopt tax avoidance procedures.

Brown and Darling have really gambled, but have spent the money on the wrong things, and have continued to compromise with the top earners and bankers who put the country in this position in the first place. Either way, it is very difficult to escape the conclusion that New Labour, when announcing the PBR, had just lost the next General Election.

Gordon To The Rescue!

One of the things which is striking about the current recession is that both the causes and fault have not really been discussed. As a result, our dear leader Gordon Brown has been portrayed as some sort of Superman by comrades, spin-doctors and allies in the press. Admittedly, he has done something to try and soften the downturn, though I would prefer that he “bails out” the hard working tax-payers and low paid who will find themselves behind the 8 ball when the storm hits, rather than the bankers who put us here in the first place.

This perhaps is the quandry behind the lack of anything that will stick to our dear leader. Brown hasn’t done that much in the past year which the Conservatives, in their heart of hearts, would disagree with. He has continued the ‘lasiz faire’ economics which was laid down by Thatcher, Howe and Lawson 30 years ago. Regulations have been dispensed with and direct taxation has come down, even if there has been a dramatic rise in indirect taxation over the past 10 years. Brown’s big failure, which has led to the credit crunch and this recession, has its seeds in his adherence to the listed ‘Thatcherite’ principles.

Had Brown imposed stricter regulations on our Banks, they might not have over-extended themselves by importing sub-prime principles to our mortgage markets or by going after, excuse the pun, a quick buck, by buying up American sub-prime debts. Brown has instead, left the stable door open. Even now, Brown and Darling are reticent to take action against the banks who have refused to pass on any of the 2% in interest cuts.

Of course, many people take their lead from the top, and this government has not set a good example with the extensive use of the capital projects version of the second mortgage, PFI/PPP. As much as £40 billion has been spent on expensive refurbishment projects for our Hospitals and Schools, with large sums not actually going towards funding the building works, but towards consultation fees for the various firms involved. At the moment, none of these fees will appear on any government books, as they have been deemed to be ‘off-sheet’. We have been promised that these will appear on-sheet by 2011, after the next election.

In the mean-time, on Monday we have the most important Pre-Budget report since… well the Budget was held at this time of year (1996 I believe). Targeted tax cuts have been hinted at, with the Conservatives claiming that this is irresponsible. One way that New Labour could be really responsible would be to raise income taxes for higher earners.

Raising the top rate of Income tax above its current rate of 40% is another course of action which Brown could have adopted, to slow the economy down. Again, Brown stuck to ‘Thatcherite’ principles and kept income tax for big earners low, the sort of big earner’s whose irresponsibility have led to the current recession. This course of action would be preferable to the other alternative being touted on Robert Peston’s blog, that of VAT being raised to 22.5%. VAT, apart from being a regressive tax, tends to be most penal on the low earners who would gain from tax cuts.

What Brown has successfully done again is marginalise the Conservatives. Cameron’s sudden policy announcement, that they would drop the policy of keeping in place the next cycle of public spending, which ends in 2011, shows a nervousness that perhaps the (poor) tactic of blaming Brown of economic miss-management has not gone as planned. The Conservitives now find themselves where they were in 2001 and 2005, arguing for economic policies which are not universally popular or acclaimed. Brown is at fault for the recession, because he followed the Thatcherite policies which brought us here. Promising more Thatcherisim to get us out of the recession, at a time where the right wing orthodoxy is being more and more questioned, is entirely the wrong tactic for Cameron. This move only brings the date of the next General Election closer, an election which could be very uncomfortable for Cameron.