Quelle Surprise ?

There have been gasps of amazement and anguish on the back of the figures announced by Alistair Darling in today's Budget. I just don't understand why everyone's so surprised.

Surely everyone knew that we're absolutely broke ? Yes, the sum of £175bn will be ft repeated by the Opposition this summer as a reminder of Darling's Debt, but why is everyone so taken aback by the fact that we're in ruin ?

As sure as night follows day, it is blindingly obvious that:

• Every Labour government increases debt
• Every Labour government increases unemployment
• Every Labour government increases taxes
• And yet, every Labour government still runs out of money.

It is true that this budget is dreadful. We are fundamentally bust, and the government is doing nothing to help. Don't be fooled by assertions that public expenditure will be cut. Cutting spending is not something that socialist governments do. They try to look as if they're cutting it, but be assured that they'll carry on spending. "Efficiency savings" is code for "savings we don't actually intend to make".

Instead, they'll do what socialists always do at times like this; take it out on the better off. Fifty per cent tax rates (remember the 1997 Labour election poster "Income Tax rates will not rise" ?) and the abolition of personal allowances are just the start. Worse, much worse, will follow.

And when it does follow, we shouldn't be surprised.

What Alistair Darling Should Do

1. Resign.

2. Go home.

Being Chancellor's simple, really.

At least, it is when you've presided over the country's entry into the deepest recession in modern times and exacerbated it by creating the biggest national debt in history.

What The G20 Should Do

1) Renounce Protectionism outright and reiterate an unshakable commitment to Free Trade.

2) Agree to stop spending money they haven’t got.

3) Agree not to print any, either.

4) Go home.

Five minutes’ work.

I was struck by Daniel Hannan's recollection, earlier in the week, of Lord Salisbury's assessment of the crisis in Bulgaria in the 1880s: "If anything happens, it will be for the worse. It is therefore in our interest that as little should happen as possible."

What A Waste Of Talent

Can somebody PLEASE tell me what Daniel Hannan is doing in the European Parliament ? He is absolutely wasted there.

Over a quarter of a million people have now watched his calm, eloquent but ultimately devastating demolition of Gordon Brown's obsession with spending and debt. If you're not one of them, click on this...



This bloke should be in the Shadow Cabinet. Correction - he should be in government.

An Outbreak Of Sense At The BoE

So Mr Mervyn King doesn’t want more stimulus; we can’t afford it. Praise be. We’ve finally got someone in the corridors of power who may not be absolutely wedded to the economic theory of Robert Mugabe.



We’ve been waiting a while, but Mr King has finally cottoned on. You really wouldn’t think it would take what has seemed like an eternity for the Governor of the Bank of England to realise that record government spending accompanied by record levels of debt is not exactly the ideal economic policy in the midst of a recession, but we are where we are. He’s with us now, in the Real World, and he’s very welcome. Whether he can bring those idiots Brown and Darling with him is a completely different matter.

The government is worried about deflation, and that’s why it’s taking the advice of the Zimbabwean School of Economics by printing money. But deflation is not the main danger, and getting the photocopier out is not any kind of answer. Whilst it’s true that sustained deflation would be deeply damaging, the greatest risk we face right now is the one we always face; inflation.

For each of the last three months the economic pundits have been predicting plummeting inflation figures (as opposed to gently failing, or even rising ones). And for each of the last three months they’ve been wrong. This time they were insisting that the CPI would be heading back towards the government’s target figure of 2%, and that the RPI (which includes mortgage costs) would go into the “meltdown” territory of negativity. Wrong again. True, the RPI hit zero, but the CPI – the government’s preferred measure - actually went up.

Recessions come and go but true enemy of long-term economic prosperity is, and always has been, inflation. It makes doing business harder, it makes us uncompetitive and it costs jobs. Most governments contribute to inflation in some way, and this one is abusing the privilege. Quite apart from increasing the money supply, which is always inflationary, the gargantuan levels of debt we’re facing causes huge downward pressure on the pound, making imports more expensive and thereby adding still more to inflation. Hence the CPI’s “surprise” hike yesterday. We’re about to enter a classic inflationary spiral, and God alone knows how long it will last. The seeds now being sown by the madmen at the economy’s helm will bear nothing but a truly rotten harvest of economic disaster for years, possibly decades to come.

Mervyn King at long last seems to be waking up. For the rousing of Mr Brown and Mr Bust to the realms of economic sanity, we may be waiting a while longer.

Well Worth A Round Of Applause

Let's put to one side the slightly bizarre decision to invite Chris Evans to the Grand Opening. What Claire Robertson is doing in Dorchester should serve as an inspiration to many.

She was one of the thousands of people who lost their job when Woolworths went under. But rather than sitting on her bum for the duration of the recession, she's re-opened the shop premises in which she worked for 18 years under the name Wellworths (nickname: Wellies) and is selling locally-produced toys and crafts. In so doing she's handed 20 former Woolworths employees a job.

And the very best of British luck to you, Claire !

Hat-tip: Sepoy Agent

Information or Propaganda ?

There's a fine line between genuine government information about what it's doing and blatant propaganda.

This web site, called "Real Help Now", was launched by Gordon Brown yesterday.



Prominently plugging Brown's call for a "new global deal" and the G20 "London Summit", publicising the Cabinet's meeting in Southamption, giving space to Jim Murphy's Press Release about another meeting in Glasgow and featuring at least one Gordon Brown video, this falls quite firmly the wrong side of that line for me. Short of calling it "Not Doing Nothing Now" Number 10 could scarcely have come up with something more partisan and self-serving.

What do you think ? Bear in mind you're paying for it !

Change Gear, Attack Govt, Apologise, Have Coffee, Attack Govt, Apologise....

There seems to be a trend developing for people stating the bleedin' obvious and then apologising.

Jeremy Clarkson - he of "one-eyed Scottish idiot" fame - was the first to give it a go. Personally I thought is was a crying shame when Clarkson apologised for the "one-eyed" bit, although at least by doing so at least he pointedly let the "Scottish idiot" part stand. It did leave me wondering though, what the point of being an outspoken TV presenter is if you have to apologise whenever you're...err, outspoken.

Now the chairman of Starbucks has followed Clarkson's lead, and caused Lord Mandy of Hissy Fit to throw a major dander by saying that Britain's economy is "in a spiral". Howard Schultz was talking about the global downturn but committed the cardinal sin of saying that the UK was not actually best-placed to survive it.

"The place that concerns us the most is western Europe, and specifically the UK", Schultz is reported to have said, adding "I think consumer confidence, particularly in the UK, is very, very poor."

Toys out of the pram time for Mandy, who is said to have wailed as follows at a diplomatic (nbo, really) drinks party in the UK.

"Who the fuck is he? How the hell are they [Starbucks] doing?", and then, ominously "Why should I have that guy running down the country ?" Expect to see legislation before Parliament any now day making it illegal for business leaders to do anything other than sing "If you're happy and you know it clap your hands" when questioned about the UK economy.















Oooo, get her....

Disappointingly, it seems that Schultz has taken fright and apologised. A Starbucks spokesman said there had been no intention by the company to criticise the UK economy, according to the BBC's spinning machine.

Why ? Why does a business leader have to apologise for saying something that is so obviously and demonstrably true ? Why does a TV presenter see fit to apologise for being no more obnoxious than he usually is ?

What is it about ZaNu Labour that these guys are so scared of ?

Shhh ! Don't Mention The Recession....

...I mentioned it once but I think I got away with it.

Apparently we're not really in a recession.

Rather, we are experiencing "the difficult birth-pangs of a new global order" . The Scottish Stalinist said that, so it must be true. Yep, a new world order in which countries that haven't mired themselves in debt recover the quickest while Britain has a seat next to Hungary in the IMF's waiting room.

You've got to hand it to the guy (or his script writers); what a wonderful piece of linguistic manipulation. I wonder if they held a competition to see who could come up with the fanciest alternative to the R-word ?


Either way, it's clear that anyone who does mention the R-word is likely to be rounded up and taken to the salt mines. In the same insane Press conference, Brown warned against pessimism and (would you believe it) the danger of "muddling through". Meanwhile Cabinet Minister Andy Burnham (he who already has bloggers in his sights) looks ready to whip anyone caught not smiling: "It is going to be a difficult year but it is important people choose their words carefully. We can talk ourselves into a worse situation." The fact that we can also spend our way into a far, far worse situation, and what's more seem hell-bent on doing just that, is obviously irrelevant.

Thus the New Labour spinning line is clear. The recession , sorry, the difficult birth-pangs of a new global order, are the fault of a) the banks b) Dave c) George Osborne and d) everyone else.

Got that ? Great. Now then, repeat after me...."difficult birth-pangs of a new global order", "difficult birth-pangs of a new global order", "difficult birth-pangs of a new global order"....

Bang On The Money

I'm finding myself increasingly turned off by party political campaigns and adverts, but I have to say that this, from Dave's Conservatives, strikes a cord.

Video from the same campaign here.

What We Need Is Leadership & Courage

There's a great article by Simon Heffer in the Daily Telegraph arguing the case for some radicalism in Conservative party economic policy.

Remarking on the death of Alan Walters (economics adviser to Margaret Thatcher and guru of monetary policy) Heffer laments the lack of a modern-day equivalent within the Cameron team, and he puts a compelling case for appointing one. Cameron, he claims, surrounds himself with the soft options of yes-men and cosy consensus, and is doing so at precisely the time that leadership and courage are most needed.

Whilst praising Monday’s announcement to abolish taxes on savings for those on the standard tax rate, Heffer says it is hugely inadequate and a mere pinprick in the policies of ever-expanding spend and tax which Gordon Brown has inflicted on us. What is needed is spending cuts and the accompanying reduction in taxes for both people and companies.

The problem is that this would take guts. The counter-argument, that at times like this the government should be increasing spending to boost investment, is seductive to many; utterly fallacious, but seductive nonetheless. Heffer argues that the electorate blames the government for the recession, is “appalled” by the debt mountain and “infuriated” by the fact that the private sector is bearing the brunt of it all. I’m not so sure about that, and to do the right thing now risks playing a less popular tune. But the key is that it IS the right thing to do - to cut government spending and start handing the money back to whom it belongs.

Throughout the late ‘seventies Margaret Thatcher repeatedly locked herself away with the likes of Walters, Keith Joseph and Nick Ridley. Together they hatched the ideas of the New Right through which budgets were eventually balanced and long-held, long-in-the-tooth State interventionist doctrines were swept away. Heffer is dead right when he says that right now we need a similar “moment of courage”. I would love to think that in twenty years time we will look back, and see this as the point at which David Cameron embraced the principles of lion-hearted leadership and started to develop the economic revolution we need so much. But I just cannot see it happening.

Heffer’s article is here.

Three Promises Dave Should Make

Before I went away to see the family and the Boys in Blue (they won 3-0), the Wilted Rose asked what New Year's resolutions the Shadow Cabinet should make. I have three ideas.

1) To get onto the front foot on the economic crisis. Cameron and Osborne have been found wanting since September and it's allowed Brown to look (to some people, at least) as if he knows what he's doing. He's come up with some "initiatives" such as the ruinous fiscal stimulus and the equally crazy mortgage bail-out and, with the help of the Mandelsson / Campbell spinning machine, he's couched these as crafted measures which suggested he knows how to beat the recession. Which he doesn't, because he can't.
The Conservatives, for their part, have been seen (fairly in some ways) as carping from the sidelines and failing to come up with an alternative strategy. Cameron's analysis of why we're in this mess and how Brown is only making it worse will, I'm sure, prove correct in the medium term. But he has to offer a narrative for how we move forward. There are signs, today, that he's grasped this at last, with the tremendous pledge to abolish tax on savings for basic rate tax-payers; if he'd have done it for everyone it would have been even better. Taxing the interest on people's savings is one of the most immoral, insidious, indefensible taxes on earth and it would be wonderful to see the back of it. We need more announcements like this over the coming weeks, backing up with a well-constructed strategy, which we haven't yet seen.

2) To launch a wholesale attack on the erosion of our freedoms that has taken place over the last ten years, including the abolition of habeous corpus, the right to trial by jury and the freedom to demonstrate peacefully. The Conservatives say, David Davies style, that they abhor the whole ethos which has created 3,000-plus new criminal offences since 1997, but they are short on policy which actually supports that view. They need to thump the table and say "This must stop". And they need to keep saying it, even after they've all been arrested.

3) To promise a wholesale reversal of the utterly insane Health & Safety and litigation cultures which have been sweeping across our beleaguered nation - in fairness since well before 1997. We cannot go on insisting on CRB checks for all and sundry, having to fill in risk assessments before throwing a snowball (no, really), or having coaches risk being sued because little Johnny hurt his leg playing football. The amount of work ahead for any freedom-loving government here is phenomenal, and would take years, but the Conservatives need something that sets the tone. the abolition of the Health and Safety Executive would be a great start.

Anyone else got any more suggestions ?

Shock Development - A European Leader With Brains

It's not our leader, of course.

German Chancellor Angela Merkel has exhibited infinitely more sense than the three prize plonkers who met in London today.

Brown, Sarkozy and Barroso got together to salivate over the utterly crazy "plan" (if that's not too grand a word for it, which it probably is) to throw €200bn into the raging inferno disaster area that is the European economy. The Germans, quite understandably, do not want to know.

Merkel, it appears, wasn't invited to this madcap resurrection of discredited Keynesian lunacy, for the very good reason that the spendaholics knew she wouldn't pay the entrance fee. This is good news for the Germans, and very bad news for us.

As discussed on this blog a couple of weeks ago, Barroso's brainwave involves a few countries (mainly us) coming up with money they haven't got, to give to the European Commission, who will use it to pay for things like loft insulation in Slovakia and improved broadband access in Latvia, in the hope that this will somehow save the millions of jobs which are currently under threat in Europe in the retail, finance and manufacturing sectors.

Not surprisingly, it appears to be taking Barroso some time to organise the whip round. The Scottish Stalinist is, of course, chomping at the bit to put his hands into our pockets, but others seem a little more reluctant. The longer it goes on, of course, the more expensive it will finally be for us, owing to the fact that the pound is dropping like sales of Irish pork. The "stimulus" that was valued at £170bn two weeks ago is now costed at £174bn. And the more countries that knock it back, the more it's going to cost us.

Germany's finance minister, Peer Steinbrück, put it beautifully - "Just because all the lemmings have chosen the same path, it doesn't automatically make that path the right one." Why can't we have finance ministers like that ? Such imagery, so appropriate.

Critics of Germany claim it has far more budgetary room for manoeuvre than any other EU country. Well, of course it has; Germany hasn't landed itself up to its eyes in debt, has it ? Rocket science it ain't.

By the way, I see from Mark Mardell's blog that the Germans are allowed to drink mulled wine while they shop, free from interference from the kind of assorted fun fascists who operate in places like Norwich. That's something else they've got right over there.

Meanwhile, back in the UK, see you at the bottom of the cliff.

Kerrrching ! Brown Opens The Till Again

George Osborne remarked a couple of weeks ago that all Labour governments end up running out of money, and this one is no exception.

The trouble with this one is that it is now abusing the privilege.

Today they've just risked pouring another £1bn down the tube with the mortgage prop-up scheme.

This sort of distortion in the mortgage market is a bad idea because:
..it can only be paid for with yet more government borrowing (this is actually taxpayer-sponsored guarantee of bad debt, financed through government debt, to try and get us through a recession which was partly caused by debt in the first place);
..it will be a difficult scheme to withdraw, because even once we're through the recession they'll always be some "deserving" cases - so this could actually end up being a permanent drain on the taxpayer;
..it encourages poor discipline amongst home buyers, who may over stretch themselves in the future in the "knowledge" that lilly-livered governments will help them out if the going gets rough;
..it opens the way for other government-inspired (and taxpayer-funded) debt guarantee schemes, to which all the above problems will also apply;
..home repossession, however painful and horrible, is one of the things that helps get the housing market going again, because it brings new houses onto the market, increasing supply and further reducing prices until such a time that people are prepared to buy again.

As is usually the case with socialist governments, this administration is awash with short-term, highly expensive market distortions that do nothing to deal with the long-term problems. Brown is obsessed with wanting to be seen as "caring" and "understanding people's plight". This is as much a political move as it is an economic one, but it's a political move paid for by money we do not have. And all along the reality is that if he hadn't taken so much money off us through tax in the first place we wouldn't be half as badly off as we are now.

Instead of taking the only path that would really help - massive government spending cuts, dealing with the borrowing and giving what he can in tax cuts, new Labour is showing its old Labour colours - spend, spend, spend when we simply can't afford it. £1 trillion worth of debt, and still courting, thanks to madcap initiatives like this one.

Osborne was right - they do all end up absolutely broke.

But Gordon Brown is, quite frankly, taking the piss.

VAT'd Be A Challenge...

Prodicus is speculating that the government is gearing itself for a cross-the-board cut in VAT, which is an interesting prospect.

As tax cuts go, you've got to say it would be a stonker. It's often occurred to me that the government must earn an absolute fortune through VAT, and many's the time I've felt heart-sick sorry fort the small tradesman who gives someone a quote and then has to lump 17.5% on top of it, thereby putting the deal at risk. It probably would be a good way of re-invigorating the economy.

The thing that strikes me, though, is would business actually want it, especially as a short-term measure ? There would be lots of work associated with changing the VAT bandings; significant administrative costs; goods to reprice, computer systems to change, forecasts and budgets to alter - probably not what they need right now. There is a discussion on UK Business Forums here which suggests that the idea wouldn't be universally popular.

Far better, I'd have thought, to cut income tax or National Insurance instead. Oh, and public spending too.

Is Dave Waking Up At Last ?

David Cameron has abandoned his pledge to match the government's spending commitments into 2011.

Thank God for that.

As The Crisis Grows, Our Politicans Let Us Down

According to Gordon Brown’s analysis the economic situation is thus. We are just entering a prolonged and profound economic recession which has been fuelled by debt. Of everyone with a negative balance sheet the government is top of the pile; borrowing stands at nearly £38bn for the first half of the year, an increase of 75% on last year. The answer to this is for the government to start spending even more money than it has been doing, and at the same time to cut taxes. In other words, the answer to the debt crisis is…MORE DEBT !

So, all the leaders trot off to the G20 summit over the weekend, which is little more than a massive photo opportunity and a chance for each leader to spin that this is a global problem – i.e. not their fault. To call it an unedifying spectacle is to err on the decidedly generous side. The conclusion appears to have been is for everyone to spend money which they simply haven’t got in an effort to boost flagging economies.

I find all this profoundly depressing. Governments have never been any good at boosting economies or creating jobs. That is best left to the private sector. The cost per job created by government spending is huge, and whatever entity they build in the process is usually unwieldy and inefficient. Whatever the answers to our current economic travails, yet more government spending is not one of them. The government behaves like a compulsive shopper; it has borrowed more than it ever dreamt of on the plastic, and while the red bills pile up the only thing it can think of doing is to keep on spending.

At times like this, with a socialist government looking to spend money hand over fist, I look to the Opposition for common sense. But we’re not getting it. Whilst not (yet) resorting to the government’s discredited Keynesian theories, they too are in denial about the true size of the hole we’re in.

Owing to the government’s reckless spending of the last few years, the simple fact is that we, as a nation, are broke; penniless, bankrupt, absolutely borassic. We haven’t got a pot to piss in. At times like this more spending is the last thing we need, closely followed, though it pains me to say it, by unfunded tax cuts.

The problem is what we need now is an opposition party with guts, a party prepared to say the unpopular. But far from preaching the classical virtues of sound money, the Conservatives have allowed themselves to have get locked into a bidding war on tax cuts which we simply cannot afford. Anyone who seriously believes that the tax cuts put forward by Cameron and Osborne will not cost money, at least in the short term, is deluding themselves. The Tories’ claim for fiscal responsibility rings hollow.

What we need is for someone, somewhere to stand up and say this: “We are broke. We cannot cut taxes and we need to cut spending. The reason is that for the last ten years the government has been spending money it does not have”. And no one’s got the guts to say it.

This Goes Against The Grain But...

Yesterday I had a quick trawl of the web because I wondered whether I was the only person in the country who doesn't think we should have tax cuts. I'm not, but there aren't many of us around.

I'll just qualify that briefly. To me we should only have tax cuts if we pay for it by cutting spending. David Cameron seems to think we can, but I think he's only talking about tax cuts because the government are doing the same thing. The assumption that targeted tax cuts will save unemployment benefit further down the line strikes me as highly optimistic; governments rarely, if ever, are so accurate in their fiscal analyses. In any case, Cameron's measures must increase borrowing in the short term at least, because he'd have to spend in advance of generating the expected saving.

John Redwood, for whom I have a lot of time, thinks we can afford tax cuts if we "abandon the ruinously expensive bank nationalisation policy". Gordon Brown is quite obviously not going to do that, so it's a slightly false argument.

Any analysis I've heard from the Left appears to say that it doesn't matter if we have to borrow more to pay for tax cuts because we're so much in debt anyway a little bit more won't make much difference - i.e. we're so far up the creek it doesn't really matter if we've got a paddle or not. What little financial discipline this government had left has been tossed away as they adopt short-termist measures to get us out of the horrendous hole their tax and spend policies have pushed us all into. I've given up asking myself "When will the bastards learn ?" because I don't think they ever will.

Interestingly (for me at any rate) it seems to be libertarians whose voices are raised against tax cuts. Old Holburn "gets it", and as the Broadsheet Rag puts it, today's unfunded tax cut is tomorrow's tax increase. I really really do not want to think about what's going to happen in a year's time, when even this government recognises that we have to start paying properly for the disaster we're currently facing. Tax higher under Labour ? We ain't seen nothing yet.