Month: Aug 2009

Today Boris Johnson uses his column in the Telegraph to suggest that David Cameron can set the tone for his new government next summer by scrapping ministerial cars. Both Boris and Ken Livingstone before him have shown that you can do a job with ministerial status without the car. Quite right. Cameron’s government will be required to visit seven years of famine on our state and it needs to start with ministerial pay, pensions and perks and then get to work on Parliament and MPs if it is going to have the credibility required to do its job.

Back in February I showed how it would be possible to save £10 million by reducing the number of cars run by the Government Car Service from 170 to 50, see here.

You can pull all the numbers you need out of the Annual Report of the Government Car and Despatch Agency, here. Government mail and car services are handily structured as a Department of Transport Executive Agency and they publish separate figures.

In 2007/8 they had 171 cars and 168 drivers and they cost £14.0 million to run. That is about £82K per car but I guess they don’t have all the cars and the drivers on the road at the same time so they probably have nearer to 150 cars out there operating and the effective cost per car is slightly higher than £82K but probably not quite as much as £100K. They bought £1.0 million worth of new cars and employed five managers who earnt over £50K in 2007/8. All employees are on civil service pensions. Nice work if you can get it.

It sounds like you could keep 50 odd cars for the real big knobs, lose 120 or so and save £10 million. They also have large premises at 46 Ponton Road in Vauxhall which would probably make a nice capital receipt thank you.

Adair Turner, Chairman of the failed Financial Services Authority, clearly does not even partially understand the industry he is meant to be in charge of. The extent of his ignorance is just stunning.

His interview in Prospect magazine published today has been widely reported this afternoon, see BBC coverage here.

The idea that a Tobin tax could curtail the bonus culture in investment banking is just facile. There is a major structural problem with investment banking – if the market worked properly then excess profits and bonuses should be competed away. The fact that they are not is a real problem. Merely trying to tax these transactions does not change that situation. It could be argued that this would simply be a case of the state trying to take a share of these excess profits. Not very efficient I think.

The UK’s banking crisis has not really been an investment banking crisis. It has been a wholesale (or commercial) banking crisis. The major casualties were Northern Rock, HBoS/Lloyds and Royal Bank of Scotland. None of these had significant investment banking activity. Indeed Barclays, which was the one British bank with a significant if specialised investment banking arm, has had a good crisis comparatively speaking. Northern Rock overtraded on a duff business model. Bank of Scotland was bought low by massive criminality in its commercial lending operation.

Turner has clearly forgotten, if he ever knew, the modern history of wholesale banking in the City of London. It prospered in the seventies and eighties because the Eurodollar market allowed corporates to manage financial risks outside the onerous US regulatory environment.

It is all very well to point out that our financial sector is too large compared to the rest of our economy. The answer is not to hobble financial services but to take the brakes off the rest of the economy. A good place to start the process might be to look at lower corporation tax levels to persuade some other businesses to come home and reverse the current trend for businesses to move offshore.

Turner is one of those “high powered” management consultants who doesn’t really know anything. The sooner the Tories abolish the FSA and Turner the better.

The comments by David Norgrove, the UK’s pensions regulator, reported today by the BBC, are I suspect just the start of a massive debate. The credit crunch and Gordon Brown’s destructive stewardship of our economy are going to blight our national life and stunt our ambitions for at least a decade. Our pensions system, and more widely the attitude of our older people and society’s attitude to them in turn, will be a key factor in our wealth and happiness during this period.

Norgrove today points out that people like me are getting 6 hours of free additional life every day. The graph above, reproduced from National Statistics here, is stunning. It is a straight line. Nobody quite knows why the graph keeps going up, or when it will stop. Indeed, some scientists say that the first woman who will live for 1,000 years may already have been born.

The great question for our society, and the key to how wealthy we will be for decades to come, is how do we use these extra hours? Do we sit around collecting silver and assets? Do we buy 2017 gold eagle coins and dig a hole in the backyard to bury them for a rainy day? Do we sit around expecting our children and grandchildren to sub us or do we earn our keep? It is right that people should be given some years of retirement at the end of their lives. Even if you feel that this time is paid for by your own savings the economic fact is that you are supported in retirement by the industry of the young.

Our plans for changing people’s expectations of retirement are incredibly unambitious. Right now, pensionable age is 60 for women, 65 for men. That will rise to 66 in 2024, to 67 in 2034 and to 68 in 2044. For myself, at 47, I will be entitled to a state pension at 66. Norgrove suggests 70. My own father retired at 70 almost 20 years ago (during which time life expectancy from men increased 6 years). I fully expect, health allowing, to work until 75.

We need to move much faster to 70 being a normal retirement age with the possibility for people to work beyond that even and enhance their pension if they need to. We also will have to look at pushing the qualifying age for other benefits associated with old age out to 70 too. Our taxes will be much lower, our national debt will be much lower, our young people will be unburdened with supporting a rising elderly population, our older people will be enjoying additional years of happy, productive life. Our working lives need to lengthen, not our retirements. If you are looking for at home care for a loved one visit https://www.partnersforhome.ca/future-home-care-services-manitoba/.

Harriet Harman is easy to ridicule as Harriet Harperson. She makes it easy.

I don’t watch GMTV but apparently that was the forum that Harriet Harman, Deputy Prime Minister [sorry Labour party leader] and the person with her finger on the red button this week and last, used this morning (according to the Times) to say:

Somebody did say… that if it had been Lehman sisters rather than Lehman Brothers then there may not have been as much…

Essentially she was trying to blame the credit crunch on men. Only on Sunday the Sunday Times quoted her as saying:

Men cannot be left to run things on their own. I think it’s a thoroughly bad thing to have a men-only leadership. In a country where women regard themselves as equal, they are not prepared to see men just running the show themselves. I think a balanced team of men and women makes better decisions.

This woman aspires to running our country. What a complete arse? Apparently she will be standing in for Gordon Brown for another week. Deliver us from evil.