Category: National politics

The Goodwin pension saga is in the papers again today. Boris Johnson points out again that the whole Fred the Shred sideshow is rather convenient for the government and keeps the public’s eyes averted from the parlous state of our nation’s finances whilst Brown is fiddling in Washington.

Boris’ best line is:

I don’t wish to sound remotely complacent, but if and when Hattie takes over from Gordon Brown as leader of the Labour Party, the Tories will be able to stop fund-raising and get on with some truly radical and innovative policies, because Labour will be out of office for a decade at least.

I am sure that Labour will be out of office for at least a decade. I think that any time that Harman spends as leader can be added to the base.

All good knock about stuff. But the implication of Harman’s interview with Andrew Marr on Sunday was that Labour would simply come up with a custom made law to swat Goodwin. Quite right you might say but quite wrong when you sit down to think about it. What part of our state can operate effectively if its partners and contractors can’t be sure when the government is going to turn around and use its law making powers to change the rules of the game? Would you do business on that basis?

Today Tom Winsor, the rail regulator from 1999 to 2004, gives a frank account in the Times of how the government proposed to do this in the case of Railtrack when Gordon Brown and Shriti Vadera came up with their evil plan to steal Railtrack from its owners.

Iain Martin at the Telegraph this afternoon points out on his blog that Royal Bank of Scotland on its own will cost tax payers £100 billion most of which we are unlikely to ever get back – maybe we will sell our 95% holding for £15 billion in a decade or so – who knows.

The whole Fred the Shred stink is embarrassing for the government but it makes sure that no-one is talking about the main story – GOVERNMENT SPENDS £100 BILLION BAILING OUT ONE SCOTTISH BANK.

Over the last week the banking chickens have been coming home to roost in a big way. On 19th February the Office for National Statistics announced that it would re-classify credit crunch victims RBoS and Lloyds as being part of the public sector thus adding between £1 trillion and £1.5 trillion to Public Sector Net Debt. To underline this the Bank of England governor told the Treasury Select Committee yesterday that these banks had effectively been nationalised:

The Government owns more than 50pc of the equity [in RBS and Lloyds] and can take its decisions accordingly.

I don’t see a significant difference between that and outright nationalisation – except in the sense that this system we have now has the merit of trying to make it clear to everybody that nobody thinks the Government should be running these banks indefinitely.

Fred the Shred’s £693K a year pension is a side show if a totally unacceptable one. This man is in large part responsible for us going from having four large, capable world class banks to having one. HSBC still stands tall, we will find out how tall on March 2nd when it announces its figures. Barclays is walking wounded and will probably try to offload some of its worst assets onto the government. It still managed to post £6.1 billion of profits this month so there is reason to be hopeful about Barclays.

Lloyds is effectively nationalised, an otherwise sound bank laid low by a combination of the hubris of its management, thinking they had a once in a lifetime opportunity to grow by swallowing HBOS, with Gordon Brown’s inept meddling. A vain attempt to save another once great Scottish institution – Bank of Scotland. Yesterday Lloyds announced an 80% profit fall in its original business on top losses of £10.8 billion at HBOS.

Goodwin’s pension has totally overshadowed yesterday’s formal announcement of the largest corporate loss in UK history – £24.1 billion on the part of Royal Bank of Scotland. RBoS took over NatWest nine years ago in a £21 billion deal that made Goodwin’s name and saw this upstart Scottish bank take NatWest’s place at the top table of British banking – the big four.

There are two phrases we hear a lot recently. One of those is that our banks are too big to fail. The technical phrase used by central bankers is moral hazard. Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

Another phrase we hear a lot is hindsight or rather that it all very well to carp about the credit crunch now but you can only do so with the benefit of hindsight. Really?

For the average man in the street the first chapter of the credit crunch was the failure of Northern Rock. We first knew there was a problem on 13th September 2007 when Northern Rock applied to the Bank of England for emergency support. Those in the banking world knew there were problems in banking over that summer. RBoS’s takeover of ABN Amro was only completed in early October in the face of a lot of negative comment about the sense of the deal. Apparently the whole RBoS board were in favour of the deal. They didn’t hear that the music had stopped. Could it be that they figured that the Government would cover the downside? You didn’t need hindsight to avoid buying ABN Amro just some feeling that it was risky and that it might destroy you. Clearly Goodwin and his board thought that they were immortal. Moral hazard at work.

I can’t help feeling that if Northern Rock and even HBOS had been put to the sword rather faster and more emphatically than they have been our bankers would have woken up and smelt the coffee rather sooner. I also can’t help feeling that Newcastle based Northern rock and Edinburgh based Bank of Scotland were not only too big to fail but too dangerous to Labour’s re-election to fail. Goodwin and Brown are surely the joint authors of this mess.

At least I am not half the politician Stephen Pound is.

I have just got home from College Question Time at Ealing, Hammersmith & West London College. LibDem councillor Jon Ball was there along with Ealing North MP Stephen Pound (Labour) and me to answer questions from about 30 students. We covered the ground you might expect us to including Heathrow, the banking crisis, the VAT rate cut, the Iraq war and Gaza.

Early on in the Heathrow debate I challenged Pound as to why he had abstained on the 3rd runway debate in Parliament on 28th January rather than resign his junior ministerial post as the two other local MPs had done. Rather than just fess up Pound took the line that there had never been a vote on the 3rd runway in the House of Commons and that the Tory motion I was referring to was so watered down because of “splits” in the Tory party is wasn’t worth voting either way so he abstained. I think Pound was taking his audience for fools. Read the motion for yourself:

That this House urges the Government to rethink its plans for a third runway at Heathrow Airport and to give full consideration to alternative solutions; regrets the Government’s heavy reliance on data supplied by BAA in assessing the case for expansion and notes the likely forthcoming break-up of BAA’s ownership of three of London’s airports following the investigation by the Competition Commission; believes that the consultation paper Adding Capacity at Heathrow Airport was deeply flawed, as it paid insufficient regard to the costs of air and noise pollution in the surrounding areas and the commitment to curb carbon dioxide emissions to tackle climate change; regrets the fact that provisions to improve high-speed rail lines from Heathrow to major cities have not been fully explored, along with the potential of other UK airports to handle more long-haul flights; and urges the Government to initiate a consultation on a new national planning policy statement on the theme of airports and high-speed rail.

Pound claimed not to know why his colleagues had resigned and voted for this opposition motion.

Luckily I got the chance to have a second pop at Pound and asked him how he would vote when a 3rd runway vote did come up. His response was that he would make his mind up at the time and to divulge his opinion now would be an insult to Parliament. More like an insult to his audience.

I just can’t get my head around this kind of dissimulation so I figure if that is what it takes to be a politician count me out.

It was a tough day for the government yesterday, not the least the mauling they got over Heathrow’s 3rd runway. They scraped a majority of 19 and saw 28 Labour MPs rebel in the course of a Tory debate on the third runway at Heathrow.

Local Labour MP, Andrew Slaughter (Ealing Acton & Shepherd’s Bush), resigned his PPS job (unpaid junior ministerial aide) in the morning and later in the day Ealing Southall MP Virendra Sharma did the same thing so that they could vote against the government. Well done to both.

Ealing North MP, Stephen Pound, was not so brave. He chose to no show. No doubt a bit of tummy ache or dodgy curry on Tuesday night. Hope it is nothing more serious Stephen. Get well soon.

The notorious “Mr and Mrs Expenses” from neighbouring Feltham & Heston to the west (Mr Alan) and Brentford & Isleworth to the south (Mrs Ann) both managed to vote in favour of the third runway. I guess that Mrs Expenses was protecting her ministerial job as a junior health minister but apparently Mr Expenses didn’t want to vote in favour of a Tory motion as a matter of principle. Yeah! Right.

The Telegraph reports today that repenting sinner, Denis Healey, Labour Chancellor during the economic crisis of the 1970s when the top-rate of tax was 83 per cent and the IMF were called in, does not believe that Gordon Brown’s 45% tax rate due in 2011 will work. He says:

… what I learned as Chancellor were that the rich can nearly always find ways of avoiding tax that are legal, and in any case the amount raised is very small. And it does encourage people to leave the country.

He even thinks that the public sector is bloated. The quote below puts him roughly in the same place as the Taxpayers’ Alliance and I:

We’ve got far too many people working in the public sector. There’s probably twice as many people working in the public sector as is necessary.

Yes, quite!

Apparently Healey lives in the Sussex village of Alfriston. This really is an amazing old-world place with a village green. I don’t suppose the place is full of New Labour types, or even the old sort. Retired majors and the suchlike, yes. I guess Healey has moved to the right as he got older like the rest of us – shame he didn’t get there rather sooner. My Dad always respected Healey because he was a beachmaster at Anzio. He also came out of the war on the left but his journey to the right was rather quicker than Healey’s. Funnily enough Healey ended his army days as a major.

Ridiculously, at the time of writing, the Whitehouse website is not carrying the new President’s inauguration address. Apparently:

Later today, we’ll put up the video and the full text of President Obama’s Inaugural Address.

No doubt the Whitehouse web team are too busy partying. Luckily the free, non-state supported Americaintheworld website, part of the ConservativeHome franchise has it in full here. This afternoon, whilst hanging up the washing, I tuned in at:

… and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.

Yes, quite. Ditto Europe. I listened to the rest of the speech but much of it flowed over me like a warm wave of lovely loveliness. One phrase jumped out at me:

And those of us who manage the public’s dollars will be held to account – to spend wisely, reform bad habits, and do our business in the light of day – because only then can we restore the vital trust between a people and their government.

As Labour MPs troop through the lobbies on Thursday to vote to keep their expenses secret I hope they remember that phrase “do our business in the light of day” and feel ashamed of themselves. I don’t think many Conservative or LibDem MPs will vote for Harman’s pernicious Freedom of Information (Parliament) Order 2009. We will see.

Last week we learnt that Harriet Harman, Leader of the House and deputy leader of the two-legs party, wants to exempt MPs’ expenses from Freedom of Information laws, see here. A statement revealing the plans was slipped out last Thursday in the Commons by Harperson, in order to “bury bad news” just as proposals for Heathrow’s third runway were made public.

MPs will vote on this proposal this Thursday. If you want to do something about it go to theyworkforyou.com and follow the instructions. I have just written to my MP, Virendra Sharma, who is MP for Ealing Southall.

Dear Virendra Sharma,

I am writing to ask you to vote against the draft Freedom of Information (Parliament) Order 2009 this Thursday and to ask you to sign Jo Swinson’s Early Day Motion number 492.

This order removes the expenses of hon. Members and Peers from the scope of the Freedom of Information Act and thus singles them out for special treatment. They will be the only public officials who will not have to disclose full details of their expenses.

This order does not reflect well on Parliament and will bring Parliament even further into disrepute. It will not reflect well on members who vote for it.

Yours sincerely,

Phil Taylor