Saturday, 20 June 2009

Accountancy Is Not His Strongpoint

'Accountancy is not my strong point,' said Jack Straw recently when challenged on a expenses. Perhaps he borrowed the words off the Chancellor. It was a case of another month, another record deficit and another missed fiscal target for Alistair Darling.

I am sure his school maths report read, 'Could be doing better' every term, but how long should we give Alistair Darling? Will Peter Mandelson be forgiven for forcing the PM not to give the job to Ed Balls as at least we could have had more fun associating his name with the economy?

We borrowed nearly £20bn in May alone - a record and the highest monthly borrowing since 1993. The simple causes were that we spent more and brought in less tax than predicted. Even a dimwit like me blogged exactly this in the past - in a recession, the burden on the Welfare State rises and less tax is taken in as more people become unemployed. However, the extent of the problem is staggering, as only 5 years ago, £20bn would be half the ANNUAL borrowing not a monthly figure. In fact, income tax receipts were 11% lower, corporation tax was 27% down and VAT receipts were 19% lower while spending leaped nearly 17%. All this means that the current net borrowing estimates are wildly out - yet again - and was the reason why the Chancellor got a fairly public rebuke from the Governor of the Bank of England, Mervyn King.

Money, Money, Money

Money seems to be dominating things of late. Little Hazel Blears, who hoodwinked the taxman on her CGT when selling her 'second home' as her 'main residence' having claimed a whole load of MP allowances on it, survived a vote of 'no confidence' at her local Labour Party's meeting. Again, I have blogged on this that is not just MPs who are out of touch but the political machine. Blears, remember, was so saucily vindictive that she resigned for full damaging effect in the middle of the MEP and Local Council Elections which were a disaster for Gordon Brown. Later, she publicly said that she 'regretted the timing' but there was no doubt as to what was on her mind, as there was no doubt what was on the minds of James Purnell and Caroline Flint. If they were to go, so was their leader. Amid that kind of double dealing and self-interest, Blears was given backing by her local Party. Sadly, I think that the local Labour Party may be horribly out of touch with the views and feelings of the voters in Salford who see Blears for what she is - a poisonous, self-interested fiddler.

I make a public prediction that she will lose her seat at the next election.

Lust For Money Clouds Transparency

One of Michael Martin's almost lunatic lambastes of the Telegraph's revelations on expenses was that the MPs' expenses were due to be published shortly. Yesterday we got the 'redacted' version of them. For those not in the know, redacted means 'doctored'. Much of the extent of what we now know, thanks to the Telegraph leaks, we would not have known. In the name of privacy and security, much of the information was blanked out. For instance, we would never have known that Gordon Brown had paid his brother for a cleaning bill - the whole thing was blanked.

This was the kind of disclosure that the Fees Office and MPs supported and it shows that they were not happy to give up their free-loading and abuse of public money. I still assert that all MPs are paid at minimum a salary in the top 3% of British salaries and have generous allowances to travel and keep an office over and above second home allowances. There was zero need for abuse of the system on a large or small scale - no excuse at all. What MPs fail to realise is that the vast majority of the citizens of this country pay what is owed in taxes, fees, bills and fines out of their take home pay and that is what the Government and the HMRC tell them what they have to do and they do it. For the likes of Blears et al, it's a different system, and even when caught red-handed, they can stand up, smile and pay back only a fraction of what they have abused for and still keep their job and way of life.

Politicians have had a rude awakening, but they will soon be fast asleep again. If the latest elections did not send a message to Salford's Labour Party, I dare say the General Election will.

Off Subject Transparency

Moving away from money, transparency has been a soundbite for this Government which they have carefully guarded. We have had two very unsatisfactory Public Enquiries into things to do with the Iraq War and neither got close to addressing the real issues. So another was announced and its purpose, we were told, was not to apportion blame but to look at what we could learn from it. Once again, we get a carefully controlled remit. Of course, there are more serious matters at stake. The Government made the decision to go to War and all the Cabinet were in on it, including several of today's Ministers. Get a public enquiry to reveal how they doctored information and defied the UN's resolution to go to War and suddenly you open up a case for illegal war and then some personal claims against them. As Blair earns a predicted £12m from his non-executive jobs, faith tours, lectures and book advance, he may sit pretty that he will not get dragged back into the mire.

Thankfully, the growing public pressure on the Government may pay off to some extent. Even previous dignitaries who led enquiries are demanding that all hearings should be in public instead of private hearings only which are the best way to get transparency. We have already seen the Government's colours on this - Jack Straw used the power of veto to suppress the publishing of the minutes of Cabinet meetings that involved the decision making on going to war - a sure sign, as we have seen with MP expenses, that there is something to hide.

We may well yet get a public enquiry that we can actually get to see but you can bet your bottom dollar that it will never address the issue of why we went to war, who fiddled the evidence, who made Ministers vote against their conscience, what really happened to David Kelly and THAT document, who said that there were WMD there, and who ignored that there weren't. None of that will ever get answered, because the truth could finish this Government once and for all, even if they are making a good fist of it now.

Enter The Enterprise Tsar

A superb popular move by Gordon Brown - Alan Sugar is appointed 'Enterprise Tsar'. Of course, no one understands what the job is or why Sugar has capabilities to do it. For those who have experienced his business methods, it is alleged that he is not a shining example of the best of British. His products were mainly poor quality clones and he never really made much wealth from them - his personal fortune came more from property dealings. No matter, his face is the one that delivers the 'You're fired!' on BBC and that was what Brown needed.

Naturally, there was the small matter that The Apprentice is about as true to business as beach football is to the Premier League, but again, no matter. Prim, lefties might argue that The Apprentice shows bad HR governance and subjectivity is the main determining factor for hiring rather then objectivity, hence two pretty girls were left to squabble over a prize that is the kiss of death - working for Alan Sugar. Then again, the standard of the candidates was pretty poor in the first place and hardly representative of modern management capabilities, we would hope.

No matter. Alan Sugar is the face of modern business and the king of enterprise. He is a popular choice, as millions watch his program and numbers don't lie.

Quite what the hell he will do is beyond me, but he's behaving like a politician already as he has a second and third job which he has no intention of giving up.

Round Up

It's a week when Fred Goodwin offered to give back £200,000 per year of his annual pension rights - if only he could give back the jobs of the thousands he displaced by his greedy business deals. He seems to not get it, as with MPs. The fact he negotiated for himself in the first place showed his metal. Giving back some of the money will not save his reputation.

In the US, Bank of America is again in hot water. Having received $45bn of state hand outs, and we already knew its take over of Merrills was a disaster on many counts, it has now been revealed that they allegedly paid $millions in bonuses to Merrills traders in order to 'keep top talent'. That would be the talent that lost the bank billions. It is a symptom of banking executive mentality that they think their businesses cannot survive in the real world without the champagne swigging, fast car driving, expensive suited multi-millionaire whizz kids who can lose them billions overnight and not care a hoot. Well, it seems they have learnt no lessons from the recent catastrophe and it's why there should be wholesale changes not just to the banking system and the regulators - which has not happened - but also vast changes of personnel.

We are setting ourselves up for the next fall and it will be harder and deeper than the last. The profits and bonuses will start to flow again soon and the make-believe world of making profits out of nothing will be the order of the day, as we foot the bill personally and collectively in taxes and our jobs.

Brown regrets that he did not impose a tougher banking system previously but didn't want Britain out of the mainstream. So why hasn't he learned his lesson and fixed it for next time?

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