Bingo or Afghanistan or Education or The NHS? Bingo, Please.

In a fairly odd Pre-Budget Report (PBR), it did not get more bizarre than the cut in tax on Bingo.

What was really odd about it was that it was so specific and announced with such gravity that it seemed every citizen in Britain would derive some benefit - hence its headline billing in the PBR. There were no free prescriptions for everyone, no free hospital parking, no extra help for working mums, no lowering of the dental fees on the NHS or boosting the availability of dentists to people. No new kit for the army, no new armoured vehicles, no new bullets for the TAs, no new police on the beat - but there was a boost for Bingo.

It is hard to believe that we are actually in financial dire straits, with a record post war budget deficit which is legally pledged in the Fiscal Responsibility Bill, farcically passed in the Queen's Speech, to halve by 2014. Here we are handing out money for people to play Bingo.

If a Martian landed on earth today and looked at the priorities of this Government they might think it odd, but if you are an earthling you would think it bizarre to the point of absurdity.

It's as if as the Titanic sank, people debated whether the Foie Gras was game enough.

Maybe I'm the daft one here - perhaps my wife and I, our immediate family and entire entourage of friends are the odd ones out in that not one single one of us has ever stepped into a bingo hall let alone played it. Maybe we are the out of date ones that don't see that the crucial mood and well being of bingo players is vital to the financial recovery, health and education of this nation. Maybe the Government knows something that I do not - maybe all bingo players are in fact mathematical maestros who underpin the design of our health system or are intelligence officers who are secretly guarding us against the growth of terrorism from within. Perhaps bingo players are capable of launching Weapons of Mass Destruction within 45 minutes and therefore this is a move to appease them.

There has to be some reason. Or is it just that John Prescott's wife plays bingo twice a week and he still has Brown by the short and curlies? Or was it a misprint in the report that Darling read out and should have said, 'Drop income tax for everyone and BINGO we win the election.'?

I haven't run the figures yet but of the £31 bn boost to spending this PBR represented I am not sure what decreasing the tax on bingo actually contributed to the bill but I am sure there must have been a corresponding multiple in benefit for the nation carefully calculated. For instance, it must outweigh the cost of one new heavily armoured vehicle sent to Afghanistan or another helicopter, or a better bullet proof vest, or some more food or even just a poster for the barracks wall that says, 'You may not think it but you boys dying in Helmand are worth more to us than people who play bingo.'

You could not make this crap up, frankly, and I apologise for my crudeness but it is the only word that describes it adequately. In the deep mire of financial mess and the blood of Helmand province, the best thought leadership of this nation came up with a 2% decrease in tax on Bingo and announced it to the country as if it was crucial to our global recovery plans.

Even Brown's cartoon character hero, Superman would have a laugh. This is a pointless Government doing pointless things at a time of crisis - Jim Callaghan and his 'Crisis? What crisis?' Government would be so proud of New Labour.

The Vision Never Achieved

When the dust has settled long after our memories will be able to recall the two years of financial disaster we have experienced, the country will have literally blown all the money spent by New Labour since 1997.

This is the stark reality we face of the Government's proposed spending cuts, the biggest squeeze on the UK's finances since the 1970s. Instead of a bold Utopian vision of the future we have slumped back into Life on Mars. For all the boldness of the Blairite, New Labour vision and all the 'investment' that went into it over the last 12 years, we will reclaim back every penny under the New New Labour proposals on spending cuts and tax increases to get our finances back below £100bn a year's worth of borrowing by 2014.

During the new years, national debt will rise to over 80% of GDP, the IMF reckons it will be closer to 99%. No matter as it will be just quibbles over how much interest we will pay which is where the cuts and taxes will be aimed. At the peak of borrowing, the estimated interest bill will be £60bn or approximately half the annual budget for the NHS.

The election will this time around be all about which party can pee over a fence higher in terms of sending cuts instead of bold new futures. Instead of shiny new 'It can only get better' and 'Cool Britannia' adverts with catchy songs, it will be all Hovis type dour music and austere themes.

Welcome to Britain under New New Labour - it has been a perfect exercise in how to blow a load of money on nothing and then reclaim every penny back so that we stepped exactly 5 paces forward and the same back.

Nice one. That story should win a few votes and if I hear once more 'It was Tory free market economics' or it was 'sub-prime in America' that caused it all, I think I will throw a brick through the TV. I have had my intelligence insulted far too often by these people - don't let the same happen to you.

Public Service Is The Place To Be

One of the most recession proof areas of the last 2 years of crisis has been the Public Sector. Makes you think we are a bunch of mugs in the private sector.

As unemployment hurtles upwards, very few jobs have been lost in the public sector as private firms have borne the brunt of the downturn in terms of laying people off and cutting costs. There are few firms in the private sector which have grown to any great degree while many have contracted or even disappeared. Meanwhile, despite a colossal budget deficit and borrowing now at 59% of GDP and rising, the public sector shows no sign of having to rein itself in - except of course if you are in the Armed Forces where there have been many crazy cuts as we attempt to fight two wars and have suffered as many casualties in Afghanistan as we did in the Falklands War.

The Sunday Times Appointments Section, barometer of how the job market is in terms of investment, has for some time been packed full of senior public sector appointments with salary packages that would make most business people look at least twice. The recruiters in this sector, like Rockpools, have been making a mint and the market for Health Interims is more healthy than the industry they supply - it's big, big business. Executives in the public sector are paid very well - far more than many of their private counterparts considering they create no wealth. Then there are the pensions. Let's not go there - I had a recent statement on my plans and frankly the prospect of retirement depresses me greatly. I can see myself never being able to stop work.

Workers in the Public Sector just don't get that point as they hassle for more pay citing the private sector as the yardstick.

It's not just redundancies - the public sector is like a vast sponge for money and it just keeps expanding. Latest estimates show that almost 1 in 4 jobs in the UK are in the public sector while the sector just absorbs more money and wastes a vast proportion of it on projects that deliver little and continually over run. In the MoD there is dreadful control of assets, huge contract overspends and then too few people at the business end with little enough equipment to do the job, while the civil servants back home pocket a share in a £48m of bonus payments. Injured troops or the families of the dead get precious little compensation for their losses when clerks in the MoD can sue for massive payouts for little than a bit of bullying or stress - try Helmand province for a bit of repetitive stress. MPs consume vast expenses for little to show for it and cannot see why the public is at odds with them - indeed, they want more pay and to continue to stand at the next election. The NHS is full of padding and overspends yet vital drugs are not given due to cost. Education is delivering mathematically sub-standard and illiterate graduates who cannot even get jobs - the list goes on. Yet we have not saved a penny despite a huge borrowing crisis.

Now we have the final insult. As soon-to-be 84% owners of RBS, we (the public) watch in sheer horror as traders and executives are to be paid over £1.5bn in bonuses from making profits that we (the public) have created for them by bailing them out and giving them free money to re-capitalise, none of which they have passed on to the economy.

It's a story that you could not write it's so idiotic and unbelievable. Globally £15 trillion has been spent on saving the banks and all we have done is lined their pockets by giving them profits as easy as spearing fish in a barrel. As Gordon Brown enjoys a resurgence in public opinion even though the public do not understand why we fight wars, his crony, Lord Myners, says that, 'Bankers should get into the real world'.

Let's just remind ourselves, this is the same Government that told us we could not get caught up in recession as our economy was so strong, then it would not hit us so bad for the same reason when it did and now of the G20 richest nations we are the only one still in recession which is the longest on record for the UK. Let's also remind ourselves that WE own a huge stake in most of the high street banks and WE are the major shareholders of these companies. WE have the capability to demand how they pay their people.

The Government continues to sit on the fence and just lob insults - as they should have done to have avoided the crisis we are in, they should ACT now. To hell with competition, stop the bonuses and reform banking.

Debt Is Good?

Hey, if bankers can make billions out of trading debt then every penny we clock up as a nation must be a good thing? Right?

Really, we owe £825bn as a nation and we must be getting richer if we borrow more, according to the rules of bankers - so borrowing a record £175bn more over the next two years must actually be a good thing. No need to tighten our belts, rein in the spending, cut costs, make efficiencies - perish the thought. Spend as if there is no tomorrow, because debt is seriously good.

Well there is a minor flaw to the logic. We know as individuals and consumers that we can borrow and borrow thanks to the plentiful supply of low cost credit using the above logic. Then the party can come to a shuddering halt. As if someone has noticed a small turd in the bath water or that the emperor is actually wearing no clothes, someone always realises that your ability to service the debt gets in the way of a good time. The debt suddenly becomes a millstone around your neck and for consumers that can mean a lot of hardship, possibly bankruptcy in the extreme. Banks can be merciless if you cannot pay up, as we know, yet when they get into debt, we get to pay for it. An odd story but that's 'Big World Economics' for you.

While our Government continues to spend as if there is no tomorrow, we ordinary folk in the street know that it cannot go on - just as many of us realised that the rise in house values had to collapse at some time. Too much debt is a nightmare. We know that, yet we are not the equivalent of financial 'rocket scientists'.

It seems the public know more about the current national situation than the ministers at the helm - in line with people at the IMF and other bodies that look at Britain as growing pile of sewage on the world seas when it comes to borrowing money. We borrow and borrow yet we make no long or short term plans in which to pay the money back other than believing we will win phenomenal growth at the next throw of the dice or that the economic recovery will take care of all that we need to repay the money. It's like an executive asking the bank for a loan as the business is losing money but makes no modifications to his or her business because they believe success is just around the corner when it hasn't been for six straight quarters.

Put in those terms, Britain is heading for a financial disaster. By all means follow the creed of Friedman but there comes a time when you have make cost cuts as the situation will start to spiral.

A survey of the public agrees - so it is not the population of this country that wants to keep clocking up this debt. We have to pay for it in taxes - the interest bill by 2014 will be £60bn, the size of the NHS budget in a single year - and contemplating it scares the heck out of us. A BBC poll suggests 59% of people would prefer to cut spending rather than have increased taxes. Almost half of those surveyed (48%) also believed there should be a pay freeze in the public sector - the reason it was only half, I suspect, is that the proportion of jobs in the public sector must mean that statistically half the people who were surveyed that work must be in the public sector - it's a position which itself is a time bomb. Bureaucracy and civil service should be the first big area to get the knife, there are just oceans of people doing little of value to this nation other than occupying a seat and consuming tax pounds.

31% of those surveyed reckon the pay freeze should for two years - welcome to the world of sane thinking. The good times, as the public know, are over.

Here's a thought, over half the people reckon that the highest earners in the public sector should take between a 5% and 10% pay cut. During the entire recession and credit crunch, the Sunday Times Appointments Section has been chock full of public sector senior jobs with huge salaries - far greater than the private sector for similar jobs and with gilt edged pension plans and benefits. It seems as if the public sector has been booming while business has experienced reality.

Of course, you have to get the priorities right - the Armed Forces and parts of the NHS should not endure some cuts but there is so much wastage in this country all the way to the top that thinking you have only to cut all salaries is the mindless way of viewing things. It's like us cutting spending on training reservists and then sending them to fight the Taliban - doing such things are stupidity in the extreme but increasing the pay for MPs is exactly the same. You have to look at things from a value point of view. Increasing the pay of a CEO at an NHS Trust gets you no value while increasing the wage of a nurse or hospital doctor does. It makes you shudder when Labour introduced the manic scheme for GPs that increased their pay overnight by a huge amount for nothing extra only to find they had made a gross mistake in calculating how much they actually worked to qualify for their money.

This whole Government tenure has been one of laissez faire management of finances, policing and immigration as examples and now, as we contemplate the abyss of massive and unmanageable public debt, they continue to spend on stupid things like MoD and FSA staff bonuses when the country is on its knees while cutting spend on Armed Forces and frontline weapons while trying to fight two wars.

The penny has not dropped in all quarters yet as Glasgow North East showed - but at least this survey shows we are finally getting there.

As Easy As One, Two, Three

Alistair Darling is a formidable politician and a fine Chancellor. His record proves it. Yeah.

So when he tells us that the route out of our borrowing situation - not mess - is as easy as one, two, three then we should believe him and start doing a Jackson Five jive. Like his Lords and Masters, Brown and Mandelson, he believes the prime way out of the mess we are in is to borrow to grow.

Hands up all those people in business who have borrowed to grow. A fair number I would suggest. Hands up all those businesspeople who have borrowed to grow in a recession. Not many. Typically in business we borrow to survive when in a recession as growth opportunities are fewer unless you can find a little opportunity niche that you can exploit.

Granted running a country isn't like running a business but there are only so many things you can spend the borrowed money on to incent growth. So far, we have seen the massive bank bailouts as the main form of spending, hence borrowing. This has been the vast majority of what we have spent. We have also reduced VAT which is due to end but retailers would say this has helped stave off the worst of the economic recession. In business to business companies like mine, VAT decrease make not a jot of difference.

So if we borrow more, we can theoretically invest to produce growth. I would really like to understand exactly what the Government is going to invest in right now to stimulate growth other than to entice consumers to do what they did before which is borrow heavily to fund their spending. Already, people are facing some austere spending cuts as job uncertainty grows. Credit card and unsecured debt across the population is dangerously and unsustainably high, wages are set to not grow and possibly decrease, and taxes are set to increase. It really does not take a genius to work out that growth is really going to have to be 'false growth' in order to stimulate the economy.

The Chancellor's wish list is that we borrow more, try to reduce spending while maintaining priorities and increasing taxes which will all stimulate growth - one, two, three. The growth will produce a richer economy which will make it easier to pay off the debts.

Right. Meanwhile, across the pond Alan Greenspan is warning that US debt is now dangerously high at $1.4 trillion. He warns that there comes a point when the economy runs away from you and you continue to borrow more money just to service the interest on the debt as the growth rate just eludes you enough to need to borrow more just to try to catch it. In 2014 it is estimated our interest bill on our debt will be £60bn per annum which is equivalent to the entire NHS budget at current rates.

There comes a time when you need to stop borrowing and cut your cloth for the economy you are in. That does not stop you from investing in growth - it is just a realistic look at what you can really afford. It means that some of your grandest plans will have to be re-thought, some of your pet projects put aside. It means you have to make a rigorous look at the layer upon layer of wasted management and bureaucracy. It means you have to look hard to gain efficiencies, it means that some services will have to be downgraded and cut. It means some businesses will have to be allowed to whither and die. It is just a fact.

Britain has gone through an unprecedented period of 'false growth' where we believed we were prosperous but we were not as well off as we thought. We have to rein in spending across the board - at a personal and Governmental level. We have to make certain sacrifices which some people will not like - but there is far too much fat in our public sector and we are letting far too many people into our country. That is not a racist remark - it's a simple fact. I have no time for people like the BNP, they are dangerous and a subversive influence with no credence in modern politics. But they will gain a foothold if we do not face stark facts in this country.

13 years ago, Blair and his Government trashed the issue of immigration at election time and swept to power. Like so many other things about that wave of 'Cool Britannia' the issue came back to haunt them in their laissez-faire style of Government. Like so many other issues, like the economy and the banking system, they now look to blame the previous Government for current problems. It really is a time when the reckoning is long overdue.

It would be good to hear from people like the Chancellor the truth about our situation, what he actually proposes to do to in real measurable activities to remedy it and then get started. If he thinks that just talking will solve it as is the traditional method of politics, then it will be as easy as one, two, three but we will be no further forward. However, if he looks a little further afield he will see that countries like France and Germany have got to the very heart of the problems and are now functioning nations out of recession as we still wallow in it. He will learn quickly that applying vast sums of money only pays dividends if you apply it in the right places.

Stuffing it into the pockets of bankers was our biggest mistake and will be the most enduring. As these rich people wave two fingers at us and make vast profits again off the back of our kindness and stupidity, Britain is no better off. Borrowing more money will not help us now - we should have never have blown so much in the first place.

I fear for the situation we are in. As Sir Howard Davies put it recently, we do not have a clue how bad the situation really is. What we do know is that debt is probably the biggest issue this country and its people face. As any small businessman will tell you, there comes a time when your business needs more cash at a much faster rate than it can grow - we call that throwing good money after bad.

Right now, Britain faces exactly that situation. For every new pound borrowed, we had better know exactly how we will spend it and how much it needs to return and in the meantime we need to find how we can create more money from savings ourselves - long before they raid the pockets of the people in taxes. Because right now, as a taxpayer with a stake in all this, I would really like to know where my next pound will be spent and it had better not be to give more support to rich bankers, support the immigration of more people, fund vast inefficiencies and bureaucracies in Government and the public sector, pay for wage rises to politicians, fund vast allowances for the same people or on wars which we should not be fighting.

It's my money, and I want a say. I think we are all in the same boat.

Layer Upon Layer

I recently took part in a survey of what things I felt could be done to help Britain reduce its borrowing. Hold your horses - it was neither the front bar of a pub nor was it in the corridors of power. It was an online thing in one of the networks I use.

So the results are hardly likely to go anywhere. However, I have to say that some of the thoughts seem to resonate with those of others and the broad consensus of agreement is that there were many, many ways for the country to save money and reduce borrowing long before we actually impact services.

The first and most obvious way to reduce costs is simply to look at the layers of structure that exist both within public service departments and Government itself. Over 1 in 4 jobs are now in the public sector and this is warning enough. But when you start looking at the complex web of management structures and communication bridges, quangos and the like you suddenly get very depressed at the level and competence of the people that must be in there. Yet not a day goes past when some advert comes out for an overpaid interim to run some NHS Trust. We are breeding terrible grounds for long term bureaucratic money sumps.

So a starting point would be to review how many people we need in Parliament, the number of people to support these and start cascading the process. Very quickly we could home in on the number of MPs, the flunkies and mandarins, then the level of Local Councillors required, their staff and amorphous bodies around them, National Assemblies and their associated costs. Vast sums could be saved on the multiple layers of politician and the associated support infrastructure and people in pretty short order. Then we start looking at the departments around them and critically analyse who does what and why - the old time and motion study on public servants would bring into stark focus why Departments have spawned their own empires and management structures - Business Secretary alone has 9 junior ministers and umpteen staff - it's bizarre.

Don't start me on quangos and ancillary 'private' companies like the FSA or similar - vast staff who have proven they do nothing and cost loads. There are thousands of them, all stocked with the highest paid clever-clogs and never sensibly priced workers. It's all jobs for the boys and none deliver real value.

Associated with this is the whole costs associated with public service. In Wales and Scotland whole new prestige buildings were erected to house new assemblies when there were oceans of office space going begging - the costs, the salaries, the expenses so much of it unregulated. Then you start to look at the 'hangers on' - how many of these offices have associated external advisers, consultants, PR agents and the like running around on vast retainers adding little value to the everyday business process and our lives. Value for money is the key issue - it's not about making politicians or civil servants' lives easier it is about getting value for taxpayers' money. First to get the chop would be the army of investment bankers and lawyers advising on the current economic crisis - nearly £100m on them alone per year.

Then we could start looking at the layers of management in each department. Having experienced the NHS at first hand in the last few months, it is absolutely clear that money is not being focused in the right area. I have no qualms with the services provided, but when consultants have to beg for the prescription pad to administrators you know there is something wrong. The layers of management in such organisations are dreadful and unnecessary. The first thing these people would do is call in advisers to look at structures when in fact this is what private business does all the time. Management reviews are an everyday occurrence in business and if that's what the NHS is meant to be, then the managers should be capable and tough enough to do it. The amount of cash it could free up in the largest public budget is enormous.

Coupled with this is the vast wastage of money associated with budget overruns or badly implemented projects. It is not rocket science but you see £billions wasted on overly complicated IT and data projects, emergency service automation projects and the like. And so much focused in Police projects on how to balance budgets through revenue collection rather than focus on crimes. Value for money is the mantra here.

And again coupled to all this is the potential savings in salaries and costs associated with reviews. But it should go deeper. There is also recession on and wage negotiations have to be tough and tightly controlled while the whole bonanza on public sector pensions has to tackled before it cripples us completely. Why public service has such bias in terms of pay and conditions is beyond most people in the private sector who would kill for such fantastic automatic pay increments and pension schemes.

The target system is these departments is just a mess. While checking in waiting times may have gone down at the NHS, the chances of getting treatment quickly is minimal and highly trained people are focused on the simplest of tasks as they help hit targets. As we all know, hitting targets means money so more can be spent to hit the next targets which move you ever further from proper value for money. The whole service of Government is becoming a postcode lottery as incompetence seems to breed in certain areas.

Education is costing more and more and delivering less. How Ed Balls can smile is beyond me when you look at the basic deficiencies of entrants into the business world. They can text nicely on a phone but using written English defeats them while basic maths skills are beyond them. Looking at exam results, then the message is that we are producing genii. We are loggerheads with reality and what is required for future generations.

It's a simple matter but layers of management are counterproductive - we in business know this. Looking in at the whole public sector and you see layer upon layer of unnecessary levels of management whose tasks are to aggregate communication for the next layer up - in today's world of advanced communication that delivers nothing and hinders plenty.

The problem stems back to the central control issue. The idea that a Government has to control everything means that you have a cascade principle at work. Only partly in that structure do you get any kind of devolved thinking and its why we get so little value for money. Services in general are less but cost more - just take a look at local refuse collection. The amount of refuse being taken is decreasing, we have to do more of the work as individuals than ever before in sorting and if we should break the rules we get a criminal record. yet do we see a decrease in cost? It's just crazy. More and more talk comes about direct taxation for specific roads or services and it makes you ask, 'Then what have I just paid for in taxes?'

Value for money should be the credo for all taxpayers. We should be able to ask how our money is spent in wars, services, education, health, bank bailouts and other areas - we want to know why we are funding more politicians than ever, why are we supporting such generous pension requirements for the public sector and why are we paying for so many external bodies who deliver zero value?

All that happens instead is we sell off £16bn of assets no one cares about. It's a drop in the ocean in terms of what is required. Governing this country and delivering service has been an enormous sponge to cash over the last 12 years and no one knows how much we get back for the money we spend. It's time that rigorous reviews are done and savings identified fast. The IOD reckons at least £50bn per year can be saved on annual expenditure without cuts in services and I think they are undercalling it.

Waiting for the election will not help deliver the necessary savings in time. It needs to start now.

Disconnected Thinking

For most of us, the issue of things like bank bonuses are complex, and therefore distrusted, mainly as we are so far removed from them. They are of an unreal world that is hard to identify with.

That explanation would suffice in most cases. But what of credit to businesses and how banks are behaving in the current recession? Surely, that is much closer to home? And education, jobs and the mythical ‘Lost Generation’ that I have blogged on before, aren’t these real world issues right at our doorstep? Why is it then that it seems so easy to disconnect these issues from what we observe in life and paint a picture of what we think is right?

Of course, I am prompted in some way by Gordon Brown’s conference speech – so much of what he talked of was as if he had not lived it. The issue of free market corrections and bank bonuses seemed not to have existed in his life and yet they occurred right under his nose, on his watch and were the subject of his very policies. You cannot disconnect them and say they did not exist or because they were there you could not affect them. It is the job of Governments to impose law and policy to make our country sound and safe yet all that seems to happen is that politicians crow about getting their pet policies right while ignoring the real world. The reality was that the whole credit crunch, recession and bank crisis were phenomena which their policies not only contributed to but compounded.

Lack of action or ignorance is not an excuse.

But there is far more of these daft situations. In this month’s Director Magazine, Lord Mandelson contributes and gives some startling statistics on how banks and the Government are helping small businesses. No less than 6,410 businesses have been deemed eligible for the Enterprise Finance Guarantee (EFG) and have the potential to receive loans of £732m. By reducing bank risk on loans, he has obtained commitments from RBS and Lloyds to provide an additional £27bn in loans to SMEs this year. The HMRC have established over 191,000 agreements with businesses to spread more than £3.3bn of tax payments so increasing the amounts available to invest. With such amazing numbers, British businesses must be thriving and Lord Mandelson can rightly sit back and pat himself on the back for a job well done.

But in the very same issue of the magazine we get to know about the reality for businesses. The Bank of England has said that lending to small businesses is down by £14.7bn this year. Insolvencies are up 40% in the same category of business. The average overdraft rate to help businesses is 6.6%, over 13 times the base interest rate – it has never been more expensive in relation to the base interest to get a loan or a mortgage for that matter. The reality is, that the moment a business raises its hand to say it is encountering a problem, banks immediately make life hard, with many businesses getting the exact opposite of help like having loan or overdraft facilities withdrawn as well as interest rates hiked up by as much as twofold. Banks effectively hold guns to businesses’ heads the moment directors approach them, only making matters worse. For many businesses, by the time they have filled in the forms, sought approvals and gotten banks or the Government’s approval to help, it is six months further on and the business landscape has changed even more so the situation becomes even more desperate prompting knee jerk bank reactions.

The reality is that the Government may believe in their figures but the SMEs are suffering so there is a disconnect between the good news received by ministers and the world faced by businesses.

We talk of the Lost Generation or Generation Y as it is labelled. The prospects for those leaving school or university have never been lower and this category has been disproportionately hard hit by this recession in the unemployment figures. Yet, if we believe the Government figures, this generation is more intelligent than ever as they have higher percentage passes compared to my generation, which are improving year on year, and these pass levels are higher with more people getting A grades than ever before. Yet the same generation leave university with major debts and much lower prospects of employment compared to my generation – and I graduated at the time of Miners and Steel strikes, with no debt to talk of. All that money into education and fantastic pass figures mean nothing when the quality is actually poorer. I am no role model, but the average literacy of new graduate entrants into business is pathetic, numeracy skills are poor even with a calculator and basic communication skills are basic at best. Despite all the extra money and the apparent results, Britain is going backwards. The standard of taught French to GCSE level is dreadful and when you compare it to the standards on the Continent of how English is taught, we are far worse than we were 10 or 15 years ago.

Britain is going backwards and there is a disconnect between Government statistics and targets and reality.

Again, in the same issue of Director, Barbara Knight of the British Bankers Association (BBA), a perennial butt of my criticism, argues that we should not cap bankers’ bonuses. The argument against is presented by a Union man and it is wrong as it stems from jealousy. I don’t believe we should cap anybody’s pay if genuine profits are earned. But where Knight falls down in arguing for is that she claims we need to remain at the forefront of the financial world, stop talent from slipping our grasp, and we need to move to where the best deals are found.
That whole argument falls to pieces when we point to the incredible calamity the banking system has not heaped on itself but on us. As we watch the unemployment clock edge toward 2.5m showing no signs of slowing, as we count the £1.5 trillion cost of the bank bailouts, we can easily argue that these so called talented individuals actually earned nothing – they created no profit at all. All profit they actually ‘created’ was clawed back in losses – every penny of it. And more, as the long term cost of this whole mess will go on until 2032 for the mortals of this country who have to pay for it – and the interest alone by 2014 will be £60bn a year, the entire current budget for the NHS.

The disconnect here is that Knight has failed to connect the fact that the same bankers she defends are the ones who have clocked up untold losses. By conveniently disconnecting the two things, she is basically saying that we pay all bankers effectively guaranteed bonuses based on make believe figures forever – no matter what happens. Losses are not what banks should be concerned about, they should be focused solely on the pursuit of fictional profits based around products or instruments that serve no purpose in the real world.

The fundamental issue is that we should take away what these people are trading, focus them on core banking activities and outlaw the complex and unreal forms of investments they create out of basic debt. Only then will we start to curb the whole bonus scene by taking away the game of monopoly they play.

Banking, as Knight defines it, is the art of sweeping dirt under the carpet and getting paid well for it. When the dirt is discovered, we should not blame the cleaner as the house looked clean after all.

And here’s another to ponder. Due to defence budget cutbacks, our territorial reserves will be training without live ammunition. That certainly prepares them well to fight a war in Afghanistan. The major decision on spending by the Government amidst mounting criticism on the mobility of our Forces there as our Generals tell us there is not enough helicopters, is to blow our budget on upgrading existing ones rather than supplying more – so the will be out of commission to be upgraded when we need more of them. And as we send more kids into danger and see them get killed, maimed or injured daily, instead of treating them like heroes and helping them look forward to something for the rest of their lives as a thank you for their sacrifice, we take them to court to claw back compensation payments when we are at fault for not equipping them properly in the first place. Yet if we listen to the Government there is no problem.

The failure to connect what you want you believe with reality is a huge issue today. The gall that has been displayed by the present Government to try and hoodwink us into believing we are in good shape is wholly out of kilter with reality and we should hammer them for suggesting otherwise. Yesterday, we saw a Union Leader tear up a paper because it dared suggest the Labour Party was wrong – for that his 2m members should park their own free will and freedom to have their own opinions and follow his lead in boycotting the paper. I have never thought the Sun as an informative newspaper and they are not well regarded for their informed debate on real matters but they still have the right to express their opinion without being subject to public blackmail. But had they supported Labour, we would have had glowing endorsements.

Disconnecting reality with the virtual world stems from my age old themes – Accountability vs Responsibility and denial. I don’t have to spell it out for you, but if we continue to run our world with our head up our backsides, we are in for a far more serious fall than the one we have just had.

When Does A Bonus Drive The Right Behaviour?

The front page of the FT yesterday had an article which said that en masse 30 people from Societe Generale's Hedge Fund activities in France resigned and formed their own Hedge Fund.

The whole saga was triggered, allegedly, by the French President's stated desire to curb the bonus culture in financial institutions specifically by limiting the percentage of profits earned which can be set aside for bonuses. Defenders of current and future bonuses in the City, like Barbara Knight of the British Banker's Association (BBA), would argue this would be a growing trend if bonuses are curbed meaning that extraordinary 'talent' would migrate to other places or set up their own businesses in order to maintain their earnings.

I am not sure how much bonus was in question about these 30 individuals at Soc Gen but I think it is safe to assume that it is more money in a single year than most of us would earn in a lifetime. That sort of frames the context here. We are talking incredible amounts of money. This is only a snapshot of an industry that rewards a comparitively small number of their workers with more wealth each year than the average weekly lottery pay out in the UK. It would be easy to trivialise the work that they do - I would venture to say that their jobs are hard, require incredible levels of dedication, aggression, some skill (come on, give them some credit) and specialist knowledge and I am sure also that the work is highly pressurised. We have all seen the films and TV programs about these types of job, the peer pressure is immense, the relentess pursuit of profits is huge and the potential rewards are fabulous leading to a lifestyle few of us can comprehend.

Perhaps if we knew the kind of pressure these people worked under and the level of specialist 'skills' required to do their job, we would have some sympathy with the 'Soc Gen 30' who seem to be martyrs for the cause of freedom of the right to earn in the world of finance. Is their loss to Soc Gen going to change the balance too for the French institution? Will it affect France as an economy? These are important questions as we deal with the concept of bonus and its culture in order to understand how we deal with the issue in future.

We need also to ask ourselves, if the incredible bonuses which have been earnt, say, in the last 12 years had not been available, would the financial world have been any different than it is today? Would the Credit Crunch and the fallout which we have suffered ever have existed if such levels of bonuses be available?

It's an important and fundamental question on a very complex topic.

Many entrepreneurs' memoirs say their commercial acumen was evident at very early ages. People like Richard Branson started making money when he was a schoolboy. He is today the epitome of the successful man in Britain, perhaps only dwarfed by the bizarre pedestal on which Lord Sugar is placed as some kind of Enterprise Tsar who openly ridiculed his own Viglen products with Ratner-style comments and whose business practices have their own war stories, some of which I can attest to. Clearly, success is only measured by the money made in that context as surely Sir Philip Green could not have been knighted for paying himself, via his non-domiciled wife, a single one-off dividend of £1bn in a year when his company earned less than a fraction of that amount in profit. In fact, it is not only the fact that people are revered if they have a great deal of money, we do not care how they made their billions to be idolised by would-be entrepreneurs. Perhaps this is human nature.

There is also in innate desire within such people to keep earning more and more fabulous amounts of wealth even though they have more money already than they could ever spend in their lifetime. What makes Warren Buffett get up each day or Bill Gates? What makes Philip Green want to buy another company? It would be like me winning the lottery then going to the bank to raise a loan and then spending the loan on buying more tickets. Some of us know when to quit when we are ahead, the knack for these people is to keep on going and making much more. We all want a steady rise in our eranings but this is at a much higher level.

You do not have to look far to understand that bonuses are woven deep into our society. Hardly a job in Britain, particularly in the private sector, does not have an element of the total compensation available marked as 'bonus or commission' - the part of the annual remuneration which is termed 'at risk'. You can also look at the public sector and see a great deal of evidence of the same culture at work - only today there is an article about head teachers being paid sizeable bonuses and even 'golden handshakes' for starting jobs in a very similar vain, although the figures involved are orders of magnitude less, as the world of finance. In the world of teaching, there are zero profits to be made as in the same way as in the world of finance but there are Government targets to be hit and that's where bonuses were and are still designed to attain.

I am a sales animal at heart and a portion of my attainable earnings each year has been driven by attaining targets - in some cases it has doubled my annual salary. From the web 1.0 era I also had stock options which came to nothing but at one stage I could have speculated about possibly paying off my mortgage if not more if things had gone right. However, in all situations, if I did not reach minimum target levels or if the business collectively suffered then my bonus/commissions and stock options were completely at risk, if worth anything at all. In many schemes it was normal to have 'clawback' mechanisms that adjusted automatically my bonuses over a year-to-date performance so if one good month triggered a bonanza and then there was poor performance, over time I earned only the average amount. Such schemes are commonplace and can be very complicated, often have large caveats to reward specific behaviour and not unwanted ones and even be taken away at the discretion of the company for whatever reason they dreamt up. Some schemes in the IT business could see SAP or other big ticket software salespeople earn over £250,000 a year in total remuneration while in general people could have anywhere from 20 to 60% of their overall package geared on achieving certain targets. I am not talking about anything unusual which has not gone on in my business for a long while.

This is generally acknowledged to be a successful system - you pay for achieving but you don't pay for not achieving - some companies do get this wrong but that is in the minority. Also, in general, it has promoted the generation of profits based on product or service sales which have added value to the customers who bought them - and this is critical in our analysis. In the public sector, when profits are not at stake, then other performance measurements and targets are in place. Some of these are just silly as they are often handed out for no more than someone doing what is on their job description and that can lead to people believing that bonuses are some sort of guaranteed element of their earnings which in turn can lead to big issues when a recession arrives.

But the general principle is the same - in Britain today, bonus culture goes far, wide and deep in both the private and public sector.

So why are we so inflamed by the bonuses in the financial world? The Soc Gen 30 would argue that they are high performers in their field, they might argue that they have generated €billions in profits for their company, they might argue that they are the 'best in class' people in their field, they might even argue that they did not cause the credit crunch and associated losses and indeed, during that time, they continued to generate profits possibly. I am sure that this will be the basis of argument for the majority of traders in the financial world - it was someone else who lost the money or management's fault for not covering the risk. And we are talking $billions and billions of profit. In fact, the amount of money allocated to bonus pools is actually a small fraction of the kind of money these financial companies have earned - let us not forget that they have also distributed a great deal of wealth to their shareholders while handsomely rewarding other sorts of investors like bondholders. The base argument here is that such incredible profits cannot be generated without the vast bonuses available to be earned down at the traders' end and the management above. One does not go without the other. Before we argue otherwiese, you have to agree with the basic principle as it pervades in all business and even the public sector as I have argued above.

Bonus drives profit - that's the credo.

Well it is not always true. In the case of the financial world we have learned that it is not true. And let us be clear here - the incredible amounts of profits earned in the last 10 years by banks have all been written off with few exceptions. Most financial companies in the main stream of commerce have had to write off all, if not more, of the profits they have made over a period of around 10 years. If companies have not already done so, i.e. those who have not made such huge losses, then they probably will at some point in the future. The reality is that the financial system has regularly given back the proceeds of periods of huge growth as huge losses, and some more learned than me would argue that the only stable underlying profit banks make are from general lending, mortgages and insurance products. Almost all profits associated with investment banking or hedge funds are regularly wiped out.

But in those periods of huge profits, a comparitively small number of people make massive bonuses. It could be argued that our financial system today, our prosperity as a world even, cannot be as we observe it today without the world of finance driving such massive profit cycles to end in bust. In the last 10 to 15 years since deregulation of the financial system we have experienced an unprecedented period of 'sustained growth'. We have found, to our cost, this has been a false boom. Yet in that period, bank executives and traders have earned more in bonuses than they ever have. And as the trades got riskier, they earned more.

In fact, they are still doing so and more aggressively as now they have the safety net that if they do make huge mistakes that incur amazing losses there is an unlimited fund available to pay for their mistakes - they have the freedom to trade as hard as they like, risk more and get paid more without fear of losing. It's like playing the casino with fake money.

And these people are already fabulously wealthy. Many earn each year in bonuses the equivalent of an individual like me winning a single lottery jackpot which is a once in a life time experience and has a chance of one in 14 million of occurring. For these people, playing the lottery is a mug's game, they have a far more secure way of winning. It's called using other people's money and the financial system.

While I would expect, quite habitually, that if I did not acheive my goals that I would not get paid a bonus or, as in the case right now, I would not get paid at all, these people have no such level of accountability. The financial system has just been bailed out to the tune of $15trillion globally and the measure of accountability has been almsot zero with the odd exception and in reality the actual collapse, far from wiping out the stupid banks that caused, it has actually primed them again to believe they can make money out of the losses they incurred.

Think about that last statement as this is the essence of the argument. By wiping the slate clean for all these people and allowing them to keep their methods of working, they will make $billions on the fact that they made the losses. Lehman Bros derivative positions worth just fractions of of their original values are now potential gold mines in the eyes of financial people. Toxic debt will be worth billions in speculation that there are plenty of potential good bits in there. Bankers already speculated before the fall of the system that repackaged Government debt would be worth trillions.

Why? Because we underwrite the whole thing and these people simply do not get it. You cannot make money out of nothing - someone, somewhere pays for it. You can buy a derivative from Lehmans for 20 cents in the dollar without someone someone else paying for that loss. When Barclays bought the assets of Lehmans for less than $2bn, it has been now alleged that the structure of the deal allowed them to make $8bn immediately. We can sit here in awe that such daring and brilliance can occur or we can stand up and call a halt to this fantastic game that is being played with our money.

The point about bonuses is that it drives behaviour. In the public sector it makes people do only the the things that hit targets - if it is reducing waiting times in Accident & Emergency at hospitals then people will be registered minutes after they arrive and then wait hours to be seen by a medical person because the statistic records that they are not really waiting at all. If the target is 20 operations per day and ingrowing toenails operations take 30 minutes but heart surgery takes 5 hours, then only ingrowing toenails get done by surgeons skilled to save lives not nails.

You get what you pay for - you reap what you sew. You gear people to take incredibly high risks without fear of accountability or losing their bonuses by selling products of no real value then they will take ever more riskier options and they will dream up ever more creative ideas to create bonuses knowing full well that such profits that are earned have to be given back at some time as they are literally conjured out of nothing.

There is a price to pay. As numb taxpayers we can watch in awe as £1.5 trillion is added to the National Debt of which by 2014 the interest alone will be £60bn which is equivalent to the entire annual education budget. Do we scrap education or raise tax to cover it? You guessed it - and the whizz kids in the City will employ clever accountants so that neither the companies who incurred the debt or the traders who engineered it pay anything like their fair share of that £60bn.

It is that perverse. We sit here glibbly reading about the whole situation and we think that because we think we understand bonuses that the financial system should have them, it is just a matter of how much they are. But we don't get it as we are the only schmucks who pay for them - they are not, over the long term, paid back for the sustained losses made; these bonuses are paid for by the taxpayer to cover the losses that are really being made.

But banning or curtailing bonuses is not the answer as the Soc Gen 30 have shown. They simply will up sticks and go elsewhere. The economy does not lose out, France does not lose as they simply do the same eleswhere - maybe Soc Gen loses for a while. The point is that until we change the system at the fundamental level to properly define what these people can trade, then will we start to get to pay them for doing things which really help our economy rather than just helping themselves.

The time has passed when we could do this and so the new course has been set. The financial world is at the trough making vast profits out of the losses they made and maybe we can curb the bonuses but we cannot stop the damage they are causing.

It's like building your house with bricks of poor stone, it does not matter how much you pay for them, your house will fall over sooner or later.

Bonuses are not the problem. It's the industry that is the problem.

The Welfare Time Bomb

Last week I mentioned that we are sitting on a massive Pension issue here in the UK and that it isn't going to get any better as this year, for the first time in the last 10, our population grew because the rate of births exceeded that of deaths and overtook immigration as the primary cause of population expansion in Britain.

We now have 61.4m living here and 791,000 births took place in the UK last year, with a trend, for the first time in a while, that younger people are contributing more. As an increasing share of the population gets older and so drains the Welfare State on health grounds and burdens us with paying state pensions for longer, we have other issues at the new born end to contend with.

Not least, that many births puts its own strain on the NHS and other parts of the Welfare System. But an interesting fact is that a quarter of all those births were from parents who were not born in Britain so immigration was, in fact, again the largest contributor to population growth after all. William Hague famously fought and lost an election campaign on the immigration issue and tried to make it a political, not racial, debate. He failed and was laughed out by the Blair spin merchants who claimed he was barking up the wrong tree. But how wrong was he?

Studies show that the optimum population for Britain to get sensible well being is between 17m and 27m and this is based on studies, albeit mainly subjective, across the globe of countries who enjoy relatively low density pockets of population. The US came top rather oddly as you wouldn't think their inner cities showed a great deal of social well being or the murder rate wouldn't suggest such either. As with many pieces of Government funded, utopian work, the study is a bit previous unless we want to embark on a program of selective extermination as there are roughly 2-3 times the optimum number of people here already. And the population is rising - at around 0.7% per annum and this is three times the rate of the 1980's.

So as our tax take drops, in recent months by as much as 20%, as corporates currently make less and less people are working, and this figure is expected to fall further as unemployment homes in on 3m, we have a massive time bomb ticking at both ends of the spectrum. More babies are being born at a faster rate than before while we are living longer. The Welfare State as it stands and is funded today, simply will fall over in the very near future. Oh, and there is another, minor problem, that may disappear in 2032 - we have much increased borrowing as a nation as we have pledged so much into the failed banking system, which wasn't exactly planned for.

Put in those simple terms, we have a major problem facing Britain. It's all very well to moan about immigration being an issue but it's a done deal. In fact, if anything, more people are leaving than arriving now. Perhaps they can see the problem better than the rest of us. The Welfare System will implode - and we are not that far away.

We talk, this year, of a lost generation of youth as young people have been disproportionately been hit harder by the recession in terms on unemployment than older people. We are also talking of raising the retirement age, as we cannot afford the state pension payments for longer living people, to 68 and even 70, which only postpones the problem. But it creates a huge problem for young people arriving on the job market - what chances do they have of getting a good start to their career and what chance do they have of progression if older people stay in senior roles progressively longer?

The answer may actually see Britain suffer a 'brain drain' much as Ireland experienced some years ago. But it is different for Britain as we have a dense and ageing population and we don't have generous payouts by the EC to help incentivise companies to relocate here. In fact, we are becoming a less attractive proposition as our employment laws fall into line with Europe and greater strain will go on employers to retain, potentially, less flexible staff for longer who will require senior levels of pay and benefits. Meanwhile, at the bottom end, we will see a greater onus on employers to put greater provision aside for pensions for new staff as time goes on. What happens next may already be occurring as this week BT, one of the largest employers in Britain, announced that it had suspended its graduate entrant scheme - while many others have cut back the number of graduate entrants.

There is now the standing joke that the best prospects of a career start for many new graduates are call centres - what a training ground for Britain's best talent.

What the credit crunch and recession has done is to bring the underlying issues into stark focus for us all but we have yet to understand the implications. It comes to stupid things like this - as we fight two major wars in Afghanistan and Iraq, we have stopped our Army Reserves, the TAs, from training with live rounds while regulars also have seen their training with live ammunition be cut back in order to cut costs. We have systematically reduced the Armed Forces and its capability at a time when it has been most utilised since WWII. But such stupidity is now prevalent at all levels with retirement ages increasing while unemployment in the young is peaking.

What it all boils down to is that the Master Plan set out by this Government, underpinned by a Fiscal Policy that relied out a banking system that had to continue to grow way beyond the actual growth of the nation, was fundamentally and catastrophically flawed. I don't know if any other Political Party could have done or will do any better - in fact, I severely doubt it given their absurd utterances - but I do know that the whole New Labour Project was built on bright ideas by 'champagne charlies' who thought if they talked a good story rather than execute the plans sensibly, the whole world would just go along with them.

Well, they have got us into a hopeless situation that isn't going to get any better until they get their priorities right and they address the real issues of this nation rather than pandering to the whims of a small number of incredibly wealthy people because they only want the world set up to serve them.

It could not be further from the make up of the Labour Party. It could not be further from what this country needs.

The Pension Game

A report by PriceWaterhouse suggests that the public sector has a very generous pension scheme. Well that was money well spent to find that out.

However, it isn't as simple as it seems. The average annual retirement income for an NHS worker is only £6,500 and the average local government worker gets around £3,800. The reality of all pensions is that only 4% of the retiring population get the nirvana of two thirds of their final salary income when they retire. That's because most people do not stay in a single job long enough, even in a final salary scheme, to qualify for full benefits. The vast majority either change jobs or enter public service late or leave early. So PWC's assertion that is causing a block to talent moving from the public to private sector and vice versa is a myth. You have only to look at some of the salaries on offer in public service jobs to understand that they are very generous pay packets to be earned as well. True, below management grade the salaries are lower but when you look at the incredible pension scheme, the draw to public sector can be strong. Private business salaries do tend to be higher and this keeps the lure of this sector going but that is because Britain has become a society of low savings and even lower planning for the future - we are a live-for-today society.

It is believed that as much as 35% of salary contribution would be required to match the generous public sector pensions for private sector workers - that is because they are back-ended. We accrue on average 6% of our salary at any time to toward our pension but our salaries grow and we pay the higher contributions for a proportionally shorter period and that is why we have huge shortfalls on what is required to live on even if we are diligent savers. In the public sector, this disparity is taken care of by the generosity of the taxpayer - we pay disproportionally more for public sector pensions than the pensioners themselves. That's a simple fact. In other words, we probably pay as much to fund other people's generous pensions as we do for our own over the course of our careers - you would have to check the sums but it cannot be far off the truth with nearly 1 in 4 jobs in the public sector.

There has been controversy lately as companies like Barclays and especially RBS have cut the payouts from their pension schemes after culling staff in the wake of the financial crisis. For RBS workers, it was particularly galling after the fabulous payout and topping up of ex-CEO's Fred Goodwin's pension which he can draw early anyway. At Barclays it comes as a hard blow as staff have been cut and traders are again courting controversy with more bonus payments worth the pension saving in a single year while new teams of 'talent' arrive with amazing packages worth the salaries of hundreds of low end staff individually. It seems very curious that these companies are not saving cash on bonuses and putting it into pensions schemes or, indeed, why have they not been doing this in the past?

Pensions is a looming time bomb for us all and the Government. Our good friend Lord Turner found time between his many jobs to put his name to a report that someone else wrote, I dare say, as he has to earn multiple salaries, which urged pension reform in public service and a potential switch to average not final salaries as the basis for pension entitlement calculation, which would make sense. Pity he doesn't look at other problems with such diligence but as with many high level business people they are great at cost cutting but poor on working out how best to deal with profit as most of it goes to a very narrow band of people leaving little to be invested in pension funds for staff.

It is a question in the private sector that the Government tried to address with the pathetic implementation of the dreadfully poor and ill-thought out stakeholder scheme. It got us nowhere but hit the soundbite machine as usual. Reading Niall Ferguson's Ascent of Money, it shows how our Welfare System has been so badly thought out compared to even under developed nations in South America as we are the most highly insured nation in the world by individual cover yet we have so little benefits at the tail end. It seems the money just goes into a massive sump - much of which and more was consumed in the bail out frenzy but a great deal of which funds a very uneven balance toward the public sector remuneration.

There isn't a great deal of time to sort the issue out. This year the population grew to 61.4m in Britain and for the first time in a long while it was births which accounted for the growth rather than immigration as mothers gave birth, on average, slightly younger than usual to far more babies than the rate of deaths in the UK. The old are growing older.

The problem of pensions, benefits and, now, unemployment are issues which are right at the head of the agenda but no one can see it.

New Report - State Pension To Be Paid Hours Before Death

The situation on State Pensions is getting so farcical that it may well be that we may only be eligible to draw one hours before our death rather than at a specific age.

We laugh? No. On the one hand we will be more aggressively screened via our DNA by insurance firms to find more reasons why we cannot have life insurance or critical illness cover as they will see from our genes whether we are potentially likely to have diseases of some kind at some point in our lives, and the other the State has strategically accrued for our retirements so badly that the pot will not cover a pension for us until we are a few hours before expiration.

Lord Adair Turner (oh no not him again - the serial report writer and FSA failure? Yes it is he!), wrote a report a while back which has been avidly grabbed by a clueless Government to get into law that the retirement age will be raised to 68 shortly. Now, the UK pension's regulator, David Norgrove, reckons that could be raised to 70.

I mean, come on. We pay astronomic amounts of tax and National Insurance - the employer pays a whack of National Insurance for each employee too and still we have no money? And let's be realistic, in an era of non-ageist political correctness, is it wise to believe that people should stay in employment that long, particularly as young people have been hardest hit in the current sharp rise in unemployment? What prospects for the future for our young?

The writing is on the wall. The bank of ideas are empty. We are going to have to work like domestic animals to our dying days because the state isn't going to provide for us despite the vast money we pay into the tax pot. Makes you wonder what on earth all that money has been spent on.

Bureaucracy springs to mind - about 1 in 4 UK jobs are in the Public sector thanks to the rise in layers of administration by this Government. Two major wars would be another. Massive, unchecked spending in Government departments like the MoD and NHS where we see little return for our tax pounds while we already know how much just keeping Politicians in the life they so richly deserve costs.

If you are in any Public Sector job then you excluded from the above shock figures, of course. Such employees are the chosen ones where the Government has granted them superannuated, index linked pensions - based on final salaries - the sort that the private sector can't afford. As the Government has not accounted or accrued for such lavish pensions, of course, it will be our fresh tax money that goes to pay for it. And it is rising as bureaucracy rises, the layers of Government rise and the cost of paying for them rises too.

But hang on. We have also 'agreed' to bail out the banks. Because of the extra burden on the State for doing so, underwritten by our tax money, the available money to be spent on Public Services is going to have to decrease - massively - in the next 20 years in order to pay for the failed gambles of the boys in the financial world who are now gearing up to pay themselves £billions in bonuses for conning us all that they should be allowed to do it all over again.

So the available money for pensions is actually decreasing and the current estimates of idiots like Lord Turner, who has so many jobs he won't have to worry about his retirement as he will be on boards and quangos probably long after his death and he probably already has difficulty remembering which one he should be turning up to each day, are already defunct even before they have cleverly press released them.

We did a really good thing in bailing out banks. All that money has gone down the financial drain and has done us not a jot of good, but has made us all far worse off. Clever.

Some 20+% of our remuneration between us and our employers goes into National Insurance every single year of our working life, I am not even thinking about PAYE tax here. Surely, there is more than enough to provide more than a pittance of a pension for a person in retirement here and chip in for the vast dole queues out of that?

But I can't add up like Lord Turner or Darling or Brown. They are the masters when it comes to the economy. Leave it to them and we will all be ok. Just hang onto your job as long as you can turn up to work or are alive, whichever comes first. I am even looking into legally bequeathing my job to a relative or keeping it after my death as there may be no money in the pot in the hereafter due to bail outs in the afterlife - I will let you know how I get on.

Should We Tolerate Any Drug Dealing?

If you want a depressing laugh, then read this article.

I know it's not good English by me, but I had a grim smile on my face when I read it. Hot on the heels of my article on 'Think Tanks' and their stupid outputs which we all pay handsomely for, we have another pile of codswallop to wade through this morning.

This time its from the UK Drug Policy Commission who advocate that by being hard on drug dealers we are actually making the problem worse. Part of their argument is that if you focus on being nasty to drug dealers in certain parts of a city, then they move to other parts to terrorise that area. Indeed, if you take one off the streets, you risk more violent ones taking their place or even 'turf wars' and gangs fighting for the selling patch.

Studies show that in fact, if you are nice to drug dealers then violence drops - or at least it did in Boston, USA where murders dropped as a result of being more tolerant to dealers.

The report advocates being 'smart' like trying to persuade drug dealers not to sell in car parks or school playgrounds but in their homes.

I stopped reading as my smile turned to utter despair. Here we are fighting a war on the Taliban that we think by using strong tactics and violence we can bring down a whole regime and doctrine but in our home land we should be tolerating the scum of the earth. I must be living in a dreamworld.

A quick look at this magnificent Think Tank's website reveals the obvious. There are 4 full time staff, one of which is the 'office manager' because you need someone in charge of photocopying and paperclips, while the Board of freeloading 'commissioners' (a commissioner is a person who may turn up on a Russian Oligarch's £80m boat in European speak - here I have no idea what it means) who get paid at minimum expenses and at most some kind of fee for their time, is as long as your arm. No change there then as there are 12 of the blighters. As usual, they are the list of the great and the good on the gravy train that is Non Executive Directors and perennial sitters on Boards of Quangos and Trusts and is headed by Dame Ruth Runciman DBE who sits on a few other sundry boards, although she has a good deal of experience in talking about drug matters - all helpful experience in formulating daft policies.

The reassuring thing is that we are paying good tax money for all this superb advice.

What Are Think Tanks For?

You could call the front bar of most pubs in Britain 'Think Tanks'. There, many people blessed with the wondrous gift of 'Common Sense' have the 'calling' and slave tirelessly, over many hours, unpaid, in the illusive quest to solve the entire world of their problems. But no one ever listens.

In fact, in the 'Think Tank' I have attended on occasions, we even predicted the over-heating of the housing markets in the Western world as being the point at which economies would collapse. We even predicted that the rise of Hedge Funds and fat City bonuses would cause economic meltdown. But as the two observations were made in different 'sittings' and by largely different members, nobody linked the two things together.

But that's how 'Think Tanks' work. It is basically people with too much time on their hands sitting in the room with some kind of 'stimulus'. In our case it was alcohol and most other Think Tanks it is the money paid by the body who wants the answers and usually the initial question goes something along the lines of 'The NHS is getting overloaded, so how much money can we get out of it?'.

You think I'm kidding? Where did you think the Congestion Charge came from or Road Safety Speed Cameras or catching terrorists came from? All the answers involved ways of making more money, the latter by using the cameras installed to supposedly catch terrorists to be used to catch people putting the wrong things in bins and old ladies illegally parking, hence making more money. And they must be all done at separate meetings as none of the answers ever reference the other and always assume we have bottomless pits of money to hand back to Government or in consultant-speak their thinking is 'unjoined up'.

So today's gem is that a new Think Tank has come up with a way to solve over-crowding at GP surgeries. It must have take all of 30 seconds this one and the minutes of the meeting show that the chairman did not even finish reading out the question when some professor from the University of Pratts Bottom piped up, 'Charge the bastards £20 a visit.' Brilliant - all those in favour? 'Aye'. Passed unanimously. Next question vexed them a bit but took 45 minutes and they decided to end world poverty by charging all inhabitants of Africa £35 for the use of condoms.

Ryan Air seem to be operating much the same way by the looks of some of the ideas they have come up with but that's another story.

It strikes me that politicians clearly can only think for themselves when it comes to expenses and getting second jobs. All other times they simply toss the offending question into a Think Tank and out pops the answer which always goes along the lines of 'The answer to Britain's problem referenced XYZ (no need to fill the question in) is to charge ABC (refer to demographic chart book) £Delta (refer to charging rate booklet).'

So do we get value for our £60,000 a year plus multiple expensed MPs? Not really as when you add up all the consulting, research and Think Tank fees they pay out a year, we see that using their outsourced brain power actually costs us a great deal more. But one thing we can be sure of is that the more we pay for them, we end up paying a great deal more in our taxes.

Get with the programme, everyone. Register your pub's front bar as a 'Think Tank', invent a suitable studious name and make some money while you drink. I guarantee you'll make more sense than the ones in existence today.

Is Smoking Good For The Economy?

I read a vitriolic attack by Duncan Bannatyne last week on taxes and it is pretty clear where his opinions lie on smoking. Frankly, I think most people would agree with him - smoking appears to be on the increase again.

In a bizarre situation in the Hubei Province in China, Local Government officials have been ordered to smoke in order to boost the local economy. The edict has ordered them to collectively smoke around 250,000 packets. There are also fines if the officials do not meet their targets or are caught smoking rival brands manufactured in other provinces.

Even local schools have been issued with a quota for teachers. It puts a new spin on kids smoking - they might actually get forced to go behind the bike sheds and have a puff. Of course, this flies in the face of national anti-smoking policies as directed from Beijing but this is aimed at boosting local tax revenues.

There is even a 'special task force' to enforce the quotas and one teacher was put on an 'official warning' when rival brand butts were found in an ashtray.

Capitalism And Other Agendas

While this is one of the most odd scenarios you can imagine, it is not so stupid as it looks. Capitalism and its pursuit will, in tough times, almost certainly mean sacrifice of more progressive values like Green Policy, Carbon Emissions and the search for alternative energy.

Even we practice it. While we loaded up the budget with £500m for a new wind power project, we are supporting the car industry with a £2.3bn bail out. While we put more money into energy efficient homes, we put 2p on the duty for fuel. While we spend on large overt advertising for giving up smoking, we add some extra duty on cigarettes and alcohol - we actually want the extra revenue, not to stop smoking or drinking.

In fact, of the tax revenues raised from alcohol and tobacco, a large proportion helps balance the bill for treating people on the NHS. One could argue the jobs created by smoking in the tobacco industry and the NHS are good for the country just as we rush to save the car industries with bail outs and scrappage when we know the cars contribute to the CO2 emissions in the atmosphere.

Capitalism has the habit of trashing many progressive ideas. People will always find good arguments not to change. Just the other day over a beer, a friend said that there was new evidence to show climate change was a myth and that we are more likely to have a massive eruption of a volcano which will blot out the sky than the damage we are doing as humans. So the message was carry on driving, flying, switching on lights as there is no point in stopping a good thing.

When times get tough, logic goes out of the window. The fancy words from Darling and Mandelson on building a new 'greener' economy is just waffle, as in the same breath they support industries which cause the problems.

The Future Is Here

Some would argue we are beyond the point of actually helping the planet and that is terrible thought as a legacy of this generation. But when you think about it, it's true and there are good reasons to think it. We are fighting more wars around the world with more lethal weapons than ever, we are emitting more CO2 into the atmosphere than ever, we are consuming the world's resources at a higher rate than ever before and we still fight wars over owning resources that may kill future generations as we consume them.

Yet, having realised we have a problem, we do not let up. In fact, we moan and wriggle about the cost of alternative energy research and pay less into it than on current energy research and marketing, while we pay $5 trillion in an instance to save banks.

The future of the world is in our hands but we live for the here and now. Just as you might leave a place tidy after you have used it, the world needs to be on a better course after this generation dies. However, our priorities are nowhere near where they should be.

The madcap and stupid edicts by the Hubei Province officials are exactly the logic we all use. Our future generations may pay a far heavier price than our tax bills for their future because of it. They may not be able to live.