Death Wish?

The second planned strike by Unite has gone ahead and BA reckon that 75% of their scheduled flights will go ahead.

The two statements within that one sentence should be the most terrible things a world class airline could possibly imagine but for Willie Walsh, the CEO of what was once 'The World's Favourite Airline', it seems to be music. He has been described recently as being 'macho' in the face of an unreasonable Union but the reality is that the fight with Unite over changes to Cabin Staff contracts is only one area of failure amidst a whole plethora for the CEO. In fact, about a year before the recession, he was voted one of the Executives of the Decade, right now he is about the biggest chump. Having lost the hearts and minds of some of the best and most loyal staff a business could have, it seems that the Board of BA are 100% behind his absurd actions but this cannot be good for shareholders.

In the grip of the first strike, I had to travel to Germany. Our agency got quotes for the required travel times and BA came out at £800 for the planned journey vs Lufthansa's £237 - standard economy fares on a standard route. OK, so that was in the middle of the strike, but last week I flew to Milan and Lufthansa again came in at around £325 to the similar flight of BA's at over £700.

All along, it has never been about the cost cutting for me - it's been Walsh' abject lack of strategy and business acumen. How can you have a business that is going to succeed when it is charging such prices at recessionary times against its main rivals? Lufthansa is cleaning up - full planes each trip, efficiently run, on time and with decent service with real technological advantages like Boarding Cards via SMS. BA is lost in the wilderness between premium class and low cost. So what does it do with the cash injection it got? It buys the second largest loss making airline in Europe, Iberia, who is similarly placed and tries to combine them. Iberia is perhaps worse off - all its old premium roots into Malaga, Valencia and other cities are dominated by low cost airlines who fly customers in waves - supposedly cheaper - for no frills. BA inherits few new profitable roots, a heavy cost based business and a management equally defunct of ideas from an airline that does not yet lose as much money as BA.

But that's not all - less than a year after two decent airlines flying all business class service to New York went bust (and both were excellent), BA launches one from City Airport which flies just 32 people via Shannon for around £5,000 each. The target customers are City Bankers, the most hated part of society since the recession and credit crunch - Walsh could not have made a bigger PR and business blunder.

Yet he survives. The lack of strategy is almost childlike, the tackling of Unite is pathetic. You can feel it happening again as the whizz kids at Royal Mail found out when capitulating to the Unions for a cost much higher than originally asked for, that modern businesses cannot take prolonged industrial actions and Walsh will have to relent or let his business die. Why would you do that?

BA is basically ruined. It will never rise again to be the airline it was but maybe the world wants something different. The trust and belief that the loyal staff had prior to all this has been ruptured and will never be regained. Walsh has put a sword through the heart of what was one of Britain's best companies.

It takes some skill to be that incompetent; to make a once loyal and much loved staff strike to kill their own company. When BA was the world's favourite airline, it was all about the staff.

He simply does not get it, does he?

They Think It's All Over.....

Oh, how naive of us to believe that dodgy expenses was the full extent of Political trough-snouting.

No one seems to realise that Politics is the ultimate game of sales - how else can a former PM be suddenly worth an accumulated £20m in just 3 years whilst being a Middle East Envoy. I mean, think about it - it's all about selling your rolodex of contacts, it's all about telling people that you can get things done - why else would someone like Blair be useful to Insurance Companies?

And we thought the Hamiltons' were sleazy. Just look at the crop we have now, not emptying mini bars anymore, the going rate for the likes of Byers and Hewitt, allegedly, is between £3,000 and £5,000 per day. Yes, that's per day.

It puts fiddling expenses into it's correct perspective - it's all just part of the way of making money.

By sheer coincidence I had lunch with a couple of people who are employed in the Lobby Industry and they had no idea this story was about to break. They talked about only the bit of the industry which they see - the endless stream of 'freebies' which MPs regularly and repeatedly partake of which royally look after their holidays and make their schedules less stressful. They believed it was right on the edge, and in some cases, well beyond the boundaries of 'influencing opinion'. The latest revelations remind me of the famous case of John Prescott being taken across the US by private jet and lauded at a ranch owned by the CEO of the lottery co-bidder, who gave him the infamous cowboy suit. Soon after, the same company landed the rights to run the lottery as part of the Camelot consortium and have remained at the heart of the biggest and easiest money making scheme since it's start in 1995.

My lobbyist friends believe that there is growing fear in Westminster and Brussels that there will be a hung Parliament causing at minimum financial inertia where no one can get things agreed and done. They said there is also a growing belief that over half the sitting MPs will lose their seats and be replaced by a new batch of wannabe MPs - the biggest churn of Politicians in ages. It would be a great thing if it happened and we got rid of the stagnant thinking, populist policies and cynical abuse of the system but I think it's naive to think so.

I agree that a huge number of people are really upset about the expenses thing and will clearly be angered about the lobbying scandal too. The belief that constituencies will vote as they should, about the individual candidate, is likely to occur in the extreme situations like Luton South or Bracknell but politicians have thick skins and voters have short memories with a limited capacity to reason. In many areas, the local MP could commit murder but the locals would still vote by Party while many will just look at the value of their staples like beer and fags and vote accordingly.

This year is unusual. We have a sitting Inquiry into the steps that led to a war that cost us billions, led to unnecessary loss of life and has stoked up the rattler's nest of fanaticism to endanger us more. The sitting PM has already admitted he has lied to the Inquiry - God knows that others have. Our economy, that we were led to believe was impregnable, has suffered a worse recession than any of its rich counterparts and our GDP is now lower than that of Italy's. We have a spiralling budget deficit and no plan to tackle it; we have the prospect of more taxes and yet we are already the most taxed British citizens of all time.

The fact we haven't voiced our discord to date is testament that we will revert to type at the General Election. It may get close but the sweet talk of the likes of Mandelson will likely win the day. And before you think I'm too biased, I predict the likes of Nadine Dorries will somehow get voted back in and what about Julie McBride?

It comes to something when we trust the likes of a twice disgraced MP.

A Month Is A Long Time

I am happy to say I have enjoyed a month away from writing as I have been lucky enough to become a father for the first time at my ripe age. It's been a very rewarding time.

Not much has changed around us, if truth be told. I thought Gordon Brown's performance in the Chilcot Enquiry was cynical beyond belief when even ex-Ministers, let alone ex-heads of Services, have already told everyone that the UK troops have been denied vital equipment through budget restraints. It just seems that lying to the Enquiry is perfectly acceptable and Brown is playing a 'It's your word against mine' routine. I just hope that documents to be reviewed by the Enquiry actually discover what actually went on and that the word of a defunct PM is not taken as gospel.

Brown has told us that we still have a long road to go on the economic crisis and cuts should not be implemented right now for fear of upsetting the delicate recovery. His precise judgement, which has served us so dreadfully in terms of a ballooning budget deficit which is growing faster than he predicts each month, is that at approximately midday on 10 May will be the exactly time when a tumult of cuts will be finally be required - uncannily that is almost certainly to be one day after the election result is known. How spookily cynical is that?

Meanwhile, the IOD and CBI have urged the Government to start making cuts immediately as the budget deficit seems to be completely on its own spiral with Alistair Darling completely unable to predict where it will be month on month let alone in 2014. It's laughable but somehow on the back of this and the appalling news in Afghanistan and the lies about Iraq, the Government has closed the gap in the Polls to just 2 points.

The old Mandelson Magic is at work - our brains are washed. If we really do think things are ok, then we are barking mad.

Problems With Sums

There are many things about life that you simply could not make up yet reality has much more of a fictional feel to it these days.

Think about it - on the one hand we make bold claims that we want more maths graduates, engineers and doctors to help make Britain great again and then we fine universities £3,700 per student over quota they go (or at least Peter Mandelson does). With university applicants up by 12%, many students are finding arbitrarily unfeasible entrance requirements being asked of them to discourage intakes. It means that universities will shun UK students and pack in more, fee-paying foreign students. That's really joined up thinking by the Government who cut funding to universities last year and will do so again this budget.

Meanwhile, in cuckoo land, RBS is clocking up £7bn of losses and the Government is set to sign off a bonus tab of £1bn for the RBS investment banking arm. How does that work when we own over 80% of the bank's shares and simply cannot afford the money? Some may argue we get some of it back through the windfall tax - but bankers are wily sorts and will make sure that is minimised while I would pose an argument that we should simply save £1bn and not pay any of them a penny.

On another note, Sir Jock Stirrup former head of the Armed Forces, has foretold that parts of the armed forces will merge before long in order to save money. Super thinking as we are fighting two major wars with many more likely - run that by us one more time. I heard John Nicholl, the former Tornado navigator shot down and paraded on TV in the First Gulf War, this morning. He made the point eloquently. Arguably with the exception of Iraq lately, all of the major conflicts which have occurred in recent times have been completely out of the blue and unanticipated.

So if we had used Jock's logic, after the first Gulf War we would have contracted the army as the whole war was virtually fought and won by aircraft. But then we could never have invaded Afghanistan if we had done so - conventional thinking is that we no longer need heavy armour as lightly armed, specialist troops are required. Tell that to the kids with arms and legs blown off and no armoured vehicles. From where we stand now, why do we need a decent Navy as wars are in major countries - but that presupposes that we never have a Falklands situation again.

The point here is that you either plan for all eventualities or none as you never know what is going to happen next or where the next threat comes from and in what form. Certainly, there is no point telling TAs to not drill or train with live rounds and then send them into battle situations - you may as well paint an arrow on their backs to a sign saying 'Greenhorn, please shoot at freely'.

It's all about non-joined up thinking and stupid logic. What is the point of paying banker bonuses when the company makes a massive loss and then telling nurses and doctors they have no pay rise? What is the point of paying off sitting MPs who are under legal investigation for fiddling expenses when they should be paying them back? And what is the point of allowing ancient protection to be misused to help them avoid legal charges? This surely shows just how guilty the people are in their squalid attempts to avoid justice.

It's a world gone crazy - the loonies are running the hospital.

The Public Sector Bonanza

If we needed more evidence that costs are spiralling out of control in the Public Sector and that it has not, in any way, shared in the need to cut costs to reduce the budget deficit, the article in yesterday's Daily Telegraph said it all.

A small, but prominent paragraph on the front page indicated there is now a record gap between Public and Private Sector pay which is over £2,000 on the average salaries in each sector.

I have beaten on about this but the Private Sector has borne the brunt of cost cutting and job losses in the last year while the Public Sector has remained fat and happy, negotiating unrealistic pay deals and sitting on overly generous pension schemes. The Government has postponed any cost reviews until after the election and our borrowing as nation rises daily - it's as if people who control these things either don't get it or, worse, don't care .

The Public Sector cost is a massive ticking bomb and the longer we leave tackling it, the worse it will get. Meanwhile, as National Debt goes onto the open market, credit agencies around the world will be questioning the British ability and appetite to deal with its growing public costs and repayments.

As we, the taxpayer, contemplate the price of all this, it is encouraging to know that right in front of our faces, our 80%+ publicly owned bank, RBS, is a principal lender to Kraft to acquire Cadbury - which no one seemed to know until after the deal was struck, while Mandelson now wants to see the detail as he wafts it through to conclusion. Further, those banks, who we bailed out are enjoying a wonderful resurgence as the wider economy still struggles - prompting new, higher pay deals and wonderful profits.

You couldn't make this up - the taxpayer gets the entire bill for economic failure to see banks whooping it up thanks to our generosity, while the Public Sector gets fatter because costs are not cut which could save the taxpayer some money.

Having just got my Corporation tax demand within minutes of posting my accounts and still waiting for my personal rebate since October, it seems that taxpayers have become the new 'Bank of England'.

The Unlikely Plotter

Let's face it - Geoff Hoon was an unlikely plotter. He was a useless Defence Secretary that lacked guts, leadership and vision. He went onto to be a central figure in the MP Expense scandal and so there are also deep questions over his integrity too.

So if anyone was to plot against a useless PM then Hoon would not have been the ideal choice. That about sums up Labour's alleged 'deep divide' - on the one hand you have a clueless and bumbling PM and on the other side you have no credible alternative. David Milliband has apparently settled his score with Brown and has now publicly backed him with some kind of positive statement after dithering and equivocating - like many Cabinet Ministers - but it is clear that in the background Peter Mandelson and his cohorts have cracked the whips and the party has stepped back in line.

Then comes this morning's Times. Hoon has come out fighting(!?) - something he clearly found impossible to do when he was in Government. Besmirched, belittled and beleaguered after Wednesday's pathetic attempt at a coup, he has decided to kiss-and-tell and harry Brown with small knife attacks to his back.

This morning's revelations probably will not surprise anyone. Allegedly (supported by leaked letters to prove it) as Chancellor Brown vetoed several attempts by the MoD to buy new troop-carrying helicopters for operations in Iraq and Afghanistan. It all makes the recent scramble by Bob Ainsworth, another useless Defence Secretary, to cobble together some new orders look very 'previous' and far too late as the death toll in 2009 rose dramatically with commanders, troops and bereaved families singing the same tune about lack of transport and armour. It appears that 2009's problems stem back to under-investment at the time when Brown himself controlled the purse strings and denied the MoD and commanders what they needed.

But this cannot possibly damage the PM. It has already been capably proven that the British public does not have the intellect to link past events to present as no one has really twigged that it was under the lengthy Chancellorship of Brown that the current financial problems brewed and amid his hubris and arrogance that he allowed the situation to blow up in our faces and cost no less than £1.3 trillion of mop up which we will all pay for until 2032. Quite the contrary. Thanks to his theatrics once the cork was out, his desperate attempts to deal with the problem, which have had little real effect, have given him a near 'superman' status.

So I doubt very much that one angry man 'possibly' telling the truth about Afghanistan will make a difference. Careful handling of the spin and repositioning of the history will deal with the problem. You have only to look back on the whole Iraq invasion affair to understand how history, that we all experienced and lived through, has been manipulated and changed. In the build up to Blair's testimony to the Chilcot Inquiry, already we have the master at work to groom us ready to believe whatever pious rubbish he spouts. The fact remains, the public still eat out the Government's hand - we still believe everything they say and we still believe that Brown would never have vetoed new helicopters to Afghanistan even if he came out and said he did, because he would deliver some made up fact to make us all believe this was a great idea at the time and serves us well now too. Just as Blair is doing over Iraq.

The other interesting pattern is this. Brown is interviewed in the 'News of The World' (NOTW) today to say that this week's plot was a 'Bit of silliness' while Hoon chooses the Times to 'Savage the PM'. Guess what? The vast majority will read the NOTW and will believe it - the people who read the Times are not only in the minority but have already pieced together the truth. The different newspaper has been well chosen by the Party to deliver their message. Of course, you will have to look really hard to find the Brown interview amid the shock-horror story of an Eastenders' split up and the lurid affairs of Tiger Woods but somewhere it is there. Because that's the level of importance this country really puts on it all because that's how the Government wants us to perceive it - the positioning is masterful.

Until we get a modicum of intelligence, the people of this country will continue to believe only what they are told by the Government. Hoon has blown his miserable political career on an ill-conceived coup plot. Even his own constituency are looking for a 'No confidence' vote to get rid of him. And good riddance - he couldn't even get a coup right.

If he had any guts or courage he would have stood up to Gordon Brown when it really mattered - when Brown vetoed the purchase of new helicopters for Afghanistan when he was Chancellor. Rather than using this information to try and save his political and vindictive skin now, Hoon might have saved a lot of lives of killed and wounded servicemen in 2009 if he had revealed this information at the right time - we might even have thought him a better man for it than the miserable wretch we perceive of him today.

But as usual in politics, it's self-interest that takes precedence. At the critical time Hoon was more concerned with preserving his job, his nice pension and all those wonderful expenses. His conscience was clear because servicemen then, like now, did not matter.

Night of The Long Knives?

It was a very bad day at the office for Gordon Brown. Having only the day before been seen smiling like a Cheshire Cat with Peter Mandelson (he's Lord Mandelson to the rest of us) while unveiling a new container port development in Essex, he rose to find that a new, more sinister campaign had sparked to scupper his leadership.

No lesser persons than Geoff Hoon, whose own credibility was low after his appalling tenure as Defence Secretary and then the MP Expense scandal, and former party darling, Patricia Hewitt, had been texting Labour MPs to have a secret ballot to change the leadership. MPs were slow enough, ministers even slower, to rebuff such calls and when they did the wonderful world of equivocation was invoked with responses from the likes of Alistair Darling saying, 'We will concentrate on winning the election.'

Central to all this was the statement by the plotters that six serving ministers were prepared to back this if MPs supported the secret ballot. Among them were Harriet Harman, David Milliband and Bob Ainsworth, as unearthed by the BBC's Nick Robinson last night.

Peter Mandelson chose his moment carefully. He had only just been found guilty of openly pleading to his party to stop just focusing its election efforts on core Labour voters but to widen the message to include people who had voted for the New Labour dream at the last three elections. According to yesterday's Telegraph this had been induced as there was a growing rift between Brown and Mandelson which had been fuelled by the Pre-Budget Report which had been so focused on bankers. Clearly Mandelson feels we should not pick on bankers so much as he would like to be one when he is finished with politics, perhaps. Then last night, Mandelson came out to try and stop the revolt in its tracks by stating that Brown was 'secure in his position'.

It was, perhaps, the most dangerous outcome for Brown. There was not overwhelming support from either his cabinet or MPs - Mandelson had to step in and that has to be bad news.

Mandelson's original reconciliation with Brown at his lowest ebb in terms of popularity has led to a remarkable turnaround in fortunes and recently polls suggested that we could have a hung parliament or even a Labour win, such has been the magical effect. But Brown has been foolish enough to distance himself from Mandelson of late and rumours of a rift have been fanned. Mandelson only recently made a statement that he supported his own Government's stand on cutting the budget deficit as if he had to endorse it to give it credibility but why he waited so long is also a mystery.

The revolt may well have been scuppered but for Gordon Brown it has been at another heavy price. After having to ennoble his old nemesis and allow him to have a 3-year pay deal with Brussels on leaving his Commissioner post, Mandelson has had to step in again to save his skin. You will bet that Mandelson has dictated his terms and central to that will be how the election is campaigned for and a free hand in policy making.

As for the six named ministers, well we will see an unsightly scramble by each and all to distance themselves from the plot now that Mandelson has decreed there is not one. They really should have checked with him first, but you live and learn. Certainly for those six, their days in office under Brown will be numbered, but you never know how politics works and you would suspect that they will have a future under Lord Mandelson.

After all, they did exactly what he wanted - they reminded the Prime Minister just who is running the show.

National Debt - The New Sub-Prime?

If sub-prime mortgages in the US really did cause the Credit Crunch then perhaps National Debt will be the cause of the next Crunch.

Newsnight featured a piece on it last night and the subsequent discussion saw Will Hudson of Workgroup defending Government policy saying there was a clear pathway to cutting £100bn off the budget deficit. He seems to know a lot more than others, possibly the Government itself as today Peter Mandelson, fresh from giving us an extra Bank Holiday to celebrate the Queen's reign (how appropriate but which Queen?) is moving to allay market fears that Britain really knows what they are doing about cutting the deficit.

One thing is clear, it is no longer simply a matter of economics. There is plenty of techno-speak on what it's all about but it boils down to politics and the stomach of the British people to fund the deficit. The politics is all about the approach to tackling the deficit - current Government thinking is no better than to continue spending and hope for growth, making a few cuts and raising taxes after the election so as not to spook people. Conservatives seem to be lost in a parallel universe where they seem to have the same recipe but different ingredients. The Lib Dems - yes, well they always seem to be a bit lost on such matters.

What it boils down to is this - there are going to have to be drastic spending cuts and these will need to be deeper and more harsh the longer we leave it and we will be paying considerably more tax in the future. The people of Iceland just voted with great drama about how they feel on paying for the mistakes of their banks in allowing deposits from foreigners to burn elsewhere, there could be a time when the British voter wakes up and smells the whiff of bull enough to know that we are being fleeced for huge economic hubris.

The point being, should we slither down this pathway then Britain will almost certainly look like, if not become, a bad debt risk in the eyes of the markets. There is a view, expressed last night, that the Government may even flirt with being a bad risk before galvanising to do something about it all - like being put on a watchlist as many other nations are now. The reality is that many nations, some richer than others, are now showing warning signs that their ability to service their national debt is worsening. Britain is not yet one of those nations but as the Quantitative Easing is due to exhaust soon, our National Debt will become the focus of the open markets and at that point we will get the first clear indication of how others see our true economic condition.

I think we are in for a rude surprise.

Happy New Year 2010

The Noughties are over and we are in 2010, whatever we call this decade.

Happy New Year to all who read this blog and I hope 2010 brings you success and all you hope for.

It's hard to say what the year will bring - many people are finding it difficult to call this year. Cautious, slow recovery perhaps? Certainly, I think this year will mark the ascendancy of China as a dominant economy and currency but what does it hold for the UK?

As we head into the run up for an election there are two things that could really strangle us - 1) a Labour win and 2) a hung Parliament. I think in both cases it will create market chaos particularly with our bonds for National Debt. This may sound anti-Labour but realistically they seem to have no plan, other than vain hope for massive economic growth to be conjured out of nowhere, to cut our debt. They have put off spending reviews, they have not tackled any public sector cuts, they have not targeted any inefficiencies - they have simply ignored the fact that come the end of Quantitative Easing our bonds will have to be bought by investors with real money and they must trust in our plan to repay. There simply is not one.

A hung Parliament is even worse as even I would imagine that Brown and his crew really do have some idea of what cuts they have to make and tax increases beyond the headline grabbing bank windfalls and on higher earners that frankly make no dent in the pile of money we owe and does not go anywhere near the interest payments we have to make. If there is no result at the election, then there will be a period of bargaining, power broking and total inertia as everybody works out how to agree on things and make anything happen. It could be a period of hiatus that literally finishes this country. So with Labour clambering back up the polls, the likelihood of a hung Parliament increases and that's bad news.

Of course, there is a curve ball. The rumoured growing rift between the arch-powerbroker, Peter Mandelson and Gordon Brown has Blairesque overtones. Once again, we see the puerile stance by Brown on the subject and there is a rumour of even a leadership challenge possibly before the next election although you would have to think that Labour would be effectively committing political suicide if that happened. Worse, it could happen after the election and we once again have an unelected leader at the helm. That would be a disastrous blow for democracy and if Labour think Brown is as bad as the rest of us thinks he is, then get him out now and let's see the mettle of the new man - whoever that may be.

Mandelson is apparently aggrieved that, having saved the political skin of Brown, he is being increasingly marginalised on decision-making and his position of 'most powerful man in Britain' is diminishing. Not surprising really, Mandelson has been behind some of the most ineffective of schemes which have talked of big money help and delivered nothing in the economy. Scrappage was an idea nicked from Germany and France while the VAT decrease had nothing to do with him. The grand Enterprise Loan Guarantee scheme and credit top up did have something to do with him and neither have really helped anyone. The £2.3bn car industry boost never materialised with not a penny used since February last year and all Mandelson seems to have done is to travel all over the place, talk and get green custard thrown on him.

So the big question is, 'Will Brown survive?' You know, I have a sneaking suspicion that the man who wrecked our economy, who dithers on foreign policy, who has no idea on how to get us out of the economic mess he put us in seems lucky enough to actually get away with it. Even if the electorate votes him back, I think his own party will ditch him.

How democratic is that? Makes Afghanistan look positively fair.

Happy 2010!

Big On Talk, Short On Ideas

Some things don't change. Over a year after the biggest collapse in the financial system since the Depression and after six successive quarters of contraction, the best Gordon Brown can do is to talk about growth.

There was precious little about delivery of this growth or how he would 'fairly' cut the budget deficit but the careful manipulation of Peter Mandelson is clearly at work on the puppet strings. After an unlikely recall to the administration and a fast track back into politics via a peerage, Mandelson has become the most powerful man in Britain. Clearly, his help comes at a price and Brown is all but a political husk, but how the gamble has paid off. When Mandelson took his ermines Labour's position at the polls was nigh on on dead. A year later, plenty of talk and little action has somehow got them back into a position where they actually may win again. After all, Blair won the last election with a mere 34% of the the vote and that won him a 167 seat majority.

So this latest 'New Year Message' promises another cycle of 10 years of prosperity - ominous as it abruptly stops after that. It seems we are now to accept that prosperity comes in boom and bust cycles. The speech gives rise to the notion that not just a rich few will prosper - well we would like to see how Brown delivers as in all this chaos and recession, the one sector that has lost little ground is the rich - in fact, most would say that they have fared far better. Sure they may get a few more taxes, but in the new decade the emphasis will be on the money men. Those that can manipulate the vast pool of money in the open markets will be the big winners as always, and they will pay proportionally less tax per pound they earn than anyone else in Britain.

That's my prediction for the new decade. The biggest losers will be those moderately well off who will be defenceless to the pounding of tax after tax - just as we were before but were too dumb to notice.

The problem with this limp message on growth is that after a year there is no detail. It is a strategy of hope. Effectively, our economic recovery strategy has ended with QE switching off shortly and VAT returning to the old high level this weekend. Scrappage is the last incentive left and that is limited to one industry. Deferred tax will be due soon and the hangover of mortgage holidays is yet to kick in - unemployment has yet to peak. Despite all this, the plan is to talk of growth and hope to God it arrives of its own accord.

Labour has a track record of 'head in the sand' governing - it's what got us into this mess as the warning signs about bubbles were clear to people on the ground. Now we are talking about 10 years of the same, led by the same people.

We must be really stupid. Then again, that's what Brown and Mandelson are betting on.

All Mouth And No Trousers

Cast your minds back to January this year and we got lots of big talk from the aptly named Department of Business of how it had introduced a scheme to support the car industry pledging up to £2.3bn in cash for loans.

This week we have heard that despite the bravado and big talk, not a single penny of that money has been given to the car industry. There have been plenty of meetings and negotiation, with Jaguar trying to get its hands on around £300m at one stage but for one reason or another, no firm has received any benefit for a scheme that was largely advertised with the sole intention of grabbing the headlines and making it look as though ministers were actually doing something about the potential collapse of an entire business sector on which around 800,000 jobs depended.

The grandly called Automotive Assistance Program (AAP) offered minimum loans of £5m to ailing car firms while the Enterprise Guarantee Scheme (EGS) offered loans of up to £1m - clearly any component or distribution firm in the car industry that wanted a loan anywhere between £1m and £5m was scuppered from the start. But then came the conditions. Far from taking on risky loans as the scheme was intended, with £400m of potential toxic debt write off written into the scheme form the start, firms who applied for the scheme found the rules too inflexible.

The Government, meanwhile, claim that there are 10 firms in negotiation on the scheme needing as much as £2bn of loans or guarantees. It seems that during the period of inertia from the beginning of the year, the scrappage scheme, successfully cloned from the continent, has filled a gap which has helped rescue rapidly falling car sales by offering incentives directly to customers to promote buying new cars - a simple and sensible proposition, easily aimed at the right point. It seems that simple, well directed applications of money get immediate and exciting results whereas complex, airy ideas which are difficult to implement but far more grandiose sounding and headline grabbing get no results whatsoever.

If only the Government had looked at its history in education and health it would have realised that smaller packets of focused money deliver greater results than shed loads poured down a hole with no real objectives and spurious measurements of results.

The Automotive Assistance Scheme has been an object lesson in how to waste time and money and get zero results but good headlines. It also illustrates that spin gets the desired results as everyone will see car sales recovering and believe it was the AAP that helped. Instead it was a continental idea that had already brought spectacular results in France and Germany - both of whose economies were out of recession at the end of the Summer.

IT seems that inaction speaks louder than words.

Another fine fiasco has been the trade credit top up scheme, designed to help small companies where their credit insurance has been lowered or withdrawn. The Department of Business, once again, offered £5bn in another headline grabbing initiative which was said to help companies maintain trade with one another. It is a testament to the fortitude and invention of treasury departments that just 72 UK businesses have benefited from the scheme utilising just £18m of the £5bn funds (less than 4% of the total).

Now Lord Mandelson has said that he will withdraw the scheme as it was no longer required, which has sparked uproar among small to medium sized business owners. The issue is that during the recession, businesses have focused on cutting their cloth and recognising more profitable business opportunities where credit is easier to cover. Now that we are entering the recovery phase, businesses will be gearing up to get a little more creative and risk-taking as markets pick up speed.

Once again, companies have felt that the scheme was too inflexible, restrictive and prohibitively costly to use. However, rather like the AAP and the EGS, great sounding, ostentatious schemes have delivered nothing to British business and it is little wonder that when so much was given so cheaply to banks and so little and expensively to business generally that the recession has lasted far longer in the UK than anywhere else. Grand ideas with little substance packaged with large business in mind always.

Too much money given to too few too cheaply, and too little to many too expensively equalling a long recession. It's a lesson in mathematics and economics that I hope Mandelson remembers in future.

One Way Or Another

I am one of those people who did not believe we were invading Iraq for the right reasons. I felt at the time we were being lied to and this week's polished PR performance by Tony Blair in the lead up to his testimony at the Iraq Inquiry only made my beliefs more firm.

For a man so devote and steeped in faith, it's disgusting that his convictions were so tainted. There is no doubt that Saddam Hussein was an evil man but the only danger he posed was to his own people - he was an international spent force. That alone is not a reason for regime change and it was a far cry from the botched and flawed gimmickry of concocting a reason when we did invade. In his own mind, Blair is blameless - he killed a worse man than he. But in the minds of the friends and relatives of the soldiers who died during the whole fiasco, he is little better than the evil dictator he sent them to fight.

This is the man who is a Middle East Peace Envoy, who wanted to be the inaugural EU President, who would want a Nobel Peace Prize, who wants a place in his history. For me, the only place for him in my memory is as a lying, egotistical sham of a man who did no good for this country. To my mind, along with George W Bush, he should be tried for War Crimes as the war they started in Iraq was illegal and contrary to the wishes of the UN. Since his time as PM, he has busied himself making money - he could not get away from the squalid world of the sleazy politics he was involved in fast enough, or the puerile relationship with Gordon Brown and then distance him from the mess he created that we all live in. He spent time, expertly creating the rewritten history of the 'Blair Years' to convince us of a new story to bathe himself in glory even though we had witnessed the same history at first hand. Largely, people swallowed it and a new generation of 'Blair Apologists' rose - who cannot wait for his autobiography which is probably being rewritten as we speak so that he can give us an updated version of his lies.

I never saw the man as the shining beacon of a new world or glossy New Labour - I saw him and Mandelson for the slimy creeps they are. Lying, shady and, ultimately, guilty of crimes against humanity.

His is a Faith I want no part of.

Predictions For 2010

As 2009 closes out and most of us want to close the door on it as fast as possible, still more bad news wallops us causing Lord Mandelson to shout that the loss of 1,700 jobs at the Corus plant as, 'Galling'.

So our thoughts start to turn to the year ahead - to a world of old rate VAT and the potential emergence, at last, from technical recession although verbally we have been assured the world is fine according to our leaders. I started to do my own bit of research on the subject of what we might expect ahead and I came a across a very helpful prediction site hosted by a bunch of psychics at http://www.psychics.co.uk/. But then again, some of you already knew I would do that.



Read them for yourselves but my favourites are:

• As commanded by Gordon Brown, Osama bin Ladin will die. No doubt Pakistan will be short of spin bowlers and select him, where he will be recognised as a famous terrorist leader and be shot by a sniper.


• An unspecified MP will be caught performing an indecent act in a public toilet. This is a safe bet as surely we have had one a year for a while or are we talking about indecent acts as 'flipping' now?


• A secret human cloning experiment attempts to clone a famous person - I can confirm the person in question will be Bruce Forsyth in order to extend the show beyond his years but wig makers are still dubious about being able to hide the join line.


• Barack Obama expresses an interest in holistic healing and it becomes a watchword in his speeches. He will be seen on live TV sipping his own urine while having his face covered in leeches.


• Britain and Germany make a green energy agreement and a huge new wind turbine farm will be constructed just outside the front doors of Parliament. Plenty of wind coming out of there.


• Quantum physicists will find a way to get electricity from water, and the MP caught in the act in the toilet will claim he was merely testing the theory.


• A celebrity is kidnapped and huge ransom is demanded, but the kidnappers got the name from Ant and Dec's list and so no one has ever heard of them.


• Britain will withdraw all troops from Afghanistan bar a few token ones from the 1st Battalion of Sitting Ducks. Straw prices go through the roof in anticipation of the draw for the short ones.


• A strike by Civil Servants will cause widespread disruption as the country struggles to find out why it has no effect on anything and no one misses them at work.

So here a few of my predictions in the same vain:

• Gordon Brown saves a baby from drowning and wins a landslide at the election as his popularity as a world superhero soars. An independent inquiry 30 years later reveals that not only Lord Mandelson threw the baby in but the real one did drown and Brown saved the plastic replica.


• Bankers agree to give up all rights to any bonuses for 50 years and most take their holidays working in parts of Africa worst affected by drought, starvation and disease.


• England come narrowly close to winning the World Cup when they are beaten in the first round by Algeria and drawing 0-0 with Slovenia after heroically beating USA. But due to a countback on non-qualifying dives, lack of unnecessary referee abuse and no hand balls they are tragically eliminated for lack of unfair play. David Beckham announces his retirement to pursue a career in banking and Wayne Rooney becomes a monk.


• Osama bin Ladin doesn't die but is actually found hiding out on the wing for Scotland's rugby team.


• MPs vote for abolishment of all expenses is a popular move, but go onto a lucrative bonus scheme in aiming to halve the budget deficit by 2014 - Brown earns £10m in 2010 as he hits the first milestone.


• X Factor is syndicated all over the world and Simon Cowell becomes the inaugural First World President by popular vote with Cheryl Cole narrowly missing out in s sing-off. Louis Walsh is condemned to death as a traitor to the cause in the first public decree while Sharon Osbourne is put under house arrest for life as a dissenter.

I'll work on a few more real ones in the coming weeks, but I am sure that unless you were part of the groups who won the £90m Euromillions last month, you just can't wait to see the back of 2009.

Stoic Britain in 2009?

I think we all need a pat on the back. 2009 has to be one of the worst years in terms of crises for many a long time, yet the average person in the street, young or old, took it all with a traditional British stiff upper lip.

We have endured 6 successive quarters of GDP contraction. We have endured 4 years (and more) of serious decline in household income, with 2009 being by far the worst. We have added well over 1m to the dole queue and there are still more to come on that. We have seen major companies try to impose draconian cuts on staff at banks, the Royal Mail and BA as good examples; we have seen the loss of major household names like Woolworths, MFI, Threshers, Borders. We have seen the near collapse of the financial system, with 5 household named high street institutions falling largely or wholly into public hands. We have seen the exposure of long term, systematic abuse of the taxpayer by MPs on their expense claims with some stepping way beyond the point of common decency and into the world of crime. We have seen more deaths in Afghanistan in one year than all the previous years of that engagement added together - and totalling now as many as those lost in the Falklands conflict. Even as we watch with horror as that seemingly pointless engagement continues, that still our troops are not being given the right support, numbers and equipment to do the job they are asked to do. As the official inquiry into Iraq starts, it is already clear that the public were grossly misled into supporting a war that had no legal grounding - making Britain no better than a rogue state intent on imposing its will on others because it wants their assets.

Why have we put up with it all? Even in the Glasgow East by-election, the status quo was endorsed. During the year there was much talk of discontent amongst workers and potential riots in the streets as Britain suffered from the depths of the recession. We have seen that wile private firms have suffered badly from the effects of the recession and the credit crunch, the public sector has enjoyed an unscathed path with hardly any job losses, no major cuts, good salaries and fantastic pension rights as more private firms close their final salary schemes.

For many we have seen our assets corrode at an acidic rate - the stock market has regained ground but most of us look at our pension and savings statements with fear and depression. Our homes have lost some 25% in value and although they are back on the rise, many people are now in the mire of negative equity or under the cloud of delayed payments. Many firms have deferred their tax under the government schemes and face a big cash call soon that may yet send more companies under. The VAT reduction to 15% will be reversed as of the end of this month and prices will rise sharply.

And perhaps most depressingly, we have been shielded from the true cost of the massive bank bail outs we have been party too. The National Audit office have now fixed the current running total as £850 bn and rising - a spend totally unanticipated by anyone and we are still worried about further liabilities as now the next wave may not be sub-prime mortgages but sub-prime national debt as whole states or countries like Greece and Dubai start to falter on debt repayments. The result is that we are likely to be paying for the huge borrowing on all this until 2032 although Government calculations seem to be wrong each month as the borrowing requirement keeps exceeding estimates.

In amongst all this bad news - terrible news - the population seems to be unfazed and carries on regardless. Even terrible disasters like the Cockermouth floods seem to move us little anymore as we become numb to the pain around us. Perhaps we are in denial - all this bad news is being locked out so that we can focus on existing in our way. After all, there are no food shortages, we still have credit and we still have means of getting what we need. Indeed, the travel industry, with the exception of BA, reports that holidays have not fallen off at all - for most of us, life goes on.

One theory why we have not been up in arms and rioting in the streets is that we have a focus for our fury. The one benefit of the bizarre banking drama has been that we can collectively and unreservedly hate the people who caused the mess we are in - the bankers. The issue just won't go away. Even as the money still pours in from the taxpayer creating an artificial market condition where every bank in the world can make vast profits quickly with little investment and cost, they are demanding bonuses for effectively just pocketing our cash. They are not even demanding it - they are blackmailing us for it.

At one point in the year, I advocated that we do not pay our tax as enough was enough - why should we give our money and see the direct result as being MPs cheating us for cash and bankers queuing to buy shiny new sports cars? Why can't we see more care homes for the wounded returning from Afghanistan or better equipment and transport for them so that they can be protected against the unseen enemy? If money was so easy to be handed out, why did we have to pay so much tax before, if debt was so good for us?

I can only put it all down to the old spirit of survival and stoicism by the British people. At the direst moments we had the surreal moment of an open racist on prime time TV telling us that Hitler had a point in so many words. And still we carried on.

I think as the year closes, we should all pat ourselves on the back for our courage, fortitude and downright ignorance of what is going on around us. By putting our heads in the sand, young kids in Afghanistan will continue to die and rich people in the City will continue to earn a fortune off the back of our mindless handouts and behave as if they earned and deserved it. Why, when history is rewritten, we will find that the likes of Goldman Sachs, RBS and the other banks saved us, not we them.

And we will believe every word of it, just as we did of the rewritten history in the TV program, 'The Blair Years'. The one thing that Mandelson and Brown got right in the last year is that the public was stupid - the rest they got totally wrong.

How Will You Vote?

Glasgow North East has delivered its message - Gordon Brown and Labour are doing a fine job and there is no need to change a single policy.

You have to wonder where the folk of Glasgow North East have been these last few months. The by election was triggered by the resignation of their sitting MP, former Speaker Michael Martin, who was at the centre of the controversy over MPs' expenses. It appeared that Mr. Marin had lost his sense of reality and fairness as well as possibly his senses in actually not agreeing with the general view in the country that MPs were ripping us off at a time when ordinary families were struggling to make ends meet. Further, as we wallowed in bad news after bad news on bank bailouts, bonuses, Fred Goodwin's pension and our treatment of our fighting soldiers, it appeared life in Glasgow was not just unaffected but thriving. The majority returned was all but what Martin won at the last election except for a few votes that were picked up by a Conservative candidate who decided to contest the seat for the first time in ages.

I am sure Michael Martin was a popular local man and had represented his constituency well - no doubt. However, it seems that the staunchest of Labour supporters cannot seem to link the country's woes with the sitting Labour PM and his Government. Perhaps the whole affair over the SNP's decision to allow the Lockerbie bomber to go free on compassionate grounds to be received by a hero's welcome by Libyans on his return was a step too far for the sitting party. Perhaps the feeling is that while Labour may be a bunch of incompetent dolts who now agree that rich people should get richer while shafting the working class, the contemplation of Tories ruling is too unpalatable. At least the BNP came nowhere - a small victory for democracy and common sense.

But it does make you wonder what will Labour have to do worse than they have so far in order to lose their core vote? Even their own MPs are fed up with Brown's leadership while who would have thought Peter Mandelson would rise to the very top like the villain of a Harry Potter book and rule the country as 'Minister for Information'. It's like the chilling plot of a novel worthy of George Orwell.

Maybe I'm seeing it all wrong. Perhaps my lingering distrust of Tony Blair's cynically sleazy regime and its decision to fight wars without good legal reasons really got to me. Perhaps I read too much into Governments that try to manipulate our minds by programming our thoughts. Perhaps I should not be surprised that the whole financial system has failed and I have born a cost for no good reason while the bankers continue to earn millions. Maybe I am the one who is illogical here, expecting too much for our troops fighting wars I think are unwinnable - certainly the way we are engaged in now. Maybe I am the one who is wrong in believing MPs should not be allowed to claim cleaning bills as that is a lifestyle decision not a burden for taxpayers or that they should benefit from the profits of houses whose mortgage interest we paid for. Maybe I am the one who is out of touch believing the credit crunch and how we dealt with it has left us worse off than all other rich nations - maybe I am too idealistic in believing as a result of this our fight to save the planet and the starving people of this world has been set back years as we have ploughed all our money into saving the wrong people because they have us by the short and curlies.

That is the Labour world I thought I would never see. From my viewpoint it has catastrophically failed us all - but Glasgow North East is just fine. I wonder if Willie Bain's first words after winning will have made the penny drop. If everyone adopted the same approach, Gordon Brown and Labour will be back in on a landslide come June.

Surely there is something wrong in that?

The Patient is Not Responding - Hit Him Again

The operating theatre euphoria dies down as the man in the white coat and thick glasses points at the bank of monitors and speaks in a weak voice.

“Em, I said it looks as if the patient’s recovery has faltered,” said Dr. King in a frail voice. L. Ron Mandelson gave him a look of pure evil. The rest of the team looked down at the patient, a Mr. British Economy, who had looked as if he was recovering from his massive open heart surgery in the wake of a severe heart attack suffered due to incredible over indulgence.

“But I thought the surgery went well,” stammered Nurse Darling. "All the other people operated on from France, Germany, Japan and USA have recovered while the Italian one is getting better despite being fatter and with all that plastic surgery that he had too."

“The expensive sticky plaster is holding the heart in place nicely, indeed,” remarked a man in an expensive suit, a Dr. I. Banker. “The vital signs have wained but a new boost of intravenous QE should sort it out. Get another bag.”

“Hold on,” said Dr. King. “That’s bloody expensive stuff you know – we’ve put in £175bn so far. We are not made of money, you know.”

“To my mind, you are,” replied I. Banker tersely. He gave L. Ron Mandelson a nod. He smiled back and turned to King and twisted his ear.

In the corner, a man with manic look on his face was putting weights on a rubber band scale which was connected to a speaker which made an annoying ‘weee, pop’ noise.

“Who is that idiot making that noise,” asked Professor Brown.

“That’s Dr. Sants,” replied and adviser. “He’s besotted with his new Stress-Testing Machine. I’ll tell him to stop.”

“Tell his boss to tell him,” snapped Prof. Brown.

“Erm, he is the one in the corner tied to a chair and gagged, sir. The one with the notice saying ‘Loony’ around his neck at the request of Dr. Banker, sir.”

A lady shuffled forward. “Before you put that bag of QE on the drip, I would like to point out that the last lot of QE had no effect. In fact I think it isn’t getting into the patient at all but it’s been diverted by another tube into this drain which says ‘Financial System’.” Whoever she was, L. Ron Mandelson cuffed her on the head and told security to remove her.

“I wouldn’t give the patient QE, try cannabis,” said a man. L. Ron Mandelson immediately cuffed the man on the head and had Porter Johnson remove him.

“I don’t pay you to advise, Nutt,” remarked Johnson. “ I pay you to toe the line.”

“You don’t pay me at all,” remarked the man.

“Precisely my point, Nutt” hissed Johnson as he threw him out.

“Right,” said Dr. Banker. “All agreed?”

Everyone looked at one another before L. Ron Mandelson dug his elbow into Prof. Brown’s ribs with some venom.

“Ow,” screeched Prof. Brown. “Yes, yes, of course, all agreed.”

“Good,” said Banker. “I’ll add that to our fees and £25bn extra QE via drip please, Nurse.”

“Wait, wait,” interjected Nurse Darling excitedly. “What about that idea of the Government being a Hedge Fund and buying further into our hopeless banks. It sounds as if everything is just going down the toilet.”

“Trust me,” replied Banker. “I know what I’m doing - as if I would ever lose you billions? You don’t think you pay all those fees for nothing, do you? Just buy the shares and put the QE in and stop asking irrelevant questions. "

'At Every Point, We got it Right'

Gordon Brown must prepare for bed each night mumbling this simple mantra to himself and perhaps he sleeps with one of those nighttime self-help tapes playing the same message from under his pillow. That way when he wakes up each day he has actually convinced himself that what he has done in the face of the economic obvious has been right.

It must come as some surprise then that despite all his evening preparations that the reality each morning is somewhat different. I mean, take away the spiteful snapping terriers in the other Parties who constantly fail to appreciate his economic genius, there are those daft sets of figures that just doggedly won't seem to tell the truth.

This week has been yet another bad one in a long succession but the news that Britain still wallows in contracting quarters GDP-wise was bad enough, then there was the news that Italy's economy is now bigger than ours while they are also set to announce the end of their recession, then Brown's good mate, Barack Whatsisname, has prevailed over a US economy that did not just emerge from recession but actually grew at a very acceptable 0.9%.

Britain remains in the dunce's corner.

The saving grace is that no one seems to think that the policies followed by our Government were wrong. From the day Northern Rock was saved, Brown seems to think every subsequent event was met with the right action and that Britain benefited for it. And guess what, it seems the public have agreed. True, there are those annoying issues like bankers earning stunning bonuses having caused the whole crash and the Postal Workers seem to defy all best advice to surrender their jobs, but on the whole the disaster of The Sun not supporting Labour has been averted and Britain believes Brown is the best man in a crisis.

Well that's what the tapes say.

What perhaps was not part of the script was that this week Brown had to go to Europe and start campaigning for Tony Blair to be EU President when patently he would prefer to sit in a bath of hungry piranhas with bovril smeared on his private parts. That was certainly not part of any script but it is the price you pay when you have been 'rescued' by Peter Mandelson. It's almost as bad as having to repay £12,500 on expenses for dry cleaning and such while McNulty, Smith, Blears et al get away scot free in the expense bonanza affair for selling houses.

That's the trouble with reality - it tends to be, err, reality. We could all like to keep saying the same things over and again to our bosses about how well we have done and how things are just around the corner, but there is no arguing with reality. If you do your job badly, reality says that the outcome is rubbish. For all the PM's self-help mantras and tapes, the fact remains that our economic position was nothing like how he described and has not responded to the stimulus he gave it afterwards.

Quantitative Easing (QE) is a classic example. The economic patient lay critically ill on the bed and intravenously money was fed in. Sadly it never got to the vein as an unforeseen valve led the money away to different bank vaults who have just used the money to go play 'casino banking' again and shore up their balance sheets as the FSA wanted them to do while hardly any of it has got into the real world where it was needed. Indeed, this week the Broad Money supply called M4 showed that the amount of money in the country is falling, showing QE has effectively gone down a drain. It has propped up our Government Debt market and that could be equally dangerous when the whole thing finally ends before we descend into being a banana republic.

Our real stimulus money for the wider economy was VAT decrease and scrappage plus a few minor things. Loan Guarantees are a mess because the Government has used the same criteria to lend as banks and the decisions still lie with banks anyway. Reams of form filling and economic data has meant many businesses have just given up on it. Oh, numbers look fine with some 200,000 businesses allegedly going for it but again reality says it was banks just getting the Government to underwrite existing debt - nice fiddle.

Meanwhile Toxic Debt has been the biggest winner. Thanks to our loans, guarantees, insurance and capital, banks have been able to write down debt positions to the point where it all looks cheap again. Guess what? Reality bites and all the banks are making hay by trading in them once more and bonuses are up again.

Our whole strategy was to save the banks and that's what we have done making rich people richer on the back of their failure. The rest of the country has suffered. Meanwhile heroes in Afghanistan die as we equip them poorly while fighting our wars, don't give them enough of the right transport and propose to send untrained reservists.

It's a script you could have been hard pushed to write as it was so patently wrong. Yet that's what happened and our PM still claims he was right. Despite the 47% rise in coffee houses in Britain in the last year, he still can't smell any.

Perhaps the whiff of Government Bull is too overpowering.

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.

It's Payback Time

If Silvio Berlusconi 'fingered' you for a particular role, I should think most of us would feel distinctly uncomfortable and start looking over their shoulder.

As David Mills has found out, there can be a high price for helping him out even if the initial rewards are good. So I wonder how Tony Blair must be feeling now, having just been endorsed by the Italian PM as the 'ideal' candidate for the new role enshrined in the Lisbon Treaty of EU Presidency. Currently, Mr. Blair is busy squeezing being a Middle East Envoy in between earning an estimated £12m since leaving office in 2007 in various other roles as writer, public speaker, non-executive director and adviser on globalisation to people willing to pay £2m a year for his wisdom.


Only the ratification of the Czech Republic stands in the way of the appointment which Berlusconi wants confirmed as soon as is 'legally' possible. The word 'legal' must send a shiver down his spine for the man who describes himself as, 'The most persecuted man in the world'. There are no suggestions of favours being called in although those with good memories will remember that the Blairs have enjoyed multiple free holidays at various Berlusconi properties in Tuscany and Sardinia. But as Tony's good friend, Peter Mandelson, knows there are always such things as free lunches and holidays on £80m yachts and the like. Just tell the public that you discussed the weather and they will believe you.


My memories are of Berlusconi smiling and greeting with a bandanna as his hair was busy being transplanted and dyed while dreaming of nubile young girls. It is as good as endorsement as Blair will get as Sarkozy and Merkel are rumoured to have not endorsed him while he is unlikely to get it from Chairman Brown.

Where's George W Bush when you need him?

What Do SMEs Want?

The Government believes that banks are choking small businesses by not lending or setting criteria which are too tough. Banks say they're finding it hard to hit lending targets as customers are paying back more.

What do SMEs really want?

It seems that everyone knows the answer and continues to beat the drum. But because no one in the Government or in banks have run small businesses, they have no real idea what they need. They don't have any shortage of senior corporate figures piping up and telling them how much they want to earn or how bad education is (Terry Leahy of Tesco has done just that today). They have even employed Lord Sugar as some kind of Enterprise Tsar, whatever that rubbish may be. But no one in the Government would want to listen to someone like you or I. We don't get knighted or put into the Lords. We don't get to speak at the CBI and tell people how it is.

Small businesses account for 97% of all businesses in Britain and are the largest body of employers and we contribute disproportionately the largest amount of tax into the system through corporation and PAYE but we have the least heard voice. So it comes as no surprise that there is an argument between the Government and banks about lending.

So let's just think about this for a moment. Why is it that SMEs don't want to borrow as much cash as everyone thinks they should? RBS and Lloyds have set aside more cash, they have even put their most experienced bankers on hotlines. Why are SMEs behaving like spoilt brats and asking for credit and then not using it?

The main reason is that lending is seen as the way to prosperity by the Government. There is no other pathway. There is a good reason at a personal level because cheap and available mortgages allow us all to trade up or release equity to supplement our household income. No one could have survived the last 12 years if they had relied purely on their average household incomes and produced the growth we had - it came from freely available, ultra cheap and few strings attached credit. Banks fought over themselves giving it to us and we took it and used it prodigiously.

There was a ripple effect into SME business. Of course, in that environment of growth, businesses see opportunities and invest to grow by taking on people, marketing, gearing up new production, maybe expanding overseas. While the market is buoyant, the lower available credit was essential for companies to move forward.

Even now, at the heart of the recession, mortgages are critical as more people need to keep moving their earnings as wage increases are minimal and jobs are becoming scarcer. People are borrowing to maintain their lifestyle and maybe to survive. They are leveraging their own bank, again. It's a dangerous strategy long term as prosperity has to be geared to income ultimately but in the short term it is the only method the Government has to stand any chance of stimulating growth to cut borrowing. You can almost see the accident waiting to happen - borrow more to fuel growth to decrease borrowing. It's a cycle doomed to fail.

But small businessmen are a canny lot. They do not operate under the same mentality. Experience has taught them that in times of recession, borrowing to invest is not a priority. You may need to borrow to survive but that's different. Survival borrowing is not favoured by banks - after all, why would they want to give money to a company to save jobs or pay wages? That's the sort of thing that taxpayers do for banks but banks don't do it for businesses - oh, no. It's a simple credo, banks lend against some kind of collateral - so if you have assets in the business or you have a strong revenue book to show, you get money under nice criteria and although the cheapest business overdraft is around 13 times the bank base rate, let's face it 6.5% interest is the lowest for business borrowing for a long, long time.

The thing about small businesspeople is that we are naturally sensible. We do not operate like Government lackies would like us to. If sales are low due to a recession, we adopt a different approach. We cut costs, conserve cash and we attempt to decrease dependence on borrowing. Why? Because CASH IS KING. If sales are not coming through and growth opportunities are not there, we do not borrow more money, we cut our cloth. There is a simple reason - SMEs want to take advantage of the growth as and when it comes through to do that you must then have access to readily available credit at good terms. Borrowing in a recession for SMEs is either done out of desperation or because the business has spotted an opportunity created by the recession.

The truth is that the Government does not know how to run their own economics, that has been spectacularly manifested. So there is virtually no chance it understands the economics of running a small business. It has no adequate advice for SMEs and so they will continue to beat up banks and banks will do stupid things like put managers in call centres. It will not stimulate the credit.

What SMEs need is sales. Pure and simple, if there are not sales opportunities out there then there is zero point in investing in new people or production. The only other area where credit would be good is for those starting new ventures - with more people becoming unemployed more will want to try their hand at starting a new business. In general, starting a business in a recession is not a good idea. You only have to look at any High Street and count the number of shops now empty to know that buying consumers are still very nervous and businesses are unlikely to start taking small risks on new suppliers.

Of course, there exceptions to the rules. Many businesses like Cisco will tell you that they started business during a recession. Let's draw a line between book theory and practicality here. Cisco was started on the back of the waves of growth in the IT networking and infrastructure business. They were riding a future wave - true, they did that superbly but not every business has such a wave to rise. If you want to start a car repair shop, a nice clothes boutique, a barbers or a building firm, there are not those waves visible to invest against. Markets are generally depressed so you have to be able to pick where the future growth will come from and focus your business upon what you know you can do to tap into it. Simple statistics show that most businesses fail within the first year - in a recession that statistic gets worse. Banks will not lend money just to help people out in tough times, they want an investment idea.

Venture Capital is a very funny beast. Up until about a year ago, you could have had an idea about paper hat design for Outer Mongolia and they would have flown expensive people to you, to 'chase the deal'. Now they are all sitting on top of their masters' cash and working part time until someone presses the green button. It's not a question of pitching to them, it's a question of finding one who is in as most are on part time work.

The money is in the wrong place. If Government is hell bent on providing credit, then support new business ideas. VCs aren't putting cash down and banks don't want to support new ideas, Government should step in. I know Mandelson will say 'we are', but reality says Government is not and if it is, it is going into the wrong places. For a small time guy to borrow £10,000 to get a small business up and running, the facilities are simply not there whether they are the next Cisco or not. Like me, most entrepreneurs do it from their own means and we, of course, bet very carefully as we have too much to lose. If I wanted to expand my business today, there is not a scheme widely available and well publicised in Government anywhere that I do not have to fill in a ton of forms about my business to the nth degree and then wait six months for an answer. Borrowing should be a simple process. It is after all, a process of gambling and banks are very good at that when it comes to large complex sums that mean nothing to anyone else or serve no real purpose. As banks gamble in front of our eyes and conjure up £billions of profits, down in the real world it would be hard to get a penny of that profit to fund a new business idea.

So here's a thought. Government step in and say, for every new £1 of profit earned by investment banking of any type, 80% of it must be invested in small business funding with a new package of conditions to stimulate commerce. Call it a tax if you want, who cares. Bankers won't like it as it will dramatically cut bonuses but would it not create an impression that if you are going to make vast profits then make them out of something that does just a bit of good to the economy.

There are lots more things that could be done. But simply screaming into a High Street bank manager's ear 'Lend!' will not do it They do not have the experience or skill to understand business in the same way as an entrepreneur. You have to structure the whole conditions properly and borrowing is a mugs game for most SMEs today - they want sales. Stimulate new business ventures and there will be more sales for SMEs and their expertise and products.

Sales are what makes SMEs grow.