Archive for June, 2009

UK Public Spending – a business viewpoint

I am at the excellent Global Leader Summit being hosted by London Business School.

Among the many interesting topics is a discussion on the down turn and its perceived length. It’s clear through overt discussions that the UK public finances are being seen as a key (if not the key) to future growth. Jeremy Darroch of Sky in particular pointed to the extent which the UK public sector permeates the UK economy (a point which is almost saturation in some geographical areas). This view was expanded by Paul Polman of Unilever who also pointed to the need for increased saving by the consumers.

Public Spending is a tightrope which must be tightened but if pulled too tight will kill off any greenshoots of recovery (illusory or otherwise). It is therefore with regret that our government have sought to use the uncertain economic climate as an excuse for ‘smoke and mirrors’ speeches and not firm figures.

David Cameron Monthly News Conference

Synopsis:

DC came out fighting effectively calling GB a coward with regard to the backing down over spending plans. Indeed he again explicitly said that the Tories will bring in spending cuts. This catches out the government who are hiding behind the “who knows what will happen to the economy?”

A pointed call for the release of the current years expenses to have less blank ink, revealing addresses.

A clever call to retain 2nd jobs for MPs using the argument that career politicians is not what the people want. I am of the opinion that it should be compulsory for MPs to have had two years experience in a job OUTSIDE politics. Get out of the Westminster bubble folks!

No date given on spending specifics. This is the correct approach to play. One cannot show ones hand when the government have said nothing. Channel 4 tried to corral DC into an autumn deadline and asked about the housing plan brought in by the govt. DC batted this away.

Speaker Froth

The media obsession with the appointment of the new Speaker is a diversion. Whilst the unseating of the previous Speaker was a microcosm of the public’s discontent, the interest in the appointment of a new Establishment figure is not. The general public do not differentiate between good MPs and bad MPs, they see the entire lower house as one cesspit of corruption and self interest. Only transparency can provide this, not a new face under wig and inside stockings, not another quango and certainly not the Prime Minister telling us that he’s the man to take us out of the ‘bust’, he presided over and claimed to have abolished.

Gordon Brown’s speech on Tues June 16th 2009

I shall avoid commenting on the rhetoric and go to the bare bones (trust me, it was mind numbing in a reality TV awkward manner – lots of letters from the public, Oprah Winfrey-esque rubbish).
GB basically said that under Labour, you get more money for the NHS, Tax Credit, Education whereas the Tories will cut these.
This is the propaganda that the public will be faced with for the next twelve months. The lasts gasps of a dying man. When will this man admit some culpability over this recession created under his Chancellorship instead of hiding behind “world recession” nonsense!
This ‘spending cuts’ argument against the Tories had its validity 24 months ago but the fact is that cuts must take place whichever party is in charge. The only point of discussion is where these will be applied. By ringfencing the NHS, George Osborne has forced Labour into the screeching of “10% cuts” knowing that cuts and tax increases must be applied. The public will be wary of this mantra by next June however and the msg of austerity will soak in. GB should only have begun this discussion if he intends to hold an autumn election. Or perhaps he does?
GB did omit that the last 12 years have been a historical time of calm hence the government’s ability to increase spending and increase taxes stealithy (think fiscal drag). Unless the govt comes out and is honest with its plans and not hide behind talk of “who knows what interest rates will be next year” and “we don’t know how much the economy will grow”, it will be swept out of power leaving a rump of a presence in Parliament. What is the point of the Treasury fiscal models, if not to plan for all scenarios?

UKIP fills the gap

With all this talk of Labour’s demise in the European elections and the rise of the BNP, too little attention has been paid to the rise of UKIP. In Nigel Farage, the party has an eloquent individual who gave the best (and most non partisan) assessment of the election results over the last 48 hours. His press conference did not gloat and correctly identified the weaknesses in the Conservative’s position of Europe. The promise of a referendum on the Lisbon treaty has had too many caveats. Whether or not and to what degree the UK stays in the EU, a greater degree of honesty MUST be employed by all parties with the public.
– What proportion of legislation employed per annum originates from the EU?
– What proportion of those EU laws emanate directly from the elected (by the public) officials?
– What do the UK parties intend to do about the wasteful Common Agricultural Policy which:
: pays the farmers of the ‘old’ EU more than that of the new EU?
: is a direct obstacle in each and every free trading round with the rest of the world?
: increases the poverty of the lesser developed world?
Is there any button which the CAP does not press when one is looking for an insiduous use of public money? The CAP is the figurehead of a wasteful system whose few good policies are outweighed by its many unnecessary and poorly thought out ideas. There is not enough space in this blog to express my disgust at the largesse of the many officials.
By perverting the traditional axis of UK politics, UKIP will increase its share of the vote in the general election, votes which could prove crucial in the North West for David Cameron. Mr Cameron need not change into some snarling anti EU-phobe. But what he must do is transplant the ideas he has put forward for the UK to the EU. That of, transparency, the idea that politicians are public servants; and subsidiarity, the idea that decisions will be made at the lowest feasible levels.

Titanic Labour

Not the force of Greek myth but the early 21st century sinking ship. As the rats leave (Jaqui Smith and Hazel Blears at time of writing), it leaves only the inevitably poor showing in the European elections to draw out the plotters. But no one is brave enough to play the part of Brutus or indeed Michael Heseltine.

The truth is that the Labour party are suffering from government ennui, a desire for change regardless of performance. Labour’s performance in recent years has been lamentable: the impoverished response to the banking crisis, the waste (non jobs in the public sector) of money in the good times, the Iraq retreat debacle, failure to assert itself in Europe. But none of these are election winners or losers. The great British public invariably vote in general elections based on the economy, incompetence, or boredom but rarely ideology. The government have handled things better than in the dying days of the Major administration but one cannot help thinking that only a collapse by the Tories will lead to anything but a 1979-esque rout.

The smell of power has quietened the rabid right wing dogs and their howls of immigration, EU, and low taxes. The hope is that David Cameron will use the 12 months as thinking time to develop a true ideology leading to economic sustainable growth, a viable ‘free’ healthcare system, a resuscitation of our morbid education system, and a foreign policy that puts the UK and its sphere of influence first.


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