A History of Gordon 'Prudence' Brown
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Brown warns Kraft on jobs |
Gordon Brown Helped Cause the CrisisBritish voters have figured it out. Will Labour Party leaders?Shocked by the parliamentary expenses scandal and suffering from the recession, British voters have shown their displeasure with Gordon Brown's government. Labour was trounced in local and European elections earlier this month. |
Gordon Brown tolerated and even encouraged the formation of these bubbles for several reasons.
The traditional sources of Britain's economic strength, the mining and manufacturing industries, shrank during his term as chancellor. Total mining sector output, including oil and natural gas, dropped by 31% between 2000 and 2007.
Total manufacturing production was stagnant during this period.
The gross value, in inflation-adjusted prices, of output from all production industries combined fell by 3% between 2000 and 2007. Their employment level dropped by nearly 1.1 million over the same period. These trends were not an inevitable result of shifts in comparative advantages that are said to occur in advanced economies. Real manufacturing output rose at an average annual rate of 2.2% in the U.S., 1.2% in Germany and 1.1% in France between 2000 and 2006, according to the World Bank.
Eager to achieve the illusion of steady progress in the overall economy, Mr. Brown needed the rapid expansion of financial services, and the real estate and business services industries.
Their output soared by 48% and 33% respectively from 2000 to 2007, compared with 19% for the overall economy. Their combined employment level reached nearly 6.7 million in 2007, an increase of more than one million.
Rapid expansion of consumer credit in turn boosted demand for wholesale and retail products and services. The booming financial and real estate sectors, with their inflated salaries, bonuses, and profits generated by unsustainably rapid credit growth, also filled Mr. Brown's tax coffers.
Thus, despite the decline in corporate and personal income and national insurance tax revenues from the production industries, he was able to fulfill Labour's 1997 election promise of expanding public services. The output of health and social services increased by 26.3% from 2000 to 2007.
Employment in the category "other service activities," which includes public administration and government services, grew by 1.3 million between 2000 and 2007, reaching almost 10 million -- nearly a third of all British jobs.
So the boom in the financial and real estate sectors served Mr. Brown's political interests well. And he was by no means a passive bystander to their growth.
He urged them along in several policy speeches. Introducing on April 1, 2005, a policy document entitled "Homebuy: Expanding the Opportunity to Own," he insisted that "this Britain of ambition and aspiration is a Britain where more and more people must and will have the chance to own their own homes."
Ignoring the inability of many house buyers to pay their mortgages, he touted this message to City bankers in successive annual speeches at the Mansion House in London, promising them "light-touch regulation."
Already in 1997 he transferred the responsibility for bank regulation from the Bank of England to the inexperienced Financial Services Authority. He also curbed the central bank's ability to keep asset inflation in check by removing housing costs from the price index.
Mr. Brown also repeatedly praised the City's "innovative skills," bragging in 2006 that it was responsible for 40% of the world's over-the-counter derivatives trade -- which includes the now infamous repackaged subprime mortgages. He gave financial institutions a false sense of security by telling them on June 16, 2004, that "I am determined to ensure that we can lock in greater stability not just for a year, or for an economic cycle, but in this generation."
With this assurance from the chancellor, how could anyone expect bankers to forego juicy profits and bonuses by avoiding innovative but unduly risky practices?
Because of the large size and global reach of Britain's financial sector, and the many newfangled financial instruments it created and marketed, Mr. Brown cannot honestly deny all responsibility for Britain's recession.
Given these historic facts, Britain's Labour legislators should think again about sticking with the prime minister. Choosing a new leader with integrity and managerial competence is the party's best chance to win greater respect from voters.
Mr. Marsden, a member of the Council of the Centre for Policy Studies, was formerly an operations adviser at the World Bank and senior economist at the International Labor Organization.
The Wall Street Journal 15 June 2009
Brown warns Kraft on jobs
Brown's bluster in regard to the Kraft takeover of Cadbury is a cynical attempt
to pretend that the government can influence Kraft's jobs and investment policies.
Agreement by Cadbury to a £11.9bn takeover bid from its US rival Kraft Foods prompted Gordon Brown today to warn the American conglomerate to protect jobs in the West Midlands.
Cadbury accepted defeat in its battle to stay independent by recommending a £11.9bn takeover from Kraft, ending one of the most fiercely contested takeovers in the City for some time.
Cadbury employs 6,000 people in the UK and the Unite union expressed fears that the deal would lead to job losses as the US company puts a priority on paying back its debt. "Whatever good intentions Kraft may have towards Cadbury's workforce, the sad truth is there will be an irresistible imperative to pay down their debt, and this raises real fears for jobs and investment in this country," said Jennie Formby at the union.
But the prime minister said today: "The one thing I want to say is this: we are determined that the levels of investment that take place in Cadbury's in the United Kingdom are maintained. And we are determined, of course, that at a time when people are worried about their jobs, that jobs in Cadbury can be secure" ...
Guardian 19 Jan 2010The sad lesson of Cadbury is the City still holds the whip
£2m a day cost of Cadbury deal – plus £12m for the boss
Mergers and acquisitions
Private Equity
The prime minister will promise to "go for growth" and deliver "a decade of shared prosperity", while cutting the deficit in a "sensible and fair way" ...Gordon Brown's new year message looks to election
Mr Brown's new year message, to be delivered in a webcast on the Downing Street website later, will include a prediction of the economic recovery in the year ahead - pledging to "go for growth" and "really get Britain moving forward again".
He will promise to outline this week plans to invest in the "industries of the future" - such as high speed rail, the digital economy and clean energy - as part of plans for "a successful, fairer and more responsible Britain" ...
BBC NEWS 30 Dec 2009Recovery will lead to 'decade of shared prosperity'
Gordon Brown backer faces Scotland Yard investigation
The investigation into Lord Paul is particularly embarrassing for the Prime Minister as the peer has recently been made a member of the Privy Council by Mr Brown. Lord Paul, a former deputy speaker in the Lords, gave £45,000 to Mr Brown’s leadership campaign and has reportedly donated more than £400,000 to Labour.
He has claimed £38,000 in Lords expenses despite being one of Britain’s richest men with a fortune estimated to be worth £500 million.
He claimed that a hotel he owned in Oxfordshire was his “main home”. The peer said that he had been living in a small one-bedroom flat on the property when it was occupied by the hotel’s manager. He admitted that he had never slept there but insisted that it was his main home as it was available for his use.
By nominating the property as his main home, he was able to claim tens of thousands of pounds on expenses for a London residence where he has lived with his family for more than forty years ...
Telegraph 28 Dec 2009Swaraj Paul's Non-Domicile Tax Status
Gordon Brown hails Copenhagen success despite widespread condemnation
The UN climate negotiations in Copenhagen broke up last night with Gordon Brown hailing the night a success on five out of six measures but most observers united in damning the meeting a grave disappointment ...clive1234Guardian 19 Dec 2009
19 Dec 2009, 9:39AM
Poor old Gordon, despite getting his face in every photo possible, he didnt save the world again; it was President Obama that managed to get some kind of agreement.
This Christmas many will be over spending on things they cant afford to buy. Its called " doing a Gordon " when one spends money one doesnt have.
What new fad will Gordon think up next to leave a legacy on his premiership.
Right now he will be remembered for having sold half our gold at a third of its worth , ruined the best pension schemes in Europe, used taxes from the banks to bung loads of money at anything that came to mind; and hired hundreds of thousands of civil servants to drop the unemployment figures.
Then when the banks collapsed printed money to give them billions without any rules or regulations as to how they should spend the cash.
A list could be made of his failures that would stretch for miles. Please Gordon go now.Climate Nut Brown Will Ruin Britain
The truths Copenhagen ignored
Gordon the Green? Compare and Contrast
Our children won't forgive us if we fail
... catastrophic climate change is no more a matter of untameable fate than slavery, women's oppression, mass unemployment or nuclear war. And over the next two weeks we have the chance to come together, as a truly global community, to take the first decisive action needed to change its course.
And today, together with Norway and Australia, the UK is taking a further step to a Copenhagen agreement: publishing a framework for the long-term transfer of resources to meet the mitigation and adaptation needs of developing countries.
Let no one be in any doubt about the overwhelming scientific evidence that underpins the Copenhagen conference. The Intergovernmental Panel on Climate Change brings together over 4,000 scientists from every corner of the world. Their recent work has sharpened, not diminished, the huge and diverse body of evidence of human-made global warming.
Its landmark importance cannot be wished away by the theft of a few emails from one university research centre. On the contrary, the pernicious anti-scientific backlash that the emails have unleashed has exposed just what is at stake.
The purpose of the climate change deniers' campaign is clear, and the timing no coincidence. It is designed to destabilise and undermine the efforts of the countries gathering in Copenhagen today ...
Guardian 07 December 2009MPs back third runway at Heathrow airport
The endorsement of the Heathrow policy comes as the Committee on Climate Change prepares to publish its own aviation report. Alongside approving a third runway, the government introduced a target of limiting aviation's carbon dioxide emissions to 2005 levels by 2050.
The committee, set up to advise ministers how to reduce carbon emissions, will report on aviation's progress towards the target tomorrow, including comments on whether a third runway will hinder the industry's ability to meet the 2050 benchmark ...
Ministers argue that congestion-choked Heathrow needs to expand, otherwise leading businesses including financial services firms will locate their bases in countries with larger, less crowded airports. With a third runway, Heathrow would go from handling 67 million people a year to 135 million.
If there is no expansion those passengers will simply go elsewhere, travelling through rival hubs in Paris or Amsterdam at considerable cost to British jobs ...
The Liberal Democrats warn today that an expanded Heathrow will cost the government billions in terms of the price of carbon dioxide generated by 220,000 extra flights a year.
"In light of the new government guidance on the cost of CO2 emissions, Heathrow expansion will actually cost us billions," said Susan Kramer, the party's Heathrow spokeswoman. "Only this government could dress up a loss of billions of pounds as a reason to have a third runway. We don't need a bigger Heathrow to keep London competitive." ...
Guardian 07 December 2009Copenhagen climate summit issues: fossil fuels
A Chronicle of 'No more boom and bust'
Modernguitars
23 Oct 09, 3:50pmOn Saturday the results of an encounter between the journalist Allison Pearson and Gordon Brown were published.Gordon Brown: November 1997 "I am satisfied that the new monetary policy arrangements will deliver long-term price stability, and prevent a return to the cycle of boom and bust."
After a load of the usual stuff about eating cold lamb chops with his children and so forth, they finally get down to business. Pearson asks if the Prime Minister if he has any regrets about his boast: ‘No more boom and bust'.
And here is his priceless reply: I actually said: ‘No more Tory boom and bust'. Yes, that really was what he told her. [Times]
Gordon Brown: April 1998 "We will not return to the stop-go, boom-bust years which we saw under the Conservatives."
Gordon Brown: May 1998 "The Government have put in place policies to deliver that objective and are determined to avoid a return to boom and bust."
Gordon Brown: June 1998 "...rigorous financial discipline that, together with monetary stability, ends once and for all the boom and bust that for 30 years has undermined stability"
Gordon Brown: November 1998 "Britain was set to repeat the boom-bust cycle that led to 15 per cent. interest rates for one whole year in the early 1990s."
Gordon Brown: November 1999 "Indeed, Britain was set to repeat the old, familiar cycle of boom and bust. Since then, we have created and rigorously adhered to a new framework of modern economic management"
Gordon Brown: March 2000 "Britain does not want a return to boom and bust."
Gordon Brown: November 2000 "Our approach is to reject the old vicious circle of the '80s--rising debt, higher long-term interest rates, higher debt repayment costs, lower growth, higher unemployment, then enforced cuts in public spending. That was the old boom and bust."
Gordon Brown: March 2001 "We will not return to boom and bust."
Gordon Brown: March 2006 "I have said before: no return to boom and bust."
Gordon Brown: December 2006 "Boom and bust is a term that applied to the Conservative years and two of the worst recessions in history"
Gordon Brown: March 2007 "We will not return to the old boom and bust" ...
Guardian 23 October 2009If this is a triumph, I'd hate to see a disaster
Desperate times call for …er… repeat announcements
... you need to have your wits about you whenever Mr Brown starts talking new numbers. His reputation for repeat announcements, inflated claims and double counting precedes him. This time the three big problems with the policy are:
It is not new. In the 2009 Budget, Alistair Darling, the chancellor, said: “The Government has set itself a central goal of realising up to £16 billion of property and other asset sales in the three years from 2011-12, with proceeds raised being used for new capital investment”. So a repeat announcement from Mr Brown (giving minimal details of the assets in question) cannot have any effect in repairing the public finances faster than the government has already pledged.
It does not affect the underlying government deficit. An asset sale, by definition, is the process of swapping one asset (a bridge, for example) for another asset (cash). It makes no difference to the underlying budget deficit, which is the difference between public spending and tax revenues.
I believe, but am in the process of checking, that it is classified as a financial transaction that has also always been specifically excluded from the budget deficit. When the government put money into the banks this year, measured public sector net borrowing did not rise - the government has had to borrow much more than the £175bn projection for PSNB this year to finance that recapitalisation; the same logic says that when it sells an asset, borrowing will not fall ... the policy does precicely nothing to reduce government deficits relative to the Treasury’s Budget forecast.
FT 12 October 2009Sale price is a 'pinprick' on deficit
Asset sale: Déjà vu?
Britain's economy ready to bounce back
Chancellor's '£2 billion gold bungle'
Britain's economy ready to bounce back, says Gordon Brown
"If you have a growth policy for Britain, get unemployment down, get the economy moving forward, then Britain can have upgrowth," he says.
"I think people have moved closer to our view that Britain is capable of coming back to growth at a higher rate next year than people were originally assuming, and higher rates in the future.
"We’ve said that the economy will grow by one and half per cent next year and more people are moving towards our position as a result of what they’ve seen in the economy over the last few months."
His remarks will surprise many economic experts, whose growth forecasts are far less optimistic. He is also likely to face Tory claims that he is failing to be "honest" with the public.
Mr Brown says, however, that it is "simply not true" that tough years lie ahead ...
Telegraph 09 October 2009UK economy contracts by 0.2pc in third quarter
Britain mired in longest, deepest post-war recession
Gordon Brown warns China over trying to usurp the dollar
The Prime Minister spoke after a senior Chinese official told the G8 summit in Italy that the world should move away from treating the dollar as its default measure of value. Governor Zhou Xiaochuan, China's central bank governor, earlier this year called for a "super-sovereign reserve currency" run by the International Monetary Fund to ultimately replace the dollar.
At the G8 summit in L'Aquila, Italy, Dai Bingguo, China's State Councillor, repeated that call, telling world leaders over lunch that the move would "improve" the monetary system.
He said: "We should have a better system for reserve currency issuance and regulation, so that we can maintain relative stability of major reserve currencies' exchange rates and promote a diversified rational international reserve currency regime."
Mr Brown later told journalists at the summit that even talking about replacing the dollar poses financial risks and could hamper any global economic recovery.
He said: "In the present circumstances, I don't want to give the impression that there is some major change about to happen around the corner and the present arrangements are destabilised."
On Wednesday, British officials were insisting that the issue would not be discussed in L'Aquila.
And yesterday, a White House spokesman at the summit said: "I don't see that there is movement away from the notion of the dollar being that currency."
Yet diplomats at the summit said that during yesterday's talks, countries including Brazil, India and Russia signalled an interest in one day moving away from the dollar.
Telegraph 09 July 2009"Be Nice to the Countries That Lend You Money"
‘Brutal’ Brown sacrificed party chief
GORDON BROWN is today accused of sacrificing the most senior official in the Labour party for personal political advantage in a devastating account of the “brutal” culture he presides over at No 10.
Peter Watt, Labour’s former general secretary, has spoken out with the aim of demolishing any residual claim by the prime minister to the moral high ground.
“Publicly, Gordon talks about values and his moral compass, but actually the way he conducts himself behind the scenes is anything but that - it’s brutal,” said Watt, who played a pivotal role in the handover of power from Tony Blair to Brown.
His intervention comes a month after The Sunday Times disclosed the existence of a smear operation run from Downing Street by Damian McBride to punish particular government ministers and destabilise the Tories.
Watt was cleared last week by the Crown Prosecution Service over a scandal involving donations to Labour through third parties.
He faced charges of breaking electoral law after signing off £600,000 in donations from David Abrahams, a property tycoon, through proxies.
He claims that Brown:
- Telephoned him to commiserate when he resigned, promising to “look after” him, but betrayed him within 24 hours by falsely suggesting that he had broken the law, triggering a police inquiry ...
Times 10 May 2009Man who ran Labour Party reveals chaos at No 10
Gordon Brown’s bank boss Glen Moreno had links to tax cheats
THE financier who has been appointed to protect taxpayers’ money in Britain’s bailed-out banks is a former trustee of a secretive Liechtenstein bank accused of facilitating massive tax evasion.
Glen Moreno, who chairs the powerful body that oversees the government’s £37 billion shareholding in the banks, was paid hundreds of thousands of pounds during a nine-year association with Liechtenstein Global Trust (LGT), a private bank based in the tax haven.
The disclosures are an embarrassment for Gordon Brown, who last week criticised offshore tax havens and called for international action to stamp out tax evasion.
“Advising the rich to exploit tax loopholes is unpatriotic,” the prime minister has said in the past. The bank was strongly criticised by name by President Barack Obama when he was a senator.
LGT, owned by the Liechtenstein royal family, became the subject of international scandal last year when a former employee blew the whistle on its dubious practices.
Moreno quit as a trustee last April, two months after it was first reported that financial details of thousands of clients had been passed to the German tax authorities by Heinrich Kieber, a bank technician.
HM Revenue & Customs was reported to have paid £100,000 for the information and said last night that it was investigating about 150 British clients of LGT.
The bank was condemned in a report last summer by a committee of the US Senate, whose members included Obama. “Ordinary Americans pick up the slack for tax cheats who hide assets in offshore tax havens, often with the help of foreign banks like . . . LGT,” Obama said ...
The Times 08 February 2009Bail-out chief under fire
Where the missing billions go
UK Financial Investments Ltd
Brown warns banks on bosses' pay
The Prime Minister has insisted there should be "no reward for failure" at banks which have had to be bailed out by the taxpayer.
Gordon Brown was speaking after reports Royal Bank of Scotland is considering awarding large bonuses, despite expectations of huge annual losses.
However Mr Brown stopped short of saying the government would impose a salary cap on rescued banks ...
BBC NEWS 06 February 2009Bankers' pay will be curbed one way or another
Some of RBS's banking stars (there are still such creatures) would feel unfairly treated if bonuses were banned, and would quickly seek employment with rival banks.Bonuses may be bitter pill for public, but ...
That could weaken RBS further and arguably make it harder for the Government ever to sell its 68 per cent stake and recoup its £20 billion ...
RBS may argue that if it is to remain a force in investment banking it will have to play by the rules of the City ...
Lower down the bank hierarchy a bonus ban would provoke fury from branch staff. Many see the annual March bonus as virtually automatic and there will be a bust-up with banking unions if it were scrapped ...
Northern Rock paid out bonuses averaging £2,000 for each of its remaining 4,500 workers last month, arguing that they deserved it because of its success in beating targets to repay Government loans ...
The Times 05 February 2009Darling vow on City bonus rules
Bankers bag £7.6bn in bonuses
Bank profits and bonuses: a checklist
Big bonuses? It would be wrong to stop paying them'
Banks defend bonus culture as profits jump
Rescued bank's traders scoop £1.8bn bonuses
RBS to reward staff in spite of losses
A year after the crunch, it's boom time again for bankers
FSA bonus rules scaled back on fear of City exodus
Minister attacks banking bosses
Brown unveils plan to create 100,000 jobs
Gordon Brown today unveils ambitious plans for a 1930s American-style programme of public works to ease the pain of recession by creating up to 100,000 jobs.
School repairs, new rail links, hospital projects and plans to usher in a new digital age by investing in superfast broadband will be used to keep unemployment down.
The plans will also be used to tackle climate change, by means of investments in eco-friendly projects such as electric cars and wind and wave power that would also create jobs ..."I want to show how we will be able, through public investments and public works, to create probably 100,000 additional jobs over the next period of time in our capital investment programme - schools, hospitals, environmental work and infrastructure, transport," Brown said.The programme will be funded by new money drawn partly from reserves.
"We are not going to stand by and allow nothing to be done when people are facing difficulties."
One priority will be jobs in digital industries, while 30,000 jobs will be in school repairs in an effort to help private construction firms ravaged by the downturn ...
He is also studying 10 specific projects on alternative energy sources. He denied that the recession would see green issues shelved, adding: "Rather than pushing the environment into a lower order of priority, the environment is part of the solution." ...
The government will also shortly unveil a payment holiday scheme for people struggling with their mortgages after redundancy ...
The Observer 04 January 2009PM defends handling of downturn
Brown unveils crisis jobs package
500,000 new jobs for British workers
Brown ready to risk billions on debt insurance
Taxpayers face years of debt ...
New bank bailout planned
Brown urges banks to 'come clean'
Final denouement approaches
Barclays dives as global turmoil hits banks
Governments eye new tools for credit crisis
Darling wrong on recovery
Britain well placed to ride out credit crunch, Darling tells TUC
Higher borrowing is 'responsible', insists PM
Gordon Brown insisted today that higher borrowing to shore up the economy was the "responsible" thing to do.
After criticism from economists of the Government's plan to spend its way out of the downturn, the Prime Minister said debt could not be brought down until tax revenues recover.
Speaking at Imperial College in London, he said the only way for Britain to benefit from the "new global age" was to invest in the necessary long-term decisions.
Now was the wrong time to slash investment in areas like education, training, energy efficiency or tax cuts for hard-pressed families, the premier said.
"That means that the responsible course of government is to invest at this time to speed up the economic activity," he said.
"As economic activity rises, as tax revenues recover then you would want borrowing to be a lower share of your national income.
"But the responsible course at the moment is to use the investments that are necessary, and to continue them, and to help people through very difficult times.
"I think that's a very fundamental part of what we are doing." ...
Independent 27 October 2008Darling set to scrap 'golden rule'
Darling under pressure to avert meltdown of sterling
Britain may need zero per cent interest rate
Compexity-Brown's Tax credits
Brown's record is a poor advert for centralist-style planning, made worse by his apparent prediliction for complexity in all things
Blogger Urism attacks both New Labour and the TUC for the increasing unfairness inflicted on those on low pay:
Urism Sep 06 08, 12:00pm
Why exactly do Labour supporters think that taking a windfall tax and redistributing it to the unemployed and pensioners won't harm anyone else?
The difference in wage between someone able to claim tax credits and me is just £1.65 a week. So Labour intends to give £150 to the tax credit claimant and I can freeze. Is that the logic?
So immediately, as a low paid worker who will be punished under this scheme, Labour have lost my vote.
There are millions of 'me' out there. People living with very low wages who qualify for absolutely no help.
Labour constantly bleats on about a 'fair' society and 'fairness' in their policies.
So far they have increased the taxes of the low paid, causing greater hardship and with a windfall tax on energy companies, would redistribute the money to those that they deem to be 'poor' which leaves out huge swathes of people who cannot afford this subsidy. What exactly is 'fair' about that?
As for the TUC, where have they been over the last ten years while Labour has positively welcomed the erosion of a living wage.
Where were they when Brown increased the taxes of the lowest paid and gave the money to the middle classes? Where were they when the absolute discrimination against older workers started and why aren't they commenting now?
Where are they when kids earning just £13,000 a year are having to pay for their own training? Where are they when kids come out of University with thousands of pounds worth of debt and have to take entry level work on £12,000 a year?
The list of grievances from ordinary people against this regime is never ending, there isn't enough space anywhere to write it down and the TUC have done zero... nil.... zilch....apart from line their own pockets hand in hand with Labour.
Guardian 06 September 2008Software glitches at heart of £2.8bn tax credit fiasco computing.co.uk 28 Jul 2008
Brown's tube policy costs taxpayer £2bn Guardian 09 February 2008
Tax credits still being overpaid BBC NEWS 25 April 2006
Tax credits fiasco costs £15m Guardian 22 July 2005
'Prosperity for Britain'
[Brown knows something the rest of us don't: oil reserves are infinite; there's no water crisis; the trickle-down theory of wealth distribution is working just fine]
In a speech to the CBI on Thursday, Brown will underline the depth of the global economic problems, which demand a global response. ...
But Brown will say that Britain is well-placed to weather the downturn:"In the next 20 years the world economy will double in its size and wealth and we have a great opportunity to win new business, new jobs and prosperity for Britain."Guardian 01 September 2008
I'm the right leader, says Brown
Gordon Brown has said he is the right person to take the British economy through "difficult times" - and said that it is "more resilient than most".
The prime minister, who is at the G8 summit, said his experience of economic matters and negotiating deals with world leaders was very important.
A survey of businesses suggests the UK is facing a serious risk of recession.
But Mr Brown said the economy was still growing, with "very high" employment and comparatively low interest rates.
Earlier a British Chambers of Commerce survey of almost 5,000 businesses suggested that the UK was facing a serious risk of recession ...
Business minister Baroness Vadera ... told BBC Radio 4's The World At One:
" ... independent forecasters ... all agree that we are going to have growth but we are going to have a downturn."
BBC NEWS 08 July 2008
Gordon Brown's 10p tax fiasco to cost another £1 billion
The [Treasury Select Committee] report ... highlighted that the vast majority of the Government’s 10p rescue package – £2 billion out of £2.7 billion – had gone to people who had not even lost out from the original tax change.
The committee also called on him to find £1 billion each year to compensate the more than one million losers who had yet to be compensated. ...
The committee confirms that Mr Brown would have known when he made his 10p decision in 2007 that there would be losers. Ministers took decisions on the basis of a “thorough distributional analysis”, according to Nicholas Macpherson, Permanent Secretary to the Treasury. ...
John McFall, Labour chairman of the committee, said: “The May 13 measures, whilst welcome, do not go far enough. There are still 1.1 million losing households, many of whom are on low incomes and who are being hit hard by rising food and fuel prices and the slowdown in the economy ...
The Times 28 June 2008Gordon Brown's 10p tax fiasco to cost another £1 billion
Darling’s desperate tax giveaway
10p tax deal 'helps only one in five'
TUC leader slams Brown over 10p rate
Low-paid hit by tax changes - MPs
IFS: 18 million families set to lose
Metronet
Brown's tube policy costs taxpayer £2bn
Gordon Brown's ill-fated determination to impose a public-private partnership agreement on the London Underground will cost the taxpayer £2bn.
The Department for Transport yesterday agreed to pay off the debt owed by Metronet, the company charged with a £17bn upgrade of the tube network, which collapsed into administration last year. Transport for London, the organisation that runs the network on behalf of the London mayor, was liable for Metronet's borrowings and faced having to cut back on important maintenance work if it was left with the bill. The DfT said yesterday it would meet the £1.7bn cost of settling Metronet's debts, plus a further £300m to cover its administration costs.
The move is an embarrassment for the prime minister, who pushed through the PPP as Chancellor of the Exchequer in 2001 despite opposition from Ken Livingstone, London's mayor.
The transport secretary, Ruth Kelly, said TfL needed the £2bn. "The settlement gives London Underground the resources needed to manage Metronet's administration and support moving toward a more stable long-term footing and continue the work to maintain, renew and upgrade the Underground," she said. ...
The Guardian 09 February 2008Mayor hits out at government over £1.4bn gap on tube
Metronet's under-delivery was 'pathetic'
Anger over Metronet bosses payoff
Taxpayers could get £2bn bill
Taxpayers' £750m is used to keep Metronet alive
It's about time Labour made its mind up about private money and public ownership
Metronet tube overspend escalates to £1bn
Metronet guilty of 'inexcusable failures'
Metronet faces £750m bill
Brown must rid the tube of these calamitous contracts
While the row over the taxation of private equity executives rumbles on, remarkably little has been written about the role of private equity companies in the demise of final salary pension schemes. The roll call of pension schemes which have hit the buffers, after having been taken over by private equity firms, is worryingly long – BUSM, Texon and Dexion. (Apax Partners), UEF (Prudential Ventures), UK Safety and Totectors (Alchemy Partners), Allied Steel & Wire (Candover), Samuel Jones (Rutland Trust) and UPF (Phildrew Ventures) - to name just a few.
In many instances, the incoming private equity firm piled up debt and shifted pension fund liabilities into subsidiary companies, only to pull the plug subsequently, leaving the subsidiary overwhelmed by debt and the pension scheme in deficit. Given that many of these firms collapsed before 2005 when the Pension Protection Fund came into force, the members and pensioners of these schemes were left at the mercy of the hopelessly underfunded Financial Assistance Scheme.
While extra funding has been promised for the FAS, this scheme will still not provide benefits at the same level as the PPF. Furthermore, its failure to date to deliver promised assistance in a timely manner does little to inspire confidence in its ability to help these people in the future. Our new Prime Minister has promised to “listen to the people” and “mend old wounds.” Perhaps he would like to start by addressing the plight of the FAS members and calling the private equity hounds to heel.
Find.co.uk + Blogs by Paul Gill and Peter Lapinskas
Pension Credits
Up to 1.6 million pensioners are missing out on Gordon Brown's pension credits, even though they are entitled to the money ... The Commons public accounts committee said that the Department for Work and Pensions (DWP) had failed to meet its target to pay the credit - introduced by the Chancellor in 2003 - to three million households by 2006.
Although the take-up rate of between 61 and 69 per cent was better than for its predecessor, the minimum income guarantee, about a third of eligible pensioners were still missing out. ...
Telegraph.co.uk 17 May 2007
Brown's New Deal on jobs a 'woeful failure'
Mr Brown ... claims to have slashed youth unemployment and transformed life for the poor. Despite Labour spending almost £2 billion on the New Deal, the number of people aged 18-24 out of work has risen by 70,000 to 505,000 since its launch in 1998. ...
Telegraph.co.uk 14 May 2007
'Private' Brown under constant scrutiny
Brown and Field's next disagreement was the new Winter Fuel Allowance. "No one told me," screamed Brown about the expensive consequences of his new system. "You were told, Gordon," protested Field, "but it's difficult to argue with you if you're shouting. Even the civil servants just give up and walk out." Treasury officials said that while he had a "good brain", Brown was overwhelmed if dealing with more than a single subject at a time. In their opinion, his mixture of arrogance and inflexibility converted every disagreement into a personal insult.
Tom Bower, Telegraph.co.uk 12 May 2007
Economists attack Brown's legacy
Gordon Brown will bequeath his Treasury successor a poisoned chalice of rising debt, rising inflation and low savings, according to a panel of economic experts.
In a report published today by accountants Ernst & Young, Mr Brown is said to be leaving the Treasury "on a high" of economic growth - but leaving the next chancellor presiding over a country "skating - not to say wobbling - on thin ice".
It warns that the UK - both nationally and invididually - is living beyond its means.
Mr Brown has joked that there are only "two types" of chancellor: those who fail, and those who get out in time. Today's authoritative report may back him up.
The Ernst & Young ITEM (Independent Treasury Economic Model) Club - which uses the Treasury's own economic models to draw up independent forecasts - warned that the benign macroeconomic climate of recent years has made both individuals and businesses "overly relaxed about risk", encouraging them to save less and borrow more.
And with interest rates predicted to rise to 5.5% next month, the club's chief economic adviser, Peter Spencer, voiced concerns over householders borrowing ever greater amounts.
"Homeowners have been under pressure from rising tax and utility bills, but all the indications are that they have kept spending as if it was going out of fashion," said today's report.
"The saving ratio has fallen back to just 3.7%, meaning that many households are borrowing to finance current spending."
Meanwhile, the state is also getting deeper into debt, with overall public sector net borrowing now expected to be £34bn in 2007-08, up from a projected £31bn in December's pre-budget report.
Prof Spencer said: "Many people are following the chancellor's lead and are borrowing to finance consumption.
"The UK's current deficit has reached 3.5% of GDP, which suggests that as a country we are close to the edge.
"Ultimately, we are all skating - not to say wobbling - on thin ice. There's a danger that we are slithering into complacency."
And he added: "Both as individuals and as a country we have borrowed a huge amount to support this growth. The bottom line is that we are all living beyond our means.
"In the short term, Mr Brown has resorted to borrowing for consumption. If the chancellor is forced to borrow so much when the economy's so sweet, what will happen when it turns sour?" ...
The club's report contained some good news for the chancellor and his eventual successor, rumoured to be either Jack Straw, Alistair Darling or Ed Balls. The report found that business investment, rather than household or government spending is now driving economic growth in the UK.
The report's prediction of 2.9% GDP growth for 2007 is above trend and well within Mr Brown's budget forecast of 2.7%-3.25%.
Inflation is predicted to fall sharply in the next few months as the impact of past energy price rises works through.
But the report forecast that this would not stop the Bank of England increasing the base interest rate for the third time since August from its current 5.25% to 5.5% when it meets in May.
The Guardian 24 April 2007
Massaging Inflation
Stand by for higher interest rates
Formally, consumer prices are up only 3.1 per cent on last year, enough to trigger the Governor of the Bank of England writing a letter to the Chancellor about it. But, of course, that figure is wrong. The new Consumer Price Index was brought in to harmonise our method of calculating inflation with that of other EU countries - it used to be called the "harmonised" index. It has been consistently lower than the old Retail Price Index, largely because it does not include housing costs. For most Britons, housing costs are quite important.
The RPI is up 4.8 per cent, the highest for a generation. That is the measure used by the Government itself to determine the interest it pays on its own index-linked securities, for its index-linked pensions, and for other index-linked contracts. It is also the measure used by pay negotiators. Even if you exclude mortgage interest payments from it, and I can see an argument for that, the so-called RPIX is up 3.9 per cent. That used to be the Bank of England's preferred measure - and it is the highest inflation rate of any major developed economy.
This raises two huge questions. What will happen to our interest rates, since higher rates are the only effective way of curbing inflation? And what does it say about our financial management more generally? ...
Lesson one is that the shift to the European harmonised inflation measure was an error. The target rate was cut from 2.5 per cent to 2 per cent when the move was made because it was reckoned to understate inflation by that amount. Actually, the understatement varies but had we stayed with the old measure it would have signalled the dangers much more strongly last autumn. Had the Bank moved rates up more urgently, it might have pre-empted the latest horror.
Lesson two is that focussing on a single (and flawed) measure of inflation is simplistic. What matters are the general inflationary pressures in the economy and, beyond that, the threat to economic stability that inflationary psychology creates. It is not the fault of the Bank that it is supposed to focus on this narrow measure: that is what the Chancellor has required it to do. But going forward, we need to figure out some way of broadening the Bank's brief.
Lesson three is that monetary policy and fiscal policy have to work in harness. At the moment we have a continuing and unplanned boost to demand from fiscal policy, for the deficits for the past five years have been consistently larger than originally forecast by the Chancellor. The Bank, by contrast, has been running an increasingly restrictive policy, though maybe not restrictive enough.
So the two horses - fiscal and monetary - have been pulling in different directions. A lot of the blame for current inflationary pressure should go down to the Chancellor, not the Bank of England. Had he stuck close to his original borrowing plans, and not puffed up the economy with huge increases in public spending, we would not have had such a strong inflationary boom. In a sense, home-buyers will have to pay higher interest rates because they are competing with others, including the Government itself, for scarce savings. ...
The Independent 18 April 2007Families stretched by inflation
'Middle class' inflation hits 6pc
Brown makes pledge to serve no more than one term
"Gordon is planning to do three years [to the next election] and four and then step down," said one of his closest friends. "That's seven years. That is what he says. You only have to look at Thatcher and Blair, who did 10 years. With today's 24-hour news, you don't get anything like 10 years before people turn against you. He knows that, and he won't make that mistake."
The Independent 18 April 2007
Questions for Chancellor over gold sales
Gordon Brown was under pressure last night to disclose what advice he sought when he decided to sell more than half the UK's gold reserves.
Both the Conservatives and the Liberal Democrats called on the Chancellor to explain the details behind the controversial sales, which happened between 1999 and 2002. The calls came as leading accountants calculated that the decision had cost taxpayers £2 billion because the bullion was sold when gold was at a 20-year-low.
Since then the price has nearly trebled. Yesterday, reports suggested that senior executives at the Bank of England warned Mr Brown that the decision was a mistake. ...
Telegraph.co.uk 16 April 2007Brown's gold sale cost UK £2bn
PFI: A gauntlet for Brown
The claim that public-sector schemes have average cost overruns of 73%, and time overruns of 70%, is constantly repeated to support the claim that PFI is value for money. But on closer examination it transpires that the only figures the government is willing to release derive from false data commissioned by the government from the PFI industry.
When a PFI project is contemplated, Treasury rules require it to be compared with a notional non-PFI project, known as the public-service comparator, and to be shown to be "value for money".
But in determining the value of the public-service comparator, the Treasury requires it to include cost and time overruns that it claims are typical in the public sector. On this basis, more than 800 PFI deals have been signed, accounting for around £54bn of investment and more than £200bn of long-term debt repayments.
But of the five studies cited by the Treasury as proof of PFI efficiency, only one contains any data.
Two reports by the National Audit Office were based on interviews with managers of PFI projects, and the authors themselves conclude that it is not possible to judge from such evidence how the method of procurement affected the results.
A third study by a private company contains no comparative data to support the claim.
A fourth, by the Treasury, remains under wraps, and repeated freedom of information requests have been refused on the grounds that "disclosure would be detrimental to the commercial interests of the specific PFI contractors".
The only report that contains any comparative data was commissioned from a consultancy and engineering firm called Mott Macdonald.
This study is very curious.
Full cost and time overrun details are provided for just three PFI schemes, although at the time of the study 451 PFI deals had been completed. Mott MacDonald claimed that it had difficulty getting data on other projects.
The report then compares these three with 39 public-sector schemes, although very little public procurement was going on at the time. What is more, of the 39 public-sector schemes, 20 are "non standard" - complex and difficult projects - whereas the three PFI projects are all standard.
You don't have to be a statistical genius to conclude that this is hardly comparing like with like.
Mott MacDonald also used different starting points when comparing cases.
They counted cost and time overruns for PFI projects from when the case was signed off, but they started counting at a much earlier stage for the public-sector projects.
Yet Mott MacDonald well knew, as consultants to the PFI industry, that one of the most striking aspects of PFI was that costs escalated between the initial tendering and the contract being signed off.
Take the Paddington hospital PFI scheme for example: the proposed cost rose in real terms from £411m in 2000 to £894m at the time of the scheme's collapse in May 2005. ...
The Guardian 11 April 2007
Treasury 'rigged' reports into success of private finance projects
Gordon Brown has been accused of making false claims that his flagship scheme to secure private finance for public sector projects provides good value for money.
A study by the University of Edinburgh of the Treasury's statements about the success of the private finance initiative (PFI) found that the evidence for the claims to be "either non-existent or false". ...
Researchers at Edinburgh investigated the Treasury's claim that 88 per cent of PFI projects were delivered on time and within budget while most publicly funded projects (70 per cent) are delivered late and 73 per cent cost more than expected.
Of the five studies cited by the Treasury, they found two were based on National Audit Office reports which concluded it was not possible to judge how the procurement method affected the results. A third contained no comparative data and a fourth was withheld by the Treasury on grounds of "commercial confidentiality". The fifth report "artificially inflated" the cost of traditional public projects, according to the Edinburgh study.
Professor Allyson Pollock, who heads the university's Centre for International Public Health Policy, said: "Government ministers have repeatedly justified the controversial PFI policy in terms of its greater efficiency and value for money savings compared with traditional methods of public investment. It would appear that comparisons are rigged in favour of PFI and that Treasury policy is not evidence-based." ...
The Independent April 2007
Brown faces backlash over pensions battle
The furore ['Brown defied advice'] came as new figures revealed that the country's poorest pensioners failed to collect a total of nearly £2.5bn in pension credits last year. The figure underlined the difficulties faced by government initiatives to reform income support for the elderly. Many are either unaware they are entitled to pension credits or confused by the labyrinthine benefits system regarding access to the money, campaigners said.
'We are talking about the eldest, frailest, most isolated people in society. People who are in bad health and fearful. They don't think they qualify for entitlements and, even if they do, the forms are not simple. They get put off,' said Mervyn Kohler of Help the Aged, who added that up to 1.5 million people could be affected.
The Observer 01 April 2007
Pension timebomb – Brown defied advice
Documents that were released to The Times under the Freedom of Information Act show that officials told Mr Brown:
–– The lower paid would be worse off under the new rules
–– Pensioners due to retire would lose out immediately
–– Businesses would struggle to adjust to the change
–– It would cost pension providers £4 billion a year
–– Pension benefits would be cut
–– Shares could drop by between 6 per cent and 20 per cent
–– The value of existing pension funds could fall immediately by £50 billion
–– Local authority schemes would need topping up, leading to higher public spending
–– The Department of Trade and Industry would be “gravely concerned” about having to bail out pension schemes driven into insolvency ...
The Treasury only released the documents to The Times after being ordered to do so by the Information Commissioner. ...
The Times 31 March 2007HM Treasury: The disclosures are policy papers dating from May and June 1997
Brown's pension grab secret is revealed
Documents are political dynamite
Aide 'purged' from Treasury meeting
Gordon Brown faced fresh allegations of "Stalinism" after the senior official who admitted that three-quarters of low-paid workers did not claim a flagship benefit failed to make a scheduled appearance before MPs.
Mark Neale, the Treasury's managing director of budget, tax and welfare, had been due to appear alongside the Chancellor at a meeting of the Commons Treasury Committee yesterday. But Mr Neale, who admitted on Wednesday that 75 per cent of eligible workers - around 5.3 million households - did not claim the Working Tax Credit, was missing from the line-up with Mr Brown.
The Conservative MP Michael Fallon mocked Mr Brown, joking: "He seems to have been purged."
MPs challenged Mr Brown over Mr Neale's comments, but the Chancellor said that 100,000 claimants had signed up for the tax credit since the figures quoted by Mr Neale were compiled. Mr Brown said: "The idea that somehow low-paid people are losing out this year or losing out generally is completely wrong. They have the benefit of an extended Working Tax Credit if they are single or part of couples, as well as the benefit if they have got children of the Child Tax Credit."
But Mr Fallon said: "Accepting 20 million are better off, five million are worse off. If the economy is doing well, why should there be losers?"
The Independent 30 March 2007
A Very 'Atlantic' Chancellor
Chancellor says growth depends on public sector pay constraint
Growth in the economy will quicken over the next two years but the UK will have to accept deeper structural reform to meet the growing challenge of globalisation, the chancellor, Gordon Brown, will say tonight.
In his first set-piece speech on the economy since the budget in March, the chancellor will say that Britain will be able to shrug off global uncertainty only if public sector workers accept pay constraint and there are radical changes to transport and planning.
Gordon Brown's Mansion House speech
In 2003, just at the time of a previous Mansion House speech, the Worldcom accounting scandal broke. And I will be honest with you, many who advised me including not a few newspapers, favoured a regulatory crackdown.Mr Brown will tell the City's elite at the annual Mansion House dinner that growth will pick up from the 1.75% recorded last year and accelerate again next year.
I believe that we were right not to go down that road which in the United States led to Sarbannes-Oxley, and we were right to build upon our light touch system through the leadership of Sir Callum McCarthy - fair, proportionate, predictable and increasingly risk based.
I know Sir Callum is committed to reducing regulatory administrative burdens and the National Audit Office will now look at the efficiency and value for money of our system.
The city of London is showing us that Britain can succeed in an open global economy, a progressive globalisation, a Britain that is made for globalisation and a globalisation that is made for Britain ....
Guardian 22 June 2006
Treasury sources said the chancellor was increasingly confident the economy would meet his budget forecasts of growth of 2%-2.5% this year and 2.75%-3.25% next. On the economy, the chancellor will call for the stability provided by making the Bank of England independent to be widened to include stability in industrial relations, a competitive tax regime and light-touch regulation.
"I can assure you that through the vigilance of the Bank and our determination to ensure future public sector pay settlements are founded on our 2% inflation target, we will maintain our anti-inflation discipline," he said. "And even at a time of global uncertainty, government debt in Britain is lower than France, Germany, Italy, the US and Japan and growth in Britain is strengthening, with growth expected to be stronger this year than last, and stronger next year than this."
The chancellor's speech comes a day after it was reported that public sector borrowing reached a May record of £10.3bn, putting additional pressure on him to rein in spending over the rest of the year.
In a clear political message that he would not slow the pace of reform if he replaced Tony Blair as prime minister, the chancellor will point to forthcoming reviews of infrastructure, skills and planning. He will say the government intends to act upon recommendations, working with business to agree transport priorities and taking forward the proposals of Kate Barker, a member of the Bank's monetary policy committee, to make the planning system more responsive.
The Guardian 21 June 2006Gordon Brown's Mansion House speech - 27 June 2002