Enron Labour

Allow me to introduce the finalists for Labour's Got A New Leader*

Today's revelations of Labour ministers flouting the rules governing the proper use of taxpayers' money ought to shock us.

"Labour ministers rammed through hundreds of millions of pounds of spending on pet projects before the election against the explicit advice of senior civil servants. Senior mandarins throughout Whitehall resorted to the ‘nuclear option’ – writing to demand written orders from ministers because they disapproved of the decisions."

According to Jonathan Baum, General Secretary of the First Division Association, which represents senior civil servants (and of which Tyler was once a member):

‘This is very much a nuclear option in government departments. ...it is very clear that the permanent secretary was very concerned about the spending decision but was overruled by the minister. When a permanent secretary asks for the letter of direction from a minister it is because they feel a serious decision is being taken which they feel is not right.’

We don't yet have all the details of precisely which decisions were rammed through like this, but the bottom line is clear enough - Labour ministers abused their power in a desperate last-ditch attempt to buy votes... with our money. Shocking. Absolutely jaw-droppingly breath-takingly shocking.

And yet... are we really shocked? Can we any longer be shocked by what that appalling bunch did during those 13 abysmal years?

From the very start they lied and cheated their way through office. They systematically abused our trust with their Enronised debt figures, their bubble economy, their illegal war, their fiddled dumbed-down exam results, their fudged crime statistics, their gross distortions over immigration, and their unbridled pillaging of the public purse.

As the indispensable Jeff put it last week (and please do read it if you haven't already):

"Unemployment is higher today than in 1997, as are taxes. The pound is worth less than 13 years ago, as are many private pension schemes. Personal insolvencies are at record levels. Worst of all, the state is borrowing one pound in every four that it spends, and our collective debt is set to double by 2014-15 to about £1.4 trillion, equal to one year's GDP.

The "success" of New Labour's economic expansion was a sham, based on a simple formula: spend more than we earn; pass off consumption as investment; wallow in self congratulation. Through the "boom" times of 2003-2007, all of Mr Brown's budgets involved massive borrowing. He told us we were getting richer, while in effect making us poorer.

In those five years alone, he clocked up £160 billion of debt. These are harsh, unavoidable facts. The legacy of that profligacy will bear down on British taxpayers for generations. As Niall Ferguson, professor of history at Harvard, has concluded, Mr Brown's stewardship of the economy was a "disaster".

But look, we are where we are. It's too late to wish away 1997. The main thing now is this: when the Brothers Millipede next appear arm in arm on the stage, glottal stopping in the limelight, and singing their saccharin ditties of progressive consensus and fairness for all, just remember.

Remember that Labour always always wreck our economy. Remember they always wreck our public finances, and they always leave a gigantic mess that someone else has to clear up and we have to pay for.

There are no exceptions. From Ronald McDonald, to Jerusalem Clement, to Wislon, to Uncle Jim, to Bliar, to Brown, it is always a disaster.

So please - one last time - never ever give them another chance.

PS Today's inflation numbers are once again very unsettling:

All measures of inflation are up, and RPI inflation is now running at 5.3%, the highest for nearly two decades. The Bank of England may still be relaxed about this, but we most certainly are not. Anyone on a fixed income - which these days includes pretty well everyone working in the private sector outside the banks - is being squeezed dry. And as for savers on their 0.5% interest rates, they've been so squeezed they're now little more than a dessicated husk.

And sterling? Well it paused for breath today, but it still looks very groggy. As we blogged yesterday, getting a grip on our public spending problem will be good for sterling in the longer term. But in the short-term it may actually make sterling a bit soggy since lower spending allows the Bank to keep interest rates lower for longer. Of course, if the Bank were suddenly to realise the jolly old inflation genie was out of its bottle again, then rates would go up and sterling would firm.

So what happened to the point that sterling would collapse if we didn't cut spending? Well, it's still there. If George doesn't cut spending, HMG will have to borrow more, a chunk of it from abroad. Which is fine as long as investors remain confident that they'll get repaid, and as long as we give them a good rate of interest. But if for some reason, confidence cracked - like for example, the markets suddenly got the crazy idea the coalition couldn't actually agree on spending cuts - then there'd be a rush for the exit. The point is that currencies are driven by a whole raft of different pressures, and they are just about the least predictable of all the key asset prices: someone once described them to Tyler as "the balancing residual in the global financial system". But what we do know from our own experience is that confidence is key. Which is why these cuts are vital to the value of sterling.

*Footnote Talking of Enron, did you see that the award winning (here) British play of that name (pic above) has just bombed on Broadway. It closed after two weeks losing an estimated $4m. The British theatre establishment are aghast, blaming those low-brow insular Yanks for not appreciating good art. Another explanation goes along the lines of US audiences not being prepared to stump up $120 a seat to watch a bunch of anti-capitalist anti-American propaganda cooked up by a state-funded theatre company from an irrelevant socialist country thousands of miles away. And come to that, who said it was OK for my taxes to be used to put on the play in the first place? If people want to watch anti-capitalist anti-American propaganda, fine. But they should pay for it themselves.

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www.gudanggrosiran.com Categories: deceit, inflation, new labour

NuLab - The Movie

No time for a proper blog - too much canvassing.

But we do need to watch and save this terrific Tory epic on NuLab's 13 appalling years. It's all there to remind us.

And while we're at it, let's take a few minutes to peruse the Sun's Dossier of Labour Shame.

While footslogging along the campaign trail we were trying to boil down their record to just three words. Setting aside a couple of thousand entirely appropriate obscenities, we eventually settled for:

• Arrogance
• Deceit
• Incompetence

Never ever elect these dreadful people again.

What's that? All politicos go the same way?

Well, yes, you do have a point.

But at least with the Tories they start from the right place. That big government isn't the answer to everything, that choice and competition are vital in our public services, and that personal responsibility is key to a healthy society.

Which is why Tyler is out 24/7 canvassing for them.

May we urge you to watch the movie and join us.

PS And yes, assuming Cam wins, we will be on his case. We may be working for his election, but that most certainly doesn't mean we then close our eyes for five years while he simply gets on with it. We need him to deliver on those traditional Tory values.

PPS How many of those dreadful people in the vid do you reckon will end up as Lords? Mandy's already got his of course, but Bliar, Brown, Blunkers - they'll all be there. And My Lord Prezza of Gross has a ring to it. Why do we put up with that, again?

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www.gudanggrosiran.com Categories: new labour

Labour's Legacy Of Misery

We've blogged the Misery Index before. It was first devised when Labour last had a go at wrecking our economy, back in the 70s. It comprises the sum of the annual increase in the RPI and the unemployment rate, which are two key statistics in gauging economic misery.  

The latest reading has pushed the index up to 12.4%, comprising 4.4% RPI inflation and an 8% unemployment rate.

So they really have done it again. When Labour came to power, the index was running at 10% and falling. It is now 12.4% and rising.

And today's unemployment stats show quite clearly that Brown's apparent miracle of stabilised employment in the teeth of recession was no more than a cruel illusion. And the unemployment rate of 8% compares to the 7% they inherited.

What a disaster.

PS Tyler lunched with a friend who has now completed his contingency arrangements to bail out on 7 May. He has a private pilot's licence, and even if the air space eco police have again closed us down, he's off. He reckons remaining here with Brown still at the controls will be far more hazardous to his health than any conceivable cloud of volcanic ash. But he'll need an early start - our guess is that the runways could be pretty packed that day.

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www.gudanggrosiran.com Categories: 2010 Election, inflation, new labour, Unemployment

Busted

I dare you to watch (you'll need to keep a sick bag handy)

Do you remember 1997?

Of course you do. Who could forget that brave new world? A new day had dawned, had it not. A new leader, a new beginning, and a new Chancellor. A Chancellor who admonished his debt-addicted predecessor thus:

"The Chancellor is first and foremost the guardian of the people's money."

Yes indeed, ladies and gentlemen - the People's Money. The money that belongs not to the selfish grasping rapscallions who earned it, but to The People.

"During the 1990s the national debt has doubled. This year alone the taxpayer will pay out £25 billion in interest payments on debt, more than we spend on schools. Public finances must be sustainable over the long term. If they are not then it is the poor, the elderly, and those on fixed incomes who depend on public services that will suffer most. So, as with our approach to monetary policy, so in fiscal policy: we will now establish clear rules, a new discipline, openness, and accountability.

My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation.

My second rule is that, as a proportion of national income, public debt will be held at a prudent and stable level over the economic cycle. And to implement these rules, I am announcing today a five year deficit reduction plan.

Together, these rules and this plan will ensure a historic break from the short-termism and expediency that have characterised the recent fiscal policies of our country. As with our monetary policy, our fiscal policy will be all the more credible for being open and accountable."

Yes, that really is what he said.

And here we are 13 years later, with debt that has already doubled again, and which is set to double again by the end of the next parliament. And debt interest payments that within a year or two will again exceed the hugely increased schools budget.

As for ensuring "a historic break from short-termism and expediency", he did that all right. Entirely disregarding short-term considerations such as red signals, and matters of expediency such as staying alive, he cranked the controls to max and slammed us into the buffers at speed. From where recovery will be a very long-term undertaking indeed.

Of course, Brown also made a number of other ludicrous pledges during those first golden months. And one of the central ones was to lift the UK's productivity levels up to those of our more successful competitors. As he put it in his 1998 budget:

"..over the next few years we must seize this opportunity - by challenging ourselves to lift our productivity in each and every industry towards the levels of the world's best...

Breaking free from old ideas of state control and crude laissez-faire, our new ambition for Britain must be... to implement for our country a medium term strategy for growth."

Not the failed Wilson National Plan, you understand, nor the failed Callaghan industrial policy with its National Enterprise Board. No, a medium term strategy for growth - something brand new and whizzo and totally 21st Century. Which is how we got all those incredibly complex and expensive arrangements like R&D tax credits.

So how do you reckon it's worked out? How do you think we've done in the international productivity league tables under Labour?

As it happens, the ONS has recently given us an update. And needless to say, it doesn't look good.

Here's the summary chart, showing UK output per worker relative to G7 average (ex UK). As we can see, despite all the huffing and puffing - and expense - there was virtually no improvement between 1997 and 2008:

Now, you might say thank God. At least Labour didn't make productivity worse.

But you should note that the ONS numbers only go up to 2008, and we know that UK productivity fell during 2009. In fact, according to the ONS itself, output per worker fell by 3.1% in 2009 compared to 2008. So watch this space.

It really is amazing how apparently intelligent people can still recall 1997 with such fond memories (eg Victoria Coren on last night's Question Time). 13 years of Labour deceit and wishful thinking have left Britain crumpled up in a busted heap. Crushed under a pile of debt and economically prostrate.

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www.gudanggrosiran.com Categories: Gordo, new labour, productivity

Old New Same Old Labour

In another 5 years they'll have control of the police too

Once upon a time you knew where you were with Labour. They spent shedloads of your dosh on half-baked social engineering projects undermining the social fabric, they wrecked the economy, and they were hostage to the unions.

Then Old Labour got replaced by New Labour. They spent shedloads of your dosh on half-baked social engineering projects undermining the social fabric, they wrecked the economy, and they were hostage to the unions.Very confusing.

So it's good to see New Labour replaced by Same Old Labour. They spend shedloads of your dosh on half-baked, etc etc.

Labour's financial dependency on the unions stinks. The unions fund the party, and the party gives the unions millions of your money in the form of various douceurs such as the £7m so-called Modernisation Fund.

Even more damagingly, the party also gives the unions a whole raft of workplace regulation - like statutory paternity leave - that imposes a huge cost burden on business (eg the notorious Warwick Agreement, under which Blair gave the unions increased holiday entitlements, and they gave Labour £8m to fight the 2005 election campaign).

Of course, post-Thatcher, the big unions are now mainly confined to the public sector. We've blogged this many times (eg here), but here's the key chart showing how union density (ie the proportion of employees who are union members) is nearly four times higher in the public sector compared to the private:

Unsurpisingly, the public sector's strike record is much worse than the private sector's:

The TPA has just published an updated analysis of this strike record relative to numbers employed in each sector. They find that the average public sector worker is 15 times more likely to strike for a day than his counterpart in the private sector.

BA is one of the few big private companies with high unionisation, reflecting its origins as a nationalised industry. But there the similarities with the public sector end. Unlike our Old-New-Old Labour government, BA management have made it quite clear they are prepared to take the unions on.

And take them on they must. According to Tyler's correspondent airside, BA cabin crew are ludicrously overpaid relative to industry averages. Judicious exploitation of allowances can apparently bring BA long-haul cabin crew up to £70 grand pa, which is simply not sustainable in these straightened times.

Indeed, it's no more sustainable than the existing pay and conditions of our unionised public employees. As we've blogged before, whoever wins the next election will have to prune the public sector paybill drastically. It's now running at 15% of GDP, and must be cut. Some combination of redundancies, pay freezes, and increased employee pension contributions, will have to be imposed.

Now, does anyone see Bottler Brown suddenly turning into Willie Walsh?

PS So even the Big Government European Commission reckons Labour's budget plans are wildly irresponsible. They say “The fiscal strategy... is not sufficiently ambitious and needs to be significantly reinforced. A credible timeframe for restoring public finances to a sustainable position requires additional fiscal tightening measures beyond those currently planned.” We'll take a closer look at the EC report later, but this is a pretty clear vote of no-confidence, and sterling has already taken another downward lurch.

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www.gudanggrosiran.com Categories: new labour, unions

Cuts? That's Not A Cut

So Gordo has done a complete U-turn (see here for excellent ConHome vid). He always promised Labour investment, but now he's delivering Labour cuts.

Except that all he actually said was:

"Labour will cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets. But when our plans are published in the coming months people will see that Labour will not support cuts in the vital frontline services on which people depend."

Hmm.

Costs, inefficencies, and unnecessary programmes - they don't sound much like the kind of the cuts the rest of us are talking about. And they don't sound much like the kind of cuts that would eliminate our £80-£150bn fiscal black hole (eg see this blog).

As all the serious cuts proposals tell us, squeezing the public sector pay bill will be absolutely central to any meaningful programme. But union-funded Labour absolutely cannot undertake such a squeeze. Period.

We are right back to 1979. Labour cannot confront the public sector unions, and the public sector unions - entirely understandably- will not accept a serious squeeze on their members.

At least we only have another 260 days to go.

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www.gudanggrosiran.com Categories: cuts, Gordo, new labour