Peter Hain has resigned. This is not shock news, what is a shock is that up until today he was still in office. The man failed to declare over £100,000 in donations to his campaign for the Deputy Leadership of the Labour Party which were routed via a fake think tank that seems to have served no other purpose, and which therefore suggests a degree of premeditation at least. His defence was pressure of work, or as Gordon Brown put it ‘incompetence’, neither of which would be allowed by any judge in the land as a reason for breaking the law. Sill, he clung on to office, despite little or no support from within the Labour Party, never mind from anyone else. Brown, typically, couldn’t decide to sack him, so he limped on until today when the Electoral Commission’s decision to refer the matter to the police finally convinced him that the game was up.
The declaration of donations and the associated administration has become something of a stick used by politicians to beat each other, but the law has a serious purpose. Without transparency on where a politician, and an officeholder in particular, obtains the funds for political purposes then there is always the danger that a decision can be taken to favour a party for reasons other than the public good. More than £100k from anonymous donors hidden behind a front organisation would have meant that there were people to whom Hain was beholden unbeknownst to anyone but Hain and his funders. This is not a technical breach and he should never have made such an arrangement and should have been turfed from office as soon as the scheme was uncovered.
A criminal investigation could be bloody, especially as the police are so keen on Labour at the moment.
Sunday, January 20, 2008
So, for all of the tough talk the government have caved in and have now offered an absurd level of public financial support for a private sector bailout of Northern Rock. Let us not forget that an offer by Lloyds TSB when the crisis first broke was rejected out of hand, even though it entailed a much lower level of public risk than what it is now on offer. Now they are going to guarantee all of the Rock's exposure to the Bank of England as some sort of long-term bond issue, which drops it neatly on top of Britain's existing public debt. This was already running perilously close to the limits set by the government and this breaks it completely. So what? Well, it will affect Britain's sovereign debt position, because the cost to our country of borrowing money is very much dependent on the UK's existing level of indebtedness. That means a bottom-line cost to our taxpayers, and for years. More public debt also reduces the government's room for manoeuvre in the short-term, and let us not forget that we have a real danger of either reduced growth or outright recession in 2008. Basically, the government position means that of all of the other potential commitments for public money, it has decided that Northern Rock is the most important. That is patently absurd. What is really going on is that Gordon Brown has bottled it again. This time he is too scared to take on Northern Rock and shut it down, which is the only way the public's financial position can be safeguarded. What they are proposing makes no sense in business or public policy terms, unless you want to avoid short-term political pain. Once again the country's interests are sacrificed to manage tomorrow's headlines. And Brown was meant to be different.
Posted by Steve Horgan at 2:37:00 p.m.