Sunday, November 23, 2008

Labour's VAT cut won't work

It is rumoured that Labour will be proposing a 2.5% VAT cut tomorrow. This will no doubt lead to nice soundbites, but will it work to help the economy? Well, the general problem with fiscal stimulus, as with any measures that affect a system the size and complexity of the UK economy, is the lag between action and effect. It is known, for example, that interest rate changes take at least 3 months before they have any discernible effect, and up to 18 months to have their full effect on the economy. So, we are actually still living with the Bank of England's policy as it was over the last two years, and their recent handbrake turn is something for mid-2009, not today. It is similar with changes to taxation as they take time to work through people's incomes and affect their confidence and economic decision-making. So, a key factor in choosing taxation changes to stave off or ameliorate recession is how quickly the change inserts itself into the decision cycle. Reducing VAT is a bad choice simply because it does not immediately connect with the consumer. Prices may come down, but not in any uniform and easily discernible way, and it will be some time before people feel that they have any more money in their pockets to spend, which is the point. Reducing VAT also does nothing to affect employee retention, which was the Conservative proposal.

What the government should have done is reduce the tax burden on small business, remember that a rise in Corporation Tax for small business is still planned though there are rumours that at least may be postponed. What they really should have done is reduce income tax, because that is an unequivocal rise in personal income that the consumer would immediately notice, and so the lag effect would be reduced.

Tax cuts should have been matched by savings of course, but, hey, this is a Labour government.

New Labour Bombshell

This sums it up very nicely:

Thursday, November 20, 2008

BNP Membership List online

Someone has put the entire BNP membership list online. On the face of it this is a gross breach of Data Protection law, and both the BNP and the perpetrator are responsible. The BNP have a duty to protect the personal information of their members and they have clearly failed. Whoever leaked it has ridden roughshod over the privacy of thousands of individuals. Both could be prosecuted or be subject to action from the Information Commissioner.

The information also throws up an insight or two on the BNP's support base, which is summed up in an article on Labourhome entitled 'The BNP IS Labour's problem'. Basically, if you have a predominately Labour-voting area then you get BNP support. Conservative areas tend to reject them.

By the way, if you want to check out the list then it would be irresponsible of me to tell you to go and look on Wikileaks.

Sunday, November 09, 2008

Tax cuts?

Following Barack Obama's win in the US on a tax-cutting platform, there are rumours that this formerly taboo subject is coming to British politics. According to the Mail, David Cameron will be unveiling something of this ilk on Tuesday. Labour actually have more scope for this now that they have decided that our children can pick up the tab for anything they want to spend. Expect them to steal any policy pronto.

Brown bounce - Conservatives 13 points ahead

The Telegraph has a poll today that puts the Conservatives 13 points ahead of Labour. Data for the poll came before the Glenrothes by-election, but that result needs a bit of perspective. It was a safe Labour seat. The major challengers were the SNP, in power in both the unpopular local Council and the Scottish government, and they ran the local Council leader of said unpopular local Council as their candidate. There was also something else: the SNP's key policy is independence for Scotland, pointing to the supposedly successful Scandinavian economies. That played pretty well during the late boom, but now with Scotland's banks baled out by the Bank of England and Iceland demonstrating that a nation can run out of cash, this looks a little less credible. In fact, it looks a lot less credible. So, a number of factors in play that wouldn't apply in an national election. Gordon Brown will not be going for an early poll.

That having been said, there is a window for Brown here on the economy, but to jump through it he would have to junk a lot of what has gone before. Prepare either for U-turns or dogma.

Saturday, November 08, 2008

Bashing the Banks

Quite a lot in the press over the last few days about the evil banks failing to pass on the Bank of England's 1.5% interest rate cut until the government put on the squeeze. It's nonsense of course, but the media seem to have fallen for it and, after all, it makes for good copy. Following a change to the Bank of England's overnight rate each bank has to calculate the effect on its finances, and even allowing that some of that can be done in advance there is still the mechanical process to change financial products to match. This is not a small deal, typically taking days to ensure that all of the systems are correctly set up for new pricing. So, it was always going to take time for the banks to react to the Bank of England's move and the suggestion that the delay was anything other than business as usual suggests some masterful spinning from No. 10.

The other funny thing is the way that criticism of the banks has changed from lending too easily to lending too strictly. Now that the banks have got taxpayer's money it is apparently OK to write bad loans is it? The is an illogical position: public money was not given to the banks to waste it and normal credit risk considerations have to apply or else the taxpayer will be wondering in a few years where all the cash has gone.

The fact is that the banks are a traditional easy target for the press and can be castigated no matter what they do. Where were the these journalists when Icesave was running a Ponzi scheme or RBS was wrecking itself in a ludicrously overpriced acquisition? They missed the stories then, and they are allowing the government to feed them its propaganda now.

Basildon Council debates secrecy

We had an extraordinary Council on Monday, called by the Labour Party around this motion:
This Council believes that local democracy is strengthened if the business of the authority is conducted in an open and transparent way. Council expresses its concern that the current administration seems to prefer secrecy to open government and furthermore calls upon the administration to fully embrace the principles of openness, transparency and fairness in its dealings.
The Labour Party simultaneously tried to present the idea that Basildon's Conservative administration deliberately runs as a secret cabal while also asking in a bipartisan way for more information for backbenchers. Now, there is an interesting debate to be had about the role of backbench Councillors and the way that a Council's decisions are subject to proper scrutiny, but you can't run that at the same time as accusing the Council's Cabinet of deliberately keeping people in the dark. One is an apolitical look at the way the Council operates, the other is knockabout. So, of course the debate was its usual partisan row that moved the issue on not a jot.

If Labour are serious about this then calling extraordinary meetings with critical motions is simply not the way to go. Oh, and for those who don't know the recent political history of Basildon, the way the Council currently operates was designed by Basildon Labour Party.

Sunday, November 02, 2008

BBC all out of friends

Mark Thompson, the Director General of the BBC, has quite a few things to worry about after the Ross-Brand debacle. He has forthcoming reports from OFCOM and the BBC Board of Governors on the subject, and the problem of getting his organisation back under some sort of editorial control. He should have one greater worry, however. In the recent row those speaking up in support of the BBC were noticeable by their almost complete absence. While the BBC was being pilloried by press, public and politicians there was almost no-one stepping up to remind us of the supposed value of taxpayer-funded TV. When the Mail on Sunday ran a poll to determine the level of support for the license fee the numbers were appalling from the BBC's perspective with 74% considering the current cost unjustified. There were some other interesting numbers too, with 71% of the youth audience supposedly served by Brand and Ross rejecting their behaviour. You could not imagine the BBC's 1990s campaign to promote the license fee being run today, which is pretty bad for an organisation that depends utterly on the license fee for its income.

How have things come to this pass? Well, there are three main reasons for the BBC's crumbling support. First, paying Jonathon Ross £6m a year is indefensible and the public see it as a waste of money, their money. Second, the BBC's insistence on chasing every audience segment, including those exciting by obscenity and abuse had removed any moral authority it may once have had. All any journalist has had to do to make the point is to quote the BBC's own content at its senior executives, and they have been doing that all week, including a seminal interview on the BBC’s own Newsnight with the DG where he was confronted with an appalling joke about the Queen, which I will not repeat here. Third, the systematic bias against the Conservatives has removed any support from one half of the British political divide entirely. If the BBC don't think that this will hurt them under a Conservative government then they are being hopelessly naive.

So, we have a public body that has lost the support of the public for its means of funding from the public, and which has also alienated the party currently running a double digit lead in the polls.

This is how institutions end.

Labour blames the soldiers for equipment failings

An SAS Major has resigned over the government's repeated failure to give his men the equipment that they need in Afghanistan. The bit of kit at issue is the Snatch Landrover, which was designed to resist rifle bullets and petrol bombs in Ulster, but which has no place on a battlefield that includes heavy machine guns, rocket-propelled grenades, landmines and shaped-charge roadside bombs. The government minister in charge reacted thus:
'there may be occasions when in retrospect a commander chose the wrong piece of equipment, the wrong vehicle, for the particular threat that the patrol or whatever it was encountered and we had some casualties as a result'
So, basically, when four of his men were blown up in a vehicle that was considered cutting-edge in 1970 it was all his fault. There you have it: Labour's complete contempt for our armed forces and their utter refusal to take responsibility for the young lives lost because of their incompetence and malice.

And they have the nerve to wear poppies.

Friday, October 10, 2008

Basildon Council has no money in Icelandic Banks

Just to be clear, Basildon District Council has no cash in Icelandic Banks. At the turn of the year members voted on an ultra-cautious investment policy, because we didn't like the way the markets looked at all. I am not saying that we were prescient, but it didn't take a great brain to work out that the international money markets were not working as they should. So, we elected only to have short terms placements at the best of the UK banks and building societies, and if we lost a quarter point of interest here and there it was a price worth paying. It is very sad that not everyone took this view, and it will be interesting to know how much of this poor-decision making was down to elected member policy, and how much was financial professionals getting it wrong.