Wednesday, 31 December 2008

Gordon Brown's career

Since it's the season of goodwill, a tribute to Gordon Brown, PM:

In the beginning was the unreconstructed socialist:



He climbed the greasy pole, became an MP, clawed his way into the Shadow Cabinet and placed himself for future glory:



He helped form New Labour, got into Government and had an important girlfriend:


He fell out with Prudence, though, and set out on a new mission:


And what a result:



Mind how you go, have a cool Yule and a Happy Easter when it comes.

Tuesday, 30 December 2008

Getting a new perspective

A morning stroll through the interwebby thing is always refreshing (providing you stay away from all those nasty areas), and helps to give you a new perspective on things. This morning I took a stroll through a few economic attitudes. Here's a banana's-eye view of some interesting penny dainties:

Luxembourg is an interesting country economically, with a large banking sector and interesting taxation policies. Prime Minister Jean-Claude Juncker gave evidence to a European Parliament committee on the fourth of November, here's a snippet or three:
Some of those now leading calls for international regulatory reform had refused to consider the proposals put forward by the German presidency of the G8 as recently as 2007, he noted.

Who could he possibly be meaning?
He called for governments with budgetary room for manoeuvre to use fiscal measures to help the most vulnerable sections of society, and to give support to SMEs.

Remarkable! That's exactly what the SNP Scottish Government did ahead of the economic meltdown (cutting business rates for small businesses, freezing Council Tax, cutting prescription charges, and so on), and exactly counter to what the UK Labour Government has done (abolition of 10p rate, increasing corporation tax for small businesses, etc).
Mr Juncker, who argued that the cause of the crisis could be found in the "deregulatory frenzy" of recent years

He's right, you know. You can tell he's right because I've been saying the same thing.

In other news, back in April when the French Government first suggested bailing out the banks (you know, that idea that Brown claimed to be his - it's also noteworthy that Christine Lagarde, French Finance Minister, tried to persuade her friend, Mr Paulson, to bail out Lehman Brothers and avoid the crisis in confidence), there was this point made:
But a senior Sarkozy aide sought to dampen expectations, saying the French leader, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Italian Premier Silvio Berlusconi are not "going to save the world."

Oops.

With the German Government and the IMF also criticising the Labour Government, perhaps it's not just the French who think that Brown didn't save the world?

I'm rattling about in any case, so let's have a pop at Iain McMillan of CBI Scotland (and, of course, a fine, upstanding member of the Commission to Repaint Devolution). He's reported as saying
"The Scottish Government holds the key levers of power to deliver Scotland's long-term economic success and, thus far, has put in place some welcome measures for business and the economy.
"Business is looking favourably on those policies that will improve the performance of the Scottish economy over time - transport, planning, education, skills, business rates and regulation.
"We are also supportive of the measures taken to assist businesses in the short-term
during the economic downturn.
"But, the Scottish Government's support for business often appears to be only skin deep and ministers need to do much more in 2009 than they have to date to develop our economy for the long term and improve Scotland's reputation in the rest of the UK and internationally as an attractive place in which to do business."
To translate - The SNP Scottish Government has done more in a year and a half to support Scottish business than could have been expected by anyone but Mr McMillan wants to have a dig and so calls that support "skin deep" and says that the excellent performance so far has to be improved upon - but he doesn't give any indication of how he thinks it should be improved upon.

A true visionary. Let's have a look at what he said when the 2007 budget increased Corporation Tax to 22% for small businesses:
"The headline cut in corporation tax announced in the Budget should only be the first step to reducing that burden."
He was, of course, referring to the 2% cut in Corporation Tax for the largest and most profitable firms rather than the 3% increase in Corporation Tax for the smaller firms which have to keep close tabs on all costs to survive and which together constitute a significant part of the Scottish economy. Interestingly, he was at odds with CBI UK:
"Some big companies that for one reason or another don't pay much tax will lose out. So will small companies that don't invest much, and so will not be able to benefit from the new capital allowances."
The Federation of Small Businesses:
"On the face of it, the rise in the small companies rate is very disappointing for our members because it is addressing a problem that I don't think exists, which is the notion that people incorporate for tax reasons,"

Chambers of Commerce:
"This budget could be damaging for small and medium-sized business in the long term,"
"Whilst the chancellor has offered incentives for investment he has also increased the amount of tax that those covered by the small companies' rate have to pay by over £800m."

I suppose, looking at Labour's record, that we shouldn't be too surprised that the Labour Government will provide billions of pounds to bail out the banks but nothing for the victims of the Farepak collapse.

Social justice would appear to be an alien concept for the Labour Government.

Monday, 29 December 2008

Fascinating Fact

Monkeys have a favourite Christmas carol - Jungle Bells.


As told to me by a wee lass with a daft sense of humour.

Sunday, 28 December 2008

Labour policies immoral

I see some Anglican bishops have called the policies of the Labour Government immoral and it's become a story.  Given that these church leaders are supposed to deal in morality every week, surely the bigger surprise is that it has taken them this long to realise, especially since Labour's own members have been calling the Labour Government "economically inept, morally repugnant and spiritually bereft" since 1998.

Meanwhile, back at the disaster zone, world saviour Gordon Brown is saying that the recession is a test of character (wonder if he created this enormous mess just to let us all prove our worth and feel better about ourselves?) and that he wants us all to display the same spirit as our predecessors did in World War Two.  "Jings, Crivvens, Help Ma Boab, Peter, it's all going down the pan, what's the emergency procedure?"

"Calm down, Gordon, if you just relax it will all go fine.  When it's this far out of control there's only one thing to do."

"Excellent, Peter, I knew I could lean on you.  What do we do?"

"Bring out the blitz?"

"Genius!  Wheel out the old Joanna, get on the pearly suit, up the apples and pears, bring out yer dead!  It'll be just like the olden days, eh?  Do you think they'll say I'm like Churchill?"

"Er, no."


Mind how you go!

Saturday, 27 December 2008

Lloyds HBOS -Let the Shareholders decide!

Well, it would have been good if they'd actually had the chance rather than being bounced into the merger by politicians on the make.

Wednesday, 24 December 2008

Humble action the imperative

A comment on my previous post gave me pause for thought. The SNP Scottish Government has a long list of achievements from its 18 months in power - a list which would be noteworthy even for a Government with a majority of seats in Parliament, and is even more noteworthy for a Government with only 36% of the seats in Parliament. It's a record that any political party should be proud of and that in any other situation we should be celebrating, but it pales at the moment because the clunking fist of recession is beating at the doors of Scottish households and that's what's focusing the minds of all of us.

People who have been or are being made redundant are thinking about employment prospects, pensioners are concerned about the future of their pensions, graduates about where they go from here. I know that the Scottish Government members - Cabinet Secretaries and Ministers - have similar concerns and are frustrated at the lack of economic tools at the disposal of the Government. While doing what they can with the powers at their disposal, they are pressuring the Westminster Government and conducting research to lay out a routemap out of this mess. Jim Mather laid out some of the efforts to help the construction industry on Thursday:
We are accelerating our investment plans in affordable housing and bringing forward capital investment plans. We are also increasing investment in school building programmes, allocating additional funding for college and university capital projects and increasing funding for capital programmes in the health sector. We will continue an active dialogue with the construction and house-building industries through the Scottish construction forum and the housing supply task force.
He also mentioned the Scottish Government's support for a VAT cut to 5% for home improvements and repairs (something that other countries are doing) which was rejected by Darling.

The Scottish Government's Council of Economic Advisors advised that the country would have been better served by investment in the construction industry than by Darling's blanket VAT cut, and you have to assume that the UK Government got the same advice. Admittedly, that would be a longer-term solution rather than a fillip to get a shaken Government through an election, but it would be acting in the long-term interests of the country.

The economic news is not encouraging, and it appears to continue to get bleaker, suggesting that it may be quite some time before we see some relief from this. The instant figures from the ONS have various timelags, but few of them seem to have any encouraging news. It looks increasingly like it will be the average-sized nations of the arc of prosperity that will lead the way out of recession - including Iceland where the business community is gearing up for rebuilding that nation's economy in the wake of the IMF refloating - economic manoeuvrability will be essential in the next year or two.

The Scottish Government is doing what it can to make the situation easier for people the length and breadth of Scotland but frontloading capital spend, easing restrictions on local government and reducing business rates will take time to filter through the system while things like the Council Tax freeze, reducing and then removing prescription charges, and increasing support for benefits checks will have some effect, but are not, on their own, enough. Having control of all of the levers of economic power would have allowed Scotland to proof its economy against the coming storm to some degree, but that is not the case at the moment and we will have to continue arguing for proper economic power to come home and persuade Scotland of the merits of that case.

In the meantime, though, political leaders should show some humility in the face of these difficulties - a characteristic that has been evident among Scottish Ministers. The manner in which Ministers bear the responsibility they carry is almost as important as the actions they take - far better to have honest humility than overblown hubris, far better to do what you can than to have claimed to have saved the world.

Tuesday, 23 December 2008

Who's saving your world?

Gordon Brown, superhero of this parish, has marched expectations of an imminent general election up the hill before and then just marched them back down again. Not content with his Grand Old Duke of York impersonation, he's marching those expectations back up the hill again. Personally, I think he'll bottle it, even if he does have Peter Mandelson back by his side.
Why would he duck again? Simple - the economy has been filleted; the pain is just getting started but it will be very evident by the end of February and any Government going into an election with soaring unemployment, a 'living essentials' marketplace which is rolling back from comfort to austerity, and with a whole load of people realising that they can't afford a holiday this summer is going to get beat. Brown will judge that hanging on might take him and his Government through the worst of the economic hard times and give him a fighting chance of staying in Downing Street - even when all the evidence is pointing to that being tosh.
Mandelson's evaluation, I imagine, will be that the election is lost for Labour and that the duty of the incumbents is to minimise the damage. Mandelson will press for an early election, before the true horror of the recession can impinge on the collective consciousness. Labour will lose, but by less than they would at a later date. Who'll win? Brown will win, he's got his finger on the button, and there will be another tiff, Labour's Government will start to unravel and it will be terribly unsightly (he said sniffily).
How can we be so sure that the economy is toast? Well, the pound is almost at parity with the euro and is now under $1.50, the German Finance Minister Peer Steinbrück has pointed to massive flaws in the Brown/Darling economic salvage plan and his voice of concern has now been joined by Olivier Blanchard, chief economist to the International Monetary Fund. The unemployment rate was already at 6% in October while the inactivity rate (same source) was 20.9% - one in five of the working age population not working and not training or in education. Non-specialised stores (like department stores) saw a fairly substantial 3.8% fall in sales. Food sales and sales from specialised stores increased slightly, but it was the smallest increase that they've seen in four years, while sales of household goods went down 2.1%. There were 111 profit warnings over the summer, and plenty since. Mortgage lending is half of what it was last year, and the number of business start-ups has shrunk markedly.

Saved the world? I think not!

Saturday, 20 December 2008

That'll larn em!

Fantastic story on the BBC website - caviar smugglers got caught with 40kg of Beluga caviar in November. Italian customs is disposing of it in a most appropriate way - the poor of Milan will be having caviar this Christmas.

Out of Control Tram

I've finally received a reply to my Freedom of Information request to tie - and I have a couple of concerns about it, strangely enough.

Firstly, Howard Elwyn-Jones, the Information Manager for tie says he didn't miss the deadline because

under Section 10(1)b of the Act, the twenty day period commences from the day
following receipt of the information request

Actually,

10 Time for compliance

(1) Subject to subsections (2) and (3), a Scottish public authority receiving a request which requires it to comply with section 1(1) must comply promptly; and in any event by not later than the twentieth working day after— (a) in a case other than that mentioned in paragraph (b), the receipt by the authority of the request; or

(b) in a case where section 1(3) applies, the receipt by it of the further information.

So 10(1)(b) is actually about the procedure when the public body asks for further information. Why did the Information Manager of tie tell me it gave him an extra day? Was he lying, does he truly not know, or is there some other reason? Whatever the reason, the mistruth is unacceptable - it's not difficult to check the Act - but it is indicative of the slapdash attitude that tie has towards the whole project.

I asked for some simple information:

the latest overall cost projections for tramline 1a and tramline 1b. Iwould like one global figure for each line and the date on which the projection was made.

Here's the response to that request:
The information which you request is already in the public domain and has been reported extensively in the media as well as in documentation available online from our website. For convenience and the avoidance of doubt, I re-iterate the ‘global’ cost figures requested below:
· The cost projection for line 1b remain unchanged from the Final Business Case of 7th December 2007 and stand at £87.3 million.
· The cost projection for line 1A was amended on the 14th of May 2008 to reflect alterations at contract closure for INFRACO, giving a figure of £512 million. This is a full release of the information you requested.
So I'm to believe that the contract cost for 1b hasn't been examined for a whole year and 1a - for which construction has already started - hasn't been looked at since May. It's the equivalent of shoving your fingers in your ears and saying "lalalalalalalalalala" very loudly. Surely no-one managing a major construction project would just leave the capital spend to take care of itself, would they?

Here's a wee problem, though, the Business Case makes it clear that costs will keep changing until the design is finalised. A previous FOI request I made came back with the information "All detailed Design Submittals to tie are due for completion by 20/02/09" - so the costs cannot be finalised before the end of February - another two months.

There's another difficulty. Have a wee look at the answers David McLetchie got to his Parliamentary Questions:

David McLetchie (Edinburgh Pentlands) (Con): To ask the Scottish Executive how payment of the remainder of its £500 million contribution to the Edinburgh trams project will be phased, specifying anticipated (a) timescale, (b) size and (c) purpose of each payment. (S3W-17962)

Stewart Stevenson: The detailed phasing of expenditure is for City of Edinburgh Council to manage. The Scottish Government will continue to meet its agreed obligation of 91.7% of expenditure, subject to annual limits of £120 million in this financial year and £149 million in next financial year.


David McLetchie (Edinburgh Pentlands) (Con): To ask the Scottish Executive whether its contribution to the Edinburgh trams project will remain at £500 million if Phase 1b does not go ahead.(S3W-17963)

Stewart Stevenson: The Scottish Government will pay the agreed 91.7% of costs expended by CEC on lines 1a and 1b up to a limit of £500 million. This arrangement is not altered by the status of Line 1b.

That 8.3% funding gap is what Edinburgh Council needs to find. Given that the Scottish Government has ponied up almost £207 million so far, Edinburgh Council has spent more than £18 million - more than half of the predicted cost has been spent and the utility diversions aren't even finished. Coming in on budget? My eye.

You'll remember that 1b was cancelled and 1a was in doubt a month ago. Attempts were made to save 1b - and reports were brought to Edinburgh Council on Thursday, including one on line 1b. The business case for 1b was based on a quarter of a million square feet of development at Granton, the report indicated that this was now six years behind expectation - they spent money on consultants Price Waterhouse Coopers to find out that there was a recession on.

I loved this comment; "Since this work was undertaken in the summer the wider economic climate has taken a further downturn", so the report is using out-of-date information - excellent!

Contained in that report, however, are hints that the 1a construction costs are out of control. Things like:
For various reasons, slower than anticipated mobilisation of the lnfraco contractor has been an issue in relation to Phase la. As a result, and until more information is to hand, a prudent view should be taken with regard to committing headroom from Phase la to the construction of Phase 1b.
The 'headroom' being referred to were the savings that they thought were coming on 1a, and that 'prudent view' can be translated as "och no, not the dreaded overspend!"

In the summer when the costs of construction were running out of control there was a suggestion that the tram vehicles could be rented rather than bought (they cost about £2m each) - I'd be surprised if that isn't brought back to save £54 million in capital costs but increase fares. Bus fares are already being increased to help pay for the tram.

Costs will continue to spiral out of control. On the 24th of April 2008 tie announced a "final contract price" of £508 million (up 2% since the Business Case passed in December) and three weeks later it had increased by another £4 million.

There's this bit from the report:

Currently tie are engaged with the lnfraco contractor on re-programming Phase la to address the slow start up of construction and this may impact on costs and risk allowances. This work will continue in the lead up to Christmas and the potential impact on financial headroom will not be known until the New Year.

That question about whether anybody running a major construction project would just trust to luck on the spending - it looks like someone is doing exactly that. And their hyphenation is out of control.

It wouldn't be so bad if the scheme was worth having.

Thursday, 18 December 2008

Scenes you never thought you'd see

Labour MPs and MSPs have been calling for pensions to be cut

Lib Dems have been asking the Scottish Ministers to take less of a salary safe in the knowledge that the Scottish Ministers have no control over their salaries (wonder why they never called for that while they were Ministers?)

Yup, scenes you never thought you'd see.

Trams

Edinburgh Council was discussing trams today.

One of the reports was about line 1b (dodgy business case for it in the first place, now completely done in).

The interesting thing to note, methinks, is the increase in the cost of cancelling 1b from the £3.2m we were told would be the limit to the £6.2m they're saying it costs now. Some people used to say that the cost of 1b was fixed ...

tie, huh, what is it good for?

Transport Initiatives Edinburgh (tie) is the body supposedly managing the Edinburgh Tram project.

Being an inquisitive type chappie, I submitted a Freedom of Information request to this shiny body back in November, asking for:
the latest overall cost projections for tramline 1a and tramline 1b. I
would like one global figure for each line and the date on which the projection
was made.

A simple request you might think. Apparently not, the deadline has come and gone without reply.

If you're managing a major project you have (or should have) a constantly updated headline figure with all of its babies, a constantly updated risk register, and a constantly updated timeline (past and future). In other words, it should have been the work of a few seconds to look up the two amounts and the date they were last updated and fire the information back to the fine chap who asked for it.

There's more than one possible explanation:
tie is old school and doesn't think the information should be released, or
tie doesn't have the figures because they haven't kept up to date, or
tie doesn't want to let the figures out because they look bad, or
tie is hoping that people will go away and stop bothering it, or
tie is just realising what a mess this all is and is sobbing gently under the desk, or
tie just doesn't like me and it's me that should be sobbing gently under the desk, or
tie forgot about me, it never calls, it never writes ...

Personally, I think it's because the cost is now approaching £800 million for line 1a and 1b wasn't a guaranteed cost at all. The only promise made so far, of course, is that it won't come in at ten times the budget. Less than £5 billion then - oh, goody.

Mind how you go.

Tuesday, 16 December 2008

John Smith House closed

Wee fact - Labour has moved out of John Smith House.
Unfortunate lack of information - I don't know why.
Solution - I'm going to invent a scurrilous rumour to explain it.
Here it is:
Labour's Scottish branch has moved out of its Headquarters at John Smith House as a result of a massive shortfall in revenue. The party started its slide into difficulty during the Blair era when long-term members walked away in disgust at the direction the party they had belonged to for many years was taking. Many even said that the Labour Government was "economically inept, morally repugnant and spiritually bereft".

That slide continued with a range of dodgy donations, cash-for-peerages, undeclared donations and dubious loans and contracts. Labour members continued to drift away, leaving just the rump of slightly less than 8,000 members in Scotland - less than twice the size of the Lib Dems - and career-minded individuals, spotting the writing on the wall (in the electorate's hand-writing), started making for the lifeboats; looking for jobs in lobbyist firms and suchlike to ride out the hard times and look to return when the going got better (with the honourable exceptions of the few who stayed to look after the peers of the realm).

On top of losing power in Scotland and slipping towards opposition south of the border, Labour is running into trouble with those who it used to rely on. Labour's funders have found other uses for their money, unions finding that their members are better served when they spend the money elsewhere, and private funders getting well and truly scunnered by the ongoing suspicion that surrounds anyone who donates to Labour and money from fundraising dinners appearing to go to Labour rather than town centre regeneration (for example).

The upshot of all of this is that Labour can no longer afford to occupy its Scottish HQ. Labour is not pining, it's passed on! That party is no more, it has ceased to be, it's expired and gone to meet its maker, it's a stiff, bereft of life, it rests in peace! Its metabolic processes are now history, it's off the twig, it's kicked the bucket, it's shuffled off its mortal coil, run down the curtain and joined the bleedin' choir invisible. It's an ex-party. (with apologies).
No doubt they'll be able to scrape together a groat or two for infighting the next election, but it's a dead brown bounce.

Now, then, I wonder if anyone else is needing scurriled ...

Monday, 15 December 2008

Interwebby

Once there was a spider got trapped inside a computer and built himself a website ...

Now there's a campaign to get Scots culture its own internet presence.

Readallaboutit!

Friday, 12 December 2008

One Census this may not be all it seems

And they're off!

Murdo Fraser, Deputy Leader of her Majesty's (AG, of course) Conservatives, led the attack, accusing your friendly neighbourhood SNP Scottish Government of forcing people to choose between being Scottish and being British. He was closely followed (careful there, Murdo) by Michael McMahon (The Scotsman got the spelling of his name wrong - nae respect), the sage of Bellshill and Labour's Business Manager. There was the faintest whiff of xenophobia (which I am sure that neither of these tribunes intended) and the highest tinge of dudgeon to their comments which are, unfortunately, entirely without foundation.

Ah, woe is them...

If only they had taken a few seconds to read the Government statement published by GRO they could have left their collective blood pressure at a resting torrent for therein they could have clicked the link to the recommended questions compared to the 2001 questions. Have a look at page 34 - the ethnicity question will, indeed, allow people to choose between (each having its own check-box):
Scottish, English, Welsh, Northern Irish, British, Irish, Gypsy/Traveller, Polish, or Other white ethnic group (a write-in).

The next section allows people to indicate that they believe themselves to be a combination of these. Is this forcing people to choose between being Scots and being British? Well, here's the groups that were available in the last census (2001):
Scottish, Other British, Irish, Any other White background

Followed by the 'mixed' question. Surely it was this one that truly forced people to choose between being British and being Scots? I know that Murdo and Michael will be embarrassed to have made such an error and will be rushing corrections out to every journalist they know. Especially since the GRO is liaising with its counterparts elsewhere to create a harmony of questions. If my good friends had taken the time to read the Wales and England equivalent publication as I have done, they might have spotted this paragraph:
In 2003 ONS published a Guide to the Collection and Classification of Ethnic Group Data recommending that wherever possible a national identity question should be asked as a companion to the ethnic group question.

Which may have led them to ask why the ONS has framed the question similarly to the Scottish one but without any reference to our Polish friends and lumping Scots, Welsh, Northern Irish, English and British all in the same check-box, giving 'Irish' its own check-box and changing the traveller category to "Gypsy or Irish Traveller", and not giving people the chance to say that they feel that they have a combination.

If I were having to fill in that form, whatever my nationality, I would feel my gorge rising ...

“I see thee still,
And on thy blade and dudgeon gouts of blood,
Which was not so before.”

Mind how thou goest!

A rare wee treat

It's a lovely thing when an old friend (very old, ancient in fact, almost historic) appears as if from nowhere (like the shopkeeper from Mr Benn) and sends you a link to his blog.

Whatever you do, don't say it's about cycling - it's about bicycles. I mentioned the war but I think I got away with it ...

Mind how you go.

Thursday, 11 December 2008

Trams on track ... to break the bank

The new heid honcho at the Tram project, David MacKay has admitted that the budget for line 1a is a ba on the slates, as I have been saying.

I was much exercised by the quote:
"I take the view that one should be looking at a range of numbers. I have no fixation in my mind about one certain number. There will be further amendments, inevitably, as we get closer to the end of the project. I would love to think the cost could go down, but one has to be realistic. We never started with a fixed budget, because the design changes as you go along."

I've been saying that for ages! £750 million is about where it would come in - except there's no more Government cash (no, not even for the £50 million they want to run a business case for line 3), and there's no way this can go down as prudential borrowing. Who thinks that the tram lines will finish half-way up Leith Walk?

You won't hear it yet, even if you submit an FOI request they'll tell you that the figures aren't final yet, but I'd give you odds that the utilities diversions have eaten into the contingency quite severely. Fixed cost contract - except for where they found unexpected things (pipes in strange places, cables where they shouldn't be, etc) and the utilities companies were called in. They managed to cut through utilities and disturb the foundations of buildings, and they found lots of stuff underground in Leith Walk that they weren't expecting.

They'd spent a third of the budget before any construction started, as well. Trams? Broke.

Tuesday, 9 December 2008

Right then, see this tribunal

Having had a wee swatch at the reporting of the HBoS tribunal, I find myself noting a point or two. Being incredibly generous, I thought I might share my musings:

Musing 1.
Nicholas Green, the QC representing HBoS, is reported to have said that Peter Mandelson acted alone in making the decision. How does the QC for one of the parties to the deal which was being examined know how the Minister making the decision acted?

Musing 2:
Paul Lasok, QC for the Government, is reported in the same piece to be saying that Mandelson was not swayed by the positions of the Prime Minister and the Chancellor of the Exchequer. The Government being his client he is in a position to have been told - unlike Mr Green - and his contention that "We are not in the field of collective Cabinet responsibility" carries merit; Brown and Darling should be excluded from this decision, except that the news release that announced Mandelson's decision said he took note of the Chancellor's opinion:
In making this decision, Lord Mandelson has considered the report provided by the OFT, as well as the representations on the public interest issues made by the Tripartite Authorities - the Bank of England, Financial Services Authority and HM Treasury - as well as submissions from third parties.

HM Treasury is Darling's department. Interestingly, the same release points to a
non-confidential version of the Office of Fair Trading's report on the merger

Does this mean that there is a fuller report available somewhere and should MAG ask for it to come before the tribunal?

Musing 3:
Other people have posited, and I agree with them, that the legislation does not allow Mandelson to disregard the OFT's concerns on a 'benefits outweigh the risks basis' but should have considered it on whether it was absolutely necessary.

Mind how you go!

Monday, 8 December 2008

Trams and environmental damage

Why do people who claim to care about the environment support the Edinburgh Tram Project? One of the worst things this project will do is slap what amounts to a concrete road right across the flood plain of the Gogar Burn. That'll create flooding problems for people who live further downstream. Is Councillor Phil Wheeler concerned about that as he chases his dream of an oversized train set? This particular headache doesn't seem to worry him - wonder if he has a good supply of painkillers?

The Edinburgh Tram Project is in chaos. Line 1b was scrapped months ago, the intention being to move money from that project to pay for planning line 3 so they could take a complete case to the Scottish Government to ask for more money - that's why there's been so much chatter about that never-to-be-built line recently.

Events overtook them, line 1b cannot now be paid for and there are serious doubts over 1a. Even if the capital to build 1a is available, the absence of 1b means that 1a is not viable - going by the dodgy dossier that was the business case for the trams.

That business case relied on continued economic growth in Edinburgh - just to get enough passengers to break even. The contribution from Edinburgh Council was to be funded through developer contributions and the sale of property. £26 million was the projected income from developer contributions - they've had £3 million, and some of that was out of the city's education budget (school building project).

£23 million short and development has all but ceased along the route - no more developer contributions are expected for quite some time.

The £20 million to come from land sales took a hit as land values dropped and that money isn't there either.

The contracts for construction were negotiated in euro rather than sterling (honestly), so the £512 million estimate for 1a, made when the pound was stronger is now around £698 million. Work it out yourself - it was around 1.5 euro to each pound when the estimate was made, so about 768 million euro; 768 million euro at today's exchange rate of around 1.1 euro to the pound comes in around £698 million. That's £186 million over budget. We know that the funds weren't hedged - tie announced a cost rise some time ago when the first adverse movement in the currency exchange rate bit.

On top of that, the design won't be finalised until February (so neither will the costs) - remember the cost estimates were withheld from the councillors who were taking the decisions when they voted on this last year.

You'll remember that there is £13.77 million tram cost which has been shaved off the project in an earlier attempt to keep costs down - that the project intended to ask the Scottish Government for, there's £1.2 million in parking charges foregone for tram construction to be added, but still Councillor Wheeler thinks he can go back to the Scottish Government for more money.

So, unless the project team have managed the costs down properly (and there's no evidence of that), the real overall cost is around £712.97 million - and there's £503 million available (and still the design isn't final).

Line 1a won't be built.

Don't take my word for it - the Conservatives are preparing the exit -
S3W-17961 David McLetchie: To ask the Scottish Executive how much of its £500 million contribution to the Edinburgh trams project has already been spent, broken down by (a) date of release and (b) size and purpose of each payment.

S3W-17962 David McLetchie: To ask the Scottish Executive how payment of the remainder of its £500 million contribution to the Edinburgh trams project will be phased, specifying anticipated (a) timescale, (b) size and (c) purpose of each payment.

S3W-17963 David McLetchie: To ask the Scottish Executive whether its contribution to the Edinburgh trams project will remain at £500 million if Phase 1b does not go ahead.

Mind how you go!

It's the way he tells them!

I recommend reading the FOI release from the Scotland Office relating to Dungavel - 25th November.

Almost entirely redacted - spectacular effort!

Sunday, 7 December 2008

Banks and cash-for-peerages

Dennis Stevenson, the chair of HBoS intent on selling the bank cheaply for what appears to be the dodgy political ends of senior members of the Labour Party was the Chairman of the House of Lords Appointments Commission at the time of the Cash for Peerages scandal - he never noticed anything wrong, of course - his judgement must be mince.

He's a lifelong friend of Peter Mandelson and organised the dinners that Blair used early in his premiership to get himself into the pockets of some wealthy people.

Strangely, he doesn't have an entry on the House of Lords Register of Interests in spite of remunerated directorships being a Financial Interest which is always relevant and should be registered (George Foulkes' entry has gone missing too).

He has an interest in ManoCap which is a fund manager set up to exploit "Opportunities for profitable investment ... in post conflict and emerging African economies" - as if they haven't suffered enough.

This isn't the first financial scandal Stevenson has been involved with, either, he was caught up in the Blue Arrow scandal - which brings an interesting link to Gordon Brown through Derek Wanless.

Anyone expecting Mandelson to back down over HBoS might be waiting a while. Hopefully the tribunal will do the job, though.

Friday, 5 December 2008

Och no, not our universities!

Much worried I was by the reporting in the journals of record of our modern age about the penury in which our universities find themselves these days (especially since it is my misfortune to know an academic or two and the anecdotal evidence doesn't match the reportage).

The Herald reported Gap in funding means Scottish universities 'lag behind'
The Scotsman had it that Universities in England beat Scots for funds
The BBC was asserting that Universities in Scotland ... are losing ground to those in England

All of this was based on a report produced by Universities UK on the impact of devolution on university funding, the news release for which stated:
Although higher education is growing in all four parts of the UK, England has started to move markedly ahead in key areas, including research funding, student numbers and international student income

Holy Jiggling Batman!

Except it’s not true. How can I be so sure? Well, I read the report (cunning devil). If you were just to read the text of the report you’d find yourself alarmed, worried, concerned, and three quarters whiffled by the devastation about to be wreaked upon Scotland’s Higher Education sector. You might even find yourself demanding immediate action and a wee jaunt in a helicopter. If you look at the figures in the report, however, you might see it differently. The latest figures in the report are from 2006 and I’m only going to use the figures in the report, not introduce anything new:

Population
Page 39,
Population of England – 50,763,000
Population of Scotland – 5,117,000
So Scotland’s population in 2006 was 10% of England’s, give or take a few fractions.

Student Numbers
Page 42
HE students in England – 1,936,420 (3.8% of England’s population)
HE students in Scotland – 215,830 (4.2% of Scotland’s population)
HE in FE students in England – 122,150 (0.24% of England’s population)
HE in FE students in Scotland – 49,885 (0.97% of Scotland’s population)

Postgrad students at university:
England 0.9% of population
Scotland 1% of population

Academic Staff
Pages 45 and 46:
England has seen a drop in the percentage of academic staff in clinical medicine (12% down to 10%) and in biosciences (7% down to 6%) since 1996, Scotland has maintained medicine (11%) and biosciences (10%).

Research Funding
Pages 46 and 47:
Scotland wins 12.5% (monetary value) of research grants and contracts from the research councils – above the 10.2% we would expect if resources were just shared equally, indicating that Scottish universities’ research is better than average (nowhere else punches above weight).

Scottish universities are also ahead in research grants from charities; bang on average in research money from business; and ahead in research money from EU sources.

Research Students
Page 48
Shocking news here that Scotland has lost 0.4% of market share in research studentships since 1996. England, though, has lost 1.5%, and Wales has lost 0.9% - it’s Northern Ireland that’s coming on strong, getting up to 2.4% from a negligible base. In fact, Scotland had dropped sharply in the middle and is coming back up, Wales and England had both increased before dropping away.

Teaching Income
Page 49
Teaching income (teaching grants, regulated fees and other fees) per full-time-equivalent student in England is £5,590 – in Scotland the figure is £6,044 – Scottish universities better funded to the tune of £454 per student. Scotland is also ahead of Wales and ahead of Northern Ireland.

International Students
Page 55
Scotland has an international student population just as healthy as England’s (15% to England’s 15.6%)

On page 7, though, the report states that

The overall increase in international students has particularly favoured
England, especially the south-east.

A wee discussion

So that, you would think kind of puts things in a wee bit of a different perspective. Let’s just ice the cake, though:

Page 10:

The impact of deferred variable fees in England will increase the resources available to institutions in England, compared with the other three countries, particularly Scotland. If Scotland and Wales maintain their policies on fees their spending on higher education will be disadvantaged.
Tell you what, I’ll lay you odds that deferred variable fees in England will result in rapidly diminishing state support for Higher Education. The Government in London, whatever colour it may be at any particular time, will turn down the tap on the money flows, forcing universities to charge higher fees. There will come a critical juncture where some universities just can’t keep going and there will be a splitting of the ways – some universities (Russell Group, perhaps) will become entirely divorced from Government and will operate as businesses while others become the poor sisters, the state universities. Whether this is desirable or not is, I suppose, just a matter of opinion.

Page 37:
The constraints on the use of these powers are practical or political: the difficulties of doing something different to England, possible implications (departing from the gold standard of British university degrees), and external factors (such as the Bologna process). How long these constraints will continue is an open question, especially if the UK/English standard either loses its lustre, or becomes unaffordable for the devolved administrations.
Who could possibly think that the English degree represents a higher quality than a Scottish degree or that there is a UK/English standard? Remarkable, really, to downplay a Scottish degree when talking about the Bologna process which will bring the European Higher Education Area ideal closer to the Scottish model than the English model.

Also from page 37:

A clear trend is already visible, with the higher education sector in England becoming larger and better funded than that in Scotland, Wales or Northern Ireland. Although higher education is growing in all four parts of the United Kingdom, England is starting to move markedly ahead in key areas, including research funding, student numbers and international student income.
Patently untrue when the actual figures given in the report are given a glance. What marks would a student get if she handed in her work with such glaring inaccuracies?

In essence, the actual figures in the report give a lie to the text in the report and cannot be said to support the contention in the news release that accompanied the report. Perhaps that’s why Universities Scotland distanced itself from the conclusions of the report, according to the Herald:

"The policy of English universities has been to move closer to an American model and away from a European model. That has been England's choice and Scotland has chosen to remain in a more European tradition.
"We do not accept that this has made Scotland's university sector weaker. England has just chosen to be different. This is what devolution means."

Just to put the cherry on it - this was before we had the great good fortune to elect an SNP Government in Scotland...

Mind how you go!

Wednesday, 3 December 2008

Itchy Cool!

New website launched by the purveyors of the excellent Scots language books Itchy Coo - have a look at the Burns winners.

Excellent stuff!

Fixed it

Seems I had the wrong link for the merger action group.

Fixed it now.

Click away!

Tuesday, 2 December 2008

Another promise kept

Good to see that another SNP election promise is well on course to being met.

"1,000 extra police officers over four years" we said.

Calman - factually incorrect

After having given lawyers a dose of gratuitous (but obviously well-deserved) abuse, I have been chided by m'learned friend.

In the midst of such tomfoolery as legal types getting on tall cuddies, m'learned friend points out that the report of the Commission to Repaint Devolution contains factual inaccuracies. I've not had a chance to check his points yet, except this one:
The Labour Party was formally committed to home rule during the 1920s but growing ambivalence in the party led to the formation of a strongly devolutionist Independent Labour Party in 1932 and Scottish National Party (SNP) in 1934.
Well, you'll find that Labour had home rule in its policy platform in the 1880s (delivered nothing in government for over a century, right enough); Keir Hardie stood as an Independent Labour Candidate in March 1888; and the Independent Labour Party was formed in 1893.

None of that matters, of course, when you consider the incredible infamy of the idea that the SNP was formed from disillusion within Labour's ranks. There's only one place I've ever seen such tosh written - the Scottish Labour Party's website. Reliable and impartial research from Calman then.
Here's a more accurate view, filched (with no shame) from the website of Dingwall SNP (fine chaps and chapesses):

The Party's somewhat confusing origins can be traced back to several organisations advocating Home Rule in the 1920s and 30s. In 1928 The Scots National League (formed in 1921) and the Glasgow University Scottish Nationalist Association (formed by John MacCormick in 1927) both combined with poet Lewis Spence's Scottish National Movement to form the National Party of Scotland.

The NPS can be seen as the most direct forerunner of the SNP as it shared the same left of centre, civic outlook as the modern party and the same commitment to independence. Many of its members were also involved in the literary and artistic renaissance that took place in Scotland in the 1920s. The first nationalist to stand for election was Lewis Spence, who contested Midlothian and Peeblesshire Northern in 1929. He won 4.5% of the vote and came fourth.

By 1934 the National Party had amalgamated with the smaller, more right wing Scottish Party to form the Scottish National Party.

Of course, it's not entirely accurate, I prefer to say we took over the Scottish Party and decided to change the name to the Scottish National Party - and a fine party it is, you should all join!

Don't trust the Commission to Repaint Devolution - their trousers are on fire. Mind how you go! (c) the train driver.

Beige, but with a hint of Brown ...

So Calman has reported - and very boring it was. The Commission to Repaint Devolution has recommended exactly what it was told to recommend by the Westminster machine - except for one line on page 120 "It has become clear throughout the first part of our investigation that devolution cannot be made to work properly. We have, therefore, changed the direction of our efforts in order to map out the best route to independence."

A bit strange that this is the only bit hand-written, but there you go.

This committee, the equivalent of a do-nothing machine but with less dynamism, strikes me as the close cousin of television as a babysitter. It doesn't matter what it says so long as the picture keeps changing.

It's like having an anarchist federation - a bureaucracy unsuited to its intent with a cacophony of unrelated but arrogant self-interests and a stunning misunderstanding of the meaning of the words in its title. Except the anarchists have better T-shirts.

I do like the fact that there's an anarchists' magazine called Organise though ...

Monday, 1 December 2008

Poverty in the midst of plenty

The BBC is carrying a story about research done by Sheffield University boffins for the BBC.

It appears to show that Scotland has suffered badly in terms of poverty over the last 40 years with now 31.5% of Scottish households classified as 'breadline poor' - the worst figure measured (27.3% in 1970; 22% in 1980; 26.8% in 1990). Except the 31.5% figure which gives the BBC its headline of Third of Scots 'breadline poor' is from 2000 - eight years ago.

It's shameful that anyone should be in poverty in a nation as wealthy as Scotland - and that shame is thrown into sharp relief by the banks bail-out - but there are more recent figures (much more recent) and we should be using them to understand the depth of the problem and begin to get some understanding of what we might be able to do about it.

I know that Brown's imagery economic miracle and the measures he took to keep the boom going were damaging to Scotland's poor, and I know that some of the steps taken by the SNP Government in Edinburgh will go a small way towards helping Scotland's poor, but before we start excoriating Brown and praising the SNP we should get the up-to-date figures.

Then we can get on with it.

A Las Barricadas!

Legal action continues apace in the battle to stop the (insert raging epithet here) takeover of HBoS. When I say apace, I mean apace, there'll be lawyers having to actually work for a living for a change.

I call for more! Alistair Darling should make it clear now what Government support HBoS would get if the vote was to plough a lone furrow. Hornby and co should also be making clear how the internal situation of the bank has changed since the Lloyds TSB ram-raid was announced.

This song wouldn't work with any other bank...
Negras tormentas agitan los aires
nubes oscuras nos impiden ver
Aunque nos espere el dolor y la muerte
contra el enemigo nos llama el deber.

El bien más preciado
es la libertad
hay que defenderla
con fe y con valor.

Mortgages and Vultures

Fascinating programme on Radio 4 last night - about how the Mortgage Protocol is mince.

The woman who was about to be evicted from her home is an HBoS employee in arrears with an HBoS mortgage - the court (in Bristol) was powerless in spite of her proposing a repayment plan. Her solicitor reasoned that the only reason she got a deal eventually was that it was simply a response to pressure on the bank in the form of an email from Radio 4. The power of journalists ...

The web story has her home being saved 'days' before eviction. I think, though, that if you use the 'listen again' function you'll hear them say it was the evening before eviction.

Vulture funds
Something else that was touched on in the programme is that hedge funds and vulture funds have started buying up mortgages which carry a higher risk of default than average.

You may recall vulture funds from the Jubilee Debt Campaign highlighting their activities or from DfID's response to the Jubilee requests or from journalists pointing out that the activities of the vultures meant that international aid money was coming straight back to the developed world as profit on debt owed (interest paid, seldom any capital paid off) or from the odd politician expressing concern.

It's a lucrative business, one not easily dissociated from the UK.

There are some who put forward arguments in favour of the vulture funds, though, and it's worth reading what they say. Even when they don't say much. There are others who don't defend the funds but do point out that it's not necessarily easy to tell the good guys from the bad. There are always different stories to be told.

Vultures descending on property mortgage markets wouldn't be an original occurrence, and some banks have already tried to offload some debts at the beginning of this year's chaos (not that it did Lehman much good), and when we save HBoS from the takeover there will be a job to do in cleaning up the bank. US funds have already been eyeing up European assets.

It's often the same people doing the dirty deed and foreclosing who did the equally dirty deed in mis-selling. Selling banks will write off the debts at a substantial loss, the funds buying the debts (which may even be owned or partly owned by the selling banks allowing them to write it off the balance sheet but still keep repackaged debt as an asset whether it came originally from them or not) will demand full repayment.

For the people struggling to make the repayments it's very bad news. The vulture fund has little, if any, interest in looking at ways to keep you in your home and have you finish paying off your mortgage. It may actually be in their interest to repossess, sell for more than they bought the debt for (whether that's on the open market or at auction), and still have you owe them the rest of your mortgage. Banks get out from under the bad debt, the funds make money, it's a win-win-lose situation - and guess who the losers are?

There may be some good news. There was a chap who was interested in making sure that action was taken - strong action - to curb the activities of vulture funds. He's been vociferous, certainly, if not very effective. He was talking about vulture funds as they were attacking the poorer nations of the world, but surely Gordon Brown will want to stop the vultures wherever they attack?

Sunday, 30 November 2008

See that there economy thingummyjiggerybobcat?

It would appear that Alistair Darling has a sense of irony unparalleled in modern politics - claiming that an independent Scotland might face some economic problems (no doubt it will) while admitting that he doesn't have a scoobies what to do about the incredible economic mess of the UK.

People really do look to him like some Moses figure who is going to lead them away from this economic mess to the promised land.
Imagine being able to say that with a straight face! I've just been listening to Norman Lamont on Straight Talk on the BBC News channel critiquing Labour's atrocious handling of the economy and the running of consecutive enormous fiscal deficits. He should know - he grew up on a croft near Lerwick called Loot ...

The person making the real movement, is Kevin Rudd, the Australian PM. Australia is so much better off than we are that there are Australians complaining that their budget surplus (yes, surplus) is only $5.2 billion (Oz dollars, so about £2.218 bn). The UK ran a £38.7 bn deficit last year. Likewise, Australia had a trade surplus of $1.5 bn in September while the UK had a deficit of £3.9 bn in the same month - which was a narrowing deficit.
Now then, advice for Ally the Chancellor from my position as pontificator to the wall -
1. There won't be a retail solution to this recession, people don't have the confidence to spend and a pitiful reduction in VAT for the first year of a three year recession just makes you look unambitious.

2. Small businesses will be the driver of the recovery but they'll have to survive first - then they'll need to have the space to grow - that means that they'll need plentiful and long-lasting help.

3. People on low incomes are suffering and deserve consideration by their Governments, they need to cop a real break.


So, here's what to change your rescue package to:

1. Sod your silly VAT cut. EU regulations won't let you cut it below 15%, so let's leave it where it is, eh? Instead, cut the basic rate of income tax for the lowest earners and give them a wee break, you could cut it to, perhaps, 10%. An increase in the top rate is fine - as would be an extra couple of percent on the basic rate for those on the average wage.

2. Let's not have that rise in corporation tax for small businesses. Instead, let's be brave, cut it by a percent or two. Even better, cut it for the smallest businesses by a good 5% and then start looking at ways of making it easier for them to grow - that'll require flexibility; different solutions for different business sectors and different regions.

3. There's action needed to cut food prices and heating prices - what about support for food co-ops, for example?
I'll be back later with more sage advice.

Mind how you go.

Legal challenge to Mandelson decision

Another champion is rising.

The Merger Action Group has launched a legal challenge to Mandelson's decision to railroad through the Lloyds TSB takeover of HBoS.

Sign up and support them I say!

Friday, 28 November 2008

You can always rely on George

Ah, the good Lord Foulkes in chamber yesterday not asking the question he wanted answered:

Department for International Development (Headquarters)

3. George Foulkes (Lothians) (Lab):
To ask the Scottish Executive what plans the Minister for Europe, External Affairs and Culture has to visit the headquarters of the Department for International Development in East Kilbride. (S3O-4977)
The Minister for Europe, External Affairs and Culture (Linda Fabiani): I have no plans to visit the headquarters of the Department for International Development in East Kilbride in the near future.
George Foulkes: I am absolutely astonished by that answer. The minister says that she has no plans to visit the headquarters, yet a few weeks ago she said that her international development plans were going to be closely integrated with the Department for International Development's work. Forty per cent of the DFID staff are at East Kilbride, including the civil society unit, which spends hundreds of millions of pounds in Malawi and elsewhere. When I was a minister there, I hosted a meeting with the President of Malawi.
The Presiding Officer: The member should ask a question, please.
George Foulkes: Would not the minister's rhetoric about integrating with the Department for International Development's programme and making her work complementary be more acceptable, and more like the reality, if she took the trouble to go to East Kilbride—it is not far away—to talk to the people who know what they are doing in international development, unlike her?
Linda Fabiani: I visited DFID's Scottish headquarters on Friday 7 November—three weeks ago. There are currently no plans to undertake another visit but, as always, we will continue to liaise with DFID.

Thursday, 27 November 2008

Baccalaureates Launched

The Scottish Language Baccalaureate and Scottish Science Baccalaureates have been launched. They'll give Scottish pupils a competitive edge in qualifications.

Another election promise delivered!

Suffer the Children

Those free school meals for tiny little hungry children ...
The Statutory Instrument passed through Parliament today - a good thing! Once again, Labour, Conservative and Lib Dem members spoke out against it.

Amendments to the motion to pass came from Labour and from the Conservatives (I can't understand Liz Smith's positioning on anything much, she's a strange fish - maybe it was being a teacher in the private sector that skewed her views on state education?), but neither of these amendments
When Labour's Karen Whitefield rose to her feet to oppose feeding small children I was dumfoonert. She even said she visited a school breakfast club this morning (leave those kids alone woman) and that the school she was at didn't have enough money to provide free school meals. That'll be why there's money in the local government settlement from 2010 to pay for it then, eh?
The Lib Dems waffled about means-testing these 5-year olds, missing the point entirely about not stigmatising children.

28 MSPs voted against the motion - voted to keep food out of the mouths of small people. The Lib Dems were whipped to vote against free school meals!

Wednesday, 26 November 2008

Dram right!

I see the Chancellor is reviewing his crazy plans for whisky duty.

Must be a result of my excellent reasoning, eh?

No control

Darling is on his feet in the chamber just now and has just claimed that neither he nor his Ministers had read the documents on the VAT change which were published with Stephen Timms' name on them.

I woudn't expect Ministers to read every word of every document that comes out from their departments, but surely they think that the proposed change to VAT is a wee bit important?

Tuesday, 25 November 2008

Och, that pre-budgetary stuff is all nonsense

Thank you Darling! He's made a pig's ear of it, and here's why:

VAT
Glenn Campbell on Newsnicht last night said that the VAT cut would be £10 off the price of a £400 telly and asked how that would encourage spending. A panel guest (I forget his name, sorry) said it was £12. Actually, it would be £8.52 off the price of a £400 telly, here's the sums - divide by 1.175 to remove the current rate of VAT (17.5), then multiply the result by 1.15 to add on the new rate of VAT (15%) - £400/1.175= £340.42 (rounded down) £340.42*1.15= £391.48. You could, of course, just multiply by 0.9787 to get the same result.

Anyway, that's not the point, this is the point - there will be no reduction in the price of retail goods. Shops set prices at a level that encourages sales rather than a level decided by a formula which includes VAT. For example, prices ending in 99 encourage more sales than prices ending otherwise (academics actually study this stuff) and a product's place in the range of prices gives customers an indication of its value and quality - malt whisky getting sold at the same price as Shuggie's Quality Own Brand will not sell - this manifests itself in some interesting ways. Some products will be kept at a higher price to convey an impression of quality to the consumer.

So big retail outlets won't be changing their prices, they'll just take that extra wee bit profit that Darling has offered them.
Additionally, of course, the reduction doesn't apply to anything which has VAT charged at something other than standard rate - sanitary products, domestic fuel and power, or the installation of energy-saving materials, for example.

It also doesn't apply to businesses on the agricultural flat rate scheme, and the other flat rate scheme has some businesses getting reductions and other businesses not getting any reductions. The flat rate scheme allows small businesses to pay a percentage of their turnover instead of having to work out VAT - have a look at Annexe E. Small businesses, in general, won't be seeing any benefit from the VAT reduction. You would have thought that the Government would be more interested in helping small businesses, wouldn't you?


National Insurance
Mrs Shuggie McDufflecoat has a small business. It's currently in a position where taking on an extra member of staff would help it to grow so Mrs Shuggie McDufflecoat is looking at her turnover and her costs and finds that employing a new member of staff is on the margins of affordability. The increase in NI may not be very large and it won't be coming in until after the general election (what a coincidence), but it will make it more difficult for small businesses to afford to expand, and employers thinking now about employing staff will have to take into account future costs.

The increase in National Insurance takes the employee's contribution up to 11.5% of the salary between £5,435 and £40,040 and the employer's contribution up to 13.3% - together that represents a sum equivalent 24.8% of an employee's salary between the two thresholds taken in National Insurance contributions (it reduces to 1% for the employee above the upper limit but the employer has the full whack to pay). That's before Income Tax.

You would have thought that the Government would be more interested in helping small businesses to grow, wouldn't you? Especially when we will need the growth of small businesses to help climb out of Labour's recession.

Income Tax
The cut in income tax - how good was that? Increase in the personal allowance will be £440, tax rates are staying the same (20% at this level), so the tax cut will amount to £88 a year or £1.69 a week. Stunning!

What about that restriction on the personal allowance for high earners? They'll lose personal allowance at the rate of 50% of the amount by which their income exceeds £100,000 up to a limit of half of the personal allowance until £140,000 where the thing kicks in again to remove the rest of the personal allowance.

Given that this will affect their tax liability on the lower rate and using the 2009 thresholds (since the 2010 ones haven't been set yet), the effect of this measure will be to increase tax by £647.50 (£12.45 a week) for people earning between £112,950 and £140,000 and by another £647.50 for people earning more than £152,950. The pips are going to squeak at £24.90 a week or so in 2010.

What about the increase to 45%? Well, it only applies above £150,000 (only 2% of the UK population earns more than £150,000), so you'd have to be earning £160,400 before you were paying an extra tenner a week. Of course, these earners will have lost their personal allowance.
Sin taxes
You'll notice that, while he was very clear about VAT coming down - and then going back up, Darling mentioned excise duties going up and then, well, nothing. Expect them to stay up. Darling did say that he was putting up duty to off-set the VAT reduction. Is that true?

Petrol and Diesel
Petrol and diesel will be going up by 2p a litre on December 1st (making the duty 52.35 pence on a litre of unleaded - same on diesel) and another 1.84 pence in April (I imagine the pump price will go up another full 2p).

Let's take 92.7p as the price of unleaded. The VAT on that at the moment is 13.8p. The price excluding VAT is 78.9p. Add on the 2p duty rise (December 1) so the price ex-VAT is 81.9p, the VAT on that at the new rate of 15% is 12.3p. The overall tax on petrol just went up. Add on April's rise and the VAT is 12.6p. Tax and duty on a litre of unleaded petrol will go up from the 64.1p that it is at present to 66.7p in April.

If you're on LPG instead of petrol, bad news - duty on that is going up by more than 4p in December and more than 4p in April. LPG is at 52.6p per litre, 44.8p ex-VAT. Add the 4.3p increase in duty in December and apply the 15% VAT - 56.5p and in April 61.2p. You're getting fleeced. Biofuels will pay duty at the same rate as petrol from 2010.

A business which uses motorised transport in the course of that business is going to be worse off. The costs of transportation will increase, leading to rises in the cost of food, clothes, etc. Labour - tough on businesses, tough on the customers of businesses.

Spirits
The duty on a bottle of whisky will be £6.454 (more if it's stronger than 40% abv). The duty is £23.05 per litre of pure alcohol (£23.05*0.4*0.7= £6.454). It's an 8% rise, indicating that the duty previously was around £5.976, a rise of 47.8p.

VAT on the old duty was £1.046 VAT on the new duty will be £0.968. Together, old duty and VAT on the duty was £7.022 and the new equivalent will be £7.422 (there's the VAT on the rest of the product to be considered as well.

When I looked here there was a bottle of Bells for £12.99. Take off VAT - £11.055; remove the duty - £5.079 is the actual product price. Add on the new duty - £11.533; add on the new VAT - £13.263. Whisky gets more expensive. Just matching the VAT reduction? Aye, right.

Tobacco
Ad Valorem duty (VAT on tobacco) is going up by 4% on products other than cigarettes and up from 22% to 24% on cigarettes. Cigarettes also have a specific duty of £112.07 per 1,000 cigarettes (£2.24 per 20 packet). Duties are now:
• cigarettes: 24 per cent of the retail price plus £112.07 per thousand cigarettes;
• hand-rolling tobacco: £122.01 per kilogram;
• cigars: £169.74 per kilogram;
• other smoking tobacco and chewing tobacco: £74.63 per kilogram.
More than off-setting the VAT cut.

Heating oils:
Duty is going up on heating oils. Not by much (less than 1p per litre) but the percentage increase there is fairly large, considering that rates are currently around 10p per litre. There's the wee note in there that, in future, these duties will rise at the same rate as road fuel duty - that means the Chancellor won't have to tell people when he's putting up the price of heating their homes.

Small businesses
We've seen that small businesses won't be getting the benefits that large businesses will get from the VAT cut and we know that the fuel duty rises will hurt them. Even turning to drink has just got more expensive for them. Time for a wee look at other effects on them.

The rise in small business corporation tax has been deferred for a year - good news except that it means that small businesses will be getting hit with a tax hike just when they're trying to repair the damage done by Labour's recession.

The trading loss carry-back is good, but I'm at a loss to understand why the Chancellor thinks that this tax cut will cost the public purse money for the first two years but then bring in £15 million in the third year (page 10). How will a mechanism to allow companies to write off losses against profits in previous years bring in money?

Actually, that same table shows that the Chancellor thinks that deferring the corporation tax increase for one year will continue to cost money even after it's been implemented.
Hang on!
Let's have a look at that costings table (they're always fun):

There's a cap being put on Housing Benefit to save the Government £5m next year and £15m in each of the two following years.

There's money expected as income to the Government from increasing Class 3 National Insurance contributions (they're the voluntary ones for people who have had career breaks to top up their pensions), but the blurb says:
the Government will change the class 3 voluntary national insurance contribution rules to allow those reaching state pension age between April 2008 and April 2015 with 20 qualifying national insurance years to purchase up to six additional years from 1975-76. The package is intended to be cost neutral overall and the class 3 rate will therefore rise accordingly to £12.05 a week in April 2009.
If it's cost neutral, where's the Government profit coming from?
Darling is to defer action on income shifting which is when a person ascribes part of their earnings to another person to avoid paying a high rate of tax on those earnings. Surely that should be illegal? Not according to Darling who will spend £485 million over the next three years taking no action on it. Build you own tax cuts with your friendly Labour Government - if you're already wealthy.

He'll only spend £170 million on giving higher Child Benefit payments (for three months).

Air Passenger duty
Page 125 of the full report:
reforming air passenger duty from 1 November 2009, moving from two to four distance bands to improve environmental signals. The Government has decided not to proceed with a per-plane tax in order to ensure greater stability and protect competitiveness at a time of economic uncertainty.
It's in 2,000 mile bands (from London, of course ...) from A to D, and two rates in each band, one for the cheapest seats, one for all other seats - unless there's only one class of seat in which case the higher rate applies (is this just to do in the budget airlines?). Here's the rates from November 2009:
A - £11 and £22
B - £45 and £90
C - £50 and £100
D - £55 and £110

Yes, that extra fiver really will dissuade everyone from flying that last 2,000 miles, right enough, but why is this indicated as a cost to Government when the rates are higher than the current rates? It can only be because the per-plane amount would have brought in more money. Environmental signals indeed - are there two doctors in the house to expand on this perchance?

Well then
All in all it's a rotten move, if you're not rich you'll get a tax cut of £1.69 a week which won't help you if you need to drive because fuel is about to go up again. Nor is there any action to bring food prices down, or energy prices or any of the other costs which have become painful recently. In fact, some of the measures will increase inflationary pressures on these items.

The VAT cut is a sham - it's pitifully small and won't result in price reductions in the shops.

Small businesses won't get any VAT benefit and will have to suffer fuel price increases before their corporation tax goes up in 2010.

Nearly everyone's taxes will be going up soon, you'd have to be earning less than £17,600 for the NI contributions increases to be less than your £88 a year tax cut - and the increases in duty couple with the return to 17.5% in VAT will catch most of us one way or another.
Not a drop of imagination in sight. Pitiful!

Monday, 24 November 2008

Pushmi-Pullyu Murphy

Jim Murphy, the London Government's Cabinet Secretary for keeping the Scots in their Place, has an amazing ability - he can look both ways at once.

He claimed that Darling's satsuma and 5p piece stocking filler would boost the Scottish budget by £2 bn - but there would be 'belt tightening'.

Right, then ...
We'll have extra money but we won't have as much.

Friday, 21 November 2008

When politicians fail

Sometimes politicians just fail to do what is right. There are times when it's not their fault, that their best efforts didn't quite match the needs of the situation. Other times it is their fault, through poor judgement, spotting the problem too late, acting with undue haste, or not acting fast enough.

It's possible to forgive much of that if it's an unusual occurrence, we can all appreciate human frailty and can forgive both the error of the politician on one side and the rush to judgement of the politician on the other. Where a mistake has been honestly made and efforts are made to put it right, forgiveness is easy.

There are situations in which politicians should not be forgiven, though. When a politician in a position of power makes a mistake, a mistake which is clear, and fails to take steps to put right that error their actions should not be excused, especially when they have a chance to rectify the situation before the full effects make a full impact.

Today Gordon Brown and Alistair Darling are in the dock, accused of hasty action over HBoS, encouraging a takeover which breached the letter, the word, the sentence and the paragraph of competition rules as well as the spirit of the rules. They further stand accused of failure to take action to remedy the situation when it became crystal clear that the takeover - bad for HBoS, bad for customers, bad for competitors, bad for jobs, and bad for the economy - was unnecessary and that the bank was in no worse a position than any other bank in the UK and in a better position than some.

Darling and Brown are, I say, guilty of breaking the first rule of good governance - always strive to do your best.

George Mathewson and Peter Burt released a statement today on the campaign website. I've reprinted it below.

Sir Peter Burt and Sir George Mathewson noted the Chancellor’s 18th November statement to Parliament on the recapitalization and funding terms on which the Government now is prepared to offer any bank, which sought assistance or sought to change the terms agreed in October. The Government’s statement has raised several hurdles very high and has made it crystal clear that they do not want and are not prepared to facilitate HBOS remaining independent. Accordingly Sir Peter and Sir George reluctantly decided to discontinue their campaign.

Notwithstanding this announcement Sir Peter and Sir George feel that the recapitalization scheme announced by the Government on 8th October was an excellent response to a deepening crisis.

Sir Peter and Sir George’s contention was that the Board of HBOS failed to explore the alternatives available to HBOS adequately at the time of the recapitalization scheme’s creation. The HBOS Board apparently failed to either argue for a better exchange ratio for HBOS shareholders from Lloyds or, at least to hold Lloyds to the
original terms of the deal. Prior to the Chancellor’s announcement we believed we could assist in this process.

The HBOS Board’s apparent apathy was further masked by the lack of transparency in the HBOS shareholder circular regarding the cost of keeping HBOS independent. Why hadn’t the Board of HBOS firmly established, as Lloyds have done, both the actual amount of the capital required by the FSA and the terms on which the Government were prepared to offer that capital? We still do not know. We can only surmise that either they did not ask or that it was the HBOS Board that failed to meet the hurdles for the funding set by Government at that time. At that point senior management changes at HBOS should have been made voluntarily.

What is particularly unfortunate is that there was an encouraging and increasing level of support, not least in financial terms. Although there was no prospect of raising all of the £11.5bn, which will be required to strengthen the new Lloyds Bank, from private sources we had offers of additional capital that would have raised more than the extra £500m needed to keep HBOS independent. Ironically the HBOS’ spokesman’s criticism that our proposal offered no additional money overlooked that fact that Lloyds themselves are providing no money at all and indeed will be in receipt of assistance at a level which is a relatively higher percentage of their capital base than
the £11.5bn is of HBOS’ capital.

However the rules have now been firmly established and Sir Peter and Sir George regret that an opportunity to keep HBOS independent, albeit with the Government as the (temporary) major shareholder, has been lost along with thousands of jobs, unnecessarily as the UK economy struggles with recession. The anticompetitive
nature of this takeover will be borne by the community at large.

Nevertheless we think that Lloyds seized a great opportunity and our congratulations go to Sir Victor Blank and his colleagues for having done so. It may well be ‘the deal of the Century!’ We sincerely wish them and all the staff at Lloyds Bank the best of luck.

Finally Sir Peter and Sir George would like to thank all those who wrote, emailed or
called with messages of support and encouragement and with offers of financial help.