George….it’s time to embrace cutting income tax and slashing spending.  That’s a vote winner and it will bring us out of recession a damn sight quicker!

Cutting taxation.

A natural Conservative heartfelt belief.

It’s at our core.

And I hope we start saying it in the election campaign…..but I feel we wont because the Party will fear the attacks from Labour.

The mentality of Brown’s Government is that to raise more revenue it is essential to raise taxation: both in corporation tax and personal tax.  Hence why we saw the rise in personal taxation to 50p on earners above £150,000, (political ‘class war’ issues also played a hand to appease Labour’s traditional hard core vote).

What’s the result of the 50p tax……?  …….higher taxes are yielding LESS revenue as individuals are either using clever accountancy to avoid taxes, they are spending less or some even relocating from the UK, (the infamous Brain Drain).  The rich have less incentive to earn more, and more incentive to dodge tax.

As the Governor of the Bank of England has recognised.  Britain, with the low value of the pound, should be an extremely attractive place to set up business and be a haven for entrepreneurs.  It is also a great time to start, if you have money, to buy and invest in housing and shares as they have hit pretty much rock bottom — pending any seismic future shocks.

So to attract more business and investment to the UK, help turn the tide and bring the economy out of this damaging recession, now is the time that the Government should change tact and CUT TAX IMMEDIATELY. 

Firstly, to cut corporation tax.  Let’s stimulate our business to re-invest and take risks.  Let’s attract more business from abroad, who will of course invest, create much needed jobs, generate more revenue for the exchequer and importantly add to a growing sense of confidence in the business community.  This is surely better to stimulate the ‘engine’ of the economy than build up huge debts and pump money to prop up the economy and create thousands of jobs in the public sector.

Yes, confidence is the key word.  Imagine, a cut in personal taxation today.  It sends a bold message out, injects more money into people’s pockets, which as the slight uplift in retail sales shows, will be followed through into retail spending.  People need confidence and the tax system can be used to stimulate—prod—spur on confidence.  People need that fire lit under them.

This bold move is one that has been achieved in the past.  JFK boldly showed this theory is sound in 1960 and the Irish have clearly demonstrated this with lower corporation tax:  less tax means greater yields.  

And of course we can point to the Thatcher era when low taxes led to increased investment, greater confidence and rising exchequer revenue.  When Chancellor Nigel Lawson cut the top rate of income tax to 40% he unleashed unparalleled wealth creation and the government benefited from taking a smaller piece of a far larger pie. 

But Socialists and Lib Dems disagree vehemently with this and need proof.  Hence hopefully they will learn a lot from the table below taken from official HM Treasury statistics.

Just consider that the richest 1% currently pay 23% of all tax revenues collected.  The richest 5% pay 42% of the tax collected.  Only 11.5% comes from the bottom 50%.  Where should the Government concentrate it’s efforts to stimulate the economy and gain more tax revenue?  It does not take a huge brain to work that out!

“Share of total income liability” is available for selected years.  Expressed as a percentage

Note: from 1999, people taxed as individuals not families

The time has come for the British psyche to realise that the phrase ‘cutting taxes’ does not mean falling exchequer revenues….it means, when done properly, INCREASED exchequer revenues.   Increased revenues means less government debt, it means more employment for all….and guess what….a rise in the general living standards of all.

Let’s hear George Osbourne grab this mantle and if elected, demonstrate these principles in his first budget.

Chancellor Lawson:  He got it…and demonstrated it.  Lower tax = more revenue

Conference seems a long time ago.  I remember travelling home on the train sitting next to David Willets and Cheryl Gillian, full of optimism.  A great Conference.  Never underestimating the task ahead, key was that everything was pointing in the right direction.  George Osborne had just enjoyed the Conference of his life and delivered a speech which tackled the big issues and underlined the economic competence of the Conservatives.  David Cameron had delivered a barn storming speech which left all with hope, (yes that great word that Obama anchors campaigns around), that we were en route to a better future.  This was off the back of a dreadful Labour Conference that saw a less than half empty hall wearily trudge through a week of depression, until Lord Mandelson rallied their spirits, (and his future career prospects), with throws of inspiring rhetoric for the Labour faithful to finally have a sliver of hope themselves.

Things are bleak for this Government.  Indeed, for the country.

And yet…..opinion polls are throwing up mixed results.  Trending is that Conservatives are not dominating as much as we should be.  Local council by election results, are ‘disappointing’,(in the words of ConservativeHome’s Jonathan Isaby.  Iain Dale also asks the question why by-election results are not going our way).  Yes, there are always localised reasons at play at by-election results, and their impact can never be dismissed.  But we are not dominating.  Opinion polls are patchy and not as inspiring as the recent 17% lead polls.  Tim Montgomerie on ConservativeHome has alluded to a drop in Conservatives support post Lisbon Treaty ‘U-Turn’.  Many seem to agree with that sentiment on that blog site.  But there is more to it than Europe.

What is fundamentally true is that the Conservatives have so much ammunition at their disposal, the question why polls are not moving stronger in our favour is a valid one to ask!

Consider what’s happening around us…..

  -           The economy.  First into recession, last out.  And the deepest recession in Europe.  We hurtle catastrophically towards a £1 trillion debt that our children will still be paying off in years to come. Brown has got away with the biggest lie in Political history.  That lie?  That debt has been built up because Brown states he was saving the UK from recession, (actually he would say saving the world from recession but scrub that).  That’s like Tiger Woods saying he had 10 birdies in a round and his wife believing he was talking about Golf!   Brown was building debt way before this recession even started.  In the good times he was spending like a manic gambler at the roulette table, hoping the ball will end on black.  In the words of the IMF:  ‘Imbalances and balance sheet strains had emerged even before the recent global shocks triggered a sharp decline in economic activity’.  ie we were heading into recession and spending too heavily BEFORE the Global shocks took place. 

 -           Unemployment heads towards 3 million, (that’s by official figures), unofficially claims of 6 million seem more accurate.  That’s people’s lives wrecked, on hold, dignity stripped.  Benefits and dependency culture set in.

 -           Class War.  Entrepreneurs discouraged.  Bankers bashed.  Top talent packing their bags to work abroad as UK thumps those very people who can bring us out of slump, create jobs for others and generate tax revenues, pummelled to the ground, with more ferocity than an uppercut from Mike Tyson in his prime, by punitive tax rates.  50% for top earners.  40% threshold frozen.  More on NI.  VAT back up 2.5%.  Penalties on companies that reward bankers who make money, (the very people we need to save and keep in this country, not incentivise to work and benefit New York’s Stock Exchange). 

 -           The Unions start to flex their muscles.  Just as the nation was free from the strangulation and choking hold of the Unions, like in ‘The Shining’ ‘They’re back’!  Strikes on the increase, Union militancy.  Bob Crow back on the telly chanting his monotone messages like a failed XFactor auditionee.  The Post Office, on the brink of collapse, wont modernise, cancerously pumping money into its bottomless pension pit, faced by striking members, and growing competition.  The RMT, getting the Tube drivers out on strike, more often than we enjoy a boiling hot summers day that we can take off our shirts and bathe!  And that comes before the pending winter of discontent as Unions rally against Darling’s 1% pay rise limit for public sector workers.  Who will be out striking first?  Rush down Ladbroke’s and place your bet tonight. 

 -           Our population continues on its inextricable path towards 70 million.  Immigration remains unchecked.  Asylum seekers lost amongst the population.  Our open borders burden the UK putting huge strain on over stretched public services, with the NHS groaning under the weight, school classes getting bigger, new houses being built on green belt, predicted power shortages for the years ahead as we don’t have the power stations to support our surging nation, public transport wheezing and roads at a standstill. 

 -           We are in the midst of a deeply unpopular war.  Over 200 brave soldiers have been returned home in a coffin.  Debates over strategy have been rife.  More concerning than that, real questions over the equipment troops are issued with and the lack of protection eg helicopters, have undermined this Government.  There could not be a more inept and ‘uncaring’ Defence Minister in Bob Ainsworth.

 -           The Iraq enquiry is rapidly tarnishing the reputation of ‘Labour’s greatest Leader’, Tony Blair.  We hear daily about the lack of credible evidence of weapons of mass destruction and the inability of Saddam Hussein’s regime to produce workable ones.  Coded language comes from the Iraq Enquiry that George W Bush wanted a hard line and pushed Blair into it.  Bliar indeed.

 -           A House of Commons with politicians so morally corrupt that make even Ronnie Biggs look respectable.  Yes, you will retort that Conservative politicians have been just as bad.  BUT the Government have been poor in taking any lead in cleaning up this sh*tstorm of a mess.  Cameron, has pushed Brown all the way.  Even this week we hear of Prime Minister Brown repaying £500 for painting a shed!

 -           Europe.  The continued enslavery of the British people continues to the faceless unelected bureaucrats of Europe.  Now we have the dreaded Lisbon Treaty with the instantly forgettable, but powerful. President of the European Union, (Herman Van Rompuy), and Foreign Minister, Cathy Ashton, (a Brit who was as vocal in British politics as Sooty was to Children’s TV!).  Blair and Brown promised a referendum for the British people but it never ever emerged.  Yes, Cameron took some hammering on his so called U-turn but a referendum on a Treaty in force is daft.  Another referendum on whether we have given too much power away, hell yes.  The blame for our European ills lay firmly at Brown’s door.

-           Education, Education, Education.  Blair’s famous pledge that education was his first, second and third priority.  A memorable catch phrase that was almost Turette’s by nature, proved to be as reliable as Amy Whinehouse sticking to drinking coke in a bar all night !   Education failures rack up.  50,000 A-level students miss out on a place at university.  This year 52,000 more people applied to University but only 13,000 extra places were made available.  The number of young people not in employment, education or training (Neet) has leapt by more than 100,000 in the past year.  Government statistics show there are now almost 960,000 16- to 24-year-old Neets in England, more than 230,000 of whom are aged between 16 and 18.  Oh and the flagship policy, SAT’s…teachers aim to boycott them next year!

-           A big brother state that worms its way into every aspect of our lives.  Want to help out at your local school?  Drive friends Children to their Cubs or Girl Guides?  Got to be checked on the anti paedophile register first.

Quite literally I could go on all night listing failure after failure after failure.

Fertile ground to be in Opposition.  Too much to choose from.  Should be Christmas all year round.

Opinion polls should be absolutely hammering Labour for their incompetence.  Criminal incompetence.  But they aren’t.

Some recent polls have put the difference between Conservatives to 10% difference.  Labour commanding a mid – late 20’s position.

Who the hell is being polled?  Who is supporting this shower?

As we head towards an election, the most important in many a lifetime, Conservatives need to open up the gap and generate clear blue water.  This is the ‘Schumacher’ moment when we need to be so far ahead of the field, we need to be lapping not only the back markers but coming up to lap the entire field.  Schumacher never slowed up.  He pummelled his fellow drivers into the ground.  As we must do now.

So what is wrong?

Why are we not opening up more of a gap?

Many commentators say that Conservatives Agenda is not yet bought by the British people.  Voters don’t quite trust us as yet.  They don’t understand what we stand for.  They like nice Mr Cameron but don’t have a feel for what he would do.

Much of this can be brought out in the wash in an election campaign say Conservative campaign team leaders.  Maybe…in them we have to trust!  We are not privy to the campaign they intend to use to convince the people.

But one suggestion I would impart onto David, Eric, George & William is that the key word around the campaigns table must be emotion.  Emotion is what politics lacks.  Emotion means getting personal.  It means relating to the ordinary person in the street.  Emotion creates and bonds loyalty and trust.

Politics today is too focused on debating statistics or policies.  As we all fight the election in the middle ground, choices get confused, differences misunderstood by the public, whose political antenna is not as attuned as Westminster politicians think.  I say we all fight in the middle, the key word is that all parties want to be perceived as in the middle, to attract the largest number of voters.  Matters not that policies may be more left or right wing, the centre is where we all will fight, (rightly or wrongly in your opinion).

Margaret Thatcher and Norman Tebbit had their finger on the pulse of the people.  They spoke in terms that people understood.  They personalised and humanised issues that people could relate to.  Politicians are forgetting that, just as any film director tries to do, it is about getting someone to believe in what they see.  Emotion is created by personalising issues.  Remember when Margaret Thatcher turned complex economic issues into the language that people understood.  On spending she equated the state to the family.  We cannot spend what we cannot afford.  When we are at home, if we cannot afford it, we save and then we can afford it, we buy it.  Simple language but the people loved it.  The housewife spoke!  Powerful and it resonated.  More so that today’s debate which quotes pure stats and percentages that Joe public does not understand…or will try to understand as they worry whether Joe, Stacey or Olly will win the XFactor!

Unemployment is not about a statistic of 3 million people it is about Mr Jones, who worked all his life, bought his own council house, can’t find work, wife fallen ill, daughter can’t afford University, a man depressed, lost his dignity but wants better for his family…and is fighting to earn money.  In him we respect and want to see him do well.

The health service is not about dirty corridors, increases in disease, rising cancer death rates, it is about Mrs Hughes, a mother who has a family of 3 beautiful daughters, husband died at war, who is diagnosed with cancer and facing life’s hardest choices.  How do we help her and her daughters.

Afghanistan is so more more than a statistic 200 dead, it is about John, a brave soldier on the front line who died by roadside ambush, a wife pregnant with his unborn daughter, a family torn apart.  How we help that family of a man who gave the ultimate sacrifice for all of us.

Public debt is not about a figure of trillion pounds.  It is about Mary, who is struggling to pay her mortgage, close to repossession, working for a company that is struggling to get credit, that is laying off workers, (her friends).

Violent crime is not about a percentage.  It is about 8 year old Sarah, whose father went to pick up a takeaway for the family, but never came home as youths taunted him, attacked him and used a knife in a savage unprovoked attack.

David Cameron is a thoroughly decent man.  Post the tragic death of Ivan the public saw a different side to the Politician.  They related to him.  A family man.  A bereaving dad.  A loving husband.  And they could associate with that.  We see less of the personal side of David of late.  That loving family man, the dad, the husband, has been less visible.   The emotion of the man not emanating out.

Some may shout this down.

But just sit and watch ‘Britain’s Got Talent’ or ‘The X Factor’.  Watch how contestant’s are introduced.  How emotion is used to get that tear welling up in your eye.  Get that lump in your throat.  Make you leap our your chair and vote for them because, for that moment in time, ‘they’ matter to you more than anything else.  You support them.  You don’t care paying a phone vote because you feel better in yourself for supporting them.  You feel you are making a difference.  We can all point to stories used on shows like this.  The daughter who was told by her dad to audition for Britain’s Got Talent by a dad, who died suddenly and she is now doing this for him.  Who did not feel emotional.

So, David Cameron, more than anyone, realises the election is not in the bag.  By a long way.  It’s not over until he faces the cameras on election night after Gordon Brown has conceded defeat.

So dangerous waters lie ahead.  Gordon Brown has been getting more confident of late.  The last two PMQ’s have been his strongest for a long time.  Iain Dale even concluded that Brown beat Cameron in one of them.  Unheard of!  The economy will start to turn round in the new year.  Brown must sit by the fire at No.10 with Sarah over a mug of hot chocolate and array of biscuits, (as he can’t decide his favourite), and really laugh.  ‘Sarah, look at how bad a mess everything is and yet look at those polls.  We are only 10% behind!  Even with the state of the UK as it is the Conservatives can’t kill us off.  We could still win this Sarah!’…..as she forlornly and adoringly looks into the eye of her ‘hero’! 

And things can change in politics.  The nightmare scenario still exists.  What if Gordon Brown steps down early next year?  A new Labour Leader emerges, be it Johnson, Miliband, Purnell or Mandelson, and starts to distance themselves from Brown’s policies, as the economy picks up and as they benefit from a honeymoon period in the polls, that any new leader always does.

Could Labour win the next election.  Yes.  The public may do a 1992 and shock and keep an ‘unpopular’ Government in.  Better the devil you know.  ‘Oh well things are getting better let’s stick with Labour’.

Worst case, as Ken Clarke would say, a hung Parliament.  The best of no worlds.

Election loss.  Conservatives would tear themselves apart.  Many keeping their lips sealed now for Party Unity would feel empowered to state their case.  Something none of us ever wants to see ever again.

So let’s see more spark to our Opposition.  Let’s see our front bench hammering the Government ever harder.  Let’s see emotion, personalisation and humanisation used to bring issues closer to the public, so they understand what really is going on.

We cannot afford, as a Great Nation, to see Labour in again.

In a recent comment to Scott Newton’s guest blog, “Why Cutting Income Tax, Cutting Red Tape and Deregulating Business is essential for the UK’s Future.” I promised to write more on UK Tax Policy.

I must add that these are my personal observations and are not intended to upset anyone…

…Including Scott who’s piece is right on the mark. (Well done Scott!)

For the past 4 years my company (www.ditg.org.uk) has been funded by the worlds largest ICT brands to establish a replacement for the Government’s Home Computing Initiative (HCI).

HCI was budget measure implemented by Gordon Brown as a Tax Incentive for employees. Under Section 320 of the Finance Act, employees could acquire up to £2500 worth computer equipment from their employer Income Tax exempt. In turn, employers enjoyed an exemption on Class 1A National Insurance on the amounts salary sacrificed by the employee.

This created an industry worth £450 Million to the UK and about 2500 related employment opportunities.

Unfortunately, the exemption was removed in Budget 2006. (It was proving too successful?)

This resulted in one of the longest cross-examinations during the reading for a finance bill in recent times. (Well worth a read on Hanson – see the below link).

The Government cited “abuse” as the reason for removing the benefit and pledged to “refocus efforts on those most in need”. Check out the written evidence taken at the time:

http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtreasy/994/994we14.htm

http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtreasy/994/994we08.htm

http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtreasy/994/994we06.htm

YOU MUST READ THIS NEXT ONE, IT IS NOT SPECIFICALLY HCI, BUT IS A GREAT READ.

IT ALSO SHOW THAT INSPITE OF WHAT YOU MAY THINK, WE DO RETAIN A AN OPEN AN UNBVIASED RECORD OF PUBLIC COMMENT AS PART OF UK POLITICS.

IT IS ALSO HILARIOUS:

http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtreasy/994/994we07.htm

Just in case you don’t want to click off the blog – here is a taster:

“The rhetoric of “transformation”, “reform”, “investment”, “transparency”, “devolution”, “prudent”, “cautious”, “audited” and “world class” is so indulgent and self-congratulatory that one wonders if some drafters inside the Treasury are parodying ministers.”

Professor David Heald, Comments on Budget 2006

Ouch!

At the time the Conservative Party and Liberal Democrats both lobbied against the decision and the recorded debate on Hansard is a fantastic read. It is also a good introduction to political punditry and how Politician’s really debate:

http://www.publications.parliament.uk/pa/cm200506/cmhansrd/vo060502/debtext/60502-22.htm

(The unanswered question for me was always how you can abuse a taxation system that assesses individual taxation in arrears…but then I am bias and this blog isn’t about HCI!)

So with this background you would think that it would be easy to gain Parliamentary support for a refocused replacement scheme developed over 4 years at a cost to the IT Industry (not the tax payer!) of over £2.6 Million.

Not so…

In practice the differentiation between the Parties on the issue of supporting a tax incentives is in practice not all that large. (Sorry Scott)

ALL Ministers (despite what the expenses scandal suggests) are concerned as to how to pay for any incentive, will it fit with policy…

So why post this blog at all?

Well my personal concern is not about the detail of Tax Policies, nor believe it or not HCI.

My concern is the Conservative approach. Will it win us the election?

Have a look at the following comparison of Labor and Tax summary statements.

John questions whether there is enough clear blue water between Labour & Conservatives on Tax policy……you decide!

Treat yourself and see if you can spot the difference!

Conservatives:

“We will freeze council tax for two years by reducing wasteful spending on advertising and consultancy in central government.”

Labour:

“We are reducing the amount of central prescription so that local authorities and their partners are better able to respond to local needs and demands.”

Conservatives:

“We will introduce a £50bn National Loan Guarantee Scheme to underwrite
bank lending to businesses and get credit flowing again.”

Labour (DirectGov):

“The government is announcing that it will offer capital and asset protection on those assets most affected by the current economic conditions. This will reduce banks’ uncertainty about the value of past investments, so providing them with greater confidence to lend in the future to creditworthy businesses, homeowners and consumers.”

Labour (Policy):

“Working with banks, Labour is providing loan guarantees to businesses to help them get the credit they need.”

Conservatives:

“We will provide tax cuts for new jobs with a £2.6bn package of tax breaks to get people into work, funded by money that would otherwise go on unemployment benefit.”

Labour:

“Extra cash to encourage employers to recruit people without jobs.”

“Stepping up the training and support people need to get back to work.”

Conservatives:

“We will cut the main rate of corporation tax to 25p and the small companies’ rate to 20p, paid for by scrapping complex reliefs and allowances”

Labour:

“Allowing businesses facing difficulties to spread their tax payments on a timetable they can afford.”

Conservatives:

“We will give small and medium-sized businesses a six-month VAT holiday, funded by a 7.5% interest rate on delayed payments.”

Labour:

“We have reduce VAT to 15%”

Conservatives:

“We will cut National Insurance by 1% for six months for firms with fewer than five employees, paid for from the above changes to the company tax regime.”  

Labour:

“When it is affordable, we will re-link the basic state pension to earnings.  We aim to do this by 2012 or by the end of the next parliament at the latest.”

Conservatives:

“We will abolish Stamp Duty for nine out of ten first-time buyers and raise the Inheritance Tax threshold to £1 million. Both of these changes will be funded by a flat-rate charge on non-domiciles.”

Labour:

“Extending the Stamp Duty holiday for properties under £175,000”

“Extra mortgage protection to help families stay in their homes”

“Helping savers by increasing the threshold of Individual Savings Accounts to over £10,000”

Now hopefully some clever contributors will now explain to me the differences in the comments…WAIT, some I can see! (And before you comment, I know that the Conservatives have shown how they will pay for it !!)

But you know it all does kind of sound the same to me…and taxation detail is part of my day job…

…So what hope does the deciding electorate have?

I do sincerely hope the Tory manifesto has some really clear taxation differentiators in it.

Otherwise I might get confused and vote for the wrong Party.

Here is a thought…committing to bring back s320 income tax benefits for computers would be a start.

Hey look, it is my daily bread…      

John Laity…..

Why Cutting Income Tax, Cutting Red Tape and Deregulating Business is essential for the UK’s Future : by Scott Newton. 
 
I run a Small Business in Newcastle upon Tyne and from my own personal experiences of running a Company I have come to the following Conclusion:
 
Britain as a whole is not a Naturally Big Government Socialist Country; we never have and never will be. This nation naturally believes in Low Taxes, Deregulation and supporting out Small Business’s and Enterprises. I believe that is part of the “greatness” of Britain. We are a very hard working nation providing Wealth Creation Opportunities to all people regardless of their background or personal Circumstances. Conservatives don’t judge people by their bank account we judge them by their actions.

The entrepreneurial talent is still there in our nation, people with new ideas, new Products, new inventions which will ultimately create the jobs that this country now so desperately needs now and in the future. Since Labours win in 1997 the Business World has gradually become more and more regulated and higher taxed which as a result I regard as Sanctions by this Government against out SME’s and talent. Every Labour Government since the war has put up unemployment and created more Public Sector jobs to hide the unemployment figures, hence why we are bankrupt; everyday 2000 people lose their jobs, and 56 Business’s or more fold. This really cannot carry on.
 
Upon the Conservative Win of David Cameron ad Prime Minister, George Osbourne as Chancellor and Ken Clarke and Business Secretary, this nation and the new Leaders must  back its Business people and it’s new wave of talent to create the new opportunities for the new jobs and new ideas. First there must be a reduction in taxes, we cannot carry on with the way we are going having huge Socialist over manning and Government jobs when there is no one actually funding this none Productive Public Sector bureaucracy which many civil Servants regard as “Cushy”.
 
We must reduce the size of this Government State and bring more power back to the people.
Margaret Thatcher had the right ideas and she was excellent, I think David Cameron must have the Thatcherism fight for Business in him.
 
Deregulating Business’s is also what I regard as mandatory; so many people have the right idea and potential to start a Business but don’t actually know how, or where to start. Many of us could be Unemployed, have the idea, have the product or service that could be a perfect little new market earner, but they get told by a Government Bureaucrat at the Local Job Centre they are not eligible for funding or initial backing due to their Current circumstances which I think this is so very wrong. Hence another Labour mistake of “creed of ignorance, philosophy of failure, gospel of envy” as Winston Churchill regarded the Socialists.
Now Red Tape is a pain, I run a Business I know what it is like, luckily I have not folded as yet but this regulation and red tape is a night mare. It’s all regulation and a constant stream of tick box Paper work for Business’s and it puts no doubt many people off running their own Company. We must move away from this finger wagging, over taxing, over regulating way of Socialism and look to the future of supporting our economy and getting Britain Moving again with new Private Enterprise.
 
I think, and I hope David and George have it in them to return power back to the people and I am 100% sure they will not let us down.

Scott Newton

Prime Minister cutting Trident budget.  Prime Minister cutting £2bn off education spending.  More cuts yet to be announced as Whitehall Mandarins currently do the maths.  Where does this leave the Tories?  Is the Emperor trying to steal our clothes?

One of the key differentiators over the summer, ‘clear blue water’, between Labour and Tories has been the early identification by the Conservatives that there needed to be spending cuts to reduce the spiralling deficit.  Pre the recess Gordon Brown was scornful of Cameron’s policies.  At times deeply patronising.  For Brown the choice was between ‘Tory cuts, Labour Investment’.  Cameron was Mr 10%.  The man would axe teachers, health workers, public sector jobs etc.  Oh how times have changed over the Summer.  Brown has been dragged kicking and screaming down the road to Damascus.

Labour have now u-turned.  They have done a complete 180 degree turn and now are prioritising expenditure reviews….only because necessity dictates.  Brown wants to avoid that visit to the IMF, cap in hand, for a bailout of bankrupt Britain….pre the election at least.  So how has this situation developed over the past 2 weeks?  First up, leaked Treasury documents showed that Labour have been in the planning stages of 10% cuts over this summer, (making the abuse that Brown gave Cameron as Mr 10% farcical and deeply offensive).  Ed Balls comes out at the weekend to announce £2bn cuts in education spending.  Yes, this involves axing teaching staff, (something Cameron had been accused of).  Now today, Brown announces he is planning to cut circa 1/4 off Trident spending.  More spending cuts will be announced over the coming weeks.

Trident is an easy card for Brown to play.  He needs his friends on the Left of the Party.  The card carrying dregs left of CND will rejoice that this decision is a move in their direction, albeit only 1 submarine!   It will be interesting to see how Cameron plays the Trident decision.  The Conservatives have always been the Party of Defence.  Known for strong investment into the defence of the realm.  Does he play this card?  Does Cameron say that Labour is leaving the country weaker, as evidenced by the Afghanistan war with soldiers left with insufficient manpower, equipment, armoury, transportation and air power, backing this up with cuts in Trident? 

Or does Cameron focus on economic reality.  He needs to make big cuts.  Not every area can be ring fenced.  The health service is sacrosanct. But cuts need to be made, is Trident one area?  Tough decisions, which will be political by nature.  Cameron also has to be aware of the prevailing times.  Obama’s New World Order, reduce nuclear proliferation.  But times that also pose new dangers.  Unpredictable rogue states like Iran, North Korea, an unstable Pakistan and a real threat of a non conclusion to the Afghanistan War, hence leaving the Taliban regaining control.  Real danger exists and must never be discounted.

The public spending debate is starting to change.  It is no longer a choice of cuts vs. investment.  It is a choice of what gets cut and how much?  As we move forward, ardent critics of the Government’s policy in the past who urged drastic cuts in spending like World Bank, IMF, IOD, CBI, will neutralize their stance / start to make positive noises towards Labour, as they at last announce cuts.  The public sometimes have short memories and hence while the Tories led the way on proposing cuts, the Government will demonstrate they have been cutting, hence moving some way to shortening / blurring the clear blue water we built on this issue.

Now what is the best policy for the Conservatives moving forward?  We could be out manoeuvred by Labour!  This is a key strategic decision by Cameron & team.

Option 1 is silence.  Do the Conservatives need to detail all the policy areas they would cut?  This in effect is the age old argument over whether an Opposition should reveal a shadow budget.  Given spending decisions are being made, unpopularity will follow for this Government.  Already in education, teaching unions are discussing the need for strike action.  Do the Conservatives need to enter into a spending squabble between the Government and Teaching Unions, when we can leave them to it and grab the pop corn and enjoy the fireworks and watch our poll ratings rise.   As other cuts are announced.  More attacks will be made on the Government by those affected.  Strikes will follow.  Public protests.  Marches.  Demonstrations.  All from which we could sit back and watch poll support, in theory rise!

Danger of this strategy is Labour’s response and whether it would resonate with the public.  It is clear that Mandolsen’s strategy in the next election will be, there will be gentle cuts under Labour, precision cuts by a skilled surgeon, and the slogan will be life would be worse under the Tories.  They will state that Tories would propose ‘savage’ cuts.  They will try to paint us as ideologically committed and turned on by spending cuts.  They will paint us as the Party of Unemployment.  This will be the line that every Cabinet Minister will subconsciously try to drum into the electorate’s head.  But will the electorate believe that?  Will they trust a proven lying Government?  That’s the gamble.

Option 2.  That is for the Conservatives to take charge of the spending question.  George Osborne could call a press conference this week and show economic leadership by providing more detail in what Conservatives propose to cut.  We know that Whitehall is preparing the figures and Ministers chewing over what has to be cut.  Before they announce their results, Osborne could have trumped them and then accused Labour of copying Conservative proposals.  We know that Labour are happy to steal our clothing.  Look at Tony Blair.  New Labour was socialism in a pink dress and nice stiletto’s, hiding the evils which lay beneath. 

These are interesting strategic times.  Critical as we approach the next election.  As Conservatives move further towards the Left to attract Liberal Democrat voters, we have to ensure that a clear choice still remains for the electorate.  Choosing between different shades of the same colour can make it easier for bigger poll swings, one way or another.  Electoral volatility is well known in our electoral history.  1992 is a great example, with Major beating the odds, despite poll ratings being wildly wrong.

Of course, Labour are mightily unpopular today.  But what if Brown does decide to retire early because of failing health.  What if the Labour Conference next week is so rebellious, that more follow Charles Clarke and openly criticise Brown, that Brown either quits for the Party of the men in grey coats knock at the doors of Number 10.  The smiling Alan Johnson, the most likely benefactor of Brown going, would enjoy a media bounce and chance to change the Party’s policies, say he is listening to the Public, then the subsequent 3 month honeymoon period, could make it tougher for the Conservatives to achieve the thumping majority we all crave for, (if a snap election had been called to correspond with the honeymoon period).

So what is the clear blue water?  What differentiates us from the other parties?  Well several cards are ours to play.  Core issues like Europe, immigration and taxation are natural Conservative areas.  These are currently on the back burner.  Unplayed winning hands.  Why are they not being played some will ask?

The answer is that polls show that the biggest pool of undecided voters lay in the centre ground.  Lib Dem supporters are volatile.  They are feeling ‘warm and fuzzy’ towards Conservatives.  Given our core supporters want / demand change away from this dreadful Socialist Government, we can bank on their support.  Their votes are in the bank, (however much they want a real swing to the right).  So naturally, as we saw Eric Pickles do last week, the Party seeks to attract Lib Dem voters by playing smooth, sensual, alluring tunes to their supporters to dance to.  Pickles won’t play the Europe card now, as Clegg himself identifies, Lib Dems and Conservatives have different visions of Europe.  Lib Dems love the European Superstate.  Hence, keep Europe off the table.  Discussing Europe will make us less appealing to Lib Dem floaters.  Whilst the Party can, it advisably follows the strategy of winning and building upon core support and keeping away from controversial issues that could be divisive.  No need to rock the boat in the delicate run up to the election.

But….here comes the but….if this Government start to reduce the clear blue water, starts rising in the polls, voters getting more confused at who offers what…..no doubt the European question, Immigration and Tax will raise their head again.  But only if and when the Party need to differentiate itself.  Until that point, the controversial issues will lie sleeping…….

Great to have Scott Newton back with another great blog contribution.  Over to you Scott.  Thanks, as ever, for your support.

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LABOUR INVESTMENT Vs TORY CUTS, ANOTHER PATHOLOGICAL LIE FROM LABOUR! AND WINTER OF DISCONTENT THE SECOND INEVITABLE?
 
So, Gordon Brown has finally said the Dreaded C Word ‘Cuts’. This time he is not referring to the Conservative Party with his Socialist dogmatic attitude. This time he is actually referring to his own Party, His own Policy, and His Understanding that we are officially bankrupt as a Country and the only way to reduce the Public Sector Debt is with Cuts. So the repeated phrases from Brown like, ‘Tory Cuts Vs Labour Investment is out the Window’ just like Gordon Brown and his Labour Government will be in the next General Election
 
I was watching the TUC live on BBC Parliament when the Prime Minister was making his annual Speech. He struck me as being a ‘bundle of Nerves’ when talking to the Congress. The Union’s were being typical of Protectionism for State Employed workers, demanding safety and Continuous Employment for all employees in the Recession. I think people like Brendan Barber & other Trade Union Bosses are living in a Dream World when it comes to making so much of a demand for protectionism and full state employment, when those in the productive Private Sector are really feeling the pinch due to Labour’s awful economic Policy since 1997.  Brown’s acts as Chancellor of keeping no Capital Afloat in the Treasury in case of a rainy Day have led to the demise of this Nation. He Spent, Spent, and Spent as Chancellor. When Sir John Major left office in the Labour win of 1997, interest Rates were Low, Debt’s Low, a Private Sector Economy Booming, a Managed Civil Service, and also Employment falling to record low numbers.  John Major had 1000x the integrity and Economic Competence of Alastair Darling, Tony Blair and Gordon Brown put together.

We have once again arrived at the time old Truth that all Labour Government’s run out of Money. We have a huge Government State squeezing the Productive bit of the Economy, Union’s once again out of control with Demands of Protectionism and more State Jobs being Created, we have a Bankrupt NHS which will have to be seriously looked at in 2011 if it is to be saved as a National Asset, A Welfare State in desperate need of reform, The Dark Prospect’s of Brown and Darling running to the IMF in need of emergency Capital.

So these next 8-9 Month’s before Election time is going to be played very dirty by Labour. But the people of the United Kingdom are wise and not stupid, they will not fall for it this time. So Brown save yourself the Bother, Resign get down to the Palace and Call that General Election! We in the Conservative Party are ready to Govern with a United Team, a United Party and an Economic Plan to move the country forward! And I will put every bit of faith in David and George. There is also the time old truth that Conservative Government always inherit a Bankrupt Nation a Labour Government. And we always seem to fix the problem!
 
Thank you. Scott Newton-Conservative Party Member. Newcastle upon Tyne.

Remember this classic election poster?  Labour’s tax bombshell.  The Sunday Telegraph reveals that according to Treasury Documents Labour, if they win the next election, are planning to increase income tax by 3p in the pound. The natural inclination of the Socialists returns.  Raising taxes on hard working families.  The truth is out.  Labour return to type!

The Treasury documents show a  big rise in projected income tax receipts between now and 2011-12, as well as in following years.  This points to Labour raising taxes immediately if they won the next election!  What a scary, nightmare scenario!

The Sunday Telegraph states that: “….Treasury tables showing the anticipated income tax receipts in the years up to 2013-14. The total falls to £140.5 billion this year, which most experts expect will include the worst of the recession, before rising slightly to £144.7 billion in 2010-11, which covers the period when the next election is expected to be held. In 2011-12, however, the projected income tax “take” leaps to £161.6 billion. The Tories said that rise could not be accounted for by the planned 50p tax rate for those on incomes of more than £150,000, which would raise just under £2 billion in 2011-12, or by people returning to work as the economy started to recover. They said the £14.8 billion “unexplained” increase in receipts would be the equivalent of putting 3p on the standard rate of income tax. The tables showed that receipts would rise still further in subsequent years, ending up at £191.8 billion in 2013-14 — a rise of 32.55 per cent from 2010-11. Further rises could lead to the amount taken through the tax increasing by almost a third by 2013-14, the Tories said. They claimed the rise in receipts could not be accounted for by people returning to work and the introduction of the new 50p top-rate tax on earnings of more than £150,000 a year”.

This boils down to the crux of the debate at the next election.  Labour will raise taxes.  Conservatives will cut spending, where prudent to do so.

The more we learn of Labour’s economic strategy, the better educated the electorate will become.  This election manifesto may well become the ‘longest suicide note in history’ for Labour. 

The more that is revealed the more interesting Labour’s Conference will be.  If poll ratings continue to decline, Gordon Brown may not survive his own Conference.  That’s unless he is, as rumours persist, is planning to announce that he is standing down as Prime Minister in his Conference speech…..?

We all want this dreadful recession to end.  Many of us have friends who have been affected by this harsh recession be it, losing their job, falling into debt, having their house re-possessed, destroying their marriage/family life, through the stress of potential redundancy / working longer hours to hold their jobs.  The sooner we see ‘green shoots’ the better.  Alastair Darling has been more encouraging lately as he sees those green shoots emerging and that the UK is back into recovery mode.  He has to be positive to talk up the markets but economic data paints a darker picture and one which shows that whilst the economy is fighting to get out of recession, the dangers of a double dip recession are serious and real.  For that we must all be worried.

Politics is currently in suspended animation.  Everything on hold until the next election.  The Government are deferring key decisions until after that election.  Tough medicine the economy needs NOW is being held until post election….why?….because tough decisions are unpopular and this Government wants to win the next election.  The lack of decision making, total procrastination at the heart of Government is damaging the economy still further.  Let’s have that election today and get on with the job of getting people back to work and this great economy on its path to recovery and prosperity.

Key economic data yesterday painted a worrying position.  Government debt is far worse than expected and spiralling.  Government revenue received through tax receipts is dropping like a stone whilst benefit payments are shooting skywards.  Bank lending, seen as key to small businesses rejuvenation, is again falling.  Banks, several of which this Government now own, (ie we do as British tax payers), are failing in their duty and stated promises to push bank lending again and get the economy moving.  These stated goals are not being implemented and not evident.  Many small businesses are delaying on investment decisions because they cannot get bank funding, (we heard that story from a recent post by Russ Rec).  In the meantime, whilst banks don’t lend, they are grabbing with the other hand.  Credit card rates are rising.  Bank charges reappearing for minuscule errors.  Private household debt the highest of European nations.

Despite the abuse Gordon Brown threw at David Cameron over the Conservatives Spending plans ie branding DC Mr 10%, we now see from leaked Treasury papers that the Government are planning 10% across the board cuts.  Hypocritical is one word Mr Brown!  The politics of dishonesty is never attractive and this electorate have long memories.

Lets make no bones about it, tough spending cuts HAVE to follow.  For the sake of the economy.  Whoever wins power.  Cuts will involved public sector job losses, hence adding to the unemployment queues.  But if we don’t, we are in danger of having to go cap in hand to the IMF for a bail out by them….again!.  They will impose tough conditions to the bail out and cuts could be even more savage.  We all know that UK PLC is in danger of losing its ‘AAA’ credit rating on the world stage. 

Any public sector losses, especially job losses/pay freezes, WILL see the Unions swing into action.  A winter of discontent beckons.  The Post Office have balloted members for strike action.  The Tube Drivers have been striking this year already.  We can expect the nation grinding to a halt at various stages this winter due to Union protests, hence damaging the recovery.  Power workers have threatened walkouts, hence the return of black outs is a real possibility.

So a lot can undermine our economy.  Double dip recession is a real possibility.  But lets take a closer look at the stats……

Our debt situation is horrific.  No over word describes the cancerous, spiralling debt this country is storing up for our children.  Yesterday we learn that bankrupt Britain borrowed £6,000 every second last month.  The Government amassed a humongous £16.1 billion debt in one month…the largest on record.  This was a 63% increase borrowed in the same month last year.  The Government has borrowed £63.5bn since the beginning of the financial year in April.  Britain’s overall debt now stands at £800bn—heading for the £1 trillion mark. That is frightening.

Our nation’s finances are out of control.  This is shameful mismanagement of the economy on a criminal scale.  Quantative easing draws mixed responses from the world’s best economists and whether it is having any effect on the UK economy.  The IMF even stated that they could not assess whether any impact had been made by pumping a huge amount into the economy.  Bank of England data shows that broad money supply grew by just 0.1% in August, after a 1.3% increase in July.  This dragged the annual growth rate down to 12.6% from 14.4% a month earlier, hence demonstrating quantative easing’s limited/zero effect.

It now looks like we are on track to amass a debt of over £200bn by the end of the fiscal year, some predicting an overshoot of Govt Spending targets by £50bn.

With the economy still seeing dire unemployment figures, predictably total tax take over the first five months of the year to the end of August was 11.4% lower compared to the first 5 months of last year, while benefits spending was 9.5% higher.

Net lending to British businesses also fell in July, (by the largest amount since records began).  it fell by £15.5bn, even more sharply than the £3.6bn drop in June.  Why?  Companies paid back more than banks lent.  The figures for August are projected to worsen.

We cannot gamble our nation’’s future any more….for the sake of our children let’s have that election now and let the people decide.

Worrying quote of the day…given we are heading for a debt of £1.2 trillion. 

Chancellor Alistair Darling has said the Government will spend “whatever we can” to keep people in work – as he predicts an end to the recession in the next few months.

Carrying on spending Alastair…grind this country further into the ground!

But…..Let us know how you intend to pay this money which you are merrily spending….but please tell us before the election.  The people deserve some Labour honesty.  Tax rises?  Labour’s tax bombshell returns?

The next election is still a long way from being won.  We cannot be complacent.  But it is interesting to start reflecting, should the Conservatives win, what Gordon Brown’s legacy will be.  What has he achieved?  How will history judge him?

All big questions.  Historians would say it is too early to judge as Prime Minister’s have to be viewed after a passage of time.  But there is no harm looking at what Gordon will potentially bequeath an incoming Conservative Administration.

So let’s do this succinctly and look at the major policy areas.

Economy

- Britain is in a deep recession.  It has been savage.  Brown claims this is due to Global economic shocks but the IMF has stated in their most recent report:  ‘Imbalances and balance sheet strains had emerged even before the recent global shocks triggered a sharp decline in economic activity’.  ie we were heading into recession BEFORE the Global shocks took place. 

- Changes made by Gordon Brown, as Chancellor, to the way banks regulated, widely credited for the severest banking crisis in the history of the UK.

- Unemployment of nearly 3 million, (official figures), (in reality closer to 6 million).

- Unprecedented National Debt of £2.2 trillion – just under 150pc of gross domestic product. This would be the worst debt total since the 1950s, when Britain was in the process of paying back its war debts.

- Bailing out a banking system.  Cost of the bailouts - broken down. Total: £904bn or 63% of GDP. A few highlights:

Northern Rock — £14.6bn.
Bradford & Bingley — £24bn
Kaupthing Singer & Friedlaender — £3.3bn
Landsbanki — £4.5bn
Heritable — £500m
Dunfermline — £1.6bn
All bank recapitalisation — £78.1bn
Credit Guarantee Scheme — £250bn
Working Capital Scheme — £11.5bn
Asset-Backed Securities Guarantee Scheme — £50bn
Asset Protection Scheme — £466bn

TOTAL TAXPAYER EXPOSURE: £904bn or 63% of GDP.

- UK Households severely in debt.  In the run-up to the crisis household debt increased to 175 percent of disposable income—one of the highest levels among advanced countries

- House prices have dropped by more than 20 percent from their peak and commercial real estate prices are down by 40 percent.

- Endemic Fraud.  HM Customs and Excise looks odds on to miss its stated target of reducing fraud and error to 5% by 2011.  It has been revealed that mistakes had risen to 8.6%, (from 7.8), in 2007 – 08, which are the latest figures available. This means that fraud and errors in the tax credit system cost £2 billion last year, which amounts to £1 in every £10 paid out.

- Falling tax receipts… Tax receipts have fallen by £32 billion according to the National Audit Office.  This includes a £6.4 billion drop in VAT income following Alastair Darling’s decision to cut the rate to 15% last November. 

- The policies that Brown has employed no-one knows if they are working.  The IMF cannot make any judgement on the effects of Quantative easing.  Is it working?  Has it had any effect?  Who knows?  The IMF don’t

- Lack of support for Small Business.  Claim:  This Government has offered more support to small businesses in the recession. Reality:  Official statistics show that it has guaranteed fewer loans in the year to march 31st. Businesses received 2,360 loan guarantees worth £177.8m under the Small Firms Loan Guarantee (SFLG) scheme and its successor the Enterprise Finance Guarantee (EFG) scheme, launched by Peter Mandolsen. Please remember…….This was a central plank in the Governments economic strategy for the recession. But this total, which includes loans approved before April 3rd is significantly less than the £205 guaranteed in the previous year, (taken from the Department for Business, Innovation and Skills report). This is also far below the scheme’s £360m budget set by the Government in March 2008, which was raised to £1.3bn in January.  This lack of lending under the schemes runs contrary to the banks’ pledges to make more use of the SFLG and EFG schemes.

Defence & Afghanistan

- An ongoing war, with no end date in sight.  No clear, measurable, objectives.

- A British Army with insufficient resources, including manpower and equipment eg helicopters.

- 207 dead soldiers and rising

- With a stated aim of helping democracy Helmand’s province, a region with a potential electorate of 80,000 voters….only 150 voted.  That’s a turnout of 0.18% .

 A dis-United Kingdom

- Between 1998 and 2003, for example, economic growth across different local areas of the UK ranged between the drastic extremes of minus 1.2 per cent and 9.6 per cent, expanding the gulf between the poorest and the most prosperous. These marked trends have persisted through the rest of the decade, further aggravating the national divide. The latest data for the 12 principal regions of the country show that total GDP growth from 2004 to 2007 ranged between 13 per cent in the West Midlands and in Wales to more than 20 per cent in London. The divergences of performance become ever greater, too, as one considers smaller localities. The consequence is that the gap between the standard of living in the most affluent parts of the nation and its poorest areas is now wider in Britain than in any other developed economy.

Politics

- Politicians with no respect and distrusted by the electorate following the expenses scandal.

- Brown’s team closely associated with the politics of smear and lying, the Damien McBride affair typifying the lows of Brown’s closest aides.

- Lack of Leadership.  Ducks the big issues eg whether he agreed with Megrahi release

Education

- 50,000 A-level students will miss out on a place at university.  This year 52,000 more people applied to University but only 13,000 extra places were made available.

- The number of young people not in employment, education or training (Neet) has leapt by more than 100,000 in the past year.  Government statistics show there are now almost 960,000 16- to 24-year-old Neets in England, more than 230,000 of whom are aged between 16 and 18. 

Welfare dependency

- NEARLY two-thirds of council housing tenants get all their rent paid by the taxpayer.  dip their hands in their pocket to pay a total of £10billion a year.  That is the equivalent of £476 every year for every privately-owned home in Britain.  How do you feel paying £476 of your money to this cause?

 Health

- A society ill prepared for Swine Flu.  Call centres manned by non medical professionals prescribing Tamiflu to everyone that calls.  Children advised not to take Tamiflu.  Vaccine in full production but untried and untested.

- Almost 1 in 4 adults in England are currently obese, and if we carry on as we are by 2050, 9 in 10 adults will be overweight or obese.  Did you know about 46% of men in England and 32% of women are overweight (a body mass index of 25-30 kg/m2), and an additional 17% of men and 21% of women are obese (a body mass index of more than 30 kg/m2 ).  The cost of overweight and obese individuals to the NHS is estimated to be £4.2 billion and is forecasted to more than double by 2050. The cost to the wider economy is £16 billion, and this is predicted to rise to £50 billion per year by 2050 if left unchecked

- Britain has the worst cancer survival rate in Western Europe.

Immigration

- MigrationWatch UK has provided an estimate that the population of the UK, (which is already the most overcrowded country in Europe), will hit………a massive 70 million in the next 20 years, (whoever is in power). Yes that is 9 million more than today.

- Keith Vaz, Chairman of the Home Affairs Committee has announced that tens of thousands of illegal immigrants have entered Britain posing as students at bogus colleges and coupled with this the Government is doing nothing to track them down.

Going Green

- Going Green ….at a cost and massive debt.  It is reported that Britain faces a bill of up to £1.2 trillion to meet the agreed target set by G8 nations to cut carbon dioxide emissions in each country by 80% by 2050. This is made up of £600bn from the estimated cost of making all transport low-carbon by switching to electric or furl efficient vehicles.  £350bn which is the estimated cost of moving the majority of industrial and domestic energy needs to low carbon electricity. £250bn estimated cost of moving all heating from gas boilers to low carbon equivalent.

I could go on…and on…..please let me know what you would add to this.

Not a great legacy Gordon.  How can you sleep at night?

Remember the arrogance of Gordon Brown, standing bolt upright in the House of Commons, and saying with all the conviction he could muster, that the UK was best placed to lead the world out of recession?  Well what happened Gordon?  Surely not spin?

The IMF has published a paper by the Chief Economist, Oliver Blanchard, that ‘the recovery has started’. ‘Sustaining it will require delicate rebalancing acts, both within and across countries’.   

His comments followed the news that Japan became the latest major economy to return to growth in the second quarter, following a recovery in German and French GDP.   How did Britain compare? We shrank 0.8%. So much for being best placed to lead the world out of recession.

Continuing the theme of economic misery, David Cameron, warns that the Government will be unable to honour it’s debts.   With Labour planning to borrow an extra £700 billion over 5 years and hence the national debt will hit £1.4 trillion that exposed Britain to economic risks.

Cameron, outlined that, in the past governments could borrow more cheaply that other institutions because investors are confident they will get their money back. Given that the government was borrowing so much, some investors may ask for higher interest rates, to reflect a higher risk of lending. Hence not repaying debt.

So Gordon, want to retract your comments?  You worry about your legacy….well it is clear….an economic legacy of mass unemployment, an economy in debt that may need to be bailed out by the IMF, downgraded by Standard & Poor from a ‘AAA’ credit rating…….how do you sleep at night?

Today we learn more of the shocking state of our nation.  We are in one hell of an economic mess.  It’s time for radical thinking and ‘workfare’.

First up, official figures show that the number of 18-24 year olds Not in Education, Employment or Training (NEET) have hit a record highof 835,000, (equivalent to 17.6% of that age bracket).  Graduates, fresh from their studies, find themselves winding their way in a queue for state benefits.  Put yourself in the shoes of a graduate.  Just finished your Degree, the purpose mainly being to give you a head start in life, and you have no where to go.  The wasting of a generation of talent.

This follows hot on the heels of a report by Policy Exchange think-tank which puts the actual number of Britons out of work and living on benefits at 5.96 million – (note Official Government figures state 2.44 million).  The UK is creating a generation dependent on welfare.

Policy Exchange calculates the figure based on the number of those of working age living off the following state benefits:

• 1.58 million on Jobseeker’s Allowance
• 2.6 million on incapacity benefit and the new Employment and Support Allowance
• 736,000 on lone parents’ benefits
• 400,000 on carers’ benefits
• 363,000 on disability benefits
• 95,000 on bereavement benefits
• 182,000 on other income-related benefits 

So this begs the question about the cost to us tax payers and the value society receives from paying blanket benefits.  The cost of the benefits system has risen from £93 billion in 1997 to £193 billion today.  That is a huge tax burden on the system especially given the cancerous debt burden which is spiralling daily.

So, it is time for Conservatives to think the unthinkable and enter a period of blue sky thinking over welfare and particularly unemployment benefits.

We are facing an unparalleled National Debt and hence a new approach is needed.  Workfare, whilst derided by the Left, should be on the table for debate today.  What is workfare?…. well…..it’s a scheme in which the long-term unemployed, in return for welfare payments, are required to undergo either skills training or work, in jobs supported by state subsidy or in community-service activities.  One of the most successful ‘workfare’ schemes has been employed in the USA, in the State of Wisconsin.  Workfare was the key principle behind the 1996 US federal welfare reforms which, with the threat of a loss of benefits after two years, led to a sharp drop in welfare recipients.  Welfare to work programs aim to break the cycle of poverty where welfare dependence can become a way of life.

So, Conservatives should include a Manifesto promise to introduce a system which obligates able – bodied unemployed people, not in re-training schemes, who are looking to work, to undertake work that is beneficial to their community in return for unemployment benefits.   This would be popular for two reason.  Firstly, taxpayers may feel that they get “more value for their welfare pounds” when they observe welfare recipients working for benefits.  This helps add to the political popularity of such schemes.  Secondly, putting unemployed people into a workplace-like environment attempts to address the argument that one of the biggest barriers to employment for the long-term unemployed is their lack of recent workforce experience.

There is plenty wrong with this country and where ‘workfare’ help could be utilised.  Imagine, if companies or the public sector were presented with extra workforce, at no extra charge to them, to help them in their business life.  Consider these ares for example:

-  Call Centres.  Rather than outsource all the call centre work to India and other Asian countries, why not staffed via workfare?

-  Schools:  Help at schools, after passing background checks, classroom help, help with PE, cleaning, making school dinners etc.

-  Manufacturing Industry:  Why not provide a stream of workers in our manufacturing plants.  This ‘free labour’ would help some of the struggling industries like the car industry.

-  Post Office:  Again, if the Post Office is to be privatised, why not utilise workfare for Post deliverers.

-  Hospitals:  Help with general work around the hospital eg the Hospital Superbug MRSA is due to dirty wards, why not have more cleaners in the hospitals instead of people sitting at home

-  Building:  with a boom in building contracts eg Olympics, more manual labour

-  Civil Service:  With so much bureaucracy, plenty of paperwork could be finally completed

-  Street cleaning & refuse collection:  (why should council pay full time salaries when this could be a workfare role?)

-  Help in Supermarkets/retail:  Be it Customer Service or managerial.

This is but a few examples of where labour can be directed.  Yes some is skilled, some unskilled.  But there are plenty of areas of opportunity to get Briatin working and ensure welfare dependence does not creep in.

To be successful a ‘workfare’ system has to include a number of elements:

- Applies to all able bodied unemployed

- Has time limits  (eg people need time to apply for new jobs etc and therefore workfare may exist for 4 days a week work or maybe all afternoons, as mornings are spent job seeking.

- Possesses Tiers of payments.  For those working more hours, they reach a higher level of state unemployment benefits.  Those who choose to work less or not participate get lower benefits.

-  Those who wish to re-train or get extra skills, receive a lower benefit as the state invests more into their future.  But this can be buttressed back up by workfare projects. 

- After 2 years, an individual would no longer receive state support.  Hence, they have the motivation to seek work, which may involve retraining. 

These ideas, obviously are fairly radical for the UK.  Again, desperate times, call for stronger measures.  We are faced with an unparalleled debt.  We have to maintain a work ethic amongst the population.  We have to ensure that the UK does not embed a welfare dependency culture.

Great guest blog today.  The return of John Laity who makes some sound observations about Bank profits.  (Thanks John).  Again, if any of you want to write a guest blog, please let me know, as you see, all is fully attributable to you.

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The billion dollar question – Who’s assets are being protected?

To address the “Global Downturn” the Government rushed through packages of support for UK Banking Institutions. Under the support plans, about £200bn was made available to banks under what is known as the Special Liquidity Scheme. This was set up by the Bank of England earlier this year. The Bank of England will, according to the Treasury, will “extend and widen” its facilities for banks to stablise the financial system. There is then an Additional £50bn security for banks:

The Treasury made available security to a number of banks should they need it to repair their balance sheet. The banks involved in the plan were listed as: Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland, Standard Chartered. The Government took stakes in the banks through so-called Preference shares.

The Government also committed to help banks refinance short and medium term debt. The Government guarantee this to the tune of £250bn.

Today Barclays published it’s Pre-tax profits (for the first six months) at £2.98bn ($5bn).

Immediately there was much press talk about a return to the “Bankers Bonus Culture” and the press quickly pointed out that such profits are only possible due to the £ bn’s spent by the tax payer. One of the most interesting comments came from the BBC, who pointed out that it is unfair that Barclay’s Investment operations should benefit from tax payer security as in effect it means the tax payer is underwriting the investment risk to the benefit of investors…So who might they be?

According to the 2007 Accounts for the Parliamentary Contributory Pension Fund (2006-2007) – Barclays Global Investments manages 50% of the pension funds assets. (15%  being held in Multi Asset Equity and 35% in Overseas Equity) …

According to the Governments Actuary’s Department On 01 April 2008, 634 MPs were active members of the Parliamentary Contributory Pension Scheme (PCPS). The equity (share) holding for the scheme being 67%.

Across the period April 2007 – March 2008 the investment return was – 4.0 %…So MP’s did suffer from an fund investment downturn. However, the PCPS is exempt from the Statutory Funding Objective (2004 Pensions Act) and benefits levels are guaranteed by legislation…

In all the rush to publish MP interests and expenses, certain things seem to remain unlisted by the Register of Members interests. Is there a listing buried away behind “employed relations” for personal investments, savings or share ownership?

I appreciate that such information could be deemed confidential…But the £ BILLION questions are these:

Have individual MPs benefited from investment returns handled by bailed out banks?

Will members of the Government receive shareholder dividends or returns of investments from Barclays?
We will probably never know, but 634 MPs have a safe bet for at least 50% of their pension provision in Barclays.
It is YOUR tax money being spent to provide bank stability, what are you going to see out of it?

This is the next in our series of Guest Blogs.  RussRec is an entrepreneur, with his own small business, the very person that forms the bedrock of this great nation.  But whilst he takes risks and works all the hours he can to help his business survive and grow, the Government is not…NOT…helping entrepreneurs and small businesses like Russrec’s….small businesses who create employment, create investment and will help pull this economy out of recession.  This is a personally written blog and one I think you will find very powerful. 

Thanks RussRec. 

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I run a small business specialising in recruitment. As early as December 2007 we saw that there was a likely credit crunch coming as the world owed trillions of dollars, and that the level of credit was unsustainable. Despite our continued success we downsized our office space, delayed decisions on replacing IT infrastructure and reduced our overheads. We increased our margins, and enjoyed a very successful period of trading from January 2008 through to July, we did begin to question our judgement but held firm as interest rates, inflation and the price of food, oil and energy were continuing to rise.

Around September 15^ththe business world literally stopped. Within a week the job briefs we were working on went ‘on-hold’ and no new ones came in. In one respect we were relieved as we were proved right but the lack of job briefs was increasingly worrying. We were busy though with hundreds of middle managers being made redundant – so we helped them the best we could. We setup new services, looked at new ventures with third parties and spoke to hundreds of our contacts, seeking briefs to fill. Whilst there were roles, there were not enough to sustain the business  so we had to make some decisions. Recognising that we were going to run out of money by the last quarter 2009, we set about radically slashing our overheads. We took pay cuts, and reduced our other overheads significantly. Our efforts in generating new business was beginning to pay off, however, people were very wary about hiring  so we spoke to our bank (Barclays) with whom we had been with for almost 20 years about a business loan – just in case. We were ‘allocated’ an Account Manager – Darren, who we met and seemed confident that we would be applicable, if not from the bank but via the Government’s much lauded Working Capital Scheme. We provided young Darren, with information, then more information, and even more information. His positive demeanour turned increasingly cautious.  Some 6 weeks after we had approached our bank, Barclays Bank he said our application had been declined, as our sector is ‘too high a risk’.  Part of the money was to pay Corporation Tax for the previous financial year, where our prudence resulted in greater profit which meant more tax. We have now applied to defer the tax payment and are waiting for a decision. In the meantime we have had to reduce our overheads further, moving out of our office, taking an even bigger pay cut and not making pension payments.

As I write this I worry for the future. The current government have failed people like me – at a time when I should be really planning for my long term financial security, I find myself in a situation where all my savings, assets, and income which I have built up steadily have decreased significantly in the past 18 months. The blame lies with this government’s, indeed the current Prime Minister’s inability to manage the financial services industry. The world followed the UK, bought into Brown’s eulogies about prudence and was duped by Gordon Brown’s fiscal policy that allowed greedy bankers to make millions, creating a credit bubble that burst.

The schemes to help small businesses the Government have created are nothing but hot air as far as I am concerned, even deferring of tax is a rigmarole. I have to pay  some income tax ‘on account’ for this year’s earnings! I can ill-afford it and my salary has been reduced by 30%, yet my accountant is not confident I will be able to defer it – if the Inland Revenue demands his Corporation Tax, we will put the business into voluntary liquidation and they can be our other creditor (Barclays!). Even though we are hopefully over the worse – as I wtite this in my makeshift office in my kitchen at home it makes me VERY angry that I am here as a direct result of bad Government.    

More economic incompetence….this time in the tax credit system.  HM Customs and Excise looks odds on to miss its stated target of reducing fraud and error to 5% by 2011.

It has been revealed that mistakes had risen to 8.6%, (from 7.8), in 2007 – 08, which are the latest figures available.

This means that fraud and errors in the tax credit system cost £2 billion last year, which amounts to £1 in every £10 paid out.

This is the tax credit system Gordon Brown launched as Chancellor….he must be so proud.

The Iron Chancellor….paraded as the man who was the best Chancellor and Economist ever to hold office.  Sets up a Tripartite Banking System, with a new Body the FSA to regulate the banking industry, which subsequently preside over the worst banking crash in UK History and now we learn his efforts to reduce fraud and error in the tax credit system, has been another failure.

No.11….the lights are on but noone’s home!