Axing those 91,000 Civil Servants

We learn that Johnson has packed off all his ministers to come up with bright ideas for saving a bob or two, thereby to forestall the the current and fast-growing economic crisis.  I'm sure we've all suffered fatuous "initiatives" like this at work, and had cause to marvel at the inanity of it all.  If your Chancellor doesn't have advisers of the calibre of a Keynes to come up with the broad macro-strokes that will be required, there's just no point.   We gather this particular "idea" is attributable to the execrable Rees-Mogg.  If BJ imagines saving a couple of billions by axing 91,000 civil servants will contribute anything meaningful, he's as stupid as anyone ever imagined.

(a) None of us want a bloated civil service, nor a bunch of workshy WFHers on the payroll; but unless by some miracle he can identify exactly those 91,000 people who are collectively & personally responsible (haha) for the global crisis we now face it will have purely disruptive consequences - and broad-spectrum ones at that - at exactly the time he's enough on his plate;

(b) I'm no expert on how public finance accounting works, but I don't see how it will save money for a good few years; 

(c) If he wants a diversionary tactic against voters noticing his own crass behaviour and manifest unfitness for office, there are many better ones, at infinitely less cost, to be had.  The only diverting that will happen will be of governmental time and energies.

As we know from covid, when the shit really hits the fan, the government cheerfully moves the whole nation onto the public payroll anyway.  The shit that's almost certainly going to happen between now and the next election makes this an entirely spurious 'policy'.

Discuss!

ND

National Express Disaster

The too-clever-by-half CEO is gone and now the very existence of National Express is in doubt. Lord Adonis has said this morning that the East Coast mainline franchise is to be nationalised and NE's other franchises are in jeopardy due to contract terms.

A fine mess, here comes the Government to clear up a poor private sector bid. The Government will say they have done nothing wrong; are they right?

I don't think so, by setting up auctions that allow prices to be bid up to high they set themselves up for a fall. Down the line companies won't be able to make the payments so they will fail and the contracts will be handed back.

Think of it like a bank offering you too much on a mortgage, when you fall into negative equity it is the Bank that loses more than yourself. The Government are too obsessed by getting the money in. Not enough due diligence was done on the winning bid, end of story.

We have seen this many times before with the Government, perhaps the 3G mobile auctions being the best example. The UK went from having some huge international dominant operators in O2, Orange and Vodafone to having the first two swallowed up by weak competition as they struggled with the debts they had saddled themselves.

Of course, the companies make the bids and so should be held to account, this is not all the fault of Government. But in desperation for money, both private and public sector are wasting it on a colossal scale instead. More thought by Government could stop this, as could more thought by the private sector.

Digital Britain - Who cares?

This morning the Government published a very expensive white paper on digital Britain. Unsurprisingly the narcissistic media like the BBC are running with it as a top story of crucial import.

But really, who cares? Having read the briefs, there is nothing in the report that a competent department of state could drive through without the assistance of a White paper report.

This paper cost a ton of money and was completed by Lord Carter, respected so much by the Prime Minister he was removed from his position at No. 10 within months of his joining. So it has credibility for the ages. The City knows this is simply his pitch to get the CEO's job at ITV.

In addition, a fag end government is in no place to really drive through any of these changes in any event. There is no time in the parliamentary calendar; they are too busy choosing a new speaker.

The best thing to do with this report is to make sure it is the last one. The UK's finances are in a shocking state, as Guido reports today, this is just another waste of money on hot air that we do not need.

FSA Report; Brown poodle spouts claptrap

The title may be a bit hard, but Lord Turner has long history with New Labour. He has issued two previous reports, both of limited effect in the long-term.

Actually there is some sense (e.g. more thorough and consistent approach to audits) in the huge report published today, but I also find some logical inconsistencies in the report.

Most of the regulations for banks after all needed to be put in place ages ago. The problems they seek to solve have been solved by the market. Assets are now marked down, some banks have failed, mortgages are not being handed out willy nilly. So much of the prescription is to fight the last war, as is usually the case with these things.

However, what is missing in the FSA Elephant in the Room. Why should the FSA regulate anything again, it has proved a failed organisation in this crisis, so too has the Bank of England in many ways. The organisations need to be merged. The BOE needs the FSA's staff and insight, the FSA needs access to the BOE boffins who can see the patterns in money markets etc.

None of this is addressed, for this would be critical of G. Brown and his lame duck Government. Brown's hedge fund friends, source of so much funding and of course Lord Myners, also get off lighlty. A nice populist attack on bonus's. This is a very political report.

One last point I wanted to make is on the silliness of over-regulation. Example A is the suggestion that mortgage lending should be strictly monitored, perhaps even with limits on the multiples that people can borrow. Why is this needed ? As an answer to the world where lending was too lax, but this world was caused by BOE interest rates being held too low, not by the banks. When rates went up and credit became tighter, banks reduced the criteria. Now we have a very tough market to get a mortgage in, with strict lending criteria.
Where is this sudden need for more regulation? The state does not need to do everything, indeed generally what it does it does badly. I hope the BOE and FSA look closely at monetary policy in the future, that is the way to stop asset bubbles. Little mention of that today.

(hat-tip for graphic to Thisislondon.co.uk)