The real dividing line between the Conservatives and Labour

I recently thought that right leaning bloggers, such as Dale + even more independent minded ones were wrong to demand that the conservatives should be honest about tax cuts.

I knew Brown's boys would never admit to a penny off any department and would be proclaiming ever higher spending, financed out of exaggerated, badly rounded, misrepresented and just plain untrue tractor stats.

Labour have been proclaiming Tory cuts mean an end to hospitals, schools and even food for pensioners.

My argument was never give your opponent the argument they crave. Brown desperately wanted the Tories to say they would make cuts of any size, to let him make his social concious, spending is just investment arguments, against the heartless Tories of the 80's.Labour are the party of investment, the Tories are the party of cuts. Today the shadow chancellor decided to do just that in a piece in The Times.

Having seen Question Time last week when Peter Hain tried just such a tactic, he was eventually reduced to pleading that if the audience didn't vote labour then they would only have themselves to blame when the cuts came. The audience , by around 2/3 , did not agree. People do appear to have understood that there is no money. No money today and no money tomorrow. Even more astounding was the media. The bloggers pointed out the holes in the Labour arguments immediately, but the newspapers, the networks and even the BBC were not fooled either. Instead of reading the press release , they actually analysed it. Just yesterday John Pienaar again contradicted the studio anchor and his 'Tory are milk snatchers' guest, making the point that what the Tories propose and what Labour propose are within a hair of each other.


The new strategy of telling a version of the truth, that I thought very risky, does seem to being received quite well.. the people do appear to understand. Whether this will continue when they are told the details, like schools must merge, class sizes must rise, train tickets must go up 15%, parking charges will triple etc remains to be seen. For now it appears that Gordon Brown is making a mistake. He is fighting a previous war, with old, obsolete tactics. He does not seem to have learnt, post Expensegate, that saying "I will be more open and honest"is not enough. He needs to be seen to be open and honest and with Malik and Iraq he is off to a very bad start.

The Conservatives can manage to simplify their message to chime with all the workers being asked to take zero or minus pay rises, or who have had to cut out holidays or luxuries. If you spend £4 when you get in £3 you will eventually have maxed out your credit card, and will be paying a hell of a lot of interest on what you have spent. This message does have power. It points out the previous overspending of Labour and highlights that further continuous overspending is impossible. It can highlight the astronomical black hole in government spending and income, and allows the Tories to say at least they are being honest, unlike ponzi Brown who promises what he knows he can't deliver. There is the rich vein of broken manifesto promises, from student fees to the top rate of tax, for Mr Osborne and the shadow cabinet to mine.

If the media continue to probe and expose the economics of the situation, George Osborne's new found honesty may just be letting Gordon Brown dig himself into a verbal hole increasingly difficult to spin his way out of. It allows the Tories to steal the PMs 'prudent'cloak, his trans-pear-en-sea rhetoric, his honesty helm and move Gordon's favourite 'public investment' ground onto the less certain 'debt crisis' territory.

I was wrong to worry. Rather than be the argument trap that Brown has laid for Cameron, it appears to be the argument that Cameron wants, and Brown may fall for.

Bank Regulation to the fore

Over the weekend the first leaks of what changes to financial regulation seeped out of Washington and London. Peston has the highlights and his take on it here.

What is missing though is anything either exciting or bold. It is firmly in the lets tweak things a bit and hope it never happens again bit.

There is for example no core consideration of preventing banks from becoming too big to fail. This was the biggest issue in the crisis. AIG, a non-bank but still a big trader, has cost the US Treasury over $100 billion, which will never be seen again. Indeed much of that money seems to have come the way of Barclays and RBS banks'.

So no big knife to cut up the industry, little comment on the need for any accounting changes or thoughts about what may cause the trip up next time.

What does this tell us? That in their hearts, the US and UK Government know that they were the prime cause of the crisis with low interest rates and large money supplies warping the system. If they did not think this, the changes put forward would be more radical.

Shrinking Before Our Eyes

So, today our Thomson Local directory for 2009-10 drops onto the mat. Comparing with last year's edition (covering the same geographical area):


- Total number of companies listed: virtually unchanged
- Total ads, by page-area: down 29.9%

There is obviously a lag-effect going on here - and possibly some bravado, as Thomson carries on listing companies it hasn't heard from for a while, to keep spirits up. But it is surely only a matter of time before the collapse in advertising translates into a fall in the number of firms with a pulse.

ND


photo (c) N Drew 2009

They all confess in the end..

Following the murder of the Leningrad Party Secretary, and Stalin's rival, Sergei Kirov in 1934, an assassination almost certainly ordered by Stalin himself, the Moscow trials took place. At the trials old Bolshevik veterans confessed to the world their most conspiratorial crimes against the state that they had helped to create. Krestinsky held out, the only accused to do so. he denied he was a traitor, or a Trotskyite, or that he had committed any crime at all. He was led away and brought back to the trial the following day where he was asked again..

Krestinsky:{accused} Yesterday, under the influence of a momentary keen feeling of false shame, evoked by the atmosphere of the dock and the painful impression created by the public reading of the indictment, which was aggravated by my poor health, I could not bring myself to tell the truth, I could not bring myself to say that I was guilty. And instead of saying, "Yes, I am guilty," I almost mechanically answered, "No, I am not guilty."
Vyshinsky:{judge} Mechanically?
Krestinsky: In the face of world public opinion, I had not the strength to admit the truth that I had been conducting a Trotskyite struggle all along. I request the Court to register my statement that I fully and completely admit that I am guilty of all the gravest charges brought against me personally, and that I admit my complete responsibility for the treason and treachery I have committed.

Former Comrade Hazel Blears held out a little longer. But she too decided to confess today to the Manchester evening news.

An apologetic Hazel Blears has revealed three major regrets - including her 'cruel' YouTube joke against Gordon Brown.

The Salford MP wished she had not worn a brooch saying 'rocking the boat' the day after her shock decision to quit the Cabinet looked set to end the prime minister's reign.

And she bitterly regretted the timing of her resignation, on the eve of European elections, that saw Labour's vote dip under 16 per cent for the first time in nearly 100 years.

"I genuinely thought I could go without it sparking off this huge firestorm. In hindsight that judgement was wrong," she said."I should have waited until after the election. The effect on the party is something I will live with forever."

The Rocking The Boat brooch, seen as a not-very-subtle message to Mr Brown, was a gift from her husband.

"It was a stupid thing to do but I think it was just trying to put a brave face on - not going out cowed on the basis of expenses claims that genuinely are not true," Mrs Blears said.

Kretinsky was innocent of anything except being a communist and a threat to Stalin's future power. He was only trying to save his and his families lives. Hazel was suddenly made aware she could be deselected and have to answer some uncomfortable questions about capital gains tax and tax evasion.

Krestinsky was shot. Hazel was only shot to ribbons.

Stalin took personal charge of the investigation into Kirov's murder. Everyone connected with the killing, including many of their families, were shot or suddenly and surprisingly ceased to continue living or just disappeared. Has anyone seen Jacqui Smith recently? And will there be any more 'spontaneous displays of remorse' from the other failed plotters?

On the move

Moving home this weekend, which means no broadband, no time for blogging and lots of stress. Not many posts from me until next week!

Have a good weekend all.

CU

North West Hutton: An Old Oilman's Story

Draw up a sandbag and swing the lamp …

The other day I noticed an article announcing that the largest offshore oil platform ever to be dismantled - North West Hutton, from the North Sea – had finally been brought to shore for scrap. This has indeed been a technical triumph – but not necessarily for the reasons BP would have you believe ...

* * * * * * *
North West Hutton was discovered in 1975 by Amoco, 130 km north east of Shetland in 143 m of water. It was indisputably a huge find, set to rival its neighbour, the mighty Brent: but its geology was complex: “a series of tilted fault blocks and extreme lateral and vertical heterogeneity”, i.e a large number of small, hard-to-access segments or, in the words of the senior Amoco geologist, “a tub of guts”.

But engineers love building things: so the owners went ahead and built a huge 39,000 tonne platform, which went into production in 1983. However, even after 55 wells were drilled, the worst fears were realised and the field would not yield its oil. Production should have been 130,000 barrels per day: it peaked momentarily at 86,000 and fell back to 20,000 – a technical and economic disaster, made worse by the oil price collapse of 1986.

A disaster of another kind happened at Piper Alpha in 1988, and the Cullen Enquiry recommended that expensive safety modifications be made to offshore installations. By its tenth birthday, the financial status of North West Hutton was distinctly sub-economic - a candidate for early decommissioning.

But abandoning North Sea platforms comes at a huge capital cost: so every day’s delay in recognising the inevitable is money in the bank. And every small thing that can be done to eke out its life is an effort well spent.

Amoco set to with a will. An new Offshore Installation Manager (OIM) was appointed; a feisty Welshman, the kind of engineer who sees things in black and white. If a widget is strictly needed, it stays: if it isn’t, it goes. He started stripping things off the platform on a very large scale – and as with so many engineering projects, there was plenty of gold-plating to sacrifice. And with every widget that goes overboard, another widget – whose only purpose was to monitor the first one, goes too. Soon, he’d stripped the platform down to the bare essentials – and that was pretty damned bare – slashing operating costs and buying several years of delay.

Ten years on, with BP now in charge and oil prices even lower, the inevitable seemed at last to be nigh: so a complex decommissioning scheme was devised (no hurry, chaps!) ‘Production’ – by now a derisory trickle - ceased in 2002: the scheme was approved in 2006 … and in 2009 it’s all over.

Funny business, economics. Happy days !

ND

A newly spun plan for Northern Rock

The Treasury, ever keen to help out its former/current leader, Mr G. Brown, is today alleged to be looking at a sale of Northern Rock by the end of this year; just to show how right the Government has been in this crisis.

I doubt this will happen as the current sunny uplands of green shoots are going to get a rough ride when we come round to September/October again, if not before.

Also, what is Northern Rock now? 50 high street stores, a current account and savings business and a £100 billion mortgage book of dodgy interest only mortgages. Plus the Government has sunk £3 billion into the beast to maintain its capital.

Then there is the work out of the funding structure Granite and the fact that the Government wants to use the Rock to encourage more lending to residential mortgage market. No one will buy this at a good price and half the banks in the UK won't be allowed to for competition reasons in any event.

Instead there will be a 'spin' operation:

*Northern Wreck will be stripped of all toxic assets that will be lumped elsewhere in UKFI (the Government vehicle).

*Only the savings and 'good' mortgage book (what is left of them, most of these mortgagees have been pushed to refinance elsewhere and the money used to repay the £25 billion loan, did I mention the Rock still owes another £8 billion).

*Accounting trickery will be used to show most of the Government money is repaid or converted in bonds or some such mechanism.

*A willing buyer, like Virgin Money, will be found and will pay a sum of money that can then magically be shown to have made a profit, say £1 billion or so for the taxpayer.

Champers all round for the Socialists who have outsmarted the Capitalists!

(N.B Event not to be held in the same room in the treasury where the hidden losses and toxic assets are to be left to quietly rot away, out of sight and mind of the voters)

What is the Peston agenda?

I note today that one of the UK's top business bloggers, Robert Peston, is again following a track on Executive Pay. This time about a retiring Shell executive.

Robert has posted a few times on this topic recently. Perhaps he sees the MP's expenses story and thinks there is a read across to a juicy business topic?

To me, Fat Cat Salary stories are a nothing, the money generally spent on Executive pay is a nothing in large companies compared to the price of decisions and investments the guys/gals make; If they do a bad job they get fired too. Shareholders can hold them to account if they can be bothered. Major corporates are not run like the BBC after all!

I do though wonder if Mr Peston has another agenda, is it possible this is a mild broadside about one's own pay negotiation? Are there not some rather fat cats within the BBC with whom one would like to be remunerated at a similar level, like Wossy for example?

We shall see in due course, will he stay or will he go?

Will Brown sink the £ and FTSE?

Even as I write there is speculation of an emergency Cabinet meeting being held this afternoon ahead of the meeting of the Parliamentary Labour Party this evening.

Also the FTSE has been down well over 1% today, dragged down by State owned banks and mining companies on the whole. The £ too has shed over 5% in a week against the dollar on the back of UK Government instability (Now there is a short opportunity I should have seen!).

I think the meetings today are over-hyped and that the media storm will blow itself out and Brown will remain in office but not in power. However,I hope I am wrong and stranger things have happened in politics.

All the whole, the markets have been in a very low volume funk for the last week or so. The power of the bull run from March is clearly at an end as the Summer encroaches upon us. Now is a dangerous time for the rally to be exposed as a Bear Market rally and a new dive in the FTSE and £ could be very dangerous.

At this time, having an unstable Government is about the worst political thing we could have, even more dangerous than Ed Balls as Chancellor. Labour need to sort it out one way or the other. More dithering will chop 5% off the FTSE this week. My short will go on later today at this rate....

Euro election spin

If the Conservatives are polling 29% in East Renfrewshire then its very bad news for Labour.
UKIP and Tory splitting the vote between them and still managing to come 1st and 2nd.
Lots of Labour talking heads and Meps and MPs and bloggers talking up how in 2004 they suffered a reverse but bounced back.

A good bit of driftwood to clutch at in the stormy political sea. Except it is nonsense.
The 2004 kicking was specifically aimed a hurting Tony Blair. Not Labour.

The public and especially Labour voters wanted to punish him for Iraq.
The Euro elections were a perfect opportunity. Kick the party without doing it any real harm. Send a message loud and clear without fear of letting in the Tories.

This time it is different. Very different.
Despite every protestation that Gordon Brown is solving the economic crisis not enough voters believe that he is. Many believe he caused it. More that he has not done enough to solve it and what he has done has been wasteful and partisan.
If voters have been repeatedly told that there is a load of help for them at JobCentrePlus but there isn't anything more than there would be in normal circumstances, then all those, and other, promises appear false.

Labour ministers and activists who are expecting a big bounce back are deluded. Of course there will be a boost, but on these figures there is no possible recovery.
Hoping something may turn up is ridiculous. Something might, but it might also get worse.
The economy might improve but it might not. And the normal travails of politics will continue.
Dangerous dogs, gang crime, flooding or a doctor refusing a minister access to a hospital because
of some funding issue, or something. These stories occur all the time. They all wear down an incumbent. Labour could not allow even one more "Baby P" story to break, yet is entirely powerless to prevent them.

The Tories, in their darkest days, did not think that they would become the third party of politics. As it stands Labour must give serious consideration to becoming the Fourth.

Final Salary Pensions? Only in Parliament

In a truly awful weekend for the UK; Government paralysed, celebrities like Suralan given jobs in Government, the Prince of Darkness promoted to be the real Prime Minister. There is another longer running story that is very bad news.

This is that many companies are using the recession to end their final salary pension schemes, even to current members. I know, pensions is not the most exciting subject, but this is sad news for all the generations of this country.

I am saving for a private pension, by my own reckoning I will end on about one fifth of my final salary is I save 10% a month of my salary. Final Salary schemes on average are 4x as generous as this. It is a huge pay-cut too all staff who are taken out of such schemes or whose companies close them.

Even worse, the reason they are closing is because companies cannot afford them at the moment and the Government has robbed with taxes the other types of pensions savings.

Only the Public sector and MP's will soon be left with such generous pensions provision. And this is payed for by the put-upon private sector who will have to find new ways of reducing employee wages in order to pay taxes and try to make profits.

The situation is untenable and will come to a head one day in a political crisis that will make today's events look like a mild disagreement at a dinner party.

Ken Livingstone: A Prediction

Amidst all the talk of Mandelson having gripped the situation, let us observe the familar figure of Ken Livingstone shuttling between the studios, putting in a series of characteristically pugnacious, steely and intelligent ultra-loyalist performances. He's playing a blinder, according to some Labour insiders.

Here's a prediction.

Commissar Ken will be positioning himself assiduously as the authentic voice of sane, electable, never-say-die Labour. He will bag a safe seat (if any there be) in the widespread post-PorkerGate fallout. He will exert himself tirelessly at the GE.

And then ...

ND

What a disaster. Live !

Poor Gordon, trying to conduct a reshuffle, being undermined by his new appointments quitting as he speaks. Gordon has denied that he ever wanted to move the chancellor from his post. Brown is using his ability to tell and retell a lie over and over while making it sound like the truth to great effect. He even managed to make the appointments of Dawn Primalo and Glynis Kinnock sound like the bringing in of positive assets to his government, instead of the scrapings at the bottom of a very empty barrel.

Here we have had a sweepstake on future cabinet appointments this week. I thought I was on a loser with my poor picks, but now I'm not so sure.

- Gary Neville
- Adam West
- Katie Price
- Diversity
- Sir Ranulph Fiennes

{ if you want to play yourselves its easy. Pick a cabinet post, say minister for local government, and then go to google serchbox. close your eyes and bash the keyboard three times. The first coherent name out is your choice. Try it.Best entries into the comments for final adjudication
It seemed a far-fetched way to run a country last week, but today..its as good as any other method in use.}

Exclusive: Pictures of No10 reshuffle 'war room'

This was a live picture taken by our man-on-the-inside just minutes ago, as as Gordon Brown shuffles round key advisers on his 'war map' during this momentus day in UK politics.

BBC Live blog, eat your hearts out, you've missed the story again!

Labour Resignation Quiz

Who is the man in the story Dennis MacShane is referring to and when is the incident?

"Mr MacShane voiced the hope that the government would quickly recover from
the resignation, in contrast to the last government, which was severely
damaged by John Major's dithering over troublesome ministers. "Compared to
the Tory resignation sagas, when ministers hung on for days and days, the
Prime Minister has reacted quickly and cleanly."

Political Funeral Blues

Hide all the clocks, and hide that mobile phone,
The Cabinet’s told Brown he’s on his own.
Prepare the padded cell; sedate the bum
And let the headshrinks in their white coats come.
ND

Making Democracy Work

I voted for Tim Worstall and his team today. If you have not voted yet ask yourself, why not? 70% odd percent of our legislation comes from Brussels so in many ways the Euro elections are more important than the General Election.




Even better, go vote and then look at this new site launched by Tim Montgomerie, the Union of Voters. I think this is a great idea, one thing recent events have proven is that a step in the right direction for this country would be one that ends the culture of the' Westminster Village.'

Apprentice Final: What Sir Alan does not say?

The BBC series The Apprentice with Alan Sugar (A man I could not imagine working for in a million years!) reached a semi-final. 3 of the remaining candidates got fired, whilst 2 remain. The clear favourite is Kate Walsh (Picture at the bottom)who is easy on the eye to say the least. Kate is a good candidate and 27, with bags of experience. Perhaps not the most dynamic but I can see her getting her way in a male dominated office environment. Rather like the Winner Sir Alan picked when Michelle Duberry, pictured to the left, in 2006. Michelle though did not last long and went her own way to find success.
Perhaps the harshest eviction was to Debra Barr, pictured classily in her undies. Debra being 23 clearly is not someone you would want to pay £100,000 a year to with so little experience. Sir Alan avoided this and simply said she was too divisive and driven; criticising someone in his own image!



Still, who says the BBC don't do quality entertainment...

Farewell Then, Vauxhall ? Bring on The Russians.

Never mind the demise of assorted clapped-out old bangers of Labour ministers: are we to lose Vauxhall - producer of the rust-buckets of my boyhood ?


Perhaps Mandelson can have a word with some of his Russian chums ... Interesting factoid: the Russian word for a main railway station - Вокзал - is a transliteration of Vauxhall. (I used to have an office beside the one below, in Moscow.) The noun derives from our own Thames-side locale all right: but opinion is divided as to whether it was the station there, or the pleasure-gardens of yore, that inspired the Russians thus.

So Deripaska should be in like a ferret up a trouser-leg ! At least I think that's what Mandelson meant.

ND

Defending Ed Balls for Chancellor..

In 2007 Ed Balls was an outside bet to be made Chancellor of the Exchequer in the new government of all the talents. A massive promotion for the most junior of Treasury Ministers . But Balls had long been a loyal apparatchik to the great helmsman.

Commentators thought he would be a disaster. Despite being a better economist and a better politician than Darling, he suffered the exact same lack of communication and lack of empathy and personal skills and boorishness that afflicted his master. He also possessed the same tribalism, bias, partisan party loyalty and above all arrogance. The city thought little of him.
John Rentoul at the Independent, almost alone,wrote that Balls should be Chancellor. Iain Dale had a nice line on Rentoul's piece.

" Rentoul comes up with all sorts of historical justifications for it, all sorts of quotes praising Mr Balls and meets all the objections to him head on, bar one. And that is that Ed Balls is, well, a bit rubbish."

It was rumoured that it was Balls/Cooper who were pushing Gordon Brown to call the earliest of early elections. They would capitalise on a Tory government in disarray, a honeymoon period, the defeat of the Blairites, the removal of Blair himself and gaining from a big bounce in the polls.
In the end it proved a poor decision that began the demise of Brown.
However this should not detract from the fact that Ed Balls was right. Brown should have called an election. It would have headed off a lot of the problems he faces today.
Balls understands strategy.

Balls has developed. He has powerful contacts. Look at how little his own second home claims have featured. The Mackay/Kirkbrides hounded from office. Balls/Cooper barely rates a mention. That is not an accident. Its contacts. The Times ran "ED BALLS, the schools secretary, used Damian McBride,to smear ministerial rivals and advance his own ambitions," Anyone remember? Did it harm him? Ed Balls has that political savvy.

As the schools minister he said sorry for baby P, way, way in advance and at odds with the PM. Minutes before at PMQ's Cameron was actually flinging papers in anger at Brown for his lack of human feeling over the death of the child. Gordon Brown wouldn't say sorry. He accused Cameron of making political capital from the death. The Prime minister gave one of his worst ever, slab faced, boring, robotic, unsympathetic readings of a prepared statement. {youtube pmq's 12/11/08}.
Ed Balls has said sorry many times. And said it with enough contition for it sound genuine.

Ed Balls has not had much success as Schools Minister. The Sats for 14 years olds disaster. The pointless "parenting contracts" , the lack of funding for 17, 18 years olds staying in school. "So What?" The list is long, the successes few, the failures many.

But Ed Balls is a political animal in the same mould, from the same streets as Brown, McBride, Watson and Campbell.. At this time, at the end of this government, this is probably what Brown needs. He has lost his street bruisers. His whips aren't whipping. McBride has gone.Tom watson is going. He needs a powerful brawler. Someone who knows that if the ship sinks, then he sinks with it. Politically its just the right thing to do. Brown's enemies are plotting. Upsetting Blairites and backbenchers is hardly a problem now. Its scorched earth time. Alistair Darling finally defies the PM at the last budget and said NO." No, there is no more money. No more money for 20 years!"Ed Balls may not be so worried about finding some stimulus money and the Prime Minister has an opportunity to tip Mr Darling into a face saving, "reward for a tough job" position at the recently vacant Home Office.

In the Prime Minister's words,
"Its the right thing to do."

Well the right thing for him. If its right for the country though...?