Bolitics The New Condem Government

[drat01]

The SIB didn't have the power to regulate the banks. It didn't become the FSA until October 1997. I'll leave you to work out what other important political event happened that year.

Anthony Hilton in the Standard gives a good summing up of the double standards and headline quotes that some are using

As a general rule of thumb, the more a politician leaks a speech in advance, the more disappointing the actual result will be when it is delivered.

The theory is that the Press, having jumped at the opportunity to be spoon-fed a few exclusive headlines, will not sustain their interest long enough to read and criticise the full thing when it is delivered. In this way, the shallowness of the ideas will go undetected.

Thus it is with yesterday's so-called White Paper on the future of banking regulation, unveiled with much fanfare by David Cameron and George Osborne. If the Tory faithful are disappointed with the Conservatives' response to the banking crisis as represented by this document — and many are — the uncommitted should be truly scared. If this is the best they can do on banking, then Lord help us when they have to sort out the whole economy.

Abolishing the Financial Services Authority is just plain stupid. The organisation is not a creature of Gordon Brown as they like to pretend, but is in fact an amalgam of the Securities and Investments Board and a variety of subsidiary regulators for different market sectors which was created by the Tories in 1986. What Brown did was to weld them into one, and add the banking team from the Bank of England and insurance from the Department of Trade and Industry for the very good reason that as big complex financial institutions covered all these areas, so too should the regulator. The Tories' headline plan to abolish the FSA shows simply that they do not understand the world in which they live.

There is a case for giving the Bank of England responsibility for individual banking supervision and looking after the system as a whole, but there is no case at all for giving it insurance as well. And it is worth remembering that when the Bank last regulated the whole banking industry, there were disasters every few years.

In 1973-75, we had the secondary banking crisis. In 1984, we had the collapse of Johnson Matthey Bank. At the end of that decade came the collapse of BCCI. In 1995, Barings collapsed. All these — and several others – happened entirely on the Bank's watch. In each case, inquires found its performance to be less than perfect — they are human after all.

That surely is the point. The FSA has screwed up to some extent but the division that did screw up was staffed by people who originally moved across from the Bank of England. It was the same team, albeit with personnel evolving with the passage of time, as the team that operated within the Bank.

It was similar with insurance, which took on the DTI employees. How much more sensible it would be to allow the FSA to build on that experience so it can learn from the mistakes, rather than tearing the whole thing up and starting again. Because if we do, it will take the new system another 10 years to bed down, and when the next crunch comes there will be no guarantee it will perform any better.

Meanwhile, as former monetary policy committee member Willem Buiter pointed out in yesterday's Financial Times, giving regulatory responsibility for banking to the Bank of England will probably mean that its success with the MPC is threatened.

History teaches us that an institution can do one or the other but not both. Why? Because the two conflict. What Bank will jack up interest rates for the good of the economy if it thinks such an action will bust half the banks it is supposed to be supervising? Unfortunately, the Tories don't seem to get that either.

Another jarring note is the idea that the Bank should also have responsibility for insurance, which is a completely different industry, and one indeed that has suffered mightily from being treated in recent years as if it were subject to the same pressures and temptations as the banks are.

As has been noted above, before the FSA, insurance was the responsibility of the DTI and, as will always happen, the results were mixed. It oversaw the collapse of Vehicle and General, and it failed to intervene in time at Equitable Life.

But it also had resounding successes — not least its authorisation of Equitas, which allowed Lloyd's of London to survive and reinvent itself in the mid-1990s. None of this ever had anything to do with the Bank of England.

My main worry though is that it is far too simplistic to say, as Cameron and Osborne did yesterday, that the banking crisis was a result of regulatory failure. That was part of it, but a much deeper cause is the tectonic shift of power from the US to China, and the massive global imbalances that have resulted.

Another is the way technology has propelled us into a world of virtual finance where the only limit is one of the imagination, which means our ability to innovate has far outrun our ability to control.

A third is the globalisation of markets so that the banking system is now much bigger than the countries that control it. The list goes on and on. Suffice it to say not one of the Tory proposals comes close to addressing any of it.

linky thing

[mykeyb]

I see pretty much as I predicted the day after the Condems came to power that targets in the NHS would be abolished. Now I can only think of one reason and one reason alone why that would happen.

You know this pot of money for the NHS thats been ringfenced...........................

[snowychap]

From the Grauniad:

Osborne is expected to claim that 80% of the reduction of the structural deficit will be achieved by spending cuts and 20% by tax rises.

What the fuckety ****? :shock: :shock: :shock:

[Chindie]

No idea if it's been mentioned, but theres talk of an insurance tax rise that had my brother in a tizzy earlier, which I've not noticed too much talk of in the papers.

[peterms]

I see pretty much as I predicted the day after the Condems came to power that targets in the NHS would be abolished. Now I can only think of one reason and one reason alone why that would happen.

You know this pot of money for the NHS thats been ringfenced...........................

There are several reasons why targets might be thought unsuitable.

One is that they can tend to worsen performance, not improve it. This can happen when the behaviour of those charged with meeting the targets alter their behaviour so that the target is met, rather than that performance is maximised. In the hospital context, that could be seeing everyone on day 89 of a target 90 day waiting time limit, rather than seeing 90% of people in two weeks, 8% in 90 days, and 2% in 100 days. The former meets the target, the latter doesn't, but this inverts what most would see as better performance. In this example, performance sinks to the level of compliance with targets, rather than the best that can be achieved.

Another is that excessive resources can be diverted into measuring and monitoring performance, rather than improving it. Like the above example, it's not a necessary outcome, more a constant danger.

Another is the cultural changes which might happen over time, if the ethos does become about compliance and doing just enough to avoid criticism, rather than trying to excel.

Targets are good in their place. It would be a pretty meaningless football league without targets, for example. But in some contexts, they aren't all they are cracked up to be.

All of which is not to say anything about the possible motives of the tories for abolishing targets, if they do. Of course the target they are working to is the percentage growth year on year of private medical care at the expense of public...

[Awol]

From the Grauniad:

Osborne is expected to claim that 80% of the reduction of the structural deficit will be achieved by spending cuts and 20% by tax rises.

What the fuckety ****? :shock: :shock: :shock:

Why Cuckoo? Raising taxes by more than they absolutely have to will hold back future growth and if they don't cut spending then the core of the problem (the government doing more than it should) remains.

Should the state really be giving money to people that don't need it, if so why and since when has it been the government's job to so? I'm certainly not against helping those who actually need help but I think the government 'machine' has got totally out of hand and extended far beyond the remit of what it is supposed to be there to do.

In terms of benefits I'm talking about providing basic support to those who need it like those unfit to work or currently out of work, assist people where possible in getting back into gainful employment and providing child benefit to the poorest families.

In terms of jobs it is not the government's role to create employment schemes through local councils by putting thousands of people into what are essentially box ticking non-jobs, measuring things that don't need to be measured, to create data that doesn't need to be analysised, to inform policy that is often a mire of bureaucratic nonsense. I'm not suggesting that many jobs in the public sector are not essential for society, just that there are many which are not.

All of this is paid for by the private sector, the bit of the economy that actually produces the wealth of the nation. I think this attitude can be summed in microcosm by Polly Tonybee in the Guardian recently:

A fair policy would not have cut free swimming for all the elderly and children, but kept the concession for those on pension credit and full child tax credits.

Seemingly Polly doesn't understand that it is not "free" at all, only free to the recipient and paid for by those working in the private sector. That is what I mean by government doing things it's not there to do. Of course those in the public sector pay taxes too but the wages that tax is deducted from inevitably comes from the economically productive part of the economy.

The bigger picture is that the government has infantalised people by removing the need, the incentive and the belief that they are supposed to stand on their own two feet. If it all goes wrong there will be a level of support they can expect from government, but too many people turn to that support as the first resort as substitute for taking responsibility for themselves. After all if you can vote yourself largesse from the public accounts why even bother making the effort?

What we need is a proper debate about the role of government and what we actually want it to do in future.

[peterms]

A fair policy would not have cut free swimming for all the elderly and children, but kept the concession for those on pension credit and full child tax credits.

Seemingly Polly doesn't understand that it is not "free" at all, only free to the recipient and paid for by those working in the private sector. That is what I mean by government doing things it's not there to do. Of course those in the public sector pay taxes too but the wages that tax is deducted from inevitably comes from the economically productive part of the economy.

Oh come on. Free in this context means and has always meant free at the point of delivery, like free health care - no-one thinks health care actually has no cost, do they? People don't really need to say "free to the recipient at the point of delivery" every time, do they?

[Awol]

A fair policy would not have cut free swimming for all the elderly and children, but kept the concession for those on pension credit and full child tax credits.

Seemingly Polly doesn't understand that it is not "free" at all, only free to the recipient and paid for by those working in the private sector. That is what I mean by government doing things it's not there to do. Of course those in the public sector pay taxes too but the wages that tax is deducted from inevitably comes from the economically productive part of the economy.

Oh come on. Free in this context means and has always meant free at the point of delivery, like free health care - no-one thinks health care actually has no cost, do they? People don't really need to say "free to the recipient at the point of delivery" every time, do they?

I know what you mean Peter but I think it does reflect a mindset whereby people don't always think about what the government is actually spending taxpayers money on - and whether it should be.

NHS - yes, of course that is fundamental to our society. Ditto Education, Transport and other vital services that have to be funded from the central pot. It's the attitude of entitlement to so many things outside of that which I think is wrong and where shed loads of money gets eaten up.

[peterms]

I know what you mean Peter but I think it does reflect a mindset whereby people don't always think about what the government is actually spending taxpayers money on - and whether it should be.

NHS - yes, of course that is fundamental to our society. Ditto Education, Transport and other vital services that have to be funded from the central pot. It's the attitude of entitlement to so many things outside of that which I think is wrong and where shed loads of money gets eaten up.

The bigger thing to take issue with in what you wrote is the idea that there is an economically productive sector (private) and a non-productive one (public).

There are lots of activities in the private sector which are non-productive, or essentially parasitic. There are plenty others which produce things, but not things that we need.

In the public sector, there are a large number of activities which create the conditions without which the private sector would struggle to exist. You worked in one such role yourself, surely Jon?

The view that the private sector is the engine of civilisation while the public sector is a leech feeding off it is, shall we say, simplistic at best.

The attitude of entitlement exists, no doubt. One example I could give is the attitude of self-styled "wealth creators", who resent their income being taxed at the rate it is (or at all), as though they have single-handedly created something without all the massive social infrastructure which not only they but all their staff, suppliers and customers depend on, and without which their efforts at "wealth creation" wouldn't exist at all.

[snowychap]

Why Cuckoo?

That's a ratio of 4:1 (cuts v taxes).

During the election campaign, the Tories were suggesting that the ratio was going to be 1:1 and even that was viewed as an unlikely state of affairs.

So I think it's cuckoo for that reason (i.e. that the claim is rather preposterous). That's not even going in to the subject of what a resultant cut of approximately 7% of GDP would do.

In terms of benefits I'm talking about providing basic support to those who need it...

Which is pretty much what happens.

...the core of the problem (the government doing more than it should).

...

What we need is a proper debate about the role of governmentand what we actually want it to do in future.

And herein lies the problem. The program of cuts seems to me to be driven by ideology and not by necessity. That is not to say that cuts aren't necessary or inevitable but that the Tory part of this government are quite happy to have the level of budget deficit to enable them to try and bring about the ideological change to the public sector and government which might otherwise have been even more strongly resisted. There won't really be any debate - governments don't really do debate.

[Richard]

The program of cuts seems to me to be driven by ideology and not by necessity.....Tory part of this government are quite happy to have the level of budget deficit to enable them to try and bring about the ideological change to the public sector and government which might otherwise have been even more strongly resisted.

Not sure I agree there.

Do you think it is not necessary for us to reduce the deficit and tackle the debt? For me I think any ideological adjustment is around that, ie getting the country out of the sh1t and back to living within its means.

Would you like to see more action taken to reduce the private sector? Like it or not , wihtout a pirvate sector the public sector is unsustainable.

[snowychap]

The program of cuts seems to me to be driven by ideology and not by necessity.....Tory part of this government are quite happy to have the level of budget deficit to enable them to try and bring about the ideological change to the public sector and government which might otherwise have been even more strongly resisted.

Not sure I agree there.

I didn't think you'd be rushing to agreement, mate. :winkold:

Do you think it is not necessary for us to reduce the deficit and tackle the debt? For me I think any ideological adjustment is around that, ie getting the country out of the sh1t and back to living within its means.

The bit that you omitted from your quote said:

That is not to say that cuts aren't necessary or inevitable...

My point was about the expedience of the situation for driving forward an ideological change.

Would you like to see more action taken to reduce the private sector? Like it or not , wihtout a pirvate sector the public sector is unsustainable.

More action to reduce the private sector? :?

Without a public sector, there would not be much of a private sector.

Unfortunately, a lot of this seems to revolve around a battle between public and private sector. It shouldn't. The economy does not have such clear dividing lines. The consumers who purchase goods and services work in both the public and private sectors; the banks who are supposed to lend to businesses (but according to that prog on C4 the other night hardly do directly - even before the recession) are in a sector which we were told only really survived because of the intervention of government and the taxpayer; lots of taxes (when not avoided) come in from the private sector to pay for a lot of government spending; and on and on.

[drat01]

Oops - they are apologising again

ConDem has to apologise again

Culture Secretary Jeremy Hunt has apologised after suggesting that hooliganism played a part in the Hillsborough football disaster.

Ninety-six Liverpool fans were crushed to death on 15 April 1989 at Sheffield Wednesday's Hillsborough stadium.

He praised the England fans at the 2010 World Cup saying the "terrible problems" of "Heysel and Hillsborough in the 1980s seem now to be behind us".

Investigations have found that violence played no part in the tragedy.

Mr Hunt was giving an interview following England's exit from the World Cup, where he applauded the behaviour of fans.

Apologising afterwards, he said: "I know that fan unrest played no part in the terrible events of April 1989 and I apologise to Liverpool fans and the families of those killed and injured in the Hillsborough disaster if my comments caused any offence."

'Absolute disgrace'

The Prime Minister's official spokesman has said that David Cameron has full confidence in Mr Hunt.

The 96 fans died and hundreds more were injured when a crush developed in the Leppings Lane end of the Hillsborough stadium during an FA Cup semi-final match between Liverpool and Nottingham Forest.

Lord Justice Taylor's official inquiry into the disaster, which reported in 1990, criticised senior police officers on duty at the match for a "failure of control" and recommended the introduction of all-seater stadiums.

Margaret Aspinall, chairman of the Hillsborough Family Support Group, called for a face-to-face meeting with Mr Hunt.

She said: "After all these years of fighting for justice I am very angry that he has shown such ignorance of the facts.

"He is an absolute disgrace."

People being lifted over the stands at Hillsborough Documents relating to the tragedy are being reviewed by a panel

Mrs Aspinall, who lost her 18-year-old son James in the disaster, said she would not accept Mr Hunt's apology unless she was allowed to meet him and "explain the facts".

She added: "I want him to understand that he has reopened old wounds which should have healed many years ago.

"The problem we have is that Hunt has influence and people listen to him.

"We have fought to move forward but now - thanks to him - it feels like we have taken a step backwards."

Speaking in the House of Commons, Derek Twigg - MP for Halton in Cheshire - said Mr Hunt's remarks were "a disgrace".

He added that he had spoken to relatives of those who had died and they were "deeply distressed".

"How can they have trust in the Government that they will see through the proper release of the Hillsborough files given that that's the view held in high parts of the Government?"

He asked Home Secretary Theresa May to "urgently" meet Mr Hunt and the families of those killed to discuss the matter.

Mrs May said the judicial inquiry into the disaster had been "absolutely clear" that no Liverpool supporters were to blame and she agreed to meet representatives of the families.

'Old slurs'

The comment has also been criticised by former Culture Secretary Andy Burnham on his Twitter account.

He said it was sad to hear a cabinet minister "echo old slurs" about the disaster.

He called for "more than" an apology and for Mr Hunt to give his "full support" to the new Hillsborough Independent Panel.

"Full truth and nothing less", he added.

Fans heckled the Leigh MP, when he spoke at a memorial service at Anfield on the 20th anniversary of the tragedy.

The Hillsborough Independent Panel is currently overseeing the release of documents not previously made public.

After a two-decade fight, the authorities finally agreed to release more than 30,000 documents of evidence relating to the tragedy.

You would have thought for a party that is made up of a lot of Tory party marketing they would be better at this whole thing, ah well.

[tonyh29]

and you would have thought that after being soundly booed at the memorial due to his not announcing a fresh inquiry, or issuing an apology from the South Yorkshire Police and the emptiest of rhetoric , Burnham should know to keep his trap shut instead of trying to score points

hypocrisy , don't you just love it

[Richard]

hypocrisy , don't you just love it

Especially as Liebour try to use a tragedy like this to score a cheap political point or two

[drat01]

and you would have thought that after being soundly booed at the memorial due to his not announcing a fresh inquiry, or issuing an apology from the South Yorkshire Police and the emptiest of rhetoric , Burnham should know to keep his trap shut instead of trying to score points

hypocrisy , don't you just love it

Again Tony in your attempt to try and wipe any ad press for the ConDem's under the carpet you miss the point.

Yes Burnham did get booed and also an apology, but the so called Culture Secretary we have now has obviously not got a clue on what to say or even the facts. So hypocrisy is a great word, especially as you miss another mistake and climb down from a gvmt that has been in power for a matter of days

[Jon]

I actually feel unclean now, having voted Lib Dem.

They are royally fecking up their party. If they want it to survive (big IF that, i think the key players were just perhaps using the party to get inot positions of power) they should withdraw from this farcical coalition immediately.

I fail to see much lib dem - ness in this govt at all.

[drat01]

Well said Jon. You and many others it would seem

[thetrees]

I fail to see much lib dem - ness in this govt at all.

Nope, it's more like Red Tory :winkold:

[tonyh29]

I actually feel unclean now, having voted Lib Dem.

They are royally fecking up their party. If they want it to survive (big IF that, i think the key players were just perhaps using the party to get inot positions of power) they should withdraw from this farcical coalition immediately.

I fail to see much lib dem - ness in this govt at all.

serves you right I'd say :-)

thing is the libs are playing a part in restoring a broken and destitute country ...I know some can't see past their cloth cap and want to ignore the 13 years of harm their party caused the country whilst giving the Tories 13 mins to put it right but it will take time an the lib dems could well come out of it as a credible party for the first time in their history ... We have just under 5 years to go , why not reserve judgement until then ?