'Dimmer up North'

My title is a gentle tease aimed at Susan Press, the owner of  'Grimmer up North'; and my tease is, indeed, gentle because she is a nice lady who puts up with my occasional visits to her site and never, well, hardly ever, hints that perhaps I am less than welcome!  Usually she ignores me which is wise of her.  So, it is a matter of some regret that she does not apply her wisdom further and wider.  Susan (I hope she will forgive the familiarity) is at the very Left end of Labour where she clings like a limpet despite loathing almost every policy of her government along with all of the cabinet and the vast majority of the parliamentary party.  Even so, she persists, filling her life with a heavy schedule of meetings, demos, agitation and the writing of minutes, and motions, and amendments to motions, and so on ad infinitum, and all to absolutely no purpose at all because no one of real political influence is ever going to pursue her pie-in-the-sky policies for the simple reason that no more than about 2.5% of the population would ever vote for them.

And who could blame them?  Just recently Susan advocated that the government should buy up houses where the mortgagees have been evicted for failing to keep up their payments and the houses should then be rented back to the previous occupants.  To be fair, the idea was not hers but 'Tony' Benn's - need one say more?  I felt impelled to point out to Susan a simple but brutal fact - her government is broke - skint - forced to search down the backs of the settees in No. 10 to find a few bob - and in considerable danger of being repossessed like those unfortunates who cannot pay their mortgages.  Like them, 'Incapability Broon' is running up, day by day, colossal debts on his 'credit cards', as you might call the international money lenders.  (Incidentally, you and I will be paying back the interest and capital on these loans for years to come.)

In today's Spectator, Martin Vander Weyer, a former merchant Banker, spells out the grim news.  He quotes a Treasury Official moaning in the Evening Standard, "Is there an economic plan?  If there is, we haven't been told about it or shown it ..."  Vander Weyer makes clear that on the monetary side nothing can be done with interest rates because, as 'Broon' keeps, or rather, kept, boasting, he handed over the job of setting rates to the Bank of England.  The words 'hoist' and 'petard' spring to mind!  Only a huge drop in oil and commodity prices would allow the BoE to cut rates - don't hold your breath! Fiscal quick fixes are out, too, because the government is already breaking its own rules (er, 'hoist' and 'petard', again) as the tax-take drops and the welfare claims start rising.  According to Vander Weyer, if the present trajectory continues the IMF is likely to step in and insist on - dread words! - government spending cuts and tax rises.  None of the quick-fix ideas for getting the housing market moving again is worth a bucket of cold spit.  The government cannot afford a universal stamp duty holiday costing billions to the Exchequer, and any attempt to let first time buyers off stamp duty will be quickly gobbled up by a rise in house prices.  Nor will a so-called 'windfall tax' work, either.  The energy suppliers will simply pass the extra charges back to the consumer.  Also, and strategically crucial, the government is desperately seeking foreign firms to replace our elderly and ailing nuclear power stations.  Slapping on unexpected taxes will only drive up the prices they quote, or, just drive them away altogether.  Needless to say, one ineffable commenter, another Northerner, at Susan's site came out with the usual mantra: "higher taxes which should be levied on the better off".  Honestly, there are times when you wonder what era these people live in, but just to spell out the 'bleedin' obvious', "better off" people don't sit around waiting for the tax man to come and rob them, they simply jet off to somewhere where there is a government which understands that rich people are an asset to a country because they spend their money where-ever they are domiciled, and therefore they ensure that their tax ambiance is easy and welcoming.

Needless to say, being a cruel and heartless man, I could not help reminding Susan that she was almost certainly one of those who cheered and clapped when 'Incapability Broon' chucked billions into the NHS and the Education non-Service.  Now that the coffers are empty she should take a look in the mirror if she is searching for a scapegoat.

Comments

[john b]

The only problem with the analysis (genuinely - aside from that it's really rather good) is that the debt point is nonsense. Having public sector debt of 40% of GDP is low by international and historical standards, and the real interest rate the UK government is facing on new borrowing is less than 1%. If Gordon wanted to take the national debt up to 60% of GDP, he'd have no problems borrowing the money to do so - nor any problems paying the interest (that isn't to say it's a good idea to do so, of course).

I also have no idea why he thinks the IMF would be involved in any way. They lend money to bail out economies which can't get loans in the market, whereas that's the least of our problems...

[David Duff]

John, nice to see you over here for a change.

However, I'm surprised at a gimlet-eyed, young sceptic like you swallowing 'Broon's' figures whole, especially given his record. The figure of 40% debt to GNP *ignores* pension and PFI liabilities which 'oor wee Gordie' saw fit to place off the balance sheet, a habit, were he ever to run a public company, that would see him inside in no time, for a long time!

"The Centre for Policy Studies argues that the real national debt is actually £1,340 billion, which is 103.5 per cent of GDP. This figure includes all the public sector pension liabilities such as pensions, Private Finance Initiative contracts e.t.c (Northern Rock liabilities)"

http://www.economicshelp.org/blog/uk-economy/uk-national-debt/

You are right, I am sure, that he can borrow the money, although the price will be raised by the lenders as our economy declines, and especially as just about every non-oil government is seeking to borrow as well as us. However my point remains, it will not be, as you suggest (in a figure of speech), Mr. Brown who will be repaying it plus interest, but us.