Don’t bank on it

A banking crisis. A huge trade and budget deficit. Steadily growing inflation.

It isn’t going too well for the former Chancellor. Prime Minister Brown has a 60% disapproval rating – a positive thumbs down.

When the shit really hits the fan Brown won’t tell us he had nothing to do with it, he’ll send someone out to say it for him.

I’m just as gutless:

Gamblers unanimous
(Wednesday 19 December 2007)

NEVER again can Gordon Brown or Alistair Darling be taken seriously when they claim that particular policies put forward by the labour movement are unaffordable.

Their readiness to gamble up to £60 billion in an effort to protect feckless and irresponsible bankers from the consequences of their own short-sighted avarice shoots down the “unaffordable” excuse stone dead.

These two bankers’ friends have shown that there is no real shortage of cash available. It is simply a matter of deciding on priorities.

And the priority for new Labour is jumping to attention when the bankers call rather than answering the demands put forward by working people for investment in jobs, council housing, railways renationalisation and the manufacturing sector.

Despite the Brown-Darling line that everything is proceeding as planned, they have shown the same blind panic and dithering as the Prime Minister displayed over whether or not to call a snap general election.

Having made the first panic-stricken decision to inject £24 billion, they now resemble gambling addicts who feel the need to throw good money after bad.

They have committed the unbelievable amount of £2,000 from every taxpayer in Britain to Northern Rock and yet they have no guarantee of ever seeing the return of this cash.

Ignoring the effect on the public purse, the PM has underwritten any cash spent by financial institutions to buy a stake in Northern Rock – heads they win, tails they win.

If the Labour leader had had any of the political principles with which he had first set out, he would have taken Northern Rock into public ownership when the bank admitted that it was insolvent.

And, instead of looking for ways to pass on profitable sections of it to other banks at the earliest opportunity, the government would have run a people’s bank to show the difference between offering an essential service and gouging maximum profits out of customers.

Sell-outs can’t sell-off


Potential privatisations worth more than £6bn have stalled or been ruled out by the government because of difficult markets, regulatory concerns or political problems, analysis by the Financial Times has shown.

Plans for a £2bn partial privatisation of CDC, the government-owned fund that pioneered venture capital investment in Britain’s former colonies, have been shelved. Morgan Stanley advised ministers on a potential sale this autumn but the government has decided privatisation is “off the table”, according to insiders.

The lack of revenue from privatisations could not have come at a worse time for the Treasury as evidence mounted on Thursday that public finances are in a tailspin.

Economists on Thursday described figures showing the worst-ever budget deficit for this point in the financial year as “ugly” and “shocking”. They predicted Alistair Darling, the chancellor, would have no chance of hitting his public finance forecasts.

With other figures showing a record deficit on the balance of payments current account, weak mortgage lending and the credit squeeze halting the growth of money deposited in banks, economists disputed the chancellor’s assertion that the economy was “fundamentally strong”.

The hiatus in privatisations leaves the government with no major cash-raising deals in the pipeline.

The Scottish elections in May sounded the death-knell for an estimated £3bn flotation of Scottish Water after the victorious SNP ruled out any privatisation. Ministers this month scrapped plans to sell the Tote betting agency to a racing consortium after being advised the £320m offered undercut the value of the business. They will put the business on the open market next year.

The government’s main cash-raising focus is now on selling land and property, rather than businesses. Gordon Brown, as chancellor, set a goal of raising £30bn between 2004 and 2011 by selling off fixed assets. A further £6bn is due to be raised by selling off student loans, once legislation now going through Parliament allows this.

Opposition politicians are warning the government to beware of the rapidly deteriorating state of the commercial property market.

The Liberal Democrats said ministers must not be tempted by the mounting pressure on government finances into repeating the mistakes of the contentious 2003 privatisation of Qinetiq, the defence research group, and selling assets at the wrong time.

“It would be damaging and foolish if the government were to be selling in a slow market, simply to release cash in the short term,” Vince Cable, the Lib Dem deputy leader, told the FT. “Look at Qinetiq – the Ministry of Defence was under pressure to release cash and sold at the bottom of the market. It wouldn’t surprise me if the same thing happened now.”

Philip Dunne, a Conservative member of the public accounts select committee, warned that property sell-offs “could be a gold sale mark two” – a reference to the alleged £2bn loss to taxpayers accrued by Mr Brown’s decision to sell gold reserves between 1999 and 2001, since when the price has trebled.

The Treasury told the FT the “very varied” nature of the property being sold and the “very good” progress to date in raising more than £18bn from fixed-asset sales meant the government did “not see any need to change the target based on the market conditions”.