In an intelligent article in this morning’s Telegraph, Jeff Randall points out that Fred Goodwin has been set up as an Aunt Sally (albeit a very highly remunerated one) in an attempt by the Government to shift attention from the dog’s breakfast it is making of the British economy:
If the inappropriately named Goodwin did not exist, the Government’s Department of Propaganda would need to invent him. By casting Sir Fred as the pantomime villain – the credit crunch’s Dick Dastardly – the unholy trinity of Gordon Brown, Alistair Darling and Lord Mandelson has been able to deflect attention from Labour’s calamitous stewardship.
The Prime Minister in particular has been brazen in threatening Sir Fred with court action to retrieve a pension package that was signed off by the City minister, Lord Myners. This is grandstanding of the cheapest kind. Sir Fred’s deal is obscene, but that does not make it illegal. Mr Brown understands this, but is desperate for the searchlight of public opprobrium to be shifted away from the unfolding debacle in Downing Street. Ironic, isn’t it, that having destroyed Britain’s private pension system with a tax raid which, grossed up over 12 years, has snatched about £100 billion from personal savings schemes, the Prime Minister is now keen to preach on pensions and justice.
It’s good to see the professional political commentariat at last latching on to what the blogosphere has been pointing out since the Goodwin pension story broke: that the affair has all the hallmarks of a diversionary campaign engineered in Downing Street.
Randall, however, has homed in on the real issue:
Last week’s £325 billion insurance scheme for RBS’s toxic assets is hopelessly flawed, according to Professor Willem Buiter, a former member of the Monetary Policy Committee. He estimates that it will cost the taxpayer £100 billion. That is three times the annual defence budget. Let’s hope that our children and theirs have a strong work ethic, because they will be paying for the profligacy of this Government long after it is booted out.
Goodwin’s pension settlement is undoubtedly repugnant, but far worse is the Government’s persistence in treating the British people as malleable, bovine idiots.
And an important question, which assuredly will be answered in due time, is: who are the “authoritative sources” who leaked details of Goodwin’s pension to the BBC’s Robert Peston, who broke the story last Wednesday, the day before Darling’s statement to the House on the RBS bail-out?
Yes, finally, a mainstream commentator have highlighted the fact that this is a ‘typical’ Labour party tactic for diverting attention from the real issues. However, there is another ‘scandal’ that I predict will come to the fore in a year or two, and this will be when these banks start to turn a profit, because for years to come, they will be able to carry forward their losses, to offset against future profits. Therefore, unless the governement does something, then the banks will not be making any tax contribution to the economy for years to come and that is considerably more than a £16m pension pot!
Darling touched on that issue in his statement on Wednesday:
To protect the taxpayer, RBS will have to bear the first portion of any additional losses over the coming years, up to a total loss of 6 per cent., or some £20 billion, on top of the £22 billion of impairment and write-downs that it has already taken. As in any insurance scheme, RBS will have to bear the first losses. After that, the Government will cover up to 90 per cent. of any further losses. RBS will also pay a fee of 2 per cent. of the value of the assets insured—some £6.5 billion—again, as in any insurance scheme. It has also agreed for a number of years not to claim certain UK tax losses and allowances, meaning that when it does return to profitability it will not be able to benefit from the losses accrued in the intervening period.
Your comment is very pertinent, though. He didn’t define the “certain” losses or how many were the “number of years”.
That is good news, however, I would like to see this extended to any company or organisation that has received some form of government assistance. Otherwise, at a time when the public faces higher taxes, the ‘bailed out’ institutions will be coining it, and that will lead to a massive level of resentment for whichever government is in power at the time.
I would also like to see a written agreement between these organisations and the government (or better still, legislation) in relation to these tax breaks, given, as we know, intent is one thing, implementation another.