Monthly Archives: March 2009

The historian Thomas Babington Macaulay once remarked that: “We know no spectacle so ridiculous as the British public in one of its periodical fits of morality.”

That was very much my reaction when I read the following pronouncement delivered yesterday by our august Prime Minister to the Scottish Labour party conference in Dundee (and what a fun event that must be):

“Only government can make the markets work in the public interest and not their own interest.

“We believe that markets need not just money men but morals, that being fair matters far more than being laissez-faire and that banks must always serve the public, not just serve themselves.”

“Being fair matters more than being laissez-faire” has a nice, alliterative ring to it; on the other hand, so did “British jobs for British workers”, and look where that landed the Prime Minister.  No doubt some No. 10 backroom boy burned the midnight oil very late to craft that particular piece of New Labour humbug.

Politicians who talk of morality are setting themselves upon a pedestal that is frequently rocky and unstable.  So, indeed, it is in the case of this Government.

Was Labour acting in the strict public interest and not its own, for example, in urging Lloyds Bank to take over HBOS, with its panoply of toxic assets, just when it was staring defeat in the face at Glenrothes?   Was Alistair Darling entirely altruistic when, at the same time, he “made it very clear” to Lloyds that the headquarters of HBOS should remain in Edinburgh (for whose South West constituency he just happens to be MP) after the takeover?

And what of Adair Turner’s revelation that the Government applied pressure to the FSA to regulate companies like HBOS with a “light touch” and to avoid being “heavy and intrusive”?  Was that an example of stern Labour financial probity?

The more one looks at Labour’s stewardship of the economy over the last twelve years, the more examples one finds of the way they have used the system for their own unalloyed political ends.   Morality has had precious little to do with it.

The trouble with humbug, as Gordon found out with “British jobs”, is that it tends to stick in your teeth.   He should have learned to avoid it by now.

Gordon Brown, it would appear, has rejected the advice of Alistair Darling and other cabinet colleagues and refused to take the opportunity, on his visit to the United States, to apologise for the deficiencies of the financial regulatory system put in place under his Chancellorship.  

According to the Telegraph: 

he defiantly believes that the problems were unique and were not the fault of the system he put in place and presided over while at the Treasury for a decade.

The difficulty for Mr Brown is that increasingly few people share his view.  Last week, Adair Turner, the chairman of the FSA, told the Treasury select committee that the Authority had been subject to political pressure to apply a non-intrusive “light touch” in regulating the financial sector. 

Today, John Kingman, head of UK Financial Investments, the company that represents the taxpayer’s interests in the quasi-nationalised banks, also appeared before the Treasury Select committee and was equally critical.  To quote the Telegraph:

He told the [committee]: “There are issues around how the Treasury and the regulator identified problems.”

When asked whether he was reluctant to admit that the system that Labour put in place in 1997 had been a massive failure, he replied: “I don’t think I am massively reluctant.”

It is becoming increasingly obvious that Labour were guilty of encouraging a lax style of regulation on the part of those whose responsibility it was to be alert to the very problems that have manifested themselves in the British financial sector.  Certainly, the sub-prime problem began in America, but the British institutions were insufficiently rigorously regulated so as to minimise the impact of the economic tsunami when it hit the UK.

 Brown positively encouraged the boom and was, equally, content to tolerate (to quote Adair Turner) “a style of regulation and a philosophy in regulation which was, in retrospect, mistaken.” 

And of course Brown won’t apologise.  It’s not in his nature.  He wants to be seen with Obama bestriding the world that he, personally, has saved.   

The word “sorry” doesn’t figure in his vocabulary.

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?