Taxpayers Alliance On Prentis, Simpson, Crow

UNITE: Protecting Simpson's Salary

On Sky News this morning I was pretty disgusted to learn from the Taxpayers Alliance chief, Matthew Elliott, that three of the nation's biggest and most militant, disruptive union bosses earn substantially more than about the same as the Prime Minister and that no less than 38 of the various types of general secretaries and other forms of leader earn over a hundred grand a piece (plus perks and pensions, natch). Said Elliott in a press release this fair morn:

"It is hypocritical for firebrand trade union leaders to be calling for strikes and higher taxes while they themselves live a life of well-paid luxury. It is small wonder that they aren't worried about the tax burden or the national debt when they are so well-off, but it is ordinary, over-stretched taxpayers who will suffer if they get their way. Their bluster should be ignored, and the Government should stop pouring taxpayers' money into union coffers, as they clearly have more than enough cash already."

Who could disagree with that (apart from the usual suspects)?

You can read the rest of this excellent expose, which is rightly and refreshingly a pretty big story today coming as it does on the back of the government's decision to publish a list of the highest paid quangocrats, on the TPA blog...here.

Toddler Tax? What About Brown's Baby Tax

All people need to know, and all the Tories need to do to counter this latest bit of lying Labour misrepresentation, is to remind them that every baby born for a generation or more will be in debt, from birth, to the tune of £32,000 and quickly rising (see counter at the bottom of this blog). The excellent Tory poster from January 2009 is now that far out of date. In 15 months, Brown's baby bill's nearly doubled.

It's Brown's baby tax, created as a consequence of his crazy scorched earth, debt-fueled spending spree after his mega-bust, and it's one of many reasons why he deserves nothing less than the total political oblivion to which the nation's about to consign him. And good riddance.

And let's hear no more pathetic, desperate lies about some phantom Tory 'toddler tax'.

There's only one conclusion worth reaching in this general election, and it's becoming clearer to people by the minute: it's time for the Tories to come in and clear up another fine Labour crisis. Failing that, it's just time for Brown to go.

The World Wants Britain To Vote Tory

Read this and weep, Labour wreckers.

The world expects a rational conclusion to the British general election, and that means kicking out this Labour government. Only idiots and socialists would fail to do that simple thing, and let the entire world down as a consequence. But idiots and socialists - they're one in the same thing, aren't they? They refuse to "get it".

"Don't let them [the British idiots and socialists] ruin Britain again," is the clear message from the rest of planet earth.

The only way forward for Britain, and the only way the international community will listen to Britain again (rather than being lectured to by an arrogant, unrepresentative weirdo like Brown), is by meeting their expectations by voting the arrogant fool out. Forever.

We absolutely musn't disappoint the world.

Tax On Jobs and Cuts In Waste

It's incredible, really, how fast the political currents can shift when a couple of objectively true concepts suddenly coalesce into slogans. It's extraordinary that within the space of 24 hours, Labour's 1% NICS rise, conceptually a heroically dumb idea even in the worst of economic times, has now become known - and will be known henceforth until doomsday - as a 'tax on jobs', and 'cuts in frontline public services' has shifted, it seems to me as permanently, to 'cuts in government waste'.

If that's not a massive shift in the 'narrative', (if you like postmodernist critiques of this sort of thing), then I'm a stinking socialist!

Cameron and Osborne have been absolutely dead right on the mad Labour NICS policy since Budget Day (I wonder what Kenneth Clarke's part was in all this), but the real consequences of being right in this case (they've been right a lot of times before, but to little or no political avail) is not merely that they've won the argument hands down, they've changed the very terms of the debate, and there is nothing, but nothing, that the Labour Party media machine can do about it. They've been linguistically neutered. For good. (At last!)

There is now, in everyone's minds, judging by the late night media coverage of the papers, a very clear, articulated, choice between Labour and the Conservatives, between Brown and Cameron: Labour offer nothing more than a tax on jobs and more waste; the Tories will deliver no tax on jobs and they will cut government waste.

If you find this hard to believe (and you shouldn't, because it true!), then read this Andrew Porter piece for this morning's Telegraph. Brown is now under pressure to kill Labour's National Insurance hike! Business groups, representing 10 million workers, have praised the Tory plan and say they will 'fight' for it to happen.

This is a tectonic shift in the mood of the nation, and the fortunes of the two main parties. I think it started with the hubristic vanity of Mandelson when, off the leash as always and carried away by a sense of his own superiority - as always - during Labour's desperate damage control operation this morning (that went well, lol), he effectively branded a lot of high-powered employers "a bunch of mugs who should know better". They should listen to him, he implied, because he knows best, according to his own estimation of himself.

Massive, massive mistake. And it will cost Labour the election, and then some. Big day, then, for everyone.

Halleluja!

Update:
Iain Martin thinks it was all part of a carefully choreographed Tory sting operation. I'm not so sure. I think this was, in addition to the media planning, a genuine, momentous outing of the truth, and therefore massively more significant in terms of historic political outcomes. No one could have planned an operation as successful as this one. He's underestimated the terrible impact of the Mandelson intervention, in my 'umble.

++Labour Economic Policy Meltdown Latest++

The latest phase of this exciting day's news, playing out before our very eyes on TV and online, sees things taking a turn for the even worse for Darling, Byrne and Mandelson. Far from their emergency smear operation, covered live and in its entirety on the Beeb, having the desired effect of lowering the graphite control rods into the overheating core of their economic policy, it has merely triggered a super-critical reaction - from the business leaders they have accidentally patronised as being too stupid to understand that the Tory Party is tricking them. Business leaders don't like that. No one does.


The Spectator has more...

Mandelson was in political warlord mode, flanked by Liam Byrne and Alistair Darling, his unlikely musclemen.

But they blew it. First, Byrne and Mandelson asserted, with absolute certainty, that the Tories will raise VAT. Opaque pledges cannot be successfully criticised by baseless soothsayings. Alistair Darling then compounded the error by suggesting that the Tories were too incompetent to cost tax pledges but sufficiently artful to con leading businessmen. That is absurd. Already, two of the letter writers have rejected the suggestion they’ve been duped, and maintain the incontestable point that a NI cut would encourage growth and employment - yesterday, Darling admitted that the NI rise would hit jobs - and the recovery by extension. Ian Cheshire, of Kingfishers, said:

"It's a little patronising to say we've been deceived, this is not a political point, it is a business issue."

After a momentary wobble, the advantage is with Cameron and the National Insurance cut.

This is turning out to be a marvellous April Fool's Day - but not if you're a Labourist fool, of course. But this is a major victory for Cameroons. And all because they started being Tories again. Who'd have thunk it?

Byrne Wriggling

Liam Byrne, no stranger to the odd pork pie, told a whole tray-full of them a few minutes ago during his interview on Radio 4. In response to the serious damage caused to Darling's tax-on-jobs NICS policy by 23 business leaders, who between them employ over 500,000 people, and who've come out in favour of the Tory proposal to more or less scrap the plans, Byrne wriggled, exaggerated, diverted and lied like only he can. The ever-changing Labour economic narrative has just morphed again, this time into an even bigger cutting machine.

For instance, while Darling was only a few days ago talking about £12Bn of 'efficiency savings' - of cutting Labour's massive overspending in other words - today Byrne talked about £35Bn in cuts. Where the hell did that come from? I'm sure he has an answer (he always does), but that's a monster leap in the cuts bidding war in just a couple of days, and gives some indication as to how hurt Labour's economic policies have been by the letter (the bigger the lie, the bigger the damage - it's always been proportional with Labour). Anyway, that's the first bit of wild exaggeration.

Then he goes on about the Tories 'magicking' up figures out of thin air (yes, Liam Byrne said that, ho ho). They will need to find an extra £9Bn in cuts, on top of Byrne's new £35Bn mega-number (he was on a roll by now). The reality is, of course, a little more modest. The Tories will need to find £11Bn in savings, of which £4.9Bn will be counted as a loss against the extra NI money that would come from Labour's tax hike and rest pumped back into the services they have ring-fenced. Byrne damned out of his own, lying mouth again, then.

Whatever the rights and wrongs of this Byrne wriggling, what it shows is that the Conservatives have won the argument on cuts; Byrne's wild numbers at least show that the debate is heading in the right direction, that the government must stop overspending so that it can cut the monstrous national debt. The other thing he singularly failed to do was attack the letter from the business leaders itself. Never once did he say that the businessmen were wrong about the tax on jobs, or, directly at least, that the Tory policy was wrong, either. He did make some feeble reference to the last NI rise, hilariously saying that jobs actually rose after it (it was well before Brown's bust, when public sector employment was still ballooning, and paid for by, you guessed it, tax rises lol), but the thrust of his trainwreck argument was that the Tories were right, but they're Tories, so they're still wrong.

Very lame, Liam. Even for you.

Massive win for the Tories.

Scrapping Labour's Tax On Jobs: All Good

So this evening we learn that the penny has finally dropped with George Osborne and he's announced that he'll be immediately scrapping Labour's crazy plan to hammer national insurance if they win a fourth term. Whatever the economic impact of this - and it will only be good in the sense that businesses will be able to breathe a sigh of relief and Joe Public will have a little bit more to spend next year, at a time when the standard of living is falling in real terms - Osborne's promise has just won the Conservative Party another million votes-plus. Don't believe me? Remember the '92 Tories? It was the campaign against Labour's tax bombshell that turned that election.

All Osborne has to do now is keep his promises on becoming Chancellor, unlike Norman Lamont, regardless of the economic situation. The only way government overspending can be brought under control is by cutting that spending, not by shafting middle (and low) earners and squeezing small businesses all in the name of propping up bloated, inefficient, poorly managed and often appallingly wasteful public services, which is all half Brown's laughable pledges meant anyway.

Whichever way you look at it, this seems like a firm, confident change of direction for the Tories - a change in the right direction, therefore. It's clear, blue water they're putting between themselves and Labour, and it speaks directly to the electorate. It says that they value aspiration and enterprise over punitive taxation and out-of-control spending. It says productive jobs, not non-jobs. It also says to people "we want to win", something I, at least had begun to wonder about. People back a team that wants the prize.

Many will think that all this has come if not in the nick of time, then not a moment too soon. To me, though, as they bring their policies further into focus, and as their message becomes clearer and voters' attitudes crystalise as they gain more confidence in that message, the Tories will absolutely annihilate Brown in the general election. Yahoo!

So, bye bye gold-selling, fake-boom-and-giant-bust, giant dithering weirdo Brown. You're going down, buster, and my God you damn well deserve all you get, and then some!

PS: Iain Dale's latest 7 Days Show podcast covers some of this policy ground, among many other things. It's well worth the listen (if you like that sort of thing). You can get to it via his blog here.

So When's The Real Budget?

From what I've read so far, 'trivial tinkering' is about as generous a term I could think of to describe what is, beyond all question, the most inept and irresponsible response to Britain's debt crisis that Labour could have managed, desperate as they are not to confront the consequences of Gordon Brown's economic car crash before the general election. We got the usual cowardly hammering of harmless drinkers and smokers, the usual mindless fuel duty increases (staggered, as if that matters during a devaluation) and the usual (from Labour, especially under Brown, but now under Darling) stealth tax increases, which are being deciphered from the small print by various sifters and sleuth bloggers as we speak.

The giveaways were pathetic too. Raising the stamp duty threshold to encourage first time buyers will have no such effect. It is, when put into perspective, a tiny tax break. Not being able to get a mortgage on decent terms, or a mortgage that any first time buyer with half a brain will know would become an unaffordable millstone with the first interest rate hike are the real problems. So, no help there. As for the attempt to woo the grey vote once more, well, it's nice for my folks to look forward to a winter fuel allowance again. But now that the worst of this winter is just about over, I can't see them being overly impressed with this straightforward bribe. They'll still have to stump up £2000+ a year for gas and electricity, a constant struggle for pensioners - who are hardly excessive users. See? Pathetic. And where were the cuts? Inadequate and slipped in under the radar.

In reality, therefore, this was a white noise budget with no clear purpose and no clear goal. I note with great pleasure that Cameron was especially thorough in his demolition of it, of Labour's latest ruin of Britain and of the man responsible for it all, James Gordon Brown. Five more years of this? You need your head examined if you seriously want that.

But if you really are as determined as I am to see the end of Brown and his ultra-corrupt government, but can't vote for Cameron for whatever petty reason, then just remember: If you do that then you will split the vote and you will get five more years of Brown. And you'll only have yourself to blame. Putting prejudice before country is as sure a way of letting these useless wreckers back in by default as actually voting for them.

I would have thought this burnt-out budget of a burnt-out government would have provided reason enough to wake up, smell the coffee, vote Tory and finally get them out.

Then, fifty days after that happy day, we'll have the real budget. You know, a Conservative budget that will begin the process of reversing the catastrophic damage long years of a Labour government has caused to the United Kingdom. Again.

Budget Bluster

What a load of laughable lightweight rhetoric. "I believe that government can make a difference," whimpers Darling. Yes, mate. But not this one. Not your bust government.

The whole tone of the thing makes me think that he's decided to vote Tory himself, actually (on the sly), because then, in his confused mind, at least he could guarantee the "big changes" he thinks we so desperately need - without Gordon there to wreck them, that is. Well, at least that's two things we can agree on then: the need for big changes and the necessity to vote Conservative to get them.

Peter Hoskin was a little less (a very little less) scathing about this pre-budget manure. He also thinks it's a signal that Darling's nicked another Tory policy and is going to cut business tax. I doubt it will be handled competently even if he does, however, given this nightmare government's record when it comes to the private, productive heart of the British economy. What's more, you can guarantee that it will be paid for not with vital cuts in government debt and overspending, but with tax hikes everywhere. Prepare to become a lot poorer after tomorrow, everyone.

Epic, unravelling fail, 24 hours before it's even happened.

Billy Bragg Mashed

I thought the Daily Mash's reporting of Billy Bragg's principled hypocritical tax protest and celebtivist posturing was rather bloody funny.

DEFICIT REDUCTION WAS BASED ON SALES OF 'BETWEEN THE WARS', ADMITS DARLING

19-01-10

CHANCELLOR Alistair Darling has been forced to scrap his deficit reduction plan, admitting it was based entirely on sales of Billy Bragg's Between the Wars EP. Bragg says some RBS executives can now afford to buy a house as big as his Britain's 14th biggest pop-folk shouter is withholding his income tax in protest at Royal Bank of Scotland's continued insistence on being a bank. Bragg said: "The RBS bonuses echo the kind of backstage rider demands I never get to make at the Tolpuddle Martyrs Festival. I just hope I can make a difference before the Murdoch press hires someone to assassinate me." But the Treasury warned it will be forced to make even deeper cuts in public services, including those council-sponsored equality and diversity festivals where Bragg turns up and makes BMW-owning management consultants feel like students again for 20 minutes. Tom Logan, chief economist at Madeley-Finnegan, said: "This is potentially very serious. Five year gilts are currently being sold on the basis of guaranteed revenue streams from William Bloke and the ones he did with Wilco. "We don't want to have to use up the tax revenues from the Kirsty MacColl version of New England. We need that in case we go to war with China." Other left-wing musicians have supported Bragg's stance, with Paul Weller only declaring income from his last three solo albums and all that Style Council rubbish. Weller added: "But not Stanley Road or All Mod Cons. I'm not some fucking mug." A spokesman for the Inland Revenue said: "I've actually got a copy ofTalking With the Taxman About Poetry. Maybe he should do a new album called Talking With the Taxman About Spending 18 Months in Jail for Being a Marxist Twat." Meanwhile Bragg demanded that all banks should be run like the Co-operative with its green investment policy, fair trade mortgage refusals and the ethical way it charges you thirty quid whenever you go 1p over your limit.

You can read Billy Bragg's pile of disingenuous horse manure here, if you really want to. Some of the comments underneath it might make it worthwhile, I suppose. Like this one from 'unionjackjackson':

I similarly am withholding my tax from HRMC until we have a tory government and my money will be spent wisely.

unlike these labour tossers pissing it away.

Or this excellent one from the multi-posting Lefty-basher 'stevehill':

I'll visit you in prison Billy. Maybe.

Starving schools, hospitals, pensioners, benefit claimants etc of funds to make a protest is a particularly infantile form of toy throwing.Most bank staff are on or below the national average wage, their bonuses will be in the order of £1,000 or so, and they depend on this to pay their bills. The bank's assets - which you and I own - are essentially its people. They walk out of the door every night. You seem to accept that you can't veto HSBC or Barclays or Goldman Sachs bonuses. So how do you plan to stop the best people at RBS joining their rivals, causing the bankruptcy of RBS, the loss of 141,000 jobs, and a total write-off of the taxpayers' investment?

No, you're not an anarchist. But you're not being very smart.

Perhaps there is hope for Britain after all - so long as we all club together now to ensure that Bragg and his ilk never have any influence on the running and the future of our country again!

Then we can deal with the bankers properly. They'll keep.

Blogger Tebbit

Lord Tebbit's second blog post cheered me up no end after a long day. For one thing, he's an absolute natural, writing with relaxed cogency and richness and engaging his many commenters - fans or otherwise - with authoritative charm. His chief idea - that tax thresholds which harm the poor so much and destroy any nascent inclination for self-improvement must be raised radically and swiftly - is one that resonates powerfully, too.

His introduction to this second post was brilliant, I thought:

Well, well. What an introduction to blogging. At first I thought it was quite unlike anything else I’d done in my political life, but after a while I realised that it is really rather like an old-fashioned political public meeting of the kind that has melted away since television took politics away from the grass roots in the constituencies and concentrated it into the TV studios. It is a pity we can’t have real-time heckling (yet?) but blogging has got life and guts.

Talk about putting it in a nutshell. He's made a observation that no one else has, as far as I know - that people want to be involved in politics, not just when there happens to be an election about, but all the time. And they always have, but while the MSM (TV and the modern DTP) certainly took politics to the masses, in a sense, it also stripped people of their ability, incentive - and right - to engage directly with their political representatives and servants. New Media is correcting that error and "Norm" has just revealed to me why I blog (I didn't realise, see. I thought it was just because I was angry!).

After thanking commenters on his previous post, he then turns to his main argument:

Then thank you, “michealp”. I think you answered my question: What is it that has changed our society for the worse? In your words, it is “because actions no longer have consequences”. Well, they do perhaps, but they are often perverse. It seems to me that our masters these days are willing to use a carrot and stick approach, but they almost always use the stick on the poor old donkey’s nose and inflict a terrible indignity on the beast with the carrot at its other end.

People are not daft. They do respond to incentives. If you let a burglar go free and jail the householder who defends his home and family by thrashing the burglar, the message is loud and clear and well understood.

And I hate to say it, but only one party leader seems to have grasped that, if you construct a system where unskilled people are worse off by taking a job than by staying on welfare, they remain trapped in poverty – and that is Nick Clegg. Lord knows, Frank Field and Iain Duncan Smith spelled it out in words and figures that only a simpleton could fail to understand, but the two main parties are unwilling to bite on the bullet and commit themseves to raising the income tax threshold from £6,475 to something like £10,000 or £12,000.

It is madness to claim that people so poor that they need welfare payments are at the same time sufficiently well-off to pay income tax. The effect is that people at the bottom of the stack living on benefits who try to get back into work are hit by 20 per cent tax, 11 per cent National Insurance and benefit losses that can add up to amost 100 pence in the pound. It is all very well for the better-off to complain about the disincentive effect of losing 50 per cent of every extra pound they earn, but what about the poor devil at the bottom of the stack who loses 90 per cent?

It neeed not cost that much. There would be a huge saving in benefits if we got those people back into work. We could redeploy all those people shuffling paper and money around the tax and benefit system to some useful work. And it would be easy enough to lower the 40 per cent threshold so that better-off people did not benefit from the increase in the basic rate threshold – so why don’t “the party of the workers” or “the party which believes in incentives” say they’ll do it? Why leave it to the Lib Dems, who are not going to have the power to do it?

It's a damn good question. I also note that he carefully (loyally) leaves deducing the obvious implications of it up to the reader: it's a pretty damning indictment of Conservative policymakers that this is not right at the very heart of the Tory manifesto, namely, a pledge to stop taxing people who are borderline impoverished, in UK terms, altogether. Another implication here is that he has dismissed Labour, New or Old, as a party capable of helping the poor, shout and jeer however much they like. They brand themselves the party of the poor, and then imprison them in a tax system designed to keep them down and reliant on the dishonest 'benevolence' of the Big State. Labour betrayed people just like Tebbit long ago. We should listen to him.

All in all, Lord Tebbit's blog seems to promise rich insight and entertainment for us commoners - and some serious and, perhaps, slightly unpalatable food for thought for David Cameron. (He should listen, too!)

Above all, however, the blog will (unintentionally) provide people from all over the political spectrum, but especially from the moderate-right end of it, with a daily reminder of just how formidable a politician Norman Tebbit is, and how much the Conservative party and the country still needs his tuned-in wisdom and his unwavering vision. On the strength of his writing so far, both of these signature Tebbit qualities appear to be undimmed by the years. How lucky we are.

Hammond Trumps Byrne

Just been watching BBC Parliament (now there's a displacement activity if ever you've heard one).

The debate on the PBR has been no contest, with Philip Hammond, Shadow Chief Secretary to the Treasury, delivering a devastating lesson in economics to the entire house, not just the idiots in government who, for instance, don't seem to be able to comprehend the difference between monetary and fiscal policy, (a pretty fundamental problem if you're trying to prove to unconvinced bond markets that you're in control of things).

He's damn good. His forensic unpicking of the Brownite, delusional, dangerous PBR is highly damaging to the last traces of Labour's credibility - or would be if anyone was watching it, of course. Even the usually thuggish Liam Byrne looked quietly impressed.

I hope Hammond is given the praise he deserves for this superb parliamentary performance.

I'll put up a link to it later, if I can find one.

==Update==
Well, perhaps predictably, you can watch the PBR debate on iplayer, but only as far as the end of Byrne's woeful and woefully partisan speech. The BBC clearly didn't feel that Hammond's excellent response, during which he not only provided a forensic demolition of Labour's fantasy economics, but also clearly set out some of a future Conservative government's plans for bringing Britain back from the brink of a credit downgrade (and why that is so desperately important), merited the little bit of extra space on their ample servers (that we own).

Bias at the BBC? Never!

==Update 2==
Jonn Ward has kindly provided a link to the transcript of Philip Hammond's PBR speech. You can find it on parliament's website, here.

Not As Bad As We Expected: Far, Far Worse

Darling's Pre-budget nonsense represents the most appalling assault on the middle classes yet, who, as usual, are going to be squeezed dry to pay for useless Labour's economic bust. It also means that Brown Labour has now dropped any pretence that it cares about anything else other than its short term goal of somehow getting itself re-elected. In fact, though, it could be said that this dodgy dossier of Tory-bashing tribalism is so utterly awful that it amounts to a capitulation - at least by the feeble realist arm of Labour, possibly located at the Treasury. They can't win the next election based on an economic record as catastrophically terrible as Brown's, so the story goes, so why not use the remaining months of power to shore up the core vote and the heartlands? Limit the damage and bugger the country.

Benedict Brogan seems to think this - and more. The budget wasn't as bad as we expected, it was far, far worse.

Even before we’ve trawled through the small print on pensions and tax changes, the pre-Budget report has lived up to the billing. Scorched earth, poison pill, you can choose your metaphor but the key point is that this was a political statement designed to protect Labour’s sectional interests, boost its core vote and stuff the Tories at every turn. George Osborne will probably get the prize for offering the pithiest summary in his reply to Alistair Darling: the greatest golden rule of all is that you can’t trust a Labour government with your money.

Every other line in the Chancellor’s statement was shaped to make a political point: ‘unemployment is never a price worth paying’, ‘government action has made a real difference’, ‘those who doubt the effectiveness of tax credits’, ‘when we could have chosen to do nothing’, all direct digs at the Tories. The ship is sinking under him but the captain blames the passengers.

The measures likewise: for example, a whacking great increase in the value of the state pension (2.5pc when inflation is negative?!), ditto other benefits, represents a gratuitous increase in the cost of entitlements, in the knowledge that the Conservatives need to review them downwards. Reckless, unaffordable, yet how can the Tories reasonably be expected to reverse that one? Such is the political craftiness of Gordon Brown. Or take the freezing of the threshold on the 40p rate: all attention is on bankers, but this is where senior nurses, policemen, middle managers will suddenly find themslelves dragged into the higher rate. Then there’s the 0.5pc increase in NICs, and the pension cap on public sector workers. Ditto the tax on bonuses: a paltry £500m in, but how many billions out as confidence ebbs away from the City. And there’s the business about taxing employer pension contributions: it hits those on above £130,000 – wealth creators they may be but how much sympathy will there be for them? Again, crafty.

“We take these decisions from a position of strength,” Mr Darling said, to howls of derision from the Tory side. The economy is crocked, the markets are pulling the plug on UK plc (bookies have just cut the odds on us losing that AAA rating), and those whose efforts are needed to get growth going again are going to have to pay a lot more, so what is he talking about? The strength that comes from being the party in power, free to use the forces of Government to its advantage. It is in office, so it is still strong. It can be outrageous, it can trash the place, it can do what it damn well pleases because it knows that the mess will be for the Tories to clean up. Labour is already waiting to be in Opposition, shrieking at any attempt to undo any of this. The civil service has been muscled aside, its warnings ignored, Labour now at the controls shouting ‘Gordon is great’ as it pushes the throttle down towards the mountain ahead.

Excellent comment and that "you can't trust a Labour government with your money" is not just pithy from Osborne, but oh-so true, too. How much more evidence do people really need that this trainwreck regime is willing to take the entire country over the pricipice (which is what I assume Brogan means by his mountain metaphor) with it? As a reader of this blog said yesterday, this is not just as bad as 1979, it's much worse. At least Callaghan was a decent human being who understood, above and beyond the pettiness of tribal politics, that he and his government (especially Chancellor Denis Healey, but even he eventually put country before party and made, as David Hughes says, the "tough choices") had failed Britain.

Brown actually does know that they have failed Britain too. The difference is, in his arrogant dishonesty and visceral, irrational hatred of the party opposite, he simply doesn't care.

So if you are one of those who think Labour gives two hoots about your country, think again. The only thing that that corrupt, corrupting and bankrupt party cares about is itself, and this is embodied in the blind ambition of Brown, himself the worst Prime Minister this country has ever had inflicted upon it. But he and his party will cripple Britain for a generation before they give up power. It really is finally time for people to wake up to this reality and act accordingly.

Whether you happen to like it or not, the fact remains that the only way to get Brown-Labour out is to vote the Conservatives in. After this latest episode of scorched earth, recession-prolonging, gaga economics from Labour, there is surely now reason enough, if you are otherwise a Tory detractor (unlike me) to hold your nose, bite the bullet and take the plunge.

Never has this country more desperately needed to oust an irrational, wounded and dangerous government and a tainted, failed - and equally dangerous - Prime Minister. So that's the first thing that simply must happen and that means supporting the Tories. All else follows.

Blair's Millions

Excellent piece from the Renegade Economist today which traces some of Tony Blair's labyrinthine collection of funds, holding companies and legal entities that he's started since handing over his mandate to Gordon Brown. According to the Renegade, he's created a "complex web of structures involving 12 different legal entities handling the unprecedented millions he is receiving since he stepped down from office in 2007."

The article goes on:

So mystifying are the former prime minister’s financial structures – which involve highly specialised limited partnerships and parallel companies – that the Guardian today launches an open invitation to tax specialists and accountants to attempt to explain the motivation behind such structures. We have published the Companies House documents and other legal papers regarding the structure of the partnerships at guardian.co.uk and invite expert comment via our site at guardian.co.uk/politics/series/blair-mystery.

Thereis no suggestion Blair is doing anything illegal. But he refuses to explain the
purpose of the secretive partnerships.

Tax specialists say Blair could use these unusual arrangements at some point in the future to seek to transfer millions tax-free to his four children.
Blair denies, however, that the structures are such an inheritance tax avoidance scheme, known as a “family limited partnership”.

“Family limited partnerships” were being publicized to lawyers and accountants in November 2007 at the time Blair’s lawyers started to set up his structures.

Known in the trade as “Flips”, family limited partnerships are a way of getting round stricter inheritance tax rules in the 2006 budget, imposed by Gordon Brown while Blair was still prime minister.

'Flips', eh? Oh, the irony. Now, as yesterday evening's post on this blog shows, I'm not a little nervous about the Grauniad's journalistic standards, so I'm very pleased that an independent economics journal and blog has taken up the story. Indeed, the article then goes into far more detail than the Graun would ever dare about Blair's on-the-face-of-it legal but pretty irregular financial affairs, all designed (so the theory goes) to dodge inheritence tax, so little Leo will inherit all daddy's estimated, post-PM fortune of 14 million quid (and rising). "There, there. We won't let the beastly tax man have any of it." Perhaps Blair will be voting Tory in the next election (if he's actually registered to vote in the UK, that is).

Whichever way you choose to look at this, and the financial arrangements alone certainly seem worthy of the taxman's attention, it is worth remembering that Blair's pocket-lining at the expense of the British taxpayer, his early retirement (a breach of both a manifesto promise and of trust with 'the nation' - or 9 million suckers, rather- that gave New Labour under Blair, not Old Labour under Brown, a mandate to govern) and his subsequent ruthless exploitation of his ongoing popularity in the United States (if only they knew him as we do) are just the tip of the iceberg. They were (are?) all at it!

There can be no forgiveness for Blair for so many reasons, and he should be investigated for his dodgy businesses and questionable tax arrangements - just after he's been arrested over Iraq - but we must never forget that an awful lot more parliamentarians have been doing this under this Labour government for more than a decade and the worst, criminal offenders have been of the Labourist stripe. Now we know why. A management culture begins at the top. If the person at the top is a money-grubbing, ruthless exploiter of tax and expenses loopholes, the entire organisation's likely to follow suit. They're just copying the boss. Indeed, for the boss to feel OK about being so venal, he will positively (though quietly) encourage it. And that, folks, is called corruption.

And we've had 13 years of it. No wonder we're bankrupt: the country financially and parliament morally. Thank Brown for the former; Blair for the latter.

Star Trek Economics

I heard some quietly chilling news on the radio while driving into work this morning and have just got in to find that Guido has already written an excellent post on the subject of deflation or, to be more precise, inflation. Yup, as predicted on the more sensible financial blogs for months now, the latter's on the rise again. Be warned, however, this is just the beginning.

As Scottie would say on the Starship Enterprise to a captain screaming for Warp 12, "I canna' break the laws of physics, Cap'ain!" In this case, the chief engineer of the Starship Britain is Mervyn King (Alistair Darling is just the helmsman); its utterly reckless captain, who managed to navigate the ship straight into an economic black hole, is Brown (naturally); and the laws of physics are, unsurprisingly, the laws of economics which, by the same token, "canna' be broken."

You print money, you devalue it. You print bucketloads of it and, well, you are courting calamity. You go into massive debt, with a huge structural deficit bolted on, and you compound that potential devaluation and turn a calamity into a catastrophe. Simple as. They will tell you that it's the oil prices, that the money is still sound. They aren't just being dishonest, I'm beginning to wonder if they (these economics 'experts') actually know what the hell they are talking about. The temptation is to trust them - they're the boffins, after all - but the economic forces at work here are so powerful that, you know what, they might not have a clue. Either way, it will be very hard for the next (I hope sensible) captain to pull us out of the gravity vortex Brown has steered us into without stripping the vessel of all its masses of dead weight first, and then by reigniting the engines with the fresh plasma that is tax cuts and other incentives for wealth creation.

Fortunately, David Cameron wrote an excellent piece for the Times this morning which outlined those very things. If only he'd reconsider the 50% tax, too. It wouldn't signal a warp speed recovery, but it might send a vital message to wealth creators and investors that they won't be punished just for being successful and simply for doing what they do best: making money and then spending it.

Here's Guido's thoughts just in case you can't be bothered to click through:

Guido was more than sceptical when politicians and Labour luvvie economists like Gavyn Davis started talking up the bogeyman of deflation at the same time as the government was running up massive fiscal deficits. It seemed too handy a coincidence that they would print money on a scale never seen before at the same time as issuing debt on a scale never seen before. They subsequently, coincidentally, bought the debt using the money they had just printed.

This we were told was to stave off deflation which it was emphasised was very bad. Goods becoming less expensive was somehow worse than goods becoming more expensive. If we got deflation it would be the end of the good times for ever according to even monetarist economists. Guido was sceptical that deflation was necessarily bad, history shows that there have been times of increasing prosperity that coincided with deflation. Deflation happened several times in the nineteenth century. During that era of rapid economic development there were no central banks and money was calculated as a certain quantity of gold or silver.

Deflation was not necessarily a threat to our prosperity, in a situation where the money supply is stable it is the manifestation of prosperity and pensioners know that their standard of living would have improved. With inflation now upticking this experiment in Mugabenomics* has to be reversed without setting off hyper-inflation or collapsing the government debt market. The policy authorities have figured out how to prop up the gilt market – they are changing the regulations to force banks to buy government debt to the tune of hundreds of billions. It remains to be seen if they can avoid an inflationary catastrophe, surging record gold prices suggest the markets suspect not…

*©Vince Cable, who was against QE before he was in favour of it. God knows what he thinks now.

I have an idea: let's make Guido chancellor. At least he seems to know what he's talking about.

Cuts In The Right Direction

David Hughes, writing on his DT blog, puts Osborne's keynote speech in perspective very well.

"A welcome blast of honesty...

Well, it was never going to be a fun fest, was it? And George Osborne will never be one of the great platform orators. But his speech this morning was exactly what was required. In setting out the unvarnished truth about the scale of the economic challenge awaiting an incoming Tory government, he was treating his party – and the country – like grown-ups. What a contrast with the performances of both Gordon Brown and Alistair Darling in Brighton last week. They both managed to plough through their speeches without addressing the mountainous deficit their policies have helped create. Osborne also hit a bull’s eye with his attack on Darling for announcing a pay freeze for the highest public sector earners during the Tory conference – and not having the guts to do it at his own.

We knew about the plan to bring forward by a decade the one-year increase in the state pension age – linking it to the pledge to increase those pensions in line with earnings will go some way towards easing the pain. Osborne’s other big announcement was a one-year public sector pay freeze (not just on the top earners) though the lowest earners and the Armed Forces will be spared. He also reiterated promises already made by David Cameron to cut salaries in Westminster and Whitehall – for “we are all in this together”. This became his mantra. He used it to justify his refusal to scrap the 50p tax rate on high earners, conceding that the tax made no economic sense but arguing that when everyone else was suffering, it would be unfair (and politically damaging) to give the wealthy a break. Osborne got his biggest cheer when he promised to reverse Gordon Brown’s pernicious pensions credit tax grab, though without specifying how, as he promised to put a Tory government on the side of savers. Osborne summed it all up at the start: “Labour created this mess; we are going to have to sort it out”. He made no attempt to conceal the fact that it is going to be very, very painful. Some people are already complaining that he’s been too honest, has put up too big a target for Labour’s attack dogs. I suspect that for most voters, a blast of honesty will be welcome after the spin and trickey of the past 12 years."

Well said. It is also worth noting that those Labour attack dogs were indeed out in force, predictably and particularly in the one-eyed Grauniad. Still believing, extraordinarily, that Labour is competent on the economy, and their own, bizarre (dishonest) version of Keynesianism, the ordinarily quite sensible Martin Kettle, for instance, commits to the record one of the most silly, backhanded and muddled pieces on Osborne, the Tories and economics generally I've ever read. This, for example:

The big fault with Osborne's argument is his belief that governments must behave in the same way as individuals in economic hard times. He wants, he said, to move from an economy based on debt to one that is based on savings and investment. That sounds like the German model. Germans are individually thrifty in just the way that Osborne extols. They save. They avoid debt.

But the trade-off for that is that the German government goes into debt on their behalf to provide public goods and to see them through hard times.

Osborne, however, wants the government to behave like individuals and get out of debt quickly if it can. Keynes always argued that this would be a disastrous course – and even Samuel Brittan, no Keynesian, argued last week that the British political focus on debt is short-sighted and mistaken. But Keynesianism is a hard political sell, as Labour is currently finding.

Voters instinctively believe the Osborne approach rather than that of Keynes.

Osborne accordingly painted a very grim picture. We are swimming in a sea of debt, he said. We have to get back to sound finance. We are all in this together. Who could be against that? Well, Keynes for one.

Having established the case for spending cuts, Osborne duly delivered them.

Can you follow this? If you can then well done, because to me it's just incoherent drivel. Someone should tell Kettle that desperately clinging on to some misunderstanding of Keynes ain't gonna make this country solvent again. It's also the big Labour fallacy, isn't it? The appeal to authority: "Well, Keynes says this so it must be right." No and no. 1) Keynes said you can pump prime during the high point in the cycle to stave off the worst effects of a downturn. 2) Even if Keynes did advocate spending yourself into inflationary oblivion during a severe recession, he would not necessarily be right, however much you might admire the man. I don't admire him as much as I admire, for instance, Hayek, but I would never say, "Well, Hayek said it so it must be true."

But even that doesn't really explain Kettle's or Labour's deeper motive. The deeper motive is, of course, plain, old-fashioned, mindless tribalism. "They're Tories so they must be wrong. About everything." It's as pathetic as it is infantile as it is insulting.

So David Hughes is quite right: George Osborne's speech was a "blast of honesty" and a "speech for grown-ups".

If Osborne could be criticised for anything, perhaps it could be for not dumping Labour's core vote-wooing 50% top tax rate, which, it has been proven (Laffer curves an' all that), will cause a net loss in tax revenues and will harm investment. If you believe economists, that is ;)

New Business Tax Relief - A Great Idea

At last, a really great idea from George Osborne: the abolition of National Insurance for business startups. Read about it here.

The only way this country's economy is going to start to thrive again, after ten years of stagnation and contraction in the private sector, is if the Tories can encourage the entrepreneurial spirit in creative people. National Insurance relief for new businesses seeking to employ staff is certainly a start - and an excellent start at that - but it should only be the beginning of the process.

What should follow is a special, ultra-low rate of "corporation" (income) tax for startups and subsidies for business rates for, say, the first three years of trading. The benefits of these ideas far outweigh the costs in the medium to long term because the businesses are more likely to survive the crucial first years, become established, learn how to be profitable and begin to expand. Most will - or should - then be prepared for the changeover from "New Business" to, let's say, "Established New Business" status. A really imaginative solution to the shock of the sudden surge in operating costs could be to make it a step change - another two years, say, where there is a small NI contribution, full business rates and a slightly higher tax bill.

The point is that this sort of debate - and hope - is/was impossible under a Labour government that's been absolutely hell bent on bleeding the private sector white and then smothering it in red tape (in addition to the endless EU legislation currently strangling British businesses).

The Tories, in making these promises, have stated their intentions clearly, enabled the debate to begin and offered an incentive (albeit a small one) to the thousands of creative people in Britain with good business ideas and who don't want to sell out to Dragon's Den type parasites before they've even begun.

"We will send a message loud and clear that this country is open for business,"

Osborne said. And he is absolutely right. That's exactly what he has done. Amazing what one good speech and one good policy idea can achieve.

So - and I'm very happy to write this - bloody well done George Osborne. I mean that.

The Emergent Osborne

Critical though I have been, almost constantly, of George Osborne since I began to write this stuff, I am happy to admit that all recent evidence points to the fact that I was, in truth, wrong about him. My lack of faith in his ability to engage with the zeitgeist, judge the political temperature and seize the moment was thoroughly weak-willed, it seems. Oh fickle me.

Yesterday was good (today will be better). Osborne railroaded Brown and trainwrecked Mandelson with the devastating timing of that leaked treasury document - and many excellent anti-Brown bloggers explained just how (I didn't). Today he's going for Labour's jugular, according to the DT's chief Conservative party news conduit, Benedict Brogan. Now that he's trumped Labour on the argument, he's going to stick it to them on policy. Public spending and debt levels are a national emergency, he will say, and that calls for an emergency budget. Excellent.

The last time the Conservatives returned to power with an emergency budget, there were no surprises. The Economist declared, "It's what you voted for", while the Daily Mirror said, "No one who voted Conservative can complain". It was 1979 and Margaret Thatcher had prepared the groundwork with a manifesto that addressed directly the twin challenges of the day: "Any future government which sets out honestly to reduce inflation and taxation will have to make substantial economies, and there should be no doubt about our intention to do so."

George Osborne is aiming to do the same again. By the time you and I vote, he hopes to have made it plain as a pikestaff that he intends to introduce sweeping measures to get the public finances back within reach of reason. It may not all be done in that first "emergency" Budget he plans to present within weeks if the Tories are returned, but he will go fast and furious, I'm told. The window of opportunity for doling out the bad medicine is narrow.

Quite what he tells us between now and polling day is another matter. He is weighing up calls for candour against the risk of showing a hand that can be trumped by a desperate Labour Party. He is aware of the need to prove there is more substance to his programme than making MPs pay more for their Commons salad, but is mulling the "how much is too much" dilemma. His conference speech in three weeks' time needs to impress the City with its maturity. He knows he should display the soberness of Geoffrey Howe rather than the showmanship of Derren Brown. It must be the address of a chancellor, and not of his shadow.

Yesterday, though, Mr Osborne was still demonstrating his knack for political coups. He released a leaked document that reveals the Government is assuming spending cuts worth 9.3 per cent between 2011 and 2014. This breach of confidence has had a devastating impact inside the Treasury. Labour exploited leaks in opposition, and is being undone by them now. This one has turned Gordon Brown's retreat from "Tory cuts v Labour investment" into a rout. To have shifted the ground of the political debate while in opposition is some feat. How far have we come if a shadow chancellor can accuse the Prime Minister of lying without provoking even a murmur of outrage?

What to cut is the new frontline in a war of attrition between the parties. But now comes the hard part. The Conservatives are committed to closing the deficit more quickly than Labour, which leaves the shadow chancellor having to explain how much greater than 9.3 per cent his spending cuts will be. As Ronald Reagan said in his first inaugural address: "All of us, together, in and out of government must bear the burden."

But do we even understand what reducing debt and reforming the public sector might mean? Glib talk of axed programmes, redundant civil servants and slashed benefits takes little account of the difficulties the politicians implementing such cuts will face. Vital? Yes. Do-able? Of course. But easy? No, and yet Mr Cameron and his shadow chancellor are being egged on as if restoring us to fiscal health is as easy as 1, 2, 3.

The Conservatives face four obstacles that cannot simply be wished away, the first of which is the public sector unions. Mr Cameron may be trying to seduce Brendan Barber, the TUC's general secretary, but the noises from its conference suggest no takers among the brothers for his olive branch. He is right to highlight the regiments of public sector employees who, like him, believe more can be done for less. But three in five workers in the public sector are unionised, and the BMA can be just as reactionary when it comes to protecting the largesse lavished on its members by Labour.

Then there is the Civil Service. Senior officials are desperate to be rid of this Government – yet, over time, Whitehall has developed its own addiction to unlimited money, coupled with an aversion to risk. A generation of mandarins has grown up fearful of delivering hard truths face to face, and of challenging poor performance. As a result, what a private company would find straightforward – the removal of failure – in Whitehall has become complicated and mired in treacle. Teaching civil servants to address poor performance with the same kind of brusque efficiency that obtains in the private sector must be part of the next government's programme of reform.

Mr Cameron, in his pronouncements so far, not least his promise to go to war with the educational establishment, shows all the signs of a politician who is not afraid to suffer the scars on his back that Tony Blair so famously complained of.

Which brings me to my next obstacle: the politicians themselves. Whitehall is gripped by short-termism, yet in a world dominated by the targets culture introduced by Labour, is this any surprise? When ministers themselves prioritise short-term results that can be ready for the Six O'Clock News or the autumn conference, how can the Civil Service hold out for the long view? Take the permanent secretary I know who was asked by Gordon Brown to deliver a 5 per cent real terms cut in his departmental budget (long before the Prime Minister was prepared to admit such a thing), only to have his ministers – all cronies of Mr Brown – veto every suggestion for shedding jobs, for fear of alienating the militants in the PCS union.

It's not just a Labour problem. Last week, Michael Fallon argued cogently in The Daily Telegraph that the shadow cabinet does not have the faintest idea of the commitment needed to cut public spending, and is still racking up spending pledges rather than offering savings.

And then there's us, and by that I mean the political and media classes of which I am a part. Are we truly ready for reform? What will we make of the grind of austerity, of the complaints from angry constituents and furious readers who have lost a hospital or a surgery, or seen their children refused a university place?

Mr Cameron proposes a long-term project of restraint and reform, but will face resistance, not just from the machine in the centre, or from the demoralised manager of a Leeds benefits office baulking at making a 10 per cent headcount reduction, but from top to bottom, an accretion of human resistance, born of short attention spans, lack of imagination, special pleading, and the siren calls of an economic recovery. How easy will it be for a Cameron government to argue austerity, when others are emerging into the sunlight and thinking: "It's over, why bother?"

Still, I remain an optimist. The public gets the need for "more for less". It's what they have always done, in the kitchen, with the home finances, and in running their small businesses. With the right leadership they can be persuaded to support a national endeavour to spend less and run things better. But it will require candour from government. In 1979, Mrs Thatcher was returned with a majority of 44, not a landslide. Her side wavered and came close to throwing her out when things got tough, until a gamble in the Falklands rescued her. We should not make the next government's job any more difficult by pretending that what lies ahead will be easy.

Great writing, especially the concerns - all of which I share. But once Labour get theirs and are kicked out of power - preferably forever - Osborne and Cameron will be given a free rein, and they'll bloody well need it to overcome those obstacles to which Brogan so eloquently refers. If they are honest with the people from the beginning, then they will. They must be honest.

It's all about faith, you see - the faith I didn't have in Osborne/Cameron initially but am rapidly discovering I now have. From faith comes a mandate; from a mandate comes leadership and strong government. None of these things has Brown ever enjoyed or deserved or, indeed, sought. And that's why he is doomed. The sooner he goes, the better for everyone.

So I say to the inheritor, Osborne: well done! But you must stick to your guns in order to rescue the country from the terrifying, deep, black hole that Brown, thanks to his catastrophic incompetence, mismanagement and world-beating, unbalanced arrogance, has dug for us.

Tories: over to you, then. You've won the argument.

Don't blow it.

What Is 'A Tough Choice'?

It is finally beginning to dawn on people that national bankruptcy is now a real possibility, thanks to the gargantuan levels of public debt generated by the so-called short-term 'stimulus' packages and vast budget deficits designed to mask the effects of the recession. It seems our own government, incapable as it is of running an economy in a period of apparent, relative plenty let alone during a downturn, now that it has decided to cling on to power till the bitter end needs some urgent lessons in what constitutes a 'tough choice'. Janet Daley points out in her typically clear-headed article this evening that people are clammering for some fiscal and monetary conservatism. I fear her call will fall on the prejudiced and therefore deaf ears of a left wing government.

So which kind of "tough choices" do you fancy? The ones that involve spending – as in, which bits of government expenditure would you choose to cut – or the ones that mean tax rises? You may as well start thinking about this because those will be the options available to you at the next general election.

The outlines of the parties' campaigns have now become clear. Labour, whoever is leading it, will be fighting the last war: trying to revive the demonic vision of "Tory cuts", as if they were somehow more fearsome than the Labour cuts that are already in the pipeline simply by virtue of being Conservative and hence inherently evil. But what even Labour spokesmen will be forced to admit, as indeed some of them did last week, is that – in the absence of serious spending reductions – the only way to fill the cavernous hole in the public finances will be through substantial tax rises. So while both parties will talk of having to make "tough decisions" – which is to say, of you having to endure some unpleasantness – they will mean rather different things by it.

She carries on by pointing-out (rather better) what yours-truly said a few days ago: Labour are being utterly dishonest in suggesting they are not going to have to cut spending - indeed have planned to do so already, but wish to fudge the issue by cutting spending stealthily. Brown's nail-chewed gnarly fingers are all over this approach. It's certainly not his second choice (and second rate) Chancellor's desire to hide from the public the scale of the problem the nation faces, as his consistent drift away from 'the message' has amply demonstrated, something that very, very nearly cost him job. But Brown and his stealth cuts are what we will have to endure. The problem is, they will not go far enough and will not be managed properly.

Daley then turns to the issue of tax rises, which is what this is fundamentally all about. Spending cuts, whichever way they arrive, as far as I'm concerned are a fait accompli. Even with the outlandish 'trampoline recovery' suggested by Darling, cuts are inevitable. As the budget deficit spirals to 110% of GDP and total debt liabilities rocket to upwards of $10 trillion-plus (380%+ of GDP) there is no alternative: you just can't sustain that level of borrowing because the likelihood of the plug being pulled by the bond market and the whole rickety framework coming crashing down increases with every new sale. It's got to be paid down at some point no matter what happens. Without aggressive spending cuts, tax rises are inevitable but their impact on an economy in recession will be to kill a fragile recovery in 2010/11. Another downturn - the dreaded double-dip recession - will become a forgone conclusion. Unemployment will begin to shoot-up even further and tax revenues will decrease even more in spite of the higher rates. It would be a disastrous course to pursue, and yet Labour in their folly seem set to do just that. Hopeless.

It's perhaps better to look at a less partisan publication, then, for a bit of guidance on this subject. There's no better or worse place to look than The Economist. In this article of June 11th, the alternatives not just for Britain, but for the US too, are made crystal clear. It's worth a read, but here's the key part:

Broadly, governments should pledge to clean up their public finances by cutting future spending rather than raising taxes. Most European countries have scant room for higher taxes. In several, the government already hoovers up well over 40% of GDP. Tax reform will be necessary—particularly in places, such as Britain and Ireland, which relied far too much on revenues from frothy financial markets and housing bubbles. Even in the United States, where tax revenues add up to less than 30% of GDP, simply raising tax rates is not the best answer. There too, spending control should take priority, though there is certainly room for efficiency-enhancing tax reforms, such as eliminating the preferential tax treatment of housing and the deductibility of employer-provided health insurance.

The next step is to boost the credibility of these principles with rules and institutions to reinforce future politicians’ resolve. Britain’s Conservative Party cleverly wants to create an independent “Office for Budgetary Responsibility” to give an impartial assessment of the government’s plans. Germany is poised to pass a constitutional amendment limiting its structural budget deficit to 0.35% of GDP from 2016. Barack Obama’s team wants to resurrect deficit-control rules (see article). Such corsets need to be carefully designed—and Germany’s may prove too rigid. But experience from Chile to Switzerland suggests that the right budgetary girdles can restrain profligacy.

Yet nothing sends a stronger signal than taking difficult decisions today. One priority is to raise the retirement age, which would boost tax revenues (as people work longer) and cut future pension costs. Many rich countries are already doing this, but they need to go further and faster. Another huge target is health care. America has the most wasteful system on the planet. Its fiscal future would be transformed if Congress passed reforms that emphasised control of costs as much as the expansion of coverage that Barack Obama rightly wants.

All this is a tall order. Politicians have failed to control the costs of ageing populations for years. Paradoxically, the financial bust, by adding so much debt, may boost the chances of a breakthrough. If not, another financial catastrophe looms.

Can anyone imagine Gordon Brown, the man who destroyed pensions in this country in the first place, with his phantom 'moral compass' and his precarious standing within his own party, being the right man to take such radical action as raising the retirement age in Britain to, say, 70? There is no way, either, that he can be the right man because he is incapable of opting for what is, to socialists at least, the counterintuitive move of boosting output by actually lowering tax rates, thereby increasing tax revenues. Neither is he the man to cut spending aggressively across the board for a couple of years in order to lend the country some sort of financial credibility again, after he encouraged with pathological self-righteousness a credit-driven boom to overheat beyond the limits of sanity and for the economy to fly apart as a consequence. It seems there is no way he can be the 'right man' in any sense whatsoever for any job associated with the UK economy.

You can't employ a wolf as a shepherd. We need a change of government - and how!

Incidentally, if you think Britain's debt levels are catastrophic, spare a thought for the poor old Yanks (who've just hired a wolf of their own). According to this article, the true figure for US debt liabilities is now so large once 'off balance sheet' numbers such as pensions and healthcare are taken into account, it has long since overtaken the capacity of metaphorical hyperbole to illustrate its scale. US debt levels have now transcended the space-time continuum and blasted off into hyperspace. The figure is so large now, it's forming its own gravity well and everyone and everything is being sucked into it.

According to Richard W. Fisher, the president and CEO of the Federal Reserve Bank of Dallas, the unfunded liabilities of the US Social Security and Medicare system stand at $99.2 trillion today. That figure is not a misprint. If the US government plans to keep operating the Social Security system and the Medicare system, then the official federal debt really is $11.3 trillion plus $99.2 trillion, or $110.5 trillion. Why does our government state that its federal deficit is only slightly north of $11 trillion (with the term “only” a relative term, given that the true US deficit is about ten times greater than the “official” government figure)? Over the years, the US government has stated several reasons why they don’t include unfunded obligations in their official debt figures, with one of the most common reasons being that these programs are optional and can be cut at any time.

However, this practice is tantamount to a corporation omitting the cost of its health benefits program from its operational expenses even though it has promised its employees health care benefits. If the government is omitting the expense of the nationwide Social Security and Medicare programs from its budget, is this an admission that these programs will soon be history? Given the fact that a $110.5 trillion deficit puts every American family of four on the hook for more than $1.45 million, it seems unlikely that those of us that have paid a lifetime of Social Security taxes but are still many years away from eligibility will actually live to see the benefits of doing so.

This article's conclusions ring true for a UK facing problems just as grave - if not moreso because our economy simply does not have the capacity, flexibility or the potential for rapid growth that a superpower like America still most certainly does.

The government may attempt to implement the tax solution but it is probably more likely that when push comes to shove in the political arena, they will have to axe either the Social Security and Medicare programs, or maybe even both. If you think this outcome is unfathomable, consider that for these two programs and their associate benefits to survive, $99.2 trillion either has to be raised through taxation or cut from programs that have already promised funds. There is no other solution to this problem, other than to attempt to inflate the $110 trillion deficit away. Furthermore, when debating the realm of discretionary spending cuts to refill the government’s coffers, this avenue, in reality, is not viable either, simply because cuts from any other programs other than from those of national defense and national security won’t be large enough to make an impact. In the end, it seems as though most of us still believe that a bankrupt government can provide the backbone for an economic recovery.

"Axe social security and health care. Are they mad?" you hear the Labourists cry. No, not mad, my delusional lefty compatriots. Just broke.

As a friend wrote me the other day, summing-up the lunacy of our respective governments pretty neatly:

10 trillion dollars here, 10 trillion dollars there, pretty soon you're talking real money...

It's worth remembering, folks, historically things have turned out very badly over a lot less than a massive international debt crisis. Someone somewhere needs to get a grip. David Cameron must be the first.