Writing in a provocative article about the recent UK riots in the news blog of The Telegraph of 2 September, 2011, Peter Oborne who is chief political commentator of the Daily Telegraph, views the root cause as the moral decay which is as bad at the top as the bottom of British society.
He considers the entire British political class right to denounce the rioters and to say that the actions of these looters, arsonists and muggers were abhorrent and criminal, and that the police should be given more support. However, he also found something very phoney and hypocritical about all the shock and outrage expressed in parliament when MPs spoke about the week?s dreadful events as if they were nothing to do with them.
He believes that the criminality in our streets cannot be dissociated from the moral disintegration in the highest ranks of modern British society. The last two decades have seen a terrifying decline in standards among the British governing elite. It has become acceptable for our politicians to lie and to cheat. An almost universal culture of selfishness and greed has grown up.
Although he stresses that most people continue to believe in honesty and decency, hard work and putting back into society at least as much as they take out, there are those who do not. The so-called feral youth for example seem oblivious to decency and morality but so also are the venal rich and powerful – and he quotes examples in his article ? including too many of our bankers, footballers, wealthy businessmen and politicians.
Mr Oborne notes that most of the venal rich and powerful are smart and wealthy enough to make sure that they obey the law although this cannot be said of the sad young men and women, without hope or aspiration, who have caused such mayhem and chaos in the riots. However, in their defence the rioters were just following the example set by senior and respected figures in society.
We must bear in mind that many of the youths in our inner cities have never been trained in decent values. Our politicians and bankers, in sharp contrast, tend to have been to good schools and universities and to have been given every opportunity in life.
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German Economic Success?
jeudi, août 4th, 2011The German economy has seemingly made a remarkable recovery since the onset of the financial crisis with GDP growth of 3.6 % in 2010, the same level expected in 2011 and unemployment now below 3 million, giving the best results for 20 years. A major factor has been the labour market proving more flexible than expected, enabling costs and productivity to be held at more competitive levels than e.g. the weaker members of the Euro-zone such as Greece, Portugal and Ireland which are now requiring financial bailouts. In reality, the German economy is now back to where it was in 2009 and the current growth rate is not considered typical, underlying growth being around 1.2 % according to Stefan Kooths of the Kiel Institute.
However, despite this growth in business and manufacturing adding an unexpected Euro 135 billion in extra revenues, the financial crisis has still left the German federal government finances weaker than before. There are structural threats to the economy from local public authority indebtedness, a costly social security system and a health system with a Euro 11 billion deficit. Half the total income of Berlin comes from federal sources and e.g. Frankfurt as a major financial centre with a population of 600,000 raises three times as much in local taxes as Berlin, which has a population of 3.5 million and a debt mountain of over Euro 60 billion. In common with the north of the UK, the former industrial heartland of the Ruhr region is still trying to replace jobs in iron and steel with new businesses in high technology and services such as the media, as the financial health of many cities in the region has steadily declined. The city of Bremen in the north of Germany has a debt of Euro 20 billion on a budget of Euro 4.5 billion and Saxony-Anhalt has the highest debt of any German state outside Berlin, with around Euro 20 billion of debt equivalent to 40 % of income.
Therefore, as is the case with the Coalition government in the UK, the German federal government is faced with having to reduce its debts (currently 83 % of GDP) by what some might well consider, however, a less than ambitious although substantial Euro 80 billion, considering the large tax gains from growth in the previous year (and indeed what the government in the UK is still struggling to replicate from growth in the British economy). It is aiming to achieve this mainly through cuts to the social service budget and family benefits, together with redundancies amongst civil servants and tax increases. Local authorities are also being forced to find new sources of income from taxes and cutting costs by withdrawing support for e.g. libraries, sports programmes, parks, playgrounds and swimming pools.
Trust in MPs?
mercredi, juillet 27th, 2011Once trust has been lost it is difficult to regain it as MPs are discovering following the scandal over their expenses. Thus, the article by Ian Cowie writing in the Daily Telegraph of Friday 8th July questions why MPs should be exempt from a new law to block tax avoidance. He writes that after Budget promises to tackle tax avoidance, Parliament is passing legislation to block several loopholes ? but an obscure clause specifically exempts MPs from these new restrictions. According to HMRC this legislation is only there to prevent tax avoidance but Section 554E(8) of the Finance Bill (No 3) in question specifically exempts members of the House of Commons and the Independent Parliamentary Standards Authority (IPSA) from the new legislation in situations where they fall within its scope.
In response to an MP who asked for clarification on behalf of a concerned constituent, the Treasury has responded that there is no question of this legislation providing MPs with a special dispensation from the new anti-avoidance rules. The issue it seems is that the scope of this new legislation is so broad that in addressing the use of third parties to disguise rewards to employees, the legislation has had to include a number of exemptions for arrangements which are considered as not concerned with attempts to avoid tax. One of these exemptions as it happens is a specific exclusion for anything done by the IPSA in relation to a member of the House of Commons. This is necessary because there is a legal requirement for the IPSA to administer payments to MPs to cover the necessary expenses they incur in their work, while also providing the necessary oversight to ensure the expenses of MPs are properly paid and that the public can be reassured that this is so.
The problem with this response by the Treasury is that it still does not seem to address the question raised by Mr Cowie and indeed distrustful members of the public, as to why MPs cannot rely on the same arrangements that every other employer and employee in the country will have to rely on to comply with the requirements of this Finance Bill. Is it just to avoid a further bureaucratic load on the IPSA for new rules on disguised remuneration which are really only intended to catch complex arrangements designed to avoid income tax through loans made to executives, typically via offshore structures?
Dilemma of Power
jeudi, juillet 21st, 2011David Cameron is faced with the dilemma of power of all Prime Ministers that he needs to court the media but not too closely, the latter the criticism levelled at the Labour government under Tony Blair. He made a mistake it now seems in hiring Andy Coulson, the former editor of the now defunct News of the World newspaper as his head of communications, and in only now going on the offensive before parliament to demonstrate his anger should the on-going police investigation reveal that Mr Coulson was more involved in the on-going phone-hacking scandal than previously believed.
However, this has allowed the Labour leader Ed. Miliband to score another tactical victory in the Commons, exploiting what the opposition believes is the weakness of a lack of attention to detail of the Prime Minister, as demonstrated not only in the current media scandal but also over the health service reforms. Previous incumbents such as Margaret Thatcher and Tony Blair both showed the benefits of better preparation and attention to detail, the latter for example with his training as a lawyer very involved in the Northern Ireland peace process and the intricacies of NHS budgeting.
Labour could undermine the government again with calls of economic incompetence if the current Euro-zone crisis further threatens the recovery of the UK economy, since British banks are still at major financial risk through the loans they have made to French and German banks more directly exposed to the terms of the second Greek bail-out being debated in Brussels today. The Euro-zone also represents around 40% and, together with the other European Union member states, some 60% of total British exports, making it critical to the success of the export-driven recovery plan of the government. As it is, total government borrowing for the financial year as a whole (following the unexpected rise in June) is now expected to be larger than the Office for Budget Responsibility predicted, its target based on an assumption that the economy would grow by 1.7 % instead of what is believed by economists as likely to be 1.4 % or even lower.
Luckily voters have longer memories of the role and responsibility of the previous Labour government in the current troubled state of the British economy, although they will progressively lose patience with those now in power if their everyday financial concerns about e.g. jobs, taxes, budget cuts, pensions, mortgages, inflation and declining real incomes, are not being competently addressed within a growing economy before the next general election. The Prime Minister also needs now to start raising his game as they say and start paying more attention to the briefing evidence presented to him by his advisors.
Eurozone Threat to Political Order
jeudi, juin 30th, 2011Further to our Euro Debate : That Britain should join the Eurozone (refer Categories/ Chairmans Blog/ Federal EU/ Euro Debate in the right-hand index column), Charles Moore writing in the Daily Telegraph Saturday 25 June, sees Britain as the political outsider, essentially proven right now that the dangers of the Euro as a one-size-fits-all currency have come to pass. He thinks this very outsider status also gives Britain little chance of influencing the current Eurozone crisis now threatening the political order in Europe. There will, therefore, be no new post-crisis agenda that Britain can change.
Since in theory existing treaties forbid bail-outs of Eurozone members, the very nature of the continuing Greek bailouts (currently the second one) is helping to bring about further European integration e.g. Euro-enthusiasts losing patience with the difficulties of extracting bail-out money from national governments, are proposing more pan-European taxes instead. The government debts of the weaker Eurozone members are being transferred from banks and other creditors to the European taxpayer. Dogmatic EU leaders are saying ? like the failed Communist ideology of the former Soviet Union ? if Europe is not working, it is because we do not have enough European integration.
However, fear and boredom are currently letting these European leaders get away with it. EU boredom works well in the UK for example with 400,000 people marching through London in protest at proposed government cuts of £6.2 billion, yet Britain has committed twice this amount to the Euro bail-outs with no one taking to the streets in protest. Fear similarly holds the angry populations of the Eurozone in check. The people of Greece do not like the austerity measures imposed on them (as they see it) by the European Central Bank (ECB), but they know that if they left the Eurozone the value of their savings would halve. Therefore, Greece will pretend to do what is demanded by the ECB, and Eurozone leaders will claim that everything is under control, until the next crisis.
The Germans are angry as well since they do not like subsidizing the profligacy of Greece, Ireland and Portugal etc. but they also do not want to lose the competitive exchange rate of the Euro, the respectability of being good Europeans or the problems of their own banks to be exposed. So Chancellor Merkel agrees to the bail-outs but only on terms so perversely punitive that they cannot work and, therefore, will guarantee e.g. a third Greek crisis.
The question is whether boredom or fear will continue to outweigh the anger of the European people. When influential people make other people poor while they remain rich, the political order can start to crumble. Charles Moore concludes that although the Euro was ill-conceived, we should not wish for its demise. There is some logic in a common currency for large parts of mostly northern Europe and only misery for many if the Eurozone falls apart. However, to be seemingly proven right as a Eurosceptic brings no power for Britain over how events in the Eurozone will evolve. Certainly, the endorsement of the Euro by the Chinese Prime Minister during his recent visit to the UK brings powerful support for the continuing viability of the Eurozone.