Monthly Archives: December 2008

I’m on holiday this week but thought I’d pass on this rumour. Plenty of interest in Westminster in who will chair the new Energy and Climate Change select committee, which will keep tabs on Ed Miliband’s new department.

Lots of MPs are keen to get themselves a seat on the table. Apparently Elliot Morley, a former environment minister, is Labour’s choice to chair the committee. Read more

The Council of Mortgage Lenders firmly denied reports from the BBC a fortnight ago that its 2009 forecast for repossessions would be 75,000. The CML’s spokeswoman said on the record that this was the wrong figure and the real number was likely to be significantly lower. This is what we said at the time.

Today, lo and behold, the CML has put out its forecast. It is of course 75k. Maybe we shouldn’t expect anything different from the group – which spectacularly failed to spot the crash coming. Read more


The rebellion has started in earnest. The PPS to the post office minister has just quit his job in protest at the plans to part-privatise the Royal Mail. It is his moment of glory, a brave stand that will see him join the masses of disgruntled MPs on the Labour benches. But there is one question that can’t be avoided: who is he? Read more


It is often wrongly claimed that Gordon Brown failed to spot the housing bubble. In fact, he called the bubble as early as 2005. The trouble was he believed he had addressed it. Brown thought he had successfully managed a boom without a bust. Read more

You don’t need to be in Berlin to take a swipe at Gordon Brown’s economic record. Members of the monetary policy committee have started to put the boot in too. Andrew Sentance, one of the MPC’s external members, recently gave a thought provoking speech demolishing the idea of a “bust without a boom”.

While we may not have seen a classic inflationary boom-bust cycle on the 1970s-1990s model, it would equally be wrong to deny that the current bust was preceded by a boom of some sort….We are now appreciating that the earlier years of this decade saw an expansion of various forms of financial market activity which have subsequently proved unsustainable.

 Read more


Are the Treasury showing a fondness for back of the envelope calculations? While the Tories are wild about tax cuts that pay for themselves, Alistair Darling seems to prefer tax cuts that are cheaper than forecast.

Remember the great fuss over the stamp duty holiday? When Darling unveiled the tax cut in September he said “it would cost a total of £615m”. But take a look at the fine print of the pre-Budget report: the estimate is now down to £280m. Read more

The UK was supposed to generate 15 per cent of its energy from renewables by 2020. That was the received wisdom. The prime minister himself has referred to it on several occasions*.

In fact British officials in Brussels have negotiated a slightly lower figure which equates to about 14.5 per cent. Read more

I wrote here a few days ago about Mapeley’s falling share price. The company came to public attention several years ago when it bought hundreds of HMRC buildings in a deal which was controversial because the group was based offshore.

This month the government announced it would close more than 90 tax offices.  Read more

I was surprised to see the GMB union describing as “total bollocks” my scoop this morning.

The story revealed talks between Corus and union officials over a possible 10 per cent pay cut for the steel group’s 25,000 workers. It’s interesting because this is the kind of idea which could be followed elsewhere (FT journalists have already been handed a pay freeze for 2009). Read more

Peer Steinbrück, Social Democratic finance minister, hardly pulls his punches in a Newsweek interview:

“Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to customers. Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90? All this will do is raise Britain’s debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking. When I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn’t this the same mistake everyone is suddenly making again, under all the public pressure?” Read more

The Treasury has just put out details of how its new anti-repossession scheme will work. (The one in which, if you lose your job, the bank will defer part of your interest payments for up to two years.)

They still only have support “in principle” from eight lenders. That means no change from last week’s announcement in the Queen’s Speech. Read more

The Westminster village should remember Mapeley. The property company is linked inexorably with the purchase of 600 Inland Revenue offices several years ago – controversially, after it emerged that the group was based offshore.

Since then it has floated on the stock market – although US investment group Fortress remains the biggest shareholder. Read more

I am starting to wish I’d spent yesterday afternoon in the Lords rather than following the navel-gazing Commons debate over the structure of the committee looking into the Damian Green affair. (Why do MPs always turn up en masse when talking about themselves?)

Some real gems in the Lords’ Hansard. Read more

Still waiting for Margaret Beckett, housing minister, to drop the ludicrous target of 3m new homes by 2020. The policy was always based on false assumptions and is now impossible to achieve because of the credit crunch/housing crash. The number of new homes built this year will be far below 100,000 – compared to the annual target of 240,000.

DCLG insists that it will press ahead despite the setbacks. One Whitehall source tells me that - in doing so - the government is reminiscent of Hitler in the bunker in 1945, “still ordering the movement of battalions of tanks which no longer exist”.

Lord Jones, former Berr minister, didn’t exactly praise the PBR when he spoke in the Lords debate yesterday: “The accent in the pre-budget report was on stimulation of the consumer. However, regardless of a VAT reduction, people will not go shopping for big-ticket items when they are out of work.”

Couldn’t have put it better myself. Read more

We spotted the rapidly rising cost of insuring UK gilts against default in this blog on November 24.

Today the Tories pointed out that the relevant figure (credit default swaps) is now twice the cost of insuring the debt of McDonald’s, the fast food chain. Read more

Lots of interest in the decision by the Public Administration select committee today to open an inquiry into leaks and whistleblowing in Whitehall. This is obviously a hot topic given the Damian Green affair.

Separately, there should be plenty of interest in Sir Gus O’Donnell when the cabinet secretary appears in front of the PAC on Thursday morning at 10am. He is appearing for a routine inquiry into the civil service. Read more

Peter Mandelson said at the weekend that there would be “no blank cheque” for industries suffering from the credit crunch.

But he sounded a little disingenuous when he claimed: “I don’t expect such a queue to form and one will not be welcomed.” Read more


The latest news from the US is simply jaw-dropping. More than half a million jobs lost in November alone – the biggest monthly drop in employment in more than three decades. The unemployment rate is now 6.7 per cent, according to the US labour department.

The news is worse even than economists’ gloomy forecast of about 340,000 job cuts. In fact, 1.2m Americans have become unemployed in just three months.

UK political commentators continue to insist that the US predicament is unique. Any similarities with Britain should not be over-played.

But remember; whatever the structural differences between the two economies, we enjoyed the same debt-fuelled boom as the Americans. Read more

I’m the first to point out other’s mistakes. So I’m happy to print that John Denham, innovations secretary, is in favour of the third runway at Heathrow – contrary to a report I did on yesterday. Apparently he has no concerns whatsoever about the scheme and its impact on climate change etc.

That still leaves a substantial number of cabinet ministers with forebodings about the project, given its likely impact on greenhouse gas emissions (and local noise and pollution).