First the facts - Government borrowing goes through the roof and will
get worse as expenditure is being maintained while tax revenues fall!
That’s the reality of the Brown-Darling meltdown.
Then the comments from Jeff Randall who met the prime minister
yesterday and cannot contain his frustration at being unable to
elicit a straight answer to anything!
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TELEGRAPH 19.9.08
1. Credit crisis: Government borrowing rises 70 per cent
Alistair Darling has been forced to extend Government borrowing to
record levels, official figures showed yesterday.
By Robert Winnett, Deputy Political Editor
The Treasury borrowed a record £10.4 billion last month - far
exceeding previous forecasts. In total, borrowing has risen by 70 per
cent during the past five months.
The figures come amid growing fears over the health of public
finances as the fallout from the credit crisis and stock market
turmoil continues.
The Chancellor is now expected to break the Government's rules on how
much it is supposed to borrow this year.
He previously predicted that total public borrowing would be £43
billion this financial year - but the Government has already borrowed
£28.2 billion in five months.
The increase in borrowing has occurred after a fall in the amount of
money expected to be raised from taxes as a result of the economic
slowdown.
The Government has also had to borrow money to fund a number of
emergency measures, including the payment of compensation to those
who lost money from the loss of the 10p income tax band.
Howard Archer, chief UK and European economist at Global Insight,
said the Chancellor's predictions had been ``well and truly blown out
of the water''.
``The public finances are being battered by the economic slowdown,
and they are also being undermined by Government policy
concessions,'' he said.
``Sharply weaker economic activity will take an increasing toll on
VAT and corporation tax receipts, while extremely low housing market
activity and markedly falling house prices are hitting stamp duty
receipts.''
Shadow Chief Secretary to the Treasury, Philip Hammond, said: "Gordon
Brown has built our economy on a mountain of public and private debt,
leaving Britain poorly prepared in the face of the current economic
crisis. His fiscal rules are now totally discredited."
According to an analysis conducted by the Institute of Fiscal Studies
(IFS), Government borrowing over the first five months of the
financial year was 70 per cent higher than last year. Mr Darling only
forecast a 19 per cent increase.
If borrowing continues at the current rate it will increase to a 13-
year high of £65 billion for 2008-09. This figure excludes the debts
taken on by the Government as a result of the nationalisation of
Northern Rock.
Carl Emmerson, the deputy director of the IFS, said: "The big
question for fiscal policy over the next few years is how much of the
big increase in borrowing, and therefore debt, that now looks
inevitable in the near term is temporary and how much will persist
when economic output returns to a sustainable level.
"The more borrowing persists, the bigger the tax raising measures and
cuts in public spending plans that would be required to get the
public finances back into good shape."
The financial turmoil of the past few days is expected to further
reduce the money raised from taxes. The financial services industry
is one of the biggest payers of corporation tax. The loss of tens of
thousands of jobs will also reduce the payment of other taxes.
Meanwhile, Gordon Brown has indicated that he is prepared to increase
borrowing to fund a series of eye-catching initiatives which he hopes
will help ensure his political survival.
==================
2. The sub-prime minister has led us beyond boom and into bust
By Jeff Randall
The speed of decline has been breathtaking. Only 12 months ago, it
was a triple-A-rated operation. It bestrode the globe, a colossus of
its kind, unchallenged by self-doubt. Now the whole thing is in
tatters, a busted flush, wrecked by a desire to trade beyond its
sphere of competence. Yes, Gordon Brown’s premiership has become the
AIG of British politics.
Having been ushered into Number 10 without the inconvenience of an
election, the Prime Minister began last autumn with a seemingly
impregnable market share. The Labour Party backed him and the polls
told us why. By any measure, Mr Brown was miles ahead of David
Cameron’s Conservatives.
Just like AIG, once the world’s biggest insurance group, it appeared
nothing could go wrong. The Bank of Brown had plenty of reserves: a
long track record in the Treasury, experience on the world stage,
friends at the highest levels of business, and unpopular competitors.
Then: whooooosh!
In the popping of a cork, it was all gone. Mr Brown was never loved,
but he was respected and, to some extent, feared. Today, he’s not
even laughed at. It’s worse than that. He’s started to be pitied, as
the terrible strain of doing a job for which he is intellectually and
emotionally unsuited creases his face.
Labour is now so far behind in the ratings, the Tories will soon be
hiring telescopes to locate the enemy. A Mori poll puts the
Conservative Party on 52 per cent and Labour on 24 per cent. Mr Brown
is testing support levels last seen in the days of Michael Foot;
quite an achievement. Much more of this and it will not be just the
BNP that’s overtaking Labour in by-elections. Bananaman, who ran them
close in the Henley poll, must fancy his chances at the next one.
In the same way that the credit crunch has knocked over financial
institutions that once regarded themselves as “the smartest guys in
the room”, the unravelling economy has destroyed Mr Brown’s
credibility. His fate-tempting claim, made many times – “We will
never return to the old boom and bust” – was so wide of the mark that
it will, surely, end up as a clip on one of those Christmas
television shows that re-run bloopers.
AIG was deemed too big to fail and was bailed out. There will,
however, be no rescue for the sub-prime minister. John Prescott has
expressed support, but that’s even less useful than a guarantee on
creditworthiness from the treasurer at Lehman Brothers. In the
sulphurous atmosphere of Labour’s squabbling tribes, very few with
electoral traction are prepared to help fill the hole in Mr Brown’s
balance sheet. For him, the receiver looms.
With this in mind, I arrived at Downing Street yesterday as part of a
team from Sky News to interview the Prime Minister. On a day when bad
facts were gathering on his desk – unemployment up to 1.7million, the
highest since 1999; inflation at 4.7 per cent – Mr Brown deserves
credit for not cancelling us. There’s no doubt that his magic circle
of message masseurs – Stephen Carter, Mike Ellam and Damian McBride –
could have conjured up an excuse.
Those who have observed previous interviews with Mr Brown will know
that he has a technique, honed over many years of media manipulation,
that is based on answering questions he would like to face rather
than the one that has been put to him. His trick is to begin his
reply with a table turning phrase such as “well, the real issue here
is…”, or “what most people want to know is…”, and away he goes,
strafing the interviewer with bullets of information that are
intended to make one killer point: he’s a genius.
The other, less subtle, way Mr Brown has of dealing with inconvenient
truths is to respond through the prism of the last lot’s failures. No
matter how badly Labour is faring on an issue, the Prime Minister can
always drag up a statistic to confirm that the Conservative Party,
when last in power, performed even worse. My first question
encountered just such a defence.
I suggested that by claiming to have abolished booms and busts, Mr
Brown had enticed many people to borrow more heavily than was prudent
in a house-market bubble. Reassured by the then chancellor that the
good times would never end (if you think I’m exaggerating, I
recommend you read his hyperbolic Budget statement of March 21 2007),
ambitious home-seekers plunged in up to their ears. Now, with
unemployment rising, house prices collapsing and bankruptcies at
record levels, gullible punters face ruin.
Mr Brown began: “The last time we had a world downturn, interest
rates were 15 per cent, in fact they went up to 18 per cent… The last
time we entered a world downturn in the early 1990s…” Oh, for
goodness sake. If the best that the Prime Minister can do, after 11
years in power, is to invoke the failures of an administration that’s
part of ancient history, is it any wonder that voters are looking
around for a fresh source of answers to problems?
Can you imagine a chief executive trying to pull off the same stunt?
When asked about his company’s multi-billion-dollar losses, the boss
of Bigbucks Bank said: “In the Great Depression, our rivals’
businesses went bust. We are dealing with this crisis in a better way
than it was handled in the 1930s.”
For all his faults, Tony Blair possessed a neat line in self-
deprecation and the capacity for a half-decent joke. When in a tight
corner, he knew how to admit a mistake without ever conceding that he
had been incompetent. It was a disarming quality that enabled him to
maintain support he did not deserve.
Mr Brown’s biggest failing is that he will never own up to one.
Unemployment is heading for two million, so he talks instead about
the numbers in employment, skipping over the fact that an explosion
of immigration, encouraged by his government, has swollen Britain’s
population.
The Prime Minister expresses concern about oil prices, but fails to
mention that his taxes form more than 60 per cent of the petrol
price. He lambasts the banks for dodgy practices, but omits to point
out that, as chancellor, he was the regulator-in-chief. Ask Mr Brown
if he is completely blameless for the mess in public finances and he
dishes out a lecture on “doing the right thing”.
There’s no contrition, no admission of fallibility, no recognition of
blunders – and most certainly no apology. This isn’t clever. It
insults the electorate’s intelligence and helps explain why, like
AIG, he’s doomed.
- - - - - - - - - - - - - - - - - - - - - - -
Gordon Brown’s one-hour interview with Jeff Randall and the Sky News
team will be broadcast tonight on Sky News at 8pm
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