Britannia Radio

Two revealing articles on the inner thinking of some of Brown's 
government.  Even Darling is coming round to the idea that the 
government has made mistakes!  (With his boss out of the country we 
can't hear what Brown has to say about that)

The second shows the kind of attitudes and opinions  prevalent in the 
Treasury as a "A senior economic adviser" blurts out their true 
feelings.

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TELEGRAPH 3.3.09
1.Alistair Darling: We made mistakes on the economy
Ministers must have the "humility" to admit that mistakes have been 
made by the Government in the lead up to the financial crisis, 
Chancellor Alistair Darling admits.

By Mary Riddell, Robert Winnett and Andrew Porter

In an interview with The Daily Telegraph he concedes that there are a 
"lot of lessons" for the Government to learn from the events that led 
to the downturn and concludes that the regulation of banks has been a 
failure.

It is the first significant admission of responsibility from a senior 
government figure for the current economic crisis, partly blamed on 
ministers allowing the financial markets to run out of control for 
much of the past decade.

Ed Balls, Mr Brown's former economic adviser who is now a Cabinet 
minister, also conceded that financial regulation should have been 
tougher.
However, he pointed out that the Conservatives had also pushed for 
lighter regulation of the banks.

The Chancellor's forthright comments will put pressure on Gordon 
Brown to offer an apology for his role in the financial meltdown 
during a visit to Washington this week.

During his time at the Treasury, Mr Brown established many of the 
regulatory rules now under scrutiny. President Obama has already 
expressed regret for the decisions made over the past decade. 
However, the Prime Minister has repeatedly blamed global forces for 
the problems.
Only last week, the head of the Government's financial watchdog said 
regulators had been under political pressure not to stop banks' 
reckless lending.

In the interview, Mr Darling appears to blame the crisis on the bonus 
culture for encouraging bankers to take risks. But he admits that the 
Government played a part in allowing it to develop.

"There are a lot of lessons to be learnt by regulators, governments, 
all of us," he says.
"The key thing that went wrong was that a culture was allowed to 
develop over the last 15 years or so where the relationship between 
what people did and what they got went way out of alignment, 
especially at the top end.
"If there is a fault, it is our collective responsibility. All of us 
have to have the humility to accept that over the last few years, 
things got out of alignment."

Ministers have been reluctant to accept responsibility for the crisis.
However, in the interview Mr Darling appears to accept some of the 
criticism for the first time.

He says: "There are some very hard questions to be asked about the 
regulatory model we have operated for the last few years.
"The model of us saying to them [the banks] 'you say it's OK to us 
and we'll go along with it' has failed. You should regulate according 
to risk ... financial services have to be properly run and supervised."

Although Mr Darling believes that bank directors must be the first 
line of defence against poor or reckless decisions he accepts that 
there is a greater role for the Government to intervene earlier if 
internal control fails in future.

In the interview, Mr Darling also effectively rules out introducing 
new legislation to recover Sir Fred Goodwin's £693,000-a-year pension.
He says the Government is seeking legal advice but he appears to 
concede that the money paid to the former chief executive of Royal 
Bank of Scotland may not be recoverable. Mr Darling also tells of 
tensions with Mr Brown.

He says this is "healthy" but indicates that the Treasury is urging 
caution.
He also says he is looking at helping elderly savers in next month's 
Budget.

The interview comes as an opinion poll shows the Tories are now more 
trusted by voters than the Government to run the economy.

The ComRes poll for The Independent finds 35 per cent now trust the 
Conservatives to steer the country through the recession, with 28 per 
cent putting their faith in Mr Brown and Mr Darling.
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2. Gordon Brown adviser says City all-important - and 'rest of the 
country can be turned over to tourism'
A senior economic adviser to Gordon Brown said the City of London was 
all-important to the Government and "the rest of the country can be 
turned over to tourism", it is claimed today.

By Gordon Rayner, Chief Reporter

A report on defence spending quotes the "influential" official as 
telling union officials that manufacturing had "no value" but the 
financial sector had to be "supported at all costs".

The alleged comments, made before the collapse of Northern Rock but 
only now made public, appear to shed new light on the Government's 
decision to press ahead with a £1.3 trillion bail-out of the banking 
sector while being criticised for doing too little to support industry.

The report by the UK National Defence Association (UKNDA), an 
independent body, quotes the government adviser as saying: "Defence, 
aerospace, manufacturing and engineering have no real value to us.
"Only high-quality professional services, financial services and the 
City of London have any real value and they should be supported at 
all costs. The rest of the country can be turned over to tourism."

The report, which highlighted a £15 billion shortfall in defence 
spending, will lead to intense speculation over the identity of the 
unnamed government adviser.

Dr Liam Fox, the shadow defence secretary, said: "If these comments 
are true, then it lays bare the contempt this government has for the 
defence industries, which play an important role in supporting 
British exports and British jobs.

"It also explains why defence was notably left out of the 
Government's fiscal stimulus package - unlike in other countries, 
such as France and Germany, which brought forward some of their 
defence spending, Gordon Brown's government has actually delayed 
major projects such as the aircraft carriers. There has long been a 
suspicion that Gordon Brown and his closest advisers had an anti-
defence bias; now we have this confirmed."

Paul Kenny, the general secretary of the GMB union, described the 
comment as "an appalling statement", which "mocked" hard-working 
people in the manufacturing sector.

A spokesman for the Department of Business, Enterprise and Regulatory 
Reform (BERR) pointed out that the Manufacturing Strategy, launched 
in September last year, committed the Government to "a mixed and 
balanced economy where manufacturing activities complement services".

The UKNDA report, which was previewed in yesterday's Daily Telegraph, 
was written by Tony Edwards, a former head of defence export services 
at the Ministry of Defence, who said he was not at liberty to 
disclose the identity of the official.  [But note that  he does not 
deny the story -cs]

The report has been endorsed by patrons, including Lord Owen and two 
former chiefs of the defence staff, Lord Guthrie and Sir Peter Harding.