All three of the ‘quality’ daillies dump wagon-loads of farmyard manure on Brown’s handling of the government, of the economy, of his uncosted plans and planned raids on other deparments.

It’s a picture of utter disorganisation wherever you look.  We have no proper government. 

Christina Speight
INDEPENDENT 30.6.09
Warning: Britain faces new recession

Economy set to relapse into dreaded 'double-dip' downturn, say world's central bankers
By Sean O'Grady, Economics Editor

The world's central bankers have warned that the British economy faces relapsing into another recession – the much-feared "double dip" downturn.

A continuing drought in bank lending, evidenced in the latest figures from the Bank of England, and the threat that spiralling public borrowing will feed through to higher interest rates and inflation, are judged by international economists to be mortal dangers to a sustained recovery.

The Organisation for Economic Cooperation and Development (OECD), which comprises the 30 most advanced economies in the world, added to the gloom, saying that Britain remained "deep" in recession and faced a "bleak short-term outlook".

"The recovery is likely to be slow and unemployment is expected to climb significantly," it said, adding that the Treasury could do "considerably more" to fix the public finances.

Both warnings are at odds with recent market optimism and so-called green shoots suggesting that output in the economy may be recovering. But the Bank for International Settlements (BIS), which includes the Bank of England, the US Federal Reserve and the European Central Bank, said it feared that the problems of the world's banks are far from fixed and could easily trigger a so-called "double dip" or "W-shaped" downturn. "A major cause for concern is the limited progress in addressing the underlying problems in the financial sector," it said.

"A significant risk is therefore that the current stimulus will lead only to a temporary pick-up in growth, followed by protracted stagnation."

The BIS cautioned that "governments may not have acted quickly enough to remove problem assets from the balance sheets of key banks". It added that financial products should be treated like medicines and sold to consumers only when they are certified safe, to help prevent a repeat of last year's financial meltdown.

Figures from the Bank of England yesterday confirmed that the banks and building societies remain reluctant to lend to any but the most secure of businesses and home buyers. Mortgage approvals barely improved during May, remaining stuck at a little over 43,000 – some way above the nadir of 27,000 last winter, but under half of their normal level. Analysts at Capital Economics said the figures were "consistent with house prices falling at double-digit annual rates".

Detailed data on changes to the money supply indicated that relatively little of the £100bn pumped into the economy by the Bank of England through its policy of "quantitative easing", akin to "printing money", is finding its way as yet into meaningful lending by the banks to small businesses and first-time buyers.

A small improvement in consumer confidence was registered last month, and there is plenty of evidence of more buyer interest at estate agents and of shoppers continuing to shop. However, for as long as the banking system remains reliant on public funding and unwilling to offer credit, little of this still-fragile optimism will be seen in hard purchases of "big ticket" items such as houses, cars and other goods linked to house purchase, such as electrical appliances and furniture.

Figures to be released by the Office for National Statistics are likely to reveal that the downturn in the UK in the first quarter of the year was even more severe than first thought, though most economists think the worst of the slump is over.  [He doesn’t mention the horrendous task of restoring state indebtedness 1 -cs]A CBI survey published yesterday said more than 95 per cent of banks and building societies expected their bad debts to rise over the next few months. Such write-offs will join the existing "toxic assets" on the banks' balance sheets and make them even less willing to take on riskier lending – the much feared "negative feedback loop".

Most embarrassing for ministers is the OECD's "health check" on important public services. The OECD agreed that, since Labour came to power in 1997, health spending has "surged" but "the returns so far appear modest". Ironically, given official enthusiasm for "league tables", the OECD says the UK's economic future is endangered by the inequality of educational achievement – a factor which has left the UK towards the bottom of the league table of advanced economies for social mobility: "International standardised tests show that the UK lags better performing countries significantly."

However, the OECD supports the shift away from targeting: "The focus on raising the school leaving age and meeting performance targets in education may still be distracting attention from the more important goal of raising core literacy and numeracy achievement." It adds: "Adequate provision of public infrastructure should be a priority, particularly in transport where road and airport congestion, and problems in the rail system impede business and constrain productivity."

Ministers have cancelled this year's Comprehensive Spending Review on the grounds that the economic picture is too uncertain and that, after a general election, "tough choices" may become easier to implement. Still, the OECD said it wanted "explicit" detail on spending cuts and tax rises, adding: "Experience in other countries suggests that a focus on expenditure cuts, rather than revenue raising, is associated with more successful consolidations." At the moment, the OECD claims, the Government is not being "ambitious" enough.

TELEGRAPH 30.6.09
'Deceit over cuts will lead to riots', says David Cameron
Britain faces “riots on the streets” if Gordon Brown’s “dishonesty” over public spending enables him to win the next election, David Cameron said.

 

By Andrew Porter and James Kirkup

The Conservative leader’s warning added to the escalating row over the Government’s spending commitments as the Prime Minister attempted to relaunch his premiership with a series of policy announcements.
Mr Cameron accused Mr Brown of “deceit, dishonesty and deception” after Lord Mandelson, the Business Secretary, admitted that the Government would not publish a spending review before the next election. In what was the Tory leader’s strongest attack yet on Mr Brown’s integrity, he all but called him a liar. The cancelling of the spending review was “a blatant attempt to cover up the truth of Labour cuts”, he said.

 

Mr Cameron admitted that an incoming Tory administration would have to cut spending because of the dire state of the public finances.

Mr Brown has made no such admission, and Mr Cameron said that if Labour were to win the next election and then start to implement the inevitable measures required to rebalance the public finances, the public would react with anger.

“The cupboard is bare. Tough decisions have to be made. Cuts can’t be avoided. It doesn’t sound easy on the ear but the public must have the truth,” said Mr Cameron.

“That would be the worst of it: you go into an election pretending you are not going to have to make spending reductions, then you have to make them, and then you really do have riots on the streets because people do not have faith in their politicians.”

Mr Brown faced further pressure yesterday to explain how he planned to balance the books from the Organisation for Economic Co-operation and Development (OECD), which monitors economies around the world. It demanded “more explicit” commitments to spending cuts and tax rises to rebalance the budget. The Government is planning to borrow an extra £700?billion over five years – a move which would take the national debt to £1.4?trillion.

The OECD said: “The schedule for rebalancing the budget after the current economic downturn abates should be more ambitious.”

The Prime Minister outlined a series of policies as part of the draft Queen’s Speech setting out the Government’s legislative agenda. It will form the basis of Labour’s next election manifesto.

The new measures included proposals to force all under-25s into a job or training by threatening to withdraw their benefits, and a tripling of the social housing budget.

However, Mr Brown was unable to promise any new money, saying that the cash would be found from other projects. There was also no mention of the planned part-privatisation of Royal Mail, which Lord Mandelson admitted had been put “on ice” following opposition from Labour backbenchers.

Independent economists have said that whoever wins the next election would have no choice but to cut government departments’ budgets.
Failure to publish a Comprehensive Spending Review document before the election would leave voters unable to judge Labour’s spending plans, it is claimed.

The Opposition claims that postponing the review is politically motivated because it allows Labour to go into an election without admitting that it will have to cut spending.

The Treasury denied that it had made a decision on the matter. But Lord Mandelson said yesterday that Alistair Darling, the Chancellor, had “made that judgment” to delay the comprehensive spending review. “The spending period currently operating in Government stretches beyond the next election and therefore it is reasonable to review public spending at that time,” he added.

At his monthly press conference yesterday morning, Mr Cameron said that the latest moves over the spending review were part of “a pattern of deception”. He claimed that there was “a thread of dishonesty running through this premiership”.

To illustrate his point, Mr Cameron gave examples such as Mr Brown’s claim that he did not cancel a general election in 2007 because Labour’s poll lead had fallen; his insistence that abolishing the 10p rate of income tax would not hurt poor workers; and his claim that he had never considered removing Mr Darling from the Treasury at his last reshuffle.

Parliamentary convention prevents an MP calling another a liar because all members of the House of Commons are considered honourable. However, Mr Cameron went remarkably close when he said: “The Prime Minister’s approach has been to say something that he knows is not true but he thinks he is going to get away with.”

He continued his attack following Mr Brown’s policy announcement in the Commons by accusing the Prime Minister of offering “a relaunch without a price tag”. “He is living in a dream world in which spending is going up, investment is going up… when is someone going to tell him that he has run out of money?” said Mr Cameron.

Mr Brown, who accused the Tories of planning a 10 per cent cut in public spending, responded by insisting: “No government has given more detail on its spending allocation. We will not make the mistake of pre-announcing ideologically-driven public spending cuts.”

Mr Brown is likely to be dealt a further blow today when official figures show that the economy has shrunk even more than thought this year. The Office for National Statistics is expected to revise its figure for the drop in GDP in the first three months of the year to 4.4 per cent.

Meanwhile, a ComRes survey for The Independent will show that only one in five people trust Labour to decide where spending cuts should be made, compared with 31 per cent for the Conservatives.

THE TIMES 30.6.09
Brown takes cash from schools, roads and health to pay for 30,000 homes

Philip Webster, Political Editor, and Jill Sherman, Whitehall Editor

Gordon Brown has raided the health, education and transport budgets to fund 30,000 extra “social” homes in a hastily assembled relaunch heavily influenced by Lord Mandelson.

There was immediate confusion in Whitehall last night as departments appeared not to be aware that they were supposed to be funding the £1.5 billion centrepiece of the Government’s pre-election fightback.

The plan to increase to 110,000 the number of social homes built over the next two years was the only significant expenditure outlined by Mr Brown yesterday as he fought to regain the initiative with a draft programme of 11 Bills for the last session of Parliament before polling day.

Downing Street signalled that half the cost would be come from the Department for Communities and Local Government and the remaining £750 million from “underspends” in other departments.

Within hours the sums were being challenged. The Department for Communities refused to accept that it would foot half the bill and appeared to be fighting a proposal to plunder its Decent Homes refurbishment programme, which was set up in 1997 to repair all four million council homes.

Whitehall sources repeatedly told The Times that “no agreement” had been reached amid warnings that the move would leave at least 200,000 council homes in disrepair.

Officials at the Schools Department were also taken by surprise. The Department of Health implied that the money could come from a £350 million underspend in capital projects this year, but had no details. The Home Office is providing nearly £50 million.The Department for Transport said that money would be raised from underspending on the widening of the M25 — a project that has been in dire financial difficulties.

Tony Travers, local government expert at the London School of Economics, said: “It would be a tragedy if the money were taken from the noble endeavour of tackling a legacy of very poor housing stock to create the appearance of a spending boost.”

David Cameron said that the programme showed that Mr Brown was living in a “dream world”.

The only other fresh spending unveiled yesterday was £150 million to boost investment in biotechnology and low-carbon research.