May UK car production was 43% lower than in 2008

Just thought I would mention it.

Of course nobody will be rushing out to buy a new car with the higher duty rates. No doubt Mr Mandelson will be trying to shovel tax payers money into the deadbeat car manufacturers, because he is there to promote "enterprise". He will also claim that it is good value for money because it will mean VAT receipts are higher, even though those receipts will be far less than the money spent.

Up a creek, no paddle

So this is how it looks this morning.

• Public sector net borrowing was £19.9bn in May, double the level of one year ago.
• The total outstanding government debt has risen to £774.8bn, £150bn more than one year ago, and equal to 54.7% of UK GDP.
• Capital Economics estimated that the total public borrowing was now on course to reach £200bn, or 14% of GDP.
• Corporation tax receipts in May down 27% year on year.
• VAT revenues down 18%.
• Income tax receipts down 11%.

So how bad is that? In a word, appalling. Do the maths. Public sector borrowing is just shy of £20 billion per month in an economy with an annual GDP of £1,416 billion, or £118 billion a month.

Let's say the government share of spending is near as dammit half that figure of £59 billion per month. So £19.9 billion of that £59 billion about 34% is not paid for by taxes but has been stuck on the national credit card.

And that doesn't take into account the growth in unfunded public sector pensions, which is growing at £3 billion per month or the off-balance sheet liabilities that are growing with new PFI projects.

Heavy borrowing, but on a lesser scale, might be understandable in a developing nation with huge capital requirements for investment with a likely future payoff, but in a mid-sized post-industrial nation with limited growth prospects, expiring natural resources and few competitive advantages, it is a sign of impending disaster.

£1 in every 6 that is being spent in this country this year is being funded by extra government borrowing with no particular reason to think it will be repaid. Just think about that the next time you are in the supermarket. One person in 6 shouldn't be there, one car in 6 shouldn't be on the road, one commuter in 6 hasn't really earned their train fare. More importantly, one third of all our doctors, teachers, nurses, policemen are paid for by the thrift of other nations.

An uphill struggle

Yesterday saw the launch of a hydrogen car whose designs will be available online so the cars can be built and improved locally. The Riversimple car will reach 80km/hr (50mph) and travel 322km (200mi) per re-fuelling, with an efficiency equivalent to 300 miles to the gallon.

Sounds neat, and digging deeper the car achieves some of its efficiency from a novel electrical system. Instead of using batteries or driving the wheels directly from the motor, the hydrogen fuel cell is used to charge ultra capacitors which will power the engine. Why is this such a good idea? The instantaneous power required to accelerate a car is much higher than the power needed at "cruising speed" so the designers think that they can use the capacitors to give a boost of power when required, achieving an istantaneous power evel much higher than the output from the engine. Their fuel-cell motor has an output of 6kW, compared with the 50kW output of a Smart car.

Sounds great in principle, but cars don't need a 20 second power boost to accelerate. They also need energy to go uphill, and with a 500kg mass of driver plus car, an 80% efficient power system with no frictional losses could only go uphill at the rate of 1 metere per second, or about 15mph on a 15% slope , but probably less.

The car will be available in a number of cities. I would suggest as flat as possible, Lincolnshire or the Netherlands sound good, and avoid Bath, Edinburgh and Rome.

The client state

Are we seeing green shoots of recovery? Not even close. US industrial production figures recorded their 16th monthly drop in May according to Fed data released on Tuesday. The glaring figure, though, was industrial capacity utilisation which dropped to a record-low of 68.3 per cent. The manufacturing figure came in at an even worse rate of 65 per cent. Prior to this recession, the low for the series which began in 1948, was 68.6 per cent set in December 1982.

UK unemployment is rising faster in this recession than at anytime since the 1980s, according to official figures. UK unemployment rose to 2.261 million in the three months to April, the highest since November 1996, according to the Office for National Statistics. The jobless rate rose to 7.2%, the highest since July 1997. The number of people claiming unemployment benefit rose by 39,000 in May, less than the 60,000 which had been forecast by analysts. The claimant count rate rose to 4.8%, the highest since November 1997.

Still if you live and work in the la-la land that is the public sector you won't have felt any of this. In fact you will have been stirred by Labour statements that there will be cuts if Conservatives form a government after the next General Election, and cuts mean job losses for thousands of doctors, nurses, teachers etc.

That isn't even close to the truth, although it is clear that there will be cuts who ever is in power. But it doesn't stop the Labour Party gunning desperately for the votes of public sector workers, who have been largely unaffected by the recession that has ravaged the private sector, causing people to lose their jobs, careers and homes. This is simply a dog-whistle message. When public sector workers hear the words "cuts in services" they don't think of the pour souls who might fail to benefit from those services, but the loss of their own jobs.

But it's coming. Whichever party wins there is a £175 billion annual deficit to fix, and a lot of that is going to come from cuts.

Just remeber this: the number of people in public sector employment was 6.02 million in March 2009, up 15,000 from December 2008, while the number of people in private sector employment was 23.09 million, down 286,000 from December 2008 (ONS, Labour Market Statistics, first release June 2009).

In the three months to April average earnings, including bonuses grew by 0.3% in the private sector, compared to a rise of 3.6% in the public sector (ONS, Labour Market Statistics, first release June 2009).

Look who's back

The government wants to start another tax. This time it's 50p a month on every phone line, on the promise of something to do with digital inclusion. The press would have realised that it was just the thin end of the wedge, sure to go up every year in the Budget, and like road fund duty, nothing to do with the underlying costs it is purported to pay for.

In essence the government is telling you to pay for somebody else's internet access. Remember the story about Williie Walsh asking BA employees to work for free? Do you see a trend?

So how do they dress it up in the media? By dredging up Martha Lane Fox, and splashing her picture all over the papers as a "Digital Inclusion Champion", not that anyone asked for one. Indeed she seems to be in place to handle a problem that hasn't happened yet, nor does it seem likely. The internet has developed quite well so far without massive government intervention.

As a counterblast of all the pictures of Lane Fox that will appear in tomorrow's paper, here is a different image, the Lastminute.com share price, the closest you will get to exponential decay without resorting to radioactive materials. Let us not forget how at the start of the millenium, Ms Lane Fox and chums managed to turn a £316 million flotation into a £25 million company. With that on her CV, no wonder she has to scrounge for work on the government payroll.

Is the US still a safe haven?

Following on from the Chrysler story of third world shenanigans, we have the news that at least one Wall Street bear thinks that the US may lose its AAA credit rating. Technical analyst Robert Prechter, known for predicting the 1987 stock market crash, said he sees the United States losing its rating by the end of 2010, as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.

The economy "is obviously heading toward a depression," despite the government's efforts, said Prechter. Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom. "It's the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.

Klutz of the week: Willie Walsh

Enough of politics for a while, the business stories are just too good to let go, and in particular we like to highlight the inadequacies of those in senior positions in major public corporations, so first up is chairman of Citigroup, Richard Parsons, who told a meeting on Monday that the bank may find it harder to retain and attract top employees while the bank is holding on to federal bailout money.

"I do worry we could be competitively disadvantaged if we aren't able to find a way to quickly repay TARP," Parsons said at a forum sponsored by Time Warner Inc, where he used to be chief executive. Look pal, if your “talented” executives weren’t losing billions, you wouldn’t need any bail out money. Go figure. It may not be such a loss.

But best of all is that perennial figure of fun, whose idea of a business plan for a highly capitalised well-run premium airline with high value prime time landing slots was to turn it into a low cost carrier. Willie Walsh has already announced that he will not take a bonus this year, even though the airline helpfully revamped its executive compensation scheme so he could still profit when BA made a loss. Mr Walsh is nevertheless entitled to an allocation of shares if BA outperforms its rivals, or to be more accurate, underperforms less badly than its rivals, and that is on top of his £735,000 basic salary.

But that is not the end of his frugality. Mr Walsh has also announced that he will not be drawing his salary in July, perhaps safe in the knowledge that the £60,000 cost will not cause too much of a dent in his bank balance. But he has asked the 40,600 BA staff to do the same, also telling them the company was looking for job cuts.

He said, “The new unpaid work option means people can contribute to the cash-saving effort by coming to work while effectively volunteering for a small cut in base pay”.

Get real. The idea of a business is that you invest capital and employ workers, by the fruits of which you sell goods and services on which you make a profit. If you ask your staff to work for free, that isn’t a business. That’s a hobby. Many airlines are started because pilots think they can turn a hobby into a business, but it looks like Walsh will finish of BA by going the other way.

Walsh has lost the plot. He might as well try to get his business out of trouble by asking his customers to pay for tickets and never fly, or suppliers to deliver their goods and tear up their invoices. If he can't make the business work wthout asking for charity handouts, then he shouldn't be in his position or drawing any of his £735,000 salary.

It's time for a new pilot in the cockpit. Perhaps one who knows how to navigate as well as bossing the cabin crew.

On reflection, make that klutz of the year so far.

America: Democracy and the Rule of Law

One of the problems with doing business in many African and some Asian countries is that a plaintiff may have a hard time securing justice through the legal process. Dealing with a government in western countries is always difficult, but elsewhere it may be nigh on impossible. The court system may be said to be founded on European principles, often French or British, but somehow the result often seems to be less satisfactory. Powerful interests seem to have a way of prevailing, and the hand of the government may be seen in the background, pulling stings for the benefit of those that help to keep it in power.

Consider then the plight of the pension fund of the State of Indiana, the Indiana State Teacher's Retirement Fund, and a few others who chose to challenge the White House's involvement in the Chrysler bankruptcy filing.

Chrysler filed for bankruptcy because it had taken on debt which they would never repay. The bankruptcy process is relatively simple in principle. The assets of the bankrupt company are sold to the highest bidders and the proceeds are distributed to the creditors, but not all creditors are created equal. There are a long line of people trying to get their money back, and the bankruptcy law specifically stipulates who has the highest priority.

A company raises capital by issuing shares and debt. The debt can be secured on the assets of the company whereas the unsecured debt relies of the general credit of the company, but because the secured creditors are taking less risk on the company. At the front of the line in a bankruptcy stand the secured creditors, followed by the unsecured creditors. At the back of the line are the holders of common shares. Somewhere in the middle are preferred shareholders. When debt is issued secured creditors generally accept a lower rate of interest than unsecured creditors because they take less risk.

The White House interfered in Chrysler's bankruptcy, arguing that normal bankruptcy procedure should be ignored in the “interests of other stakeholders”, and that secured creditors should not take precedence. Most of the secured creditors were already in hock to the government through TARP, so their complaints did not last long, but the Indiana pension funds were not so sympathetic and asked the Supreme Court to strike out the bankruptcy filing, but after a stay, Judge Ginsberg let the filing proceed.

So the teachers and firemen of Indiana will suffer from the actions of the executive branch recouping about 33 cents on the dollar for their secured debts, but who is the principal beneficiary? By all accounts it is the United Auto Workers Union and their pension funds who will get 55 per cent of the residual value of the company for their supposedly higher risk unsecured paper. Under normal bankruptcy law the secured creditors would have got their money back in full before the UAW saw any value.

But then the Indiana public servants didn’t contribute to the Obama presidential campaign on the same scale as the UAW.

It was never going to happen

The funding gap between state and private secondary pupils has grown by 20 per cent in three years. When Gordon Brown announced his objective to lift state spending on children to the private sector average in his 2006 Budget, the average bill for a private school day place was £8,150, while spending in state schools was £4,750 per pupil.

Since then, the gap has increased from £3,400 to £4,446, with the Independent Schools Council (ISC) putting the average annual fee for day pupils at £10,296 in 2008/09 compared to the £5,850 spent on each pupil in a state school.

And the gap has grown by more than 50 per cent since 2002 to almost £4,500 a child, according to ISC figures. In 2002, private schools were charging an average £6,550 compared to the state school spend of £3,650 - a gap of £2,900.

The pledge was always likely to prove undeliverable for the simple reason that private schools only stay in business by spending more on education than state schools can afford. If that meant that they became unaffordable for some and the number of private schools fell, then so be it, but so long as private schools remain affordable for some, they will continue to exist.

Which is why government ministers have changed their tune and now say that Mr Brown's 2006 goal was to bring state spending up to the then private-sector average of £8,150, which of course it wasn't, but that is history and there is no more money in the pot.

A bit more on Ronaldo: the Beckham Law

With the caveat that this is not tax advice and I lifted it straight from Wikipedia, it seems that CR7 might have cut himself a sweet deal tax wise. Well this is what Wikipedia says:

On June 10th, 2005 the Spanish government approved Royal Decree 687/2005 implementing the Personal Income Tax regulations in relation to article 9.5 of the Spanish PIT Law. The "Beckham law", as it is commonly known, regulates the procedure to apply for the new Spanish tax regime for expatriates in force since January 1, 2004.

The change of legislation allows an individual who has relocated from another country to Spain the choice of being taxed as a Spanish resident or as a non-Spanish resident. The choice applies in the year of arrival to Spain and continues for the following five years. By electing to be non-resident, one can limit their liabilities to Spanish taxation to Spanish income and assets only and not on a worldwide basis. Thus under Spanish Non-Resident Income Tax rules they may avoid tax on their worldwide income for a period of up to six tax years provided that certain conditions are met.

Should such a choice be made, the expatriate will be subject to Spanish taxes on their Spanish source income and on their assets located or exercisable in Spanish territory, being subject to a flat 25% tax rate on his salary income instead to the progressive tax scale for resident individuals (ranging from 15% up to 45%) during the year of acquisition of the Spanish tax residency and the following 5 consecutive years.

Not bad at all. A 25% tax rate instead of the UK 50% rate and no tax at all on foreign source income. A little like the UK non-dom rules, but without any of the messy "bringing income onshore" rules. Very handy if you have a big deal from foreign sponsors, international image rights, worldwide endorsements etc. Particularly if you have a relatively short career like a footballer.

When should governments invest in banks?

About 20 years ago a Harvard Business School professor lectured to me and others that the only logical reason why a shareholder should logically support an acquisition of another public company (in which the shareholder could have taken a stake) was for the tax benefits. As it happens, I think he was wrong, but he had 75% of a point.

Now it seems the boot is on the other foot, and if I was a US tax payer, I would want the government to take a major stake in Citigroup. Why? Because of the tax.

Citi has been reported as creating a poison pill that would deter investors and hedge funds from building up a large stake in Citi as well as deterring existing shareholders from increasing their holdings. If an investor buys a stake of more than 5 per cent in Citi, or if an existing shareholder with more than 5 per cent increases its holding by more than 50 per cent, all other investors will in effect be able to buy one share for every share held at a 50 per cent discount to the market price.

Citi people said they introduced the measure because US tax rules threatened Citi's ability to benefit from a $43 billion tax benefit. Those rules limit companies' ability to use prior year tax losses when more than 50 per cent of their shares are held by investors with stakes of more than 5 per cent. If Citi loses its right to use some of the tax benefits it has accumulated over the years, it will have to write down substantial deferred tax assets, book big losses and lose Tier 1 capital.

But if I was a US tax payer, I would be saying to myself, that is $43 billion of future taxes that may or may not be going to the US treasury.

What is the market cap of NYSE:C? About $19 bn. So a 50% stake from the US Government in Citi would run to about $10 bn, for an immediate payback of $43 billion in eradicated tax benefits, plus there might even be some upside in the shares!

Citi never sleeps, but Uncle Sam is snoozing on this one.

Sports news: UK tax flight starts

A few weeks ago, Andrei Arshavin commented in the national press on his pay packet. Since joining Arsenal in the January transfer window the Russian midfield wizard has dazzled the fans of the North London team with his fancy footwork and creativity, but it seems that Mr Arshavin now considers that his move to the Premier League may have been one of his less astute manoeuvres.

Arshavin agreed a deal worth £80,000 a week, more than the €106,000 wages he earned at Zenit St Petersburg, but as is often the case, he was surprised upon receiving his first payslip to find that his bank account had been topped up by a much lower amount. Arshavin had been used to a relatively low income tax rate of 13 per cent in Russia. Now he has learnt that next year he will have to pay the new 50 per cent tax rate on his annual earnings over £150,000, which in his case means £77,000 of his £80,000 weekly pay.

The 27-year-old said with customary delicacy: "I have a problem with my contract. Certain nuances emerged linked to taxation and some other things. As a result, I’m getting less money than I expected. My advice to other Russian players who may move to England in the summer is to take contract matters more seriously. It’s important to understand clearly and in detail what money you are going to get and what taxes to pay, so that there are no unpleasant surprises of the kind I am facing now. Nothing should be done in a rush."

English football clubs should take note. Their revenues from TV rights and match day tickets may be higher than their continental rivals, but despite paying lower wages (often 70 to 75 per cent of a club’s revenues) continental clubs could look a more attractive option with lower tax rates in Spain (25%), France (40%), Italy (43%) and Germany (45%), particularly to players who instinctively go for the net.

Indeed, this morning's news that Manchester United have agreed to sell Christian Ronaldo to real Madrid will be no surprise. The player may have wanted to move for some time, but not only will the player take home the same at £100,000 a week in Madrid as he would have banked at £150,000 in Manchester, but he will pay hald the amount of tax on the earnings from his not considerable wealth.

The loss to the UK exchequer is clear and the extra stamp duty from a house sale won't come close to filling the gap.

It tells you something ...

... when the most intelligent talk on politics and the economy is not on the news channel, the business news or the political programmes, but on the Comedy Channel.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Peter Schiff
thedailyshow.com
Daily Show Full Episodes Political Humor Newt Gingrich Unedited Interview

"Too many Americans bought too much stuff that they couldn't afford with money they didn't have and now we need to go back to a basic economy where the economy grows based on under consumption, where we save more and consume less."

"But all we have is our consuming. We don't have a manufacturing base any more. We don't make anything any more. We don't do anything. All we do is buy stuff. You take that away from us and we're Poland".

Classic.

The engines cannae take it any more, cap'n.

Oh, such is the wailing from the NHS Confederation you would think that the end of the world was nigh. Apparently the NHS will cease to exist if the £110 billion budget is not increased in real terms. I'll say that again for the benefit of those who might have missed it: £110 billion, or as near as damn it a quarter of all the money raised through taxation.

Are we spending more or less than the rest of the world?

Well, here are the figures for government health spending as a percentage of GDP from 2004 for the 25 most developed countries:

Iceland 8.3, France 8.2, Germany 8.2, Norway 8.1, Austria 7.8, Sweden 7.7, Luxembourg 7.2, Denmark 7.1, United Kingdom 7, United States 6.9, Belgium 6.9, Canada 6.8, Switzerland 6.7, Australia 6.5, New Zealand 6.5, Italy 6.5, Japan 6.3, Israel 6.1, Ireland 5.7, Netherlands 5.7, Finland 5.7, Spain 5.7, Greece 4.2, Singapore 1.3, Hong Kong 0.

So that puts the UK on 7% at about ninth place. Except that as we now know in 2011 it will be £110 billion out of around £1,400 billion GDP, which would be 7.9 %, enough to put the UK in 5th place.

But hang on. We know that £175 billion of UK GDP is not self sustaining economic activity, but pump priming financed by egregious government borrowing. A more sustainable level of borrowing would be the supposed limit on budget deficits for the Euro area, 3% of GDP or about £50 billion. So to put the UK's spending in perspective, let us compare NHS spending with what we might term "UK long term sustainable GDP", which would be £1,400-175+50 billion, or £1,275 billion.

That gives a figure of 8.6% of GDP which puts the UK NHS in first place.

And now for something completely different?

George Osborne gave a speech to tha ABI at their annual conference, and for once it sounded as though it was written by someone who knew what they were talking about. It may be woolly fluff or he may be serious, but I liked this bit:

The charge of short-termism and underinvestment in long term productive assets has frequently been aimed at Britain's economic model, and with some good reasons.
We have lower levels of physical capital per worker than our main competitors, and research by the OECD and the National Institute of Economic and Social Research has shown that in key sectors this is an important part of the explanation for our long-standing productivity gap with countries such as France and Germany.
Our physical infrastructure is older and far more congested than the average for OECD countries, particularly our transport and energy networks.
And our levels of investment in R&D and innovation are significantly lower than the US, Japan, Germany and France.

The Labour government actually took a step forward by reversing some of the disincentive to investment coming from the 6% writing down allowances on long life assets. Which international company was going to site its long life assets in the UK when it could choose other European countries where they get to write off more than 80% of the asset cost over 25 years? That was a Conservative policy, and I can't recall any major investments where the UK was chosen over other countries since 1996. In the current budget the rate has been increased to 10%. which is probably about right.

But the Labour went the other way reducing the general rate of writing down allowances from 25% to 20% and by setting a rate of 10% for integral fixtures in a building. This includes, by way of example, "air cooling or air purification", so the government can kiss goodbye the idea that any high-tech firm will set up any chip fabrication plants in the UK.

Last of all, but most importantly a Conservative government should scrap all of the Labour government's legislation and there are dozens of pages of it eneacted since 1997, which aimed to stop the bank's leasing large items of plant and machinery to UK companies under tax based finance leases. The government effectively cancelled the primary means of leveraging inbound investments until 1997, that financed not only the Toyota and Nissan car plants, the NEC factory in Scotland, most of the offshore drillships in the North Sea, the gas interconnector to the cntinent and the electricty interconnector to Ireland. More importantly it would put the UK back on a competitive footing with Germany and France where such finance is widely available from their banks. A big ask, perhaps, but these are desperate times.

Hampshire horror story moves on

Dear Reader, you may remember the tale of Nicola Horlick and her battle with Vincent Tchenguiz, which had all the ingredients of a Jane Austen novel.

It is now time fr the next chapter, for Ms Horlick's company, UK asset manager Bramdean Alternatives, has named the mysterious suitor who has emerged as a rival the proposal by property tycoon Vincent Tchenguiz. It is none another Hampshire name, Petersfield Asset Management Limited, beneficially owned, forsooth, by none other than Nicola Horlick.

Ms Horlick, as one well remembers, made a name for herself by flouncing out of Deutsche Bank. She then courted the womens' pages in the national press by presenting herself as the only woman to have ever worked and raised a family at the same time. Not necessarily successfully, because as readers will recal from last year, while Ms Horlick took care of her family, she aske Bernard Madoff to babysit a substantial part of her investors' money, which is one reason why Bramdean Alternatives reported a net asset value of $257 million at the end of July 2007, but only $181 million in March of this year.

Mr Tchenguiz, who holds a 28 percent stake, has called for an extraordinary general meeting on June 18 to replace the chairman and directors.

To paraphase Jane Austen, it has become a truth universally acknowledged, that a single man in possession of a good fortune is in need of a woman to spend it for him, but paying 2% annual management fees for the privelege adds insult to injury.

Scottish banking disaster: 1,500 innocent bystanders wiped out

If you are one of the 1,500 people who stand to lose their jobs because Lloyds Banking Group is to close all 164 branches of Cheltenham & Gloucester, you would undoubtedly be pretty pissed off right now.

After all, when the "merger" with HBOS was announced it was pretty clear that the LLoyds businesses were pretty robust and the mortgage book was reasonably sound, although not perfect. One would have thought that any job losses would have fallen on the other side of the fence.

Moreover, when the Prime Minister waved the merger through all the normal anti-monopoly processes, it would seem that the bank and its employees were getting a free ride.

Not so, beause what Brown and his lackey Victor Blank forgot to mention was that the EU also has a say in these matters and they don't look to kindly on the notion that the average British High Street should be full of Lloyds Bank operations selling mortgages.

I don't really see the problem with that. If Lloyds wanted multiple operaions selling against each other I am not to bothered. They don't have a monopoly on High Street sites. There are plenty of empty storefronts in most British towns, and more outlets will generally mean more choice not less.

No doubt the reality is that Lloyds management see the excess capacity as ripe for cost saving, but ne can't help seeling sorry for all the diligent C&G workers who will lose their jobs as a result of an exercise to bail out another incompetently run Scottish bank.

Did anyone else notice

.. that while the world's press was looking the other way at a Committee Room in Westminster, LDV vans went into administration? P45s all round.

From Dr Seuss via Dan Hannan

Gordon Brown will you please go now!
The time has come.
The time has come.
The time is now.
Just go. Go. Go!

I don't care how.
You can go by foot.
You can go by cow.
Gordon Brown will you please go now!

You can go on skates.
You can go on skis.
You can go in a hat.
But Please go. Please!

I don't care.
You can go
By bike.
You can go
On a Zike-Bike
If you like.

If you like
You can go
In an old blue shoe,
Just go, go, GO!
Please do, do, do, DO!

All you need to know about yesterday's election results

Results are now in from Scotland and N Ireland, and as things stand about one person in 19 voted for the current government or about 1 in 25 of the whole population.

Another pointless statistic is that the expected increase in the National Debt over the next 4 years is about £325,000 per Labour voter. Thanks guys.

No really thanks a bunch. That explains why, after last week's election, Labour has fewer County Councillors (146) than MPs (283).

Oh and the BNP (not that I am a fan) polled more votes in Yorkshire and the North West than Labour polled in the 10 seat South East region.

Artificial sweeteners for Lord Sugar?

Conservative Shadow Culture Secretary Jeremy Hunt MP issued a statement this morning regarding the appointment of Alan Sugar as an entrepreneurial tsar/csar:

"Presenting a programme for the BBC and working for the Government on the same issue is totally incompatible with the BBC's rules on political independence and impartiality. Sir Alan Sugar needs to make a choice between his role in The Apprentice and his role as the Government's business tsar. I have written to Sir Michael Lyons and asked him as a matter of urgency to explain who at the BBC gave guidance to Sir Alan and whether he had informed them that he would be a Labour peer."

John Whittingdale, Tory Chairman of the Culture Select Committee, has already objected in a similar fashion:

"In my view, it is not possible for him to continue to present The Apprentice at the same time as he is so closely identified with the Government. I had assumed that by accepting the role as enterprise tsar, he would stand down from his role in The Apprentice. His show is all about business and enterprise. he will be making recommendations on policy to Government. He is already a political figure – he has made no secret of his admiration for Gordon Brown. Either he is an influential figure in Government or this is just window-dressing."

Both of which miss the bigger point. Sir Alan is the owner (and Chairman of the board) of Viglen Ltd, an IT services provider catering primarily to the education and public sector. Following the sale of Amstrad PLC to BSkyB, Viglen is now Sugar's sole IT business.

Viglen announced on 30 April 2009 that it had been awarded a contract by the Office of Government Commerce (OGC) to supply a range of computer equipment to the public sector.

The company said that the award of the contract will see Viglen supplying over 45 central and local government councils, including a number of NHS and local education authorities, just under 70,000 computers over the next two years. The contract is a 24-month supply agreement with a 12-month extension period, and has the potential to grow further to include educational establishments, charitable organisations, social enterprises and the voluntary sector.

Viglen expect the total value of the contract to be worth up to 30 milllion pounds.

Now that is a real conflict of interest.

Why is Brown hanging on?

Can things really get better for him over the bnext year? Probably not, but perhaps he is mindful of this Persian tale:

Nasrudin was caught in the act and sentenced to die. Hauled up before the king, he was asked by the Royal Presence: "Is there any reason at all why I shouldn't have your head off right now?"

To which he replied: "Oh, King, live forever! Know that I, the mullah Nasrudin, am the greatest teacher in your kingdom, and it would surely be a waste to kill such a great teacher. So skilled am I that I could even teach your favorite horse to sing, given a year to work on it."

The king was amused, and said: "Very well then, you move into the stable immediately, and if the horse isn't singing a year from now, we'll think of something interesting to do with you."

As he was returning to his cell to pick up his spare rags, his cellmate remonstrated with him: "Now that was really stupid. You know you can't teach that horse to sing, no matter how long you try."

Nasrudin's response: "Not at all. I have a year now that I didn't have before. And a lot of things can happen in a year. The king might die. The horse might die. I might die.

"And, who knows? Maybe the horse will sing." "

PM's expenses

In view of the fuss made over wreaths and church collections, it is surprising that we haven't heard more about the fact that the Prime Minister claimed £30 on his office expenses for the cost of hiring a bagpiper to play at a ceremony for veterans.

The same report for the Telegraph says that Mr Brown flipped the designation of his second home before moving into Downing Street and submitted an estimated electricity bill for his home in Fife which partly covered a period when his London flat was his designated second home.

He also claimed for council tax and service charge bills for his London flat for periods when his second home was in Scotland.

And how was this different from any of the MPs who have been barred from standing again?

Spot the odd one out

Top headlines in today’s media.  See if you can spot the one with the different angle

Gordon Brown fights for his political life as 75 rebel MPs urge him to stand down - Mirror
Brown hangs on, for now - Guardian
Campaign to oust PM gathers pace - Independent
Labours cybermen are ready to delete PM - Sun
Plot to oust Brown as Labour fears poll disaster - Times
'Don't sign Gordon's death warrant': Mandy begs MPs to snub anti-Brown email as Milburn and Byers are named as plotters - Mail
Gordon Brown fights for his political life - Telegraph
GO NOW: LABOUR MPS TELL BROWN TO QUIT FOR UK'S SAKE - Express
Brown fights for survival -- Rebel MPs prepare resignation call – FT
UK votes in MEP and council polls – BBC Website

No bias at the BBC then.

 

Another game of hide and seek

Having tried for months to hide the details of their own expenses from the public gaze, MPs are now getting uppity about the amounts that the "talent" at the BBC take home, and worse still that the BBC tries to keep the details confidential.

The Public Accounts Committee has complained that the National Audit Office was not given access to individual salaries because it would not sign a non-disclosure agreement. The BBC Trust said that was because it had "legal obligations to staff" to protect the details. In February, the NAO reported that BBC stars were paid more than commercial stations and that about three quarters of budgets for breakfast and drive-time shows were spent on presenters.

Edward Leigh MP accused the BBC of fighting "again and again" not to disclose the salaries of its radio presenters, and said the public should have at least "an idea" of what they earnt.

"It is disgraceful that the NAO's lack of statutory audit access to the BBC puts the corporation in the position to dictate what the spending watchdog can and cannot see. The reason why they give this excuse is because they have fought again and again to prevent parliament, the National Audit Office, and the Public Accounts Committee getting full statutory access to the BBC which is wholly owned by the public," he said. "Because we don't have statutory access they can then plead data protection. If we investigated the BBC like every other government department then data protection would not apply".

You only have to look at the excuses put out by the BBC to see he has a point:

1. Staff employment agreements are subject to confidentiality agreements. I have never seen a properly drawn up confidentiality agreement that didn't provide for disclosure to government agencies, as and when required. In the case of the BBC, all employment contracts could and should provide for review by the NAO.
   
2. Full transparency would lead to demands for higher pay. Not so. The MPs' expenses scandal shows that when the public sees how much public sector workers are paid, they will press for the amounts to be reduced. Indeed if the stars really believed transparency would lead to higher pay, why would they be so keen to have the figures kept confidential?
   
3. The Corporation's governing body, the BBC Trust, says staff have a right to privacy under the Data Protection Act, balanced against the public's right to know how public money is spent. BBC staff are to all intents and purposes paid out of the public purse, albeit through a hypothecated annual duty levied on the use of television sets. Other public sector workers accept that their pay is subject to public scrutiny and publication.
   
4. If their pay was disclosed it would be easier for stars to be poached by commercial channels. Commercial channels pay less than the BBC so that is hardly likely. It is more likely that other performers would undercut the BBC's "stars" by offering to do the same work for less money.

You’ll have to help me out here

I am still trying to figure out the Iraq War.

Obviously we didn't go to war because of weapons of mas destruction. The UK bomb factory at Aldermaston is massive, as is the site at Porton Down, so these stories about mobile weapons labs were obviously pure fantasy.

Then Dick Cheney stands up and says there was no link between Saddam Hussein and 9/11. Well we all knew that, but so did the US administration, so that leaves petrol as the only possible reason.

But then the next thing you know, General Motors goes and sells Hummer to the Chinese.

Now I am foxed.

Push any harder and the hedge funds will push off

Hedge funds don't like being regulated. Lack of regulation is in effect the
sine qua no of hedge funds. After all if they are trying out all sorts of
financial gymnastics, the last thing they want is a bureaucrat telling them
whether they should be doing back-flips or somersaults. Such is the
international nature of the hedge fund business that they are not
particularly wedded to any particular country. If they want to short
Turkish government bonds whilst taking a long position in peso volatility,
they can do it from the comfort of their beach villa in Grand Cayman just as
easily as they can from their mansion in Connecticut or their Mayfair mews.

So imagine their consternation when the EU issued a draft directive on
alternative investment funds that would limit their capacity to borrow.
Private equity firms are also caught by the rules. What upset most of the
hedge funds is that the rules try to capture the implicit borrowings in
derivatives as well as traditional borrowings.
"If this directive goes through as drafted, large chunks of the industry
will be leaving Europe, whereas we have the opportunity today to have large
chunks of this industry coming to Europe," said Ian Wace of Marshall Wce.
The FSA and the Treasury described the borrowing provisions as naive and say
they will fight the directive. If they are as effective as they were in
regulating the banks, expect the shares of intercontinental removal firms to
go through the roof. We repeat our buy recommendation of a few months ago
on Zug real estate.

Well that was quick

Several moons ago, the directors of Barclays figured they were a bit short of capital, and faced with the prospect of nationalisation they went cap in hand to the Gulf, seeking Arab money, which they duly found, much to the consternation of several socialist politicians who wanted to give the bankers a clip round the ear, for no better reason than the fact they were bankers, but let's leave that aside.

Also peeved were one or two larger institutional shareholders, who thought that having ridden the Barclays share price all the way down (which is what you do if you are running atracker fund), they should have been allowed some of the upside from a discounted equity issue. The Barclays directors unveiled International Petroleum Investment Corp, an investment vehicle of the Abu Dhabi royal family as its new investor, adding that IPIC chairman Sheikh Mansour bin Zayed al-Nahyan, a member of Abu Dhabi’s royal family and owner of Manchester City football club, was a long-term strategic investor in the bank.

It seems that seven months is long term these days, because IPIC aanounced plans on Monday night to offload its stake, pocketing a large profit on its £3.5bn investment. The group also invited offers for its £1.5bn holding of Barclays capital notes in a sale to be completed by tomorrow.

The share price of Barclays has surged since the Financial Services Authority concluded the it did not need to turn to the government to raise additional capital. No doubt the Arabs decided that the FSA were no more likely to be correct now than they ever have been, so they got out while the going was good.

Air France plane goes down in the Atlantic

A tip for travellers: If you are going to take a flight across a large body of water, i.e. to North or America or Austraia / New Zealand, be sure to take a plane with more than 2 engines. Actually given the age of MD-11's, DC-10's, Boeing 727's and Lockheed Tristars, make that a plane with 4 engines, which for all practical purposes means a Boeing 747, Airbus 340 or 380 (we can forget the RJ/Avro).

Here's a French joke: Two Belgians were flying home to Brussels from Rio de Janeiro via Paris (because Sabena went bust and the rail connection to BXL from CDG is fantastic). Shortly after taking off there is a big explosion and the pilot announces that one of the engines has gone and the flight will take 20 minutes longer. Not long afterwards the pilot announces that a second engine has failed and the flight time will be longer still.

Half an hour later the pilot speaks to the passenger again to say that they are now flying on one engine and arrival would be delayed by a couple of hours. When the plane finally lands one Belgian turns to the other and remarks, "Just as well the fourth engine kept going or we'd have been up there all night."

If they were on an Airbus A310, A330, Boeing 757,767 or 777 the joke would have stopped at the first paragraph, and you would have missed the punchline.

Do as I say not as I do

Chancellor Alistair Darling is to repay about £700 of expenses following allegations about his allowances, which is curious given the statement his spokesman made this morning.

In July 2007, 10 days after he became Chancellor, Mr Darling submitted a £1,004 claim for a service charge on his south London flat. The service charge covered the six-month period from July 2007 to December 2007. Mr Darling then moved into Downing Street and claimed second home allowances for his grace-and-favour apartments, which the Telegraph said meant that costs relating to two of the Chancellor's homes were being met by the taxpayer at the same time, in contravention of parliamentary rules.

A spokesman for Mr Darling denied the allegation this morning, saying "The allegation of double claiming is simply untrue. He paid the bills due for his flat until he moved out in September 2007 after which he made no further claims for it.", which in hindsight tells us all we need to know about spin.

Gordon Brown had earlier said he did not think the claim had "substance", but it palpably is true. The claim may have been submitted in July, but the expense related to service charges from July to December. Try feigning ignorance of the accruals basis of taxation to the tax man and see what happens.

The Daily Telegraph says he claimed for costs on a flat in south London while claiming allowances on his grace-and-favour home in Downing Street.

Well then surprise, surprise when later this morning, Mr Darling said it was "untrue" he had claimed for two properties at once but would repay the flat's service charges for September to December 2007.

Excuse me, but if he wasn't in the wrong, why was he repaying the expenses claim? Does he now think that we will all pay taxes that we don't really owe, but you know every little helps in these difficult times? Of course not, Darling was caught bang to rights on a petty matter, but as is the way with modern politicians, instead of fessing up and apologising, he tries to act the martyr and make political capital.

And the funny thing is that no sooner had the prime minister got back to his office from his trip to the BBC to cover for his chancellor, than he heard that the man next door had taken out his chequebook and posted one back to the Fees Office, and issued an unreserved apology for what he said he didn't do.