26 January 2011
17 January 2011
So, the Localism Bill will sweep away the Audit Commission and the Standards Board and replace them with precisely nothing at all. It seems that we can rely on 'codes of conduct' to regulate our Town and Parish Councils and we know how effective they were in Somerton. It seems that Dave 'Big Society' Cameron has already forgotten just how deep our MPs had their snouts in our pockets and he and the rest of the ConDems are busily chewing the magic mushrooms and convincing themselves that everything will be fine, as long as we shut our eyes or look the other way.
Someone once said that you get the government that you deserve. If that is so then we can't desrve very much at all.
Posted by niall connolly at 22:53
8 January 2011
So, you'll see in your Council Tax bill that, whilst services arebeing slashed, the Council Tax bill will stay the same. At the same time, town and parish councils are being urged to raise their Precept demands (paid for by you and me) to try and make-up for cuts in services and, at the same time, VAT is going up to 20%.
So, national government is going to drain out of the economy just as much as it put in to bail-out the banks and the money is going to come not from the banks (they need to pay huge bonuses to stop the staff from going to Bejing or Shanghai) but from you and me.
I've long suspected that Maggie Thatcher's drive to turn the UK into a service economy (ie hairdressing and interior desgn) was driven more by a hatred of unions than by any clearly thought through plan. Today, that project is starting to look like a pretty poor call as China really starts to gain the momentum that we provided by exporting all of our manufacturing. It was a great idea as long as the Chinese workforce were willing to accept a bowl of rice in return for a week's work.
But those days are rapidly coming to a close and the cost of manufacturing in China is set to rise as that nation develops aspirations. As the cost of production in China rises, and as we have less and less to sell to them (if we ever had), the more likely the possibility that we won't be able to buy the goods that we need.
The recent story about industrial espionage involving Renault makes for interesting reading and, if the story turns out to be true and if the people who stole the information and sold it to the Chinese turn out to be French, I hope the French lock them up and throw away the key. Why such strong views? Simple. Maggie Thatcher pretty much did the same thing by getting rid of our manufacturing base thus making us hugely vulnerable to being marginalised by emerging countries. The people who stole/sold Renault's secrets have, effectively, done exactly the same and the fall-out will effect the wider French economy and the French people.
Throwing away the key would be letting them off too lightly.
If you want to view a catoon explanation of what the FED did in 2008 to bail-out the US economy, try this link that a friend sent:
Till next time, don't let Ken and his chums tell you that they give a damn. They don't, and the libraries are only the start.
Till next time, I'm Niall Connolly
Posted by niall connolly at 23:38
7 January 2011
Banks to pay out billions in bonuses
The government has become reconciled to British-based banks paying out bonuses running to many billions of pounds in the forthcoming bonus round. After weeks of talks between ministers and senior bankers, the best that ministers are hoping for from the banks is a statement from them - possibly at the end of next week - that they will pay out less than they would otherwise have done.
"They are looking for some words from us that prove that the negotiations have achieved something," said a senior banker. "I fear however that there may be more spin than substance to what we say." A member of the government said: "We have never said that we want to see the end of big bonuses because we know that is not deliverable."
Investment banking has been a less profitable business for many banks in 2010 than it was in 2009. So bonuses were expected to decline in any case. Royal Bank of Scotland may pay nearer £1bn in bonuses than last year's £1.3bn. Barclays may award less than the £5bn to £6bn in salaries and bonuses that its results for the first nine months of 2010 indicate it would pay out to the 25,000 employees of its investment bank, Barclays Capital. In the case of Barclays Capital, many of its employees are based outside of the UK: it has a huge base in New York, having bought the rump of Lehman in 2008. Even if bonuses are cut, investment bankers won't necessarily be worse off, because many of them have enjoyed rises in fixed salaries of between 20% and 40%.
"It's well known that the pay of investment bankers has been reweighted towards salaries and away from bonuses," said the senior banker. "So even if bonuses are cut, the total pay of many bankers won't fall."
Another banker said: "the total amount we pay out in bonuses will look huge to most people. Even if we pay out less than the £7bn or so it was estimated we paid in 2009, we are still likely to face criticism".
The Chancellor, George Osborne, recognises that Royal Bank of Scotland, Barclays and HSBC - which are the main payers of bonuses among British banks - operate in a global market, and cannot afford to pay significantly less than their overseas competitors.
The banks argue that they would lose staff essential to their profitable operations if they fail to pay more-or-less the going rate.
To take the sting out of criticism of the substantial rewards for bankers who are widely blamed for the recent savage recession - and whose organisations are only afloat because they have been rescued by loans and investment from taxpayers - the government is looking for the banks to make new commitments to provide additional credit to small businesses.
The hope of Mr Osborne and of the Business Secretary Vince Cable is that the banks will make binding promises to increase lending to smaller businesses and charge those businesses less for credit.
"The Governor of the Bank of England and the Chancellor are concerned that banks' understandable and sensible desire to shrink their balance sheets is depriving credit-worthy businesses of essential finance," said a government source. "It's really important that the banks are seen to be making a contribution to the recovery of the UK economy."
Ministers are hopeful that the banks will sign up to a meaningful lending pact, but it is by no means certain. "The deal is certainly not done and it may never be done," said a member of the government. One problem is deciding how much each individual bank must commit to lend.
"The banks in general understand that they must be seen to be lending enough," said a banker. "But when capital is in short supply, it is quite difficult for a global bank like Barclays or HSBC to choose to devote a substantial amount of resource to the relatively risky and low margin business of lending to smaller UK businesses, when there are more attractive opportunities elsewhere in the world."
As and when the banks issue their statement on lending and bonuses, they are also likely to say that they support David Cameron's plan to create a so-called Big Society bank using the proceeds from customers' dormant accounts (or funds left untouched by depositors for so long that they are unlikely ever to be claimed). "The only problem we have with the Big Society bank is that we are not completely sure what it is going to do, though the idea of using the funds for community projects seems a good one as a general idea" said a banker. The negotiations with ministers on a bonus and lending pact were started by John Varley, who has recently stood down as chief executive of Barclays.
Posted by niall connolly at 03:01
3 January 2011
In November I wrote to Kutter Ken Maddock, the Leader, and shared with him my concerns over 'the cuts'. Ken hasn't bothered to reply (golfing commitments no doubt) and neither has the lovely Ms Sheila Wheeler, Chief Executive, although Ms Wheeler has indicated her intention to reply to my letter, presumably when 'the plan' is ready for public consumption. So, it has been left up to Mr Huxtable to fob me off with flim-flam and platitudes about how serious things are and how 'change' is unavoidable.
Readers of M&B may have seen that I previously published the debt curve that is predicted by County Hall and debt is not scheduled to fall anytime over the next 4 years, which information caused me to ask exactly what was going on. If swingeing cuts in services are proposed then surely that would result in a reduction in debt. But it seems that it won't because National Government is diverting funds that would have come from us taxpayers to the treasury and back to County into .......... the Treasury. In short, our tax is being used to bail-out the Government's finances in exactly the same way that our tax was used to bail-out the bankers.
But, looking at Somerset County Council, what is the Leadership (oxymoron again) doing. Well, in simple terms, they're doing nothing. The idea is that they are going to cut the staffing levels at County by 25% over the next 4 years but they are not actually doing anything to achieve that reduction because, in general terms, natural wastage means that an organisation like County will loose 8% of its staff per annum. If you apply that reduction to the 6,500 staff at County then, after 4 years, the staff level will be 4,656. However, if you CUT the staff by 25% you end up with 4,875 so, do nothing and let natural wastage deliver the 25% reduction. Wizard eh? Doesn't need a rocket scientist to pull that one off.
(A word of caution here - the staffers less likely to leave will be those with better pay and pension arrangements. In an atmosphere of low-morale, as it is today at County Hall, front-line staff will be more likely to leave so, in 4 years time, County will employ 75% of today's staff but the average pay of the remaining staff will be higher than today and they will deliver less in the way of services. Brilliant!)
Then there are the CUTS themselves. What is the Leadership (oxymoron) doing? Well, nothing really. At least, nothing innovative. As Mr Huxtable explained it to me, the idea is that County will reduce its service provision on the basis of statutory obligations. So, if they have a statutory obligation to mend the roads, they will. If they don't, then tough, they won't. Care-workers? If they're not a statutory obligation, Sayonara.
Then there are the County's assets. Mr Huxtable explained that the Council currently occupies 52 sites where there are more than 10 staff and in 4 years time the number of sites will be reduced to 10 and the redundant property sold off. Of everything that we discussed this was the only vaguely strategic and sensible proposal. However, there is a problem here and it was referred to by the BBC in June of last year where the possible glut of property coming onto the market will depress prices. Is there a 'Regeneration Programme' to combat the possibility of vacancy and dereliction? No, because that would be a non-statutory obligation. So, who will buy up all the surplus property in Taunton and across the County and will the taxpayer get royally screwed in the resultant depressed market? The answer to the first is 'friends of the Leadership' and to the second, 'yes'.
So, Kutter Ken and his Crew have a very cunning plan which requires them to do nothing at all. George Osborne (the smug one in the photo at the top of the page) tells Kutter Ken (with the scissors - how subtle) that government is sending them less dosh and that they'll have to cut their cloth to fit. Ken and his pals accept this without a word because their loyalty isn't to the electorate of Somerset, their loyalty is to Central Office and the only way they have a chance of getting a cushy number in a few years time is by doing what they are told. And the the Lib Dems sit idly by and do what they are best at - nothing at all.
It would be interesting to know if any of the clowns at County Hall, the councillors or Leadership that is, have any plans for attracting employment into the County. Now that would be constructive but I forgot, it isn't a statutory obligation.
Till next time, I'm Niall Connolly
Posted by niall connolly at 00:39