« Have the Conservatives had a "Clause Four" moment? | Main | George Osborne says recession would be worse if Britain was in eurozone »


Obviously! every single thing the Labour Regime propose.....is a flop!, they literally cant do anything right! they cnat even send an email without sending it to the 'wrong people' IE the opposition.

We are stuck with these incompetent, criminally and dangerously indept far left-wing extremists for another 18 months!.

"every single thing the Labour Regime propose.....is a flop!"

Steve, take a look at this on PlayPolitical:

"George Osborne: We recommended bank recapitalisation plan"

As you will see from the first commenter, Redwood wisely said the money should have been spend on tax cuts instead.

"...and B, the rate cuts are not being passed on in full."

And they never would be because the interest that banks pay to the BofE represents only a small percentage of the interest that the bank is paying on all its borrowings. It is disingenuous to pretend that all rates should move down by the same amount.

How much longer do we as a Party have to suffer this juvenile oaf!

George my dear friend has shot himself in the foot again!

He forgets that the very measures he now attacks are the very measures he congratulated the government on introducing when introduced but attacked them roundly and publically for "stealing" his ideas!

Like many of his ideas they are not well thought out - but politically - he and we will now be mugged by the simple comment that Osborne says one thing one day and totally the opposite the next whilst failing YET AGAIN to come up with a coherent alternative.

And as someone who serves on the Committe of a major Bank specialising in Rate Change decisions I can tell him unequivocally that MOST MAJOR BANKS - form and arrange such committes the DAY AFTER the BOE announcement in order to make A BALANCED DECISION!

My advice always has been ...WAIT TIL THE TUESDAY AFTER THE BOE meet and announce - to allow EVERYONE time to adjust and move rates to get a true picture!

Brilliant - simlple and to the point.

What a contrast to brown/darlings obfusication of everything.

Of course Brown would rather the country crashed than admit to any error :-(

But noone can say Osborne didn't tell him.

So Osborne recommended lending taxpayers money to the banks to lend back to taxpayers but when they did not and kept it to protect themselves, Osborne now wants to use more taxpayers money to bribe the banks to lend taxpayers the money taxpayers lent them in the first place!

Gids set the house on fire and now wants us to pass him a bucket of petrol to put it out.

John Redwood and other sensible Tories suggested the painfully simple and effective solution of large tax cuts.

Since the BoE sets the Bank rate at which it will discount first-class Bills of Exchange it seems bizarre to think banks stuffed to the gills with non-performing loans and junk bonds are going to write-down these assets to market and then shrink their equity base.....as a prelude to lending to potential defaulters.

The simple fact is that the banking carousel was allowed to go on for 3-5 years longer than was reasonable for them to be able to row back.

The Banks are frightened of going the way of Woolworths as their loan books turn into liabilities and overwhelm their capital base. The Government behaves as if the banking system can pump-prime the economy whereas it is as hamstrung as the rest of the economy by fears of mounting bad debt and poor collateral.

The Government has brought the entire economy to the brink of meltdown and with it a collapse of living standards and possibly even of whole regions of the country. Huge balances are held by self-employed and businesses who must provision for income tax and VAT payments yet who get no interest on their balances yet have fear of default.

Had the Government used £12.4 billion of VAT revenue to let small businesses live on this cash rather than pay HMRC it would have been more effective.

Similarly abolishing withholding tax on savings (EU will not permit this) would lower the cost of funding banks through retail deposits which is the only source of bank funding available apart from taxpayer funds. Yet the individual pays 20%-40% tax on his savings and the Government takes 12% PRE-tax on capitalising banks with Prefs.

Osborne is the BIGGEST Liability we have!

He is quite simply NOT up to the job

The great paradox of the situation is that he IS A BRILLIANT fund-raiser and SHOULD BE PARTY Chairman.

That role is currently effectively DORMANT! whilst CS is in absolute total limbo!

We are losing the economic debate - because of Osborne and DC's blind faith in him!

We are losing CHQ jobs due to lack of funds - funds GO could be raising

Caroline Spelman is a dead woman walking

George would be the ideal Party Chairman

David Davis would be the ideal Shadow Chancellor - we dont just need a coherent policy economically - we NEED an experienced politician to GET THE MESSAGE OVER...

Now is the TIME TO ACT!

Ian Bennett, your post reads like a Sun editorial. All those big capital letters for emphasis as if your readers are morons. I think that tells us all we need to know.

Remember C and O's mantra "What Would An Opportunist Do?" and it all makes sense.

So WWAOD? Support it when it seems like a good idea so he can take credit for it, and pretend he didn't support it when he doesn't like it any more.

pretend he didn't support it

Has he pretended he didn't support it, or said it was the wrong thing to do?

Fine, you can choose and say he made a mistake (although you could just blame it on brown's bad implementation) .. but I don't see any of the denial of ever been anything to do with it that people (the usual anti-osbourne suspects) are trying to pin on him.
I think we're just so used to ministers denying history that such things are just expected.

The country has three options:

#1 A Tory govt with Osborne as Chancellor
#2 A Labour govt
#3 A Tory govt with a different Chancellor, a Tory who has shown to come up with ideas that would help this current mess, and opposed the plans of #1 and #2 that has failed.

#1 is madness when Osborne comes up with monumentally bad ideas that cost the nation billions of pounds.

#2 is there for comedy value. These jokers who got us into this mess in the first place are so clueless, they even pinch the kamikaze ideas of Osborne.

#3 - Please! We need to replace this government with a competent alternative. That is not #1 but it clearly exists within the Tory Party.

"(although you could just blame it on brown's bad implementation)"
Not when you praised it *after* it was implemented without a hint of criticism of how it was implemented!

Richard J

As a party member and supporter for years I am just (you will have to excuse me) increasingly exasperated that this buffoon is being allowed to continually undermine the PARTY!

You,me,all the hard working MP's,members,CHQ etc - working for what this Country needs - A CONSERVATIVE GOVERNMENT - are being undermined everytime this juvenile and incompetent Shadow Minister opens his mouth on economic matters!

In my locality we are losing members at a time when we should be seeing queues outside the doors,we are continually being told on the doorstep that we have NO coherent economic plan - the common theme of disdain and ridicule is Osborne - before the Deripaska affair and after it...

Put simply - at a General Election - in my experience -over 40 years door knocking and pleading for votes - he could cost us 5% OF VOTES - VOTES WE NEED IN key seats!

David Cameron said it is about judgement not experience. Osborne has failed on judgement.

We need a strong Tory chancellor with the right judgement, one who has proven recent judgement by opposing the failed recap plan *before* it was implemented and openly accepts the cuts that will be needed (like the refreshing article from Howard Flight today).

He needs to be bold and to be straight with the British people under a banner to Rebuild Britain. If a bold Tory shadow chancellor told the British people that there will be pain and cuts, no matter who they vote for, it is unavoidable as a result of our huge debt, but that rather than the self-denial or deliberate misrepresentations of Labour that are bankrupting the country, the Tory plan will minimise the pain and speed the recovery, I am sure the British people will not just understand but get behind the Tories.

You can sell 'cuts' when you explain that your cuts will be less severe than your rivals and will speed recovery.

Be bold. Tell it straight. Don't avoid the traps, or even just spring them, but rip them to pieces.

The Tory lead has collapsed, donations are collapsing, staff are being sacked at a time when our government is ruining the country. How can anyone judge those events as a success by the Tory treaury team.

"As a party member and supporter for years I am just (you will have to excuse me) increasingly exasperated that this buffoon is being allowed to continually undermine the PARTY!"

Posted by: Ian Bennett | December 05, 2008 at 16:02

I am sorry Ian Bennet but as a party member and supporter for years I am getting increasingly exasperated by buffoons like you who seem only able to throw around anti Osborne insults. On this occasion he is quite right (How that undermines the party I have no idea,) and the fact you havn't said so suggests you are not interested in reality, just winging. As for the original support for the bail out, firstly the banks had to be saved and secondly the details only dribbled out weeks later.

I would also point out it was he who stopped Gordon's election band wagon and clobbered Darling over his mini-budget which demonstrates that the name of the game is politics. We need to learn that and think twice before meandering off into nerd-land about bank finance.

Just to add now I have read his speech and my only complaint is he gave it just to business people in the NE. He should give it to everybody. Perhaps the problem is that Osborne and the Tories are trying to address the problem and Labour are trying to use the problem as an excuse for policies which are popular with left wing voters - much easier and get more publicity.

Osborne is mentioned - queue GB£ for a moan or 3 or 4, now part of a double act with ian bennett.

The anti-Osborne thing has been done to death - I am pretty sure everyone reading here has made up their mind one way or the other and isn't going to change it based on a standard rant (covering stuff that they have probable read here several times already).

If you haven't got any thing new to say - why don't you save everyones time - we already know you are going to whinge whatever he says...

On the subject - aparantly Osborne didn't want the banks to go bust, so approved of recapitalisation (I have no idea if it would have been in the same form that has been done or completely different - but it is hypothetical so whatever...).

Personally, I think the banks should have been left to stew - I beleive they would have found a way to sort it out. Then Brown would have enough of our money floating around to buy the Honda F1 Team -- as a taxpayer I could live with owning a slice of that (and saving 1000 jobs of course).

Osborne would have saved the banks, I would have left them to it - what should I do? vote lib dem (ha ha ha ) -- no, there is more than one way to skin a cat, and if george would have skinned it with reacapitalisation - fine.

I was ant-George till 'mandy/oleg/tarriff'gate - he handled that perfectly (given the predicament that had been engineered for him), and has been doing better and better ever since.

Go George!

'I am sorry Ian Bennet but as a party member and supporter for years I am getting increasingly exasperated by buffoons like you who seem only able to throw around anti Osborne insults. On this occasion he is quite right (How that undermines the party I have no idea,) and the fact you havn't said so suggests you are not interested in reality, just winging. As for the original support for the bail out, firstly the banks had to be saved and secondly the details only dribbled out weeks later.'

David Sergeant, sadly it is you who are in the wrong, rather than Ian Bennett!

Firstly, we had share the proceeds of growth nonsense, backward looking political positioning with no forward looking analysis of the depth of danger that are over borrowed economy was in!
Secondly, apart from the banks stupidity in getting themselves into their current position, for a successful economy you have to have a strong banking system, even with the 'bailout' we are not there. Anyone with any financial 'nous' knows, and has already been stated on this site a number of times, that banks still fund most of their lendng from the wholesale market whose interest rate is set by LIBOR not the base rate. Both Brown and Osbourne are demonstrating pure political posturing! David get real, we have to let the banks do what they should know best(?). The banks themselves don't want to force the economy into the depression (40% probability)that we are heading into, because it means non-performing loans will rocket driving the banks further into huge losses. Being blunt, sadly there are many businesses who would not have existed if interest rates had not been kept artificially low for the last 7 years or so distorting the risk/reward equation. To remind you David, what has already been said many times on this site both the Government and Consumer has got themselves massively over-indebted, and there is no way out apart from cutting both personal and Government expenditure to rebuild their respective balance sheets. The only other way will result in the folly of hyper-inflation. So Ian well said - Politicians of all parties, are as ever not facing reality and Bankers remain the bogeymen!

The Banking system has crashed because the banks have lost confidence in each other. They also have a difficult situation where the government told them that they needed to increase the level of capital held, hence the need for recapitalisation. Thirdly the assets against which loans had been granted have collapsed in value.

All these issues have made life difficult for the banks to operate.

Then Gordon Browns recap plan displayed all the financial understanding of a primary school child. Banning the banks from paying dividends was plain crazy. GB doesn't understand that the share price is a function of future dividend expectation, therefore all the banks now under government control are hobbled and the government will not be able to sell the shares in the market any time soon. By all means place a restriction of dividends to the extent that the interest on the pref shares has been met, but any banker will tell you that in commercial lending that is all you do, because you want your client to prosper- not so this government.

Then there is Base rate. This has been cut to a historic low, and GB gets on his hind legs huffing and puffing that banks aren't passing on the savings. Well there is a simple reason for this. Banks have to borrow on the interbank market and the rates there are almost 4% when base rate is 2%. Base rate is irrelevant to the cost of borrowing.

Finally we have GO's idea of a government guarantee for business lending. This is a VERY BAD IDEA. I speak as a banker, and can guarantee you that any such scheme will land the government with a very large bill as bankers lend to the guarantee rather than to the company.

Fundamentally Banks should not be lending to anyone that cannot demonstrate the ability to repay. If that means some companies cannot borrow, then better that than a bigger problem later

Stewart Geddes December 05, 2008 at 23:48

Stewart, you write on Osbornes lending guarnetee proposal - are you aware that he only proposed a guarntee for part of the loan? The intention being to prevent the very issue you raise?

The financial crisis is now beginning to impact heavily on jobs as we see numbers of redundancies each day and sometimes within hours of one another.

These people have families, mortgages, some will have loans, credit cards and car loans, and if we go by what we think of as a national average, then three people are effected directly by each person becoming unemployed.

Lost income will reverberate through the economy as those people begin to struggle with their weekly shopping and become more selective and less thrifty as their spending has no option but to match drastically lower income levels.
Many will receive pay offs so their budgets will steadily reduce as money declines gradually, whilst frugality will exacerbate the problem of a lack of sales and profit to businesses and a continuation of the cycle of no confidence.

None of this is of course good for those concerned and nor is it good for businesses which are still left struggling to get by with less customers spending less money as they in turn hang on to their cash due to "lack of confidence".

The tactic launched by government to promote confidence into the market has been to reduce VAT and to allow businesses to defer payment of this tax, but a cut on purchase tax on goods which people have no confidence to buy, will not as George Osborne indicates, restore markets or promote confidence, and will inevitably only reduce revenue which the government needs in order to meet the rising costs of state welfare which will continue to grow as a result and further effect of lack of confidence and rising unemployment.

The cycle has to be broken if confidence is to be restored and if banks are to begin to lend again, and also if people are to return to work so they can meet their obligations in keeping their homes and paying their loans and credit cards, and lessening dependency on state welfare which if not halted will carry on rising to a point where higher taxation will inevitably have to be taken from those still in work if the same level of services are to be maintained, or otherwise government will have to increase the money supply and borrow more.

Currently, the government's plan is to borrow money and this will lead to it being repaid later by higher taxes. It gambles with our future and it gambles that confidence will return. But as we can see, confidence is not returning and unemployment is rising and George Osborne is right to say that Gordon Brown's plan is not working.

Patently if people are not spending then the British public agrees with him.

Currently, there are calls for government simply to print more money and to do what amounts to throwing it from helicopters. It might sound good but I'm sure it would only be good if a pile of it landed in YOUR garden as opposed to the fella's next door who happens not to have lost his job, isn't struggling to pay his mortgage or feed an average household of three.

It is perhaps too obvious then as to what is needed now to stimulate confidence and to get people back to work and thus get those shops and banks full of happy customers again, but I have some difficulty seeing that the government itself is capable of U-turning on its policies in order to bring about these essential changes to restore confidence.

What are they ?

Simple :-

One - Get the Loan Guarantee Scheme underway which George Osborne wants immediately and get finance to businesses either through banks which will lend or direct through the DTI for the alternative is to nationalise banking.

Two - Refund a proportion of taxes to businesses which are verging on liquidation by bringing in an immediate and urgent business protection bill similar to the U.S Chapter Eleven which can help support a failing but otherwise viable business through difficult times.

Three - Increase the money supply and reduce taxation to people's incomes and couple this with a one off payment to all welfare claimants in the form of "Fuel Voucher".

Granted, some will stick the extra money they have into their bank accounts but that in itself will restore the banks deposits and promote more toward capital adequacy as investors see confidence returning to our economy.

Interest rates do not need to fall to the floor, they can return to levels which promote investment and savings.

Print a money bandage and apply it directly to the wound, i.e. People and businesses which need confidence and which are paying the taxes government is currently heaping into banks which are hanging on to it and not sharing it out yet wanting us to take on liabilities through borrowing ( our own money ), which is never in a month of Sunday's going to restore confidence nor will it save jobs and businesses.

Has he had time to look at the new Banking Bill yet? I should have seen him yesterday in Newcastle but I'm recovering from a second cardiac arrest (seriously).
Anyway the Banking Bill probably explains why the official portrait is being kept under wraps then.

Basically, the "bank rescue package" is a damp squib. It is also far too little, too late (as was the pathetic cut in VAT).

I would welcome "large tax cuts". Furthermore, the base lending rate should have been cut more significantly, quite some time ago. Labour have none of the answers to our economic crisis. As "rugfish" says, "It gambles with our future and it gambles that confidence will return".....

The comments to this entry are closed.



ConHome on Twitter

    follow me on Twitter

    Conservative blogs

    Today's public spending saving

    New on other blogs

    • Receive our daily email
      Enter your details below:

    • Tracker 2
    • Extreme Tracker