It comes as no surprise to discover the government is on another tax grab, this time through a backdoor increase in National Insurance on middle income groups.

The sad truth about Gordon Brown is he does believe that you make public services better by spending more and more. Faced with the growing evidence that they are still not offering good enough services despite all the spending, he simply ups the spend.

He has not learned what Tony Blair had grasped before he left office - you need to spend wisely, and you have to reform the way the leading public services are run if you are to get value for the extra cash. Never has so much been spent in the NHS than is spent today, and never have so many caught dangerous hospital acquired infections as are caught today. Mr Brown needs to ask himself a few tough questions about how this has come about.

To : Prime Minister
From: Senior Political Adviser

I was sorry you did not like my previous advice on the subject of the EU. I agree the course I suggested was not an easy one.
As you can now see from the last two days newspapers, your chosen course is not risk free either.

As predicted, your decision to back the Treaty negotiated by your predecessor and to get the EU to move on as quickly as possible, away from endless rows about powers and constitutions, has not worked in the British press. We now have a very angry Murdoch press. They feel let down, because they thought from your earlier Eurosceptic briefings you would put up more of a fight for British powers and interests than they now believe you managed. You may be able to get to the next election without any further constitutional demands from the EU, which will help, but so far the Murdoch press - and the Eurosceptic groups of course -have threatened to keep up the pressure against this Treaty until polling day.

Your strategy is to hold a long and detailed debate in the Commons and Lords in the first few months of the new session. Yes, this will enable you to say you believe in Parliament, and are taking Parliament seriously by giving it time to scrutinise the Treaty. You can deal with the reply that it is shadow boxing over a done deal by saying that nontheless Parliament has an important role in making sure the deal is implemented in a sensible way. You are right in assuming that we can win all the votes, as it looks clear that the Lib Dems with either Clegg or Huhne as Leader will continue their pro EU views and support us. This allows us to slip or play down the 30-40 Labour rebels on certain key issues and end up with a decent majority. Some of the Labour rebels are not very brave and would be attracted to you letting them off for the day of an important vote so they do not have to support the government. It has the double advantage for us that they will not be here making a noise, and we only lose one vote rather than the effective two if they turned up and voted against us. It is important not to try to use strong arm tactics on the rebels which could backfire, leaving us looking divided.

We have been briefing that the Conservatives are split on the EU, and as you remind us it would be an added bonus if long Parliamentary debate produced a split in Conservative ranks. I have to say I think the Conservatives are looking much more united, and many of them mean business in demanding a referendum. I know we have the helpful Kenneth Clarke quote, but we have no out of order words from anyone else. By having a long Parliamentary examination it gives the Opposition more time to rally support in the country for a referendum, and more time to try to pressurise our own MPs, many of whom feel guilty about our change of plan on a referendum. The Tories are going to be egged on and helped by the press. It is not in our interest to maximise the time available for the Opposition to disucss an issue where they are on the popular side, backed by most newspapers. We cannot even rely on the BBC to help us on this issue in the way we would like, as they have come under a lot of pressure for bias in reporting EU matters and are currently trying to even it up. They are also under a lot of pressure from their audiences, who do want a vote on the Treaty.

My advice remains that we cannot win a referendum in favour of the Treaty, and to lose one where we recommended acceptance would be very damaging to your authority. As you are against scuppering the Treaty by urging a vote against it - and cannot now change your public position on this - it becomes vital to avoid a referendum in the least damaging way. I think a long Parliamentary session on all this, maximising press and Opposition’s chances to keep this issue alive, is not a good idea. It is an issue of trust - as the Euroscpetics argue - and not one we wish to see embedded in the public consciousness.

I suggest offeirng the least time possible for scrutiny of the Treaty, and organising strong alternative stories on the days when important and newsworthy issues come up on the Treaty. Of course all Ministers must be boring and technical in everything they say on this issue. Above all we need to close down debate on a referendum, as this is an argument we cannot win from our current position. I heard and watched Mr Miliband this week. He is trying harder, and had marshalled the best arguments this time. Unfortunately it came over as clever lawyer with bad case.

Gordon Brown insulted the intelligence of the British people by his cack handed attempt to divert attention from the constitutional complexities of the Treaty to the issues of jobs and prosperity. He tried to make the news a move by the EU from introspection (i.e. power grabbing) to using these new found powers to tackle the problems of unemployment and poverty throughout the EU.

It was as if he had said to an alcoholic, drunk on the heady brew of taking power away from member states, you can have one more blinder of a drinking session if you promise to sober up and do something useful afterwards. The truth is the EU will be so bloated by bureaucracy, legal arguments, regulation and stupid policies that it will not be able to sober up to create an atmosphere that allows more jobs and prosperity to emerge.

That is why some of us oppose the development of more and bigger government in Brussels. If more laws and more bureaucrats created wealth the EU would already be the wealthiest part of the world.

The questions to Mr Brown on his vision of a useful EU are these

1. When will he propose serious deregulation to tackle the massive cost imposed by EU laws - estimated by Commissioner Verhuegen at

It was perhaps fitting on a day when the government gave away so much power to Brussels to govern us that it should also announce yet more time off from Parliament. Apparently the government does not have enough legislation to put through so we can have more time away from Westminister.

As far as I am concerned it amounts to a lock out from my place of work. I am pleased there is not going to be more useless legislation. We need instead far more time to cross examine Ministers and to debate how to put the public services into better shape, how to spend the money more wisely and which legislaiton we should repeal because it is not working well.

If the government wants to know how we could use more time, it just has to listen each Thursday to the long list of matters MPs wish to debate during the weekly question session to the Leader of the House. The whole of local government only receives 30 minutes of questions a month in the Commons. Popular debates regularly restrict MPs to ten minute speeches only. There was no debate in government time to advise the PM on how he should handle the EU negotiations at Lisbon.

The public is not getting value for money from its Parliament, because this government prevents us from meeting enough.

I awoke yesterday to hear reports that the Chancellor had predicted a fall in house prices, and had urged mortgage companies to be more careful in their lending - which could trigger a fall in house prices.

Fortunately it was Treasury Questions yesterday. Unfortunately the question I had submitted once again was not on the Order paper, so I had to find ways of getting my question in order as a supplementary to someone else’s.

There was a question on the government’s forecasts for revenue from Inheritance Tax. As you cannot forecast Inheritance Tax receipts without having a forecast of house prices, I asked the Chancellor what his forecast for house prices for the next couple of years was in the IHT forecast, and whether he had recently decided to change his forecast, as it sounded as if his latest view was more gloomy on prices.

As always with this useless government the Chancellor was unable - or unwilling - to answer. He denied he had forecast a fall in house prices, and did not know - or would not say- what forecast of house prices underpins the official Treasury forecast of IHT receipts.

I will pursue it further,as it is not good enough that time after time Ministers are unable to answer the most simple matters for which they are responsible or where they take it upon themselves to comment.

Meanwhile the government which claims house prices are too high and which says there needs to be more affordable housing remains unprepared to say by how much they think house prices need to fall. I went yesterday to a briefing on “affordable housing” from Housing Associations and the Housing Corporation. Once again there was the same stone wall. They assert that housing is not “affordable” but will not say by how much they want house prices to fall or how far they expect the present credit crunch to go to bring house prices down.

In the end the British Prime Minister not only gave in over the large surrender of power to Brussels, but spent time trying to persuade the Italians to give in as well so the Treaty could be signed.

We now know all those Eurosceptic noises and briefings whilst Blair was still PM did not mean a thing. No wonder the Murdoch press is livid with Brown - he soon forgot his Eurosceptic clothes when invited to join the synchronised swimming in the Lisbon pool.

The PM’s calculation is he can make out that this is all very boring and technical, grinding people down in the detail of the legislation in Parliament, whislt telling electors that he wants to get on with the “real agenda” and the “vision”, whatever they may be.

The surrender of so many vetoes means many more things where we will have to do what Brussels wants. More and more the UK Parliament becomse a rubber stamp to push through the consequences of Directives we never wanted and may even have voted against.

Norman Tebbitt, Bill Cash, Ruth Lea and I shared a platform yesterday to urge a referendum on the government. They have broken their promise badly. This will do lasting damage to the PM, undermining his stated wish to restore faith in politics and to listen to what the public wants. It will also do more lasting damage to Lib Dems, unless they wake up to the public demand for a referendum and use their votes with the Conservatives and Labour rebels in the Commons to try to secure one. It will be the first test of Mr Clegg.

Readers of this site were told of the forthcoming contest before Ming quit, and read that Clegg and Huhne were the likely front runners. More has now come to light, following a spate of shock announcements about who will not be running.

Some non runners:

Vince Cable former Labour Councillor and civil servant
Ed Davey former management consultant
Susan Kramer former banker, first elected to Parliament in May 2005
Simon Hughes former barrister

Those runners in full:

Nick Clegg educated: Westminster School and Cambridge University
First elected to Parliament in May 2005
Former EU official and former MEP
Policies: More power to the EU “espouse the realities of supranational decision taking”
Higher and more green taxes

A lady We have been told by Ming that there will be a female candidate - although what does he know about it?
Likely policies: More power to the EU
Higher and more green taxes

Chris Huhne educated Westminster School and Oxford
First elected to Parliament in May 2005
Former journalist and MEP
Policies : More power to the EU
Higher and more green taxes

There are three simple points to make about today’s likely large giveaway to the EU.

1. The only sure way to defend the so-called red lines (important areas where we need to be self governing) is to keep the veto.

All Gordon has to do to avoid any further rows about whether his red line defences will work or not is to keep an absolute veto for the UK over any proposal in these areas which we do not like.

2. He should resist all further transfers of power to the EU..

He should veto all 50 (government or 60 (Open Europe) areas where the EU is proposing moving to majority voting to make decisions. Hew could allow the others to surrender their vetoes, as long as we keep ours.

3. He should honour his word to hold a referendum on the Treaty, assuming he does not do all of the above.

Why does all this matter?
The argument about red lines has been technical and abstruse - deliberately so on the government’s side to try to prevent a major surge in public demand to veto the Treaty.
Yet it matters greatly. If Brown signs the current version, it could mean in the future amongst other things:

1. Uk oil policy could be dictated by non oil producer members of the EU
2. The EU could decide how we punish criminals
3. The UK will be increasingly forced to accept a pan European foreign policy which may not suit our interests
4. UK social security could be partly decided by a majority vote we had lost (the last emergency brake we had fell off owing to lack of use - it was called the Luxembourg Compromise)

On the day when The PM assures the Commons that the targets are not getting in the way of successful nursing a prominent nurse resigns from the NHS because she cannot nurse as much as she wants. The reason she gives is she has to spend far too much of her time filling in forms and doing paperwork. A lot of the paperwork is necessary to collect figures for the targets.

Most private sector businesses use targets to help them run efficiently. These targets are few in number. They are specific to the people and the tasks concerned, or general but relate to the one or two most important things to ensure overall success. They are achievable but stretching, and can be hit if the people concerned do the right thing. They are often used as the basis for incentive pay. No well run business sets dozens of targets, and allows targets through which may be contradictory or difficult to reconcile.

The NHS suffers from too many targets, from too much monitoring of these targets, and from too little acceptance of the targets by the staff. If the staff think the targets are the problem, and are not motivated to hit them,. then the targets are the problem.

It has taken Commissioner Mandelson a long time to wake up to just how successful the Chinese are at manufacturing things, just how much they now sell to us and how little we sell to them. Some of us have been pointing this out for years. I wrote about the surge in China and their likely future prospects in Superpower Struggles in 2005.

It is a bit rich of him to abandon his free trade principles now and to start to sabre rattle, using the language of a protectionist trade warrior. He helped preside over the rise of China during his early years in his current job.He should instead understand just how much damage EU regulation and taxation has done to our competitiveness, turning his attention to trying to help companies in the EU by cutting the costs the EU imposes on them.

Of course if China breaks the World Trade rules by subsidising, barring access or other anti competitive practises we need to take cases up through the WTO. We also need to remember that some of the worst anti competitive practises in the world are systems like the Common Agricultural Policy, devised and enforced by Brussels.

Mr Mandelson’s posturing does not mean much. He is not in control of World Trade rules - the WTO are. He and his colleagues have sold an important stake in Galileo technology to China, which is an odd decision given his current views of this new superpower. He should also understand that a lot of European businesses have now set up factories in China itself, despairing of the EU ever sorting out the huge cost burden it places on making things nearer to home.

Sir Menzies at last broke his silence and tried to persuade us that it was his unfettered decison to go.

I would find that more credible if he had agreed to stay around until the new Leader was elected, if he had made the original statement rather than leaving it to Cable and Hughes, and if Cable and Hughes has supported him properly in interviews before he decided to go.

The pattern of events and statements looks as if he did feel under pressure from his party to go. His two main lieutenants did not actively support him in the way you have to support a Leader under pressure.

His late intervention in the dispute about the circumstances of his downfall leave many questions unanswered, and evidence pointing the fact that too many senior Lib Dems did want him to go. The press did not make it all up.

In answer to parliamentary questions (see below), the Government has had to admit:

1) there is not yet a designed scheme for Crossrail;

2) there is no accurate costing, as they do not yet know what they are building;

3) there is no detailed signed financing agreement;

4) work could not conceivably begin before the next election.

Is this just another example of pre-early election spin?

Parliamentary Questions:

a) Question 158498: To ask the Secretary of State for Transport, what steps need to be completed before a construction contract can be let for work on Crossrail.

Jim Fitzpatrick

The Crossrail Bill needs to be given Royal Assent; the Department for Transport and Transport for London need to conclude a suite of agreements on project funding and governance arrangements; the relevant property needs to be acquired; and Cross-London Rail Links Ltd needs to complete project design and contract development work, issue invitations to tender and assess the resulting bids.

b) Question 158496: To ask the Secretary of State for Transport, when the design work on Crossrail will be complete.

Jim Fitzpatrick

Design is a continuous process. Cross-London Rail Links Ltd expects to complete design work for the purpose of tendering construction contracts by the first quarter of 2009.

c) Question 158497: To ask the Secretary of State for Transport, when a decision will be taken on letting a construction contract for Crossrail.

Jim Fitzpatrick

Assuming that the Crossrail Bill gains Royal Assent in summer 2008, Cross-London Rail Links Ltd expects to commence the procurement process in the first quarter of 2009 and let construction contracts in the first quarter of 2010.

The Health Secretary’s reluctant Statement about the deaths in the Kentish Health Service yesterday, prized out of him by an Oppositon Urgent Question, was alarming in its content.

The Health boss told us that standards were quite unacceptable in the affected area, and that the lack of cleanliness caused the problem. He implied that this was a problem unique to this Health Authority, and implied that now the Chief Executive and the Chairman had gone things would get better.

He did not tackle why patients were told to soil their beds instead of being taken to the bathrooms. He glossed over the fact that Maidstone was not the worst performing Trust in the figures for hospital acquired infecitons, and did not discuss at all the 6000 deaths in 2005 where hospital acquired infections were mentioned on the death certificates.

There is still no great sense of urgency, or apology for the enormity of the infection problem in our hospitals. The Health Secretary says the right things - that he wants zero tolerance of dirt and infection and expects better of the NHS. He then at the same time sets a target to cut some infections by 30%, which implies he does not mean what he says about zero tolerance.
How many deaths in hospital will it take before this government wakes up to the need to change the way it runs the NHS to stamp out this dangerous state of affairs? If this were a large private sector company or institution presiding over so many deaths this government would have taken much stronger action to stop it.

The former Lib Dem Leader’s short letter and refusal to grant interviews shows how hurt he is. His immediate resignation demonstrates a fit of pique. Any normal person who made his own decision to step down would have said to his party I will remain as Leader until a new Leader has been elected, and then hand over in a friendly and helpful way. Instead Sir Menzies went back to Scotland to nurse his hurt,leaving Vince Cable to hold the ring. The more Cable and Hughes deny they plunged in the knife, the more their words in recent interviews will be played back when they failed to support their Leader to the hilt in his hour of need.

Watching Cable last night on Newsnight he manged to look both guilty and ambitious. His guilt stems from his devastating lunchtime interview yesterday when he told us - without knowing his Leader’s intention to give up - that the leadership was up for discussion. Hardly the words of a loyal Number 2 trying to buttress his boss, more the words of someone trying to give the final push to a Leader worrying about his lack of support.

Cable’s ambition was written all over his face when the interviewer put to him that he might be a candidate. He made a poor fist of concealing his thought that maybe he could convert the temporary Leadership into the real thing. All he had to do was to say that by accepting the caretaker leadership he was ruling himself out from the Leadership race, but he could not bring himself to say that. It gets the Leadership election off to a bad start when the man holding the ring as temporary Leader may want to be a candidate, and underlines how unhelpful Menzies rapid departure was. The other candidates would have a right to feel aggrieved if the acting Leader became a candidate, as he would have the advantage of the Lib Dem office and press machine behind him in his role as Acting Leader.

Little groups of excited and worried Lib dems are huddled all round the Palace of Westminster today, seeing who has seven friends to launch a bid. The rest of us can sit back and enjoy this little battle, which has got off to such a rancorous start.

It only took a few hours after my blog on Bring on the Contest and they obliged!
It sounded terminal when his senior colleagues took it in turn to criticise him on the airwaves, or damned him with faint praise.
They will tell us he left voluntarily, but his MPs effectively forced him out. They have been talking about his demise non stop for many days and now have hunted down their Leader again.

We look forward to the 3rd Leader/contender this Parliament for the Lib dems - and he had better mind his back given the way the MPs behave.

As a Conservative I look forward to another Lib Dem leadership battle. It is wonderful entertainment to watch so many trying for such a “job”, and to see and hear the skeletons falling out of the cupboards as each contestant is put through the mud wrestling challenge that is the Lib Dem leadership contest.

I am not going to waste my time sending good quality political advice to Menzies and his challengers. Conservatives who face Lib Dems challengers get used to them always claimong in their first election leaflet they are going to win. I will just sit back and enjoy the infighting.

If they do give us the joy of a contest I am told there are two front runners - and goodness knows how many backmarkers who want their moment of fame.

If we were lucky enough to get Nick Clegg, he I am told wants to make them more like the Conservatives. That would be a good way to persuade some more Lib Dem voters that they would be better off voting for the real thing. I am always delighted when my opponents think we have the best tunes. Nick would also alientate a lot of Lib Dem activitists, who would not agree on a move towards the Conservative view.

If we got Chris Huhne we would have against us that toxic combination of more whacky ideas to tax us more in the name of greenery coupled with a big dose of Euro federalism.
With him as leader we would have a better chance of reminding people that the quickest way to a federal superstate is to back the Lib Dems, who go along with every federalist power grab.

Menzies had better watch out. His Deputy was far from loyal today on the radio, telling us people are discussing his leadership. He underminded Menzies with sweet reasonableness, talking as if he were a political commentator looking on from afar. With friends like that I just hope poor old Menzies doesn’t have too many enemies in his party. Maybe Vince thinks he has the charisma some fear his Leader lacks.

Today the talk from the markets is of a deal to refinance sub prime mortgages. This could be a good idea if it establishes a sensible new pricing level for this kind of debt, and if it leaves bank balance sheets in reasonable shape. It could take some of the sub prime worry out of the money markets.

If it establishes too low a price for sub prime, leaving more of it out there for people to worry about, or if it stretches bank balance sheets too much, then it will not be so helpful. It is one of those possible deals where the pricing and the small print matters.

Meanwhile, if the authorities want it to help avoid downturn they must keep the money markets liquid whilst these changes are put through. If they want to intensify their inflation fighting they can use it as a warning about future risky lending and keep markets short of funds.

The main equity markets have got over the wobbles of the summer, whilst the Asian economies continue to power ahead.

The Labour government when they arrived in office in 1997 told us they intended to be animal friendly. Ten years on it looks very different.
There was an excellent article in the Sunday Telegraph pointing out the irony as Labour Ministers order the early deaths of farm animals because they have foot and mouth, a disease that cannopt spread to humans, caught from a source at a laboratory producing a vaccination which Ministers refuse to use to protect the animals.
Why run the risk of the virus escaping to produce a vaccinaiton you do not intend to use?

Alan Johnson thinks obesity is as large problem as climate change. Prepare yourselves for a government media and advertising bombardment on what we should eat, what we can drink, how much exercise we should take and how we should change our lifestyles. Prepare to be told yet again that the government does not approve of how we live and is out to change it. These politicians just want to meddle in every detail of our lives, with their army of regulators, tax officials, monitors, prying forms and surveillance cameras

Many of us do not approve of how the government lives, and would like to change that. The government may be right that if you become too fat your health deteriorates and your quality of life worsens. They should look in a mirror and understand that it is certainly true that as government expands its own waste the quality of its services deteriorates and the rest of us suffer, paying high tax bills for no good reason. This is the government that has plenty of our money for more politicians, more bureaucrats, more adverts, more spin doctors, more quangoes and more glossy brochures, but is often stumped for the money for drugs and bed spaces in hospitals.

It is a bit rich to get lectures on deaths from obesity from a government which cannot keep the hospitals clean, just a day or so after it has to reveal the sad truth about 90 deaths in Kent from hospital acquired infections. Anyone who read about the disgraceful conditions in a hospital where patients were told to soil their own beds instead of being helped to the bathroom would expect the Health Secretary to have the sense to concentrate on getting his own house in order before reading the riot act to the nation.

I encourage readers to send in their own examples of government waste and bossiness. I will be running occasional features on this government’s own bulging wasteline.

The bruising passionate powerful performance by England yesterday at the Stade de France was magnificent. It was also great to learn that so many happy fans in the bars and on the streets of Paris enjoyed themselves without letting the country down.

There was something quintessentially English about the whole demeanour of the team. The underdogs, written off by many in the media and by opponents as useless when they lost so comprehensively to South Africa, they quietly rebuilt. They decided to prove their point in the best possible way- by winning. They did it the difficult way, from behind in the first half, with too many kicks wayward until the final quarter of the game. The Australians enjoyed sledging us, the French were confident they were the justified favourites. Today the English team is just 80 minutes of rugby away from being world champions again, but still no-one should say we are the favourites in this competition which has stood form and pundits on their heads in so many matches. We seem to do better when expectations are lower.

Today is the anniversary of less happy times - the date of the battle of Hastings.

To: Prime Minister
From: Senior Political Adviser

I have not heard back from the officials about your response to my memo, but I was pleased to see you demanding stronger red lines in briefing prior to attending the EU meeting. You may recall I felt that was a crucial first step to try to head off more Tory led trouble on this difficult issue. Since I wrote the Euroscpetic sites and analysts have gone further in trying to establish their case that the red lines will not work, and in pointing out that some important powers are surrendered without any red line defence. As we cannot count on the Murdoch press on this issue we need to be careful about these ideas gaining general currency.

I promised you a more detailed note on which issues you should highlight to demand a better deal. I suggest:

1. Justice and Home Affairs. The latest draft goes a long way to try to prevent us using the opt in arrangement we negotiated. This is very sensitive territory, and we should demand a much stronger endorsement of our right to choose in which areas we accept EU common policy.

2. The Protocol protecting our position on the Charter of Fundamental Rights is weak. Howver, this Charter is much more popular on our side, so I would suggest you continue to deny the significance of the Charter and make this a dividing issue with the Tories, accusing them of wanting to take rights away from people through limiting the effect of this Charter in the UK. You should be aware, however, that the right to conduct a business could upset some Unions defending public monopoly interests, and some of the justice clauses could limit the freedom of the UK to impose stiff sentences in certain cases.

3. The declaration on Foreign and defence policy is virtually worthless. Under the cloak of this your predecessor agreed to eleven areas of majority voting in foreign and defence matters. The UK as you have often said needs to be able to act independently. You should dig in on this issue, especially as our opponents could sensationalise it as losing our seat on the UN Security Council and losing control over war and peace.

4.The “emergency brake” on social security harmonisation can be circumvented by direct rights offered to migrants under the new Treaty. Given your tough rhetoric recently on “British jobs for British workers” and your wish to cut the spending on “economic failure” by getting more people off benefits, this set of proposals could limit your room to do as you wish in this difficult area. The UK used to have an emergency brake on all EU matters, called the Luxembourg compromise, but this fell off owing to a lack of use.

5. You should make a new red line over energy policy. The UK is the only oil producer in the EU and could easily find its producer interests outvoted by the others. Oil is still a source of revenue in the future, and is a cause of dispute with the SNP. We could be vulnerable to their counter-attack if we lose control and then the EU does something they do not like. They would soon reverse their generally pro EU positon to exploit the issue.

I hope these are helpful. I do think you need to escalate the clash, and to be prepared to amaze people by holding a referendum if the other EU member states have not taken our demands seriously. This would win the Murdoch press back and boost poll ratings substantially. You could then put the pressure on the Tories to explain what they would do differently.

Labour government. Nationalised industry. Strikes. Unhappy workforce. Huge losses for the taxpayer. Cuts.

Some things never change. It’s just like the dreadful 1970s all over again. There will be no winners from this primeval battle of attrition between managers and employees.

Now a settlement is in sight, there needs to be a sharp change of direction in how the Royal Mail is run, to create a better atmosphere for employees and to win customers back.

There are four main businesses.

1. Royal Mail franchise of smaller shops. This is a privatised network, shrinking fast. The loss of government business from this Labour government is driving many out of business, never to be replaced. This will continue unless the Royal Mail management finds a better range of products and services to feed through this network. The government could help by changing its mind on it use of the network, as it directly caused the problem.

2. Trunking and sorting mail. This government has presided over the decision to switch mail traffic from rail to road almost unbelievably when we have a semi nationalised railway and the government is lecturing everyone else on the need to switch the other way. This business will be strongly affected by competition, as it is not a natural monopoly. Competition will find lower cost solutions.

3. Final delivery of post. The Royal Mail has a strong near monopoly of delivery over the last mile through its liveried postal workers. It should be able to keep this going, offering their services to rival postal businesses who organise collection and trunking. This workforce needs incentives and participation in the success of the business.

4. Crown offices the large Post Office owned shops. This is where the biggest business opportunity rests. In many cases there is a potential property profit from redevelopment or change of address. There is considerable scope to sell more products and services to the many people that already use these offices, and to attract more custom.

How can change be driven successfully?

There are three things that need doing:

1. Give control of property and revenue to the business managers running each local area of the business. At the moment so-called managers are just there to cut the costs. They are not responsible for driving up revenue or improving the use of the assets.This is bad for morale and creates a difficult relationship between managers and managed.
2. Give everyone in the business a share in the business, so they feel part of the team and become interested in maximising profits and use of the assets.
3. Introduce more private capital by selling some shares on the market to accelerate the application of technology to sorting and trunking, and to improve the Crown office network more rapidly.

How would this work on the ground?

Wokingham has a Crown office building on one of the principal streets in the town centre . This street has become largely an office environment, a little away from the main retail pitches. The Post Office has a good fa

I have seen a letter addressed to people who have claimed the single person discount from Council Tax. It reads:

“You currently qualify for a 25% discount on your Council tax as you are the only qualifying adult resident.

In order to ensure that the Council’s records are up to date and accurate it is necsessary to review the granting of single occupier discount at regular intervals. Can you please complete and return this form with the next 21 DAYS. Please be advised that failure to return this form will result in the loss of your current discount.”

No wonder so many of us are fed up with the aggressive and hectoring state. People are expected to drop everything and fill in this form for an entitlement they have by law. They presumably have to ensure it reaches the Council offices, when placing it in the post might mean it does not reach them in time thanks to another public service that does not work. What this official letter is effectively saying emerges in my re-write below:

“You have dared to claim a discount in your Council Tax. We think you might be sharing your home with another adult. If we do not hear from you in 21 days we will levy extra tax on the basis that you are lying to us. If by any chance you are telling the truth we still intend to take your legal discount away, unless you deliver us another form promptly. Don’t think you can hide behind delay or failure of the Post office to deliver your form. If I were you I would deliver it in person to make sure.”

Following the Chancellor of the Exchequer’s statement to the House of Commons on last month’s Northern Rock crisis, the Rt. Hon John Redwood MP sent the following letter to Mr. Darling, highlighting the irrelevance and poor analysis of his statement:

Dear Alistair,

Yours ever, John?

The text of John Redwood’s exchange with Alistair Darling in the House of Commons follows below:

Mr. John Redwood (Wokingham) (Con): Given that this was a monetary policy crisis made in Downing street and Threadneedle street, why was no action taken in early September, when many of us were warning that the credit crunch was too severe? If the Monetary Policy Committee is to be anything more than a highly paid monthly debating competition, its rates must be enforced by the vigorous use of open-market techniques by the Bank of England. Unlike other banks, the Bank of England failed to take such action, thus needlessly putting not just Northern Rock but several other financial institutions at risk. Why did the Chancellor not intervene earlier?

Mr. Darling: I am bound to recall that just a few weeks ago, the policy commission that the right hon. Gentleman chaired suggested to the Conservatives that there was

no need to continue to regulate the provision of finance, as it is the lending institutions … taking the risk.?

I think the right hon. Gentleman ought to reflect on what he was recommending a few weeks ago.

Yesterday in the House Alistair Darling gave a dreadful performance on the Northern Rock crisis.

He did not seem to understand that this was a monetary policy crisis, not a specific company crisis. He did not mention Victoria Mortgage which went into administration shortly before the Northern Rock bank run, and did not mention the fact that other financial institutions relying to some extent on money market funds were coming under Stock Market pressure just before he cracked and guaranteed all deposits in institutions seeking short term funds from the Bank of England.

When I asked him why he looked on as the monetary authorities in the UK forced perfectly good financial institutions into trouble through a complete lack of cash in the money markets, he made no attempt to answer. He instead produced a foolish point which shows he neither understands the money markets nor the functions and limitations of regulation.

He said I had proposed removing the latest round of extra mortgage regulation this government has introduced (true) - which was stupid of me because Northern Rock shows we need mortgage regulation- false.

How can anyone make such a nonsensical point:

1. If such regulation “worked” there would have been no run on Northern Rock. We had no runs on mortgage banks prior to the introduction of such regulation.

2. The Chancellor himself says the mortgage book of Northern Rock is fine. He admits the problem for Northern Rock was on the liability side of its balance sheet - how it raised the money it needed - not on the asset side - the mortgages it advanced to people. Mortgage regulation concentrates on the asset side of the banks activities. General banking regulation concentrates on how the bank fiannces itself, regulation I would keep but try to make more effective.

If Mr Darling is going to try to do this difficult job sensibly, he needs to ask for some more advice on how banks and the money markets work. He could start by asking:

1. Why did the Basel internaitonal agreement on banking regulation place more emphasis on caopital adequacy than on liquidity? Was this wise? Banks need to be liquid as well as solvent so they have money when people wish to withdraw funds.

2. Why did the Basel agreement rate mortgages as safer assets than other types of loan? Didn’t this distort markets, encouraging banks to expand mortgage lending more than other kinds? Doesn’t this explain much of the huge property price rise we have seen in many markets in recent years?

3. When Mr Darling lectures the mortgage banks to make available more money on fixed rate longer term mortgages, what does he think this is going to do to mortgage bank balance sheets? If the main source of money for most mortgage banks remains the retail deposit, a variable rate interest account, Mr Darling is urging the mortgage banks to run a huge risk by having to face increased interest costs on their deposits when rates go up, with no matching increase in their income from mortgages. He is, in effect, urging them to adopt a riskier model than the Northern Rock’s!

It’s not easy Mr Darling - try doing some homework before you make such silly comments and asides in the House again.