I am an optimist by nature. I would like 2008 to be so much better than last year, as there is much we can achieve together. I hope you have all had a happy and relaxing Christmas ?? or have now recovered from the exertions of catering for families reunited around the Christmas tables. I wish you and yours a prosperous and happy new year.

This year I want to see the government lift its nasty credit squeeze. The run on Northern Rock was just the most visible sign of distress in our economy. The new year is ushered in against a background of falling commercial property prices, fears about house prices, and difficulties for people seeking mortgages. High fuel prices, high taxes ?? with a further National Insurance rise to come for many ?? and general rises in the cost of running a home are all taking the shine off the new year even as it dawns. If the authorities cut interest rates and make more cash available to the banks we can avoid too sharp a downturn.

I have been very moved by the fact that there are still people unable to live in their own homes following last summers floods, and have been angered by the slow response of the authorities to the need to improve the flood protections. Too much building on low lying land in decision after decision taken over local heads by government Inspectors has put too many homes at risk. I will press the agencies and government more to try to get them to take preventative action for the future.

I am glad our troops will be coming home from Iraq after long and arduous tours of duty. I hope the US and the UK governments will put more effort this year into peace initiatives in the Middle East ?? it is time for jaw jaw, not war war. Fear, distrust and jealousy generates conflict: being positive, talking through problems, and trying to see the other persons point of view can make things better.

The government has lost its reputation for economic stability, and has seen a massive hole blown in its spin that it created an independent Bank of England, as a result of the convulsions in credit markets and the run on Northern Rock.

Ever since Gordon Brown took over as Prime Minister, things have gone badly awry in banking markets. We have lived through the end of the long financial bubble of easy credit he created as Chancellor by keeping interest rates too low and agreeing to the Basel rules for banking capital which encouraged banks to lend and lend through off balance sheet devices. The great army of regulators looked on approvingly, as all their boxes were being ticked.

This summer some in the City and I through my website, www.johnredwood.com, told the authorities that money was by then too tight. We urged them to lower interest rates and make more money available to the banking system. They ignored us, and told any bank in trouble that it served the bank right. The banks were on their own and had to sort out their own difficulties. The Chancellor was sending out this tough message on the eve of the run on Northern Rock.

Northern Rock changed all that. For the first time a UK government offered to stand behind all the bank deposits in the country if need arose. For the first time the taxpayer lent more than ?25 billion to a single company as a rescue. Late in the day interest rate cuts and extra liquidity became available. It became obvious to all that far from having an independent Bank of England, the Brown reforms had taken away important functions from the Bank that helped it regulate banking markets well.

To me, the urgent question today is how will the taxpayer get all the money back that has been lent to Northern Rock, or offered as guarantee. That should be the overriding concern of the Chancellor, representing a government which said originally that all the money would be repaid. The choices for handling Northern Rock have been narrowed to three by the spinners for the government and the Lib Dems.

The first is sale of the bank to a third party who could repay some of the government loans immediately, and take care of Northerns financing needs thereafter. The best chance of doing this was the Lloyds expression of interest before the crisis became acute. The authorities failed to respond positively.

Since then we have not been told of any large organisation emerging as a bidder which has the balance sheet strength to take it on and solve the problem itself. The two ??preferred?? bidders need access to substantial market funding, and one only wishes to buy a minority stake. Even Lloyds needed financial help from government and the markets, as Northern is big even for a bank the size of Lloyds. Anyone needing access to substantial market funding will face the same kind of difficulties that caused the problem in the first place ?? the drying up of credit in markets.

Everyone agrees the sale to a third party who could solve the financing problem would be ideal, although there remains scope for disagreement about how to value the existing shareholder interest in such circumstances, and scope for disagreement about how much money taxpayers should expect to get back immediately, and for how long the remaining money could be lent to the new owners.

The second is nationalisation, the Lib Dems recommended ??solution??. The new Lib Dem leader showed his folly by rushing in to back this irresponsible proposal as one of his first acts, after appointing a pop star as an adviser! He clearly does not want to be taken seriously and does not think things through before issuing the press release.

Taking on over ?100 billion of risk in a single mortgage bank at a time of falling house prices and credit crunch is too big a bet for taxpayers. Many of us think taking on ?25 billion of risk is dangerous, but quadrupling that is absurd. The government itself has stupidly increased our risk by an amount the Chancellor told us on December 19th he could not quantify! It shows they are being far too cavalier with our money.

As the Lib Dems themselves admit, the government would not bring any especial expertise to running a mortgage bank and would need to seek professional management from the City. They say it would be temporary, leading to a sale at a later date. They forget that nationalising would mean the taxpayer had to pay for any one off losses or write downs that may be necessary on inspecting the books, and for any running losses the bank might incur under nationalised management.

If it turns out the bank cannot sustain its current level of employment, the taxpayer will have to pay for the redundancies. If the bank needs to expand its branch network or invest in new computers, the taxpayer will have to make a judgement about that use of public money as opposed to school and hospital spending. Given the scale of Northern Rock ?? total liabilities bigger than the health budget ?? any government would be mad to take on those risks. Just losing 1% of the assets costs more than ?1000 million.

The third is Administration. The government could demand repayment of its loans (subject to any legal promises it has made about their duration, which the government refuses to tell taxpayers and Parliament) which could trigger administration in current circumstances as there is no lender prepared to replace the taxpayer at the moment. That too would be a foolish policy. Shareholders would be aggrieved, as they have been told by the authorities that their bank is solvent and been led to believe taxpayer funding will see it over a difficult period. There is no good market in mortgages and the other principal assets Northern Rock owns, so any fire sale at these levels would guarantee the taxpayer lost money. The Administrator is no more likely to find a big buyer for the whole bank than the current auction team. There cannot be any potentially interested party in the world who is unaware of the sale process. If the government favoured this route it should have refused to lend the bank any money in the first place so no public money was at risk.
There is a fourth option which needs proper discussion. I call it the ??tough bank manager?? approach.

The option starts from where the government has got us ?? from the position where taxpayers have lent money and guaranteed loans but do not own the mortgage bank. It recognises that when you are in a hole you should stop digging. We have to accept that the Treasury/Bank of England combination are the principal bankers to Northern Rock. It is high time they started acting as a bank manager faced with an over borrowed client who cannot repay in a timely way.
They need to:

1. Explain the limits of their funding to Northern.
2. Set out the interest rate and interest payment dates for the loans.
3. Set out a schedule for capital repayments.
4. Take all the asset cover there is left in Northern to secure their huge loans.
5. Insist on daily cash and profit monitoring.
6. Place a cash sweep on the business that returns surplus cash to the taxpayer at regular intervals.
7. Insist on approving all increased spending of any kind on capital and revenue account.

The repayment schedule should not expect repayments currently, whilst the main banks are trying to arrange their own affairs to show strong balance sheets for the year end. It should start phased capital repayments later in 2008. It would be up to Northerns management to decide whether these repayments could be met from trading profits and cash generated within the business, or from refinancing in commercial markets, or from selling assets. Where assets are sold, the government team needs to insist on a minimum price to protect its asset cover position.

The extraordinary thing is that apparently many of these basics of banking have not been observed by the nations top financial team. The Chancellor on December 19th in the news conference once again told us little. I hope they are doing more than they are saying, but there is no evidence that they done a good job on securing the taxpayers position, either by means of securing full specific asset cover or by means of repayment schedules that are tough but achievable. Its high time they started. We are told they have asset cover for the loans, but specific questions have not been answered about how the protection works. There has been no hint of any repayment schedule.

It appears they hoped the Branson bid, and then the nationalisation idea, would reassure depositors, reducing the pressure for taxpayers to put up more money to replace lost deposits. The best way to secure the deposit base is to take strong and sensible action, so it looks as if the government as bank manager has a professional grip on its over borrowed customer, and will stand behind them until it is sorted out. If a buyer emerges who can raise the necessary money then all well and good ?? the bank manager can agree to the sale if that is what shareholders want to do, having secured the taxpayers interests.

All this assumes Northern is a solvent business ?? which we know it has to be as the regulators are letting it trade. Assuming they are right there is no need for taxpayers to lose a penny ?? so why wont the Prime Minister repeat his promise about that? His hesitation damages confidence. If they nationalise it the taxpayer is likely to end up with a huge bill given the past track record with nationalised businesses, as well as legal actions from unhappy shareholders assuming they offer little or no compensation to them.

I naturally wish those trying to sell Northern every success in finding a good answer, but I do want the government to protect the taxpayers money fully in those negotiations.

In the last couple of weeks I have visited several sites that were badly affected by floods last summer. In several cases people did not have their homes back in use for Christmas, as builders scrambled to complete the new plastering ,wiring and other tasks to restore the properties.

Each location has a different version of the common problem. In some inadequate surface drainage led to sewers overflowing as well, in others proximity to a river or stream bursting its banks just engulfed the low lying areas in flood water. In each case there is an argument between the authorities over who is responsible for the maintenance and improvement of the drainage.

The Environment Agency, after a series of meetings, has accepted that it is responsible for the Emm and for the Loddon. However, responsibility does not mean that riparian owners, the Highways Authority and others are free of all duties. The Agency does seem to accept that too much water can try to come through the Emm brook, and spill over into homes at pinch points along the stream. They have suggested an improvement scheme to hold surplus water away from homes, releasing it at a manageable rate. I am keen they should press on with working this up into a firm proposal and putting it in their budgets.

Thames Water is still reluctant to commit to spending where its facilities have been overwhelmed by flood water, taking out pumps or exposing inadequate capacity in pipes and manholes. I do think that where foul water reaches into peoples homes they should move quickly to improve facilities to prevent that happening again. I will keep at the task of trying to persuade them to do something to sort it out.

In some places ditches, culverts and drains have not been kept clean. In other places they are simply not large enough. We seem to have plenty of lawyers, administrators, assessors and experts writing letters and arguing over liability. It is high time more of the budget was spent on some people to go out and scour the ditches and widen and deepen the watercourses so next time heavy rain hits people can be assured it will not come into their living rooms.

The Environment Agency itself did not maintain its systems to a sufficiently high standard, and had to admit as much in its annual report. It now has extra money from the government for anti flood investment for later years, but needs to get more out of its current ?1,000 million a year budget to reassure us. Many of the schemes we need locally are small and relatively cheap. I want to see a greater sense of urgency. It is no good just spending money on putting all our homes on maps on the internet, and placing lines around the unlucky ones to say they are prone to flooding.

This government has been particularly keen to require more and more homes be built in places like Wokingham. Much of the land is low lying. Much of the open land that remains is flood plain. Planners have a duty to consider the impact more tarmac and concrete will have on the rate of water run off when it rains, and the impact converting flood plain into housing estate will have on the neighbours as well as on the new properties. It is heart breaking to see peoples dreams shattered when their brand new homes are awash with dirty water. It is high time the authorities sanctioned fewer houses, and improved our flood defences. This is not global warming, this is bad planning.

Today I heard on the radio that mortgage advances have fallen 44% compared with the same period last year. Its a fitting epitaph to this governments woeful misunderstanding of the housing market, and the folly of their current policy which will not succeed in tackling the problem of providing more people with better homes that they own.

The government have made access to home ownership in this country much more expensive by combining two policies:

1. Allowing a credit boom until last autumn, which drove house prices to new heights as banks and building societies took advantage of the low interest rates and easy money to lend more and more against individual properties. They also lent more and more as a proportion of peoples income.
2. Introducing Home Information Packs, which has deterred people from putting their homes on the market, reducing supply and delaying the price adjustment which would otherwise take place in response to the credit crunch.

The main reason for the current high property prices is the first one. The lurch from boom to bust conditions in UK money markets will put downward pressure on prices, as we are beginning to see, but the other two policies are delaying and reducing this adjustment.

The governments own analysis has been pathetic. They have said house prices are too high for first time buyers because too little housing is being built. They have steadfastly refused to answer my simple question,?? How far do they want house prices to fall so they are affordable again??? They have decided the answer to high house prices is to build more. They also allowed many more people to come to the Uk who need homes, seeing the problem as solely one of inadequate supply and not looking at either demand or the terms of finance for house purchase.

In the meantime they are presiding over a house-building industry in difficulties, now cutting back on the number of homes they will build even where they have land with planning permissions available.

The truth is the government will not be able to build itself out of high house prices, as the supply of new homes is a tiny fraction of the number of homes that come onto the market each year. The government should recognise that the main determinant of house prices and therefore of affordability is the supply of mortgage finance, and the terms of that finance. We have just seen a long period of rapidly rising house prices driven by boom credit, yet the government refused to understand that it was primarily a monetary phenomenon.

The government may also find out that falling house prices are even more unpopular than denying access to younger first time buyers by allowing ever higher prices.

In housing policy there is no substitute for a government managing conditions in money and credit markets competently, so that house prices are relatively stable. This government made the problem of housing affordability far worse by the boom credit conditions of the last few years, and is now going to do the opposite for a bit with the credit crunch. Falling house prices put people off becoming first time buyers, and credit crunches drive out of the market the people who most need credit to be able to buy a house.

The government not only needs to stabilise credit conditions, but also should abolish Home Information Packs. It was a stupid time to introduce them, when the market is going through such convulsions, as the Northern Rock crisis unfolds.

2008 message

Today we are promised from Jack Straw that the government will do better in 2008, whilst the Prime Minister tells us he can carry through the changes the UK needs. Both senior politicians are long on words to meet the public mood, but short on ideas to sort out the mess Gordon Browns government has created.

This government is stuck in the mud of the old politics of the ??New?? Labour era. They believe politics is about raising large sums of money, spending it on ever more detailed opinion research, and then playing back carefully controlled messages to the public, based on what the public believe and what they want to hear. They spend a disproportionate amount of time monitoring the Opposition and seeking to distort or exploit any different nuance from any Opposition speech or spokesman. If they had their way there would be no debate, and the media would only receive the carefully honed messages of the central spin machines.

If they want to tackle the problems which 2007 will bequeathe to the new year, the first thing they need to do is to tear up this old model of politics. They need to limit the amount they can raise in individual donations, cut the amount they spend on opinion research and spin doctoring, and spend more time in their government offices seeking advice on how to solve the very pressing problems this country faces. Here are some suggestions:

1. The Credit Crunch. The government has to make room for more interest rate cuts and more private lending, by cutting its own demand for borrowing. It needs to cut back on inessential or undesirable spending ?? by cancelling the ID computer scheme, cutting out unwanted regional government, placing a staff freeze on more administrators for the civil service and the quango world, cutting regulation and removing unnecessary layers of government in the quango world.
2. Northern Rock. The government needs to work with the Bank of England to impose the disciplines on Northern Rock needed to limit the amount of extra lending the taxpayer has to do, and to set out how and when taxpayers will get their money back.
3. Flooding. Instead of crowing about how well he handled the floods in the summer, the Prime Minister should understand that six months on some people are still not back in their own homes thanks to the damage, and many homes remain at risk in this country. The government should change its planning policies, to make it clear there will be no more building on flood plain without proper water handling and containment measures being put in place. It should change the management of the Environment Agency, demanding of the new management that more of the money and effort goes into flood prevention schemes, and insisting on higher standards of maintenance of flood facilities.
4. Inflation. The government should see that its easy credit policies of recent years has left an inflation problem this winter. It should tell people it will cut petrol tax to a level which maintains the estimated amount of revenue from the tax in the budget, instead of persisting with the higher rates of tax imposed this autumn and threatened for next year, as petrol is one of the main items causing the price rise. It should redouble its efforts to reform the Common Agricultural Policy and to allow better access to our markets from developing countries, both to help the developing world and to provide some more countervailing pressure against the current big rises in food prices.
5. Transport. The government should start to match its rhetoric about increasing transport capacity with some action to show it is doing so. The pathetic level of railway service over this public holiday has reminded people just how limited the public transport option can be for many people, whilst the government has still not done the obvious things to increase the capacity and improve the flow of our existing highway network. This would be a green policy as well as a commonsense one, to ease the artificial restrictions on movement.
6. Cleaner hospitals. In 2008 the government should show it has made good progress in cutting hospital acquired infections and in cleaning up our hospitals, so people need not worry about going into a hospital for treatment.
7. Restoring faith in democracy. The government should start by offering a referendum on the EU Constitutional Treaty in line with their promise to electors in 2005. They could replace their distorting and gimmicky policy about petitions in local government with greater powers for local Councils to make decisions in areas like planning that matter most to people. The government could change its way of speaking to us, admitting the problems and setting out what it is doing about them,instead of playing silly politics with everything and refusing to answer most of the important questions.
8. The Post office. The government should be radical, granting shares in the Post office to its employees, and putting in a management that delegated power so the asset base could be properly managed and the revenues increased. We need to get away from cut after cut, and the negative approach coming down from the top.
9. Taxation. The government should revisit its CGT tax plans, keeping the 18% rate but also keeping a 10% rate for those who have invested in their own businesses or have bought employee shares.
10. Foreign Policy. The government needs to understand the power of the Anglosphere, and the need for the UK to strengthen its good links with India, Australia, and New Zealand to reflect the shift in world economic power to Asia away from Europe.

If they did some of these things the public would notice and the governments ratings would start to improve. If they did all of them they could become a very good government. They have a long way to go even to start reverse their recent plunge in popularity, because they are spinning too much and governing too little.

??1066 and all that?? told us there were only two memorable dates in English history, 55 BC (Caesars invasion) and 1066 (The Norman Conquest).

By the same standard there is only one memorable day and month date in English history ?? the 5th November (Gunpowder Plot).

The present government has had a very poor understanding of history. It seems to divide it into the veiled years ?? anything before 1979; the Thatcher years ?? have a free hiss before passing go; the Major years ?? blame it for anything you do not like about today ; and the New Labour years of glory and enlightenment. There are some signs of revisionism creeping in, as friends of Gordon seek to divide the New Labour years into the years of mistaken ideology, the Blair phase, and the sunny uplands of the Gordon regime.

Anyone seeking to understand the present, and to have some sensible view of what the future might hold, needs to understand the past in all its complexity. The past may be another country, but it was peopled by our predecessors who contributed to the folk tradition, or by ourselves even if we were behaving and thinking somewhat differently from today. A society is influenced and constrained by its past, and only wants to change so much at a certain pace.

I thought it would be a good idea to draw attention to some of the events of British history that have had an impact on our island story, as their anniversaries come up during the course of 2008. By seeking birthdays for events I will be forced to mention more battles and treaties than processes or actions that took place over many days. There is a commemoration day for Trafalgar but not for the Industrial Revolution, but each anniversary will allow comment on the wider issues that lay behind the memorable event.

I will also seek to show why these events still have some relevance today, or how they reflect something in the British character and approach to government and to our place in the world that still holds true. I will use the modern or Gregorian Calendar even where contemporaries were using the Julian which would bring the date forward. If you wish to improve on the policies and approach of a government that seems to have little understanding of history, you need to demonstrate how sensitivity to the past can avoid present and future pain. If only this government had, for example, understood the strong objections to Cromwell’s Major Generals, maybe they would have taken a different view on much hated regional government today.

As dusk fell on 29th December 1170 the four knights came into Canterbury Cathedral from the cloister. The monks had barred the doors against them,but Becket had them unlocked, with the words ??I will not have the Church made a castle??. The Knights accused him of treachery to the King. Becket responded ?? I am no traitor, but the Archbishop and Priest of God??. His words were provocative to ears wanting reassurance that he accepted the King’s authority.

The knights were convinced of Beckets guilt and proceeded to attack him. His last words were ?? For the name of Jesus and the defence of the Church, I am willing to die??, as he was hacked down in the north west transept of the great church. He had picked a fight with the power of the Crown which he largely lost when alive, but extracted some concessions from the monarch when dead. He gave to Canterbury a Saint and a story which led to large numbers of pilgrims and the business they brought in for 368 years.

This dark event on a dark day late in the year 1170 has left its scars. Its shadow has a long cast. To this day there is a huge empty space behind the high altar of Canterbury, the Trinity Chapel and its marble pavement, where Becket shrine shone adorned by gold and jewels until Henry VIII had it removed and plundered in 1538. Even today Becket is clearly too contentious a figure to justify some reconstruction or commemoration of the tomb in the prominent position where it lay for so long.

Henry VIII, like Henry II before him, saw Beckets allegiance to God, to the Pope and to the Catholic Church as treachery to the King who had sponsored him and nominated him for the archbishopric. He wanted all record of Beckets allegiance to a higher or non English power expunged, as well as welcoming the redistribution of wealth which the plundering of the monasteries and the shrine permitted.

When Henry VIII completed his reformation of Church-state relations, he ensured that no Archbishop of Canterbury could appeal again to the Pope and his secular allies on the continent in the way Becket had appealed between 1162 and his death in 1170. The struggle between Church and State was also a struggle between English and continental power, with Becket appealing to foreign Kings as well as to the Roman curia.

When I first had the story told to me on a dark winter evening in the cloisters of the Cathedral the conflict seemed to be one of the past. I was born into what appeared to be a settled country where power came from an elected Parliament, which could decide the laws and run the administration without foreign interference. Whilst I hated the butchery and barbarity of the knights, I had some sympathy with the Kings wish to be master in his own kingdom. The murder of Becket meant the most powerful monarch London had seen had to put on sackcloth and wend his way in sorrow as a penitent in Canterbury. The man who was King of England, Duke of Normandy, Duke of Aquitaine, Count of Anjou and Maine, and lord of much of Ireland was damaged by the violent acts of his supporters. It deflected him for a bit from getting more control over clerical matters, but did not stop the wish in England to establish authority here at home. It is only in more recent years the secular authority has been casual with our right to self government through its signature of several centralising EU treaties.

I am glad there is to be a Parliamentary investigation into the state of our water supply and flood defences.

Some say we need it to deal with the consequences of global warming. The predictions of climate change theorists tell us that we will need to store more water for drinking and other uses during the wet periods to cater with the drier periods. They also warn us about more floods, anticipating too much water in too short a time period.

I agree with those who say we need to manage the consequences of global warming, as the UK on her own will be unable to curb the worlds carbon output. The case for tackling our twin water problems is so much greater, because water shortage and too much flooding is directly linked to another contemporary phenomenon ?? high levels of inward migration allied to massive development.

I will be submitting evidence to the Parliamentary enquiry, and have submitted evidence to the governments review. My own constituency has given us plenty of warning of what is going wrong, thanks to the pattern of intense development. It reflects the position in much of southern and eastern England.

In recent summers we have been told to go easy on our water use, and in some places hosepipe bans have been imposed. We have experienced regular bouts of flooding, especially in places where there has been recent building on flood plain.

The solutions are relatively straightforward. To secure our water supply we need to take account of rising population, and rising water use per head. There is no need to demand restrictions on individual water use ?? water is the ultimate renewable resource, with the water cycle bringing water to us and taking it back to the sea on a regular basis.

By all means let the water companies mends their pipes, to get more water to market. We should remember, however, that mending pipes in urban areas is very disruptive to traffic and daily life, and might be ridiculously expensive. We should also expect the water industry to put in more capacity, increasing its reservoir space, and tapping new and rising water tables through boreholes. Introducing competition into the industry would doubtless bring in the new capital needed whilst lowering prices. It would also allow experimentation and innovation. Do we really need drinking quality water pumped to our homes to clean the loo and wash the car? Would house collection systems be better for some purposes? Would two different supplies make sense in some densely populated areas, with a cheaper grey water for many purposes? The market would answer these questions if allowed to function.

To keep us drier we need government to insist on proper flood control measures if they will persist in requiring development on flood plains. Every large scheme should not only tackle its own fast run off water but should make a contribution to the backlog of capital works needed to contain and route the run off water away from the developments. The Environment Agency needs to do a better job cleaning and maintaining the flood defences it already has, and putting in place the many schemes needed to bring relief from flooding to all those badly affected this summer.

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Visiting local Post Offices before Christmas reminded me just what a mess this government has made of one of the few remaining nationalised industries. If anyone still thinks nationalisation is the answer, they would be well advised to study the Post office as an object lesson in how not to run a business. It is bad for the staff, for the customers and for taxpayers.

At a time when government worries about human carbon output, they switched the Post office from sending many of its letters and parcels by train to sending them by road. They were,apparently, unable to negotiate a contract that made sense for such a large users of the railways, with the railways where the track has recently been taken back into a form of public ownership!

Claiming to understand the importance of the large inherited network of small post offices, the government took away their main source of livelihood, the substantial counter business they used to transact for various government departments. Apparently, it is more efficient to transact these items through the for profit private banking sector, than through the nationalised postal counter network.

Their management style and the government business loss combined to create huge losses for the Post office. These were then reduced by a triple whammy for taxpayers customers and staff ?? a subsidy, big increases in the monopoly charges to carry a letter, and staff cuts with closures.

The atmosphere in the business is not good. Many of the staff resent the way they are expected to find the cost reductions the management say are necessary. The lower paid staff have to deal with customers, explaining to them the big increase in charges and the decline in service.

Customers resent the surging price of posting a letter, the move to single deliveries each day, and the likelihood that your delivery does not arrive before you leave for work. Middle ranking managers lack authority and responsibility to drive the business. They do not control their property and other assets, and they have little ability to try to increase the volume of business or try out new services.

If you take the case of my local main Post Office in Wokingham, you see a typical example of how local people are prevented from transforming the business. The Wokingham Crown Office and the sorting office are combined on the same premises in Broad Street, one of the principal streets in the town. The sorting accommodation is cramped and out of date, with some employees having to work in sheds beyond the main complex. The sorting office site is a very valuable site which could probably be redeveloped for office accommodation, freeing Post office capital to acquire a better located sorting site where vehicle access could be much easier and where there was enough decent accommodation for all staff.

The front of the building is a good looking early twentieth century structure, with room to add more counters which are much needed to deal with the growing numbers forced to use the main Post Office by the closure of smaller offices elsewhere. 2 more are scheduled in the latest cull which the Post office is currently consulting about. The users of these offices are very unhappy about the proposals. It is difficult to see how the main Office can deal with them at peak times without a major overhaul and expansion.

Unfortunately local management is not empowered to sort out the property mess and release the property potential. Capital spending permission comes from the centre, and that means it rarely if ever comes. Local management are not encouraged to try out new services that might work well in Post Offices in their area, and are not rewarded generously for increasing the revenue of the business.

If you think the only ways to raise profits are closures, higher prices, and cuts in staff numbers you end up with a very demotivated business. If you tell the staff that if they are more efficient getting around their delivery area they have to come back to base to do some other work, you do not motivate your postal workers readily or well.

You have a very old fashioned nationalised business. The irony is that it is government which is knocking the stuffing out of it. The double blow of the loss of government business and the introduction of competition means the Post Office is no longer capable of sustaining its traditional volume and range of services. The New Year will bring more closures, more price hikes, and more staff cuts.

We are witnessing one of those retail binges that characterise modern living.

The retailers play games with the public, deciding when to lower prices and offer knock out deals to attract people to the stores. The people play games with the retailers, playing hard to get until the deals on offer spawn exciting headlines.

More people now seem to leave buying what they really really want until after Christmas, reckoning they can buy it more cheaply.
Families that have lost the knack of self entertainment, bored by the vanilla viewing scheules for the holiday and by the endless repeats on TV, are inclined to venture out for some retail therapy, walking a little of the excess off around the shops.

It produces retail sales figures that become ever more difficult to interpret. Stores sales space has been expanded. The internet now takes a lot more shopping traffic. Individual sales days can see huge turnover and big footfall. Other weeks can seem poor. A few shops groups trade very wlel, others do badly.

The likelihood is that the retail sales will slow after the Christmas and January sales have seen a last consumer fling. People’s incomes are under pressure, as higher mortgage costs kick in for some, and higher taxes and higher petrol, heating and food bills for all. It is going to be more difficult arranging the personal loan or the bigger mortgage than it has been for decade.

The credit crunch has not gone away. The banks should be at their least helpful to customers wanting to borrow ahead of their year ends. When they relax a little it will still be at lower levels of advances that peolpe have been used to. Valuers will become much more cautious about the values of properties when assessing their worth to support loans.

This Christmas and New Year sees more people than ever taking a long break from the office. The economy may weaken over the turn of 2008, and we may find the going gets tougher in the new year.

It is traditional at this time of year for commentators to misrepseresent the Christmas story, urging more social housing to deal with the problem of homelessness.

If they read the bible story more carefully, they would see it was not a housing shortage but a hotel bedroom shortage that caused the trouble. This shortage had been brought on by a nasty government, forcing people to travel away from their homes to the large towns and cities to register and to pay a tax. It was some kind of combination of an an early forerunner of ID cards with a poll tax.

As far as we know Joseph had a home,and turned to a home in Nazareth after the stay in Egypt, where they successfully evaded the massacre of the innocents ordered by Herod.

The New testament story is interwoven with interesting questions of how Jesus should relate to the kings on earth. His advice of render unto Caesar what is Caesar’s was wise indeed. It recognised the brutal reality of Roman power, whilst reassuring people there were other values that the temporal power could not overcome in the free minds of men.

Happy Christmas to all my readers.
Politics and comment has been left aside for the day.

The message of Christmas, that love can conquer hatred and vengeance, is a powerful and attractive one to people of all creeds and of none. Fear comes of hatred and begets more hatred.

This UK government seems to be rooted in fear – fear of the reactions of people, fear of England, fear of the people they call middle Englanders, fear of terrorism, fear of being blamed, fear of the truth coming out when they make mistakes. It lashes out in a less brutal way than Herod, ordering more and more controls over the rest of us, and centralising more and more information about us in the hope they can use it to exert their will and protect themselves. It tries to terrify the rest of us into thinking we do need to surrender our freedoms because of some threat or other.

Fear leads to authoritarian responses. It leads to the wish to micromanage and control everyone and everything. The government pursues secrecy, coming to regard public information as it own bank account, to be spent only when it sees fit in ways it wishes to. Otherwise it is a miser with public information, hoarding it in case it falls into the "wrong hands". Paradoxically, its incompetence at times means the legitimately private part of this information does spill into the wrong hands on a regular but unpredictable basis.

Better government trusts people more. It lets them make more decisions for themselves. It does not constantly challenge their lifestyles and hector them to change the way they eat, look, live or think. It tries to do a sensible number of things well, sets out what it is doing, and is honest and apologetic when it makes a mistake. It leads by example and incentive, more than by additional regulation and penal tax.

It is difficult to govern well if you do not like many of the people you are governing, or think them wrong about many of the issues that matter. This government is learning the hard way, that if you take on the Briths people and try to make them something they do not want to be, you just antagonise them. Try liking them, warts and all, and you might find there is less to fear.

Today we learn that various NHS trusts have lost data concerning their patients.

We seem to be living in a surreal world, where the government spins out the stories about data loss, to try to drive the stories about house price collapses, mortgage shortages, the credit crunch, the black hole of Northern Rock, overborrowing and the balance of payments off the front pages.

Or maybe, for once, they have just lost control of the media. Harriet Harman’s attempt to get a debate going over cash for sex may have been their last counter spin ploy, to change the media weather. It is unusual – but not suprising with this government – to see a very senior member debating an issue in a "personal capacity" to avoid committing the government she is meant to represent and defend.

It is not surpising that the NHS like much of the rest of the public sector under Labour has been casual with our data. The whole government is casual or mismanaged from the top.

When we are allowed to cross examine them, Ministers are on the whole poorly briefed, and lack detailed control over their policies and their departments.

This is a government which never prepared itself to run anything properly. It was born of spin and will die from spin. In opposition they honed their skills at generating stories . They were an effective, hard hitting opposition, always willing to blame the government for anything that went wrong, and always able to put the worst construction on events.

In government they have carried on in a similar way, seeing their role as being to expose and destroy Conservative policy, ideas and party management as if they were still the opposition. They spend too much time on this, and too little time discharging the responsibilities of high office.

When I was sent by mistake a copy of a Cabinet Minister’s diary I could not help but notice when I was trying to find out whose it was and where to send it back to how little there was in it. There were the usual political and constituency meetings you would expect, but there was no morning to night bookings for meetings with officials to review and improve administration of the departments policies, and no rash of meetings with users of their services and those affected by their regulation to see if it was working properly. I remember as a Minister these dominated in my diary.

Too many of these ministers define their jobs in relation to media interviews and the opposition. They should start defining their jobs in relation to the public. It is not easy providing a good service with the large empires they have built up. All of them should spend more time with their departments getting things right. They should start by sending a clear message from the top,that the public matters and their data is important. They then have to have endless meetings to ensure that message is taken to every part of their empires, and reflected in operating procedures that will keep the data safe and lead to the public being better served.

Until they do so, the public will conclude that we do not matter to this government. We are necessary as a source of money to pay for the poor performance. We are the people they intend to regulate out of freedom. We are not valued customers of the state, so keeping our data secure is not a high priority.

The EU Constitution
ID cards
My personal subscription as a taxpayer to their badly handled Save Northern Rock campaign
The South East England Development Agency
The South East Regional Assembly
Half their consultancy contracts telling them how to do things ?? I dont mind which half
All red phased traffic lights
Next years supply of speed cameras
Next years supply of data discs for HMRC
Most of the 2008 legislative programme
The London congestion charge
?5 billion a year of regulation

Instead they will cancel

Many of the trains over the holiday period
Access to many public services

A couple of days into the new Lib Dem leadership, and the press who once thought him media savvy are nostalgic for the golden age of Vince Cable as acting Leader.

It is not surpising. The only thing he seems to believe in apart from the power of spin is the move towards a centralised EU with big government in Brussels. He will discover the hard way this is a very unpopular position with most British voters.

It is symptomatic that one of the first deeds of the Lib Dems as his leadership began was to vote against a referendum on the Constitutional treaty in the Edinburgh Parliament, at a time when the Conservatives and SNP were united in their wish for one and even Labour had the decency to abstain. That shows real determination to break promises and take the unpopular line.

It is difficult to see how Mr Clegg thinks he can break with present politics, as he says he wants to do, by beginning his leadership pledged to deny the referendum they promsied in the General Election, on the specious grounds that the Treaty is not the old Constitution rehashed.

It was also indicative of how he is not serious that his first appointment was of Mr Brian Eno as a senior adviser, before he even got round to finding a job for Mr Huhne or Mr Cable. I recommend websites and press articles about Mr Eno to anyone with curiosity about the kind of advice the new Leader may be getting from this man. Indeed, it would be a good pre Christmas game for surfers to come up with the best quotes and highlights from Mr Eno’s life that could help Mr Clegg in his current quandary.

His casual mistakes about his taste in music, and his clumsy announcement of his atheism pale into insiginificance compared to the Lib Dems flip flop over a vote on the Constitutional treaty. I could forgive them a lot if they join us in the lobbies to vote for a referendum on the Treaty, but it looks as if Clegg has no wish to do the decent and honest thing. That would mean jeopardising an important part of his credo. He is truly Euro Clegg.

The press has turned on Browns economic stewardship with a vengeance. For ten years I have tried to point out that Brown did not make the Bank of England independent, and that he had weakened it in a way which made it likely a future financial crisis would be handled badly. I lost the battle beneath the weight of Browns spin and the readiness of so many to believe him. For ten years I have pointed out that Browns preference for higher tax income and higher spending was bound to create an inefficient public sector, and weaken the overall performance of the UK economy. Many commentators turned a blind eye to this, because inflation and interest rates were low compared to the 1970s and the ERM period.

Now the press can find little good in Browns economic stewardship, seeing that the UK has suffered from higher interest rates, higher inflation and slower growth than the successful Anglosphere economies, and seeing that the UK economy is now unbalanced, with huge public sector and balance of payments deficits.

Browns period in charge of the UK economy as Chancellor and now as PM divides into three periods. In the first, 1997-2000, he carried on with Conservative spending plans, he repaid public debt, and continued the impressive recovery that started soon after we exited the ERM under the Conservatives. He was married to Prudence, and all went well.

In the second period, 2000-2006, Brown went on a huge spending spree, hurling money at the NHS, at education and many other areas of government. He and his colleagues just wanted to boast about record levels of spending. They did not seem to pause to ask what they were buying with all the money. They bloated the budgets for external advice and consultancy, they pushed up public sector pay more rapidly than private sector pay, set up many new quangoes, and recruited large numbers of extra people into the civil service. They did recruit some more nurses, teachers and doctors, just as previous governments did. They did rebuild some schools and hospitals that needed modernising, but there was overall too little to show for the vast increase in spending. Public sector efficiency fell in some areas, and performed very badly overall. Public debt started to build up, and Brown encouraged his own sub prime financing for government, creating a large number of off balance sheet ways of swelling public borrowing.

In the third period we are witnessing efforts to bring public spending growth under control. This is a very necessary task. Stupid mistakes like the meanness over the police pay settlement show a lack of political touch and a lack of understanding of the significant numbers. Worrying about ?40 million for the police is bizarre, at a time when ?25,000 million for Northern Rock threatens to upend any attempts at spending control. The UK economy will not start to perform as well as the more successful economies in the world until public spending is under proper control, and the public deficit is falling rapidly.

The UK is now paying the price of its own government excess in recent years. Too much public borrowing crowds out private sector activity. Browns lower tax rates on enterprise through his reform of capital gains tax and his movement down of the rates of income tax and corporation tax, were more than offset by huge tax rises elsewhere through the pensions tax, the congestion charge, national insurance and others. As a result the UK is now much less tax competitive than it was in 1997, and faces the threat of a worsening of parts of the capital gains tax regime.

It is most important that the UK government does get on top of its own spending and borrowing rapidly, to help stabilise a shaky economy. It is also important that the government stops digging an ever large hole on Northern Rock. I cannot believe the huge sums they are risking and committing to this venture, with still no sign that they are putting in basic banking disciplines to ensure we get our money back any time soon. These failures mean continued pressure on peoples spending power, a lower pound, and a falling growth rate.

There is something I want for Christmas.

It is a government which understands that people have seen through spin and are sick and tired of silly media games played by senior politicians.

We are fed up with consultations that are bogus, with promises that are not kept, with side stories that try to distract from the bigger issues and with Ministers who think legislation is just another press release to capture a headline.

We would like Ministers to spend more time in their offices sorting out the problems, and less time on the media telling us they are sorted, or trying to get us to look elsewhere when a disaster is all around them.

We would like Ministers to concentrate on the things where they can make a difference. We would like them to spend taxpayers money as carefully as they do their own. We would like them to find out what they can buy with extra cash before they put out a press release saying they are going to spend it.

We would like Ministers that had some commonsense. It seems stupid to penny pinch ?40 million over police pay, upsetting police officers, whilst asking Northern Rock how many noughts it needs on the latest cheque as the bill climbs higher than ?25,000 million of loans.

We would like Ministers who believe in their staff enough to ask them to do the work, rather than putting so many things out to management and other consultants so we pay twice to get it done.

We would like Ministers who wanted to tell Parliament first, rather than reaching for the spin doctor to brief things in advance. We would be grateful if when they say Parliament will decide something, Parliament holds a decent debate and has a vote before the Treaty is signed or the action taken.

We would like them to answer questions about their stewardship, instead of replying to every reasonable question about something the Conservatives said or did years ago.

We would like them sometimes to take their critics criticisms seriously, instead of trying each time to demolish the critic.

We want them to spend less on administration and spin, and more on the services on the ground. We want an end to regional government in England, an end to ID computers and cards, an end to so much extra regulation.

As we approach Christmas the country is weary of the lecturing and hectoring, the spin and the incompetence.

Could Ministers think long and hard over the holiday about why they are so unpopular? Could they come back refreshed in the New Year realising that people want more delivered for less. We want a government that likes us, not one which is always telling us we have to mend our ways, and that everything is our fault.