Yesterday we held a half day debate on the state of Britains railways.

During the course of it Ruth Kelly, Transport Secretary, did tell us Network Rail has apologised for the delays to engineering works at Liverpool Street and Rugby on the West Coast mainline over the Christmas and New Year break. The apology stopped there. There was no apology from Ministers for the performance of their creature company, Network Rail. They told us there would be an enquiry into what went wrong, and they promised Network Rail would learn the lessons from the mistakes. I was far from convinced.

The delays at the start of 2008 were not the first time that Network Rail had misjudged and mismanaged engineering works, leading to substantial cancellations of services. Clearly the company did not learn the lessons on previous occasions. It is also difficult to understand what more they need to learn about the errors. Senior management misjudged how long it would take to carry out the works, and misjudged the availability of skilled labour to perform the tasks they needed done. The cause of the cancellations is crystal clear

The Chancellor today sounded like a old cracked record that no-one wants to hear any more. Listening to him on the Today programme, I was left wondering does he really believe what he is saying or does he think we are stupid?

He told us the UK had enjoyed economic stability for ten years, including a better record on inflation than many other countries. Has he checked the figures? If you look at the UKs record on the RPI it is worse than the EU or the USA, which is why his predecessor had to switch indices to make it look less bad. Does he think the credit boom followed by the credit bust and a run on Northern Rock is proof of stability?
Is he aware that UK interest rates have been higher than US and EU rates for most of the last decade?

Worse still was his incantation that all this stability had been created and guaranteed by an independent Bank of England. Is that the same Bank of England that Mr Brown reduced in stature so badly by amputating its control over government debt and clearing bank supervision? Is that the same Bank that has to work with the FSA under the chairmanship of the Chancellor when banking problems emerge in the markets? Is that the same Bank that gets briefed against when the Chancellors tripartite system makes a mistake? Is that the same Bank that had to keep interest rates lower than it would have liked and money looser, because the former Chancellor changed the target for inflation at a crucial time when rates would otherwise have gone up? Is that the Monetary Policy Committee whose members are appointed directly by the Chancellor, or by bank officials themselves appointed by the Chancellor? Is that the same Monetary Policy Committee where we are not allowed to know why some members were renewed by the government, and some were not?

The Chancellor should learn that he cannot spin himself out of the current economic difficulty. Some figures will pop up to reveal spin. Many clever and well informed people are watching his every action, and every movement of the economy. The Chancellor would do himself a favour if he dropped the tired old fashioned wrong headed highly spun rhetoric of the Brown years, and started to understand the true nature of the problems he faces. These include:

1. An overspending state which is not getting value for all the money it is tipping into the public sector. He should immediately impose a staff freeze on all public sector posts other than front line in essential services. He should take Conservative proposals to get people back to work seriously, and do something similar himself instead of just talking about them.
2. He should try to stop the flood of public money into Northern Rock, and impose some discipline to ensure repayments.
3. A broken regulatory regime where the Bank has been undermined. He should return government debt management and day to day banking supervision to the Bank.

I am all in favour of celebrity chefs and TV programmes crusading for a better life for chickens. Buy organic and free range, turn down animal suffering.
Unfortunately this government at the moment can neither deliver a better life for chickens nor for people.

The Chancellor is now ransacking the files of the 1970s as he seeks to curb an inflation his predecessor and the monetary authorities allowed to get a good hold through their easy money policies of a year or so ago.

He seems to believe that lectures to groups of people will work. This week he is applying his time to lecturing the energy companies to keep the price of electricity and gas down. Has he noticed the international price of oil has just surged to a new high? Will he, like King Canute, signal to the oil market that it must recede? If he managed to hit it just as the tide was turning, he could look quite clever to the uninitiated.

Meanwhile, his mentor next door is busy lecturing MPs to vote down the independent pay award recommendation (whatever that may be), so that MPs can show solidarity with the police, whose independent pay award has been docked by the government. The Prime Minister may at last have found a popular cause with the public, but it is difficult to believe the odd percent off MPs pay will transform the inflationary problem the government faces.

You might have thought Mr Darling would be fed up with lecturing people, after his disastrous lecture on the need for bank to become more prudent without government or Bank of England intervention and assistance, just before he offered the most comprehensive assistance to banks and markets during the Northern Rock crisis.
This latest round of arguing against the energy price and pay inflation is like arguing against the weather. This inflation was made some time ago. It is not going to persist in a year or sos time, given the dreadful credit crunch we are now living through in money markets. Timing is everything.

In the 1970s a previous Labour government used to lecture everyone on how much they could earn and what they could charge for things they sold. The pay and prices policies they developed of course failed to contain inflation, and became extremely unpopular. They overspent, overborrowed and wasted money as a government, and failed to keep proper control of the money supply.

There are some worrying similarities in outlook between Labour Chancellors then and Mr Darling now. The good news is the international background is much less inflationary today, and the credit crunch means inflation is not the true enemy looking beyond the next few months. The bad news is Mr Darling does think his lectures will make a difference, at a time when he should be concentrating on getting the credit and banking markets functioning properly again. His two tasks for this week should be

1. Find a solution for Northern Rock which stops the taxpayer funding increases
2. Start controlling public spending ?? he could place strong controls to prevent recruiting extra people to the public sector other than front line people like nurses and teachers, and back that up with a moratorium on management consultancies and IT projects without very thorough examination of why they were needed

Unfortunately we have a Chancellor who sees his role as being part of the media commentary on the situation, instead of the key player trying to lift a losing team.

Gordon Brown has claimed to issue his vision of Britain, in his Observer interview today. There are slightly warmer words for those of us who believe in defending and strengthening our civil liberties, with a promise that ID cards will not be compulsory. Why not just drop them altogether, as an unwanted expense and a temptation to government to intrude too far? Why not introduce proper border controls, and use the passport and visa system, to deal with immigration?

In contrast there are tough words for those who want to preserve Englands green and pleasant land

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.

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

In 2005 I voted for change when I voted for David Cameron. I voted for him to change the Conservative party, and to go on to change the way political parties are run and organised, as a platform for going on to change our country for the better.

I wanted him to move away from the big money highly spun model of politics that defined the Blair era. I was delighted when he came out for a

There are two tired and overworked phrases in this governments repertoire which we are about to hear concerning Northern Rock.

The first is ??We have learned the lessons?? of whatever catastrophe they are talking about.

The second is: ??We will make sure this will never happen again??.

Ministers usually recite these phrases instead of providing proper analysis of what went wrong, and in place of ensuring the people in whatever regulatory system they have are up to the job and empowered to make the right decisions in good time.

I remember when I was the DTI Minister responsible for financial regulation, in the days when the DTI regulated insurance and financial services itself, having to handle the occasional problem. Each time the cry would go up to change the law and regulation. I usually pointed out that what had happened was a breach of the law or regulation anyway. We werent short of laws even then and there are many more now. It was intelligent enforcement that had failed. I was also pressed to guarantee it would never happen again. I was usually careful to make no such guarantee, and to point out that in any field of human endeavour there will always be some mistakes and some lawbreakers.

This government is foolish to say there will never be another loss of data by the public sector, because there will be. They should claim instead it is much less likely. They do have to be able to say there will never be another run on a bank, as we know we can have a period of more than a hundred years without one. Something uniquely wrong has happened on their watch.

My concern with Northern Rock is that the government does not appear to have learned the lessons. It is usually wise to manage a crisis to a conclusion before attempting to learn all the lessons. This crisis is far from over. Where there is a need for earlier action ?? as there may be on a deposit guarantee scheme ?? it needs to be carried out as an interim response, not foreclosing other action to mend the regulatory system once the crisis has been resolved or is stable.

What are the lessons of Northern Rock?

It is unwise for a Chancellor and Bank Governor to lecture the banking system about the need to deal with their own banking mistakes without assistance from the authorities, just a few days before offering massive assistance on a scale never before seen in the UK. If the authorities know of an institution in trouble ?? as they did a month before the run on the Rock ?? they should avoid inflammatory statements that they might have to rescind.

It is unwise to keep the banking system starved of cash until a major institution is in deep difficulties, and then to provide money to the system after a run on a bank has begun. If money is going to be provided, it should be provided early.

A tripartite structure for responding to a banking crisis is too inflexible, and keeps the Bank starved of important hour by hour information on the state of banking markets. There should be a unified command under the Bank of England. The Bank should have to keep the Chancellor informed, and submit to his judgement if things become out of hand. The Bank needs to get back the management of government debt, and day to day banking supervision, as it had before the Brown reforms.

The Basel I capital rules did not work as intended, and Basel II may now make matters worse. The government should enter discussions with the international community about a sensible capital adequacy regime, which gives enough attention to liquidity, and which deals differently with off balance sheet items.

The world authorities should avoid seeking to increase the capital requirements rapidly at a time of banking risk aversion. Any necessary increase in banking capital requirements should be phased in, as the system stabilises and starts to function more aggressively. IT will make matters worse if we hear the sound of regulators slamming the doors on capital adequacy after the horse has bolted, against a background of damaged balance sheets and a reluctance to lend.

The government should consider changes to allow take-overs of banks in trouble to take place rapidly, with the negotiations happening in private. This may well entail changing or clarifying EU law. This should be carried out urgently.

The government has asked the private sector to come up with a better deposit guarantee scheme. This should be put into effect promptly. More importantly,. The government should work out how to climb down from its blanket guarantee of all bank deposits in the UK of any bank in trouble without triggering a further run, seeking to do this in parallel with the changes to the overall guarantee system.

On January 4th 1642 Charles I attempted to arrest five Members of Parliament in the Commons.

The day before the Kings Attorney General had accused Lord Mandeville, and the five members, of High Treason in the Lords. As a result John Pym MP, John Hampden MP, Arthur Haslerig MP, Denzil Holles MP and William Strode MP were alerted to the Kings intentions. The Kings agents made the mistake of not arresting the peer and the five members immediately they made the accusations.

A day later, on January 4th, the five MPs remained in the Commons, with people outside watching the Kings movements for them. They attended the morning session, adjourned for lunch and resumed their seats in the afternoon. At about 3 pm news came that the King himself was on his way, backed by his own armed guards.

As Charles approached from Whitehall Pym asked the Speakers permission that he and his friends could leave. They left by river barge and went to the City.

Charles himself arrived a little later in the chamber of the Commons, accompanied by his nephew, the Elector Palatine. Charles took off his hat and asked the Speaker to vacate the chair. Charles assumed the chair and asked if Mr Pym was there. Speaker Lenthall fell on his knees and said it was not his part either to see or to speak but as the House desired.

Even the engineering works fail to run on time

The first thing people need from train travel is reliability. If there is a frequent train service with trains running to timetable, you can plan your day and your journey accordingly. If there are too few trains, or if the trains are late, the whole day can be disrupted. Busy people are then into cancelling meetings, failing to turn up for appointments, or for politicians letting down audiences who have sought their help to keep democratic debate alive in the UK.

The second thing regular users of trains need is affordability. The latest round of fare increases are in many cases swingeing, at a time of restrained earnings growth, higher taxes and mortgage payments, and a credit crunch. We are used to many of the things that are supplied by the competitive private sector becoming cheaper over the years, as the bargains in the January sales in the clothing and textile departments remind us, and as the ever better car offers on the forecourts confirm. The poor old train commuter is sandbagged again. He or she is being made to pay an ever heavier price for trying to rely on the railway.

So why are train travellers this week being made to pay through the nose, and why are they being told that there are still no trains on part of the West coast mainline near Birmingham?

The answer is partly the botched nationalisation of Network Rail by this government, partly the technology and partly the fixation of trying to get more speed out of the railway instead of concentrating on reliability and affordability, the things that matter most to passengers.

The government has been at its most prejudiced when it comes to transport. The bankruptcy of Railtrack turned a poor solution into a worse solution, leaving all the evils of monopoly in place when it comes to track provision, whilst removing the restrictions on overspending that applied to Railtrack but not to Network Rail. The answer is exactly what you would expect from a monopoly with effective recourse to the taxpayer to underwrite almost any level of spending it wishes to undertake on the existing network

Today is the anniversary of two different unions that have had a profound effect on the UK and its people.

The first was the Union of Ireland with England, Scotland and Wales on 1st January 1801. It was a union that many Catholics never wanted. Its early years were made worse for the Catholic majority in Ireland by Pitts failure to deliver the promised catholic Emancipation measure through the United Kingdom Parliament. This Act of Union may have had the agreement of the Irish Parliament of the time, and did lead to 100 Irish MPs appearing at Westminster, but it also ushered in a century and two decades of unrest culminating in the creation of the Irish Free State in 1921. It showed that if you do not base Unions and governing arrangements on overwhelming support, and the consent of the governed, the system will be unstable. The support of many Protestants was not enough: there needed to be common agreement to a system of government seen to be fair by both sides of the religious divide.

The second was the entry of the United Kingdom into the European Economic Community on January 1st 1973. This ushered in years of argument of a non violent kind over how the UK should be governed and who should have the right to make decisions. The government of the day did not gather the whole hearted support of the people for the original entry. A subsequent government did allow a referendum in 1975 in order to conceal its own major split on the issue, but in the debate over the referendum the

The New Year began as the old one ended, with public transport struggling to cope with a great surge in demand in London by people wanting to get to and from the celebrations.

I understand the police problem, and they needed to act in a way which prevented so many people coming to harm through crowd surges.

MY criticism is of the transport authorities. The big shops manage to deal with crowd surges at the opening of their sales. Football grounds handle huge numbers of fans at popular matches. Can’t London Underground do some research and spend some money so that when large numbers of people wish to use a given station there is a better answer than closing the station completely? Of course there would need to be limits on how many people were allowed into the station at any given time, and that would mean queues with barriers outside the station. It could mean people being told that queues were too long at any station and not to wait there. But surely it would be better to move as many people as possible by tube when you have a big event like New Year?

Instead last night many people drove to the edge of the celebration zone, parked, and then all tried to drive home after the fireworks, with predictable chaos.

The news today that London Scottish Bank is being told by the FSA that it needs to raise additional capital is a grim reminder that the credit crunch of 2007 gives 2008 a grisly hangover. London Scottish itself is a small company, led by a new cautious CEO who wants to provide for difficult conditions in the lending markets and to meet the Regulator’s requirements for capital. Understandably he wishes to write off anything he has inherited which he does not like the look of, just to be sure. The provisions can always be put back at a later date into profits if conditions improve. The importance of this small case is that it setting a standard for how much write off and provision should be made against certain types of lending. The Regulators will use it as an example of how much capital a bank now needs in these straightened times. It could mean more write offs and more capital raising by the bigger banks.

There is always a danger that worldwide regulators will seek the lock the stable door after the horse called Prudence has well and truly bolted. If they do this on any scale, they are tackling last year’s problem of excess, not this year’s problem of too little lending and confidence which will delineate the opening months of 2008. Regulators will reason that they must learn the lessons of the period of too much credit, and now demand more cautious lending as well as insisting on banks having bigger reserves and more spare capital. This impulse will intensify the downturn in lending and keep money tight in banking markets. Inspired Regulators respond to the conditions that pertain today, looking ahead to tomorrow’s problems. Other Regulators look back to past problems and try to make sure they can never happen again. They will, of course, once the Regulators have been forced to respond to the next set of problems which are the opposite of those of the period of excess.

All this has been made much more difficult for the western economy by today’s adoption of Basel II, the new regulatory capital requirements. The natural temptation for the world’s regulators will be to use these new rules as an opportunity to revisit the money banks need, and to raise the standards, demanding more liquidity and more capital for any given volume of business. If this had been done a year or two ago it would have been a very good thing, and would have reduced the excess in lending and leverage which characterised the easy money era. Done too much today, and it will deepen the crisis, reducing the amount of money available for lending in the system still further, and pushing banks into more aggressive competition to raise the regulatory capital they need to sustain their current level of business.

Regulators are very important players in this credit crunch. As I argued yesterday, the regulatory requirement for Home Information packs is distorting the UK housing market, keeping homes off the market and delaying the price adjustment. Worldwide banking regulation could reinforce the boom bust lurch in credit markets if we are not careful. In the good times Central banks and other regulators turned a blind eye to the big build up of lending and the low levels of liquidity held by some institutions. Now they might go too far the other way, demanding standards of prudence that the damaged and constrained markets will struggle to provide at sensible levels of new lending.

All this is relatively bad news for the UK economy, where government indebtedness and the huge balance of payments deficit add to the unfortunate inheritance for 2008. There is talk of further tax rises to tackle the excessive government borrowing. There should instead be talk of controlling public spending better, as the last thing the UK economy needs right now is a set of further stealth tax increases. The government could begin by showing it now understands the need to control its spending, by getting a grip on how much it will lend to Northern Rock and when it intends to receive some repayments. It could cancel the hated ID cards spending, on a day when it is revealed that the UK has come to rank in the lowest grade of countries with respect to protecting citizens’ privacy. The Privacy International Think Tank just tells us based on comparative study what many of us have known intuitively for some time - we have lost a lot of liberty, and the government is sending us the bill for all the suurveillance and form filling. There will be an economic price to pay for all this in 2008 as well as the loss of liberty.