In accordance with my long stated policy of making this blog mainly about current government policy and what to do next I have not been discussing the Labour government’s great recession and banking crash of 2007-10 for many years. We talked about it at the time. I explained how Brown and Darling could have avoided the worst of the banking squeeze that undermined the banks. I with the Opposition and others had warned of the excessive credit and money causing inflation in the long run up to the crisis. I blamed them for keeping money and credit too loose on the way up and making it too tight on the way down along with their chums at the Bank of England.

They put us on a merciless big dipper, said it was caused by the rest of the world, trashed their reputation for economic competence and duly lost the election. As always the public blamed the incumbents not worldwide trends and in this case were clearly right to do so.

Labour lived under the shadow of their disaster for many years. They won in 2024 not because they had rebuilt trust with millions of voters they had lost but because the Conservative vote collapsed out of anger about what the Conservative government had done and not done, with mass abstentions and votes for parties that could not win that election carrying Labour into office.

In eighteen months Labour have halved their small support levels of the 2024 election and lost more of their rating for economic competence. They have so far put inflation, unemployment, illegal migration, taxes, borrowing, energy prices and closures of business up, and failed to deliver much by way of better public service for all the extra money spent on wage rises and more public sector staff.

Into this mess Gordon Brown decides to go on the media, possibly with the agreement of Keir Starmer, to demand changes with the way things are done to tackle the abuses he allowed or helped create in markets, banking and the economy 18 years ago. Bring it on! He has just made Labour’s worst days 18 years ago relevant to their worst days so far under this government, with the help of his new enemy Mr Mandelson who he brought back into the Cabinet and recommended for a peerage.

Gordon Brown has now made allegations about what Mandelson did, but these are all matters subject to a police investigation to see what evidence there is. Today Mr Mandelson is not guilty of breaking any law and faces no charges. Gordon Brown implies there are issues other than or as well as possible misconduct in public office that need looking into. Time will tell if there is anything that can be proven.

Gordon Brown pleads guilty himself to the same gross error Keir Starmer admits he made of welcoming Mandelson into the heart of government and believing him. Starmer and Brown are joined together in claiming Mandelson was a liar to both of them, and claiming that he both let the Brown government down and now the Starmer government. This is a far more serious crisis because a PM and a former PM both say they put a liar at the heart of government and both say he did damage. In Gordon Brown’s case he says he did not know at the time what damage Mandelson was doing and in Starmer’s case the damage is visible and tearing his government apart.Only they know what Mandelson did say to them, and will need to produce documents to prove their charge of lies.

2007-10 was a disaster for the UK economy, banks and markets. It took years of patient and difficult work to rebuild the strength of the banks and to get public spending and borrowing under some control. Labour MPs need to read the runes of 2007-10 and recognise if they make the wrong decisions about who to lead them and what action they take to improve the economy they could revisit some of the darkest economic and market days of their previous government. Mr Mandelson’s tenure as Ambassador to the US has ended by doing damage to the important US relationship.

Gordon Brown’s list of things to do to try to purge the two crises will not give us growth and lower prices. It seems more designed to make Mandelson take the blame for all failures rather than sort out today’s difficulties of policy. They do need a fair enquiry into Mandelson’s actions then and now. More than that they need new immigration and economic policies that work and are in line with public demands. Attacking workers, savers and strivers and giving away power money and islands to foreign interests is angering many more people. Smash the gangs? Give us the fastest growth? Keep taxes down ? When do they do any of these things?

Some people are arguing that now is the time for the opposition to table a no-confidence motion. The Leader of The Opposition has made it clear she will facilitate one if Labour MPs now want to get rid of the PM. The Opposition is of course free to do this but will only do so if it seems likely there are enough Labour MPs to make it a worthwhile thing to do. Often the Opposition tabling a motion simply unites the governing party to fight off the threat to the future of the government. This defers the infighting which the crisis has generated. MPs in a governing party are usually reluctant to vote to destabilise their own patronage machine or to hasten an election.

Of course if enough Labour MPs see a No Confidence motion as a means to rid themselves of an unpopular leader then the Opposition can help the rebels by tabling and voting for such a motion. When a party has such a large majority as Labour there is no chance of passing a No confidence vote without large numbers of Labour MPs voting for it. If that did happen the King would ask whoever emerges as the new Labour leader to form the next government. It would not bring on an early General Election.

The Labour Party at the moment is very divided with a large number of Labour MPs extremely unhappy about their leader and about the events surrounding Lord Mandelson. So far the rebels have not all agreed to get behind a single candidate as an alternative to the Prime Minister. Instead the leading contenders or their supporters are busy attacking the Prime Minister in their briefings and doubtless seeing how many other MPs would be willing to get behind a leadership bid by them. It takes 81 Labour MP s to all declare in public they want the same named replacement as Leader to trigger a contest.

I have deleted more than usual as people are ignoring guidance. You should not accuse people of criminal acts or claim people are corrupt when you have not supplied evidence and helped persuade the authorities to bring charges.

Yesterday the PM was unable to put the fires out. Deadly Opposition from the Conservatives confronted Starmer with a motion he needed to vote down, demanding full publication of all the documents around Mandleson, his appointment and his tenure as Ambassador.

The PM realised his huge majority was not with him and he could not perform the usual routine business of voting down an Opposition motion. He decided to compromise by offering to publish much, but keeping under his officials the right to withold important documents they deemed to be important to national security and or international relations.

His rebellious party would not accept that. Livid with how their top people had landed them in a huge crisis, many demanded full disclosure. The Conservatives proposed letting the senior, confidential Parliamentary Intelligence and Security Committee read the relevant papers and decide which if any should not be published. By the time Angela Rayner agreed with this the PM had no option. The hapless Minister defending him in the Chamber tried the line it was too late to amend the motion, but the Speaker made clear he would take a late manuscript change to accommodate the obvious mood of the House.

This feels like a seismic explosion, a large fire engulfing this Administration. By appointing Mandleson the PM came to part own the Blair government, the great banking crash of 2008-9 and worse still for him the worrying emails,payments and deals surrounding Mandleson.

The police enquiry may take time and may dampen some speculation. The governing party looks gutted by what has happened and is in no mood to cover up or support. There will be plenty of stories about what did go on in the dying days of the Brown government and in the Oval Office under Starmer. It is deeply embarrassing for our country, and it has upset the crucial relationship with the US President. The last thing Donald Trump wanted was more discussion of Epstein.

The government has said that by 2040 the reset will bring benefits of £9 bn to our economy. That is just 0.3% of Gdp spread over 14 years, or 0.02% a year. Why bother?
In practice it will be a loss to the UK as this assessment of benefits leaves out the costs. There will be a financial contribution to the EU to pay for it. There is the surrender of our fish for another 12 years leaving us short of fishing revenue. There is the very expensive Erasmus scheme to help more EU students than UK students replacing the much better and much cheaper Turing scheme for UK students we currently enjoy .
Worst of all is the wish to sign us up to the very costly EU carbon trading scheme. This will put up the UK carbon tax which will speed the closure of more UK businesses relying on gas and on petrochemicals. Adopting a version of the carbon border tax will make our imports from non EU dearer, as it is an expensive tariff. What happened to the government’s focus on the cost of living?
Integrating our electricity industry more with the energy short continent will make us more dependent on expensive imports.
The SPS changes on food exports and imports are unlikely to simplify or reduce costs by much as we will be forced to adopt the EU schemes which requires extensive use of vets and certification in a very bureaucratic package. We also need good food safety rules.
The EU is anti innovation. Accepting their rules on farming and business could cut us off again from important new ideas and science being pioneered in the US.

I with others argued that appointing Lord Mandelson as Ambassador was a bad idea. We had a good career diplomat Ambassador in Washington, liked by President trump, who got appropriate access and set out the UK case.

The PM knew Mandelson had connections with Epstein though he may well have not known what has come out. He would have known that President Trump had no wish to have friends of Epstein in the Oval Office given Epstein’s criminal convictions. He should have worked out that some of Mandelson’s past views and certainly some of his past statements about Trump were far from helpful in winning over President Trump. By any measure this was a bad appointment before we learned of more of the detail of the Epstein relationship.

One of my biggest annoyances is the damage this has done to UK/US relationships and the impact it has had on UK policy. When he was first appointed I urged Mandelson to see the damage the Chagos give away would do. Instead he helped Starmer reassure the President this was a good policy. Now the President has found out more of the truth about the deal he has concluded it is a very bad idea.

It looks as if Lord Mandelson failed to explain to the President the US/UK Treaty promising the UK would keep the freehold of Chagos, failed to explain the consequences of Mauritius being signed up to a No nuclear Treaty, and failed to consider the defence impact of the islands being owned by a friend of China.

An Ambassador being close to our most important ally let us down badly by not explaining all this to the President,leaving the President no choice but to change his view when someone else put the full truth to him about this bad deal.

When responding to this remember Mandelson has not been accused of any criminal offence and is innocent until proved guilty. Of course the revelations of his lifestyle and the involvement with Epstein has been quite enough for the PM to say he has behaved badly, should not be a peer and should be subject to an enquiry. All this from the man who thought he was the best person to be our most important Ambassador and who said he had full confidence in him when the Opposition pressed him in Parliament.

Why did he ever force Mandelson onto the diplomatic service given his troubled past when in government? This was well known to all of us given his loss of office twice over conduct issues.

Do you remember the one about how the government was going to preside over building far more homes, boosting growth and jobs? The last government promised 1 m over five years or 200,000 annually whch it delivered after covid. The incoming government promised 1.5 million or 300,000 a year. So far instead of putting up the rate of completions, they are down.

The Chancellor was arm wrestling the so called independent OBR to give her credit for more growth ahead from more homes which were going to come from easier planning rules. The OBR need to review that decision as numbers of homes have gone down, not up.

The collapse has been biggest in London, the part of the country with the dearest homes and the biggest shortages. A Labour Mayor and a Labour government have added more expensive regulations and allowed lower targets, against their own national policy. The new rules on two staircases in mid rise blocs, on net zero standards and more outdoor space requiring balconies, have undermined the viability of new flats projects.

The big tax attack and the government inspired or regulated price surges in water, energy, rail fares, Council taxes has also meant fewer people have enough money to think about buying their first home or about trading up. The housing market is sluggish or in decline as a result.

The Housing Secretary says they are sticking with his 1.5 m target. Few commentators and builders think there is any chance of hitting it. Labour would be doing well to get back up to the last government’s build rates. No more growth here than in China.

Much of the public deeply resents the spending priority afforded to migration. We read that the government is being asked to pay yet more money for its hasty and botched cancellation of the Rwanda plan, rubbing salt into wounds when we do not have the deterrent effect of somewhere to send illegal migrants which the government clearly needs. The government pays large sums to the French to stop the boats without conditions and accepts the French have broken their promise to tackle some of the boats in shallow water before they depart when their intentions are clear.The government is paying large sums for hotel accommodation they promised to close down, and paying more to convert older buildings for use as migrant hostels in an attempt to avoid more hotels as illegals continue to arrive. The government is paying top up benefits to migrants, and a full range of benefits to dependents that come to join them. Migrants taking up lower wage employment qualify for subsidised housing, free NHS, free school places and the full range of public services. The press have recently highlighted the costs of providing free English language tuition for recent arrivals. The arrival of a large number of people speaking a wide range of languages has raised language costs in a number of relevant public services.

In 2025-16 the EU was trying to respond to the large numbers of migrants arriving across its borders.They made a proposal that countries that would not take their fair share of these EU arrivals should have to make payments to the countries that did take them. Their calculation suggested that the set up and early year costs of a new low or no pay migrant were 250,000 Euros.
I tried to work out what a similar cost would be for the UK leaving the EU. I saw that the EU figure had plausibility. If many people come then the state does need to build new flats or houses to accommodate them, and these will need to be heavily subsidised with the public sector picking up the initial capital cost. There needs to be more school places and surgery and hospital capacity, with capital costs to increase the capacity of schools and health centres, and with more staff being recruited to man them. Adding more people on a big scale also means putting in more road and rail capacity. Meanwhile the private sector has to spend on more broadband, water, electricity and gas supply.

The case for controlled immigration has been clear and popular with the majority of voters for a long time. The Treasury idea that high levels of migration were fine because they added to GDP was always disbelieved by many of the voters. It is difficult to understand why clever Treasury officials never wanted to highlight the public spending consequences of unrestricted migration when it was bound to have a very visible impact on capital and revenue budgets for key state services and for benefits.

This anti growth government that has done so much to kill growth in our domestic market now goes in search of growth from EU trade. It has banned our businesses getting out more oil and gas, put strict limits on how many petrol and diesel cars our motor industry can sell prior to a complete ban on their best selling lines in 2030, taxed people out of jobs and increased closures of pubs, shops, entertainment businesses and the rest. It has followed a strong de industrialisation policy,is trying to close down as much industrial capacity as possible that dares to use fossil fuels by imposing high carbon and windfall taxes and bans. It refuses to offer grants to farmers to farm but will offer them money to stop growing food and rearing animals.

It is true our exporters do create jobs, pay people good wages and boost our GDP. If its more exports the government wants to replace its dwindling home output of manufactures, energy and food, then it should go to the places that buy lots of our exports, are buying more year by year and want to do business with us. Both in and now out of the EU our trade with non EU countries has been growing faster than with the EU. Both in and out our trade in services have expanded rapidly, especially with non EU countries. The quickest wins for more exports are trade deals and government backing for more exports of our services to the rest of the world beyond the EU to countries that speak English and like what we do.

Our trade in goods with the EU sees us in massive deficit. In 2024 we imported £313bn of EU goods but exported little more than half that at £174 bn. We import lots of refined oil products as we close down more of our own refineries in the name of net zero. We are importing plenty of crude oil as we refuse to get more of our own out of the ground. We are importing large numbers of cars as the government squeezes our own industry to closure brought on by high taxes on petrol and diesel cars made at home. We import plenty of vegetables and fruit we could grow for ourselves as government policy seeks to dissuade farmers from growing things. We also import a lot of European medicines and electrical products.

Our balance of trade in goods is bound to get worse with the EU on current policies. Our past top exports to them of oil, refined oil products, vehicles, chemicals and miscellaneous manufactures are all being hammered by the government’s high energy anti industry policies. Our services exports to the EU are growing but at a slower pace than with the rest of the world.
The government is wrong to think making sacrifices to try to get more trade with the EU will help us grow faster. Loosening rules on trade will help them more than us given the huge imbalance in trade in goods and the impact of their restrictive rules on farming and making things.

What would make a big difference is import substitution. That would boost growth. If only the government would follow policies that encouraged us to get out more of our own oil and gas, keep open our refineries, run chemical works with sensibly priced feedstock, and boost domestic entertainment, hospitality and tourism we would cut the big EU balance of trade deficit, create more jobs at home and enjoy faster growth. Imports subtract from GDP.