Unfunded Tax Cuts - Hooray!

At last a policy from the government that Guido can support. Let us hear no more from Labour politicians about Tory "unfunded tax cuts". The government is going to have to go to the City to borrow the extra £2.7 billion...

This Leak Enquiry Should Be Easy

Careful examination of the photographic evidence reveals that it is the manicured finger of Ms Flint that is holding this morning's Cabinet briefing* for public viewing. She should be charged under Section 8 of the Official Secrets Act 1989 for failing "to take such care to prevent its unauthorised disclosure as a person in his/[her] position may reasonably be expected to take."

The final sentence visible concludes, in bold type, that most importantly: "... it is vital that we show that at this time of uncertainty we show that we are on people's side". You see that is the thing with New Labour politicians, what they care most about is covering their arse. Not that they would think to introduce an emergency growth package as Bush has done in the U.S., or cut taxes to boost growth like they have elsewhere in Europe. No, the most important thing is that they push their disingenuous spin slogan that they are "on people's side". That should do it...

*They don't have a clue - 5%, 10% or more falls in property prices possible. Government has of course guaranteed the mortgage market with taxpayers money.

Northern Rock Shareholders Offer to Buy Bankrupt Labour Party

click to enlarge

The letter from the Northern Rock Shareholders Action Group makes an offer of £100 for the Labour Party and gives "the existing Party members the opportunity to buy it back in 5 years time at the same price". This will give the Labour Party a "period of temporary private ownership under a new management team…which may well give it the breathing space it needs to recover and protect the interests of all the stakeholders." Well they are bankrupt and those are reasonable terms, better than the Treasury offered...

Taxodus : Aberdeen Asset Management Packs Bags

Aberdeen Asset Management manages £114 billion and is rumoured to be following Brit Insurance to Dublin. The Times adds Smith & Nephew as well as Cadbury heading for the tax exit doors. Will the last multi-national to leave switch off the light...

Taxodus - Enterprises Flee UK Tax Regime

The news that WPP is considering fleeing UK shores to escape ever increasing taxes resulting from Gordon's prolifigacy must signal that business has had enough of Gordon's tax and spend policies. Every week a major business seems to make the move, Ireland is continually welcoming companies keen to halve their tax bill.

The Irish benefit massively and the inward investment has helped make Irish per capita incomes now higher than in the UK. In the last 11 years Gordon's big government and big tax bill thinking has contrasted with Ireland's more Thatcherite approach - resulting in Ireland becoming richer. It has come to something when the republic is spending hundreds of millions of euros to help the poor neighbour in the North upgrade infrastructure. Eurosceptics who claim Ireland is subsidised by EU funds are out of date. Nowadays Ireland is a net loser from the EU financially.

Gordon says he is listening, well he should hear what businesses are saying and see what they are doing. The tax base is narrowing and will continue to do so until he takes the low tax, high growth route to prosperity. The taxodus across the Irish sea will only increase otherwise...

+++ United Business Media Flees UK Taxes +++

The company valued at £1.3 billion is fleeing the shores of Britain's increasingly high tax regime, joining the FTSE 100's Shire Pharma in what is becoming a trend as Britain becomes less competitive.

UBM will become tax resident in Ireland, where we enjoy corporation tax rates of 12.5% compared with the 28% suffered in the UK.

Plenty of room for the rest of the FTSE 100...

UK Mortgage Debt / GDP Ratio Worse than U.S.

"I will not allow house prices to get out of control and put at risk the sustainability of the recovery."

Gordon Brown, 1997 Budget Statement.

Gordon repeatedly tells us that Britain will weather the global financial turbulence better than America. The Bank of England projects that over a million homeowners could face negative equity in the widely expected property market downturn. The data above shows that British homeowners are more indebted than even Americans...

The National Association of Estate Agents reports that house sales and mortgage approvals have halved. First time buyers are an increasing rarity, below the asking price deals more common, properties are taking longer to sell and the number of buyers on agents books is down by a third. And Gordon still condemns the Tories for proposing to effectively remove first time buyers from paying stamp duty...

+++ Alliance & Leicester Drops 10% +++

Perhaps they need another £50 billion...

Gordon's Local Garage Hikes Fuel Price 25%

Britain is getting more and more like Zimbabwe every day, a leader afraid of elections, food prices soaring and now petrol prices jumping 25% in a week.

The Rix garage in Kirkcaldy has been charging an outrageous £1.45 a litre for diesel and £1.25 for unleaded petrol. Not that this will bother Gordon - he has never had to pay for petrol.

The Grangemouth oil refinery is on the verge of shutdown as it looks like a two-day strike by staff will go ahead this weekend.

Reports from around the country tell of queues of panic buyers worried that the 200,000 barrel-a-day Grangemouth refinery closure will force the BP Forties Pipeline System, which transfers oil from more than 50 North Sea fields, to be turned off. If the dispute lasts for more than two days Britain will run dry...

Oil Hits Record High as U.K. Strike Shutdown Proceeds

Ineos Group is proceeding with the shutdown of its 200,000 barrel-a-day Grangemouth refinery as talks with unions to avert industrial action look bleak. The plant takes crude from BP's Forties Pipeline System, which transfers oil from more than 50 North Sea fields.

So the housing market is dropping on the back of the credit crunch and U.K. oil supplies are about to be turned off. Not exactly the best economic outlook is it? Expect to see queues at petrol stations just in time for the local elections....

Bank of England Chief Economist :1,350,000 Borrowers Face Negative Equity

Charles Bean is the Bank of England's Chief Economist, he gave an under-reported speech last week that shook up the Gilts market. It should shake up everyone. According to Mr Bean the Bank's research has found that 5% of mortgagors have less than 20% equity in their home. That is equivalent to 1,350,000 homeowners.

Along with many other reputable forecasters Professor David Miles, chief UK economist at blue chip investment banking powerhouse Morgan Stanley, is predicting that by the end of 2009 house prices will have dropped 20%.

In pockets of London prices have already fallen 20% from their highs. If that trend goes nationwide Britain is looking likely to have more than million homes in negative equity before the next election. This is based on the Bank of England's own somewhat conservative numbers...

If Gordon Loses the Vote, Gordon Has To Go

As Cameron signals that he will probably line up his troops behind Frank Field's amendment could we be looking at a no confidence vote? Effectively yes. Gordon introduced the 10p rate, Gordon abolished the 10p rate, Gordon complicated the tax and benefits system with his endless tinkering at social engineering. This mess is 100% Brown stuff.

The paper pundits are intoning gravely. Jackie Ashley says Gordon could be gone this week, Kavanagh says kick Ken out next week and get rid of the unelected PM. If only...

Despite Alistair's grandstanding calls on the banks to buck the markets and drop their lending rates, even Northern Rock, controlled by the Treasury has upped lending rates. Meantime the socialist dreams of Gordon Brown the student are being realised with the back door nationalisation of the banks. Another £50 billion is to be pick-pocketed from the taxpayers to prop up banks. Guido does not know what the exact terms of the bail-out are, but in principle is opposed. Why are taxpayers expected to take risks which properly should be borne by shareholders?

Why should the banks listen to Gordon when his own government ministers don't listen? Many junior members of the government are expected to rebel on the 10p rate, 42 days and even ID cards. We have a shambles of a government by the shambolic, with support slipping away. Bring on the General Election...

Another Firm Flees UK Tax Burden

When the odd non-domiciled Labour Party donor threatens to leave the country because of Brown and Darling's taxes it is unfortunate. When a FTSE 100 corporate giant announces it is to re-register its head office outside the UK for tax reasons it is a disaster for UK plc.

According to London's City A.M. business paper, the £5 billion Shire Pharmaceuticals is going tore-domicile to Ireland. The company will re-register in Jersey and re-domicile in low tax Ireland, joining a growing number of firms who have relocated away from Britain for tax reasons. Insurance brokers Hiscox and Amlin went to Bermuda. Technology groups Electronic Arts and Yahoo! are off to Switzerland. The truth is the UK's excessive tax burden is driving high value and high tech businesses out of the country.

The TaxPayers’ Alliance's Matthew Elliott puts it succintly “This disastrous news confirms that Britain’s competitiveness has suffered a series of blows from misguided tax hikes.” Gordon is destroying the ability of the UK to compete globally.

UPDATE : Shire officially confirms story to the London Stock Exchange.

UPDATE II : Don't know how the Guardian will be reporting this, but they have re-located their property arm to the Caymans to avoid tax.

Pound Plunging Means Europhiles Rejoice

This chart makes europhiles moist with excitement...A lot of eurosceptics have a nightmare scenario in which the plunging pound reaches parity with euro. At this point, they believe, swapping pounds for euros would be easier for the political class to sell to fundamentally eurosceptical British voters. It is no big deal the europhiles will claim, "prices will remain unchanged".

The pound has now plunged to an all-time low against the euro, it bought €1.50 last year and now buys €1.25. At this rate of decline sterling could easily hit parity before the next general election. So a by-product of UK inflation getting out of control, growth faltering and house prices slumping could be joining the European Monetary Union and anchoring our economy to the Bundesbank. You have been warned...

Talking of warnings, only on Saturday Gordon was pontificating that the IMF needed to become "an early warning system", well yesterday the IMF warned UK house prices could fall 10% this year. Got that Gordon?

The Chancellor's Unfunded Spending Hikes

Back in 2005 Gordon boasted in his budget of "economic growth for the 50th consecutive quarter" in 2006. The next year he did not subsequently boast of 54 consecutive after Guido pointed out that he was taking credit for the five years of growth under the Tories following White Wednesday in 1992.

The point of Guido giving this background is to highlight that during all this long unbroken period of economic growth, Gordon failed to pay down the government debt - a truly prudent Chancellor would have done it at some strong point in the economic cycle. He did however forecast the budget surplus this year to be of some £9 billion, in fact the budget will probably be in deficit £9 billion. As Michael Fallon points out, despite many predictions to the contrary, the budget has never been in surplus* under this government. Gordon's imprudence over the last 5 years alone has led to £69 billion in unplanned and unfunded spending hikes. The public sector has been bloated by a governing Labour party beholden to public sector unions for funding.

Who pays for this unfunded spending? Middle class taxpayers of course. The interest on the government's ballooning debts consumes an ever increasing share of tax revenues. The nationalisation of Northern Rock further smashed the golden rule by £110 billion. We are now heading for G.F.T.** in a weakened fiscal position compared to other major economies. Alastair's response? The word from the Treasury is that they plan to fiddle the statistics so that the golden rule will magically become unbroken. An illusion that will fool no-one.

Remember this when the new Chancellor talks about budgetary control or prudence in his budget speech. Treat any promises of future surpluses as a bad joke. Any "Green" tax hikes should be seen as what they really are, an excuse to tax the middle classes even more. The truth is Labour's out of control unfunded over-spending hikes have added to Britain's economic woes.

The budget should:

• Focus on a growth-package to boost real incomes based on reducing the tax burden for those on low and middle incomes.
• A boost for small businesses with reductions in corporation tax to Irish levels (12.5%).
• A civil service recruitment freeze. We don't need any more bureaucrats.

Instead we will probably get higher consumer taxes to pay for higher government spending.

*As pointed out in the comments, this is apart from the extraordinary 2001 windfall from the 3G bandwith auction bonanza. A one time bonus never to be repeated.

**Global Financial Turbulence in the vernacular of the Treasury.

Unfunded Tax Cuts v Unfunded Spending Commitments

Yvette Cooper is spinning to all and sundry that the Tories have made £10 billion in unfunded tax reduction promises without "balancing" tax increases. She is briefing that reducing corporation tax to 27% will reduce taxes by £1.75 billion, £3.2 billion will stay in people's pockets after the introduction of a transferable tax allowance, £3 billion will not be taxed from those getting working tax credit, £2 billion from the abolition of IHT for all but millionaires and £400 million lost to the Treasury and kept by first-time buyers after raising the stamp duty threshold.

Never mind that reducing corporation tax to 27% will still leave the rate 15% above high growth Ireland's rate and that the extra billions in people's pockets will be spent in the economy productively and have positive dynamic effects. Osborne has not balanced his budget plans is her central charge.

Guido wants to know about the Labour government's unfunded spending commitments:These are the figures from the ONS, in 2003 Gordon made unfunded spending commitments of £36 billion, in 2004 £41 billion, in 2005 £38 billion, in 2006 £34 billion. This was during a time of strong economic performance when Gordon should have been paying down the national debt with budget surpluses. His prolific spending meant that he failed to balance the budget.

Last year he smashed the golden rule with £110 billion to be added to the PSBR after the nationalisation of Northern Rock plus the usual annual unfunded overspend of some £40 billion. To which we can add the off balance sheet fiddles like £725 billion of public sector pensions unfunded, not forgetting the £110 billion in payments due to companies in the next three decades under PFI and £18 billion of debt held by Network Rail and the figure is nearer £1.4 trillion, which is well over 100% of GDP. So the amount of unfunded spending commitments has now reached £1.4 trillion. Yvette Cooper is accusing George Osborne of proposing unfunded tax reductions which are small change in comparison.

The Myth of UK Economic Strength

With a week to go before the budget it is worth reflecting on where we are economically. Exactly ten years ago the FTSE 100 stood at 5,782. Last night the stock market closed at 5,767. Investors have seen the stock market and the value of their pensions decline during the ten years of New Labour's economic management under Gordon Brown. A lower stock market after ten years of Labour government is an incredible indictment.

By comparison the Dow was at 8,569 on March 6, 1998 and last night it closed at 12,213. Up 42% over the same period.

Remember that next time Gordon or Alastair claim that "Britain is stronger placed to weather the coming global financial turbulence". Complete fantasy.

UPDATE 09.05 :

Given some are suggesting it is currency related, broadening the comparison:

The Great British Economic Miracle:	The Land of George Bush's Tax Cuts:	Workshy Cheese Eating Surrender Monkeys:	Merkel's Tax Cutting Social Market Economy:	Chinese "Communists" with 16% Income Tax:
FTSE 100 on 6 March 1998: 5782	Dow Jones on 6 March 1998: 8569	CAC 40 on 6 March 1998: 3875	DAX on 6 March 1998: 5097	Hang Seng on 6 March 1998: 11519
FTSE 100 on 5 March 2008: 5767	Dow Jones on 5 March 2008: 12213	CAC 40 on 5 March 2008: 4676	DAX on 5 March 2008: 6545	Hang Seng on 5 March 2008: 23120
Growth: -0.26%	Growth: +42.53%	Growth: +20.67%	Growth: 28.41%	Growth: 100.71%

Hat-tip : Free Britannia and table courtesy of Spokey in the comments

EXCLUSIVE : The Numbers Are InThe Myth of the "Quality Loan Book"

Alistair Darling and Gordon Brown chant the same mantra, the government's investment is backed by the assets of the bank, "a high quality loan book", which they claim has been verified by the FSA - as if the FSA employs surveyors and has the competence to take a view. Anecdotaly this untruth was unraveling, Anatole Kaletsky said this week that it was a delusion to believe that "Northern Rock had a “sound book of assets” when it was the country's biggest lender of mortgages worth more than the houses on which they are secured." Guido now has the hard numbers to prove it:These figures were compiled yesterday and are taken from analysis of the Courts Service, Possession Claims Online Database. Guido has obtained the list of 690 individual Northern Rock Possession Claims, averaging some 40 every working day. Of all mortgage lenders Northern Rock has the absolute highest rate of possession claims. Hardly evidence of a sound loan book...

UPDATE : As of midnight last night Northern Rock has withdrawn from offering 125% mortgages.

UPDATE : In the comments a co-conspirator has made an effort to normalise the results by market share using market leader HBOS against Northern Rock:

HBOS has 20.4% of the market, with 520 reposessions in Feb = 25 repos per 1% of market

Northern Rock has 7.2% of the market, with 690 reposessions in Feb = 95 repos per 1% of the market.

In short, Northern Rock repossesses almost 4 houses to every one repossesed by HBOS, when market share is factored into the equation.

Hat-tip : HousePriceCrash.co.uk via LabRat

Granite's Lawyers Boast of "Socialist Model"

Angela Clist is the mega-bucks partner at City lawyers Allen & Overy who advised Barclays and Merrill Lynch on the establishment of Northern Rock's £20 billion mortgage-backed note programme, "Granite Master Issuer plc".

In a tombstone note to clients she boasts that

The Granite Master Issuer plc securitisation restructured the existing Granite RMBS master trust, with cashflows being changed from a "capitalist" to a "socialist" model to simplify the addition of new tranches of debt from a single issuing vehicle.

How prophetic of her...

Hat-tip : BOF2BS gets sent a well deserved T-shirt for this tip.

Government to Make Darren Minnikins Homeless

In Bishop Auckland right now the "People's Bank" is attempting to make Darren Minnikin homeless.

Claim 8PA12900:
Northern Rock plc versus Mr Darren Minnikin

Congratulations Mr Minnikin. You are the first victim of socialist economics today...