Labour wants to help people overcome the credit crunch but the Tories propose making cuts in vital services just when they're most needed to get people back into work. Any idea why Tories should think this way?
| They simply don't understand the gravity of the situation |  |
| They do understand but don't know what to do | |
| They do understand but prefer to look after their own | |
Economic & Political Commentary | |
The Queen's Speech - some pointers - the Financial Services Bill - 12/12/2009
This is only one part of a wide-ranging Bill, which will make the financial services sector in the UK more stable through several means. Firstly, financial stability will be explicitly mentioned in the remit of the Financial Services Authority. Secondly, new restrictions will be introduced on the practice of “short selling”, that allow stockbrokers to profit from plummeting share prices. Finally, the Bill will require systematically important companies (ie those that are “too large to fail”) to put together “Rescue and Recovery Plans”. These plans, which will be regulated by the FSA, set out what actions are to be taken if it looks as if a financial institution is going to fail, so as to not precipitate crises in other institutions. Whilst only being a short part of the written Bill and perhaps not the most fascinating of subject-matter, these Plans are an important lesson learnt from the recent crisis. Much time, effort, and money was spent untangling those parts of banks which were critical for financial stability and protecting consumer deposits from those parts that could be allowed to fail. Whilst there was some cross-party support for measures in the Bill, the Shadow Chancellor George Osborne used the Debate to reiterate the Tory’s policy that responsibility for banking regulation be given to the Bank of England. This used to be the case before the FSA was granted extensive new powers in Labour’s first term. The Chancellor replied to the suggestion by pointing out that having the same organisation responsible for macroeconomic and monetary policy such as setting national interest rates, and also the regulation of financial advice firms of only a handful of people, was not a sensible approach. The Labour Government is in favour of the tripartite approach, with the Treasury, the FSA and the Bank of England all having responsibilities. Many argue that such a separation minimises the risk of a “group-think” mentality, where all of those involved in regulating the financial services fall prey to the same flawed presumptions. The Queen's Speech - some pointers - 12/12/2009
The primary goal for the new Parliament, outlined in the recent Queen’s Speech, remains securing economic growth and recovering from the recession. The Financial Services Bill will reform the financial sector in order to make sure that the global recession isn’t repeated, the Fiscal Responsibility Bill will make sure that the public finances are put on a sustainable footing, and the Digital Economy Bill will help to make sure Britain remains on the leading edge of the global digital economy and that our creative industries remain among the worlds’ best.
There were also a number of other bills announced, such as the Personal Care at Home Bill that will enable those most in need to receive care in their own homes and will be a step towards Labour’s vision of a National Care Service, a bill to ban the use, production and trade of cluster munitions, and legislation to make schools accountable to pupils and parents. There will also be two bills that commit future governments to continue to make progress towards abolishing child poverty by 2020 and to spend at least 0.7% of GDP on international aid. The Equality Bill and the Constitutional Reform and Governance Bill have both been carried over from the last parliament, and will help to make Britain a fairer, more equal society that has political institutions which the public have confidence in. Why Britain should not fret about the national debt - 27/03/2009 In an article in the Financial Times today (27 March 2009), distinguished economist and commentator Sir Samuel Brittan quotes English historian Lord Macaulay (1800 – 1859): "At every stage in the growth of the national debt the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt kept on growing ; and still bankruptcy and ruin were as remote as ever." The Conservative "concern" (bordering on hysteria in the Tory press) should be seen for what it is: opportunism preying on irrational fear, with no economic foundation. The simple forces of economic growth and modest inflation will reduce the debt. Sir Samuel concludes: "Of one thing I am sure. If we had the misfortune to engage in a major war, we would have far higher deficits and debts than anything now in prospect and few except some pacifists would worry. Why should it be more alarming for governments to get into debt to put people into useful work satisfying human needs than to borrow for guns and tanks whose only aim is to kill other human beings?" We might add to this – "... and to engage in the wholesale destruction of wealth in the form of buildings and infrastructure". | |
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