I can now state with certainty, and from nore than one source, that Chancellor Alistair Darling is considering the imposition of a windfall tax on energy companies. The political attractions to a beleaguered government are obvious and on tonight's Newsnight, a Labour PPS will call for a tax to be imposed.
But the government is said to be wary on three fronts: first, there are the technical arguments that retrospective taxes deter future investment; second the governent is said to be concerned that the energy companies may retaliate by raising their prices, squeezing low income Labour voters even harder and pointing (as the government itself has done) to global economic forces. Thirdly, there is the problem that energy companies - many of them internationally owned - may change their domicile to, say, Dublin. A further reservation is that the 1997 windfall tax was a manifesto pledge - this would come out of the blue. Despite this I have been told that the Chancellor has neither ruled it out, nor decided on it.
If they do go for it, I expect it to form part of a comprehensive economic relaunch in September - before the PBR. If they do not go for it, it may be held as a reserve measure to encourage the energy companies to become more competitive and reduce their prices fast. Either way it has moved, in the space of a few days, from Tony Woodley's Warwick wish list to a serious possibility.
We'll have more on Newsnight at 2230 GMT.
Following his Guardian article, and that discursive presentaton on Anglo-Italian diplomatic themes yesterday, some of his opponents were unkind enough to brief that he is "stuck in the year 1995" - and that "Oasis ain't in the charts anymore". The Foreign Secretary's friends have hit back by releasing his current iPod playlist, which Newsnight can exclusively reveal.*
There is and, showing a fine taste in Northern Soul, this . More Wigan Casino magic with this inspirational number - then the collection takes a turn into . This captures the current mood on the FCO's grand central staircase, while this angry heart-wrencher from adds edge to the collection. Pete Seeger's famous Harlan County to may resonate strongly in the PLP, while I was charmed to find trombonist Jack Teagarden's ouvre .
Strangely there was no Dionne Warwick.
* Just to make absolutely clear for all those who take everything on my blog literally: this is a spoof. The briefing, though, is all too real.
George Orwell's diaries are to be as a blog. So in homage to the old "Tory anarchist" whose face still stares out, Orwellianly, from the Βι¶ΉΤΌΕΔ's intranet portal as I log on each morning, today's Idle Scrawl is written as an Orwell Diary entry...
Wed 30 July: The pre-revolutionary situation in the Labour Party continues. Overnight, Miliband has published a seemingly innocuous article about how LP could be less braggartly and more humble. Coded attack on Brown. Papers and Today programme full of this...
Read the rest of this entry
cds2008.bmp
My post today on bank balance sheets has prompted a lively discussion (see below). I've just been sent a research note from banking analyst Bruce Packard of Pali International. I will give you the title and the first paragraph:
"The N word: Nationalisation, we believe, is on the agenda for UK banks. We have looked at the Nordic banking crises of the early 1990s for potential lessons that might be applied to UK banks. A worrying measure is that UK indebtedness (loans/GDP 150%) is currently much higher than in the Nordic countries during the Nordic banking crises (less than 100%)."
Read the rest of this entry
Heard in London: Hedge fund economist: "Hey Bill I am worried that one of the major banks will go under by next year." Hedge fund manager: "Fred I am certain one of them is going to go under". Now hedge fund people move in a world of febrility, giant risk and hyperbole but this conversation happened, and recently (names changed, obviously).
If it's a plausible risk it explains why much of Gordon Brown/Alistair Darling's effort on the economic front was focused on patching up bank regulation and boosting liquidity. Far from "shutting the stable door after the Northern Rock has bolted", there may yet be the danger of another, more thoroughbred, horse kicking the stable door down and careering between Canary Wharf and Poultry smashing things up at all points in-between. We'll be looking at this on Newsnight sometime this week but, for now, here's a primer on what they're worried about...
Read the rest of this entry
The buzzword among Labour negotiators at the Warwick conference is "managed decline". A Labour official told me this last night - at a time when most people at the National Policy Forum were expecting to win Glasgow East.
Two weeks ago I was told that if Labour did lose Glasgow East Jack Straw would be urged to come forward to "do a Michael Howard" - that is a damage limitation job in the run up to the next election. Now however sources at Warwick tell of Harriet Harman busily descending on negotiating meetings to "fly the red flag of socialism"...
Read the rest of this entry
chinasocialunrest23july08.kmz
Bear with me: I am trying something new today - blogging about two obsessions at once. If you click the link above, and you have Google Earth loaded onto your computer, you should see an annotated map of the last two weeks of social unrest in China. I believe it is an elementary form of something called "mashup". The data is taken from the latest Βι¶ΉΤΌΕΔ Monitoring social unrest update and I plan to do one of these regularly: Chinese city names, let alone counties and rural police stations, can get you very confused and I wanted to see if there was a geographical pattern to the unrest reported. The answer is yes, obviously, for the ongoing post-earthquake unrest in Sichuan. But there is also an interesting ethnic sub-theme: many of the areas where there is unrest are either border areas or places where there are large minority populations. It's too soon to draw any conclusions from this but worth marking.
Obsession number two is the Doha trade round. Here's what I have been told about what happened last night, according to my contacts at the talks....
UPDATE! I am now being told 2000 hrs GMT is the likely collapse point for the Geneva talks. The watch shop at the airport better stay open late.
Read the rest of this entry
Last night on Newsnight we asked UK trade minister Gareth Thomas a question: what are the UK and the EU giving away on our behalf to gain the various concessions that are happening at the WTO trade talks in Geneva? Twice.
Specifically what we wanted to find out was whether the "free temporary movement" of skilled labour from all 153 member countries into the EU is on the table. This is known as "Mode 4" and is the obsession of a small but determined band of trade experts, from both the political left and right, who have been bending my ear about the lack of coverage of this issue....
Read the rest of this entry
One advantage of blogging versus TV reporting is that you can blog while on holiday. So I am writing this surrounded by wetsuits, binoculars, mini-Malibus, Neolithic cromlechs and the Welsh coastal mist. Subject: a) the rethink of the fiscal rules that is leading the radio news bulletins this morning and b) what that means for monetary policy. First, nobody seems to know exactly what is being envisaged - so it's worth sounding a note of caution. Many economists had presumed that a statistical rewrite of the GDP measurement, due this autumn, could raise the size of UK GDP by 2% - apparently the financial sector has been adding more to the economy than we previously understood. This statistical tweak would, I am told, allow the government to borrow another 12bn even without rewriting its fiscal rules. Second: clearly a relaxation of the rule is on the cards since, as I have pointed out both here and on Newsnight, it is going to be broken - together with the inflation target. The issue is bigger than offering Gordon Brown/Alistair Darling a get-out-of-jail card for the next Pre-Budget Report. We are facing the first big downturn of the globalised and liberalised economy and some of the rules which seemed to work during the upswing - and in fact seemed to be as immutable as a Neolithic cromlech - are proved to have just been economic tactics. They will be superseded....
Read the rest of this entry
The panic on Friday about the two US mortgage giants, Fannie Mae and Freddie Mac, is followed by the collapse of California's IndyMac, a regional mortgage lender. Customers at Indy have been told their money (up to a $100k limit) has been transferred to something called "IndyMac Federal Bank". The crucial letter in the acronyms that Freddie and Fannie are short for is F, as now also with Indy: the two giants are Federal institutions, as is - now - the busted Californian bank. Slowly but surely the state - not just in America but here too - is having to bail out the financial system, and I think this could have a big impact, eventually, on politics too....
Read the rest of this entry
All the truisms accumulated during the economic boom now have to march up and be tested in the line of fire against the current downturn. No more boom and bust? We're busting rapidly. Inflation targeting? It's off target. No return to fiscal activism? Just listen to Yvette Cooper MP extolling fiscal activism (Newsnight iPlayer Tuesday 5 July).
However there is one phenomenon of the boom that I believe could stand up to the test of this downturn: the reformed UK labour market. We may get massive job losses and a fall in total hours worked, but we may not see the same kind of mass unemployment as we did in 1981 during the Thatcher-Howe recession. Here's why...
Read the rest of this entry
I always get worried when politicians start putting a monetary figure on the benefits of a controversial policy. Gordon Brown did this in Tokyo yesterday when he said that concluding the Doha trade round would reduce British families' food bills by an average Β£200 a year.
I'm trying to piece together the maths to justify this but in the meantime there's a lot more at stake in this than the price of a frozen pizza. If the Doha round is not concluded at the ministerial meeting that begins in Geneva on 21 July the whole 20 year process of liberalising global trade will be stalled. And some say finished....
Read the rest of this entry
BONG: Trinity Mirror's shares down 81% in a year; BONG: Johnston Press shares down 90%; BONG: Daily Mail and General Trust Shares down 54% - it's all there on the front page of the Guardian Media section. What does it mean?
What it does NOT mean is that newspapers are dying as media businesses: the ad spend figures projected by Group M last month are for a fall in growth - from 6% to 4% - masking a rapid rise in Internet advertising (27% projected next year). What it does mean is newspapers will have to become multiplatform businesses reliant on a multiplatform ad spend and probably lower revenues.
I think it means that tabloid newspapers are going to become less important politically, and that their positive political functions - as a kind of analogue network for the collective emotional feelings of the wider electorate - are already moving into other media. As a result, politicians who understand this will probably spend less cosying up to newspaper proprietors .
Read the rest of this entry
"Do you think," asked my contact, a parliamentary researcher, "they are planning one, big policy that turns things around and makes them unstoppable?" He was referring to the Labour government, and he was not the first to ask me that. There is much nattering in the bacon sarnie joints around Westminster about a planned "Autumn Relaunch" of Gordon Brown's government.
If true, a key element of it will be at the level of micro-policies, not big bang. Word on the street is now that Labour will hit the Conservatives with a series of "bread and butter" measures aimed at making life "easier and fairer - and that the current strategy of the unions is to offer a whole smorgasbord of such bread and butter at Labour's forthcoming Warwick II policy forum.
Read the rest of this entry
The in Guizhou, China after students believed relatives of local officials were implicated in the death of a classmate, is now looking like a very major incident in Chinese terms. It still provokes discussion and angst on Chinese . Here are some from the incident.
I have just been sent an excerpt of what my colleagues in Βι¶ΉΤΌΕΔ Monitoring have gleaned today from Xinhua, the official Chinese news agency....
Read the rest of this entry
In 2002 Derek Wanless to double NHS spending: and issued a stark warning. Unless the NHS got more productive, fast - and unless people got engaged in healthier lifestyles, the cost of a better NHS would be much higher. By 2022 he said, we would be spending one pound in ten on health if everything goes right; one pound in eight if it all goes wrong.
So you might think there'd be somebody in the Treasury or the Department of Health relentlessly monitoring progress against this landmark report. But there is not. I've worked with health and the to try and take a snapshot of the progress of the NHS against Wanless objectives: I have a sneaking feeling that, having said "thank you very much" for the moral permission to spend extra billions, Wanless has been quietly shunted out of view. But here's what I've found....
Read the rest of this entry
