Inside The House of Commons

Debate in the House of Commons at the moment is electric, with sparks flying over the state on the economy. I thought I'd highlight an excellent speech delivered on the 21st January by Conservative MP Mr Brooks Newmark (Braintree), not least because I was very honoured to get a mention!

"Under the Government’s current economic policy, prudence seems to go unrewarded. Regrettably, the Government have still not reacted to the devastating consequences that interest rate cuts have brought to a generation of savers. The Government may be offering bail-out after bail-out to over-leveraged banks. However, they are failing to help, if not reward, those in our society who have put aside money in the form of savings, especially the more vulnerable in our society, such as pensioners, who are now seeing their standard of living drop daily.
We need a savings culture at the heart of our economy if it is to grow out of this recession. Thrift and prudence will ensure confidence and the ability to invest in the future. However, recent economic policy has only consolidated a longer-term trend that has emerged under this Government. That trend, which was exemplified by the Prime Minister when he was Chancellor, is towards a Government built on a mountain of debt and indulging in their own spending binge. Encouraged by the Government’s poor household financial management, ordinary individuals have gone on a borrowing and spending binge too. The result is that in 2007 the household savings ratio fell to less than one third of what it was in 1997.
Cutting interest rates was indeed the right thing to do to deal with the current crisis. However, hanging savers out to dry in the process is completely unacceptable. We have now seen seven consecutive interest rate cuts—that is seven consecutive hits on savers and seven opportunities lost by the Government to give help to those who need it. Instead of looking after savers, the Government have written a blank cheque for the banks—many of them the very institutions that helped to create the economic mess. With taxpayers’ money keeping them afloat, those same banks continue to slash interest rates on savings accounts, which have reached as low as 0.1 per cent. for some instant access accounts.
Savers and borrowers are confused about how to play the game of interest rate roulette. With low returns on savings, high borrowing costs and interest rate cuts not being passed on to borrowers, people simply do not know what to do. With poor savings rates on offer and a drop in confidence in the banks, it is projected that 45 per cent. of people are less likely to save in the next three months. What is it that people save for? They save to put a deposit on a house, help provide care for themselves in old age or send their children to university. Without savings, none of that can happen, which will have grave consequences for our economic recovery.
The Government may claim that their economic policies are offering real help to the people who need it most, but unfortunately those polices have failed to help the most vulnerable in our society—the poor and the elderly. With interest rates not expected to rise again in the near future, the Government must urgently create incentives to save again. Even bank bosses agree that we need tax incentives for our savers.
I thus ask the Minister at least to reflect on the proposals of my right hon. Friend the Member for Witney (Mr. Cameron) and the shadow Chancellor my hon. Friend the Member for Tatton (Mr. Osborne), as outlined in this debate by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond): to reduce to zero the 10p starting rate and the 20p basic rate of tax on savings, so that basic rate taxpayers pay no tax at all on their income from savings, thus helping them by up to £7,200 a year; and, secondly, to increase age-related personal allowances by £2,000 for those aged 65 and over, benefiting them by up to £400 a year.
To conclude, this debt-addicted Government are doing nothing for those who have been more prudent than themselves. To borrow more money to get the country out of its problems, according to Dr. Tempest, is a bit like telling a heroin addict that he needs more heroin in order to recover. This country does not want a legacy of debt; it needs a culture of saving and a Government who are willing to take urgent action to make it happen."

Gordon Brown - Double or Quits?

Whilst watching ‘The City Uncovered with Evan Davis: Tricks with Risk’ I was struck by the words of Nick Leeson; the man who broke Barings bank. He said “I tried big bets using futures and options…I believed that one day I would be able to resolve the situation and move on from it. There’s a degree of stubbornness and compulsion…it’s the human element, more often than not, needs to be controlled.” His story ended when Barings bank thought he had lost over £2 million of their money, but this later ballooned to a figure of £208 million.

Nick Leeson is right that the economy and psychology are linked. So if Gordon Brown also has a tendency for stubbornness and compulsion, then maybe we should be very afraid. His first £37 billion bail out has been quickly followed by a second bigger bail out. Yet, all of this money has been spent, without knowing the depth of toxic debts on the balance books. It seems betting on futures and options is a risky business – but I don’t want Gordon Brown betting my options, or my children's future away.

What is Happening on our Labour wards?

Today the Centre for Policy Studies hosts a blog, written by myself and Dr Mark Slack. See here. It questions the legacy the Labour government shall leave their NHS namesake, the labour wards.

Patrick McGoohan

This blog is in rememberance of Patrick McGoohan who sadly passed away today at the age of 80 years. He was best known for starring in cult 1960s TV show The Prisoner. The actor, who was born in New York, was raised in England and Ireland. It is often forgotten that he was also a writer and wrote some of the episodes of The Prisoner himself, under a different name. In The Prisoner his character spent the entire time attempting to escape from The Village and finding out the identity of his captor, the elusive Number One.
He repeatedly declared: "I am not a number - I am a free man!"

Ecstasy - the UK's third most widely used illegal drug

Neil McKeganey, a professor of drug misuse research at the University of Glasgow wrote the following in The Guardian today:

For Simon Jenkins, the debate around the possible reclassification of ecstasy has only two sides (Who will cure ministers of illiberal headline addiction?, 7 January). On the one side there is the rational weighing of evidence that would recommend the reclassification of ecstasy from class A to class B under the Misuse of Drugs Act; and on the other there is a prime minister and a home secretary living in mortal fear of a mauling from the tabloid press were they to accept the advice of their expert committee.
The home secretary, Jenkins claims, "may be putty in the hands of her advisers on curbing civil liberty but sternly resists all the blandishments of reason in the matter of narcotics". What would it take for the home secretary to accept those blandishments? According to Jenkins it would be to accept the advice of her experts and reclassify ecstasy to class B.
"The justification for regulating drugs," he writes, "can only be the harm their use imposes on individuals and the community." A Lancet study cited by Jenkins "classified 20 mind-altering substances by personal and social harm" and "put ecstasy at the bottom, well below alcohol and nicotine". The research on which that list was based, though, was not about assessing the scientific-evidenced harm of different drugs but on a poll of addiction specialists. This was scientific opinion rather than scientific fact, and only 37% of those asked to provide their assessment chose to do so.
There is, though, a wealth of research evidence from both Britain and the US on the harms of ecstasy use that shows the adverse impact of this drug on the heart, on mood, on brain activity and on sleep pattern. It has been shown that individuals will often combine the use of ecstasy with the use of other illegal drugs. While there is some dispute as to the number of deaths directly associated with ecstasy, it is clear that use of this drug is associated with an elevated risk of death.
We should also be concerned at the speed with which ecstasy has become the UK's third most widely used illegal drug. Research has shown that those who consume the drug are often not even aware of the chemical constituents of the pills they are taking. Ecstasy may in this sense be playing a major role in normalising drug use, and may therefore be having a much more harmful impact.
Jenkins makes the point that if the home secretary does reject the advice from the Advisory Council on the Misuse of Drugs, this "would render the committee largely pointless". Surely those receiving the advice should retain the right to make up their mind as to whether or not to accept it. A second rejection of the ACMD's advice may not make the committee pointless, but it may lead to a different question: why is the ACMD preoccupying itself with the matter of where drugs are placed when there are surely many more urgent questions on how we tackle our developing drug problem?

The North/South Divide - Does it exist?

Today The Guardian reported on ‘how northern children top the happiness league’. An Ofsted report found that teenagers in the north of England are emotionally more secure and have more than one best friend by the age of 15. The survey ratings were less good news for leafy Richmond, London. Where children reported the lowest levels of emotional well-being.

So, perhaps during this current recession we should all learn something from the community spirit that remains alive and well in the north of England. In the last ten years Gordon Brown has tested to destruction his theory that money can buy happiness – it can’t. As psychologist Winnicott famously stated, life is about interactions between people. But then when Gordon Brown has Peter Mandelson as his best friend, I can not imagine a happy outcome for him.