So what is new?

As we are just over through way through the party conference season here in the UK. So what has been the main policy announcements?

For the Liberal Democrat’s free school meals for all children in years 1 and 2 saving parents about £400 a year per child. The scheme will cost the tax payer around £600m per year. The announcement was welcomed by the Child Poverty Action Group, many parents, and the Chair of Local Caterers Association. It was seized upon by the opposition because not only those parents of the less well off would receive the benefit so would sons and daughters of rich bankers, footballers and millionaires. It sort of made the policy rather bananas! As one group stated “There is no such thing as free lunch, especially one doled out by a politician”. This announcement means taxing those on low and middle incomes to pay for hand-outs to affluent families. It’s incredible to see it proposed by Nick Clegg, who was, until very recently, rightly arguing against universal benefits for wealthy households.

Twenty months will tell if this is the right policy or if polls are correct and the Lib Dems seats in parliament as predicted will be halved.

The big announcement from Labour was a 20 month freeze of gas and electricity prize while reforming the power regulator. Tories and powers companies were quick to point out ‘Red Ed’ was back and Labour were taking us back to the 1970’s, with power cuts and black-outs. The big energy companies fail to mention they have been over charging business and domestic customers by manipulating the market by a tune of 125m per year for at least the last 5 years.

The Tories would ever admit to do such as thing because it would be an acknowledgement that privatising the energy market was a complete failure. Michael Portillo on this Thursday’s ‘This Week’ stated it made on economic sense to fix prices. So all those -like myself – who have been on a fixed pricing plan (in my case 2 years) don’t know about economics? The point is the policy may help those who pay day-to-day via meters. Many already have fixed term deals so I hardly think the lights will go out!

Buried within these announcements was a commitment to lower the voting age to 16.

Not wanting to be outdone the Conservative Party would like to take the country back to the 19th century by announcing tax breaks for married couples. The prime minister said four million couples would benefit from a £1,000 transferable tax allowance from 2015. Conservative Health Secretary Jeremy Hunt said the policy recognised the value of the institution of marriage.

Shadow chief secretary to the Treasury Rachel Reeves said: “David Cameron’s so-called marriage tax break won’t even help two-thirds of married couples, let alone millions of people who are separated, widowed or divorced.

“He’s so out of touch he thinks people will get married for £3.85 a week.”

The battle lines for the next general election have been drawn – only 20 months to go!

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Summer Holidays Over

Summer Holidays nearly over and MP’s returning to Westminster after the recess. Chancellor George Osborne has spent his summer hols deciding how to stimulate growth in a flat-lining economy. With Plan A consigned to the dustbin Mr Osborne today announced £50bn of private sector building.

Labour should be jumping for joy as the Coalition have decided what they have been saying the past year is in-fact correct;  the way out of recession is to borrow.

The coalition in 2010 cut 50% of the Affordable Housing budget but with 2011 completions and 2012 start on sites lower that any year Labour was in power the coalition have decided to inject 10bn in the hope the country will build itself out of recession.

It however, remains to be seen if any projects get off the ground as strict rules of apply and all have to start within the year. To do this the coalition will reform planning laws just 6 months after reforming them.   So only if they can reform the expensive appeals process will this make any difference. Yet there goes another Coalition policy as out of the window goes localism!

So two and a half years of saying no policy change.  The Chancellor finally admits plan A is a failure and his gamble has lost. So his solution is a 180 degree turn around and a gamble that this time it will work. Two and a half years wasted  and just two and half to go before the next general election?

Bets please?

Chancellor to win or lose

It’s time for a policy rethink

Comment: The UK government issued another round of bank lending in the hope that this money is filtered out to small business in cheap loans. The Coalition’s Programme for Government set out that deficit reduction, and continuing to ensure economic recovery, is the most urgent issue facing Britain.  The government’s response was to cut spending, increase VAT, and to increase the pension age. But has the government fundamentally got their sums wrong and is it time to rethink policy?

The new money the Bank will now offer cheap loans to banks on the basis that they increase lending. This will make it easier and cheaper for banks to borrow at least £5bn every month to cover any shortfalls in cash.

New money may provide short-term bank liquidity but at long-term expense. Currently private pension schemes are in deficit. According to the Pension Protection Fund (PPF) deficits have reach 312bn with only 929 of the 6,432 schemes currently in surplus.

Many private pensions buy government gilts but with the influx of printed money yields have fallen by 0.55 percentage point and overall 1.73 percent by May 2012. The National Association of Pension Funds (NAPF) continued to blame the Bank of England’s policy of quantitative easing for much of the recent ballooning of deficits.

The policy has been explicitly aimed at driving up the price of government bonds, which in turn depresses the returns they provide to investors, such as pension funds.

When it comes to retirement it seems many people will be disappointed with their payout. The government feels rising the retirement age will decrease its outlay on ageing population. Yet it will be false economy and only store up problems for future generations. As older people cannot retire until 67, 68 or 69, and will not be able to access a generous private pension they will hog jobs that younger people could fill. Those first years after school or university are important to mould young people into the work ethic. Two or three years of doing nothing they will be a lost generation relying on government handouts.

There are radical things the government could do to raise more capital but would be very unpopular. Extend VAT on newspapers (VAT is already charged on a newspapers internet business), VAT on children clothes, and abolish child benefit. They could also let some banks fail or as I would put it consolidation. At the same time they need to set a national price for fuel to keep consumer bills stable.

A UK GDP growth rate around 0.8 per cent this year I feel is still an optimistic outlook which I believe will be lower, a lot lower if the Euro collapses although we could still be a few years off a full collapse. However, it is coming!

Time for a revolution?

The row over rising executive pay has once again been reignited as a survey reveals a 10% increase inbayofFTSE100 bosses. Median total remuneration increased by 10 per cent to 3.7m, five times the increase in average earnings across the economy and despite 5 per cent fall in the FTSE 100.

Some of the biggest City’s biggest investors are starting to get nervous warning that excessive pay was against the ‘mood of the times’ when people were losing their jobs and struggling to remain employed.

The survey found basic salaries if FTSE 100 bosses rose by 2.5% but were boosted by deferred bonuses and long-term awards.

Comment: FTSE boss’s have shown their true colours! They need to tread carefully because if the Indians feel they are ‘taking the Michael’ off with their heads. Seriously the FTSE is down and they really don’t care about those who are less fortunate. As long as they can keep their lifestyle, expensive cars, dinners out, holidays, and second homes.

No wonder the masses feels very little sympathy for them when they fall. However social cohesion is vital for a society to work and at the moment society is straining to hold itself together not just in theUKbut many European countries. Anymore strain and both politicians and FSTE 100 bosses will feel the wrath of cain.

Why I would not buy Facebook shares!

Comment: Since trading Facebook shares have fallen over 20% as investors continue to question the long term business prospects and valuation of the company.

With a short delay at lunch the overloaded NASDAQ  took orders and shares peaked at $43 up 13%. There is however concern over long-tern financial viability. The company is uncertain how to monetise the high number of users. There is also the quesion if  users warm to this new advertising base.

In the highly competitive and evolving technology market you do wonder how long Facebook will be able to keep its market leading position. You only have to look at MySpace and Friends Reunited to see how the dot com bubble can burst. The sceptic in me believes there is already someone sitting in their bedroom coding away on their raspberry pi at the ‘next big thing’ after Facebook.

What is happening in education?

Comment: Something concerning is lurking in the world of education. In 2010/11 Ofsted inspections of maintained schools decreased from 6,171 to 5,726 and since 2009/100 there has been an increase in satisfactory and inadequate schools. Only in 2010/11 did schools in the inadequate fall what would seem would be many falling schools turning themselves in academies. So you have to ask yourself is the current UK government using Ofsted to do their dirty work in a two pronged attack on education. Many teachers within schools feel so – the good schools become academies – the bad ones also become academies. It would seem the government harbours a secrete policy to destroy the UK educational system for ideological reasons. For years education for politicians has been about economic value not growth and development of young people. Anyone who does think this must be living in a different world. For teachers who see their primary job to educate young people they are in a loosing battle. The government attack is academies and free schools where they can cut teachers pay and conditions by taking them out of local authority control and ripping up national agreements. It is unlikely that these new schools will produce and better results however at least your child can stay at school longer allowing you more time at work.

Send in your comments.

Ipad G wizz

The Advertising Standards Authority has widened its inquiry into the advertising of the Apple iPad.
The authority has receive dozens of complaints in relation to 4G coverage and certain features the ipod claims to be able to do although these features are only available in Canada and the US.

Apple’s UK site still offers consumers the chance to buy a “wi-fi + 4G” version of the iPad. A footnote explains that “4G LTE” is supported only on certain networks in the United States and Canada.
When 4G does arrive in the UK, the frequencies to be employed for the new networks in Britain – and the rest of Europe – are different from those used in the US and Canada. That means that the “4G” iPad, in its current configuration, can never connect to 4G networks in Europe.
Comment: Well, what do you expect from an American company that can’t be even bothered the make ‘a real’ keyboard for the English market!  Apple need to wake up, smell the coffee, stop ripping people off with their prices if they are to continue to be a global company or their trendy geeky image will stained beyond repair.