Weekly Opinions

Weekly Opinions

The decline of Britain’s white working class

This is our objective summary of Simon Heffer’s article on the decline of the white working class published in the Daily Mail Newspaper.

It was the suggestion from the Universities minister, David Willetts, earlier this year, that poor white pupils often from deprived backgrounds should be treated as a disadvantaged ethnic minority when it comes to university admissions that prompted that article from Simon Heffer.  What became of our white working class could not be better narrated than what Mr. Heffer said an eminent Cambridge professor once told him; that the white working class went from being ‘the salt of the earth to the scum of the earth in just two generations’.  He blamed the State for that tragic decline.

The slant of Simon Heffer’s argument was that poor white pupils should not be made to need a ‘leg-up’ on the education ladder if the government and all other people in position of authority did their work properly.  Successive Labour and Tory governments were blamed for the fall in the quality of education and the decline of our great grammar school tradition.  Blames for widespread welfare dependency and millions of poor families living in ghettos of squalid tower blocks was similarly apportioned too.

Trade unions were not spared the blame either, the irresponsible conduct of many union leaders for promoting unrealistic expectations and inciting their members into trouble making was cited as contributing to our overall ills.  The combined effect of all these national failings is to give the impression, in the words of the author, ‘rightly or wrongly’ that increased immigration drives some poor white working class into the embrace of the British National Party, BNP.

A rare praise was reserved for Jon Cruddas for being honest enough to admit that some of the Labour Party’s policies when in government alienated many of its natural constituencies. In his conclusion, the author recommends a drastic scaling down of the size of the State and an equally massive enlargement of the private sector in order to enhance job creation throughout the country and save our economy and, who knows, probably redeem the declining white working class too.

                                     

                                                         

Editor’s COMMENT:

Simon Heffer’s article has implications beyond the fortunes of the white working class, unfortunately most of the problems uncovered blights many poors, both whites and non-whites.  But the core of the massage remains unshakably true: That the legacy of those ordinary folks who gave all for King and Country is fast vanishing.  Before the 2^nd World war, there were hardly any council flats, no welfare payments and no NHS yet; the men and women of that generation excelled both in their enterprise, dedication and conduct. [Patrick Chike]

***To read the entire article by Simon Heffer, go to: http://www.dailymail.co.uk/news/article-2257325/Britains-families-breaking-point-They-deserve-better-trite-gimmicks.html

 

News Commentaries

The rise of UKIP: Time will tell

Comment

One thing that many commentators and voters of the Tory party appear to have either forgotten, or just failed to take into account, is that the government led by David Cameron is a coalition, and that his freedom to carry out the policies he believes in is tempered by the willingness of his coalition partners. When did we last see a coalition government in Britain?  No, not in this generation.  This morning Lord Lawson declared that he would vote for Britain to leave the European Union; this is hardly helpful to a beleaguered Prime minster.  It is easy for UKIP to promise heaven and earth to voters from a position where they don’t shoulder the burden of responsibility.  Word is cheap!

You only have to look at the United States to see what the equivalent of UKIP, the Tea Party, is doing, not only to the fortunes of the Republican party, but to the American body politic in general.  So bad is the disunity in the Republican Party brought about by the extremeness of the Tea party, that the speaker of the House of Representatives, John Boehner, himself a Republican, can not even get his own bill passed. 

In December last year Speaker Boehner was humiliatingly forced into withdrawing his own finance bill because his fellow Republicans threatened to vote it down.  A similar pattern of dissent was repeated when Republican senators twice withheld the appointment of one of their numbers recommended by President Obama to the post defense secretary.  It took a third attempt before they finally relented and Chuck Hagel’s appointment was ratified in February this year.

In the provinces too, the Tea party’s style of politics brought strife and deep-running divisions, just like UKIP is sowing the seeds of discord here.  I remember with dismay how Senator Richard Lugar, a moderate Republican who has held his Indiana seat for 35 uninterrupted years, was dramatically displaced by Tea party hardliners peddling the politics of hate.  The crazed gunman who shot Congresswoman Gabrielle Giffords claimed to have lifted his manifesto directly from the extreme rhetoric’s of the Tea Party.

It was not long ago that Nigel Farage stood on the floor of the European parliament and lambasted the then newly appointed President of the European Council, Herman Van Rompuy.  It was a completely unprovoked tirade on the president and a terrible insult on the honour of that legislative house.  This in a way shows the nature of the man we are dealing with, combative without a cause and ready to upset and trample down on the established order, without any regard as to how much damage and destruction his actions wrought.

David Cameron rose through the ranks to become the leader of the Conservative party and the Prime minister of our country; he has duly served to get to the position he is in today, and will now in turn,  rightly expect faithful service from those under him.  At a time of worldwide economic and political uncertainty, those near the PM should close ranks and give him all the support he needs.  Time will tell if UKIP has the keys to heaven, as they would like us to believe.     

  

  

News Commentaries

[Multiple Blogs]

HP’s new boss and a

disastrous deal

Comment

Hewlett Packard Vs Autonomy:

I am not surprised that Hewlett Packard is now pursuing the former owners of Autonomy through US regulators and Courts to remedy what are clearly their own failings in basic business decision-making. Furthermore, though I am not preempting their outcome, I hold very little faith or confidence in that process, judging from how American regulators have been extorting huge sums of money from UK-based businesses, especially banks, in recent years.  Look at what is happening to BP; haemorrhaging cash at a rate that no multinational corporation has ever suffered and survived, they may end up with a bill in excess of $50 billion. The sums suffered by BP and our banks far exceed the gravity of their ‘sins’, if any.  

People who make a wrong commercial judgment should not expect the Courts to remedy their loss.  In the case of Guy Hands Vs CitiGroup; where they claimed to have overpaid on the acquisition of EMI, they subsequently lost the case and were forced to dispose of the asset, compounding their loss.  Royal Bank of Scotland deliberately overpaid to outbid Barclays in the acquisition of ABN-Amro; this was a reckless and greedy transaction that later rendered RBS insolvent and had to be taken-over by the State.  Though the law suits against Facebook’s $100 billion IPO is not strictly a case of direct business acquisition like the ones referred to already, it follows the same pattern of people complaining only after buying and sustaining at a loss.

 Meg Whitman, the new boss of HP will be better advised to concentrate her energy on rebuilding the company from scratch than pursuing an unjust and wasteful witch-hunt that has no merit.

 

Cameron and Merkel 'agree to work together' on EU

Comment

David Cameron’s family visit to Angela Merkel at her country retreat is a PR coup for both parties.  It clearly shines a favourable light on the Prime minister, but may not be enough to appease his eurosceptic parliamentary colleagues.  Similarly for Mrs. Merkel who is facing elections later in the year, such advert will resonate well with many Germans amidst growing whispers of resentment that Germany is becoming a sugar-daddy whose money is propping up the rest of the Eurozone.  Definitely the PM knows that he can no longer hope to materially change the direction of European integration, but the symbolism of his visit is equally significant.  

In about 2 year’s time, all things being equal, I must hastily add, the PM will be seeking another mandate from the British people.  British voters are intelligent enough to judge that this PM has already delivered much from a very restricted position; struggling with a coalition government with its inherent limitations and at the same time trying to rescue an ailing economy which he inherited.  There was a great old sage that says: ‘To whom much is given much is required’.  But in the case of PM Cameron the converse of this sage should apply: ‘To whom few is given few will be required’ – So expecting the PM to perform miracles with what is in effect a minority government is like asking an athlete with one hand tied to his back to outrun Usain Bolt. 

The PM should remain true to his conscience and convictions and, in the meantime try to optimize with the resources available to him.  Among the many tributes paid to Baroness Thatcher, the words of Sir Malcolm Rifkin best supports my argument that the PM should not try to be all things to all men, but should follow his convictions.  Sir Rifkin recalled one occasion when the then Prime minister Thatcher was asked if she believed in consensus politics, she replied: ‘Yes, I do believe in consensus: There should be a consensus behind my convictions’.

So, with disloyal Tory parliamentarians exploiting the PM’s lack of majority at every turn, his Lib-Dem coalition partners threatening to withdraw support if they don’t have their way, and UKiP intent on splitting the conservative party, there is clearly no way the PM can expect to keep everybody completely happy.  But you never know, 2 years is long time in politics; between now and 2015 when the next election is due any thing can happen.  At a point in Margret Thatcher’s 1^st term as Prime minister she was so low in the polls that she was not expected to win a 2^nd term, but she went on to win 3 terms.

Finally, I just hope the PM and Chancellor Osborne will carry on with their policy of economic discipline because, to my mind, there is no third way.  However, in the meantime, the PM should not allow the controversies surrounding the EU to distract him from the more urgent work at hand.   

     

        

Public Opinion

What do you think?

‘I'm keeping all four!' What this courageous mother replied when doctors said: Sacrifice two of your sons to save the others

Doctors don’t know all; Follow your instincts

The miraculous story of Emma and her husband Martin started about 2 years ago in Bristol.  She was pregnant and went for the usual checkup at 12 weeks when she was told that she was carrying 4 babies which was conceived naturally at a mind bugging odds of 750,000 to 1.

When she went for her next routine checkup, to her further surprise she learnt that of the quadruplets; 2 were identical twins.  But there ended the sweet stories as the consultant explained the dangers inherent with such level of multiple births and recommended that she either get rid of 2 of the babies or terminate the whole pregnancy.  After discussing with her husband they resolved to carry on with all 4 babies.

On her 20^th week checkup she learnt that all the 4 kids were boys.  Here then comes her final temptation; for after this week she must live or die by what ever she decides now, she can’t change her mind after that date, said the consultant.  As this is the last time a termination or selective reduction would be possible she found herself in an impossible dilemma, she thought; ‘ If I abort 2 to save 2, then each time I looked at my surviving babies I’d also be thinking about the ones I’d lost.  The thought of it broke my heart’.  She however decided to soldier on, what ever.

Financially, how will she and her husband cope?  God will provide, she believed.  Last month the 4 bubbly, happy and healthy boys celebrated their one year birthday.

(Now consider the 2^nd case below)

Would you give up your disabled son to allow your other children a chance of happiness? Despite agonies of guilt, Jane says it's the best decision she ever made

A mother’s anguish

Jean and her husband, Andrew, have 3 children, Tom, James and Elizabeth; they live in Birmingham where she worked as a solicitor.  In 1999 she gave birth to James, her second child, and her life and the life of the entire family changed dramatically; for James was born severely disabled with cerebral palsy, epilepsy and autism and he grew up to be wheel-chaired.

From the day James was born in 1999 the entire family suffered for 9 agonizing years before finally deciding to give him up in 2008.  Attending to James was so all-consuming that Jean’s other 2 children were almost forgotten and the strain almost destroyed her marriage.  James was extremely troublesome; he attacked everybody including his mother, his other siblings and even complete strangers.  He was so dreaded at home that his elder brother, Tom would refuse to join a family outing if James was coming along.  Jean had no time for any other thing, she ignored her husband and her other 2 children to be a 24-hour carer to James.

By around 2007 Jean and her husband made the decision to give up James.  Then began the struggle to get the local council to admit James as a special needs pupil and provide funding.  The parents spent over £20,000 of their hard savings on legal fees and professional assessment in their long battle to convince the local authorities that their son was disabled enough to qualify for admission and funding into a special needs residential school.

In 2008 James finally left home for this residential school and the reports his parents gets on his progress has so far been encouraging.

      

Editor’s Note:  If you want to read the full story, see my twitter page at @ Patkehinde on Tuesday, 9-4-13.  Alternatively you can send me an email at: journalists@newsbitsweekly.mygbiz.com, allow 3 days for a response.

News Commentaries

(Multiple blogs)

It's trade or bust for Britain

(Says, BBC Business editor, Robert Peston)

Brief Comment

This essay by Robert Peston should be read by every household in Britain in order to appreciate how out-of-balance our economy is and how uncertain the future is. I keep on hammering the ‘gospel’ that the rise of China has changed all known axioms about the Wealth of Nations. Chancellor Osborne is right in cutting spending and diverting the savings into new house building.

 

BBC director general Tony Hall 'confident'

about the future

Brief Comment

The BBC, like our Monarch is a name that opens doors all over the world, rich in goodwill and accepted without question. But in a fast changing world, to remain ‘confident’ about the future, in the words of new D-G, Lord Hall, the BBC must explore all eventualities, including self-financing in the long-run. Adopt forward-thinking models like Tesco and Primark.

 

M4 relief road: Chancellor

'to approve toll plan'

Brief Comment

If the success of the Millennium stadium in Cardiff in terms of costs and revenue can be replicated in this proposed M4 Relief road, then it will be a viable project. Otherwise the government may be better advised to wait to see how the economy improves before allowing the Welsh government to commit itself to more borrowings. Will private investors contribute? 

News Commentaries

[Multiple Blogs]

Food banks used by thousands

of jobless, figures show

Food-banks are staffed by volunteers who provide

emergency food for people experiencing hardship

Brief Comment

Food banks should not be seen as demeaning, especially when you consider, as reported in the Press 2 months ago, that Britons throw away £10 billion worth of good food every year. Yes, the price of choice food may have gone up, but you can still buy a big loaf of bread (Everyday Value range) from Tesco for 50 pence. Don’t throw good food away; give them to Food banks.

 

Should Britain let go of London?

Brief Comment

Separating administrative capital from commercial capital as in: USA; Washington and New York, China; Beijing and Shanghai, India; Delhi and Bombay, and Nigeria; Abuja and Lagos, is the way forward for strategic reasons and as a way of reallocating resources. Moving the admin capital of UK to say Birmingham would relieve London and solve other problems.

UK banks 'still short of capital',

says BoE

Brief Comment

4 months ago the BoE said that the 5 big UK banks would need a new capital injection of £60 billion in order to withstand accruing losses, but with increased provision for PPI and other penalties the figure could now be a lot higher. The problem in Cyprus today is extreme capital depletion in their biggest banks. Banks in Asia are not exposed to extreme bad debts as in the West. 

Public Opinion

What do you think?

‘Get me back to Belgravia’: Mother of six demands she is re-housed in exclusive suburb after a cap on housing benefit forced her out of £2MILLION home  

Taking the taxpayer for a ride

Miss SD has 6 children and is on benefits, she lives in a £2 million 4-Bed room town house in Belgravia, near Sloane Square which is one of the most exclusive areas in London.  Her total rent of around £4,800 a month is paid nearly entirely by the State. 

Because of budgetary constraints forced on us by world-wide economic decline, the government had to cut corners to keep the country afloat.  Therefore new rules for those on benefits was fixed at maximum of £400 a week (About £1,700 a month) for rent; consequently those living in more expensive areas like Miss SD must have to relocate.  The Council gave her £10,000 gratuitously to help towards her relocation expenses; she contested it and asked for £40,000 instead.

To add insult upon injury, she is now asking the Council to return her back to Belgravia from Edgware where she has been living in the past 2 months or so.  Her reasons are her studies and her children’s schooling.  Worse still, she went to the High Court and lost her application to stop the Press from reporting the story of her claim - If she had a noble cause she would surely want the world to know about it.

(Contrast this case of Miss SD with the story of Mr. and Mrs. R narrated below) –

Living by the sweat of their Endeavours

The Rs started off together very early in life when they were in their teens. The couple has to date given birth to 16 children, 9 sons and 7 daughters, the whole family live together in a 9-bedroom house which they bought after the birth of their 6^th child. They don’t claim any state handouts; the husband runs a successful bakery in Lancashire and leaves home for work at 4 am every day and their 2 oldest children also work in the bakery.

Editor’s Note: 

1) To read the full story of both Miss SD and the R family, visit my Twitter page on Thursday, 28^th March 2013: @Patkehinde

 2) No view is held or expressed on the size of either family, the issue here is; dependence.

News Commentaries

Cyprus president defends bailout

deal amid public anger

Comment

In every country on earth there is only one occasion on which people lose the money they deposit in a bank; that is only when the bank goes burst.  Even with all its shortcomings, Robert Mugabe’s Zimbabwe did not quite stoop as low as what we are seeing unfold in Cyprus today. 

We have seen governments in the past impose various types of restrictions on both Banks and depositors, like - temporary restrictions on; the size of withdrawals, the size of cash people can take out of the country in order to discourage capital flight and in rare cases a punitive tax on excessive deposits, but even then the government gives adequate notice and allows investors the option to take away their money.  But for a government to go overnight and seize the money we keep in our bank accounts is breaking a taboo.

At a time when it was beginning to look like the worst of the Eurozone’s worst days are over, this bank raid reignites all those old fears and doubts with a possible contagion effect on Greece, Portugal, and Spain and even further beyond.  The question in the mind of investors now will be; who will be next?  The UK could now be the unwitting recipient of huge inflows of cash in the next few months from depositors fleeing Cyprus-like money grabs across the Eurozone jurisdiction.

As Chancellor Osborne presents his budget for the next 12 months tomorrow, what is happening in Cyprus should strike fear in those people who have consistently opposed his policy of fiscal restraint in the past 2½ years; all that the PM and the Chancellor have been doing is to save us from a similar fate.

Do not be complacent; our economy is not too far from the same troubles blighting Greece and Spain.  About 4 months ago the Bank of England warned of the fragile state of our banks and that they would need more than £60 billion of emergency funding to protect against future loses.  Further, with 4 in every 10 businesses that started since 2008 folding up, and the BoE confirming that 1/3 of the remaining firms are so weak and unprofitable that they exist only as ‘Zombie businesses’, we must support the government in its effort to steer us clear.

What President Nicos Anastasiades, his Eurozone partners and the IMF should have done, according to experts, was to raise that money through a new tax on landed-Assets; that would at least have removed the unsavoury appearance of this broad-day-light ‘bank robbery’.  We just hope that this unfortunate precedence does not signal the beginning of the end of the Eurozone.        

   

News Commentaries

    [Multiple blogs]

Chinese President Xi Jinping calls for renaissance

Xi Jinping: "I will be true to the responsibility given to me"

Brief Comment

So far Xi JinPing has shown genuine intention to rid China of the malaise of deep-rooted corruption since assuming power last year as the general secretary of the Communist Party. But power in China is exercised collectively by the whole leadership, and judging from what we learnt by the fall of Bo Xilai last year, the new President has a mountain to climb. Good luck to him!    

 

MPs should not shackle our Press

(As the debate over press freedom rages on)

Brief Comment

A truly free Press is rightly regarded as the 4^th arm of the realm after the legislature, Judiciary and the executive in any system of modern democracy; but unlike the other 3 has to conduct its business completely unfettered to maintain maximum effectiveness. To impose such strictures that stifle bold reporting desecrates the sacrifices of people like Marie Colvin. 

On the compromise we were told was reached yesterday, one can only say that the taste of the pudding is the eating. 

                                                                                                                       

Weekly Essay

After UK lost top AAA credit rating

for the first time in 35 years:

What next?

 

Comment (Essay)

             

I just hope that the disappointment of last week’s Eastleigh by-election result does not discourage Prime Minister Cameron or Chancellor Osborne away from the part of economic prudence on which they have led this Country for the past 2½ years.  I wrote a blog on the 25^th of January in response to the Deputy Prime Minister’s regret that: ‘The coalition made a mistake in cutting back capital spending when it came into office’.  In that blog I defended the government’s austerity cuts as their only wise recourse judging from the constraints it faced, and that had it embarked on an unfunded mass capital expenditure programme, it would have lost its credit rating 2 years ago. 

Coincidentally, on the day the UK was downgraded, Lena Komileva, an economist at G+ Economics echoed a similar view when she told the BBC that: “The very fact that we didn't see this downgrade happen in the past few years is a testament to the UK's credibility; there are no magic fixes for this kind of problem. It's not a question of what the government is willing to do; it is what it can do."

If any good came from this credit downgrade, it is its effect to serve as a wake-up call to everyone and a reminder that the UK is not immune from the same problems that the Greeks, the Portuguese and even the Spanish face.  Yes, the Banking collapse of 2007/08 was the major cause of the economic problems presently afflicting Western Europe and America, but it is by no means the only cause; the rise of new competitors like China, India, Brazil and even Russia is a second factor; no wonder Ben Bernanke, the current US federal reserve President, said last year that ‘China is hurting’. 

A third factor which though on the surface looks remote, but is in fact an off-shoot of the China-factor, is the rise of what we could call resource nationalism amongst less developed economies of  Africa, Asia and South America.  It is against this background of a world that is changing in a very fundamental way that we should examine the new awakening which this credit downgrade has imposed on our thinking.

What are the prospects for the UK economy in say the next 2, 5 and 10 years; that is in the short, medium and long term respectively?  Specifically, what will be the position of the European integration in five years time, and against that background what will be the position of the Pound Sterling?  If the claims by Jose Manuel Barroso, the president of the European Commission last December that the EU has now passed its most troubling period is true, and the uncertainty arising from last week’s Italian election are resolved and the Eurozone march forward and wax stronger; what effect will such a state of affairs have on Britain’s fortunes; if we are outside the EU? 

Personally, I share the fears, and reservations of those who think that the EU is more and more straying away from its core founding objective of promoting free trade into becoming a political super-State.  But staying away is not the answer, Britain should stay there and rough it out; if it is good enough for France, a country which has similar historical past in terms of having old colonies, then it should be good enough for us.

The report by Moody’s agreed that Britain’s economy is not under any immediate danger, but also recognised that with a very high Debt to GDP ratio and a stubbornly high annual budget deficit; if there is no evidence of growth in the overall economy for a prolonged period, then UK bonds should be rated in a way that reflect that position; hence they downgraded it from AAA to AA1. 

So what is the position of the UK economy?  But before going into that let us consider the vexing question of growth in the economy which has acquired prominent headlines in recent years in the media and  among politicians, especially the way Ed Balls, the Shadow Chancellor has predicated his entire economic mantra on achieving growth by all means and at any cost.  Even the in-coming governor of the Bank of England, Mark Carney has indicated that he is prepared to ditch inflation targets in order to achieve economic growth.

Figures released last month showed a fall of 0.03% in economic activity in the UK, that is GDP, in the last quarter of 2012.  Growth in the economy is a good thing to which all countries aspire. It is analogous to a workman who gets good increases to his wages every year, against that he could acquire more financial commitments and hope to pay for them from his wage rises. 

If on the other hand his wages suddenly stops rising, or worse still, he gets a wage cut he may find it hard to pay all his additional commitments.  Similarly, if a country’s economy stops growing or even starts contracting, that is a fall in GDP, then the fear will arise as to whether it will still be able to meet its commitments as they fall due - This is what credit rating agencies like Moody’s and others measure.

Economic growth borne out of hard work; where goods and services are paid for by actual earned income and where exports are increasing is the Holy Grail which all Nations aspire to.  But a so called increase in GDP created largely by a frenzied expansion in consumption and paid for by excessive borrowings is like a house of cards. 

It took 300 years, from towards the end of the 17^th century to 1996 for UK domestic borrowings to reach £ ½ trillion, and just 10 years from 1996 to 2006 to borrow another £ ½ trillion, bringing the total to £1 trillion then; today it has risen to around £1.2 trillion.   This is just borrowings by households alone.  So the inflated GDP figures of those years were largely fuelled by a consumer binge which is largely illusory.  Now that household borrowings are falling, or rather adjusting to reduced Bank lending the new GDP figures is nearer to reality - But the shadow chancellor may disagree.

Another factor is the reluctance among big corporations in Europe, America and even Japan to make major new investment decisions hence building up cash mountains that run into several trillion dollars.  Dead money, as Mark Carney calls it, is reducing economic activity which results in reduced GDP figures.  He contends that instead of sitting on unused cash piles, companies should in addition to increasing dividend distributions, return cash to shareholder which will in turn find its way back to the economy. 

This is exactly what Apple did when it decided last year to return a good chunk of its $ ½ trillion cash pile to investors. Japanese companies’ liquid assets have soared by around 75% since 2007, to $2.8 trillion, according to the ISI Group.  American companies have been net suppliers, instead of users, of funds to the rest of the economy since 2008. Firms in the S&P 500 held roughly $900 billion of cash at the end of June last year according to Thomson Reuters; this is 40% up on 2008.  The same trend is found in corporations in UK too.

The Banks are even worse culprits when it comes to sitting on cash piles, the so called Dead-money syndrome.  The European central bank, ECB, raised alarm when in just one day last year banks deposited 750 billion Euros with it overnight instead of lending it to fellow banks.  This is exactly what caused the great Banking collapse of 2007 – 2008 when interbank lending ground to a halt, because banks started doubting the balance sheets of other banks, they stopped lending to themselves and instead chose to keep it with central banks for practically zero returns. 

No wonder a few days ago, the deputy governor of the Bank of England hinted that he may do the unthinkable and start charging banks interest to keep their money.  Think about it, if the banks are now so reluctant to lend to their own peers, how less eager will they be to lend to struggling medium and small-scale businesses; that is why the government’s £80 billion funding for lending programme is so far failing to have the desired result.

The overall burden of debt on the economy is enormous when you take into account our public, private and business obligations.  They weigh so heavily on the shoulders of the country that it sort of casts a shadow over every other thing we do.  How much exactly is our national debt?  The government says it is around £1.1 trillion, but other specialists disagree vehemently, including even the government’s own official statisticians, the office of national statistics, ONS. 

Adjusted figures from about one year ago by the City think tank, the Centre for economic and business research puts the UK’s public debt at more than £2 trillion.  But worse still the ONS at about the same time puts our National debt as high as £4 trillion.  In arriving at that figure the ONS added to the government’s own figures such provisions as it deemed prudent, like: Public sector pension liabilities, Private finance initiative (PFI) obligations, substantial liabilities assumed when the State took-over the Royal bank of Scotland and Lloyd’s bank, and finally £500 billion for contingencies; which amongst other things, include the various loan-guarantees given by the State.

So, you can now see clearly that this new government had a mountain to climb right from the first day it assumed office in 2010.   Compounding the problems posed for this Prime minister by the chronic economic problems he inherited, is his lack of overall political majority; and having to compromise with his coalition partners on every front. 

As the Lib-Dems more recently, increasingly re-assert their difference from the Torys, more and more traditional conservatives are protesting and some are even deserting to UKIP; this weakens the Prime minister’s grip on his party and consequently on his government.  As I was just typing the concluding parts of this essay yesterday, the Prime minister was defending his policy of economic discipline in a speech in a factory in West Yorkshire while at the same time his business secretary, Vince Cable (A Lib-Dem) was busy singing from a different Hymn sheet; writing in a newspaper, he implied that the government should worsen the budget deficit by borrowing yet more money to fund new capital expenditures. 

No, the PM should eschew populism even if it makes him unpopular electorally in the short run, history will always vindicate the messenger of a bitter truth in the long run.  Even if the Coalition arrangement is forced into a ‘divorce’ and the Torys become more disunited with the advance of UKIP that does not mean the end of the political life of this Prime minister. 

Just last month Binyamin Netanyahu of the Kadima party won an increased mandate as the Prime minister of Israel after the collapse of his coalition arrangement.  The Kadima party itself was successfully created by former Prime minister, Ariel Sharon out of a rebellious Lukid party.  So, you can see that the political permutations and possibilities open to the PM in future are limitless if in the judgement of the people he optimised with his acutely limited mandate when he was in power. 

So, after this credit downgrade; what next for the UK?  Terry Smith, chief executive of Tullett Prebon and Fundsmith holds the view that the government should concentrate its effort on reducing UK’s yawning budget and current account deficits than borrowing more money to pursue an uncertain growth.  He cited the example of Japan, the world's third largest economy, which has just entered its fifth recession since 1989 and that its plight is a testament to the poor outcome of applying Keynesian economic theories, as its government debt is now 20 times revenues. 

Also, Andrew Sentance, a former member of the Bank of England’s monetary policy committee, MPC, and now a senior economic adviser at PricewaterhouseCoopers, PwC, is known to favour similar pragmatism.  Again, Professor Larry Summers, a former economic adviser to President Obama and a Treasury secretary in the Clinton administration is widely known to argue against excessive stimulus too.  Yes, massive Keynesian expansion in the 1940s and 50s and 60s by the West went unchallenged and they were able to sell all their wares; but with the rise of China, markets are narrowing and you cannot be sure of recovering all your outlay. 

I think Britain and the entire Western economies have to go back to the drawing board and start again from first principles.  What is wrong with Britain creating a Sovereign wealth fund, SWF, and applying the profits from such fund towards paying for welfare in the long run rather than perpetually paying welfare with borrowed money? 

Such a fund can be gradually capitalised over a couple of years with sums cut out from our bourgeoning Social security and NHS budget which presently gulps about 50% of the entire annual budget of the country.  China has given out over $1/3 trillion in overseas development loans in recent years, more than the World Bank and IMF, 75% of which are to developing nations.  There are millions of Chinese workers in these countries remitting both part of their earnings and taxes back home plus of course unlimited access to raw materials, re-export of finished goods and above all taking the trading profits of these enterprises. So it is clearly a win-win situation for them. 

So a completely new thinking is required; a business-like approach should be used in appropriating our tax receipts, like investing some of them in a SWF and living off the profits.  This SWF should invest both locally the UK, in successful companies; like Tesco and Primark and overseas too.  The State should become more entrepreneurial in other to survive. 

2 years ago China acquired ½ of the vast land of Madagascar for plantation farming of maize and palm and about the same time Indian and Singaporean concerns were investing $4.5 billion in Garbon, central Africa for similar venture including infrastructure.  Nations are now looking further afield; Sir Terry Leahy, the former head of Tesco said in a Times CEO Summit 6 months before he left office that Britain should now start thinking globally.

The world should be our oyster; this is Britain after all, the country that gave the world the English language.  The supremacy of the English language as the ultimate vehicle for economic and political success in the world was succinctly articulated in an essay written by Jim O’Neill, the chief economist of Goldman Sachs on his return from a business trip to China 2 years ago.  In one of the big Chinese cities he saw a bold inscription on a college signboard which read: ‘Success in English, success in life’.

I, like Winston Churchill, believe that the best days of the English-speaking world still lie ahead.

 

 

                    Notice:  For the next 3 to 6 months, ‘Weekly Essay’ will regrettably, be published at irregular times and at irregular intervals.  In other words, it will be published only when available.

Patrick Chike [Editor]

 

Weekly Essay

Court rejects bid to overturn

GCSE grades 

The controversy followed last summer's GCSE exams when pupils

got lower than expected grades

 

Comment

 

When recently the education secretary announced that his Plans to scrap GCSEs in key subjects in England and replace them with English Baccalaureate Certificates are being abandoned by the government, my first thought was that the Court case against the state on the GCSE results of last August would also go against the government.  On the surface at least, the government’s seeming U-turn may be construed as an admission of fault which will not go unnoticed, not least by the Judges who are yet to pronounce on the case.

 

When Micheal Gove stood on the floor of the House of Commons and made admissions like ‘a bridge too far’ and that "My idea... was just one reform too many at this time", humble and honest as they seem, one cannot help but conclude that such statements could prejudice the pending GCSE Court case, which after all is at the core of the dispute.

 

That the Court ruled in favour of the government and agreed that standards need to be maintained, showed two things, first, that the growing abuse and misuse of rights in our society should not be allowed to trounce the good intentions of the government.  A coalition of litigants wanted to force the government to change the results of last August GCSE exams and award their pupils a higher grade than they really achieved, the government said no, contending that adequate standards have to be maintained, they then sued and lost.

 

We see similar abuse and misuse of rights growing in every sphere of society these days, and in almost all the cases trying to thwart the government’s well-intentioned plans for the long term good of the country.  The government has indicated it wants to cap maximum payments to a family on benefits to £26,000, that being the average annual income of a working family; some pressure groups oppose it and are threatening to go to court. The State’s plan to relocate families on benefits from very expensive areas, like Westminster, to cheaper areas is facing similar resistance too. You can’t eat your cake and still have it in your hands!

 

Second, that ruling goes to reaffirm the faith of many people in the integrity of our Judges and the robustness of British justice.  Personally I believe that the integrity of our Judges and our Justice system is the greatest asset this country has.  Wealthy people, Corporations and Sovereign wealth funds from all over the world who are queuing to invest in the United Kingdom are attracted mainly by the safeguards provided by our legal institutions.

 

Two years ago Roman Abramovich, the owner of Chelsea FC, floated Evraz, a steel giant based in Russia, on the London stock exchange; you just need to read the accompanying 635-page prospectus to see the extreme lengths the promoters went to satisfy our listing disclosure requirements - They were set on ‘tablets of stone’, this boosted investor confidence and they subscribed handsomely.  October last year the Kingdom of Saudi Arabia sought the help of our government to establish Arbitration Court in the UK, in the hope that a London-based arbitration centre would help counter investor concerns about the Saudi legal system and thus boost foreign investment in the kingdom.  The court would hear some of the most high-value and sensitive legal claims in the world. The Saudis want their largest companies, including Aramco, the state oil monopoly, to stipulate in contracts the use of the London-based venue to settle any dispute.

 

Qatar, Kuwait and many other middle-eastern countries have investments running into tens and probably hundreds of billions of Pounds in the UK, the Chinese have too, and billionaire Li Ka Shing in particular keep snapping up our utility companies.  In all these, the main attraction to an investor is the assurance that he can seek redress and gets justice if his interests are threatened; he does not have to, as it happens in many parts of the world, rely on the whims of a benign dictator to sleep well at night.  I believe our Judges should be held sacrosanct and their remunerations should not be subject to any austerity cuts - we are lucky to have them.

 

Coming back to the dispute under discussion, I think there is overwhelming merit with the government’s position.  Both GCSE and A-Level standards have been falling steadily over the years and complaints were coming from all quarters; from employers, from universities and from the government itself.  Sir Terry Leahy three years ago when he was still the boss of Tesco complained that school leavers are so inadequately equipped in basic numeracy and literacy that they had to completely retrain them to bring up to scratch.  Sir Stuart Rose, the former boss of Marks and Spencer expressed similar levels of dissatisfaction.  Last month the CBI which represents all the captains of Britain’s industry and commerce, referred to the ‘exam factory’ mentality that is destroying both our School system and school leavers.  Both Oxford and Cambridge universities have lost so much faith in our A-level exams that they now virtually have to rely on their own entrance examinations, like the Cambridge pre-U for their intakes.

 

Let us return to those old traditions that made British education such a hallmark of excellence that all the nations of the earth aspired to it.  History has it that after the 2^nd World war, even up to the 1950s American aristocrats still felt compelled to send their children to avail themselves of a British education.  British private schools, like Eton, Harrow, st Pauls and many others are highly sought-after by well-to-do parents the world over, but ironically you will be surprised to hear murmurs of elitism in some quarters within the UK itself.  Recently, Mrs Frances King, the principal of Roedean College, a top girls private school in East Sussex, where fees for boarders is up to £31, 000 a year, quit Britain to take up a similar appointment in Switzerland, criticising the tide of jealousy and  hostility towards private education within Britain.  Similarly, Anthony Seldon, master of Wellington College, last month warned that private school pupils were beginning to feel the effects of a ‘hatred that dare not speak its name’.  Again, like Mrs King, he criticised ‘jealousy and hostility’ towards independent schools and warned that public school pupils were being ‘discriminated against at the final hurdle’ when they apply to universities.

 

These schools are a huge source of income to Britain; some of them have even opened satellite colleges overseas, like what Charterhouse is doing in China. Every economist in the land will tell you that what Britain needs most now is to boost export, which will in turn boost growth.  This is exactly what the Prime minister has been doing in India for the past three days, spreading the reach of the country further afield and show-casing the best of Britain.  So let us support and be proud of our schools and do away with tribal bias against our wealth-generating private schools.  I remember hearing PM Cameron say during the last Tory party conference that he has not come to apologise for privilege, but to actively spread it as wide as he can possibly do.  Spreading it is exactly what Eton College has just done last month, by building a second brand new ‘Eton’, called Holyport College.  This school which will start in September next year will devote half its entire intake to pupils from poor families and educate them completely free of charge in the best of the Eton tradition.  What can be greater than this? 

So coming back where we started, can there be any justification for the case against the State, which was brought by a total of 167 individual pupils, supported by 150 schools and 42 councils, plus six professional bodies, including teachers' unions?  Put it another way; had Lord Justice Elias ruled in their favour, and the government compelled to climb down and re-award all those pupils, about 50,000 of them,  higher grades, will they and their sponsors go away celebrating that they have won a noble course?  The answer, I am afraid, is no. They may have only won a pyrrhic victory.  What is wrong in re-sitting your exams if the assessors Judge that you have not done well enough?  What surprised me most was that those teachers and especially council leaders who sponsored that Court case went to school in an era when the word of the school examiner was beyond reproach.  At a time of austerity when all governments are facing budget cuts, the leaders of those local councils are using our council tax moneys to pursue such a hollow course.

Modern communication technology has now made the world a smaller place; you can now easily compare how our school leavers measure up with their counterparts in other advanced, and even emerging economies.  More importantly, like I said earlier in this essay, what matters most is the final user, that is the employers to whom the skills of our school leavers and graduates will fall upon to hire.  We have to trust our government that they mean well for us, when they say that standards are falling and need to be toughened up we should believe them.  If you allow a free fall in quality and award A-grades to every school leaver,  it will show, you cannot hide it, and will I bet you, the market which is the final arbiter will definitely not be misled by such fool’s gold.

 

 

NB - Sorry this article was originally intended to be a short News Commentary of less than one page, but as I progressed it turned into a formal Weekly Essay. It was billed to be published on Sunday, but I changed my mind and published it today Thursday, that is 3 days earlier.

Patrick Chike [Editor]