Gordon Clown .Com

A new study shows that the “low unemployment” which Gordon’s much heralded “miracle” economy has been built upon, is a mere sleight of hand, and that actually unemployment is much much higher than the government are willing to admit to.

Unemployment is almost three times as high as the Government’s official figures a new study has claimed.

A report by Sheffield Hallam University said 1.7 million “hidden jobless” should be added.

In particular, the report said that at least one million of the 2.7 million people on incapacity benefit should be classified as unemployed.

However, official unemployment has fallen by 15,000 to 1.68 million in the same period. The claimant count has fallen for eight months in a row, the longest continual reduction since the summer of 2003.

The claimant count, which covers people eligible for jobseeker’s allowance, fell by 9,300 in May to 880,400, the tenth time the figure has fallen in the past 11 months.

The claimant count has fallen for eight months in a row, the longest continual reduction since a run of 20 consecutive monthly reductions which started in the summer of 2003.

But the figures were overshadowed by a big increase in the number of people classed as economically inactive, which includes students, those looking after a relative, workers who have taken early retirement or given up looking for a job.

The figure increased by 77,000 in the latest quarter to 7.95 million, the highest figure since comparable records began in 1971.

The number of jobs in manufacturing firms also fell to a record low of 2.96 million after a fall of 49,000 in the latest three months compared with a year ago.

Today’s data from the Office for National Statistics also showed that the number of people in work fell by 10,000 in the quarter to April to just over 29 million.

The claimant count is now at its lowest total since September 2005 and is down by 71,500 on the year.

Average earnings increased by 4 per cent in the year to April, down by 0.4 per cent from the previous month.

Excluding bonuses, the figure was unchanged at 3.6 per cent. Wage growth was 4.2 per cent in private firms, down by 0.6 per cent on the previous month, compared with an unchanged figure of 3.1 per cent in the public sector.

There were 638,000 job vacancies in the three months to May, up by 21,700 from the previous quarter.

There were 2,000 days lost through industrial disputes in April, the lowest monthly total since January 2005.

The UK still has one of the lowest unemployment rates in Europe at 5.4 per cent, but the figure has increased by 0.2 per cent in the past year compared with an average European Union fall of 0.9 per cent.

Jim Murphy, Minister of State for Employment and Welfare Reform, welcomed today’s figures, saying: “Since 1997 the numbers on jobseeker’s allowance, incapacity and lone parents benefits have fallen by over 900,000 and they continue to fall. Today’s figures show that the number on jobseeker’s allowance has now fallen for 10 out of the last 11 months.

“Our welfare reforms, combined with a strong economy, are helping more people to come off benefits and look for work - but we are determined to go further still, and to break for good the cycle of poverty and dependency.”

Meanwhile the bond markets are making things uncomfortable for Gordon’s coronation, with long term interest rates rising by about 0.50% in the last week alone.  The market is doing the MPC’s job for them and there’s nothing Gordon can do about it.

The Confederation of British Industry has said today that the number of manufacturers intending to raise their factory gate prices soon has hit the highest level for 12 years.  This is the latest in a sequence of events demonstrating that inflation is back with a vengence, and that suppliers and retailers have rediscovered their pricing power.  With commodity prices and food ingredients prices soaring, price rises at supermarkets look set to continue for the forseeable future.  The collective coma surrounding oil depletion has led to soaring biofuel demand causing food prices to shoot up, a situation that is not likely to be reversed easily or soon.  Pricing power has returned to supermarkets who are seeking to rebuild profits following the energy price shocks of 12-18 months ago, and in view of the likely future ramp up in food costs.  Gordon and the MPC should be very worried indeed about this.  King has already linked climate change to an increase in biofuel demand and hence food price inflation - this is not an issue that is going to go away soon.

The CBI’s Industrial Trends survey showed that 32pc of manufacturers expect product prices to rise, compared with 8pc thinking that they will fall. The resulting rounded balance of +25pc was the highest since March 1995.

It came as oil prices hit a nine-month high of $72 a barrel, fuelling fears that higher petrol prices and transport costs could generate further jumps in inflation.

Brent crude was up $1.10 at $71.70 a barrel in late trading, lifted by concerns about the potential for military action against Iran, and strikes by state oil workers in Nigeria.

With mounting evidence that worldwide oil supply is near to peaking, or may indeed have already peaked, the long term trend in oil prices from here forwards is likely to be up, and up fairly quickly.  Oil is vital for everything the world economy does, so the price of all goods and services is likely to be affected.  There is no easy way out of this one.

Howard Archer, chief UK and European economist at Global Insight, said: “The CBI survey adds to the pressure on the Bank of England to lift interest rates by a further 25 basis points to 5.75pc sooner rather than later, and a back-to-back [increase] in June is currently looking like a real possibility. Furthermore, there is an ever-growing danger that interest rates will reach 6pc before the end of the year.”

George Osborne, the shadow chancellor, said: “It’s official: Gordon Brown is leaving the Treasury with the public finances in the worst state in Western Europe. You have to be truly incompetent to combine the highest taxes in our history with a budget deficit higher even than Italy’s.”

While problems on the world stage can take some of the blame, the MPC and Gordon Brown must shoulder the greater share.  Inflation is a problem for the US and Europe too, but it seems to be affecting the UK worse than most - our food price infltaion is far higher than the eurozone.  Perhaps it’s because the British economy is built on debt, with enormous monetary growth needed to keep everything ticking along.  Until it all goes wrong, of course.

Gordon Brown is set to face a major headache just as he takes over as leader of the Labour party, an event that now looks to be mere weeks away.  It has recently transpired that Labour, who have long been running close to the wire in financial terms as witnessed by the various loans for peerages scandals that have come to light in recent years, are £5m in the hole for party funding.  When installed in office around the beginning of July, Gordon will have to go cap-in-hand to any and all who may cough up to keep Labour from going bankrupt.

Tony Blair has screwed Gordon again, somewhat, as it appears that a few rather sizeable loans taken out during his time are due for repayment very soon after Gordon takes over, and with the good favour of Tony amongst the wealthy a thing of the past, it now appears that those loans are likely to be called in.  The scale of the Labour party’s debts are staggering, and perhaps only outdone by the massive debt that Gordon has put the country in during his 10 years as chancellor.

On 13 September, Lord Sainsbury, the former science minister, is expecting £2 million to be returned.

On 30 September, £1 million is due to Nigel Morris, co-founder of Capital One Financial Corporation, and £400,000 should go to businessman Derek Tullett.

Sir Gulam Noon, the Indian food tycoon, is due to have £250,000 repaid on 30 October.

Another £1 million is owed to developer Barry Townsley in April, and two loans of £500,000 each from former Capita boss Rod Aldridge are due in autumn 2008.

The loans were taken out on Mr Blair’s orders during a panic over funding for the 2005 election. A police inquiry is thought to have recommended charges be brought over allegations that some of Mr Blair’s officials dangled honours, including peerages in front of wealthy backers.

Labour also owes £2 million to fashion magnate Richard Caring for a loan taken out last year and repayable next February.

Channel 4’s Dispatches programme tonight examined some of the personality traits that Gordon is said to exhibit behind closed doors that may betray his unfit state to govern the country.  Chief among these was his propensity to only listen to a very small group of so-called “trusted advisors”, those from the past such as Geoffrey Robinson and Charlie Whelan, both now fairly disgraced, and present advisors such as Ed Balls.  Brown was portrayed in the programme as a control freak whose treatment of other ministers and colleagues ranges from ignoring them to bullying them and worse.

“I’ve been a political journalist for fifteen years and have closely followed the career of Gordon Brown. I have written pieces that both criticize and praise the Chancellor but one thing is unarguable - he is a massive politician of exceptional gifts, the kind of figure that comes along once in a generation - and in a few weeks time he’ll be Prime Minister. And yet some very senior figures on his own side are certain he is unfit for office - one has called him a ‘control freak’, another ‘psychologically flawed’ and one serving cabinet minister has said he’d be a ‘f***ing disaster’,” says Peter Oborne.

Again and again examples are given of how Brown snubbed, cut, bullied, ignored and ploughed his own furrow. Even friends acknowledge the problem. The film examines a double allegation of a refusal to collaborate with his colleagues allied to vindictiveness against those who threaten to stand in his way. These character traits have mainly been concealed from the public but they have shown themselves in a series of feuds, particularly with potential challengers; for example his clashes with Robin Cook, Mo Mowlam, Peter Mandelson and Alan Milburn.

Brown’s relationship with Blair is also put under scrutiny. Brown arrived at 11 Downing Street still believing he should be the man in No.10. He’d been given by Blair unprecedented authority over economic and domestic policy. Brown has interpreted this as a licence to defy No. 10.

Numerous and authoritative accounts of Brown’s behaviour in government, the sulks and surliness, refusal to co-operate - according to one extremely well-placed insider he even stormed into No 10 and hurled obscenities at Tony Blair - paint a very different picture from the warm man loved by his friends.

In conclusion Peter says, “Gordon Brown is going to be the next Prime Minister. It’s important for all of us - except perhaps the Conservative opposition - that he should be a success. But we’re taking a giant leap in the dark. Gordon Brown is a brilliant man, capable of great warmth and human decency - but he’s also very closed, clannish, suspicious, tormented and very difficult to deal with. The success of his premiership depends on whether, when he attains his lifetime ambition and enters No.10 Downing Street, he can become a changed character.”

Only time will tell whether Gordon genuinely can change his character and reverse the clear flaws which have been demonstrated by his time in Number 11.  The odds don’t look good.

The newspapers today are reporting that Gordon has admitted his mistakes in an aim to make a clean break with the Blair years.  These mistakes he has specifically admitted to are as follows:

• Some mistakes made in Iraq
• Some mistakes over ID Cards
• The culture of celebrity

Cunningly, none of these mistakes could be directly pinned on Gordon and for most of them, Blair is more to blame.  Although quite who can take the blame for the “culture of celebrity” is anyones guess.  Gordon, of course, failed to admit his more numerous and gross errors as Chancellor, preffering to brush the following under the carpet:

• Inflating enormous debt bubble
• Destroying pension schemes
• Massive PFI off-balance-sheet debts
• Massively increasing tax burden through fiscal drag
• Selling Gold reserves just before Gold tripled in value
• Creating the biggest trade defecit in 10 years
• Pricing hundreds of thousands of people out of owning their own home
• Nose picking
• etc

Conveniently the above mistakes were not mentioned.  Over the coming months and years, as the long term effects of these blunders become progressively clearer.

After taking a pasting at the polls on Thursday, obtaining a meagre 26% of the popular vote and losing control of the Scottish Parliament, Gordon must be wondering what message the general public are trying to send him. Blair, having promised to serve a full third term, looks set to take the money and run next week, looking forward to having more free time to spend “up George Bush’s arse” in the future, as the BBC suggested on Have I Got News For You. Gordon, meanwhile, is facing virtually no opposition in the leadership contest - most likely because in the next 2 years the job of Prime Minister will undoubtedly become a poison chalice as the chaos caused by his economic mismanagement while in No. 11 begins to unfold.

There can be only one message to take from Thursdays humiliation for Gordon - the public doesn’t want you as Prime Minister, and therefore you must call a general election once you take over as leader of the Labour party. The Tory’s election campaign slogan from 2005 of “vote Blair, get Brown” appears to have come true, and the country at large is lodging its protest vote here and now.

With the polls looking awful, allegations of electoral fraud in Leeds and severe mismanagement of the chaos that has occured concerning the Scottish ballot papers, things aren’t looking too promising for a Brown premiership. The Scotsman highlights Gordon’s difficulties north of the border:

GORDON Brown yesterday suffered a massive personal blow to his status as prime-minister-in-waiting after the party he aspires to lead lost an election in his own backyard.

The Chancellor had played a major role in the Scottish Labour Party campaign, both with repeated public visits, and as a key strategist behind the scenes.

Yesterday’s disastrous result for Labour could set up years of constitutional wrangles for Mr Brown, who is likely to have to fend off attacks from the SNP in Edinburgh.

The message is clear to Gordon - the nation demands an election.

Apparently, Gordon has said that he refuses to work together with the SNP in the Scottish parliament, not withstanding the massive defeat that Labour will almost certainly suffer in the elections on Thursday:

Gordon Brown last night warned Scottish voters that he will find it “impossible” to work as prime minister with a Scottish National party-led government in Edinburgh if its leader, Alex Salmond, refuses to abandon his “dangerous and disastrous” plans for independence.

With Labour facing the prospect of losing an election in Scotland for the first time since 1955 to a hostile coalition in his home base, Mr Brown made an impassioned plea to wavering supporters to “come home to Labour” and head off the separatist threat of a “day one conflict strategy” if the SNP wins on Thursday.

Ladbrokes makes the SNP 1/5 favourites to be the largest party with 46 seats to Labours expected 40, but 65 seats in total are required for a majority, which would leave the SNP free to attempt to construct a deal with either Labour or a collection of other parties including the Lib Dems and Greens.

Mr Brown argued yesterday that a new generation of young Scots voters are much more internationally minded than their elders and not “obsessed with constitutional wrangling”.

A “Labour-led Scottish parliament and a UK Labour government can focus on the No 1 priority, not creating constitutional chaos but building a world-class education system,” he said, refusing to concede the possibility of having to work with Mr Salmond.

Now, what is the likelihood of Gordon having a change of heart after the full reality of Labour’s crushing Scottish defeat becomes clear on Friday morning?

The Times has revealed today that Labour party workers in Leeds are deliberately attempting to rig postal votes by collecting them from voters and selectively posting only the Labour votes.  A Times undercover reporter posing as a Labour volunteer recorded this conversation:

Keith Wakefield, the leader of the Labour group on Leeds city council, drives two students and an undercover reporter to Gipton and Harehills.

Wakefield: So our job, I believe, will be to make sure they have either done it [their postal vote] or we help them…Now the reason why it’s really, really important on this one: the average postal votes for a ward in [the] city is 800 to 1,000, there’s 4,000 postal votes [in Gipton and Harehills]… So it’s make or break…as you know, more people vote through postal than not. If we can get back those votes for Labour we can win this. So it’s really, really important that we chase the votes. I have never known as many postal votes in any election in 20 years.

Student 2: Do you know why it’s so many?

Wakefield: Yes. We can speak amongst friends. It’s very much an Asian, half Asian, half white working-class ward. And er, both, all the parties use the Muslim connections, which probably some people would frown at, and families to get everyone on postal.

Student 1: That’s exactly what we’ve done in our ward.

Wakefield: Oh right yes. So while there is paranoia in the country about the use of Asian voting systems…as we all know, they have a brilliant network; they pass it on; they all want to use the postal.

Wakefield, students and undercover reporter arrive in the car park at the Fairway pub in Gipton and meet Graham Hyde, a Labour councillor. Hyde briefs the group on what to do.

Hyde: Simply, what I want you to do is you knock on the door, say you are from the Labour party…‘Have you received your postal votes?… These are all Labour people. ‘Have you returned it?’ If they give it to you in your hand, you collect it and put it in the postbox…If they haven’t, you say: ‘Have you got your postal vote?’

Wakefield: You’ve got to do it for them.

Hyde: The thing is we want to know who has returned them. And if you are knocking on the door and they have a postal vote and they haven’t done it, ‘Would you like to do it? We’ll put it in the post?’ You have to do it very careful…because they [the opposition or the authorities] are watching everyone.

Wakefield: I know, I know.

Hyde: All these here are postal votes.

Wakefield: All we are doing is chasing the postal… Do you have to seal it [the postal ballot] before posting?

Hyde: Yeah, seal it all up… We also want to check they are voting Labour as well. Yeah? If they are voting Liberal Dem, then don’t offer to put the postal vote in. We’ve found 10 so far out of all those we’ve done in Gipton.

Student 3: ‘Yes, I’ll post that for you!’ [laughs]

Hyde: Yes that’s it, and then it ends up in the toilet [laughs]. I know…Put the postal vote form out of sight, or if you are passing a postbox throw it in it. Don’t get caught with any on you. We are not supposed to collect them.

Student 4: Yes, it’s illegal to collect.

Hyde: Yeah.

Reporter: Is it? Why?

Student 4: It’s illegal to collect, isn’t it?

Hyde: Yes it is, but we’ve done 25% already, so…

As we draw closer to the local elections, a group of prominent economists have today put forward their argument for higher interest rates in an open letter to the Bank of England in which they state that inflation risks could surge out of control if the Bank does not raise rates soon and quickly.

Tim Congdon, Gordon Pepper and others have said that broad money (known as M4, and currently rising at 12.8% per annum) points to much higher inflation next year.  Congdon told the Telegraph:

“Inflation is back and it’s going to get to 4pc by the middle of the next year, even though I expect the CPI to fall back a little over coming months first.

“You can’t get away with money supply growth of 12pc or 13pc like this. It’s not as bad as earlier cycles, but it is nevertheless bad and it’s going to end the usual way. Rates will have to go to 6pc to 6.5pc, and may have to reach 7.5pc,”

Mervyn King is also concerned about M4, in opposition to other MPC members such as David Blanchflower who believe monetarism is dead and buried.

Mervyn King told the Commons Treasury Select Committee last month that he was watching the money supply closely. “I’m more concerned with monetary aggregates than some of my colleagues. To ignore it as a potential influence could lead into tricky territory.

“My concern about the money numbers is whether they are telling us something about the inflation numbers not in two years but in maybe three to five years,” he said.

Mr King’s comments were a veiled criticism of the doveish faction on the MPC, many of them political appointees picked by Chancellor Gordon Brown. Insiders at the Bank are said to be particularly scathing about the choice of David Blanchflower, best known for his academic opus Money, Sex and Happiness, an area of research viewed as frivolous by monetarists.

It remains to be seen whether the CPI measure will fall back to target later this year as the MPC has forecast, but they will be looking further ahead than that in making their rate decisions, and if the opinions of these economists are anything to go by, rates could have to go quite a bit higher than Gordon wants.  They are already paying the price for failing to raise rates quick enough in 2006, and now rates will have to go higher for longer.  With the “low inflation” pillar of his potemkin economy crumbling and about ready to collapse, how long will Gordon last in number ten?

Peter Spencer of the Ernst and Young ITEM Club economic think-tank has characterised the UK consumer as being addicted to credit, according to the latest ITEM club report.  The report says that while the outlook for growth remains reasonably good, most of that growth is likely to be based on borrowing, as consumers follow Gordon’s lead and steal from their future to pay for current consumption.  That has created a country that is complacent about risk, and an economy that is skating on thin ice.

“Many people are following the Chancellor’s lead and are borrowing to finance consumption.”

“Both as individuals and as a country we have borrowed a huge amount to support this growth,” Mr Spencer said.

“The bottom line is that we are all living beyond our means. In the short term, Mr Brown has resorted to borrowing for consumption. If the Chancellor is forced to borrow so much when the economy’s so sweet, what will happen when it turns sour?”

The report highlights the fact that the current account deficit has ballooned, despite a healthy economy and robust tax revenues. Government borrowing is higher than forecast, with overall public sector net borrowing now expected to be £34bn in 2007 to 2008, up from the £31bn projected in the pre-Budget report.

Mr Spencer said: “The UK’s current deficit has reached 3.5pc of GDP which suggests that as a country we are close to the edge. Ultimately, we are all skating - not to say wobbling - on thin ice. There’s a danger that we are slithering into complacency.”

“The current benign macroeconomic environment has made both individuals and corporates overly relaxed about risk, inflating asset values and transactions and boosting borrowing and spending,” it reads.

“Homeowners have been under pressure from rising tax and utility bills but all the indications are that they have kept spending as if it was going out of fashion. The saving ratio [the proportion of income people save] has fallen back to just 3.7pc meaning that many households are borrowing to finance current spending.

“Lenders have relaxed their criteria and we have been gearing up accordingly.

“The US sub-prime market, which now threatens to contaminate the rest of the mortgage market, provides a clear warning of what can happen when lending criteria become too lax.”

Growth in the UK economy was driven by the business and financial services sector. The report said the strength of the business sector was reflected in industrial confidence, mergers and acquisitions, fixed investment and employment.

“It also underpins the high value of the stock market and low level of corporate yield spreads, lowering the cost of capital and providing further impetus to M&A and business investment.”

However, the ITEM Club expresses grave concerns over long-term risks to the economy: “A major threat is building up in financial market gearing, asset valuations and overconfidence.

” These markets can turn on a sixpence. The relentless upward march of prices leaves them prone to relatively minor shocks, as we saw in February. Moreover, the burgeoning current account deficit leaves the UK prone to currency weakness.

“The problem is that if asset prices do not stabilise this will leave the UK, with its heavy dependence upon financial markets, vulnerable to a crash.”

The Independent lays into Brown today, saying that he is a nasty piece of work for the way he has treated those people who’ve been unfortunate enough to see their pensions go belly-up.  But to expect anything different from the Iron Chancellor is clearly misguided, as he has shown his true colours only too well in recent times.  Public dissatisfaction with Brown is bad, but with the move nextdoor and more and more past mistakes coming to light, it’s likely to get far worse.

Gordon Brown is a pretty nasty piece of work. Over the past three years, he has done everything in his power to prevent the Government having to provide financial help to the 125,000 people who lost their occupational pensions when their companies went bust. And every concession that has finally been made, every penny that has eventually been paid, has come only after a lengthy battle.

By the time this year’s Budget came round last month, the political pressure had become so intense that Brown finally conceded to enhance the grossly inadequate Financial Assistance Scheme (which he set up in 2004 to stave off another backbench revolt). However, his new and more generous package still fell short on just a few details.

For a start, one of the biggest problems with the FAS is that those who qualify aren’t getting the money quickly enough - some died before they saw a penny. As a result, the campaigners had proposed that an emergency fund be set up to help those most in need. Getting rid of archaic rules that force bust pension-funds to buy annuities for their members was another suggestion that would help the remaining cash in distressed pension schemes be released immediately.

And finally, while the new FAS will cap benefits at £26,000 a year, well above the £12,000 cap originally put in place, there is still no inflation protection - ensuring that pensioners’ incomes will be reduced in real terms every year.

The combined cost of sorting out these final niggles would be negligible. However, when the opposition parties laid down an amendment to the Pensions Bill this week, which would have dealt with all these issues in one fell swoop, the Government whipped its members to vote it down. Although several Labour MPs rebelled, the Government still narrowly won the vote - a political victory for Brown, but yet another blow for those who lost their pensions.

It’s sad that this issue has got caught up in Brown’s campaign to become the next Prime Minister, and disappointing that he didn’t realise he could have done the right thing and emerged looking compassionate rather than mean-spirited. Who knows; the public may even have started to believe in the cuddly image the Chancellor has been trying to cultivate by pretending that he listens to the Arctic Monkeys.

Although the Government began trying to fight off its responsibility to the 125,000 victims of this scandal by saying that it was not its job to underwrite private sector pensions, the precedent of this case is no longer very important. With the Pension Protection Fund in place, people who lose their pensions in future will have a lifeboat waiting to rescue them - funded by private, not public, money.

The real message that the Government’s stubborn stance has sent out is that, while it might be willing to send money to the other side of the world if there’s a natural disaster, it’s not prepared to put its hand in its pocket for its own citizens when their life savings have been washed away through no fault of their own.

This week’s defeated amendment still has life. It must be voted on in the Lords, and if it is upheld there, the Government will face yet another Commons vote. In the meantime, however, thousands of people struggle on without the pensions they are owed.

This is Brown’s chance to show that he has an ounce of compassion in him.

Hardly likely.