Not Me Guv

I don't agree with everything he says but, like many of the Conservative ideas on how to control the economy, it makes sense. Lord Turner's proposals will upset a lot of people and it seems slightly odd that somebody who had anything to do with the FSA should even be given the oxygen of publicity but I suppose anybody can cock-up once and be given a second chance.

Money availability and credit got way out of line over the lifetime of the last Government and there's no doubt that things have to change. The days of self-certification and lending up to 6 times joint income have to be addressed. Debt itself isn't a bad thing, it's the repaying of that debt which is the problem and. as the last Government have found to their cost, and the incoming coalition have found to their horror, you can't keep borrowing and spending other people's money if you don't have the security in place to support either. The easiest way to reduce debt, in pure accounting terms, is to reduce deficit and that's what the Autumn Budget will set out. Of course wholesale across the board cuts aren't the answer either, cut too quickly and too deeply and you will hit a double dip recession.

An article in a magazine produced by the ICAEW last month together with other stories that have been 'doing the rounds' indicate that the banks weren't as great a problem as everybody hoped they were. The stories of misaccounting and poor disclosure have not been supported by any evidence, there was a story doing the rounds a short while ago that the implementation of new (American based) accounting standards were going to send us all to hell in a handcart but upon closer examination the story really didn't stand up.

There is an old joke about the difference between Socialism and whatever the Conservative polar opposite is called where the payoff goes something like, "the Socialists will take other people's money and spend it." But that's the whole centrepiece of the traditional difference in ideologies. I don't mind paying more taxes if it creates a better society for all, particularly those who are genuinely needy, what I don't want to do is pay more taxes so that more people get paid for not working because they have made the lifestyle choice not to. There's no doubt that banks did cause a great deal of damage, that perhaps individuals did get greedy and that some controls were ignored but ultimately it's the Government that sets the agenda and I'm sure that history will show that the Government that inherited a healthy bank account from its predecessors and left its successors a series of iou's was the major cause of the current crisis.

As a country we aren't bankrupt but we seem to have gone almost full circle in attempting to recreate the old 'sick man of Europe' label that we wore with embarrassment a generation ago. Tax revenues are down, in fact barely a day goes by without a client receiving a repayment of tax, this is due to the self assessment system rather than any computer cock-up. VAT will be going up to 20% in just over three months time and additional income from that is vital for the long term success of this Government/Coalition project, the forecasts and projections that were part of their budget leave little room for error.

All Governments seek to regulate and control to some degree, the increase in audit legislation can be traced back to Michael Heseltine for example but the overburdening of businesses with form filling can be well and truly laid at the door of the last Labour administration. As I've posted before there is no value to most of my clients if I have to spend a day at the end of each audit ticking a box to confirm that I have done the expected work when that work is already on file. It should be about balance, about adopting a 'light touch' and more about common sense than regulation for regulations sake.

Of course if it all goes tits up then George Osborne will have to sell the public investment in the banks, let's hope he does it when the market is at its peak rather than make the same error as Gordon Brown did when he sold all our gold reserves.

What must not happen of course is a return to the situation in the late 1970's and early 1980's when during Mrs Thatcher's first term those struggling at the lower end of society were callously cast adrift, the fear with the idea of 'big society' is that it will see a return to the era when only those who could help themselves survived, to the era before the welfare state. Government's have to get the balance right, to be compassionate whilst at the same time ensuring that money is well spent, certainly the creation of so-many non-essential jobs during the last Governments three terms was a mistake and the multi-layered management approach in the NHS hasn't been a winning story either. One of the politicians who I have also had the greatest respect for is Ken Clarke and he once said in a television interview that "throwing money at something didn't make it better," he was right of course, but withdrawing all funds doesn't make something any better either.

The Coalition haven't been in office for long and so far they've performed like a swan on the river, gliding gracefully in front of the cameras whilst working hard beneath the surface to project that air of grace and control. As the nights draw in, the redundancies start to take place and those cuts, which will impact on both the public and private sector, take affect we will see how the Government can really perform. The next six months are going to be as interesting as anything we have seen in British politics during my lifetime.