Populus’s monthly poll in the Times is out and has voting intention figures – with changes from their last poll – of CON 41%(-4), LAB 35%(+5), LDEM 16%(+1). The poll was conducted between the 7th and 9th November, so is the first to be carried out after the Glenrothes by-election and the interest rate cut.

The Conservative level of support is at the lower end of the support they’ve registered in recent polls, but is not particularly out of line. More notable is the big increase in Labour support, the five point boost to 35% gives them their highest level of support in any poll since March and the highest from Populus since November last year. On a uniform swing it would produce a very hung Parliament indeed – even the Conservatives and Liberal Democrats together would only scrape a majority.

There will be plenty of speculation about what has caused the sharp narrowing of the gap. The by-election and the interest rate cut are the obvious candidates, though actually rather a lot has gone on since the previous Populus poll. Their last survey was at the beginning of October, way back before the bailout of the banks and the fuss over George Osborne, Peter Mandleson and the luxury yacht. My guess is that this is actually a result of either Glenrothes or the rate cut – while strictly speaking one should only ever compare one pollster’s figures to figures from the same company, ICM and Populus’s methodology have relatively minor differences and immediately prior to Glenrothes ICM were showing a 13 point lead.

As to which – who knows? A high profile by-election win can have a surprisingly large effect on polling figures (look for example at the effect Brent East had on the Lib Dems). One wouldn’t normally expect interest rates to have a big effect, but in this case the highly personalised intervention of Gordon Brown to make banks pass on rates could have had an effect. There’s another reason to think that may be the cause which I’ll come back to at the end of this post.

Looking at other questions in the poll, we still find the contrast between preferences now and in the longer term future. Gordon Brown has a large lead over David Cameron as the “right leader to deal with Britain’s economy in a recession” (52% to 32%). However, David Cameron beats Brown when people are asked who is “better able to lead Britain forward after the next general election” (42% to 35%).

On the leader ratings Gordon Brown receives higher ratings than David Cameron for the first time, albeit narrowly, scoring 5.04 to Cameron’s 4.94. Nick Clegg scores 4.08, the lowest recorded by any Lib Dem leader to date.

Turning specifically to the economy Populus also asked about how effective various solutions would be in helping the economy. The route that met with the most public support was that which has actally happened – a big cut in interest rates – which 77% of people thought would be effective. Almost as popular was increased public spending on construction projects and house building (73%). A slightly smaller, but still solid majority (63%) thought “tax cuts even if it boosts government borrowing” would be effective. When the consequences of borrowing are mentioned in the question though enthusiasm starts to falter. Asked about “increased public borrowing now to boost the economy in the short term even if it means higher taxes and slower spending growth in the long term” only 40% think it would be effective, with 49% disagreeing.

Finally, while economic optimism for the country as a whole remains low – 66% think the country will fare baly next year, the second lowest Populus have recorded in five years, economic optimism for people’s personal financial position has become positive. 51% think them and their family will do well financially in the next year with 44% thinking they will do badly. In contrast people’s expectations for their own financial future back in July was strongly negative and this switch could be a big factor in the government’s recovery.

It does, however, also highlight a vulnerability. What if Labour’s recovery is based on people’s expectation that they themselves won’t suffer in the downturn… but then they do? That gap between expections and what is actually likely to happen in an economic downturn raises the question of what will happen when people’s expectations hit reality…


111 Responses to “Populus show lowest Tory lead since April”

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  1. Colin – we really are in Alice in Wonderland. Has there ever been a government that goes into a recession, whether it is part/fully their fault or not and starts to gain in the polls.

    Some can blame the punters/voters for being stupid enough to vote for NuLab(I think that’s the popular name apart from the less printable ones on Conservative blogs). They can blame the press, one today claime The Mail and the Times have a Brown agenda.They can blame Mandleson,Russian billionaires and the BBC.

    If the government is as bad as all these people make out, with everything people on here and elsewhere say it has done wrong and is still closing the gap with the Conservative Party.

    What does it actually tell you about both opposition parties and the people that lead them?

  2. James, there’s no guarantee they will be in goverment at any time is there – so no point in having any policies then? (now I understand why there aren’t many! :))

    The point I was making referred to Cameron’s announcement which I listened to carefully and which I am sure you will have heard or read, where he urged the government to ‘adopt the policy immediately’ to give employers £2,500 N.I relief for taking on people who have been unemployed for 3 months or more.
    (Maybe the Tories and Labour could sack 20% of their workforce, replace them with people on the dole, save lots of money on N.I payments and then they wouldn’t need any more green holidays to Greece on board yachts to collect cash in order to pay their way!!)

    The proposals emanating from the Tories at present are what they would do now, if they were in power,(freeze council tax next year for example) not a wish list for post 2010.

    Maybe we should split the country up like the good old days with boundaries suiting all of the contributors prejudice’s, then all the rogues on here would be happy at last. :)

    I find it surprising how the Tory supporters on here think the next GE is in the bag, it was only 18 months ago that the talk was of replacing your leader was it not? People in this country seem to have very volatile views when it comes to politics, probably out of ignorance but at this stage in the game, the reality is anything could happen in a GE. I would say the longer Brown leaves it the more chance the blues have got but if he gets it right there’s lots of permutations for a Brown minority government or a pact with the Lib’s early next year.

    If Brown can get his vote to 34% or above then the Tories MUST get a minimum of 40% to stand a chance of even forming a minority government or having a Con/Lib pact (the Libs will get 16%min IMO). It’s not guaranteed at all is it. More work to be done I’d say.

  3. “I find it surprising how the Tory supporters on here think the next GE is in the bag, it was only 18 months ago that the talk was of replacing your leader was it not?”

    Who said that Richard?
    I think you are attacking something that isn’t there.

  4. A question was asked about weighted means. I don’t know exactly how those quoted above were calculated, but assume that they are the mean of a certain number of previous polls, weighted perhaps by the number of people interviewed for these polls?
    If so, I would not find them very helpful as, if there is a trend they lag behind the trend, and if there is a sharp, but real change (for example perhaps, although we do not know, a reaction to the recent by-election), they smooth it and make it less clear. I prefer to look at the actual data points, with sampling error born in mind.
    Mixing different polls is another potential problem, but perhaps not serious in this case.
    I am not a statistician, but a scientist who has studied time-series data for many years.

  5. Tony Jones – “As I posted the other day how anyone can accurately predict the next election is beyond me considering it is hard to predict what the next poll will be.” Wise words Tony. It’s far too early to predict a Tory landslide based on polls taken in 2008. There won’t be an election until 2010. Conventional wisdom has it that the government will close the gap (if there is one) as the election looms, but the Labour improvement in the face of a recession defies conventional wisdom. I think we have to wait & see what other polls say and also be wary of reading too much into a sub-regional-sample of one individual poll. To dismiss this as a rogue poll is very silly, but to regard this poll as in any way definitive is just as silly.

  6. Tony Jones – you seem to think everyone is disapproves of Brown and New Labour (that’s the non-partisan form), and therefore it’s mad that the polls show support.

    I think that says more aboutyou than about the voters.

    There’s a clear desire for something to be done, and there are clear actions being taken by Brown. Whether or not you agree with borrowing more to effect those actions, you can’t deny that they are getting some popular approval.

    By the way, taxes always increase during up-turns – and so they should. Last time, the extra revenues were used to pay down national debt, and increase long-awaited investment in public services.

    Perhaps the next upswing will allow the concomitant extra tax revenues to pay down the national debt again. The question in my mind is how painful will that be for me during prosperous times. I suspect not very .

  7. Osborne’s gone quiet on the fuel tax stabiliser. Presumably he realises that hiking it now would knock a few more points off the Tory lead.

    |This is no time for a novice to raise tax.

  8. “the Labour improvement in the face of a recession defies conventional wisdom”

    I can see that this statement is logically correct , but would be interested to know if there are historic examples of incumbent administrations defying it to achieve an election victory.

    There is a growing narrative in the Press along these lines:-
    *Monetary Policy-not Fiscal Policy is the lever which has effect in a recession.
    *A Recession caused by a Private Debt bubble cannot be solved by a Public Debt Bubble.
    *At a certain point, UK Government Debt levels will collapse Sterling’s Exchange Rate, pushing long term interest rates up, and reducing the number of willing buyers of UK Gilts.
    *The World does not need-and the USA will not support-a new panoply of International Financial Regulation -Breton Woods2.

    If this narrative becomes reality, Brown’s fortunes will change & the Conservative’s advocacy of Fiscal prudence will gain support.

    If the narrative turns out to be flawed, GB could win another term.

  9. I do not think we can borrow our way out of this recession without causing a run on the pound and for that reason I do not believe that Alistair Darling will do more than play at the margins. His room for manouvre is fenced in and all this talk is just the treasury flying kites to test city and public sentiment. We have been here before.

  10. I should have said “Conservative & Lib Dem Fiscal prudence”

    Lib Dems would fund their reduction of lower end tax rates, with increases at the higher end as I understand it.

    Nick-it would not have surprised me if GB floated Tax Cuts in order to tempt Cameron into announcing some….then do no such thing in the Pre Budget Report, & criticise Cameron for imprudence!

  11. “By the way, taxes always increase during up-turns – and so they should.”

    john tt:-

    If, by “taxes” you mean Tax Revenues from pre-existing Tax Rates-of course.

    If you mean Tax Rates-I would be interested to know the evidence for “Tax Rates always increasing during up-turns”

    Thanks

    Colin

  12. I thought this group was to discuss polls not tax policy can we have either discipline or moderation

  13. Colin – you’re right I did mean revenues rather than rates – it’s interesting that the TV Tories don’t make such a distinction.

    Paul – the potential impact of tax cuts on polls make it worthwhile to discuss.

    Immoderate discussion requires moderation; no sign of yah-boo nonsense here as far as I can see.

  14. Paul means he wants Anthony to moderate the comments. He doesn’t refer to moderation as a political policy.

  15. I don’t know what other people think but I don’t feel that the response to Cameron’s NI announcement yesterday was particularly positive. Over the weekend they were promising some very imaginative and sharp new tax policies but the outcome seems somewhat muted.

    A key issue in the tax debate is how quickly and dramatically a borrow and spend policy works, and in part this will be linked to linkages with global issues. Brown is angling for a concerted fiscal stimulus and it looks like he will get it, and this makes life easier in the UK – if we borrow and spend in isolation it would have little impact except to ramp up UK debt, but a coordinated global strategy has a much greater chance of success. This is the lesson of the 1930’s.

    I think one thing to look for is the structure of any tax cuts. Since his conference speech Brown has consistently flagged up ‘fairness’. I am expecting tax cuts heavily balanced towards the lower earners. There may even be a redistributive element, as low earners have a higher spending ratio than top end earners, thus providing a further boost to the economy. I wouldn’t be at all surprised if very high earners feel some pain – who would bemoan increasing NI or income tax on £100K plus earners in, lets say the City?

  16. I can’t see the Tory NI change affecting the polls, it seems too small a change and too prone to abuse. If I sack 5 people can I then employ 5 new people and get this tax break? If not, then can I as an employer only take on new people if I have not sacked any? seems the whole thing will be too complex to police. Lets see what the other two parties come up with.

  17. Garry-Your right it won’t.
    But imho that isn’t it’s purpose-not yet anyway.

    Brown sounds as though he will propose a fiscal stimulus paid for by borrowing. Indeed he stated in terms that this stimulus would only be effective if it was funded by borrowing.

    ie-he favours a net injection of spending power into the economy, which, together with the further interest rate reductions he hopes for, will in his opinion mitigate job losses.

    Cameron agrees with the latter-but not the former(adding to “structural” government debt)-so he proposes to tackle the same problem-rising unemployment-by paying companies to employ people, rather than paying unemployment benefit to those people.

    You can argue about the fine print of implementation for either policy-but it’s the difference in principle which matters.

    We have colours nailed to masts-or as john hh said “clear blue water”-this is a good thing from the voters point of view.

    We just have to wait now & see who got it right-the Polls will react accordingly presumably.

  18. Thomas –

    You are correct. Calling it a rogue is incorrect. I simply mean that it is skewed by its timing in much the same way as Conference polls.

    Labour’s tax cuts could see them even take a narrow lead in a poll or two before xmas.

    I really do not understand why people on here react so violently to current polls. People should stay calm and look at the polls come February.

    My guess is that the Tories will be around 10% ahead by Valentine’s as the recession kicks in.

    Incidentally, what was the unemployment figure when Labour came to power in 97? I think it was around 1.95m.

  19. Colin it’s tt not hh!

    Structural borrowing? It’s like increasing the mortgage debt on the house. Usually unwise, and only ever to be contemplated if you’ve already paid a chunk off. Brown’s argument is that the current account is empty because we’ve paid a chunk off in the past.

    Personally I’d hate to extend my mortgage, but if needs must, you make a judgement – sell up and downsize, or ride it out with equity release, and think of a plan to stay above water.

    It takes confidence to do the latter. Ironically, the educated confidence of the Tory top table doesn’t naturally lead them to have confidence in this country’s workforce to work through the crisis and compete successfully.

    If anyone can answer sunbeam’s question, can they also say what the level of national debt was then as a proportion of GDP compared to now? And what inflation and interest rate levels were?

  20. Sunbeam,
    I agree with what you mean, but I object to the language which you use to describe it – ‘skewed’ implies that the underlying trend is obscured, when really the underlying trend(s) are created by an aggregation of responses to the events. In other words ‘skewing’ the polls better than the competition is the job all good party management teams are tasked with.

    Labour has more power to influence and coordinate the events which ‘skew’ the polls as they jockey for position, so perhaps as we look back it was a mistake to bury the by-election in the week of the US Presidential election as this also shows they thought they were going to lose it and has consequently minimised any consequent publicity and therefore influence on the national polls.

    Would Labour’s poll bounce have been higher if Glenrothes had been held one week earlier – or would the ballot have been much closer if held then?

  21. hi Thomas. I’m not sure the result coming so soon after the US election did the LP any harm. I agree is was probably their intention to minimise coverage in the event of a loss, but what it did was allow them to hitch a ride on Obama’s coattails and bask in some of the reflective optimism which came with it. By hammering home the message that Gordon Brown saved the world economy (which is the consensus in much of the world, I read most of my news outside the UK), that Labour have a plan (?) for the UK, and by saying that they are changing things around they have somehow managed to seem forward looking again. The first bit of good strategy I have seen from No.10 in a long time. They now need the actions to back it up!

  22. @ Richard (Tatton) – you seem to assume that everyone here except you is a diehard Tory. Not true.

    And no election is ever “in the bag” when there’s up to, what, 18 months to go before it has to happen.

  23. I think there was a poll recently where 22% of the electorate had trust in politicians.
    If Osborne had worked much harder at getting coverage for his ideas TV wouldn’t be interested in Redwood. But TV knows Redwood has the fascination of the mad lunatic – everybody loves a nutter. Redwood must know this – did he really say Brown should have let the banks collapse?
    IMHO the foreign exchange market and the unions will do for Brown as they have every Labour PM.
    The Germans listened to Clement Attlee after the war and did exactly the opposite – who won that war?

  24. One would have expected on a day when employment has risen again and yet more bad economic news is headlining, that at PMQ’s, the opposition would have at least mentioned the economy! Not very clever politics in my opinion and certainly no votes to be gained by missing such a good opportunity.

    When under pressure, one must not get sidetracked or flustered and miss an open opportunity to examine our oponents economic credibility :)

  25. I get the impression Richard from Tatton is determined to say some of his things about Tory posters before he’s read what they say. As an obvious Tory hater, he must be rather frustrated in Tatton, wonderful area though it is.

    Redwood did not say the banks should be left to collapse on Newsnight on Monday. He was asked it, I think by an opponent, and clearly denied it, saying he wanted to use private money earlier.

  26. Richard Tatton. Not true at PMQ’s Cameron started off by making a comment(not question) regarding the unemployment situation which was refered to on at least 2 TV channels. It was reported that BBC2 feedback was generally very complimentary regarding Cameron and highly critical of Brown at PMQs . Brown has reminded the commentators of several of his weaknesses and this may well influence a change in the narrative.

  27. Mike
    Richard Tatton
    Also the LD leader and I think 2 Tory MP’s raised economic issues.

  28. National debt in May 1997 was 44.2% of GDP.
    National debt by Feb 2002 was 29% of GDP
    National debt 2007 was 36.2% of GDP
    National debt September 2008 was 37.9% of GDP

    Unemployment in 1992 was 3 million, in 1997 a little over 2 million. (The claimant count is different than the unemployed figures before anyone thinks the figures are wrong!)

    In May 1979 there were 25.1 million EMPLOYED
    In May 1983 there were 23.6 Million EMPLOYED
    In 1997 there were 26.6 million EMPLOYED
    In 2002 there were 28 million EMPLOYED
    In Sept 2008 there were 29.4 million EMPLOYED

    Inflation May 1979 9.9%
    Inflation 1980 18%
    Inflation 1997 3.1%

    Bank Of England Base Rates :
    May 1979 12%
    Nov 1979 17%
    May 1997 6.25%
    Nov 2008 3 %

    For those who are interested :)

  29. Mike,I stand corrected re PMQ’s must have missed that bit!
    JJB, If you read my postings on this track again you will see that I haven’t commented on anything any individual Tory posters have said on this thread at all! Tatton is indeed a lovely place (we even voted IND once!) and so is my MP and my dear sister who is very much a Tory parliamentarian, so I am not frustrated at all, I enjoy having my vote communist poster in my Ferrari amongst all the Mondeo Tories :) I hate no one – life is far too short!! Nothing wrong with being a Tory,Lib or Lab or anything else in my book at all, its the people who dont vote that get my goat!!! (But I’m not really a commi :))

  30. a commi is a sort of chef – perhaps you mean a Commie. :)

  31. Inflation rose again from 1979 to 1980 partly because of a switch to VAT.
    It has disadvantages, and becomes regressive if too high, but if you properly zero rate things, it actually gives people more choice about what they want to buy.

  32. Richard (Tatton Const)
    It’s supposed to be about polls here really but your list of ‘stats’ really is lame and has goaded me into responding!

    “National debt in May 1997 was 44.2% of GDP.
    National debt by Feb 2002 was 29% of GDP
    National debt 2007 was 36.2% of GDP
    National debt September 2008 was 37.9% of GDP”

    Do you not think that national debt reduced in the years after the tories were kicked out in’97 in part because their spending plans were adhered to by labour for a few years? It started up pretty quick once they got to work proper eh?

    “Unemployment in 1992 was 3 million, in 1997 a little over 2 million. (The claimant count is different than the unemployed figures before anyone thinks the figures are wrong!)”

    This is just bogus. I reckon we’ve still got about 3 million on some sort of handout. I’m not sure Labour got rid of ANY unemployed at all, just moved a load onto PERMENANT disability benefits instead!

    Also;In May 1979 there were 25.1 million EMPLOYED
    In May 1983 there were 23.6 Million EMPLOYED
    In 1997 there were 26.6 million EMPLOYED
    In 2002 there were 28 million EMPLOYED
    In Sept 2008 there were 29.4 million EMPLOYED

    How many of those are due to the effect of uncontrolled mass immigration (without making any comment on it’s various possible negative effects) and general population growth?

    Crime’s gone down, kids are brighter and more respectful that ever, no more boom and bust, no more slum estates Blah blah…

    Fact is this Labour government will end it’s reign just like the last one, leaving my country in a bloody mess both moral and economic.

    How’s that for partisan?! On the poll, as I’m being honest here, I’m gutted! :-)

  33. Yes Ivan – terribly partisan! :)

    Just within these four walls, there are some of us who can give credit to many politicians of both (yeah ok all of) the main parties… in my case, leaving aside some particularly divisive examples, such as Th*tch*r or T*ny B*nn.

    What gives politics such a bad name among the majority of our fellow citizens is the inability to have anything approaching a civilised, intelligent discussion. Cameron touched a nerve by saying he wanted to avoid “punch & judy politics” – and of course that promise didn’t last long. But surely it must be possible to disagree, even strongly, without constantly accusing the “other side” of lies, bad motives, or incompetence – or exaggerating the real power of any government to control all of the events that occur (either to praise or blame them).

    Our parties are inevitably broad coalitions; there is and always has been far more overlap of views among many members of the Labour, Liberal or Conservative parties than any of them are willing to admit in public. But it is not hypocrisy both to accept this overlap and also to feel more comfortable with – and to remain loyal to and fight strongly for – one particular party. Neither side is dishonest/corrupt/unpatriotic/stupid, but we disagree on which imperfect team we feel more comfortable with and which we hope will, on balance, be best for the country.

    So yes, Ivan (and others) – history WILL show that the last 11 years have seen many important advances and improvements… and also many errors and missed opportunities. I see more of the former and would like at least one more term for Labour, you see more of the latter and would like the Conservatives win in 2010.

  34. Richard (Tatton)

    “National debt September 2008 was 37.9% of GDP”

    That’s only true if you exclude Northern Rock whih you really shouldn’t.

    And the situation now after the recent bank bailouts is much worse than that and getting bleaker by the day.
    Just how bleak will be revealed by Darling in the pre budget report a week on Monday.

    Whilst we’re on the topic of stats one MP at PMQs asked GB a mischievous question – Would GB be emulating every Labour Government in history by going out of power with unemployment higher than they inherited?

    If you look at the Unemployment numbers for May 1997, then look at them now and where they’re going then it could well be true that by May 2010 (next election) unemployment will be much higher than the Labour party inherited in 1997. Even soe so called experts are predicting unemployment at 2.5M over the next 12-18 months which is much higher than Labour inherited.

    Not something for GB to trumpet although I’ve no doubt he’ll manage to put sone positive spin on it, and not somethig you want in the run up to a GE.

  35. The obvious GB spin is that as the Uk population is a lot higher the proportion of unemployed is the thing to focus on. It will still be higher but not by so much.

    The other one is the rise in the work force so even with unemployment growing they can still factually say that there are more people in employment now than in 97.

    Of course as with under the Tories much of this has been the rise of part time working and indeed more commonly now people who do two jobs, Office worker by day and pub worker by night.

    When you break down the figures you can see that where as thirty years ago we had a lot of men working 40 hrs a week, now we have a higher percentage of women in the workforce many working 30 hrs or so spread over two and sometimes three jobs.

    So the numbers employed may be higher but the hours worked not that much different.

    I am not in any way against flexible working or more women earning a living, although it would be better if they got better jobs and the same rates as men but my point is that as time goes on these comparisons are of less use and easily manipulated.

    Richard’s figures above may all be true but they don’t represent a data set and are really just a collection of those figures that cast Labour in the best light.

    A good example of how politicians use statistics but probably not a smart thing to try on a site frequented by semi professional number crunchers.

    Peter.

  36. All Labour governments run out of money-this one just took slightly longer. We cannot borrow our way out of this recession because we did’nt make provision for a rainy day when times were good and which Gordon Brown assumed would go on forever. We are partly in the hole we are in because the country thought it a brilliant wheeze to live on tick and like an alcoholic we are going to have to be weaned off our addiction and government has to set the example. The electorate are not stupid-they know this and will blame Brown if he causes a run on the pound by flagrantly breaking his own rules.

  37. Our gold reserves have been sold at the bottom of the market.
    I think some people are pretty stupid though Nick – the number of “economists” who seem to be calling for the economy to be put back to how it was in summer 2007 – if we attempted that artificially (impossible) we’d compound the problem. And as soon as it recovers, those same voices will want the housing market over inflated again.

  38. Just to counter those two partisan posts above …

    If you read Anatole Kaletsky’s excellent article in The Times to-day, you’ll get the apparent inconsistency into the right perspective.

    Basically, there are two ailments, requiring opposite solutions. The cancer is over-borrowing (gone on since Thatcher de-regulated in the 80’s), but the collapsed lung is the credit crunch, and that requires re-flation before the chemotherapy of re-regulation can work. There’s no point treating a corpse with medicine.

    On saving money – a chunk was paid off the national debt by Brown, and now it’s being re-increased.

    The gold sale is a red-herring – no-one would sell it now.

    And we did need to invest in public services. The alternative would have been health and education vouchers, and no-one wants them any longer as far as I can tell.

    Kenneth Clarke would not have stuck to his own spending plans had the Conservatives won in 1997, he said so himself when he was speaking out against Brown’s stringency in 1999.

  39. So John is another one who complains about partisan posting – I suggest he re-reads his own.

    “The gold sale is a red-herring…..”

    Why?

  40. Margaret Thatcher believed in control of the money supply, although there was a case for loosening it, as it is a very blunt instrument.
    This government has been in power for 11 years and had plenty of power to control an explosion of M3 credit if it wanted to.

  41. JJB
    Mine was partisan, simply to counter yours. I certainly wasn’t complaining about partisan posts – I appreciate them because they make me think, and respond – usually respectfully I hope.

    The sale of gold – it would make no difference to our current position if we had more gold (by current I mean current account).

    The movement in gold price is wrongly used to decry selling it at a low point. The fact is that no-one was advocating selling it at its very high point earlier this year. Gold sits there as security, bolstering confidence perhaps, but more of it wouldn’t have any effect at the moment. What is needed is an international response, so that one currency doesn’t become a safe haven at the expense of any other. It’s no good us lowering interest rates if other countries don’t as well.

    Selling it, only to see the price rise, was only a mistake if you regard the Chancellor of the Exc. as Head Gambler. (some do, I’m sure!)

  42. Redwood’s idea last year was to de-regulate further the mortgage market “because the risks should lie with the lenders” and presumably they would be self-controlled by there own risk management systems.

    Now his idea is to not re-capitalise the banks, but to allow them to seek “private” funds to do so for themselves. Like Barclays.

    I’m not sure the best people to control our banks are middle-eastern wealth funds (or Asian ones either for that matter), but Redwood appears to advocate it.

  43. “The gold sale is a red-herring…”

    The sale of gold under Labour was only partly used to raise revenue. Its more important function was to create a more balanced spread of risk – so while the nominal potential gain from current price rises has been lost, this raises questions about the judgement of the then chancellor.

    Balanced accounting has long been consigned to a mere statistical indicator only relevant to levels of confidence, so provided there wasn’t a crunch the deficits can be sustained indefinitely.

    Unfortunately for all the governments in the post-gold standard period reality has always managed to creep back into the picture to usurp the emphasis placed on politically expedient budgeting by successive Labour and Conservative governments.

    John Redwood is an interesting throwback who represents absolute opposition to political expediency – which is an ironic position to hold for anyone in a power-hungry opposition.

    The twin morals to this story are that expediency is not sustainable and eventually a return to fundamentals is inevitable (that there is no permanent hiding place), but equally that expediency is vital for the vulnerable (who have good reasons to be fearful) and action is necessary.

    Perhaps the current state of affairs shows us at a tipping point between the two poles, which makes things interesting as there is hope that we will find a way to strike a lasting balance.

  44. Thomas – I appreciate your analysis (I’m no expert), but I don’t agree with words like “vulnerable” and “fearful” in this context. Expedency certainly should be temporary, but it should not be countenanced out of fear, but rather out of a desire to maximise the chances of a healthy recovery. That takes confidence, not fear, and requires a soliud plan of action, not a hopeful sigh of relief.

    Personally I like Redwood’s style – I think he’s a real character, and a person of conviction – just (in my view) quite wrong about the way to tackle this storm.

  45. “I’m not sure the best people to control our banks are middle-eastern wealth funds”

    Well you’d better get used to it john!!

    Since November 2007 SWFs have responded to funding requests to the tune of $41 bn in Citi Group//Morgan Stanley/Merryl Lynch…& UBS, the biggest bank in the world.

    Barclays & Lloyds would be dead in the water-or UK government subsidiaries- if it wasn’t for SWFs

    Who is going to buy UK government debt to fund GB’s “anti-recession” expenditure if it isn’t SWFs?

    Brown went to Saudi to ask them to fund his grand new plan for the IMF.

    These are the “Masters of the Universe” now-they own huge chunks of the money we’ve spent ten years binge spending with.This is why we have the “Global Imbalances” GB THe Governor are always refering to..

    All that means is-we’ve spent it-they’ve got it.

    The Global Economic Centre of Gravity is shifting east.

    Just on the vexed question of UK Government Debt-a few thoughts from some quick research .

    Lets include:-Net Government Debt /Public Sector Pension Liabilities because they are guaranteed by The State and fundable from future taxation streams/PFI Liabilities for all future payments on extant contracts because they are Capital Projects funded by “HP” agreements & so shouldn’t be “off balance sheet”.

    1997
    GDP £790 bn ( ONS & BoE)
    Net Government Debt £350bn-or 44.2% of GDP ( ONS)
    PS Pen. Liabs £ 300bn ( Govt Est-Telegraph)-or 38% of GDP
    PFI -just started in earnest-say £15 bn-or 2% of GDP

    making a total of £665 bn -or 84% of GDP

    2008-
    GDP £1486 bn (ONS)
    Net Government debt £563 bn-or 37.9% of GDP ( ONS)
    PS Pen Liab.£915 bn ( CBI)-or 62% of GDP
    PFI-£158 bn ( PAC answer Oct 2007))-or 11% of GDP

    making a total of £1636 bn-or 111% of GDP

    So-the combined Net Debt + PFI liability has increased from around 46% of GDP to 49% of GDP
    In addition Public Sector Pension Liabilities have increased from around 38% of GDP to 62%

    These figures exclude NR £82bn/ Bradford & Bingley £40bn/Recap of Banks £38bn/Bank Loans & Guarantees £250 bn-which will not be a net cost….hopefully .

  46. As a former constituent of John Redwood I really don’t like him, his politics or his manner of dealing with issues.
    I do however respect his position for all that I am capable of disagreeing with it.

    john tt,
    the problem with what you’ve said is that you are trying to condense responses into a singular view, which is impossible while there are massively disperate and multiple opposing circumstances within society – we have yet to determine where the balance will be found, and this is what is being reflected in the volatility of the polls.

  47. Nick Keene

    “The electorate are not stupid-they know this and will blame Brown if he causes a run on the pound by flagrantly breaking his own rules.”

    Agree with you on this – A “golden rule” is only believable if it sacrosanct at all times and will never be broken. GB said in the good times that he “guaranteed” that his 40% Golden rule would never be broken. Now it has been broken and over the next 18 months it will have been broken by a very long way indeed.

    By the look at the big falls in Sterling it looks like the markets have finally woken up to the Governments real financial position.

    The Tories should be making a lot more of these facts in their questioning of the Government.

  48. Oh dear…,

    Same failed social-services, despite billions-of-pounds wasted. And then even the Trots have admitted that any tax-cuts forthcoming are illusionary.

    Time for England to have a choice, and not a dictated solution. Bye-bye Scotland, Wales, Northern-Ireland, Europe, et al.! ;)

    [P.S.: The Kingdom Of England is not exclusive: all former Crown-Colonies are welcome. Holland and Flanders would be cool. Massachusetts and Manhatten are Crown-owned (but were stolen) – ask the people of Maine! So don’t think there is no hope outside Her Majesty’s English Realm! :) ]

    [Anthony: Apologise for a tired post! The poll will prove an outlier. Major Tory win will occur (despite their unwillingness to give we-English a voice…).

    Happy birthday to the Prince-of-Wales. God-bless-Our-Queen! :)

  49. Anthony, what is going on…?

    I thought a rational discussion of Economics was not the point of this site? We should surely reflect on the polling-information and what it portends…?

    Or will you allow me carte-blanche…? It may upset a few regulars…. :(

  50. if government borrowing goes up now to fund public sector spending and tax cuts and the recession is shorter and shallower than if government borrowing doesn’t go up now would that result in government borrowing being lower in the medium term even though it would go up in the short term ?

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