Emperor Browns new Clothes

First the Germans said, it now the IMF have followed suit Far from being the saving of the British economy the VAT cut is looking more and more like the Emperors new clothes.

But should we be surprised, while the big retailers are happy to pass the savings on what about the rest of the economy.

The publican running a microbrewery "I cant afford to change all my menus and beer prices are actually going up, the duty change over cancels the cut in VAT and that is permanent"

The small builder (and the haulage sector) "increases in fuel duty mean we are paying more not less tax and we cant claim that back"

Hotels personal experience "none of the hotels I use on a regular basis have changed their prices so all this means is margins going up"

Sure I have saved some money as a result the vacuum cleaner we needed to buy was £3 less but I saved far more by shopping around for the Children's presents than I did from VAT changes.

So where are we left, in 373 days VAT will return to normal and if the commentators are to be believed we will still be in deep recession. Potentially worse the rise may even create a double dip scenario with firms either forced to cut margins or see a further hit to spending.

We need confidence back by that point if we are to survive.

So is it working? Just look to the high street today

The Officer Club : up to 70% off

HMV: 2008 chart albums 2 for £10

B+Q: 50% off sale starting tomorrow on bed, bath and kitchen furniture

Adams: savings on everything bar the spring 09 collection

Waterstones : large range of 3 for 2

The sales have started and it isn't even Xmas eve. Compared to this the Chancellors offering is an expensive red herring.

Then look at the queues the bigger the cuts and the cheaper the branding in any case the bigger they were, The Works, Primark, Waterstones were all busy. In short shoppers were trading down and again by far more than 2.5%.

Now the figures in January will tell their own story as no doubt will be the number of businesses in receivership but now is the time for the Chancellor to be bold.

If the stats show the VAT cut isn't working it should be reversed immediately. With the money saved he should.

Invest in insulation of all public buildings.

Underpin the housing market by purchasing vacant property across the country and use it to reduce council housing waiting lists and homelessness.

Initiate further investment in infrastructure modernisation across the UK.

If the chancellor thinks getting the public deeper in debt for consumable items is the way out he is little more than giving whiskey to the dunk on the street corner. We do need to spend but we need publicly visible signs of our investment to build confidence in the rest of the economy not just a cheaper wii to fill our days while we sign on and look for a non existent job

If Gordon can multiply why can't Darling

An old colleague once told me the key to winning EU bids is not to show how much grant money you will spend in an area but how that money will multiply within the local economy.

While its seems that our PM has learnt this lesson the chancellor most definitely has not.

What do I mean by this curious statement well take their two big announcements. When the chancellor decided to give home buyers free loan to spend on new build he created a single transaction in short he allowed the payment to the builder. No knock on no multiple just one payment and one transaction.

In contrast GB resisted the siren calls of a rob peter to pay paul windfall tax which would just circulate money around the system and hit lower middle income earners with big price increases. Instead he offers up a means of saving money year on year and the opportunity for builders to take on new work to see them through the current slump in their trade creating new tax revenue two three or more steps away from his original investment.

So now think about the housing market if the Darling proposal was also open to old houses how many links in a chain could be completed with all associated agent and legal fees and at the high end of the chain additional tax for him to reinvest further.

So I say again if Gordon knows about multiplication perhaps he need to teach his (new?) Chancellor about the trick

Gwyneth Dunwoody

When you see on teletext the note veteran MP dies that first though is often I hope it isn't one of ours (followed a microsecond later by how sad for the family).

Todays news I have to say leaves me feeling that it is one of ours that Parliament has lost this week. At a time when too many politicians are little more than lobby fodder for the whips it is vital for our democracy that genuine thinking politicians with a free mind can still find their way to Westminster.

That is the type of person I feel we have lost today, while Labour now praise her memory and her effectiveness I hope they select a fit replacement in the same mould to contest the seat, if not I hope they get well and truly stuffed

Do Labour MPs need reading lessons?

Are some of our poor hard working labour MPs in need of a lesson on how to read legislation?

The reason I ask is they seem to have failed to understand the text of the budget measures they voted for last year with the 10p tax band....

..or did they?

I can just imagine the discussions 12 months ago

MP1: "Gordon I dont like this cut is sounds so unfair on the poor?"
GB: "keep quiet I'll be PM in a couple of months we get another 5 years in September and everyone will have forgotten the change by then"
MP1 "OK but..."

Need we say more?

Johnson - pleasure at Lib Dem Response

There but for the grace of god go I must the non atheist MPs be saying today over the supposed Alan Johnson "scandal".

As far as I can see Mr X didn't want to be associated directly with funding the campaign so he asked Brother Y to give the money instead. Y was a legitimate donor and campaign Z having checked him out made the formal declarations.

For the Mail on Sunday to cry sleaze is I have to say a bit over the top this wasn't a deliberate ploy by the campaign to hide donations it was an act of deception on the part of an individual against a member of parliament.

Of course the time is ripe for reform of the party funding system part one reform that I am sure will get cross party backing is the creation of a new offence of paying a proxy to make a declarable donation under the PPERA legistation to an individual party or campaign

Between the Rock and a hard place

Yes its back to our old friend the Northern Rock and the complete dogs breakfast our government have made of the whole sordid business. I've said before that the government has many unanswered questions.

But the latest steps in this affair have left me decidedly underwhelmed. While I have never favoured nationalisation which puts me at odds with the party as a whole I do find myself agreeing with much of what Jonathon Wallace had to say earlier this week.

However what alarms me has been the wholesale demonisation of the shareholders during this affair. Sure some of the hedge funds are latecomers to the party and many have upped stakes as the price hit the trough it is now in and will have made a tidy profit this week however there are many of us who have held shares since demutualisation and we may yet get our revenge.

You see what people have tended to forget is that the three motions that failed at the recent EGM only did so because they needed a 75% vote all three motions secured over 65% of the vote showing a clear level of discomfort at what was planned.

So where are we now. Well despite all the Labour spin of the weekend Branson is not the only game in town , both Olivant and the new board are putting together packages and the shareholders will have the final say and with the Government finance on the table who is to say others wont appear.

And that is the rub the original Virgin offer was an insult to the intelligence of the existing shareholders. We were in effect told to double up or risk with no guarantee of returns for the foreseeable future or lose everything.

Since then the incompetent handling of the affair by our Chancellor has seen shares fall still further and the balance sheet get bleaker. So when we now see Gord and Dickie smiling at one an other in China there comes a temptation to to say sod you when it comes to a vote.

However there are more questions that now need to be aired.

Given the sensitive nature of his comments weren't Northern Rock shares suspended first thing on Monday morning until after the Chancellor had spoken in the Commons (or at the very least while he was speaking) ?

What exposure does the government have in the event of a failure and what exposure do shareholders have in the same circumstance?

And what are the government plans if the only solution they approve is Richard Branson and his plans are rejected by shareholders?

While a private sector solution looks possible nothing can be rules either in or out at this moment in time.

Clegg Q+A in the People

Since everyone has picked up on the Times and Telegraph already I thought I would point out a nice simple little Q+A in the People (note I scan the on-line site not buy the paper).

The questions are intelligent and the answers largely to the point. The Christmas presents will make you laugh.