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Gordon Brown has put a brave face on the economic downturn by declaring today that “we have got through the storm together”, though he warns there will be “bumps in the road ahead”.
There certainly will, judging, for example, from yesterday's trade deficit figures, which showed that the gap is now at its widest since August 2008, despite exporters benefiting from a weak pound. Today's manufacturing figures are dreadful, too. Meanwhile the public debt stands at £178 billion.
The Budget, which we shall get in a fortnight, will be a measure of how realistic the Government is on the economy. We can assume, given an election follows hard on the Budget, that the Chancellor will not wear his hair shirt too conspicuously. But measures such as the PM outlined today, including pay restraint for top civil servants, will amount to savings of only £3 billion, which comes nowhere near the amount that will be needed to tackle the deficit.
Still, the Government can always get some credit for measures to tackle public disquiet about the scale of bankers' remuneration. Today Lord Myners, the financial services minister, outlines plans to oblige financial institutions to publish figures about how many of its employees are paid £500,000 and more. This may not be a means of identifying overpaid individuals, but it is a way of ascertaining whether banks are responding to public concern about their behaviour, notably on bonuses.
It may be a political move but it is a useful one. That, however, should not distract our attention from the bigger, blacker economic picture.
Down the Tube
Today's decision by the arbiter of the Tube Public Private Partnership was not unexpected, but it deepens the sense of crisis surrounding the next seven-and-a-half-year tranche of Tube work. He has ruled that contractor Tube Lines can charge Transport for London £4.46 billion for the work. TfL had said it was worth £4 billion; Tube Lines had demanded £6.8 billion, revised down to £5.75 billion.
Unless Tube Lines was grotesquely inflating costs, it is unclear how it will complete the work, at least on time — and the Northern and Jubilee line upgrades are already badly delayed. Equally, while TfL is talking of possible legal action, it is not clear where it will find the extra £460 million if, as seems likely, it has to swallow the ruling.
That would mean hard choices for the Mayor. He could either scrap vital Tube upgrades or put them back by years, or else take money from elsewhere in TfL's budget. Where? Further cuts to bus services would be unpopular. He could renege on his commitment to scrap the western zone of the congestion charge, which would raise at least £412 million over the period concerned. Or he could raise fares — but they have already gone up significantly.
Many will wonder why London Underground cannot simply take over Tube Lines' work — but tearing up the consortium's contract would be hugely expensive. Whatever the financial solution — and the Transport Secretary has already refused to give more money — the wasteful PPP scheme is likely to stand as Gordon Brown's lasting gift to London, long after he has left office.
The Phantom's return
CriticaL opinion of Andrew Lloyd Webber's new musical, Love Never Dies, may vary — but there is no denying he remains a central figure in London's West End. Its opening last night was an event, generating huge excitement. Love Lloyd Webber's shows or loathe them, they are part of the draw of London theatre: we welcome his new spectacular.
Reader views (1)
How come wage "restraint for top civil(?) servants" doesn't seem to include MP's bloated salaries?
- Pee'D Off Pensioner, London / UK, 10/03/2010 17:20
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