The Rt Hon Malcolm Bruce MP

October

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What it takes may be big interest rate and tax cuts

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Parliament returned this week to a financial crisis that turns and twists in different directions almost by the hour. After the shotgun marriage proposal of HBOS/LloydsTSB and the nationalisation of Bradford and Bingley we were faced with the decision of the Irish Government to guarantee all their bank deposits apparently followed by Germany. This puts pressure on Gordon Brown and Alistair Darling to follow suit.

I had the chance to intervene on the Chancellor in the first statement of the new session.

I could not resist pointing out that I and others had forewarned of at least some of the present troubles when we had called for action against banks pushing unsolicited credit card debt and mortgages based on more than 100 per cent of value and five times salary.

Of course we could not have known how much had been swept into dodgy derivatives which are the course of the threat of global collapse. We had kinda hoped that the financial authorities would have been watching these. Clearly they weren't.

However the threat now is to the real economy, consumer spending businesses, homes pensions and jobs. This requires new good capital which the taxpayers will have to underwrite. The Chancellor says he will 'do whatever it takes' to meet the crisis but clearly he doesn't know what that is.

There were a couple of points I chose to make. I campaigned for the independence of the Bank if England in the 1997 election. Gordon Brown and Alistair Darling didn't but they implemented it with no mandate immediately after they took office.

I don't favour setting that independence aside but I do take the view that Parliament could in exceptional circumstances change the terms of reference. At the moment the Bank is charged with keeping inflation within Government targets and subject to that having regard to employment and growth.

The Chancellor thinks that is fine. The trouble is that inflation is already outside the upper limit of the Chancellor's target which limits the Bank's room for manoeuvre. If we want to make a serious statement we need to cut interest rates by at least 2 per cent to ease the burden on consumers and businesses who are threatened with recession and deflation in spite of current high prices.

The Chancellor could assist hard-pressed families further by cutting the basis rate of income tax by up to 4p. These two measures would demonstrate the Government really meant business in tackling the worst financial crisis in most people's living memory.

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42-day detention without charge a lost cause

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It looks as if the Government is finally recognising that it cannot get its law to detain people for up to 42 days without charge through Parliament. Certainly to persist in the face of sustained opposition in both houses when it is seeking cross party support for financial rescue messages would be thrawn.

In any case, even if it passed into UK law, there is every indication that it would be in breach of the European Convention of Human Rights.

I am not soft on terrorism. I accept there is a real threat and we need to be able to respond. That means strict security checks and effective intelligence. It is why we have to maintain our commitment to Afghanistan to help local people and minimise the danger of it becoming a safe haven for terrorists again. However, giving up a right we have valued for centuries would be to surrender to terrorists. It is simply not British.

Nor to my mind are ID cards which will not stop terrorists or criminals but will incur massive cost and intrusion to ordinary citizens. Given the massive cost overruns of Government IT schemes and the almost daily loss of confidential data this is something that could be abandoned and the money returned to the taxpayer.

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Country dwellers and cash metre payers fuel losers

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Ofgem have concluded that there is no collusion on electricity and gas prices among the leading suppliers. That will be greeted with disbelief by many but this has been through and therefore may be hard to dispute.

However Ofgem did 'discover' that those off the gas grid were losing out both in terms of prices paid and because they were using more expensive fuels such as oil.

They said this was a surprise and adversely affected rural consumers in Scotland. Well, they shouldn't have been. I and others have been telling them this for years.

How many of you have received the flyers offering you extra discounts if you switch your gas and electricity supplier to the same provider? That seems to have been the main effect of competition - billing economies rather than fuel economies. And if you can't get gas (like me) then you can't have the extra discount - costing as an average extra £55 a year. I'll be looking out for the remedy.

The other disadvantaged groups are those who pay through pay as you go meters. No surprise there either although I question whether direct debits are that good a deal for the customers as the power companies are more in credit than I am. Let's see how long a remedy takes.

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High risk re-shuffle for high risk Government

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The Prime Minister's Government re-shuffle caught all the commentators by surprise with the return of ' Mandy' - Peter Mandelson aka the Prince of Darkness.

Mr (soon to be) Lord Mandelson is an architect of New Labour. Yet he had to resign twice form Government in circumstances that revealed a natural arrogance in his right to rule.

He was a good Secretary of State for Trade and Industry and that is the post, effectively, to which he has returned with the four years of experience as EU Trade Commissioner under his belt.

It is a high risk bringing him back but a Government that has suffered such dire reversals over the past year needs to take risks.

One labour MP described the financial crisis as Labour's Falkland moment when an unpopular Government takes on an unexpected crisis with a high risk strategy and no guarantee of the outcome.

Well. We will see. So far the Tories have looked unsure and uncomfortable and it has taken Vince Cable, the Liberal Democrats' Shadow Chancellor to take the lead to great effect.

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Crossrail essential part of city by-pass

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As the Aberdeen Western Peripheral Route enquiry rumbles on I believe it is right to link this to the Government's dilatory treatment of the Crossrail project. This was always seen to be an integral part of the whole project. It is not just a vehicle by-pass but required public transport options.

That was understood by previous Ministers even if they had not formally committed to it. That is no excuse for present ministers. The plan continues to be progressed but against a background veering between indifference and hostility by the Scottish Government.

My colleague Alison McInnes, North East Scotland MSP, former chair of Nestrans and wholly committed to the Crossrail plan is campaigning hard in the Scottish Parliament to secure positive support. She has my full backing.

ENDS