Bring On The Toffs

Sovereign Wealth Funds, recently discovered by the British media, have been in existence for more than 30 years. Kuwait was one of the first to hit on the idea of holding reserves from its sales of oil in assets other than government-issued debt or bonds. Now there are a clutch of countries with multi-billion positive balance capital accounts, the funds invested with an eye to achieving bigger returns by buying businesses, shares, commodities and other assets around the globe.

Although much feared by some in case these funds start buying ‘strategically important’ assets such as American ports, or shipping, the credit crunch has shown that, on the contrary these funds have been playing a vital role in saving American and European banks, and greatly assisting the stability of the world’s financial system.

In an interesting Spectator article Martin Vander Weyer HERE points out that Britain would have been able to start building a Sovereign Wealth Fund of her own, using North Sea Oil tax take, which produces about GBP10 billion a year. By his calculations this could have been worth GBP500 billion by now, the equivalent of one year’s government spending.

Little Norway for example has managed to build a Sovereign Fund of GBP200 billion, by ensuring the one-off benefit of her oil was used to buy other assets.

In 1997 when Labour came to power, government spending was GBP800 million a day. If this had been carefully tended, the boom years that have followed that date would have been sufficient to buy Britain one of the largest Sovereign Funds in the world. Instead Britain was fed on a glut of election-winning cheap money, leading to high property prices which are now teetering, combined with private and public debt and deficits at record and unsustainable levels. Government spending in now GBP1.5 billion a day, but despite all these billions being thrown into the State sector, most people say that they get less from public services now than they did before. Brown has literally blown the lot.

From being one of the richest and most competitive countries in the world, Britain under Labour has become a financial basket case. It was no accident. New Labour and especially Gordon Brown, pretended to market ‘prudence’ as one of their virtues. But throughout the Brown/Blair years, money was thrown around like confetti.

The only currency which these two respected, was hanging on to power, in Blair’s case to feed his uncontrollable narcissism. In Brown’s to hide the fact that he was almost bereft of any management or leadership ability of any kind. By throwing money around (or just pretending to by multiple announcements of the same spending), he found he could silence his critics.

The result of Brown and Blair is that instead of being in a healthy financial position with plus GBP 500 billion invested around the globe, Britain has been reduced by New Labour into the state of financial hopelessness, with inflation shooting up, banks unwilling to lend to each other, and taxes having to be raised while incomes are squeezed.

As Labour parades its activists around in Crewe and Nantwich, asking voters to dislike Conservatives for being ‘Toffs’ (See previous post – Labour Emulate Monster Raving Loonies), it might give voters pause for thought. Why is the country reduced to such a mess, when not long ago the economy seemed so strong? Might the irony not occur to some that the one thing that traditonally wealthy families did well, was what Labour is congenitally incapable of doing, that is, treating money with respect, and saving a bit of it. See Telegraph on how much Labour has spent since 1997 HERE.

Now if Britain’s government could learn to do that, a bit of ‘toffery’ might not be that bad a thing. Non-toff Ken Livingstone might appeal more to the social instincts of the average Londoner, despite his anti-semitic tirades, and strange associations with South American dictators, but the New Mayor Boris the Toff will get the price of your bus ticket down, and your Council Tax.

As it is, Britain has no choice but to struggle under load, undoing all the damage inflicted by Blair and Brown, the two biggest money-blowers in its history. The Conservative slogan quite clearly should be exactly as proposed by Labour – ‘Bring Back The Toffs’, or at least the respect that the Toffs held for people and their money.

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.

2 Responses to “Bring On The Toffs”

  1. Anonymous says:

    Remind me under which prime ministers North Sea revenues started to accumulate…?

  2. tapestry says:

    I’m glad you asked me that, Mr Anonymous. In Labour’s first term Britain moved from deficit into a substantial fiscal surplus.

    Brown claimed this to be ‘Prudence’.

    In fact it was an attempt by him to comply with the Maasdtricht Treaty to the letter. Although Major obtained an opt-out from joining the Euro, he diod not obtain an opt-ouit from the Euro Convergence Criteria.

    These specified that no government could run a fiscal deficit of above 3% of GDP. In good years that enforced a surplus, as in recession years, government revenues can fall as much as 8%.

    You could fairly argue that Maastricht made it impossible for Britain to build a Sovereign Fund, due to the Maastricht requirements….and still does.

Leave a Reply

You must be logged in to post a comment.