Petrol under £1 a litre

We finally see a supermarket war has broken out, and the result is lower petrol pump prices, finally back below that £1 a litre mark.

The thing is, the price of a barrel of oil has fallen form $150 to $80 but we’re still only slowly seeing 1p – 3p reductions working their way through to the pumps.  It’s also very interesting to note that it’s not the oil companies launching the price cuts, but instead the supermarkets, shaming the oil companies into following suit.

It has been said that it can take up to 6 weeks for a reduction in a barrel of crude to work it’s way through to the petrol pump price.  However, increases in the price of crude seem to have an immediate, sameday, increase in our fuel bills.

Do we have a case of the oil companies wanting to have it both ways?  Or is there any underlying commercial reason that the price cuts have been so slow to work their way through to the consumers.  Some my cite the financial crises, unstable markets, fuel companies being reluctant to pass on cuts incase the next week they need to increase the prices again, and all the bad PR that would bring with it.

Or is it simply the case that the fuel companies will charge what the markets will bear, and that during the last few weeks consumers, the media and everyone else has taken their eyes off the price of fuel, and have been watching the FTSE instead, and so the oil companies have simply sat quietly by and taken advantage of a couple of weeks of higher margins.

If this is the case, is it wrong?  Are we right to expect the oil companies to pass on the reduction in the price of crude, after all they are all commercial companies there to make a profit.  They know that there are lean times coming and that now is not a time for a low margin/loss making price war.  After all, many of the banks failed to pass on the government’s required 1/2 % interest rate cut onto new borrowers, choosing instead to keep it and use that to give themselves a bit of a cushion and to make a bit of a profit to cover those great big losses.

The price cut does however co-incide with the Prime Minsters’s call last week for the oil companies to cut the price of fuel.  It seems that someone is still keeping a close eye on them.

The Top Ten Things That Hardworking Families Pay For.

Today the Prime Minister said

“Let’s never forget we are talking about households that are paying higher fuel bills as a result of global oil prices,  we’re talking about small businesses that are lacking capital because of a global financial crisis, we’re talking about couples and families that cannot get mortgages because of a global crisis, we’re talking about families and communities hit by unemployment because of this global financial crisis.”

This is good news from our Prime Minister who has acknowledged that during this difficult time his priority must be to “do what I can on the side of hardworking families”.

Is this the recognition that tax payers have being looking for years, the “hardworking families” that Gordon Brown is talking about are the normal, everyday, real people that pay the mamouth bills that this country pays every year in providing vital services to everyone, taxpayer, or not.

The top ten- So where does tax payers money get spent?  Here’s a quick guide through 2007-8 estimated expediture.  Are you happy with how your money is being spent?

1.   We spend over £103 billion a year on the National Health Service, this works out at £1,490 per person per year.

We have one of the best health services in the world, with some of the worlds highest skilled doctors and nurses at our service.

Are we as tax payers getting the service that they pay for, or are we having to pay for private treatments because the health service is snowed under with non-contibuting patients from other countries getting free treatment, and others that use the NHS to service their addictions problems?

Do you think that you should only get out of the health service what you put in?  Should treatments be restricted to the people that have paid for it?  And who should come first in the queue tell us what you think?

2. We spend £100bn on Social Services and other forms of Social Protection. 

And this doesn’t include pensions.  £27bn of this is personal social services, another £35bn relates to sickness and disability, £28bn goes on families, and £22bn goes on unemployment and social exclusion.  These are all huge numbers which would explain why policies which look to cut back on incapacity payments, and get people on benefits back to into work are always top of the election manifestos.  Do you agree that this is an area where easy savings can be made?

3.  We spent £79bn on Pensions & Old Age

Again, the UK stands tall in the world in providing a standard pension that everyone is entitled to, regardless of their financial status.  Many groups argue that the pension is too low, and can’t properly support an elderly person who has this as their sole means of income.  The stock market crash has wiped billions off the values of stocks and shares, and with it billions off peoples personal pension funds.  And together with an aging population this figure is only set to rise.  Can we continue to afford to pay everyone a pension, regardless of their other sources of income?  Do you think that Fred Goodwin (Lately departed RBS head) will truely appreciate his £90.70 a week or do you think it would be better spent elsewhere?

4. We spent Just over £70 billion on Education and Training each year, that’s £1,160 per person per year.

Falling class sizes, choice of schools, record exam pass rates every year, more people attending university than ever before……  The Government has spent a lot of money over the last decade on improving education, infact 20% more than 5 years previous.  Do you think we are getting value for money out of the eduction spend?

5. We spend £34bn on defense spending.

This is three times more than the total annual spend on the environment.  Should be be protecting our environment through military defense? Do you this those priorities are correct?

6. We spend £32bn on public order and saftey

Included is this £2bn on managing immigration claims and £5bn on the prison services.  The law courts cost us another £9bn.  Are we paying the costs of being a lawless society?

7. We pay £30bn on interest on government debt.

This is equivalent to £500 per person in the UK.  But given the bank bailout this is likely to rise next year.  We may be lucky, Northern Rock has already repaid 57% of it’s government loan, but how long are we going to be paying interest on the debts used to finance the banks.  Tell us what you think.

8. We spend Just over £21 Billion a year on transport.

Just over £6 billion a year that is spent on our roads, upgraiding them to be safer to drive on. The government is also spending over 20 milliom on road safty. Of this, £15 million was used to support all of the activity on the THINK! campaign. this covers media spend, PR work, sponsorship, partnership work creative work, e-communications and evaluation. The budget is spread across a number of issues such as drink-driving, child road safety. £3 million per year is spent on paid advertising for the THINK! Drink Drive Campaign. About £850,000 per year is for the THINK! Christmas Drink Drive Campaign. And  the rest of the money is spent on public transport,  bus, railways etc. Tell use what you think.

9.  We spend £21bn a year on things we never see.

£5bn gets spent on International Aid, should charity begin at home? Is it time we started looking after number 1? and what could we use that money for that would benefit the tax payers – after all, that’s more than we spend on under 5’s education, or over half of the secondary school budget each year.   This could provide state funded childcare for all of the those hardworking families who see huge amounts of their weekly pay disappear in childcare costs.  An amazing £16bn gets spent on legal, executive and non departmental bodies and organisations.  What do they do with it?  Who knows?  We don’t even know who they are?  Our guess is that this must be the civil service pay!  Tell us what you think, maybe this is the number that everyone jumps on as “wastage”.

10. We spent £12bn on Housing

This must be a minefield for the government, large amounts of houses that are occupied by people who may have never worked, or may never intend working for some reason.  Should we accept this, or should we ask our councils to do something about it.   Should tenants be evicted, and not given other accomodation, if they fail to look after and maintain their properties propertly, and made to pay the bill for fixing the property up?  Do you think that priority should be given on the waiting lists to the hardworking families that Gordon Brown is talking about, instead of them ending up down the bottom of the queue behind those with no earned income.  Even newly arrived assylum seekers are assured of accomodation somewhere or other.  However many working families find themselves stuck on the list for years and years in damp and inadequate accomodation simply because they don’t have enough “points”.

This is the top 10 areas of exenditure as extracted from the Functional and Economic Category Analysis of Public Sector Expenditure, April 2008, table 5.2 Total Expenditure on Services by sub-function 2007-08 estimated outturn.

Thatcher v Brown

Black Monday 2008 and the events thereafter, including the effective Nationalisation of 3 major banks today, brings the 1987 Black Monday back into forefront of everyone’s mind.

Undoubtedly Alistair Darling’s bleak phrophesies of the beginning of Septembers are fulfilling themselves, and we truly are facing some of the worse economic conditions of modern history.  And although Governments, Chancellors, Economists and Policy Makers are currently busy trying to head off the worsening conditions, attention will soon shortly turn to recovery, and how we can kick start the economy, and the financial systems back to life.

In the late 1980’s Nigel Lawson took some very controversial measures which many believe we are now paying the final price for.  These included a slashing of the top rate of income tax, and reduction of the interest rates (yes, you youngsters, the government used to be able to set interest rates itself) to encourage a spending boom.   These forcibly, perhaps unnaturally, low interest rates are credited with the creation of that monster the housing market boom.

And out of these circumstances was created Maggie’s most famous creation – the Yuppie!  Greed is good, filofaxes, shoulder pads, sharp suits and Macintosh’s.  The young Urban Professional, frequently found guzzling the Beaujolais, and saying “OK, Yah” loudly into their brand new brick sized mobile phone.

These yuppies helped to spend the UK out of the recession, and during 1988 and 1989 UK growth was at 5% pa, twice the long term average rate.

So, do we need the yuppies back?  Is there room for the Yuppie mentality which is based on greed and self, particularly in a world that is now concerned about the environment, long term energy solutions and is supposedly a more caring, sharing place than the UK of the late 1980s.

We also have a very different political thinking in place.  In the 1980’s and early 1990’s Thatcher and Lawson were busy telling us that the Free Market was the only way, and that state involvement and ownership only distorted markets and interfered with pricing.  But since then we’ve seen that British Rail wasn’t that bad after all, and that running fundamental organisations such as the Water Utilities and the Rail Transport Network with the sole motivation of profit, isn’t such a “win,win” situation for the rest of us.

The Labour government has a strong ethos of social responsibilty.  How they pursue it, and how successful they are at achieving it, is a matter for everybody’s own individual opinion.  However we cannot doubt that it is core to the policies and decisions made by them.

In the early 1990’s the Midland bank was one of the first UK banks (in modern history) to verge on bankruptcy.  But instead of stepping in and protecting the millions of ordinary people that had savings and mortgages, the Thatcher government left it to the markets, and HSBC picked up the midland bank for a song.  No more the listening bank.

The 1990’s also saw hundreds of small banks & building societies swallowed up under the label of “de-mutalisation”.  Perhaps now we can interpret that term slightly differently – taking the benefits away from the members and giving them away to the shareholders.

The crash of BCCI saw a lot of UK organisations loose a lot of money.  Not householders, but local councils, charities and larger companies.  The UK government did not act, but instead left it to the companies and the banking and market regulators to sort it out.  Laissez Faire – let it be – the free market catchphrase.

Contrast this with the current headlines we are reading this week;

• UK to sue Iceland
• Government takes stakes in 3 UK banks
• Gordon Brown leads way through financial crises
• even “Gordon Brown Superhero”

So who will be the winner?  Who has got it right?  Is it best for Governments to get involved aka Brown, or sit back in the Style of Thatcher and just let it all run its course.  Unfortunately there is no quick and easy answer to that, infact we may now, 20 years on, be finally assessing the impact of Maggie’s decision to Let it Be.

photo credits; Del boy – BBC images

Thatcher & Brown – Dailymail.com