Apple vs the UK Government

I read an amazing fact about Apple yesterday. It is sat on cash reserves of $51 billion. Yes that’s right it has liquid assets of $51 billion dollars, which is approximately £32.73 billion pounds.

For comparison the UK government held net assets of $38.1bn in November 2010 of which only $701m was cash, so Apple has 72 times the cash reserves of the UK government. If it wanted to Apple could not just buy those 2 aircraft carriers that the MoD can’t afford but actually pay for its entire capital and operating budget for a year with a bit of change left over  to run the Energy and Climate change department.

Perhaps we should start taking economic advice on how to run the country from Steve Jobs.

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The jobs tax is back

One of the most successful attacks against Labour during the campaign was the branding of Labour’s budgeted National Insurance rise as a tax on jobs. The term stuck, looked great on posters and in headlines, talked to the growth agenda and was a definite policy redline between the two parties.

Fast forward 8 months and unbelievably it’s back. In case you missed it, today saw VAT increase from 17.5% to 20%, and Alan Johnson took to the airwaves to say it was the wrong choice and that instead we should be raising National Insurance (which would mean about a 4% jobs tax rise).

And knowing how catchy the phrase “tax on jobs” was Labour have also been out and about trying to brand VAT as a tax on jobs (because people will buy less, even though a 2.5% decrease didn’t really make people buy more) and therefore companies won’t make as much money so jobs will be lost. Do you follow the odd leftie logic there which avoids the growth / disincentive to employ arguement completely.

To back them up they have the CIPD saying that the VAT rise will mean 250,000 jobs lost by 2015-16 three times the jobs official figures say will be lost as a result of the NI increase (not forgetting other measures predict 2.5m new jobs created). Except it turns out that the CIPD got those figures by their head, who happens to be a Labour party member, ringing up a few friends and asking how many jobs they thought they’d lose, multiply it up and there’s your quarter of a million you were looking for.

So the tax on jobs is back and here to stay, you can have either the Labour or Conservative flavour depending on your political persuassion.

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Swinging further right won't win an election

There's a great post on Spectator Coffee House (again) which points out an important point, best highlighted by this paragraph

"Let us be clear. The idea that a more right-wing strategy would have garnered more votes at the last election is simply not borne out by recent history or polling. It would win an outright majority on Coffee House and ConservativeHome - but not in the country."

It's right, this idea that the party should be more right wing and then it would have won a majority is pure delusion. As is the idea that the Lib Dems are forcing the coalition too far left. The right wingers screaming from the papers and ConHome that the party needs to go further right are just undoing the brand detoxification and making the wider pubic think that underneath the new branding we're just the same old Tories. If that sticks then come 2015 we'll lose, simple as that.

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High petrol prices equals low polling numbers

Peter Hoskins over at the excellent Spectator Coffee House Blog has pointed out the history of high petrol prices correlating to low government polling numbers.

Apparently when petrol was at it's previous highest we had our largest lead over Labour and when it was at its lowest they closed the gap to just 1 point.

As he points out VAT increasing and an increase in fuel duty is about to drive what is already a high price even higher. This could be bad news for the government.

You can see why this correlation happens when there's significantly less correlation to overall inflation (which has also been rising). Petrol is the one thing most people buy exactly the sane amount of every time, and being creatures of habit, normally from the same place, as a result they are incredibly sensitive to price changes. When your tank empties you go fill it right up again and if it cost you £60 last time and £65 this time you feel that you have less money in you pocket. By comparison it's a rare family that buys exactly the same things every week in the supermarket so price increases are much less noticeable there even if month on month they may be higher.

So what can the Government do? At the moment very little. The manifesto, but not the coalition agreement, included a fair fuel stabiliser which would fluctuate fuel duty up and down based on the underlying price of petrol. This is a fascinating idea but difficult to implement at s time of deficit reduction as fuel duty is a flat pet litre rate not a percentage so it results in fluctuating revenues for the exchequer.

My prediction is that if underlying petrol prices continue to soar then this will be announced in this year or next year's budget to come into force in two years time therefore giving a temporary polling boost and delivering a pre election lower petrol price related boost as well.

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2011 predictions

My predictions for this year

1) The coalition will hold together. After all it's a coalition of views not everyone has to agree all the time and the sensible people in both the Conservative Party and the Liberal Democrats know that being in government in coalition with compromise is better than not being in government.

2) Ed Milliband will become more effective as opposition leader, not because he himself will become more effective but because his team will. You only have to look at how reactive his new Comms team has been to Bookstart and other stories since they were in place (and technically they don't start until the new year)

3) Inflation will become an issue (see this week's spectator for why it really already is) which probably means an interest rate rise and perhaps falling house prices (especially if house building gets off the ground and supply is increased).

4) There won't be a reshuffle, and certainly not of Secretaries of State in the major departments. Most ministers such as Gove, Lansley, Pickles and Duncan-Smith and their teams know their briefs inside out and have shadowed them for years. They have passion for their areas and are determined to deliver the headline reforms necessary.

5) Gove will go back on something else, probably another spending cut which will make delivering his CSR settlement difficult.

6) the AV referendum will fail to ignite the interest of the public until the last minute. This will mainly be driven by a lack of media interest, until the last minute when they start running stories about how uninterested the public is in it.

7) A devolution of power through the localism agenda will be seen by the media to have failed somewhere when one area gets something another doesn't. Postcode lottery will be screamed by the headlines and the left will scream that this is why we need central control and targets. The government will wobble on its commitment to localism as a result but will pull through it after a cohort of new backbenchers lead the charge against the old guard.

So all in all it's going to be a tough year but all in all a good one.

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Tory Minister sacked for pro Murdoch gaffe

A Conservative Minister's front bench career was over last night after it was revealed he had been secretly recorded boasting that he would  approve Rupert Murdoch's take-over of BSkyB regardless of the evidence put before him.

"Am I at war with Rupert Murdoch?" He said on the tape "Far from it, if anything I would say I love News Corp and Rupert, perhaps a little too much, ha ha"

Is what the papers would have been reporting had the Business Minister been a Conservative and he'd been caught saying the opposite of Vince Cable. For what Vince said, was no worse than the quote above, yet he maintains his ministerial position (albeit with a bit of power cut from it) and there is no outpouring of rage over his lack of impartiality from the anti-mudoch media.

If the situation had been reversed and it had been revealed that the Business Minister was pro Murdoch you can gurantee that the columnists would still be screaming now. Instead we have the Telegraph claiming that it had always intended to publish the full transcript and that tidbit, really we did, honest, there was no agenda in leaving it out, none whatsoever. All in all simply appaling journalistic ethics.

Worse still by keeping Vince as a minister all that is happening is a reinforcement of his delusion that he's in some way too important to be sacked and a stoking of his monster, I predicted the recession, ego. Yes I understand that he holds a large sway over the left of the party but by not removing him, and in broad terms barely sanctioning him, all that has happened is that power has been reinforced.

Since Vince came to office he has enjoyed the privilege of pushing his left leaning views out there, playing to his left base within the Liberal party, who lets face it are really Labour voters too afraid to vote Labour. Coming alongside his constant banker bashing and his crazy anti captialism speech at the Lib Dem conference this whole fiasco has turned into just another chance for him to play to the gallery.

Footnote:
For a fantastic take on the Cable story check out satirical website The Daily Mash

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Why Labour are really against Elected Police Commissioners

"At the heart of objections to the Bill lies a deeply worrying philosophy. It is the view that one cannot trust the people. Heaven forfend that they might elect someone who represents their views. Those are the same disreputable arguments that were mounted against enfranchising the general public and women. The same attitude pervades opposition to the Bill-that one cannot trust the electorate. It is as undemocratic as it is elitist to argue that the public should have no say, and that our public services would be run so much better by people who are unaccountable and who know better than them."

Nick Herbet, Policing Minister

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