Sunday, 26 August 2007

Putting the food on our plates

This weekend there have been calls for a national watchdog to monitor the supermarkets and the food on our plates. Though I believe in free markets I do think the big 4 supermarkets could do with more watching. I've written about my bug-bear of food labelling before.

Wanting to know more about how farmers have coped with the terrible weather and how the food chain works I went to visit a friend who is a Lincolnshire farmer.

Taking valuable time away from his combine (and given the wheat price it is really valuable this year), Robert took me to see his main crop potatoes. Flooded out in one area, blight in another, but most of his crop looks like it may still be OK. He's been lucky, many other crops have not survived so well.

He said if I wanted to really understand the chain I needed to see the packager so off we went. Multi million pounds of cooler sheds, grading and packaging machinery, as well as fleets of HGVs all to prepare exactly the size, shape and blemish-free produce that we consumers expect to see in our plastic bags. The supermarkets do weald enormous power, they push it down to the packagers and processors, they push it down to the farmers. Farmers markets are good but only serve a tiny minority. I realised that as long as the majority of consumers continue to expect "perfect" looking produce on the supermarket shelves it comes with large scale centralised packaging operations - and the downside is all those lorries.

Thursday, 23 August 2007

Benefit Fraud makes me livid

As a local councillor I'm delighted that the council has just prosecuted yet another benefit fraudster. In this case an unemployed woman claimed over £6,000 in housing and council tax benefit before a sharp eyed council officer spotted a huge plasma TV through the window and a nearly new car in the drive. It turns out her partner had been living in the house all the time. This is the fifth such case our single district has dealt with in the past few months - and people are getting away with this up and down the country. I don't think the courts are nearly tough enough - yet again this woman has got away with a spell of community service.

Benefit fraud makes me livid. It's stealing. Stealing from every one of us who pay our tax each month. I loathe paying tax anyway, every time I look at my payslip I wonder where has all that money has gone? It wouldn't be so bad if I really believed that the money was giving children a fantastic education, making sure a doctor will be there when I need them or even given to those who really need it. But the idea that it has just been siphoned off into some fraudsters pocket is just too much.

Last year the government lost £2.5 billion in frauds and errors. Frighteningly the amount lost in frauds (that we know about) was only £690 million of that amount. The rest was all due to "errors". It's my money, your money and is not working.

Sunday, 19 August 2007

Bring it on Gordon...

In the news today is the story that the Conservative Party are preparing for an Autumn election - should the PM decide to call one. I for one say "Bring it on Gordon".

OK Gordon has had a boost in the polls but I don't believe that he will do as well as he thinks.

From first hand experiences of recent parliamentary selections, I know that the Conservative Party is well armed with an troop of outstanding candidates in many, many constituencies. Candidates who bring wide ranges of different experiences to offer their country, often with strong local roots and, vitally, candidates who are prepared to roll up their sleeves to help others.

Pictured here are Maggie Throup candidate for Solihull and Mary MacLoed candidate for Brentford and Isleworth, giving up their Saturday to come and help me work on the preschool for orphans in Rwanda. Both are constituencies I know well and both candidates will make outstanding MPs for the people they seek to represent. They are not alone. So go on Gordon, give us the chance to paint our own country just a bit bluer.

P.S I've realised that I haven't posted many pictures of the Rwanda trip and everyone in the street asks how it went. So here are just some of the many that show some of the children we helped and some of what we all did.... Thank you for your support.

Saturday, 18 August 2007

Whats happening in the world of money?

I’ve watched the roller-coaster of the financial markets over the past days. What does it means for “normal” mortgage holders and pension holders.

Politically the Labour Party are playing up memories 1992 and the disasters of Black Wednesday. Alistair Darling has repeatedly said that the UK “economy is strong” and we should not worry.

I am worried. The financial world has changed a lot in the past decade and the risks we face are very different.

1. Borrowing, whether through mortgages or loans has ballooned. A small movement in interest rates takes more out of the pay packet than before. We are more “sensitive“ to ½ or even ¼ interest movements than we were a decade ago. Fixed rate mortgage deals mean for some there is a time lag before the pain bites. But it does bite. One of the results of the recent market volatility is that mortgage rates in the UK for higher risk (generally lower income) house-owners have climbed again.

2. Savings have also dropped from historic averages of around 8% of income to nearer 4% today. Savers have less put by to help withstand market fluctuations. The risks of investments are also very different. “Investment Funds” are now much more intra-invested across the globe, frequently in complex debt instruments as well as traditional shares. On one hand this has brought “diversity “ opportunites for savers on the other had means that domestic markets are more susceptible to crashes in other overseas markets than in the past.

The trigger for the current market turmoil was the crash in the US subprime mortgage market. People on low income were encouraged to borrow too much, had problems meeting their mortgage payments and that market has crashed. It’s easy to point the finger of blame - in reality many things could have tipped this turmoil. There has been a bull market, many fund managers have taken more risks in many different markets.

3. As we are seeing the markets can become highly volatile even when there are few underlying changes to companies’ business performance or the economy as a whole. As some markets started to drop, others also spiralled as highly complex investment funds chased “liquidity" and had to sell off other seemingly unrelated investments to meet requirements of their own investors and the ratings agencies.

The “Fed” (US central bank) and the European Central Bank have pushed liquidity into the system in the past days, and for now the markets are a bit better. There are still risks in weeks ahead as it becomes clear who has been hit by this volatility.

What does this mean for regulators and for government? Mud-slinging at hedge funds and rating agencies could appear tempting, as would weighing in with a clunking fist of regulation. However regulation and extra controls can also limit growth - remember lots of people, from different income spectrums, have benefited from the growth in the markets over the past few years, as has the whole economy of the South East of England. Pension funds desperately needed the chance re-grow and businesses have also benefited from increased availability of funds.

As the markets have grown in complexity so has a level of self-regulation through rating agencies and market forces. It would be inconceivable for any government to try to emulate that regulation today. Many of those who have lost out in hedge funds are highly sophisticated investors capable of understanding the risks they were undertaking. Just one of the suggestions in the Conservative Policy document “Freeing Britain to Compete” is that these investors should be free of regulatory interference to take their own decisions on risk.

At the other end of the spectrum, there is an increasing gap between those who are aware, educated, and connected to this complex market and its risks and those outsiders who are not. We must forget the low-income mortgage borrowers in the US who were encouraged to take on debts of 100%+ of their homes whose losses triggered this crisis. It is right that those on the outside (often those who can least afford to lose) should be properly informed about the risks they are taking on. Regulation of financial advisors, and mortgage lenders is important but, as in all sectors, regulation should be targeted towards helping to manage sensible risks without stifling opportunity or becoming overly burdensome. Redwood and Wolfson's report this week on competitiveness does not call for an end to all regulation - but to make sure that regulations are disciplined, costed, regularly reviewed and where practical phased out by competitive pressures and market awareness. It is this balance of regulation that is wrong in Britain today.

Sunday, 12 August 2007

Back in the UK....

It's good to be home.

From Rwanda I travelled for 36 hours to the west coast of Ireland - a place where my family have holidayed for 36 years. When I was a child this was a deeply poor area. Children piled out of cottages with no shoes, donkeys were still used as transport and rocky hilltop "fields" were tilled by hand. I nearly bought a house there 10 years ago - I can't afford to now - Ireland today is a very wealthy country.

I have seen that Ireland's economic boom has been partly due to international aid but it has also been thanks to great education, hard working people and low tax policies.

Its always interesting to see how ones own national news is reported from overseas. I'm returning to a stock market crash, hiking interest rates, foot and mouth and a fight about congestion charges.

In Ireland traffic is a huge problem. I hate traffic jams. They are a waste of time and, in an economy, time is money - but I'm not convinced that conjestion charging is the solution - unless coupled with massive improvements to affordable public transport. I haven't seen that commitment from our government.