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Peter Oborne - Does George Osborne Dare Reveal The True Size Of Britain's Black Hole?

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http://www.dailymail.co.uk/debate/article-1278581/PETER-OBORNE-Does-George-Osborne-dare-reveal-TRUE-size-Britains-black-hole.html

He suggests that it could be as much as 2 trillion pounds.

Prime Minister David Cameron has moved with incredible speed, daring and ruthlessness. In a matter of days he has reshaped the landscape of British politics, chucking overboard the Tory Right, and creating what is, to all intents and purposes, a completely new political party: the Liberal Conservatives.

What Cameron has done is extraordinary. For ten years Tony Blair dreamt impotently of moulding a progressive alliance on the Left of British politics though a merger of Labour and the Liberal Democrats. Cameron merged the Lib Dems and Tories in three days. Whatever else, it shows that he is a leader of the highest calibre. But his biggest challenge is yet to come. The real problem facing Britain is not political. It is financial, and last week's pyrotechnics at Westminster have done little to address the economic crisis.

It is very grave indeed. And once again it confirms one of the immutable laws of politics and economics in Britain: it is Tory governments who sort out the chronic mess habitually left behind by Labour. Back in 1979, Margaret Thatcher's overwhelming task was to address the social and economic catastrophe bequeathed by Jim Callaghan's outgoing administration. Social order had broken down, unemployment was rising, the unions were on the march and the country was living beyond its means.

Thatcher saved Britain - and has never been forgiven by the Left for doing so. The challenge facing Cameron and his new Chancellor George Osborne (the youngest occupant of the post since the 19th century) is graver and even more onerous than the task that faced Thatcher and her Chancellor Geoffrey Howe in 1979. Consider the facts. This year, according to Treasury forecasts, British government spending was expected to exceed income by the spectacular sum of £160 billion. That is approximately £500million a day - an amazing sum of money.

Brown's government was in total denial about this desperate situation. It refused to do anything to confront our massive national indebtedness. Indeed, just before the General Election Brown took the reckless step of postponing the Comprehensive Spending Review - the housekeeping exercise through which the Chancellor of the Exchequer sets the budgets of government departments - until next year. This meant that during the election campaign, Gordon Brown could use every opportunity to accuse David Cameron's Conservatives of planning cuts that would damage the living standards of ordinary people. Such conduct was deeply cynical because Brown would have known that he would be forced to make cuts himself if he'd won the election.

Labour's decision to bury its head in the sand means that for the past two years the British people have been insulated from the consequences of the global economic recession. Over the next few weeks that safety net will at last be taken away. We will be forced to acknowledge the appalling economic reality.

George Osborne's first act on entering the Treasury 72 hours ago was that of any new chief executive who takes the helm of a failing or bankrupt corporation. He ordered a rigorous and thorough examination of the books. So over this weekend a top-class team led by Sir Alan Budd, a highly regarded economist who is the head of the newly created Office for Budgetary Responsibility, is going through the Treasury accounts with a toothcomb, seeking to expose the accounting tricks and fraudulent devices for which Gordon Brown and Alistair Darling were notorious.

One of Brown and Darling's favourite wheezes was to hide government liabilities 'off balance sheet' - the same kind of notorious business practice that led to the bankruptcy of the Enron energy trading concern almost ten years ago and Lehman investment bank in 2008. They did this through the Private Finance Initiative (PFI), whereby the government built hospitals, schools and other public enterprises using money borrowed from the private sector which will have to be paid back like mortgages over a long period.

Crucially, those massive loans have not been declared in the public accounts - something that would be illegal in the private sector - yet it is we taxpayers who are going to have to foot the bill. Gordon Brown and Alistair Darling were aided and abetted in their financial skullduggery by the Treasury Permanent Secretary Sir Nicholas Macpherson, who may now find himself with some very tricky questions to answer.

It should be born in mind that one of the key reasons that Gordon Brown got away with this deeply questionable conduct was that he sacked or moved all the honest and independent-minded officials who stood up to him. Sir Alan Budd's task will be to establish where the PFI liabilities have been hidden, to quantify them, and then to make sure that they are accounted for in a regular and honest manner. Nor is that all. Over the past ten years, New Labour has also repeatedly given in to trade union demands for higher pensions for Britain's six million public sector workers.

As a result, our civil servants now have far better and more secure pension entitlements than their counterparts in the private sector. But once again Brown and Darling concealed the cost of these concessions by hiding them 'off balance sheet'. Nobody knows the true extent of the liability, but experts reckon that it could stretch as high as a terrifying £1,000 billion. In all, I guess that the black hole at the heart of the Treasury accounts as a result of 13 years of New Labour fraud and neglect is not far short of £2 trillion, or about £40,000 for every family in Britain.

are truly shocking figures, and they mean that Chancellor Osborne will soon be confronted with a very difficult decision. Does he come clean about the full scale of the financial horror bequeathed by New Labour and add the extra £2 trillion to the national balance sheet?

If he does so, financial markets may easily take fright, interest rates rise and sterling collapse. On the other hand, if Osborne does not come clean, then he, too, will be guilty of the same fraud and concealment as his New Labour predecessors. He faces a very delicate task. It will take Sir Alan Budd's crack team at least a month to discover the truth about the real state of British finances. Only once he has done so will George Osborne be in a position to deliver his emergency Budget, which is now expected in the third week of June. It is here that Osborne will unveil the first of the Budget cuts which New Labour so disgracefully put off. As I've explained, I believe our true financial situation is far, far worse than than anybody yet realises.

No doubt it will be Osborne who will get the blame for the cuts - and they will be the sharpest since before World War II. But the real culprits are New Labour and in particular Gordon Brown and Alistair Darling. If they were the chief executive and finance director respectively of a failed public company, they might now be waiting for the fraud squad to come knocking at their door.

Edited by zagreb78

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In all, I guess that the black hole at the heart of the Treasury accounts as a result of 13 years of New Labour fraud and neglect is not far short of £2 trillion, or about £40,000 for every family in Britain.

Assuming 17.1 million families - using 2006 figures from the ONS.

http://www.statistics.gov.uk/focuson/families/

The total number of families reached 17.1 million in 2006,....

That gives £117,000 for every family in Britain - not £40,000. In terms of households it's still about £80,000 per household.

And why shouldnt George Osborne Dare to tell the truth about The True Size Of Britain's Black Hole.

Can't any of them be honest or something. They all played down how bad things were before the election but if they have all the figures now there's no excuse to keep them hidden.

How about the much trumpeted transparency and openness for a change.

Edited by billybong

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And why shouldnt George Osborne Dare to tell the truth about The True Size Of Britain's Black Hole.

Apparently because it might destroy the Tories chances of getting re-elected for a generation..

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'Coming clean' on the finances by exposing the tricks of a previous administration is exactly what triggered the Greek crisis.

At some point they will have to come clean so it might as well be now and put the source of the problem where it belongs - with NuLabour.

Actually no lets have another few years of spend spend spend :lol:

Then NuLabour can blame the Tories for the black hole when they next get in.

Edited by billybong

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Apparently because it might destroy the Tories chances of getting re-elected for a generation..

That's not conditional on them being honest as eventually the state of the economy will hit them over the next few years.

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So over this weekend a top-class team led by Sir Alan Budd, a highly regarded economist who is the head of the newly created Office for Budgetary Responsibility, is going through the Treasury accounts with a toothcomb, seeking to expose the accounting tricks and fraudulent devices for which Gordon Brown and Alistair Darling were notorious.

He'll probably come back and say "Actually they're not that bad" :lol:

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The markets already know that the UK has these liabilities as does the Daily Mail who managed to write the article before the review/info has been published. The markets would actually approve of a real determination to deal with the debts. Osborne 'Coming clean' IS ESSENTIAL IF HE AND CAMERON AND CLEGG ARE TO TAKE THE COUNTRY WITH THEM. People will not have it unless it is explained now and the hidden parts exposed.

It was commented upon through the election that all parties were 'keeping stum' on the true extent of the crisis for fear of 'frightening the voters'. Sadly we are a nation of people who tend to vote for the most palatable but unattainable policies, in what I call a 'promises auction' provided by policiticians we then like to blame when it all comes undone later. Then we call them liars, when in fact we wouldn't vote for them if they told the truth. We are all at fault over this and need to change it. That is why Cameron and Osborne paid lip service only to the extent of cuts required. They are massive and unprecedented in peacetime.

Right now is the only opportunity to 'come clean' and tell people that Brown has left a scorched economy behind him. If they don't they will be balmed as if they caused it themselves. It saddens me to say it, but it is always Labour which has over borrowed in this way and left office on every occasion with the economy in tatters. The tories have managed to get it right some of the time and Labour have never done so in their history. Look at 1945-1951 - huge debts of war never tackled and spent ALL the Marshal loan gift from USA in 5 years (About £160BN in todays money). 1970 - country in turmoil and permanent economic crisis through 64-70. Weak tory lot doing no good, then useless Labour govt to 1979 again leaving it worse than before. 2010 - worst ever peacetime debts.

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http://www.dailymail...black-hole.html

He suggests that it could be as much as 2 trillion pounds.

"Thatcher Saved Britain" - ******

Oil revenues which conveniently came on line saved her!

She diverted attention from the troubles at home by blowing a load of North Sea revenue on some place down sarf, most people had never heard of!

The Falklands was the population diversion from conflict with the Govt of the day with all the pomp and ceremony jazzed to the limit with their 'send offs' on the liners etc!

As we know the army/BBC 'edited' "reports" were farcical as the argies were reporting their triumphs, whilst the army/BBC were denying losses/hits!

Thatcher and her cohorts then went on to destroy the Unions power bases, thru complete destruction of jobs and the tightly knit 'communities' who ultimately provided the support for unpaid workers!

Union leaders were out of control, but I reckon the leaders like RED-ROBBO(22) were plants/stooges who took demands to their limits deliberately and the union sheep followed/voted/striked to their ultimate job/company/union destruction!

They were then legislated against out of many powers they used to have!

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Not that I want to let New Labour off the hook for their part in our downfall, but PFI started under the Tories (in fact I believe it was invented by Mussolini, but that's a different matter :))

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Not that I want to let New Labour off the hook for their part in our downfall, but PFI started under the Tories (in fact I believe it was invented by Mussolini, but that's a different matter :))

Brown is a thicko moron, con man who would not have lasted thirty seconds in business.

On Gordon Browns orders, the government, up to 2007 signed more than 750 public sector deals with private companies under PFI.

Including:

64 out of 68 hospitals in Browns first 8 years as chancellor. As were 230 new schools, 185 new hospitals, health centres, 43 roads and bridges

It was PFI which enabled Brown to keep public borrowing below 40% of GDP.

[An acccounting fiddle. Enabled him to keep infastrusture spending off the governments 'current' account books.]

Debt acrued by 2007, owed by government to private companies was in excess of £55Billion. [All basically hidden]

Many roads and bridges which were owned, paid for by the taxpayer, prior to Browns stint as chancellor were then sold off to private companies, on the quiet, who now charge us for using them.

Point being Brown, as chancellor, using PFI has spent all the money and it still has not even begun to be repaid.

The bankers who financed these deals walked away with absurd profits.

[One group of Bankers walked away from one PFI deal with 662% profit]

Well done for mentioning Mussolini. It is a sign of a facist government when government and business are merged in such a way.

PFI is a perfect facist tool. Everyone wins except the populace.

The bankers outwitted Brown the Clown at every opportunity.

The equity in the rebuilding of the M40 has been sold at least five times. with different building contractors making huge profits. One company sold a prison for six times what it had paid.

Brown just let it continue......

All these problems have yet to be faced. Osborne and co are complete idiots if they do not make all this national knowledge as quickly as possible. And they will get burned for it if they do not.

By the time Brown stopped being Chancellor he had lumbered £54billion in debt just for the cost of buildings onto the taxpayer.

[in reality, to repay that debt will be closer to £160Billion]

So yes. £2trillion is certainly not pie in the sky.

Governments can always borrow money more cheaply than private companies. If Gordon Brown had haf a brain he would know that by allowing private companies to borrow money on his behalf, all he did was increase the cost to taxpayers.

Brown was also a fan of PPP Public private partnerships.

Brown supported metronet, the ppp london tube project. Against advice.

In july 2007 the development had to call in an administrator. Taxpayers paid the £2billion over run and the £2.6 billion debt and administrators bill.

This is tip off the iceberg stuff for people interested in how abominable Brown has actually been.

This debt has been passed onto your childrens children.

“The function of socialism is to raise suffering to a higher level.” Norman Mailer

Edited by Dan1

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'Coming clean' on the finances by exposing the tricks of a previous administration is exactly what triggered the Greek crisis.

It's a lovely catch 22, lie and go bankrupt, tell the truth and go bankrupt.

Or we find oil and pay off the debt.

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Brown is a thicko moron, con man who would not have lasted thirty seconds in business.

On Gordon Browns orders, the government, up to 2007 signed more than 750 public sector deals with private companies under PFI.

Including:

64 out of 68 hospitals in Browns first 8 years as chancellor. As were 230 new schools, 185 new hospitals, health centres, 43 roads and bridges

It was PFI which enabled Brown to keep public borrowing below 40% of GDP.

[An acccounting fiddle. Enabled him to keep infastrusture spending off the governments 'current' account books.]

(snip)

I fully agree, I was just pointing out that it's disingenuous of the article writer to spin PFI as a New Labour "favourite wheeze" while conveniently forgetting who introduced it to this country.

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Read the first few paragraphs.

I'll give the Lib Con alliance a year. Mr Cable was asked what it would be like working with Osbourne he just laughed.

Thatcher was in power when billions of pounds worth of oil wealth was found. That wealth was largely squandered (say compared to Norway). She was the end of politics in this country and the start of PR - scum

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Apparently because it might destroy the Tories chances of getting re-elected for a generation..

Osborne has done it already. He already ordered the audit: "So over this weekend a top-class team led by Sir Alan Budd, a highly regarded economist who is the head of the newly created Office for Budgetary Responsibility". Fact. Past tense.

Now, even is Osborne changes his mind, and tries to stop the publication of it, it will leak. No way to stop it now.

Besides, as another poster mentioned above, the market already knows the real situation. But the majority of the people don't know yet - the real gigantic dimension of the problem.

The gov. has to tell them now, as graphically and as memorable as possible, to blame Labour for the pain to come.

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I'd like to convince myself that the Tories would have been different, but TBH Thatcher ran a deficit in almost every year she was in power. There has been ample opportunity to pay off the national debt over the last 50 years, but in a democracy it is never politically feasible. Good governance does not win votes, handouts do.

We get what we vote for.

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Osborne has done it already. He already ordered the audit: "So over this weekend a top-class team led by Sir Alan Budd, a highly regarded economist who is the head of the newly created Office for Budgetary Responsibility". Fact. Past tense.

Now, even is Osborne changes his mind, and tries to stop the publication of it, it will leak. No way to stop it now.

This would be the same Alan Budd who was founding member of the BOE MMC set up by Gordon Brown in 1997.

He has spent a good part of his working life at the Treasury.

http://en.wikipedia.org/wiki/Alan_Budd

Do people really think he is going to publish a report that will displease his political masters ?

He has been appointed as a 'safe pair of hands'.

There will be nothing to frighten the horses.

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I'd like to convince myself that the Tories would have been different, but TBH Thatcher ran a deficit in almost every year she was in power. There has been ample opportunity to pay off the national debt over the last 50 years, but in a democracy it is never politically feasible. Good governance does not win votes, handouts do.

We get what we vote for.

When Thatcher came to power our debt was 44% of GDP. In 1991 it was 25% of GDP. Admittedly inflation helped, but you can see where it was headed. It took her 10 years to produce a surplus, and then another recession hit. Gordo managed to produce a surplus after 3 years due to following Tory spending plans. Subsequently he ran large deficits for the next 7 years and grew the debt from 30 to 36% of GDP in 2008, despite the economy growing by 40% in that time.

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