Let me repeat a few old truths, and add a few new examples. I detect a new mood in the public and the media. Many people know public money is being wasted on undesirable schemes, on inefficiencies, poor quality, and on marginal projects. Unlike their government, most votes know this cannot go on on the current scale.

There are some obvious areas of spending to remove.
1.Begin by abolishing the whole ID cards scheme.
2.Stop the centralising computer contracts that have been so badly managed.
3.Abolish unelected regional government in England.
4.Abolish the targets and circulars bureaucracies that ensnare local goverment.
5.Have a couple of years off from legislating more regulation
6.Put through a repeal act, cutting out less desirable or ineffective regulation, so fewer regulators can concentrate on the things that matter.
7. Sell off parts of the banks to cut risk and raise cash
8. Stop all free newsheets and PR materials from government departments for a year
9. Cut the number of Ministers by 10%, reallocating responsibilities to raise their productivity.
10. Cancel all Ministerial and senior official fact finding and non essential visits abroad.

There are some general spending disciplines that need to be introduced into every government department and quango.

1. Place a freeze on all outside recruitment, save in front line roles like teachers, nurses, doctors and service personnel. Seek to appoint from within, and reduce the number of administrative posts each time someone leaves.
2. Place a freeze on new outside consultancy contracts, requiring a senior Minister to consider the case for such work and to sign off on it in exceptional cases where in house staff cannot manage the task.
3. Review all procurement, with a view to buying better.
4. Run down in house stocks which are often large and badly managed. Go over to something closer to a just in time principle for supply.
5. Close all public sector pension schemes to new staff and set up defined contribution schemes instead.
6. Set cost down targets for every sub department and quango.
7. Review corporate plans of all quangos at Ministerial level with a view to identifying substantial cost savings
8. Raise quality targets. Error rates in government are very high, leading to too many expensive complaints and to the need to do things twice.
9. Rationalise building use, shedding surplus space as the staff reductions from natural wastage kick in.
10. Rationalise transport use, which at the moment is wasteful and often not co-ordinated between users.

Yesterday we were treated to the news that the government is going to investigate how many parents might have made misleading claims when applying for a preferred state school place for their children. No sooner than we learn that Harrow are not going to prosecute a parent who applied for a place at a better school from her parents address where she was staying at the time, than the government decides to take up the cudgels to stop people finding imaginative ways of gaining the place they want.

I have some advice for the government. Instead of declaring war on parents trying to play the system, reform the rotten system. This would not happen if there were enough places at good schools in each County or unitary Council area. Whilst I of course do not condone misrepresentation or fraud, I think the right punishment for anyone found guilty of it should be loss of the favoured place and a place at a poor school, not a term in prison. There needs to be some sense of proportion.

We pay lots of tax to have education departments which serve those with children well. Those departments should be trying to ensure that all parents have a school of their choice, not seeking to enforce complex catchment rules to ration scarce good places in a way which comes down heavily on the disappointed. We need schools departments dedicated to creating more good schools, and more places at good schools.

The very system encourages people to be selective with the truth. You are unlikely to get a place at a good school from outside its catchment by saying you want your child to go to School A because it has better exam marks than School B. Arguments have to be constructed around issues like school transport, single sex education, where other family members go and what the specialism of the school might be. I have met a good few caring and sensible parents in my time, desperate for their child to go to School A. I always support their applications, whilst of course advising them to put the best truthful case forward that they can muster. I want a system which allows more parents to get their first choice, not a system which seeks to criminalise them if they get the application form wrong by mistake, or even if they dress up their answers a bit because it is so important to them.

All of us in the public sector should remember who pays the wages. PUblic servants are here to serve the public, not to create ever more complicated and unsatisfactory systems so they can prosecute more people who fall foul of them.

Beware all the statements from EU leaders that the UK has their support over the Iranian attacks on UK embassy staff. There was yesterday an orchestrated PR attempt to show the EU is on the UK’s side. Of course they are and of course they should be, as the principle of diplomatic immunity is an important one which all sensible countries uphold in their own interests. If a country’s diplomats wrongly interfere in domestic politics in their host country they should be expelled, not locked up.

I suspect the UK and EU governments decided to use this diplomatic spat between the UK and Iran as an opportuntiy to arrange some favourable publicity for concerted EU action. I note that the action does not run to other EU countries breaking off diplomatic relations with Iran or doing more than telling Iran they do not approve. Doubtless the UK governemnt is smarting from the strong showing of anti EU government votes in the recent European elections, and thinks us hearing the President of France talking of solidarity will win us all over to Lisbon and yet more powers for the EU. Dream on. The more we hear of EU politicians seeking to take our right to self government away, the more we will vote against EU government.

The Independent Parliamentary Standards Authority is a remarkable creation: it not only seeks rather heavy-handedly to draw a line under MPs' expenses as the biggest political scandal in modern times, it also threatens to undermine a fundamental component of the Bill of Rights of 1689.

Big falls in share markets yesterday were put down to worse than expected unemployment figures in the USA.

Readers of this site will not be surprised that the real economy is still struggling. In this recession in the US and the UK industrial companies have been much quicker to cut employment costs. Some have done this by agreeing unpaid leave, temporary factory closures and short time weeks. Others are simply firing many people, deciding there is too much capacity and wanting to get rid of the costs before they bring the whole enterprise down. Expect more job losses on the both sides of the Atlantic, as the green shoots do not extend to a significant upturn in industrial orders yet.

The collapse of the National Express franchise for the East Coast rail service may well foreshadow the redrawing of the entire privatised rail franchise system. The loss of this £1.4bn contract, the most expensive in the country, will have a major impact on the 5-year funding settlement for the railways which will have to be met by the taxpayer in higher fares. But it presages a wider crisis in that the £35bn settlement for the 2009-2014 maintenance and upgrade system is based on the assumption that rail fares will increase by an average of 7% over this period, when in fact because of the recession passenger numbers are falling so that fares are increasing on the East Coast line by only about 1%. There is the further immediate issue of the conditions under which National Express can walk away from its £1.4bn contractual liabilities with the loss of only £72m in loans and performance bonds since the Department for Transport cannot legally demand that the company pay the full cost of the contract. This is yet another flagrant example where a company privatises the gains in conditions of economic growth, but then leaves the taxpayer to socialise the losses when the economy deteriorates. Is this a way to run a railway, let alone a range of other major public services?

Privatisation, the flagship of the Thatcher-Blair administrations, is now visibly wilting.

It was not a great start for the soon to be nationalised Eastern mainline company. The media were told early yesterday morning, whilst the Commons only had official confirmation and a Minister to question twelve hours later. The statement wasn’t worth waiting for. The Minister had no figures of how much revenue would fall, how much of the promised premium payments would be lost, how much capital they would need to put in, or how they would improve the performance and lower the cost of the service.

This is the second franchise that has gone wrong, implying the government’s system for letting these contracts is bad. Taxpayers have had to spend a lot of money on contract negotiation and due diligence on the companies taking them out. There won’t be any explanation or rebates on all that wasted money.

According to the Commons Minister (who simply read out his boss’s statement from the Lords, including referring to his audience as lordships) all will be well. He told us the company is profitable, that taxpayers will enjoy a period of the revenues from the franchise before selling it off again to another private sector company. There was no recognition of what a financial body blow this is to his railways budget. Once again we have a government rushing to nationalise something they clearly do not understand, which will turn out to be a worse financial deal than they let on. There was no sign yesterday of any controlling mind amongst Ministers who knows how to make this proposal work.

What should they have done? They should have taken more security and negotiated a tighter deal when they set up the franchise in the first place. They should have spent more time seeing what the relative cost of dealing with the existing franchise holder would be compared with taking it in house. I am not persuaded they did the homework or came up with the best answer for taxpayers. Given that they signed a bad contract originally, they should have spent more time examining all the options to mitigate their losses. Yesterday’s statement looked like a fit of pique allied to playing to the nationalising gallery.

Yesterday Barbara Keeley produced one of the worst Ministerial replies I have heard during the proceedings on the government’s rushed and incompetent Bill to change the arrangements for paying MPs allowances and salaries. It was so bad her boss Jack Straw also gave a wind up speech on the same amendments, to try to calm the House down. Those of us who asked her to clarify her proposals received no answers of any kind. Shortly afterwards the government lost a vote on the much hated Clause 10 of the Bill, so that clause was struck out.

Sadiq Khan was dragged to the House around 8pm to tell us about the nationalisation of the East coast mainline rail franchise, which everyone else had heard about hours before on the media. I asked him how much money the taxpayer would have to put in as share capital and working capital to set up the nationalised company that would run the service. There was of course no answer, as Ministers apparently have gone ahead with their plan to do this without working out the numbers and the money at risk. As always, they only do soundbites.,

Sarah McCarthy Fry, a junior Treasury Minister, completed the trio by being unwilling or unable to answer basic questions about how their new scheme to encourage saving for people on benefit and low income would work.

The purpose of Gordon Brown's grandiloquent statement on Building Britain's Future is (1) to give the impression that the Government is still fizzing with new ideas (even though the current Parliamentary session is the thinnest for years in terms of legislative reform), (2) to show the Government in a positive light compared with the Tories, and (3) to put the best face on the collapse of the Government's economic model by diverting attention away from its potentially disastrous implications. By those (contradictory) standards, the Government has probably put the best fist on it that they can. But it is still seriously holed below the water-line. There are the obvious weaknesses which have already been highlighted by the Opposition, in particular how will it all be afforded? This is not however a menu without the prices, as Douglas-Home's taunt against Harold Wilson put it in 1964, since the costings of the biggest item - the trebling of the budget for building Council and affordable housing to £2.1bn - are covered by the transfer from the capital spending budgets of DCLG and the Home Office. But there are still funding gaps in other areas, notaly over the proposed health entitlements. Then there is the serious question of enforceability, which is being postponed for several months, which all goes to show that this is a rushed job to fill the political vacuum.

The best part of the programme is the proposal to triple the £600m promised in the last Budget for new Council and housing association homes. The £2.1bn now to be pumped into affordable housing is intended to build an extrqa 20,000 homes on top of the 90,000 already in the pipeline. This is good news since the acute shortage of flats or houses for low-income families to rent is arguably the biggest single cause of social misery in Britain today. But building 55,000 such homes a year for the next 2 years has to be seen against the magnitude of the shortage: there are currently 1.8m households on Council waiting lists, so that at the new slightly improved rate of build it will take 34 years to clear the current list, irrespective of future demand. At least however the New Labour/Tory block on building Council houses for those who will never be able to buy a house has slightly lifted - over the last several years the number of new build by Councils has been down to near zero (just 100 or 200 in many years).

The worst part of the programme is the proposal to dock benefits from any young person out of work for more than a year who refuses to take a job. There are already nearly 1 million people aged 18-24 out of work, no less than 1 in 6 of the age group, the highest rate for 15 years, and still increasing. To meet this need, the Government did announce in the last Budget £1.2bn fund to create employment for up to 100,000 young persons. But that is still only one-tenth of the number requiring jobs. The Government's answer to that is that where no job is available, they will be expected to take training or a community taskforce assignment as a condition of benefit. Sadly, this aspect of Building Britain's Future looks rather punitive, in keeping with Purnell's scheme of so-called welfare reforms, and it would be much better to focus instead on providing significant incentives to employers for taking on young people.

The real problem for Gordon Brown's programme, if it is intended to galvanise Labour activists and voters back into the fold, is that it leaves untouched the foundations of the current economic model which have so deeply alienated such supporters - the ascendancy of the banks and the City of London, an unfettered market system, the excesses of corporate power, the marginalisation of the unions, the growth of obscene levels of inequality - and merely offers a load of sweeties which don't in any way affect the fundamentals. Yet it is only by challenging those fundamentals that Labour supporters will be jerked out of their cynicism and despair. The problem is that this Government is now so weak that it's unable to confront and transform that power structure, even if it was so minded (which it certainly is not).

Yesterday we debated the msierable and foolish Bill the government has brought in to change the way MPs allowances are paid and to regulate MPs financial conduct.

The centre piece of the Bill is the establishment of a new quango to design and administer the expenses and allowances system - the very same system Kelly has been asked to redesign as well. We were told the rushed Bill can always be amended later in the year if Kelly disagrees!

I asked what consultations the government has held with the Fees office staff who currently do this work. No answer.

I asked if staff in the present Fees office will be automatically transferred to the new quango (under TUPE). No answer.

I asked if staff will lose their jobs and have to compete for new jobs at the new quango. No answer.

I asked how much extra the new quango would cost compared with the current arrangements. I was told it would cost the same. I find that difficult to understand, given the costs of set up and the likely high salaries that will be offered to the Heads of the new body.

We need a less generous system of allowances. I suspect we now have one, after the changes made in recent weeks. It just needs summarising and approving.

We need tighter administation of the new system. That can be delivered by clear instructions from Parliament to a suitable senior employee, who should be responsible for systems that ensure proper approval and documentation of claims.

None of this requires an elaborate new structure. A good employer embarking on such an upheaval would consult with the exisiting staff first, hear their views, and would seek to minimise disruption and redundancy cost.

This bull in a china shop approach is likely to produce more problems, not less. This government has been keen to pass lots of labour laws for the private sector. Don’t any of the rules apply to them as employers?

The latest figures show the UK economy has been in worse decline than at any time since the 1930s. As expected, the Chancellor’s forecasts have turned out to be too optimistic.

Worse still, the biggest decline by far has been in manufacturing. The government sector has continued to grow - on borrowed money - and private sector services have been patchy. The biggest hit has been taken once again by those who make things. This is the very opposite of what the PM always said he wanted.

Two of the weakest sectors have been new housebuilding and car manufacture. The government has sought to encourage the former throughout its life, but has been most unsuccessful. It has sought to tax the car into oblivion for much of its period in office, only to offer some offsetting cash breaks once the crisis in motor manufacturing was painfully clear.

The irony of the government’s strategy of subsidising banks, spending more in the public sector, whilst regulating and taxing private industry more has been to lead to relatively much more unemployment in the industrial sector than elsewhere. The legacy of the distorted economic policy will be more closed factories and more retreats from making things in the UK.

It is bizarre after 12 years in government that the voters don’t know, as David Miliband says, what Labour stands for. But that is the price of the Blair interregnum which was a power project devoid of ideology – other than largely maintaining the policies and ideas inherited from the Conservatives. Yet if there’s one thing the electorate craves as the election looms, it’s a genuine choice rather than a continuation of the essentially one-party State we’ve endured for the last 20-30 years. The outline of that choice is clear. First and foremost it should be the protection of jobs, incomes and homes of all those employed in the real economy. But that isn’t the policy being pursued at the moment. Eye-popping levels of taxpayer-funded grants, loans and guarantees have been put at the disposal of the banks so that they can continue lending to businesses and homeowners – £645bn at present, but projected by the Chancellor to double to a staggering £1.3 trillion by 2013 – yet the banks have been allowed to renege on their side of the deal. They have taken all the money to consolidate their own balance sheets whilst cutting back lending to the real economy almost to nothing. The latest Bank of England figures show that lending to businesses and mortgage-owners, which was rising at 19.8% a year in 2007, has now shrunk to a miniscule rise of 0.8% a year.

The first requirement therefore of an alternative strategy must be to stop the aggressive self-interest of the banks from crucifying the rest of the economy by withholding credit. Protecting ordinary people means using the power vested in majority ownership of several major banks to force them to give priority to getting the real economy out of recession rather than feathering their own nests. Then the tide of unemployment, repossession and insecurity will begin to be turned.

Then the nation has to be safeguarded from any recurrence of financial crisis and economic breakdown. No policy has been put in place to do this. No curbs have been placed on the use of highly toxic credit derivatives, the global proliferation of which brought Wall Street, the City of London and banks worldwide to their knees. The bonus culture which drove the greed and recklessness that sparked the crisis is alive and kicking, as the latest revelation of Barclays awarding £22m to Bob Diamond, the chair of BGI, and £55m to its chief executive for its sale to BlackRock only too clearly reveals. The credit rating agencies are not being regulated to remove the current glaring conflict of interest. Commercial banking is not being separated from casino banking. Capital adequacy ratios and reserve requirements are not being put in place to secure stability. Offshoring and massive exploitation of tax havens is not being stopped. The alternative policy to protect the nation from being held to ransom again by the banks would include all these items.

Then the free market fundamentalism which gave rise to the crisis has to be dealt with. We need a rebalancing of power which continues to release the creative energy of the private sector, but within a framework of prudential public controls which restrains the dangerous excesses. This certainly doesn’t mean a bureaucratic over-centralised State, but one which is a more proactive buttress against the unfettered market power which caused the crash and now the massive public spending crisis. However, there is little sign that any of these lessons have been earned. Privatisation is still being pursued as the panacea for Royal Mail, PFI credit crunch, and the fixation with massively costly and poorly performing IT super-databases as the superficial solution for much deeper social problems continues unabated. What is needed, but not on offer from today’s political parties, is a new innovative role for public services where the market has massively failed in housing, pensions, energy security, and social and environmental goals for the private sector.

Nor apparently are the fundamental changes being considered to set the economy on a more stable and sustainable course. We hear a great deal about industrial activism, but no evidence of it. It means shrinking the bloated financial sector and giving much higher priority to building Britain’s strength in industry, manufacturing and services. It means reactivating industrial and regional policy which has been downplayed for three decades. It means phasing out the harmful pre-eminence of the City and making management-union partnerships the driving force in remedying the deep long-term weaknesses in Britain’s economic performance. That choice is not on offer at present, but should be.

Again, as signs of the recovery emerge, the horrendous post-crisis spending black hole is being bickered round in the political debate in the narrowest terms, namely which party will cut public services most. There is no sense of addressing one of the greatest social evils in Britain today – that our society is now even more unequal than under Thatcher and has extremes of inequality, with all the destructive impulses that is known to generate, which are unparalleled in the Western world outside the US. The policy alternative this throws up is not being put. Instead of across-the-board public service cuts (whether 7% or 10%), cut the big hugely costly projects which clearly cannot now be afforded (and were not fit for purpose anyway) – Trident replacement, ID cards, and massive Government IT schemes which regularly break down and often leak disastrously – and for the rest cast the burden where it can most equitably be shouldered.

That is with those who have in the last three decades made monetary gains unprecedented in British history. Moreover, since a high proportion of them were involved in the operations that led to the crash, there would be poetic justice in that too. The figures are impressive. Treasury estimates indicate that a 50% rate on the top 1% incomes over £100,000 a year (the richest 300,000 people) plus a 60% rate on incomes over £250,000 a year would raise revenue of £11bn a year (or more probably £9-10bn given likely evasive action). Since the wealth of the wealthiest has quadrupled over the last decade under New Labour’s rubric of being “very relaxed about people becoming filthy rich”, the redistribution involved might seem rather modest. But combined with a genuine crackdown on tax havens, promised at the G20 but not delivered, which cost the UK an estimated £25bn a year, it would probably suffice.

Labour is searching for a formula to stave off a stonking defeat at the election. It is a plausible assumption that any such formula would have to include all or most of these proposals if a demoralised and despairing electorate is to be galvanised. As Lloyd George said to the Triple Alliance confronting him in 1919: “Gentlemen, are you ready?”