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The UK ECONOMY Sept 2010

posted Sep 22, 2010 09:40:31 by terrygasking
David Cameron & Nick Clegg
10 Downing Street
SW1A 2AA 21 July 2010

Dear Prime Minister & Deputy Prime Minister,
You have asked for suggestions on the Economy and the Social fabric of the U.K and I offer the following –
1. The coalition if enacted in the spirit of consultation and compromise is the greatest hope the U.K. has for future economic and social prosperity.
2. The public will be sympathetic to the goals of austerity and recovery for about another 4 months or so. In the lead-up to Christmas the political emphasis needs to shift toward highlighting some tangible successes in recovering from the discomfort caused by the ‘inherited’ position from the last government.
3. The coalition needs some tangible early successes of a significant size to avoid International Money and Bond Holders Shorting the UK currency as part of their trail around Europe whilst the Recession lasts. (All my books over the past decade warned of a Massive Recession from 2008 – 2010 so it will be November before we begin to see the early signs of Recovery)
4. The best candidates to give significant returns to the government coffers and that will prove popular with the public and will give success are –
- The Banks
- The Health Service
- Defence
- Minimum Wage (see ‘Double Your Money’ enclosed)
5. The BANKS
All banks that have used taxpayers money – either directly or benefitting through inexpensive finance under the Money Printing enacted by the Bank of England to save them - may continue to declare dividend and bonuses that they feel are appropriate but will only be allowed to pay out 25% of this sum until their indebtedness to the government is repaid.
The 75% can be retained by the banks to strengthen their Balance Sheets or pay down their indebtedness to the government and repay and benefits bestowed upon them by any of the forms of Bank Bale-out they have used...
The Banks must carry a Contingent Liability on their books of the amounts they owe their shareholders and bonused staff and may start to pay these amounts once their indebtedness to the government is clear. Unpaid bonuses will be dependent on the staff members still being employed by the bank after the Banks indebtedness to the government (British Taxpayer) has been cleared.
This scheme will overcome the Bankers claim that they will lose vital staff for I would not expect many to leave whilst there are outstanding bonuses waiting to be paid. The scheme will also encourage everyone in Banking to repay their Bank’s indebtedness to the British tax-payer as soon as possible.
Any resistance should be countered with the reminder that had the government not stepped in with massive funding that has almost crippled the country then the banks would have folded and there would be no bonuses or dividends.
This scheme will rapidly bring many billions of £ into the government coffers without harming the Economy, the Banking System or the Banks!
It will prove to be immensely popular with the UK public and many of our International Allies

“The Health Service has more Managers than Beds!”
This phrase caught the imagination of a huge number of people in the U.K. and underlined where the country had gone so wrong. The coalition has pledged to safeguard spending on the Health Service but now needs to narrow that definition to ‘Safeguarding the Spending on the Front-Line Services within the Health Service’
The Management structure of the Health Service is massively over-manned with no benefit to the patient.
Much of my work with more than 300 international companies and organisations was in refocusing staff to the reality of their organisations position and winning their hearts and minds to actions that were needed to resolve the problems. In most cases this consisted of generating Cash from ‘Idle Assets’ that could then be used to self-finance profitable ventures within their organisation that they often defined. During this process many redefined their own jobs and activities to actions that were far more relevant to the needs of their organisation and their customers.
The Health Service would give massive returns from such an exercise!
If this were to be well managed you could halve the number of managers within the Health Service within one year with no discernable loss of service to the patient.
This scheme will rapidly bring many billions of £ into the government coffers without harming the Economy or the Health Service! It would be immensely popular with the public especially if you could divert a small proportion of the savings to the front-line Nursing Services!

Here is an area of massive savings – most of them easy to achieve without political damage to the coalition and without damaging the defences of this country.
Virtually every Procurement Contract undertaken by UK governments runs into massive overspends and are late. The Audit Committee are continually lambasting the MOD and most other Government Procurement Offices for their poor management of Procurement contracts yet nothing ever seems to improve.
In 2008 I wrote a book ‘Your way to CASH & MANAGEMENTSUCCESS’ and devoted a complete chapter to PROJECT MANAGEMENT. It defines precisely why projects run over costs and late and how they may be managed to avoid both these catastrophes. Many of the Contractors tactics and strategies are revealed.
If you were to insist every manager involved in Procurement and Project Management in the MOD and the Civil Service did no more than read this book you would save many, many £billions!
Many MOD projects need not be built or proceeded with and should be cancelled.
When the Eurofighter was being discussed in Parliament I wrote to George Robertson (the then Defence Secretary) pleading with him not to waste £billions on a wonderful aircraft that would be of no use in the changing format of world conflicts.
My letter then, as with the letters to the last government (that can be seen at the back of ‘Double Your Money’) that tried to deter them from committing £billions (£Trillions?) to the Bank Bale-Out were met with no more than an acknowledgement. (It will be interesting to see if anything more positive results from this letter)
My Chapter PROJECT MANAGEMENT dwells on the emotional impact of a new project on all involved from its Conception through to completion. It is often this factor that continues with projects long past their useful life and well beyond the date at which they should have been cancelled.
Spending on front-line military support needs to be extensive but well managed. Projects should prevent the awful catastrophes of equipment shortages, and equipment totally unsuited the theatre of war, of fraudulent bomb checking equipment (how much did the MOD spend on non-operating divining rods?) and so on and leave sufficient funding to properly support our front line troops.
We should have a checking system that prevents excessive spending on ‘Toys for the Boys’.
Go anywhere in Britain and state-of-art aircraft are flying at head height all over the place even when we have equipment shortages for our troops in Afghanistan. The reduction of just one of these ‘toys for the boys’ that are flying uselessly across the U.K. would have provided enough finance to cover all frontline troops’ equipment shortages. Well Managed Projects would have got the equipment to Afghanistan to have saved countless lives. (Even the fuel consumed by the boys in their toys across the UK would have provided all the funding you needed to support the troops on the ground in Afghanistan and Iraq.
We must prevent this continual waste of expenditure on equipment that might never be used!
Trident is just such a project. Massively expensive – will never be used – and gives us little more than our existing system can provide.
You have got yourselves in a bit of a state over Trident. It was used politically to attack the lib-dems in the election campaign so is difficult for either of you to back out of the coalitions stance without loss of face (please read the emotional attachment to new projects in ‘CASH & the Art of BUSINESS MANAGEMENT’ (also named ‘Your way to CASH & MANAGEMENT SUCCESS’) to understand you and your party’s emotional dependency on Trident. It is this dependency that is preventing you from rational and logical analysis. Once the euphoric appeal of the project is understood I really believe that both of you have the maturity, politically savvy, and intellectual capabilities to reconsider your support for Trident)
Pulling-out of the Trident contract would be massively popular with the British Public but the only way I can see you succeeding politically with this objective is to start winding down the peripheries to scheme. Laying off the scientists and workers at Aldermaston is sure to be greeted with that old chestnut of the Defence Organisations that it will cost jobs but these people were all employed elsewhere when they were recruited so there must be jobs elsewhere that they can move onto without swelling the ranks of the unemployed.
Iraq and Afghanistan are absolute disasters as well as massive drains on our economy. I really am sympathetic to the two of you for the situation you find yourself in having to fight America’s War. I can only plead that you extract the UK as rapidly as you can politically manage from these hugely unpopular and unwinnable wars. I also plead that you set up a system of counterchecks in government and parliament that would prevent any small cabal being able to lead the country into conflict ever again.
This above suggestions will rapidly bring many billions of £ into the government coffers without harming the Economy or the Front Line Military that are required to combat aggression in today’s world!

If you read the enclosed ‘Double Your Money’ you will see that one of the ways I tried to get the government to follow instead of pouring most of our financial resource into the banks for them to use to gamble on the exchange and overseas bond markets was to increase the Minimum Wage.
The premise is simple –
- Increased Pay/bonuses to the top earners immediately leaves the U.K. into Tax Havens, Swiss bank accounts, and safe havens ($US, Gold etc). It does nothing to ease or prevent the recession.
- Increased pay to the Lowest paid is immediately spent on necessities of life.
- Recession is not caused by a lack of Lending but by a lack of Spending
- Lack of Spending closes down markets and causes companies to ‘lay-off’ staff and workers who become surplus in their reduced trading conditions.
- Give the poorest paid higher wages and they have little alternative but to spend it! Sales increase, companies do not lay off staff and workers and many will find the need to increase their workforce to deal with the increased trade coming from the greater demand in our home market.
- It is only those on the Minimum Wage who receive additional pay – there is no differential increases in pay working up the working chain. Thus a 50% increase to the lowest paid will cost the company a far lower % increase in their overall wage bill. In return they get a far more active market place with customers spending money. Profits are maintained or more likely increased despite their marginally higher wage bills.
- I used all these arguments when I was lecturing at Europe’s Top management colleges prior to the introduction of the Minimum Wage to counteract the bleating of most of the experts and top businessmen claiming that the Minimum Wage would see the ruination of their companies and of the UK economy.
- In the event the years following the introduction of the Minimum Wage have seen some of the greatest years of economic prosperity in the U.K.
- Significantly increasing the Minimum Wage will see a rapid recovery from the present Recession and create a far wider differential between those at work and those on the ‘dole’. Many people have told me that it is not worth their while going to work for they can earn nearly as much on the ‘dole’ with benefits as they can at work. For the sake of the country this situation must end and soon! A 50% increase in the Minimum Wage would be very difficult for you to politically manage but would give you massive benefits to the economy if you can achieve it.
- Higher wages would attract many of the unemployed to seek work. In doing so they would decrease the countries huge costs of benefits and increase its tax take.
- A reasonable take-home wage will begin to give those presently unemployed far more self-respect will significantly impact favourably on social behaviour and crime.
- Significantly higher Minimum Wage will be a difficult trick for you to get through parliament but the results really would be a win-win situation.

I recognise that this suggestion would be the most difficult for you to embrace and implement but that does not devalue it. Implementation will rapidly bring many billions of £ into the government coffers. It would improve the Economy by allowing a far faster recovery from the Recession and would make the U.K. a lot nicer place to live.
So there we have it – my response to your request for thoughts and ideas that would help in the management and government of the U.K. I am confident that all my suggestions would be successful if well managed. I am happy to discuss these ideas further. I live just the other side of the hill from Chequers – you are both more than welcome to drop in for tea.
It is surprising how clear situations can be from the Chilterns. Remember in my books I called the Recession exactly correctly as early as 1999 and even wrote a book ‘Get Out of Debt with Terry Gasking’ in 2004 that specifically tried to guide the individual into positions that would safeguard them when the Recession hits in 2008. At that time none of the ‘experts’ who had the governments ear, or the top business people in the U.K. or the Bankers, or the ‘Credit Experts’ had read the signs that were all too obvious from here!
In a similar way none of them are calling the economy correctly at this moment in time.
I wrote the enclosed book – Double Your Money’ in March 2009 when all the expert advice was doom and gloom! (But then what do experts know?). Had you purchased a copy then and invested as the writer suggested your investments would have already increased by 74%. I believe they will increase further over the next two to three years and will double from their present value. (But then what do I know? I did call the 2008 – 2010 Recession correctly for a decade before it started and have 25 years experience of correctly calling the focus and actions of hundreds of International companies. Does that deserve more than an acknowledgement to this letter? We shall see).
My very best wishes to you both for outstanding success in the coalition
Terry Gasking
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