This morning there have been calls for Alistair Darling to resign after the publication of a leaked Downing Street memo in which the Chancellor lays out his plans to massage the UK’s inflation figures. The memo also contains detailed plans which effectively make homeowners liable for the national debt to the tune of £30,000 each.
The revelation couldn’t have come at a worse time for the Government ahead of next month’s General Election. In the memo to the Prime Minister, Alistair Darlings sets out his plan to secretly remove VAT from a select list of goods and services that form part of the recognised ‘basket of goods’, which is used to determine the UK’s headline rate of inflation. The list of goods affected ranges from men’s hair dye through to certain types of fish, such as red snapper. Opposition MPs have accused the Chancellor of trying to temporarily reduce inflation ‘’by underhand means’’ to win votes ahead of the General Election.
The memo then goes on to set out the Government’s plan for attacking the banking sector. Under the proposed plan, which is to come into effect at midnight on 1st April, banks will be forced to take on part of the national debt over the next fours years. Effectively IOUs from the banks for future payment will be used to help the Government meet its optimistic repayment targets, announced in last week’s Budget, for reducing the level of national debt. However, a concession within the plan allows the banks to use existing mortgage loans as security against the eventuality that they default on their obligation to take on Government debt. As a result the Government could technically enforce the realisation of any security in the event that a bank negates on its promise. This effectively means that mortgage borrowers could be forced to sell their homes. Based on figures contained within the memo the level of securitisation on a given property will be limited to £30,000.
Downing Street has refused to comment on the contents of the leaked memo but there has been a widespread call for Alistair Darling to resign. A full copy of the leaked memo as well as details of how the proposals will affect you can be found by clicking this link.
