Cuts for everybody except the regulator

14 June 2010

Over the weekend I started reading economist Anatole Kaletsky’s latest magnum opus predicting a new golden age of capitalism.

I was amused at the optimistic vision it offers compared with the Prime Minister’s stark warnings about the years of economic pain that lie ahead.

In Capitalism 4.0 Kaletsky writes: “Once the self-healing nature of capitalism is recognised the charge of ’passing problems on to our grandchildren’ - whether made about budget deficits by conservatives or global warming by liberals - becomes unconvincing.

“Our grandchildren will be richer than us and have more powerful technologies. It’s far from obvious why we should make sacrifices on their behalf.”

Of course, it’s one thing to pen such words of wisdom in a book or weekly column and another to run a country, particularly when over-leveraged economies rather than over-leveraged banks are the issue.

So the pragmatism of Sir Alan Budd and his new Office for Budget Responsibility is likely to prevail and cuts rather than stimuli will be the order of the day, although not at the Financial Services Authority whose funding requirement for 2010/11 is £454.7m - up 9.9% from £413.8 in 2009/10.

The FSA is funded by the industry, not the taxpayer, although ultimately it is consumers who foot the bill. This prompts two questions -who ensures that home buyers or investors are getting value for money and how do we measure the FSA’s effectiveness?

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