ACTION IS NEEDED NOW
An investigation over three years has found and proved the answer to the question "Where did the benefit of the QE money go?" The answer is simple -
NOBODY KNOWS – EXCEPT IT'S ANYWHERE IN THE WORLD!
It is a startling fact is that neither the Bank of England nor the Treasury have any idea as to the identity (or nationality) of the real owners of the gilts purchased under QE. The Bank bought through agents (GEMMs) and thus has no knowledge of the actual beneficiary of the QE money. The Treasury has now confirmed that it is not aware of any disclosure by either the Bank of England or HMT that the owners of the QE purchased gilts are unknown. There has thus been neither Parliamentary nor public scrutiny of this fact or any formal public consideration being given to the severe, adverse impact of this fact on the UK economy. The Bank of England acknowledges that QE is a blunt instrument in that it could not be targeted solely on the UK economy.
George Osborne's office was told this in 2009 when he was Shadow Chancellor.
The leadership of the Bank and the MPC claim that the Bank has "injected a vast amount of liquidity into the UK economy". Another part of the Bank has published Working Paper 442 in January 2012 acknowledging that the benefit of QE sterling could have been exchanged for foreign currency and has thus disappeared overseas.
Following the Editor's Freedom of Information request in 2009, the Bank of England, HM Treasury, Treasury Committee and even the National Audit Office should have become aware that nobody had any idea where the benefit of the QE money had gone. Now, three years later in 2012, both the Bank and the Treasury have again confirmed in response to FoI requests that they still have no idea who benefited from £375 billion of QE money.
Worse, the Bank, the MPC and the Treasury have collectively failed to inform Parliament, the Treasury Committee or the media that the actual beneficial owners of the purchased QE gilts are unknown.
At the Bank's MPC meeting in September 2012, the committee members again considered a further increase in QE. There was no discussion on the hidden question as to who had the benefit of the QE money.
Recover and redeploy the wasted £375 billion for the exclusive benefit of the UK economy.
Follow the QE trail.
Boost UK 'growth' by filling a vast gap in the exploitation of UK innovation
The majority of the unemployed need jobs. Starting an SME is not for them or for most inventive individuals in secure, well-paid jobs. Without an effective, fair way of exploiting those ideas, they get lost to the UK economy. It is a proven fact that most innovators are poor business managers. Sir James Dyson is an exception.
Since 2009, the Editor has become very concerned that whilst there is much talk about 'Growth', there are very few realistic ideas as to how to make it happen. Growth is heavily dependent upon the creation of additional job opportunities. With a stagnating UK economy at best - made worse by a global decline in demand – no employer is going to take on staff unless it has the potential to make productive use of them. Training courses, in themselves, do not produce jobs.
The UK economy is seriously short of cash because, despite the assertions of the Bank of England, "vast amounts of money" have not been injected into the economy because it has leaked overseas. The Bank and the Treasury have both admitted in response to FoI requests that, as it has purchased gilts through agents, it has no idea who were the actual beneficial owners of the gilts, where in the world they were located or what they did with the money!
The Editor first became aware in the 1970s, whilst seconded to the DTI, of the UK’s very poor performance in supporting the effective commercialisation of UK innovation. Nothing has changed except for Government support for starting up small businesses which have about as much chance of becoming “global brands” as tourist parties travelling to the moon.
The budding inventor or SME is presented with a bewildering choice of some 1,000 varying sources of business support, many of which are funded all or in part from the public purse. Each has its own bureaucracy, application procedures and requirements and varying availability of funds governed by the fiscal year and the level of support from the UK, regional and local governments.
It is obvious to him that urgent changes are needed to encourage and support realistic solutions for encouraging and supporting UK economic growth. The much needed missing funding can be found by the phased selling back into the market of the gilts purchased in the QE programme.
See how to fill the Innovation Support Gap.
Improve the quality and execution of UK economic planning
UK plc urgently needs competent strategic planning and execution if the current economic decline is to be rapidly reversed.
It is a matter of very serious concern that too many current politicians, economists and special advisers lack the practical understanding and experience of real business. Frequently 'solutions' are proudly announced by Government only to be amended or dropped soon after. Some appear to have been rushed out without the traditional Civil Service checking and review. Advisory panels of experts are often ignored.
Many commercial organisations have been brought to ruin, acting on the advice of young, inexperienced 'experts'. The UK Government must not keep making similar mistakes.
Unlike China, the knowledge and experience of the senior grey part of the community is either unsought or ignored.
Urgent effective action is needed on a number of vital issues including:
generating UK economic growth (as against just talking and wishing for it)
reducing massive youth unemployment
delivering more effective commercialization of UK innovation – especially eliminating the "Invented here, made in China " syndrome
helping individuals and businesses seeking business support to locate matching solutions from nearly 1,000 listed in the Business Link master index
requiring the Technology Strategy Board and Business Link (both BIS sponsored) to make available to applicants a one-stop, initial process for supplying essential data on their proposed start-up / business expansion plans. Currently each business support provider has its own bureaucracy, application processes and forms, varying time scales and funding availability. In consequence, applicants are needlessly diverted from running and growing their business.
avoiding further misapplication of UK resources such as £375bn expended under QE where an unknown proportion has leaked overseas
recovering the QE money by selling the purchased Gilts and deploying the cash in a properly controlled way into the UK economy – and not the whole world as now.
This website has been launched to identify urgently needed specific action. It is also aimed at sharing creative ideas on how to fund and create growth in the UK economy. It is hoped that like-minded people with the expertise to identify where change is needed and how to do it, share their proposals and make the Coalition aware that there is more that they can do than just talk about "growth" or delivering knee-jerk, ill-thought-out proposals.
Alan Kay FCA The Editor