Gosh, political leadership! Will this be the start of politicians doing the right thing even if it gives them political problems at home?

I have been researching UK government revenues and expenditure leading up to the credit crunch. The gap between income and outgoings grew every year. We were told that growth would help to build government revenue and close the deficit which it did, but never by enough.

The crisis in government financing was always going to happen: the credit crunch masked this, and the government’s bank bailout then sent government borrowing into the stratosphere.

I wondered at the time and am still left wondering why the government didn’t do a pre-pack administration on RBS and Lloyds, allowing the ‘bad’ bank to fail and keeping the ‘good’ bank in public ownership, giving shareholders a stake in the good bank so they could recover some part of their investment at some stage. This would have cost the taxpayer next to nothing. The shareholders would have taken the initial write-down but would have had some potential upside in future. As it is their investment is worth a fraction of its original value but government debt has increased stratospherically.

The economy would now be growing strongly, the public sector cuts would have been unnecessary, inflation would now be 2% and there would be no tents around St Paul’s!