A month ago the experts were predicting an era of deflation once the retail price index was published. I cast doubt then and do so now on this analysis. The danger for the British economy is inflation not deflation.

This morning's press was again full of the experts predicting a negative rate for the RPI. The guesstimates were for a fall of between 0.5 and 0.8 per cent. (It is the oldest and most comprehensive index. It excludes only some atypical households)

For the second month running the experts are wrong. The RPI registers this month an overall nil increase in prices.

Examine the inflation target set for the Bank of England. The bank is to aim for a 2 per cent rise in the Consumer Price Index. Last month it was 50% above this level but it still did not stop the commentators shouting about deflation. This month it has risen up to 3.2 per cent. It will be interesting what the Governor says in the letter he now has to write to the Chancellor.

Look at the other indices as well at the Consumer Price Increase. The All-Items RPI, excluding mortgage interest payments, rose from 2.4 to 2.5 per cent.

The core inflation rate - excluding energy, food, alcoholic and tobacco - rose for the third consecutive month up from 1.1 to 1.3 and now stand at 1.6 per cent.

The British economy is in a big enough mess without policy makers fighting the deflation dragon which shows not much sign of yet appearing on the scene. The 30 per cent collapse in sterling has still to be fully registered as an upward movement in these measurements. And the Government has embarked on a printing money policy which can only lead to ginourmous inflationary pressures.

It is inflation not deflation that is still the public enemy.

Another day and yet another scandal over an MPs' expenses. A setup where a senior member of the Government lodges with their sister, or has their parents living in their constituency house, is clearly unacceptable. There is something wrong with the rules if such payments are in order.

Public anger is currently concentrated on the allowance MPs have for a home in their constituency or, if that is where their main home is, a home in London. But only a few months ago it was employing members of an MPs family who were not all good examples of the Protestant work-ethic.

Most voters accept that MPs need to run an office so they can do their job properly. I have argued since I first came here that MPs should be able to choose their staff but the staff should be on the House of Commons establishment. This would mean that outside advisors would judge that the successful candidate for a post has the skills to carry that out properly. Such a reform would also guarantee that MPs did not direct any of the money themselves.

I cannot now see any alternative other than for the House of Commons to own these second homes and to service them. I know where the next media attack will be, on the bureaucracy in the House of Commons needing to run such a system. But I do believe that the current system is so damaging to the political process that the most drastic reform is now necessary.

In this way, MPs would not be open to big capital gains or losses on their second homes. The cost of running a second home would be met directly from the House of Commons not by the MPs claiming back expenses.

We have had long enough trying to put our own house in order and we have failed. We are now into a period when taxes will need to go up and public expenditure cut. There is no way that our allowance system can survive the new politics that are being ushered in by the current mega financial and economic crisis.

How does our Balanced Migration campaign run outside Parliament? Yesterday, Nicholas Soames and I met up with Roger Godsiff in Birmingham. If we could get a proper hearing here, without our political motives being unfairly questioned, we would have established a bridgehead that would encourage further work.

Our first port of call was with the editors of the Birmingham Mail, Post and Sunday Mercury. In the minefield of immigration politics, could we persuade our hearers that our single and only aim was to try and persuade the political elite to join where the overwhelming majority of the electorate is on this issue?

That events turned out positively owes most to Roger Godsiff.

It is strange how events can show one's colleague in such new light. I had never questioned Roger's integrity. I had watched him debate too much on the immigration question to have any doubts on this score.

It was Roger, after all, who exposed the unbelievable fraud in local government postal voting. He did so in a city where very shortly white voters will be in a minority. His success was in asserting that what might be acceptable electoral practices, say on the Indian subcontinent, are not acceptable in this country. That postal voting arrangements are being overhauled owes everything to him.

As Roger spoke I could not help letting my mind go back to my first ten years in Birkenhead when the Trotskyites were by simple thuggery trying to take over the Labour Party. The campaign was so awful that I decided not to make my main home in Birkenhead. So while it was my duty to fight the corner and never to surrender an inch if that was at all possible I had another life outside of Birkenhead to argue my case.

But Roger's home is in Birmingham and those few of us who are prepared to raise the question of the levels of immigration in Parliament do not get an easy run - although it is getting easier. Roger did not only rely on integrity. We had arguments and facts as well. If present levels of immigration continue we will need to build the equivalent of seven new Birminghams. The arrow of our argument landed a local bullseye.

We also developed the argument that despite all the razzamatazz about the use of class politics, immigration was essentially a class issue. Both long established citizens, as well as more recently established citizens, believe the government is wrong in its open borders policy. Our initial poll to launch Balanced Migration showed there was no statistical difference in the proportion of Black or White citizens, or older established or newly established citizens, in their wish to see the number of new arrivals drastically reduced.

Studies in the East End of London have shown how the complaints of the White working-class fifty years ago that the Bangladeshis were putting pressure on the housing and schools, are now identically voiced by well established Bangladeshi families equally concerned about how new arrivals are affecting their families' chances for better housing and better schools.

The other lesson of the day was the contrast between power of leaders in the print industry to respond to political campaigns compared with the BBC's chain of command.

The three-MP delegation to Birmingham had an equally constructive meeting with the BBC regional political staff. But it was quite clear from our conversations that, in order to, in a sense, preserve a BBC line, the command chain in the BBC is lengthy.

I could not help think, while sitting in the meeting, that one of the reforms the BBC must think about is how does it pass real editorial power down into its regional offices, so that it can let the regions begin to change how the Corporation approaches emerging political topics.

In a 24-hour news medium, is it appropriate for a line to be held until a decision is made and so the whole Corporation jumps to a new position? Wouldn't a better approach be to let those areas where a political issue is more important - say the levels of immigration into the West Midlands - respond appropriately, knowing that this may begin to set the new line which the whole Corporation would in time adopt?

Our next trip to the regions will be to Liverpool and Manchester. After Birmingham we have a yard stick against which to measure our attempts to get the regional media reporting seriously on the immigration we have.

(this blog initially appeared on the Guardian's Comment is Free site)

At least its timing has not deserted the government. With unemployment surging through the 2m barrier today, perhaps heading for 3m, ministers were able to get their Welfare Reform bill out of the Commons on Tuesday before the Grim Reaper published his figures.

I spoke in total opposition to the bill. The bill was designed for the land of the never-ending boom. We are now stuck in the quagmire of recession.

The government has been axing Jobcentre Plus offices, and cutting staff, as though there is no tomorrow. Now my constituents face a situation of a much-reduced Jobcentre Plus service, and a massive increase in the demands placed on that service.

But what are those demands? Good, upstanding citizens, who have worked practically every day of their lives since leaving school or college, now find themselves with the increasing numbers who have been made redundant.

They are not interested in the highfalutin' supply side of things that the government has been concentrating on over the last ten years or so. None of them are work-shy. Work is part of their DNA. Yet they will be subjected to the same old roughing-up treatment that the government has been half-heartedly applying for a decade to claimants it suspects of being half-hearted in trying to find a job.

These men and women who have been made redundant, perhaps for the first time, expected that their NI contributions would offer a soft landing so that they can scramble back into work. And by "scramble back", I mean it - the desperation is real: studies show that unemployed people with good work records often take a job paying far less than their previous role, as work is a central part of their dignity and self-confidence.

Our proud boast when we were elected in 1997 was that we would reform the welfare state to meet the new strains and stresses of a global economy. Now, at the feast promised by pegging into the global economy, we have an unwanted ghost wearing the ugly face of 1930s unemployment.

A Welfare Reform bill aiming to help counter the recession would have centred on two points. It would have reformed the redundancy payment scheme to make the payments adequate, so that our newly-unemployed constituents are compensated. Lindsey Hoyle, the Member for Chorley, introduced such a bill last Friday, only to find the government attempting to block it.

Similarly, instead of drawing up more measures to get the supposed work-shy into work, the government should have been radically overhauling the National Insurance-based Jobseekers' Allowance. People around the country are complaining to me of being gobsmacked when signing on for the first time and finding that not only do their decades of insurance contributions qualify them for a mere £60.50 a week - exactly the same as if they had never gone to work in the first place - but that Jobcentre Plus skills are not honed to helping them get jobs.

Ever since Balanced Migration was established, we have campaigned for a revolution on the issuing of work permits. Approximately 150,000 skilled workers came into this country from outside the EU during the past year. Not one of these applications was tested by insisting that jobs were first advertised at Jobcentre Plus.

Whisper it, but in the last few days, the government has made a most welcome u-turn. From April 1, no work permits will be issued unless the jobs have been advertised at Jobcentre Plus for two weeks. Here is a real achievement. British jobs will first be offered to unemployed British workers.

Here is one really good piece of news showing the government doing its best to protect British workers. Why aren't the prime minister and all his colleagues singing this message from the roof tops?

Today's headlines scream abuse with one accord at the latest bailed-out company insisting on paying grotesque bonuses. The Financial Times is the most reserved with "Outrage at $165,000,000 AIG Bonus Payments" adding that the Obama Administration expresses its anger.

So things are slightly different in the United States. The new Government is prepared to condemn such outrageous behaviour from financial institutions which have got us into this mess, after being bailed out at huge expense to the tax-payer, yet still want to grab last year's bonuses.

That this grotesque acquisitiveness is now such a set pattern makes me wonder whether something much more fundamental is afoot.

Is it, I wondered, walking back after buying the FT, that the nature of capitalism has changed in a fundamental way.

Our economic text books taught us about entrepreneurs being driven to make great fortunes and, hopefully, benefiting the rest of society.

Then came the revisionist stage where the Labour Cabinet Minister, Tony Crosland, popularised academic work emphasising the roll of managers that now controlled these vast industrial empires.

These managers would be well paid; they would get many more times the salary of an ordinary worker, but still inhabit the same planet.

Latest figures show that the industrial leadership now gets not ten times or a hundred times the average wage but three hundred times, as shown below.

                                         © Financial Times

Is this the new stage of capitalism that managers now expect to make great fortunes as did the entrepreneurial class? If it is, it perhaps begins to show why there is such brass neck resistance to any modification to their grotesque bonus system.

Lord Lawson, a one-time Tory Chancellor, writes in today's FT to support the campaign Liam Halligan has been spearheading for a reintroduction of the Glass-Steagall Amendment which the current head of Obama's economic team did so much to destroy back when Bill Clinton ruled the waves.

Lord Lawson argues that it is only when there is a crisis in the commercial or retail banks that the economy is so adversely affected.

Preventing retail banks undertaking the functions and the risks of investment or merchant banks is a crucial reform towards which we should be aiming.

Lord Lawson also puts his finger on this change in attitude which I have been describing. "We now live in an age in which the acquisition of wealth appears to count for more than reputation."

If Lord Lawson is right, and the thirst for wealth is a greater motivation than being regarded as a good upright citizen, then one of the most significant changes imaginable has taken place in human society.

How do we prevent vulnerable children being killed by toerags passing off as parents, or, as likely, by the mother's latest boyfriend? That is a question to which Lord Laming has again given his judgement.

Way back, David Hunt and I went to the then Health Secretary about Wirral's chaotic children's department. I asked the Minister whether our children's department was the worst in the country.  The expression of the face of Lord Laming, then the Government's Chief Social Work advisor, suggested to me that it may well have been.  

David and I therefore spent the rest of the meeting asking what could be done to turn around this broken-backed department. Under pressure following a debate I held in the Commons, one Director of Children's Services was shoehorned out and the council did not renew the contract of another.

Lord Laming promised to help find us a new Chief Officer worthy of that name. The long-haul to rebuild children's services began at that point.

So there is no greater fan than I of Lord Laming. But let me give you one example of how our children's services can sometimes operate in Birkenhead which questions whether this huge emphasis Lord Laming puts on procedure - rather than judgement - is quite the right balance for running the most difficult brief in local Government.

I was at one of our primary schools, like practically all of them run by a brilliant head, who told me the following tale. She was worried about two of her children who were looked after by their mother, an alcoholic. The mother would be seen driving around Birkenhead with the children falling about the back of the car. Meetings had been arranged with children's services, only for the meetings to be cancelled when the Headteacher and Classteacher arrived at the council offices.

On one occasion the children did not arrive in school. Immediately on the following day, when there was again no sign of the children, the head asked the police to investigate.

They broke down the door, found the mother dead and the children greatly distressed. Being eminently sensible, the police then took the children into school. The Head, calling children's services, was told not to worry as the children would now be put on the "at risk" register.

The Head replied, I would guess with some anger, that the children had been at risk, and that she had been trying to draw attention to this fact. With the mother's death they were no longer at risk. What they needed was not an entry on the "at risk" register but a foster parent that night.

Having guidelines on what to do is crucial for all of us, and social workers are no exception. My worry is that we are beginning to develop a culture where ticking the boxes, which covers your back if things go wrong, is not only immensely time-consuming, but defocuses social workers from exercising judgement.

On some occasions, social workers have to be extremely brave. No-one is suggesting that the group of adults surrounding Baby-P were anything other than the most awful thugs.

None of the professionals involved with Baby P exercised any judgement whatsoever. It would have been judgement, that something very serious was wrong, despite whining protestations from Baby P's family that could have saved a life. If we are to save more children's lives then the exercise of judgement, not just by social workers, but by neighbours, friends and voluntary works is what will do it.

In the meantime, my thanks again to Lord Laming who exercised his judgement all those years ago over a Chief Officer's qualities in Wirral.

The Bank of England, it is reported, has every reason to be pleased with the initial market reaction to its printing money policy. The newly-printed money process began last Thursday.

The bank seems to have three options on how to spend its new money. What appears to have happened from last Thursday on is for the bank to buy its own existing debt.

By stepping in with unprecedented amounts of new money, the Government's aim was to push up the price of its own debt.

The hope was that as prices rose, and thereby the rate of interest fell, those selling gilts would not use the money to buy other gilts but, hopefully, put the money into company bonds or elsewhere in the economy where there is a better return.

When the printing money debate began, the Treasury was clearly briefing the media that the printed money might be used to go into the corporate bond market. By purchasing long term debt being floated by major companies, it was hoped that companies would use their increased capital supply to invest, and thereby help lay the foundations for a more hopeful recovery.

It does not seem yet, but it is early days, that this policy has been pursued. But there is of course a third alternative which is not mentioned.

At the moment, the Government is operating in a market trading in existing Government debt. At the same time as refinancing loans that expire, and thereby keeping the level of Government debt constant, the Government knows it is in the business of offloading additional debt, the size of which we have not seen since the financing of a World War.

My concern is how the markets are going to react when large tranches of new debt run alongside the operation and sales of existing debt.

This will be the test about how confident the market is in the Government's long-term financial stewardship. Will additional buyers be found for £140 billion debt for this year and every year into the far-distant horizon?

I doubt it. Why should economies like Brazil, that have currency reserves, lend to a country that has helped get the world into the fine old mess we now face?

The only way of attracting buyers will be to push up interest rates, i.e. it will be the only attraction in trying and persuade people to part with their currency reserves and so sure up British Government finances.

Such a scenario would be serious as rising long-term interest rates would undermine and timetable for industrial recovery. But it might not be the worst scenario.

It may not be apparent to the lay-person's eye just what quantity of new debt the Government is offloading at any one time. Every week the life of gilt issues comes to an end and the Government, unless it wants to cut the size of public debt, issues new bonds, to take the place of those expiring.

It won't be easily apparent to our eyes that the new bonds are renewing existing debt or are about increasing the level of debt. But the market will know as the size of the amount of bonds at any one time being offloaded will begin to increase dramatically. If there are not enough buyers for this enlarging debt market the Government may be forced to turn to that third use of its newly-printed money, i.e. it will be forced to buy its own debt.

What will be the effect then on sterling? What will those people that hold sterling do in such circumstances?

My guess is, sadly, they will sell and once the Government encounters difficulty in finding buyers for debt other than itself, sterling will collapse.

So, we therefore will get a first-rate sterling crisis even though we have a flexible exchange rate. It is the combination of rising long-term interest rates and a dramatic collapse in sterling that will test whether the Government can survive.

Likewise, a similar collapse of sterling will occur if the Government loses its triple-A credit rating, as has already happened to Spain and Italy. As neither of these countries have reserve currency status, and both of them are now in the Euro where Germany is now propping them up.

Should that scenario occur, the Government will have to overnight convince the market that it is serious about beginning to get the public finances back into shape.

That will require immediate tax increases and, as a start, cash-limiting public expenditure. The test will be whether the present administration regains the confidence of the markets under the set of circumstances I have described.

But look at the strains within the Eurozone, bond markets in Italy in Spain show significantly higher interest rates than in Germany. The printing money story has only just begun in terms of its likely consequences.

James Purnell, Work and Pensions Secretary, is being increasingly forced to look as though he is Old Mother Hubbard going to the cupboard and finding it bare. His latest initiative to help unemployed professional workers find work is well meaning but pretty fatuous.

For the next month, professionals who sign on will get one-to-one meetings with a personal advisor; attend group sessions for similarly jobless people at new style "job clubs", be given help to brush up their job-hunting skills and receive advice on changing careers.

The Government will also pay specialist recruitment agencies, such as Reed, to help people seeking executive posts.

But many of the people made newly unemployed are not just professionals but highly skilled people whose jobs have gone up in smoke thanks to the banking crisis.

As I have said before, these people have got work stamped through their DNA. While being treated well at Jobcentre Plus, not having to mill around for too long with young lads who have remained unemployed despite 3 million new jobs being created since 1997, today's statement smacks of yet another New Labour initiative. It sounds good but . . .

There is one move the Government could take immediately to increase significantly the job chances of unemployed skilled workers. Making this move won't look as though they are fiddling as people's economic prospects burn.

Last year the Government allowed in over 150,000 skilled workers under its work permit scheme. These workers came from outside the European Union.

50,000 plus were allowed in on the basis that they had a degree qualification, even if they had no job to come to. And it is unknown what job they gained, if any.

100,000 or more are brought in under the Government's skill shortage scheme. The test of a shortage here is whether Professor David Metcalfe and his colleagues calculate a shortage occurring.

All this activity should be confined to the dustbin of the boom. The one sure test of whether there are skills shortages in this country is to have all jobs advertised in Jobcentre Plus throughout the country. If a job hasn't been filled in, say, a month, employers would then, and only then, gain permission to import a skilled worker from outside the EU.

When old Mother Hubbard went to the cupboard and found it bare, she didn't simply build another cupboard. Had she been Work and Pensions Secretary it is unlikely she would have cooked up another recipe for nonexistent ingredients, i.e. yet another new deal.

She would have sought ways of filling the cupboard. James Purnell urgently needs to fill the empty job cupboards, by disallowing work permits for any job which has not been advertised at Jobcentre Plus. The Government is still, sadly, fighting the last welfare war, and not the one that has now engulfed us.

For what the Government might do, see my recent piece in last Friday's Daily Telegraph and other posts here on the blog.

The news is through at last that Birkenhead's independent all-girls' school has safely made the journey from being independent to becoming Birkenhead's first academy. What a wonderful gift to what the Cabinet Member for Children, Phil Davies, has called "the family of schools in Wirral".

There have, of course, been those people who have tried to prevent this wonderful gift being bestowed on young people in Birkenhead. I have opposed them resolutely all along the line.

My support for, and the now-silenced opposition to, Birkenhead having its first Academy rest on clear assumptions on how best we can raise standards in schools. For most of my lifetime the comprehensive argument has won. In theory, it is difficult to find a better line to plug. Children all happily come together from different backgrounds and the outcome is not only greater social harmony, but higher educational attainment.

Forty years later you have to be pretty "determined" to peddle this view. I never accepted it in its heyday, so I am unlikely to give it much support now.

I do not see most social and educational advance arising from a top-down approach trying to enforce standards or structures. Progress is most likely to be achieved when there is a variety of provision and where there is competition between the different suppliers.

My life was changed by winning a scholarship. I wish there were more grammar school places for Birkenhead children. But I am equally clear how, over the past sixty or more years, Governments have failed a huge proportion of young people.

It staggers me that after twelve years of state education all too many young people in Birkenhead can hardly read or write. Many of these people I admire: they come from "homes" which would have probably sunk me.

So while each of us has some responsibility in making the most of our best selves, decades of schooling which fail to get the vast majority of children up to and way beyond the minimum school leaving requirements must be deeply troubling. It certainly troubles me.

Look at our results in Birkenhead, despite the real efforts of our many devoted teachers. If a hospital was advertising that it had a 20 per cent success rate, but that 80 per cent of the operations would fail, none of us would go near that hospital, yet we are still intent that children go to schools with a similar success/failure rate.

This state of affairs is now coming to an end. The Birkenhead High School for Girls will be the first of a number of academies in Birkenhead, and with the academy will come freedom and responsibility.

The structure and Governors of the schools will be different. But given the devotion of teacher in our current schools getting such "modest" results we do need to look seriously at how our schools are organised and what is taught.

The system I grew up in did not fail me, but it did fail a huge number of other young people who were denied a pukka technical education.

Germany has always known the value of very serious technical education for a very large proportion of German pupils. More than that, Germany has built a parity of esteem between technical schools and academic schools.

Now change is at long last coming to Birkenhead schools. We can begin a real debate about planning for success - not a success for say 30 per cent of our pupils. We must surely aim for ensuring 95 per cent of pupils, at least, gain the minimum qualifications needed either to continue their education or to win them a place at work which guarantees over time real increases of wages and salaries.

So three cheers for Birkenhead High School for Girls and their Trustees who have made this key decision. But let the school know that they better not sit on their laurels. As the other new Birkenhead academies are created, there is going to be intense competition for the coveted prize of best school in Birkenhead.