Why the extraordinary fuss over Sir Fred Goodwin’s pension?  Isn’t there a danger in concentrating on this boil and losing sight of the pox-ridden body of which it is such a nasty part?

It is this main picture that has always distressed me.  Hardly a week goes by without my coming across a constituent, or a correspondent from a wider field, managing to bring up a family on something around £11,000 a year.  I know there might be tax credits on top of this sum, but it is usually the bureaucratic failure to get tax credits right that introduces me to the constituent. 

For decades now we have been awash of news of the loads of money brigade flaunting ‘their’ wealth in our faces.  One of the big political failures for most of my lifetime has been the Centre Left’s inability to see any distinction between self-interest, selfishness and greed.  

This simple failure to appreciate the subtlety of human nature and to applaud self-interest, also left much of the Centre Left speechless when it came to playing a role in helping to curb the unpleasant excesses of human nature.  New Labour found this fertile ground to promote its amoral philosophy.   

I think it was St. Augustine who said we should preach all the time and sometimes use words.  We have a culture, thank goodness, where actions speak louder than words.

What words does New Labour have to help remake a moral map and compass for negotiating today’s mega economic crisis when four Cabinet Ministers defend their expenses as being within the rules, when practically the whole country is appalled by their behaviour? 

Back to Sir Fred.  These pensions, rewards and expenses are disgusting in a country where families nobly manage to survive on salaries with five or more of the end noughts missing. 

Of course the whole RBS pension package is obscene. But that the Government nodded it through says everything about our warped sense of fairness.

In the natural world,  few of us are ten times taller than the shortest, nor ten times brighter than the least bright person.

So how can salaries or pensions that are ten thousand times greater than those of the humblest individual ever be justified at the bar of history?

Today's Telegraph/YouGov poll puts immigration as a key concern for both Labour and Conservative voters. 62 per cent of Conservative and 42 per cent of Labour supporters polled agreed that immigration to this country must be reduced. These results sound the most sombre warning. Unless the two major parties respond to the legitimate worries of voters, they will punish them horribly at the European elections in June.

So, there is a danger of rising interest rates as the Government begins to offload their huge deficits onto the bond market. It has been part of the denial line that there is any such danger.

Angela Merkel, thankfully, has let the big cat out of the bag. She is worried, as she has every right to be, about the consequences of Governments trying to raise over £2,000 billion in loans during this year alone.

The German Chancellor has many abilities, but I doubt whether they extend to regimenting an ordered issue of bonds from debtor countries. Her aim is not only to coordinate Europe, but the whole world! There is simply too much debt coming from too many countries for that!

What Mrs Merkel has not factored in, in public, at least, is the credit ratings of the debtor countries. When your credit rating is in free fall, you are not going to stand in an orderly line supervised by Mrs Merkel: you will have to bob and weave like mad to get the money, and pay over the odds. Hence the rise in long term interest rates. It is almost certain that Britain will lose its triple-A credit rating later this year.

Sorry, not yet to have any cheering news. The Government needs now to start planning if it is going to counter a sterling crisis and a gilts strike that will whack the economy sideways later this year.

The downturn in the economy, which is severe, is no doubt going to test still further the manufacturing base. Last Friday in Birkenhead was a tonic for lowly spirits. Part of the day I spent visiting LT Print Group. Based in Hamilton Street, and the bigger works over in Wallasey, LT Print Group is a model of what Britain has got to become if we are to maintain, let alone improve, living standards.

Here are the pointers for the future. The firm is owned, but more importantly, led by Robert McWilliams, who knows that British manufacturing (and the service sector as well) can only survive and prosper by embracing new technology.

In both the Birkenhead and Wallasey works, the firm thrives on an investment programme using the latest techniques. Success is also seen in other tangible ways.

Forty plus people are employed by the company, and as I moved about the two plants with Robert, it was also noticeable how busy people were but how this industry also helped create a happy environment. There did not seem to me to be any passengers living off the efforts of their colleagues.

Another tangible sign of success was the number of men employed. I am going to go on about this point over time until people are incredibly bored, but the most important change in local social ecology since I have been part of Birkenhead has been the collapse of male jobs paying family wages.

I noticed soon after the loss of a third of manufacturing jobs under Mrs. T, the rise of very young single parents. That horrendous cull of jobs (and a similar cull on a much smaller base over the last ten years) disenfranchised all too many males from becoming effective breadwinners.

It is when we add to this already dangerous cocktail a social security system that gives independence to very young, single mothers, largely closing a blind eye to fraud that makes the cocktail evil, if the nurturing of children successfully is to be a key goal of our society. Robert McWilliams shows what can be done. LT Print Group is one of the bigger private employers in the Wirral. He has also got some very interesting views about how schools should perform.

As we begin to reorganise secondary schools in the Wirral, I hope his voice and others like his are going to play a larger part in serving up a real New Deal for young people.

The UK's race relations lobby has a mixed record. For the very best of motives it succeeded for all too long in closing down a debate on the changing composition of Britain's population.

The reason for this is as understandable as it was wrong. The race relations industry feared a racial backlash from British citizens.

This approach was part of the two long decades of deceit that the political classes practised in Britain. Never was the obvious question asked on why there might be a backlash.

Had such a question been posed, I believe there would have been two answers. The first was that when forces were at work that fundamentally change a society, that society should have the right to decide whether or not they approve the changes.

Following on from this answer would have been a plea to moderate substantially the rate of change. The political classes seem to have been born without the common sense of voters that integration takes time and real effort.

The race relations industry knows it has now lost the argument - badly. But it still peddles its politics of deceit.

Take the Royal Commonwealth Society's response to yesterday's figures that one in nine people in Britain were born abroad. Do not worry, we are assured, immigration to Britain had to be seen in the light of hundreds of years of Britain as a hub of people on the move - "immigration adds to the patchwork of Britain".

The deceit is clear. Of course Britain has had open borders from its very inception. It is the numbers coming - coming in at twenty five times any record peak, and for that peak to be maintained for such a long period of time that is the deep cause of discontent.

The Government knows that the electorate is likely to settle the accounts at the next European election and at the following general election - hence the quick footwork to try and re-establish a new position.

But no amount of prattling on about the new points based system makes much difference. Modelled on the Australian system, it has the key component missing. Australia starts with a number of people it is prepared to admit to its shores, and it calculates this figure on how well these people can be integrated as Australian citizens.

Look at the Australian application form. One question is: "Can you speak English?"

The one in nine statistic is deeply troubling because the political classes have made no attempt to set out what it means to sign up and be full members of UK ltd. Failure to limit citizenship to signing up fully to our way of life, and pledging first loyalty to Britain, means separate communities have been created in this country.

It is now a hundred times more difficult to begin that process of integration. But that will be the task not only of the next radical Government, but one that is not prepared to blink first.

Does the Government have much of an idea the outcome of spending 40% of the national income? Well the answer is not very much, sadly.

Graham Allen, the Nottingham Member, brought together a small group in the cabinet office today. There we met Steve Aos, who runs for Washington State, USA, a research unit that tries to answer the question of how to spend public money to best effect. It was an impressive display.

I could not but help wondering whether we were not missing the obvious. Steve outlined a whole host of intervention programmes, the success rate, and the amount of savings to tax-payers by employing each of the schemes.

He made a passing reference regarding trying to reduce crime. The one intervention with least effect was where the offender had very little contact with the programme.

We ranged over the whole list of interventions, pre-schooling, starting school at a younger age and so on. I couldn't help wondering whether the real impact of these programmes was that someone was taking an interest in the recipient and his or her family.

Most of us know that our lives can be touched by a good teacher who tells us what we can achieve. Might not the same happen for those families in receipt of an "intervention programme"?

Might not the most effective intervention be to give the Mum of the family a buddy, whether it be an adopted "brother or sister" or an adopted grandparent? The buddy needs to have the skills of raising successfully their own family. Might not the most effective intervention programme be to give that bit of extra long term help and real interest in a family succeeding by employing this sort of approach?

Any legislation coming before Parliament has to have the financial impact of the bill and also whether it fits within the human rights legislation. I suggested at the meeting that those MPs present today should propose a Bill that no expenditure programme would be approved until the receiving organisation sets out what, say, the three major objectives it believes it would achieve. Continued funding would then depend on research being carried out on the impact of the expenditure.

I will report back more on Friday when a group of civil servants and I are up in Nottingham to look at how Nottingham City Council has bought in a very very early intervention strategy.

It was wonderful to sit down and listen to senior officers contribute to a debate so constructively and, thereby, add to the collective wisdom of the whole of the group.

The debate over the Wirral Council's Strategic Asset Review has been backward looking. I much prefer to look to the future to see how common services might best be provided.

The Government is committed to a programme called "Building Schools for the Future". The aim is that every secondary school will either be rebuilt or significantly repaired and brought up to standard over fifteen investment waves. We will be getting our share of this programme in Birkenhead and I am anxious that the local authority thinks imaginatively how their services might be delivered from a new system of schools that are community based and are open from 12-14 hours a day.

It all sounds fine, but here is the possible hiccough. Most of this programme will be financed by what are called PFI contracts. Money is borrowed from the private sector and paid back over twenty or twenty-five years.

It was mentioned on the BBC at the weekend, then in the Financial Times, that there may be severe difficulties is raising this capital to pay for Building Schools for the Future. It is because I was worried about what would be the impact of the recession that I was anxious that the first parts of our programme were signed up and agreed.

When Labour came to power in 1997, I argued (if that is not too strong a word) with Gordon Brown that pension funds needed some long term bonds of fifty years of more, and why didn't the Government issue these bond specifically designed to balance portfolios of pension funds.

The argument was squatted on the grounds that the debt would appear on the public balance sheet. It does not now appear on the balance sheet, but it is, as we will realise only too soon, part of the public debt.

I therefore argued that, if the aim was to keep things off the balance sheet, then surely a Labour government would go down the road of allowing local authorities to issue bonds. The great reforming mayor of Birmingham, Joe Chamberlain, largely financed the rebuilding of his city by the issue of bonds.

Bonds have an early claim on local authorities' revenue. There is not much risk attached to them. Furthermore, pensioners and others are always trying to seek safe havens for their funds with reasonable returns, and never more so than today.

If the PFI programme goes up in smoke I will be pressing the Government to allow local authorities to raise capital by their own bond issues.

When I last asked, Wirral's PFI programme was being repaid plus 16.3% interest as well as management charges. No-one could tell me what these management charges were!

In today's climate anyone with savings would be jolly pleased to get a safe haven promising a 5% return.

So who knows, we may see over the next five to ten years a total rebuild of our schools, the schools to be used as centres for our libraries and children's services, and financed by Wirral bonds paying modest but much sought after rates of interest.

That is my take on the Strategic Asset Review and the fine old financial mess into which the Government has helped land our beloved country.

Our economic policy makers are clearly suffering from a form of psychological hysteresis. This wonderful word, hysteresis, re-emerged after the early Geoffery Howe budgets had send the economy into a nose-spin, during which a third of our manufacturing industry was wiped out.

Somebody clever thought up using the word hysteresis to describe a market economy where its decline has been so severe that any normal propensity to rebuild for recovery became paralysed. In such circumstances only a great stimulus from outside could help revive the market economy.

The same seems to have happened to the brains of your financial and political leaders. For six months now they have been chuntering on about the dangers of deflation. In Michael Hestletine's famous phrase, "it is all balls."

As I keep commenting here, inflation is an ever-present threat, particularly in the medium term (i.e. before, in Lord Keynes' view, we are all dead.)

The Bank of England managed to stir up a cohort of commentators to build up over the weekend and on Monday that the latest inflation figures would show a further dramatic drop, heralding a great fear of deflation.

So what happened? The figures were published yesterday evening, and practically the whole of the press reported that we were heading for deflation.

The only financial journalist, that I have read, whose brain is not suffering from hysteresis, is Norma Cohen in the Financial Times. She writes inflation is more entrenched than many economists had imagined.

Despite all the projections, the Consumer Price Index rose in January at a year-on-year rate of 3%, a mighty reduction of 0.1% over the December figures.

But, as Norma reports, retail prices - which more accurately measure household prices - deny economists' expectations of a contraction and registered an 0.1% year-on-year rise in January.

The Financial Times gives a wonderful spread on the main parts of our budget - bread and cereals up almost 10% in the last year, dairy products by 8.5%, coffee and beverages by over 16%, alcohol by nearly 6%, electricity and other household fuels by a cool 36%+

It is one thing to have the residents in the mad house sounding off with their latest delusions. It is desperately worrying when those residents are actually running the economy.

There will be no end to the economic crisis until the Government acts decisively to restore confidence in our banking system. Our policy of throwing money at the banks clearly has not worked. The root of the evil lies in those toxic assets into which the banking elite so greedily bought.

So I come back to a topic I keep banging on about. How the Government deals with the Lloyd's Banking Group crisis, which is largely of its own making, will dominate, no doubt, today's headlines. But the big issue of today and tomorrow and forever after, until the Government acts, is getting the bankers to own up on the size of their dud assets.

The FT Weekend had reports that President Obama was moving in this direction but there were problems on how to value these assets. Surely this conventional wisdom is wrong on this score.

The main issue surely is to get banks to assign those assets to a new national holding bank. Valuation can come later. The Government needs to then promise enough tax-payers' money to recapitalise banks.

It will be expensive. But it has been expensive up to now with the Government merely throwing money at the banks with little to show in terms of increased credit flowing to would be customers.

Parliament, which is in recess this week, needs to return to the task of both supporting decisive intervention on these lines, but also setting up its inquiry into who is responsible. The cost to savers and future pensions is huge.

Such an inquiry needs to go beyond traditional select committee hearings. There needs to be a special select committee of the whole house which pieces together both the genesis of the mega crisis as well as its latest manifestations.

Looking at the Lloyd's TSB and HBOS debacle could illustrate how such an inquiry will work. The inquiry needs to detail from known sources what the role of the Prime Minister was in this deal, was Sir Victor Blank the chairman of Lloyd's TSB a willing suitor, and how involved was the board of Standard Life whose Chief Executive Sandy Crombie, was the only figure from the financial services sector to receive a knighthood in the New Year's Honours - in Standard Life's public welcome for the fatal merger between Lloyd's TSB and HBOS? The committee could also look at the papers regarding Sir Sandy.

The role of the committee would then be to present their evidence to the main players and to ask for their comments. It would then be up to the respected boards to sack those chief players whose actions have helped bring the country to this sorry pass.

I usually try and balance the main part of the blog with a more cheerful comment. I cannot think of one today, try as I might.

The National Statistician, Karen Dunnell, has every right to feel sore this morning. Without exception the Establishment has been encouraging her to develop the independence of her office. In a democracy this can only be good.

One suspected all along that there were a number of weasel voices joining in the general cry who were probably none too keen on her efforts to give substance for an independent national source of statistical data. She now knows who her friends really are.

When I saw the data she published yesterday, showing a significant rise in British-born workers losing their jobs, and an equally significant rise in the numbers of non-British-born workers gaining jobs in the country, I was loathed to comment. I fear, in the long-run the grass roots political backlash to such data. My cowardliness was combined with a sense of failure to get the Government to live up the danger it has been creating over the last ten years in allowing unrestricted immigration.

Nicholas Soames and I, the joint chairmen of the Cross Party Group on Balanced Migration met with Phil Woolas yesterday afternoon. We publicly made it plain to Phil that we had no intension of commenting on the figures because we were scared of a growing backlash against foreign workers whom the Government has been inviting to come to our shores and work.

On other occasions I have made it plain that any anger must be directed at the Government, and not at those workers who have taken up opportunities expressly opened to them by Ministers. We have kept pointing out the huge danger to which Government was exposing the country to by failing much more effectively to control our borders.

The Government says that it has no intention now of letting our population be grown largely by immigration. On current trends the population will rise to 70 million by 2028 and to 80 million at the midpoint of this century unless new arrivals wishing permanently to settle in this country are reduced drastically.

This 70 million target is based on the annual net immigration figure of 190 thousand. In fact, we are still well above that level with a net migration figure of 237 thousand last year.

The Office of National Statistics was thankfully not attacked by leader writers for helping the debate by saying that if the Government wished to keep the population below 70 million it needed to reduce net migration to 60 thousand. The Government's much-flaunted points system will reduce last year's net migrant total of 237 thousand by a mere 12 thousand.

Balanced Migration has been pushing the Government to take action before it is forced to. It should abolish the tier one scheme. This allows in each year 50 thousand supposed very skilled workers to come to the UK who have no job to come to and we do not know what job they actually take up. It needs also to ask the Metcalfe Commission on skills vacancies to report monthly instead of annually. Likewise, it needs to encourage employers who have any skilled vacancies to register those at Job-centres so that local people can have first chance of applying. That new Job-centre data should be then used by the Metcalfe Commission when setting out what the true level of skills scarcity in the economy.

A third move would be for the Government to ensure that universities abide fully by the proposal that overseas graduates can work here but for only two years once they graduate.

Watching the Government's response from Northern Rock onwards has been like witnessing a crash in slow motion. Every action the Government has taken has been late. The plea Nicholas and I made yesterday, and which has just been simply ignored by the leader writers chasing after the National Statistician, is that on immigration the Government must get ahead rather than acting when it is too late.