Bolitics The New Condem Government

[snowychap]

It looks like the government owned Tote is being shifted to the Channel Islands. That wouldn't be for ahem, tax planning [avoidance] opportunities would it?

Well, let's ask the government.

A spokesman for the Department for Culture, Media and Sport declined to comment last night.

Oh. They appear to have no view.

The tax system in this country is morally bankrupt. Why on earth should ordinary people struggling to get by feel content that the government not only turns a blind eye to tax dodging by the wealthy, that it is comprised of serial tax dodgers in a personal capacity, and that even government-owned entities are at it?

Are they attempting to make it slightly more attractive to potential bidders?

It's not only tax dodging opportunities, I'd say it is an opportunity to dodge the levy, too. If so (on either or both counts), it's utterly disgraceful.

[JulieB]

This is quite an interesting read following his recent TSC grilling....

The Forked Tongue of Bob Diamond

At the Barcap annual seminar in 2009, Bob Diamond rose to speak, and uttered these words:

‘‘The partnership of Barclays Capital will perpetuate a culture that is based on putting clients at the centre of what we do. It is based on focusing and execution, but mostly it’s a meritocracy and behavior. How we behave matters. We really do have a no-jerk policy.

Yet in reality as exposed by a recent whistle blower Barclays is the bank, whose call centre staff no longer refer to their clientele as "Customers"......they are now merely (sales) "Hits"!!!

[peterms]

This caught my eye about Bankers & their bonusues in the Telegraph yesterday & how they may have been miscalculated using spurious accounting valuations.

Here

Many are starting to ask questions of Accounting firms such as Price Waterhouse Cooper & KPMG etc and their supposed "impartial" audits of large banks etc & the reports they undertake on behalf of the Treasury & the FSA. They get paid millions by the banks, so surely bias comes into question when the FSA asks them to produce reports investigating how failures happened eg RBS, Lloyds etc.

This is why I say they've been trading while insolvent. The assets they owned were worth nowhere near what they said they were; the auditors whose job was to expose this were complicit in covering it up; and this practice seems to have been endemic across very large parts of the banking sector.

If a corner shop had conducted itself in this way, the owner would be facing action. If he had paid himself very large bonuses for nothing while insolvent, presumably further action would be taken in respect of the preferential creditor rules.

"Too big to fail" also seems to mean "too big for the normal legislation to apply".

[JulieB]

"Too big to fail" also seems to mean "too big for the normal legislation to apply".

I agree especially when you consider that they are all in each others pockets. Take for example the current Financial Secretary to the Treasury one Mark Hoban MP - a Chartered Accountant in a former life with whom? - PWC that's who........ the auditors for RBS - whose report to the FSA, their disasterous purchase of ABN Ambro & their complete colapse under "Fred the Shred" still remains under lock & key, despite costing millions of pounds. Hoban has angered IFAs & even MPs of his own party on the TSC intensely, with his seeming bias towards the bankassurance sector against small businesses.

It all becomes clear though because you just know that there will be a big fat seat on a City board when life in parliament comes to an end!

[peterms]

This is quite an interesting read following his recent TSC grilling....

The Forked Tongue of Bob Diamond

The same blogger has this piece elsewhere on his site, short enough to quote in full.

Bankers explained in 300 words

Whenever the debate about contemporary banking – and what it allegedly ‘does’ – gets close to the truth, one can always rely on banker PR to pile in and muddy the waters with jargo-bollocks, fantasy statistics, and how much tax the UK banking sector pays to the Exchequer.

This mercifully brief post will therefore stick to the following irrefutable facts as a guide to long-suffering Slog readers. Here goes….

1. The cart and horse goes like this: banking is the horse that pulls the cart of entrepreneurial capitalism. It is not the other way round.

2. Having an all-up derivatives sector valued at ten times global GDP (and consisting entirely of notional, ‘virtual’ money) contributes nothing to real capitalist business, and is the single biggest instability factor in the global finance system.

3. From the mid 1990s onwards, the banking sector consistently lobbied to have regulation either watered down, or easy to avoid. In particular, the key factors of client credit worthiness, bank capital requirement, and separation of retail from merchant banking were all ignored in favour of profits for the banking sector – not the economy that requires finance from that banking sector’s access to funds and markets.

4. Since 2008, precisely the same lobbied opposition has been applied to all the SEC, EU and FSA ideas about how to make banking safer. Not a single major piece of globally applicable legislation has been passed.

Everyone – even bankers themselves – needs to wake up to a simple reality: bankers are children straight out of Lord of the Flies. No adults, no rules, no ethics, no socialisation. They ask for endless glasses of water rather than go to bed. Any application of discipline is ‘so unfair’. All rules are to be flouted – and laughed at behind hands. And given an island cut off from civilisation’s rules, they will run riot.

Point no 2 is the most important, for me.

[blandy]

It's the most obvious one, but the one that gets ignored - Like I said Banks don't actually create anything, they move money about. is putting it simply. And what that blogger says is spot on - legislators simply will not act to control these "lord of the flies kids". Blaming the "kids" for being kids is like the Scorpion and the Frog. It's Gov'ts that have to regulate them. Sure the banks are feral, but anger at them needs to be directed at Gov't, they won't change their ways themselves.

[peterms]

It's the most obvious one, but the one that gets ignored - Like I said Banks don't actually create anything, they move money about. is putting it simply. And what that blogger says is spot on - legislators simply will not act to control these "lord of the flies kids". Blaming the "kids" for being kids is like the Scorpion and the Frog. It's Gov'ts that have to regulate them. Sure the banks are feral, but anger at them needs to be directed at Gov't, they won't change their ways themselves.

There are some interesting insights in a couple of articles linked from this page, explaining how some people in the Treasury over many years has wanted to get tougher on the tax havens which have for decades been a refuge for organised crime and corrupt dictators, but the Bank of England has defended the tax dodgers, over decades.

Right now, HMRC has a tiny number of people investigating tax fraud. They have allowed tax dodgers to shift their money to Liechenstein, pay a tiny amount of tax previously illegally avoided, escape prosecution and remain anonymous. So much for transparency.

I certainly don't expect these banks to behave properly; only a fool would, given the well documented history of what they have done. Which is why it comes down to whether there is political will to do anything substantive about it, rather than a bit of the usual window-dressing while the rackets go on behind closed doors. When our political leaders are themselves tax-dodgers, what hope can we hold out that they will tackle the rackets, especially when their chums from school, the Bullingdon Club and the City are the ones so actively engaged in thieving from the rest of us?

[snowychap]

It's the most obvious one, but the one that gets ignored - Like I said Banks don't actually create anything, they move money about. is putting it simply. And what that blogger says is spot on - legislators simply will not act to control these "lord of the flies kids". Blaming the "kids" for being kids is like the Scorpion and the Frog. It's Gov'ts that have to regulate them. Sure the banks are feral, but anger at them needs to be directed at Gov't, they won't change their ways themselves.

Governments are unlikely to regulate them whilst they (a) have as part of their number former, future or wannabe 'kids' and ( whilst they still believe them (the 'kids') to be the secret to power and succesful economies.

Whilst the public continues to (a) elect those people who will pay homage to these 'kids', ( make excuses for the behaviour of these 'kids' and © believe that wealth equates to superiority, should the public not take some of the blame?

If bankers are scorpions then politicians and governments are scorpions, too.

Financiers/bankers (and others) should be held accountable regardless of their 'nature'. The people should hold them to account and we are but frogs if we believe that those in power (if not held by the throat by the people) will.

[JulieB]

I can't disagree with any of this & those of us who have been involved in UK financial services have seen what's been happening behind the headlines

for a long time.

The government, the regulator & the banks are all in this together but like Snowy says the ultimate responsibility has to lie with the politicians who appoint the regulators who should regulate the "kids". I think part of the problem is that many MPs as well as the public find the subject too complicated & difficult to get their heads round. So they tend to set up independent, statutory regulators as with the FSA - supposedly to do their job for them. However in the UK the FSA, whilst many of their lower ranks are perfectly decent people the higher managers in the Treasury, the B of E and the FSA are mainly made up of I'm aftraid to say part of this "scorpion pack"....so is it any wonder the whole thing has been a sham. Also under FSMA2000 rules - the regulator is immune from prosecution for it's failings.

The only good thing about all this is that there is a whole raft of new MPs in the house now & they are starting to ask questions. Hence why Bob Diamond faced some pretty heated arguments at the TSC. Parliament has disbanded the FSA & is putting in place a new regulatory regime. MPs like Andrew Tyrie & Mark Garnier are not unaware of what's going on, as I've had correspondence from them regarding the RDR, which parliament recently debated because of it's obvious shortcomings.

It remains to be seen whether the scorpions continue to run amock or whether their stings are removed...I'm not holding my breath!

[snowychap]

...but like Snowy says the ultimate responsibility has to lie with the politicians who appoint the regulators who should regulate the "kids".

Well, whilst I've said politicians should also take the blame, that was blandy who said this, I believe.

[CarewsEyebrowDesigner]

Think it's bad here? Have a look what is happening in Tunisia

[peterms]

...I think part of the problem is that many MPs as well as the public find the subject too complicated & difficult to get their heads round. So they tend to set up independent, statutory regulators as with the FSA - supposedly to do their job for them. However in the UK the FSA, whilst many of their lower ranks are perfectly decent people the higher managers in the Treasury, the B of E and the FSA are mainly made up of I'm aftraid to say part of this "scorpion pack"....so is it any wonder the whole thing has been a sham. Also under FSMA2000 rules - the regulator is immune from prosecution for it's failings...

I don't know about the FSA, but regulators in other sectors I've had the pleasure of dealing with have not always been the brightest of creatures. They have come across as very strong on procedure, order, very conformist and rigid in outlook, pretty low on imagination and creative thinking.

That was in sectors where the regulated weren't trying to think of wheezes to outfox the inspectors. I do hope the same traits aren't apparent in the FSA. However, the outcome of financial regulation over the last 20 years or so makes me fear they might be quite like the ones I came across.

I don't want to be too dismissive of regulators. It's not an easy hand to play, when you are the archetypal bureaucrat, when you are challenging immensely powerful forces, and when you know that the CE of the firm you are trying to regulate regularly has dinner with your Minister. And if you also feel underpaid and more importantly underresourced and ultimately unsupported because the Minister doesn't actually want his tennis partner to be screwed for £billions of back tax, where do you go from there?

[Awol]

Incredible that the BoE have left Interest Rates unchanged.

Never mind inflation, they've got to maintain house prices at an artificially high level or those bank balance sheets are really going to take a kicking...

How long will they carry on trying to ignore reality?

[JulieB]

Incredible that the BoE have left Interest Rates unchanged.

I think it has alot to do with the fact that THIS inflation is being caused in the main by rising oil, energy & commodity costs. The developing world is sucking up more & more stable goods as their economies expand & the populace become wealthier so supply & demand is having an effect on our food bills.

If they put up the interest rates banks will put up borrowing costs to SMEs & individuals even further which are already higher than they should be.More businesses will fail if they do & people will not be able to afford their mortgages, because the cost of living is rising faster than earnings now. Cheaper existing mortgage payments for the past 2 years has somewhat offset all this, but if interest rates rise how are most families going to be able to afford to keep up their payments? Most people are facing pay freezes & cuts, unless of course you are on of the chosen rich, with a million pound bonus.

So the B of E are in a very precarious position - if they do what they always have done, the feeling is there will be more repossesions & more bankruptcies, hurting UK growth & the economy even further.

[Gringo]

Incredible that the BoE have left Interest Rates unchanged.

If you bumped up interest rates to a realistic level, ie 3%, the mortgage payments on an average price house (£163k source Nationwide) would go up £370 per month.

Never mind inflation, they've got to maintain house prices at an artificially high level or those bank balance sheets are really going to take a kicking...

How long will they carry on trying to ignore reality?

So it's not JUST bank balance sheets'they're trying to protect. If payments went up that much there are going to be a lot of people for the local authorities to house - maybe that's why they're getting those cuts in first.

Q3 2007 vs Q4 2010

Anyone who bought a house near the peak with less than a 10% deposit can't afford to sell and are unable to remortgage due to the negative equity. And with complainst of gazundering filling the pages of the daily mail, it's obvious the pressure on prices is still downwards. These graphs suggest that a further 20% fall is required to bring the markets back to the norm.

Average house price vs Relative cost against earnings

That doesn't mean that a 20% fall is going to happen. The norm may have moved - subject to changes in other factors such as supply and demand.

[Awol]

So the B of E are in a very precarious position - if they do what they always have done, the feeling is there will be more repossesions & more bankruptcies

I don't dispute that Julie and it's because far too many people have borrowed more than they can afford to repay, either on a commercial basis or in the form of domestic loans. This may sound harsh but more fool them, the banks didn't force 125% mortgages on people, greed did that.

hurting UK growth & the economy even further.

If they want to help growth then they should cut either income tax, national insurance contributions or both.

Personally I think the plan all along was to keep people spending (what's the point in saving when interest is virtually non-existent) and create massive inflation in order to devalue the debt away. That route will ultimately hurt people on limited incomes just as much as an interest rate rise, then the rate rise will eventually happen anyway.

[snowychap]

From the Indie, Steve Richards: A revolution that shows Cameron in his true colours

His crusade goes well beyond handing taxpayers’ billions into the hands of GPs. Approve or disapprove, this policy marks the end of the NHS

David Cameron is proving to be a charmingly evasive public figure. Every day of the week I read articles demanding that Ed Miliband define his political purpose, or colourful obituaries of Nick Clegg's wildly oscillating career.

Curiously there is less scrutiny of the Prime Minister. Instead there seems to be a broad, but vague, consensus that he is a one-nation centrist leader in the Harold Macmillan mould, while someone called "Clegg" has tripled the fees for students and a figure known as "Lansley" leads a reckless revolution in the NHS. Mr Cameron is the decent chap who pops up every now and again to say how much he wants the poor to go to universities and admires those who work for the NHS.

Yet a judgement on a leader, especially a Prime Minister, cannot be based on whether he is a decent chap. The policies he seeks to implement, and the values on which they are based, determine a leader's public voice and role.

In this respect Mr Cameron's plans to transform the NHS are an important guide. I stress they are Mr Cameron's plans as much as Andrew Lansley's. After all, he is Prime Minister. He has known about them for years. If he disapproved or was worried about their impact, he could have done something about them. Instead, at the end of last year, he sought to reassure by asking his close ministerial ally Oliver Letwin to keep an eye on the policy. This was the equivalent of ordering Engels to check up whether Marx's Communist Manifesto was a practical programme. Mr Letwin was advocating the NHS reforms before Mr Lansley.

Oliver Letwin is one of my favourite politicians – thoughtful, polite, willing to engage, and achieving more of his policy ambitions than politicians that seek the limelight but make no practical change whatsoever. But he is also committed to policies that complete Margaret Thatcher's more tentative reconfiguring of the state. The NHS changes are central to his vision.

Over the past few weeks it has become something of a cliché to describe the plansfor the NHS – either enthusiastically or dismissively – as a revolution. For once the cliché merits persistent repetition. Mr Cameron's crusade goes well beyond putting taxpayers' billions into the hands of GPs, some of whom have enough to worry about already. As Nigel Edwards, acting chief executive of the NHS Confederation, noted in yesterday's Financial Times: "By 2014, the NHS will no longer be a system which still contains many of the characteristics of an organisation ... Instead it will be a regulated industry ... The Secretary of State will no longer have the power to intervene in NHS organisations which will stand or fail on their own ... there will be no power for the secretary of state to prop them up, or intervene if something goes badly wrong ... And unless a service is designated as protected, it will also be possible for a hospital or other healthcare provider simply to stop providing a service or operating a site from which it can no longer make money". Approve or disapprove, the policy marks the end of the NHS.

Tonally, Mr Cameron advances his case in the most reasoned manner, the very opposite of Mrs Thatcher's provocatively harsh style. He joked endearingly when he felt that John Humphrys was interrupting him on yesterday's Today programme, and stressed how much he valued the NHS and those who worked in it – an observation he contradicted later in the interview when he said that he was not surprised that the reforms were opposed internally because the competition would force staff to raise their game.

In his speech delivered after the interview Mr Cameron was the model of tonal moderation once more, copying Tony Blair's third way by arguing that the left was too preoccupied by the state and the right by the markets. Mr Cameron cited Mr Blair several times, and there is no doubt that the former Labour prime minister opened the door that Mr Cameron rushes through at dizzying speed. That is not in itself an argument in favour of the revolution, but it helps to give the changes an aura of pragmatic centrism.

The aura is deceptive. A centrist would not be so disdainful of context or practical consequence. Mr Cameron did not put his proposals to the electorate last May. Instead he promised there would be no more big reorganisations of the NHS, insisting that there had been enough of those. He must have known he was planning the biggest reorganisation in the institution's history, so the lack of candour highlights the degree to which Mr Cameron is committed to his NHS crusade. He was willing to risk being exposed as duplicitous in order to win power and then press ahead.

A leader following Macmillan's expediency or indeed Mrs Thatcher's calculated caution would act with more humility. She only started to speed up after her 1983 landslide victory, and she had won a fairly big majority in 1979. Mr Cameron secured no overall majority for his view that markets and the "big society" could take over some of the state's responsibilities. His excuse for the gap between what he said before the election is breathtaking in its chutzpah. He told the Today programme that what he meant before the election was that he was opposed to any change that turned out not to be a change, such as re-naming primary care trusts. This is not what he said or implied at the time.

His argument on the substance is superficially compelling: the Government is letting go, but patients will be in charge. They will have the choice to go to the doctors they want and the surgeons they seek. Until there is a surplus of good hospitals and GPs, such choice is an illusion. There will never be a luxurious surplus.

Perhaps there will never be a market to replace the NHS in the way that Mr Cameron currently envisages. As long as taxpayers fund health provision, and services are provided free of charge, governments cannot and should not let go entirely. Ministers raise the taxes and are ultimately responsible for how the money is spent. They cannot afford to let hospitals and GP surgeries go bust, and will not do so. Still, the advocacy is defining. In terms of the reform of public services, Mr Cameron is rooted firmly on the right.

[JulieB]

Perhaps we should start a seperate "bashing the banks & their bonuses" thread.......

One thing Bob Diamond forgot to mention to the TSC in his evidence in his statement about Barclays being "at the forefront of customer service"..... was the £7.7M fine Barclays retail banking doled out by the FSA yesterday, over giving clients appalling investment advice over two AVIVA funds a while back. Basically they were caught "advising" OAPs including 90yr olds - to cash in everything & anything to put it in these funds paying the bank 6-7% initial commission - described as cautious - when they invested in global junk bonds etc & higher risk assets. The funds promptly dropped about 50% & have still not yet recovered their losses when I last checked.

Barclays have had to pay out millions in compensation so far & there's more to go after being named & shamed by a special Panorama investigation & an expose on Rip off Britains.

The fine is no more than a drop in the ocean for Barclays overall & a slap on the wrist. No one banned, no permissions withdrawn just a fine for an institution whose investment arm paid one of it's chief executives £40M a while ago in bonuses that was disclosed to no one including shareholders!

Big fines handed out to RBS, Nat West & Barclays by the FSA in last week or so.... Nicely timed as this years bonuses are soon to be announced by the FSA for their staff.

One big gravy train!

[ender4]

we should probably have a separate thread to discuss the NHS reforms as well.

[drat01]

Some appalling attacks on the NHS coming through now from this Gvmt. Total and utter lies and bollox about not wanting to attack it. Interestingly some of the Tory party donators are part of private health care. This lot and the LibDem supporters really should hold their heads in shame at what they are doing