Fiddling while Rome burns

Just occasionally, government ministers actually resolve problems.  (I can't for the moment think of any concrete examples but it must be true.)  Mostly, however, they simply try to avoid making them worse, in effect by kicking the can down the road.  But, once in a blue moon, they come across a problem that is so damaging and so intractable that they have no alternative but to resort to the ultimate sanction - they are forced to re-orghanise.  So it is with Mrs May and the UK Border Agency:

The troubled UK Border Agency is to be abolished and brought back within the Home Office, the home secretary, Theresa May has announced.

She told MPs that she will also split the "closed and secretive" agency into an immigration and visa service and a separate law enforcement command while bringing it back under the direct control of ministers.

May first split off the UK border force from UKBA 12 months ago in the wake of the Brodie Clark affair.

The home secretary said in an unscheduled Commons statement that UKBA was "a troubled organisation … its performance was not good enough". She identified four main problems: its size, its lack of transparency, its IT systems and its policy and legal framework.

She said that the immigration agency has been such a "troubled organisation" for so many years that it will take many more years to clear the backlogs, which now top more than 310,000 cases, and fix the system.

It reminds me of the spurious quotation attributed to Petronius:

We trained hard . . . but it seemed that every time we were beginning to form up into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralisation.

Will Mrs May's reorganisation make it better? Need you ask?

What did he think he was doing?

It may not exactly qualify as snatching defeat from the jaws of victory, but it comes pretty close.  The Guardian reports:

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus. The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency's smaller members would be the template for rescue packages for bigger countries.

Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.

For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.

Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.

The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.

By the end of the day shares in Europe were tumbling, the euro was dropping against the dollar and the cost of insuring European banks against default was rising, forcing Dijsselbloem to issue a clarification of his earlier remarks. Confirming that European politicians could not organise a booze-up in a brewery, Cyprus was back to being a special case once again.

     

Sorted?

So, crisis resolved?  The Guardian reports:

European leaders reached an agreement with Cyprus early on Monday morning that closes down the island's second-biggest bank and inflicts huge losses on wealthy savers.

Russians would lose billions of euros under draconian terms that are aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency.

"Herman Van Rompuy has brokered an agreement between the troika and Cyprus," said an EU source, referring to the president of the European council and Cyprus's trio of creditors: the European commission, the European Central Bank and the International Monetary Fund.

Well, not quite.  The deal has yet to be finalised.  It remains unclear how many billions of euros will be confiscated from the Russians.  And does the Cypriot parliament have a say?  And when will the banks open?  And under what conditions?

Furthermore, in the medium term, capital controls may stop (or, more accurately, delay) the flight of funds from Cypriot banks, but can do nothing to encourage any further investment.  Who, now, would be so foolish as to put any money in a Cypriot bank?

Should have gone to Specsavers!

Car crash

In case you hadn't noticed ...

The Telegraph blog records:

But rising numbers of people on above average earnings are paying income tax at 40pc. The starting point for higher rate tax has already fallen from £37,400 under Labour to £34,371 now. HMRC’s figures show that has increased the number of people paying 40pc or higher rates of income tax by 670,000 from 3.19m in in 2009 to 3.86m today.

As a result of Mr Osborne’s proposal to lower the starting point for 40pc tax to £31,865 with effect from April, 2014, nearly 5m people will be caught in the top rate tax net – even if their pay remains unchanged. By the time of the next election in 2015, Grant Thornton forecasts that more than 5.2m people will pay higher rate tax.

And it's not just those who suddenly find themselves in the higher tax bracket.  The reduced threshold means that everyone in the higher tax bracket will pay more tax than would otherwise have been the case.



 

Aspiration nation

So the chancellor mentioned aspiration 16 times in his speech yesterday.

When I studied phonetics some 40+ years ago, I was taught that aspiration was the puff of air that accompanied the articulation of a voiceless plosive,  Basically, it was just hot air.  Seems appropriate somehow.

In those days, a pint of beer could be bought for between 2/- and a half a crown.  A penny off your pint would have meant something.  Nowadays, with the price of beer exceeding £3 a pint, a penny off is neither here or there.  It's just a gimmick.


 

Cyprus - what happens next?

Good question.  The answer is that nobody knows.

It remains possible that, as the Cypriot parliament has rejected the deal, the troika withdraws its (conditional) offer of a bail-out.  Cyprus renegues on its debts and its banks go bust.  The EU throws it out of the euro and Cyprus starts again with a new currency and capital controls.

But this will not suit anyone.  The obvious next step is for the troika and the Cypriot authorities to get together and thrash out a new deal.  But it is difficult to see how the gap between the two sides can be bridged.  Nor does it seem possible that the Cypriot banks can re-open until the issues are resolved (as everyone would immediately empty their accounts).  How long can a country survive without a functioning banking system?  We may be about to find out.

Could the Russians come to the rescue?  In return for what?  And where would that leave the EU?  And what about contagion spreading to Greece, Italy, Spain and Portugal?

We live in interesting times ...

The drama continues

I would respectfully suggest that the ba' is on the slates,  The Guardian reports:

It appears certain that the Cyprus parliament will reject the bailout package as it stands.

A spokesperson for the governing Democratic Rally (Disy) party of President Nicos Anastasiades revealed before the debate started that its MPs have decided to abstain, rather than support the package.

With the rest of the parliament expected to vote against it, this is a major display of defiance from Nicosia against the eurozone.

And so armageddon draws a little bit closer.

Meanwhile, the Ministry of Defence is getting over-excited:

Britain has just sent a aeroplane carrying one million euros to Cyprus as a"contingency measure" to help troops and their families.

The move (which sounds like the start of a Hollywood heist), is an attempt to make sure military personal [personnel?] won't run out of cash if ATM machines and bank cards stop workinh

Further plans [planes?] could be sent too. PA says the Ministry of Defence is determined to minimise the impact of the Cyprus banking crisis on "our people" and it will consider further shipments if required.

Not looking good

Imagine that you are one of the Russians who have a collective €30 billion plus on deposit in Cypriot banks.  You are about to lose 9.9% (perhaps more) of those funds in expropriations.  What are you going to do when the Cypriot banks re-open?  Are you going to sit around waiting for the same thing to happen again (as euro crises have a habit of recurring)?  Or are you going to move what remains of your money to somewhere safer, outside the EU (Switzerland perhaps, or the Caymans, or the Middle East)?  I know what I'd do.

Then imagine that you are one of the 18,000 plus British pensioners resident on the island.  You are also about to be expropriated. perhaps by a smaller amount than the Russians.  Worse, the UK Government has stopped your pension until the current banking confusion is cleared up.  And, as the banks are closed, at least until Thursday,  you cannot access any of your money anyway.  Are you ever going to trust a Cypriot bank again?

Finally, imagine that you are the boss of a Cypriot bank.  Although you were only doing what you were told, you and your bank are being treated like lepers.  The foreigners and the locals are closing their accounts like there was no tomorrow.  And for you, there may not be a tomorrow.  After all, for how long can you expect the ECB to keep you afloat with expensive loans?  Banks rely on trust and, even if it was not entirely your fault, you have forfeited that trust.

Where will it all end?


   

Quote of the day

Simon Hoggart in The Guardian (here):

Gosh, they were pleased with themselves. They'd come to a deal over press regulation, and there hasn't been so much self-congratulation over a multilateral pact since Versailles in 1914. David Cameron paid tribute to Nick Clegg andEd Miliband. Clegg had kind words for Miliband and Cameron. Miliband himself was in grateful debt to Cameron and Clegg. It was what the Americans call a "circle jerk".

Don't expect any comments from me on the deal.  The press have written yards and yards of comment, none of which actually explains what the deal involves.  And I am far from sure that Cameron, Clegg and Miliband understand precisely what they have signed up to.


 

Am I a media whore?

Not all bloggers are what they seem - allegedly.  The Independent has the skinny:

So in a media world where the lines between editorial and advertising have never been harder to detect, how many more bloggers out there are working for a hidden paymaster?

It has recently been brought to my attention how easy it is for public relations firms to round up whole battalions of lifestyle bloggers with no apparent experience in professional journalism and feed them video clips, which appear like harmless fun, but have a deeper political significance. The amateur bloggers are encouraged to share the material with other like-minded blogs and offered free "press trips", unaware that their presence may have a political purpose.

Fashion blogs are offered giveaways for readers in return for using agreed copy. Numerous websites encourage bloggers to make money by composing (presumably favourable) product reviews.

I can only assure you that this blogger has never been offered any inducements; the opinions expressed here are unaffected by monetary or other external considerations.  Buy, hey, if anyone out there is offering ...

Daylight robbery?

Oh to be in Cyprus now that spring is here.  The Observer reports:

Cypriots reacted with shock that turned to panic on Saturday after a 10% one-off levy on savings was forced on them as part of an extraordinary 10bn euro (£8.7bn) bailout agreed in Brussels.

People rushed to banks and queued at cash machines that refused to release cash as resentment quickly set in. The savers, half of whom are thought to be non-resident Russians, will raise almost €6bn thanks to a deal reached by European partners and the International Monetary Fund (IMF). It is the first time a bailout has included such a measure and Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis. The move in the eurozone's third smallest economy could have repercussions for financially overstretched bigger economies such as Spain and Italy. 

People with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said, while those with greater sums will lose 9.9%.

You think it wouldn't happen in Spain, or in Italy, or in the UK?  Don't count on it ...


 

Military mysteries

So, some 16,000 soldiers are to return from Germany over the next six years.  I wonder what they have been doing in Germany for the past 20 years.

I can understand why British troops were located in Germany in the years following 1945 and during the Cold War.  But it is now many years since the USSR posed an invasion threat to Western Europe.  Did someone in the Ministry of Defence just forget about all those troops stationed in Germany?  What possible purpose could they have been serving?

Meanwhile, through all those years, MoD bigwigs were complaining of a lack of resources.  Funny old world, isn't it?

Quote of the day

From the Home Affairs Select Committee (here):

 "We do not believe that officers should enter into intimate, physical sexual relationships while using their false identities undercover without clear, prior authorisation, which should only be given in the most exceptional circumstances.

"In particular, it is unacceptable that a child should be brought into the world as a result of such a relationship and this must never be allowed to happen again."

I can see their point but I'm not sure how it can work in practice:

"Look boss, I have infiltrated this group of environmental eco-terrorists and I have met this nice lady.  She says she will tell me when they next propose to bomb a certain nuclear facility but will only do so if I agree to sleep with her.  May I have your permission, please.  I promise to use a condom."

It's not going to happen, is it?


   

It's a funny old world

I suppose that it would be naive of me to wonder why a bank which makes an annual loss of more than £5 billion should pay out any bonuses at all, let alone £607 million.  The fact that the bank is 83% owned by the taxpayer merely compounds my irritation.  What special magic is this that insists that top bankers (and their ilk) require massive bonuses in order to do a decent job?

Meanwhile our Prime Minister seeks to resist EU proposals to limit bankers' bonuses to 100% of their salaries, apparently on the grounds that these might encourage foreign banks located in London to decamp to Zurich, Singapore or New York.  My own (naive) opinion would be to let them go; we have more than enough parasites feeding on the system.  It is not as though they do anything useful, after all.

It's more than a bit watery to begin with

The BBC reports:

Beer drinkers in the US have filed a $5m (£3.3m) lawsuit accusing Anheuser-Busch of watering down its beer.

The lawsuits, filed in Pennsylvania, California and other states, claim consumers have been cheated out of the alcohol content stated on beer labels.

The suit involves 10 Anheuser-Busch beers including Budweiser and Michelob.

How could anyone tell?

A pedant writes ...

Our old friend "refute"  (here):

Lord Rennard issued a statement last night after being notified by the party of an internal investigatory panel.

His spokesman said: "Lord Rennard refutes these allegations. He will co-operate with any properly constituted inquiry."

No, no, no.  He has not refuted anything; he has merely denied the allegations.  A refutation would require a demonstration that the allegations were false.

The revolt of the vegetables

Discord in the cabinet?  Will no-one spread oil upon these troubled waters?

David Cameron has presided over one of his most fiery cabinet meetings when a group of ministers demanded an end to "ringfenced" spending and two ministers were criticised for failing to promote growth measures.

The so called National Union of Ministers, led by the home secretary, Theresa May, voiced anger that their departments are on course to face further cuts while others are exempt.

The chancellor of the exchequer, George Osborne, is expected in summer to announce a further round of cuts when he outlines a spending review for the 2015-16 financial year.

May, who has been joined in the past by the defence secretary, Philip Hammond, and the business secretary, Vince Cable, is annoyed that her department is facing further cuts while the education, health and international development will be protected. "The National Union of Ministers were in fine voice," one government source said. Another added: "Theresa really got stuck in.

Is anyone in charge?  Will someone tell them where they are going?

Money worries

It's a hard life, trying to keep up with the foreign exchange markets.  Here is The Guardian  bewailing the impact of the loss of the UK's triple A status:

What about spending – will this affect the pound in my pocket?

It looks that way, certainly if you were planning to go on holiday abroad this year, and probably even if you are having a staycation. The pound had already fallen against the euro and dollar, and the downgrade appears to have put it under renewed pressure.

"Last summer Britons were enjoying a sterling-euro rate close to €1.30 [to the pound]. Now the rate is below €1.15, that's a drop of more than 11%," says Tracey Tivnan of foreign exchange firm, Moneycorp. That means £500 will buy just €572 compared with €645 in July 2012. "Holidaying in Europe this spring and summer is likely to hurt them harder in the pocket, unless sterling stages a quick recovery."

Alas!  The pound has re-bounded, due to the Italian elections stalemate, and is now comfortably above 1.16 euros:

Of course it has a long way to go to get back to the rates of last summer, but still ...

Difficult to know where to keep one's pennies.  The euro is sinking, the outlook for the pound is gloomy, the dollar is doing well for the moment but that pesky cliff is approaching again.

Bankers and their bonuses

I have in the past criticised bankers and their bonuses.  But are there no circumstances in which bonuses are appropriate?  Should I be prepared to go with the flow?  The Guardian reports:

For Stephen Hester, the chief executive of Royal Bank of Scotland, taking a bonus has been pretty much unacceptable since the crisis, with the exception of 2010. His counterpart at rival bailed out bank Lloyds Banking Group, António Horta-Osório, did not take a bonus for 2011 – his first year in the job – because he had needed time off to recover from sleep deprivation. But for 2012 it does appear that Horta-Osório will be handed more than £1m, which will only pay out if in the future the share price of the bailed out bank breaks through the average 73.6p at which the taxpayer bought the shares for three months or so.

The shares currently trade at 55p – after roughly doubling during 2012 when they were the biggest gainers in the FTSE 100. But linking Horta-Osório's bonus to a breakeven point for the taxpayer should not make his payout acceptable.

Influenced no doubt by the fact that my Lloyds shares have been languishing - for many months - below the price I paid for them, if the good Antonio can get the price from 55p back up to over 73p, then I would be inclined to say that he deserves a bonus of £1 million.  It's a pretty big ask, however ...

 

Compare and contrast

Our friend, Slasher George, does not have to seek his troubles.  Here, he is desperately defending bankers' bonuses:

Britain and the City look set to be the losers in the battle against the European parliament's plans to bring in the toughest restrictions on bankers' bonuses since the financial crisis began in 2008.

The UK appears to be leading a minority of just three countries that oppose a new rule which would limit bonuses to no more than 100 per cent of salary, or 200 per cent if approved by a super-majority of shareholders.

His argument is not helped by his chums at Barclays (here):

Five top bosses at Barclays will share a jackpot worth up to £17million despite being tainted by a string of scandals. 

Those in line for the ‘wildly misjudged’ bonanza include chief executive Antony Jenkins and Rich Ricci, the controversial investment bank boss.

Meanwhile, Big Dave is getting excited about the virtues of morality:

Speaking in Mumbai on the first day of a three-day trip, Cameron likened "aggressive" forms of tax avoidance by multinational companies to illegal tax evasion, saying that its most extreme examples raise questions of morality.

But it was only yesterday that his government's own morality was brought into question:

Small arms weaponry, ammunition and various other military equipment were among millions of pounds' worth of goods exported last year from Britain to Sri Lanka under licences for arms and other closely regulated exports.

Statistics taken from the British government's own database for strategic export controls show items ranging from assault rifles and shotguns through to weapons sights, pistols and ammunition were sold last year to the South Asian nation's government, which has been accused of extensive human rights violations in relation to its treatment of its Tamil minority and the suppression of armed separatists, who have also been acused of abuses.

And then Dave pushes helicopter sales, despite more than a whiff of alleged corruption.

All very confusing ...

Leave me alone!

I have been back in Scotland for less than 10 days and I have been deluged with phone calls (well, four of them actually) from young ladies with Indian accents offering to compensate me for having been mis-sold payment protection insurance.  Remarkably, they seem to know the amount of the loan involved, the purpose for which it was provided, the fact that the loan was timeously paid off and the amount of compensation to which I would be entitled, as well as my name, address and telephone number.

The only problem is that, other than for mortgage purposes (and that was in the dim and distant past from building societies), I have never taken out a bank loan.  Like any well brought up laddie, I was taught to save up for what you wanted.  And, as a (more or less) well paid civil servant, I was lucky enough not to need loans.

So why am I plagued by these PPI vultures?  Is it always like this over here?

 

How to get it so wrong

Beware ideologues!  Like this guy in City AM:

POLITICAL ideas have always been cyclical. When incomes are falling, the economy is flatlining, credit is scarcer, prices are rising and it is hard to find work, the public always turns against capitalism (or the mixed economy corporatism that these days passes for it); in boom times, it tends to be more relaxed about other people making vast sums of money.

But ideological shifts are not a given. They can be stopped and reversed by determined leaders – as Boris Johnson showed during his election campaign, for example – and by the right policies. The key problem is that many markets have become rigged by massive government interventions in every nook and cranny of the economy, creating inefficiencies, damaging growth and financing vested interests at the expense of the general interest.

Yeah, yeah.  Were the problems at the banks, from PPI mis-selling to LIBOR rigging, and above all from the 2008 combustion, caused by excessive government intervention?  Are the current difficulties in the meat industry caused by excessive government intervention?  You do not have to be of a leftwing orientation to believe that we would all benefit if the government and the regulatory authorities took a rather closer interest in what businesses are up to.

It's not just the banks

From here:

BP has awarded chief executive Bob Dudley an annual bonus worth £2.6m in shares and cash as a reward for the oil major’s performance in 2012, despite a slump in its profits.

Company performance deteriorates, but the bosses reward themselves.

   

Nagging away

Do you suppose that Ministers and the Food Standards Agency are sufficiently competent to deal with the horsemeat scandal?  Or are they forever condemned to remain behind the curve?  The Guardian reports:

Speaking earlier this week, environment secretary Owen Paterson said he hoped for "meaningful results" from the tests by Friday, but experts warned the flood in the demand is slowing the process down, and may shed little light on food safety even when they are delivered.

A source at one retailer said: "There are simply not enough labs in the world to get all the tests done that the FSA have asked for. We are trying to help, but it's just unrealistic." Another who attended the emergency meeting called by DEFRA into the horsemeat scandal added: "We told them [the Government] that it would be challenging to meet the deadline on Friday and they changed their position from wanting everything tested to just providing the results of tests we had already done."

The process of determining which species of animals are contained in a given ready meal sample typically takes around a day, but with the sudden surge of products to test, turnaround is up to about three days, according to one laboratory involved in the current tests.Research by the food and drink magazine The Grocer and analytics company BrandView has found more than 600 separate product lines in need of testing across just four of the major retailers – 150 branded lines and 433 own-brand products. As each product may require multiple samples in order to deliver a clean bill of health, this could represent a backlog of thousands of products across the country in need of testing.

However, when results arrive, they may offer less comfort than consumers intend. Each separate species must be tested for separately: if you don't look for a particular animal's DNA, you won't know whether it is present or not.

The FSA has only required the industry to look for traces of horse in beef products – so if the products were to contain lamb, pork, poultry or any other animal, this would not show in the results when they are published.

Consider it and weep.  Were there no officials in DEFRA or the Agency able to advise them on the inadequacy of the testing programme?  Or were Ministers and the Agency so desperate to be seen to be doing something (anything really) that they ignored (or did not ask for) advice?

Fashion

Hadley's advice on scarf-wearing for men:

The European knot: This is when you fold your scarf in two and stick the two ends through the loop and around your neck. A British man who wears his scarf this way engenders great suspicion from his fellow menfolk and no wonder: the knot is European, after all. If you wear your scarf this way everyone will think you're Eurotrash, which you probably are.

The Ascot knot: The over-hand knot, when the scarf is wrapped primly around your neck and then knotted properly up close to your neck and the two ends lie perfectly on top of one another. Hello, old Etonian and/or employees of GQ.

The twisty scarf loop: You twist your scarf and then tie it once close around your neck and then again, loosely knotting the ends together. You are either a foreign correspondent for a newspaper, or trying to look like one.

The drape: When you simply fling the scarf around your shoulders and don't bother tying it around your neck. You are a student who thinks he looks like Christian Slater in Heathers but actually is a bit more Tom Baker-esque in Doctor Who.

The single wrap, over shoulder fling: The scarf is wrapped once around your neck and one end hangs down in front and the other is flung over your shoulder. You like to imagine you are a nouvelle vague hero. You think you look "dashing". We'll leave it at that.

The single wrap, loose knot at the bottom: the scarf is wrapped once around your neck and then the two ends are tied loosely at the bottom. Fussy.

The loop and tuck knot: You take the scarf around your neck and hang both ends down your back equally. Then you wrap them over opposite shoulders, wrapping your neck, so they now hang over the front. Then you bring the two ends under the bit of the scarf that is wrapping your neck at the front, looping them over and then letting them hang down. You are Brian Sewell.

The double wrap: The scarf is wrapped twice around the neck, the ends hang in front of your shoulders. Absolutely acceptable; actively encouraged.

No. I'm not going to discuss my preferences.

 

News from a different planet

You may think that a basic annual salary of £1.1 million is more than decent, even astronomical.  But the high heidyins at the RBS beg to differ.  The Guardian reports:

The chairman of the Royal Bank of Scotland on Monday described the pay of the bailed out bank's chief executive Stephen Hester as "modest", amid fresh scrutiny of bonuses in the wake of the £390m Libor fine.

Sir Philip Hampton said Hester – who can get up to £6m a year from bonuses on top of his £1.1m salary – was paid "well below the market rate of people working in banking" because his bonuses had not paid out in full. He was speaking during a lengthy session of the banking standards commission in Westminster, in which a senior RBS colleague admitted the bank had believed Libor rigging was "a mathematical impossibility".

..

Hampton, defending bonuses for Hester, conceded the chief executive had a "highly paid job" but that "his pay has been modest relatively". He had received just one bonus since joining in 2008, of £2m, which has yet to be paid out. Some £780,000 of that will pay out in shares next month.

Wouldn't it be nice if we could all aspire to a "modest" salary of £1.1 million (and never mind the bonuses)?  Even if we were totally unaware that our underlings were playing at naughty boys by rigging the Libor rates ...

 

Red Osborne

So the government intends to meet social care costs by freezing the threshold for inheritance tax:

The £1bn cost of the new cap – this sum is bound to rise massively – will be funded by a stealth hike in inheritance tax. Everybody with sufficient assets to qualify will pay far more in tax, regardless of whether they end up benefiting from state-financed care. This will be imposed by freezing the inheritance tax-free threshold of £325,000 until 2019, even though inflation on the retail price index is currently 3.1 per cent. By 2019, the threshold would probably have increased to £420,000 without the freeze; so this is a pretty massive raid and will hit many elderly folk and their children. In many cases, this will be very unfair: a family that cares for its own elderly relatives will be hit by the tax, even if they were able to avoid using institutionalised care.

Is it a stealth hike?  Not if everyone knows about it.

Is it unfair?  Do we really want inherited wealth to cascade down the generations, maintaining those and such as those in the position to which they have become accustomed?  IMHO, £325K plus 60% of the remainder should be more than enough for any set of heirs.

Quote of the day

Roberto Mancini bewails the testicular apparatus of his Manchester City players (here):

"When you are a top player you should take responsibility always," Mancini said. "It is not always the fault of the manager, the players should take the responsibility if they have big balls. If not, they can't play in a top team."

As the ladies would tell him, it's not the size of the equipment that matters ...

The boy done good - maybe

So he's a political paragon.  The Guardian reports:

Fuelled by copious cups of coffee from a brand-new Nespresso machine,David Cameron chalked up a Brussels first as he debuted at an all-night EU summit.

Looking mildly tired after 25 and a half hours on the go – with a two-hour "freshening up" break at 10am on Friday – the prime minister hailed his achievement in negotiating the first ever cut in an EU budget.

"The British public can be proud that we have cut the seven-year credit-card limit for the EU for the first time ever," he said before travelling home for dinner with his wife, Sam.

Not sure about the credit card analogy, but quibbling would be specious.  Nevertheless, it would be no surprise if the deal were to fall apart before next Tuesday,  But then a cynical old sod like me would say something like that ...

Naughty boys

It could have been worse:

Royal Bank of Scotland was handed a £390m fine on Wednesday for "widespread misconduct" in rigging the Libor rate until as recently as November 2010, two years after it was bailed out by the taxpayer and even after regulators had begun to investigate the key benchmark rate.

After all, UBS had to cough up £940 million.

Is it a bird? Is it a plane?

You need a vivid imagination to be a parliamentary sketch writer:

 Christopher Chope, one of the Tories who voted against gay marriage, wanted him, in the interests of equality, to offer civil partnerships to straight couples too.

Cameron wasn't going to fall for that. "I am," he declared, "a marriage man. I am a great supporter of marriage. I want to protect marriage, to defend marriage, to encourage marriage." Civil partnerships would only weaken marriage. I had a vision of Cameron as Marriage Man, a superhero who leaps into action whenever marriage – straight, gay or transgender – is under threat. He wears grey, striped, figure-hugging underpants, a black cape with tails, and a silk topper. Young folk would call him on his Marriage Mobe.

"Marriage Man, I want to marry my boyfriend, but my parents say he's a no-good waste of space. I need your help!" Faster than a Rolls trimmed with white ribbons, Marriage Man races to the spot, biffing the anti-marriage parents, kapow!

Sorry, got carried away there.

Justice

I have no sympathy for the wretched Mr Huhne but what exactly would be the point of sending him to gaol? The man's career has been destroyed and he faces massive legal costs.  I can/t see any purpose being served by detaining him at a cost to the public purse.

 

Quote of the day

Wee Georgie Osborne (here):

“From September this year, every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one in seven days. All they will have to do is sign up to a new bank – and the rest will follow.

All the direct debits, the standing orders, everything will be switched for you with no hassle. This is a revolution in customer choice.”

Sure, just as soon as you have supplied proof of your identity and a fuel bill and all the other gubbins to avoid falling foul of the money laundering requirements.

   

La cerise sur le gâteau parisien

Apparently, a certain aging footballer has just signed for a Paris football team.  Le Figaro has the news:

En un an, le PSG est nettement monté en gamme. Désormais, Beckham est la cerise sur le gâteau parisien et non plus l'homme providentiel missionné pour faire entrer le club parisien dans une autre dimension. Zlatan s'y colle déjà. Dans ces conditions, la volonté qatarienne d'attirer le footballeur le plus célèbre de la planète pour accroître la valeur de son image internationale n'a plus besoin d'être corrélée à un pari sportif d'avenir. Ce qui a sans doute facilité son transfert à Paris.

I doubt if anyone in England has noticed ...

Cameron's new best friends

Well, his Algerian chums are not exactly democrats.  The Independent reports:

Known as "the dandy diplomat" during his 16-year tenure as the country's Foreign Minister in the 1960s and 1970s due to his Westernised sense of style, Bouteflika found favour with Western countries in his first term as President, having established a fragile peace and transformed Algeria's international image.

But allegations of corruption have also plagued Bouteflika. He spent six years in self-imposed exile in the 1980s following corruption allegations, and his election (plus subsequent re-election) has been marred by claims of vote rigging. In 2008, Algeria's parliament voted overwhelmingly in favour of scrapping a rule limiting presidents to two terms, making way for Bouteflika's third term.

Speaking at the time, Saïd Sadi, the head of small secular opposition party the Rally for Culture and Democracy, said: "We are living through a disguised coup d'état."

I just hope that Dave has taken a long spoon with him on his travels.

Should ...?

Do you agree that ...?   Such fine distinctions should matter?

Still, nice, for once, to see everyone in agreement.  Except, maybe, this guy.

   

Mid term breaks

It's all so difficult at home, n'est-ce pas?  The economy tanking, the coalition falling apart, the banks continuing to misbehave, and even the wife complaining.  Far better to get away to foreign shores, preferably warm ones:

The growing importance of the unrest in West Africa was highlighted last night when Downing Street announced the PM would be flying to Algeria tomorrow for urgent talks with Prime Minister, Abdelmalek Sellal.

Mr Cameron was already scheduled to attend a development conference in Monrovia, Liberia, but added the Algerian meeting following the recent hostage crisis at the Amenas gas plant which left six Britons and 47 others dead.

Number 10 said the discussions were likely to include the military campaign in Mali, a neighbour-state to Algeria.

These African johnnies know how to roll out the red carpet and treat one with respect.  So unlike the miserable sods in Brussels.  And far from the literal and metaphorical rain clouds of old Blighty ...

Mission creep

It is less than two weeks since Mr Cameron stated unambiguously that there would no British troops on the ground in Mali.  Now look at the latest position, as reported by The Guardian:

Britain is prepared to provide hundreds of troops to help the operation and is considering a few options:

• Forming part of an EU military training mission in Mali. The British contribution to this would be in the "tens", according to Downing Street.

• Training troops from the Economic Community of West African States (Ecowas) in neighbouring countries for possible operations on Mali. This is likely to be the main focus of Britain's contribution because Ecowas members include many countries with strong links to Britain. British troops could be used to train Nigerian forces.

• Providing "force protection" for the trainers. This would be armed protection but would not amount to a combat role.

Downing Street is adamant that British troops will play no part in combat. A spokesman said: "We have the capability and capacity to do that. We have the ability to contribute a sizeable amount if required."

Britain initially put two RAF C17 transporter aircraft at the disposal of France for the transport of troops and material to Mali. One of these is still dedicated to the Mali mission.

Britain has also sent one RAF Sentinel surveillance and reconnaissance aircraft to Senegal to help with the mission. The Guardian reported last week that a small number of British special forces soldiers were on the ground in Mali advising the French.

Aeroplanes need to be supplied and maintained; troops need to be equipped, housed and fed.  And experience has shown that training and advisory missions have a habit of expanding into other activities.

What are we getting into here?  What are the objectives?  What length of commitment?  And, crucially, how do we get out?

Worth seeing again (and again and again)

The Guardian has comments from the players involved.

More money than sense

From The Economist (here):

(Unaccountably, they appear to have omitted Hibs.)


   

All talk and no trousers

I see that, once again, our Prime Minister has been banging on about tax evasion.  (In Switzerland of all places!)  The Guardian reports:

"Companies need to wake up and smell the coffee, because the customers who buy from them have had enough," the prime minister told business leaders (video) at the World Economic Forum in Davos.

Protesters targeted Starbucks branches late last year after it admitted it had paid just £8.6m in corporation tax in the UK over the past 14 years. The firm subsequently promised to pay £20m over two years, amid fears of a consumer boycott.

Cameron's speech attracted strong criticism from the body that represents Britain's accountants, but the PM insisted he was the most "pro-business leader" you could find. He said it was not just NGOs that had been lobbying him to crack down on tax-dodging firms, but the upper echelons of the City too. "It's a world where some companies navigate around legitimate tax systems – and even low tax rates – with an army of clever accountants."

Cameron said there was nothing wrong with sensible tax planning, but "some forms of avoidance have become so aggressive that I think it's time to call for more responsibility and for governments to act accordingly". He said: "In the UK we've already committed hundreds of millions into this effort – but acting alone has its limits. Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus just moves on elsewhere. We need to act together at the G8."

Do you suppose that this means that the UK government will crack down of those of its dependencies, such as the Caymans, whose principal function appears to be acting as tax havens?  Or that they will reverse the cuts in HMRC staff numbers?  No, nor do I ...

Quote of the day

David Cameron (here):

"It is time for the British people to have their say."

Um, well no, not now.  The British people will have their say when I say they can have their say.  Probably late 2017.

     

There's a bad smell

If I were Frau Merkel or Monsieur Hollande, I would tell him to get on his bike.  The Guardian reports:

David Cameron will on Wednesday set a deadline to hold an in-out referendum on Britain's membership of the European Union by the end of 2017 as he hardens his position on the issue that has bedevilled Tory leaders for a quarter of a century.

To the delight of Eurosceptics, the prime minister will throw down the gauntlet to his fellow EU leaders to agree to a revision of Britain's membership terms within two and a half years of the next general election or risk triggering a British exit.

But Cameron is not Andy Murray, able to despatch Frenchmen without breaking sweat.  (Murray is 2 sets to love up at the moment.)  If our European partners disagree to a revision of the UK's membership terms, what then?  Aye well, there's the question:

Cameron will say: "Some argue that the solution is...to hold a straight in-out referendum now. I understand the impatience of wanting to make that choice immediately.

"But I don't believe that to make a decision at this moment is the right way forward, either for Britain or for Europe as a whole. A vote today between the status quo and leaving would be an entirely false choice."

All very complicated.  Meanwhile, for the next five years (at least), the shadow of Brexit hangs over the economy.  In these circumstances, why would Nissan or LandRover Jaguar invest in this country?

It appears that Le Pong does not emanate solely from Rouen ...

 

General Cameron

Yesterday evening, I was reading a rather splendid novel (The Heroes by Joe Abercrombie) and came across this passage.  It reminded me sharply of a certain politician:

"I think you would have made an excellent lieutenant, a passable captain, a mediocre major and a dismal colonel, but as a general you are a liability.  I think you know this, and have no confidence, which makes you behave, paradoxically, as if you have far too much.  I think you make decisions with little thought, abandon some with none and stick furiously to others against all argument, thinking that to change your mind would be to show weakness.  I think you fuss with details better left to subordinates, fearing to tackle the larger issues, and that makes your subordinates smother you with decisions on every trifle, which you then bungle.  I think you are a decent, honest, courageous man.  And I think you are a fool."

 

Conversation of the week

From The Guardian (here):

Cameron: Can someone tell me what's going on?

Osborne: Sorry Cams, old boy. There's no one from the civil service in Downing Street at the moment, so I don't have a clue either. You could look in the diary.

Cameron: I've done that, but it wasn't much help. Just something about making a very important speech about Europe on Monday.

Civil service: Actually, we've decided it's going to be on Friday instead.

Cameron: I knew that really. Can we rehearse what it is exactly I believe in?

Civil service: This may take a while …

Cameron: I believe … No, make that I firmly believe, that the European Union is both vital and entirely irrelevant to Britain's interests. So it is absolutely right that we should use this opportunity to place ourselves at the centre of Europe by trying to distance ourselves as far from it as possible …

Osborne: Total masterpiece ...

Cameron: And, in conclusion, it is right that the people of Britain should be allowed to have a referendum on our membership sometime long after the next election, by when I will be out of a job so I'm not too bothered one way or the other …

Counting the cost

The Independent is getting over-excited about the RBS:

British taxpayers are set to pay $800m (£500m) in fines as a result of Royal Bank of Scotland traders’ involvement in the Libor interest rate fixing scandal - with nearly all of the money going to the United States.

American watchdogs are set to hit RBS with as much as four-fifths of the total penalty as it becomes the third bank to settle over its traders’ role in the scandal.

...

RBS is 81 per cent-owned by the Government, which means the taxpayer will effectively foot the bill for its fine, although the bank is expected to attempt to head off protests by cutting its investment bankers’ bonus pool. 

Well yes, in a way.  The taxpayer will in theory have to meet four-fifths of four-fifths of the fine.  But only if you regard a loss on every transaction made by the bank as falling to be met by the taxpayer, while ignoring every element of transactional profit which might equally be said to fall to the benefit of the taxpayer.

Furthermore, as the value of the taxpayer's shares has risen by about 75% in the last six months (from about 200 pence per share to about 350 pence per share), it might be considered that the taxpayer is not doing too badly, even if the current value of the shares remains below the original cost of their acquisition.

So although the £500 million fine involves a lot of money (as well as substantial wrong-doing on the part of the Bank's traders), it is arguably misleading to consider it in isolation as a charge to be met by taxpayers.

The scorpion and the frog

I don't blame Goldman Sachs - or at least not wholly.  It's in its nature after all:

The great vampire squid’s move to even consider delaying bonus payments to some of its staff just to save them a few quid in tax indicates that it continues to live in a separate world to the rest of us.

More than that, it lives in a world beyond even most other powerful banks. Early reports on the matter said that other large finance firms had wondered whether they should wait for the tax rate to drop from 50% to 45% before paying out bonuses and quickly decided that it would look bad.

No, it's Slasher Osborne who deserves the opprobrium.  First, for reducing income tax for the very rich; and second for giving the world a year's notice before putting it into effect.

Foreign adventures

You may be interested to see this satellite photo of Mali (lifted from Wikipedia):

Mali is a huge country in West Africa, occupying 478,000 sq miles.  (By comparison, France is about half this size.)  Its population amounts to some 14.5 million, while gdp is less than $18 billion (cf French gdp of more than $2.2 trillion).  All of which has military implications.

I rather doubt if France (and the UK) will be able to get out of Mali as quickly as they got in.  Accordingly, we may hear a lot more about this poor country over the next five years or so ...

Ageism?

I am struggling to come to grips with the government's proposed new arrangements for old age pensions.

As far as I can tell, people who have already qualified for the pension or, like me, will do so before 2017 will not benefit from the new flat rate pension of £144 per week.  Instead, we will continue to get the existing pension of £107 per week.  (Both these figures will be uprated to reflect inflation.)  It is not yet clear to me whether the additional pension credit (payable to pensioners with very low incomes) which will be abolished when the new flat rate pension becomes payable will be retained for those having to live with the existing pension.

It is nevertheless obvious that the effect of the proposed arrangements will be to create two classes of pensioner: those who were already receiving a pension before 2017 and who will be stuck on a lower rate and those who will benefit from the new flat rate.  The former will of course be older than the latter.  This seems a strange way to introduce greater fairness into the system.

I need hardly add that what is proposed is unlikely to be welcomed by those of us wrinklies stuck on the lower rate.

Garment of the week

It has to be Nick Clegg's "onesie".

A bit inconvenient, I would have thought, when nature calls in the middle of the night.  But perhaps Nick is young enough not to be troubled by such matters as yet ...

   

The danger of being sarcastic ...

... is that people take you seriously.

What Sir Jeremy Heywood actually said was:

"We accepted there were unanswered questions including the possibility of a gigantic conspiracy or a small conspiracy. Those were unanswered questions. But we decided, on balance, to let matters rest as they were, decide to stick by Andrew Mitchell, keep him in post and move on."

Now you may consider that the reference to "a gigantic conspiracy" constituted mockery of the possibility.  But the press are more literally minded.  Thus The Guardian reports:

Britain's top civil servant believes Andrew Mitchell, the former chief whip unseated by the "plebgate" row, could have been the victim of a "gigantic conspiracy" involving members of the diplomatic protection group that guards Downing Street.

while The Independent takes a similar line:

Britain’s most senior civil servant was aware that the Government’s former Chief Whip Andrew Mitchell may have been the victim of a “gigantic conspiracy” when he was fighting to save his job - but did not raise his concerns with the police, it emerged today.

Perhaps this will teach Sir Jeremy that in future he should avoid being a smartarse.

   

When will they ever learn?

I am prepared to accept that public sector bureaucracies are not always terribly efficient, although I suspect that the alleged lack of efficiency has more to do with under-resourcing than with anything else.  But on the ideological principle of private sector good, public sector bad, this government seems determined to strike down long-established public institutions.  Here is the latest:

The justice secretary, Chris Grayling, is to outline plans for the wholesale outsourcing of the probation service with private companies and voluntary sector organisations to take over the rehabilitation of the majority of offenders by 2015.

The public probation service is to be scaled back and "refocused" to specialise in dealing only with the most dangerous and high-risk offenders and public protection cases. The majority of services will be contracted out on a payment-by -result basis.

You may discount the reference to voluntary sector organsisations; experience has shown that they are seldom big enough to act other than as sub-contractors to the Sercos, Capitas, A4Es and G4S's of the business, while cash-flow problems eventually drive the voluntary organisations into the ground.  And so another allegedly inefficient but well-meaning bureaucracy will be replaced by profit-driven private sector bureaucracies whose track record in terms of efficiency is at best patchy.  And all for what?  Does anybody, even in government, really think that a private sector probation service will deliver better results in terms of probation than the existing system?

Hot and bothered?

It's a tough old life, being a gas chief.  The Guardian reports:

The managing director of British Gas is set to leave the business with a pension pot, shares and basic salary worth more than £10m, amid public and political disquiet over soaring household bills.

Phil Bentley, who oversaw a 6% increase in bills this winter, is expected to confirm that he is stepping down this year. He is believed to harbour ambitions to become a company chief executive in his own right.

According to the annual report of Centrica, the parent of British Gas, Bentley has an interest in just under 2m Centrica shares, worth £6.65m at closing share price. The 53-year-old executive is also expected to depart with a year's basic salary, which came to £635,000 in 2011, along with his £3.6m pension pot.

...

Bentley joined Centrica as finance director in 2000 and was handed his British Gas role in 2007. Centrica declined to comment on Bentley's imminent departure.

At least, he won't have to worry about paying his fuel bills ...

   

Cooking the books?

Well, there's a surprise.  The Independent reports:

Pension savers face a serious blow to their retirement prospects with confirmation this week on changes in how the retail price index (RPI) is calculated.

The Office for National Statistics' reform of the RPI is expected to lead to rates of the key inflation benchmark coming into line with the traditionally lower consumer price index (CPI).

Is it not passing strange that reforms of the methods of calculating inflation always seem to have the effect of reducing inflation?


 

Talk is cheap

Do you believe that he'll actually do anything?  The Telegraph reports:

Foreign companies like Starbucks and Amazon which have avoided paying large corporation tax bills in Britain lack "moral scruples", David Cameron has said.

The Prime Minister said he was going to make “damn sure” that foreign companies like Starbucks and Amazon which have been found to avoid legally paying a large corporation tax in the UK paid their fair share.

We'll see ...  But don't get your hopes up.

Obélix among the Russians

Incroyable!  C'est pas vrai!

Impending chaos?

So.  A lot of middle class families may be upset.  But Slasher Osborne likes to kick his potential supporters in the teeth.  The New Statesman explains:

...  the first test for the government will come next Monday when the withdrawal of child benefit from higher earners begins. From 7 January, payments will be tapered away from individuals earning over £50,000 and completely withdrawn at £60,000 (however, as Labour is keen to point out, a household with two earners each on £50,000 will keep the benefit in full). Those households affected will either need to stop claiming the benefit or pay a new tax (known as the High Income Child Benefit Tax Charge) to cover the cost of the payments. Families will lose £1,055.60 a year for a first child and a further £696.80 a year for each additional child, meaning that a family with three children stands to lose £2,449.20 - the equivalent of a £3,500 pay cut (since child benefit is untaxed).

With the changes announced as long ago as the 2010 Conservative conference, the government has had no shortage of time in which to inform those who will lose out. But as today's Telegraph reports, almost a third of the families affected have still not been formally warned that they will no longer be eligible for all or part of the benefit. Of the 1.1 million households due to be affected by the change, 316,000 have not yet been contacted by the tax authorities. As a result, having missed the opportunity to opt out of the new system (as 160,000 have done), they will have to fill in self-assessment forms or face fines running into hundreds of pounds.

A spokesman for HMRC insists that "extensive advertising, media and online activity" means those affected will know about the changes. However, it's not hard to imagine that some families will get a nasty surprise when they discover that they owe hundreds of pounds in additional tax.

Aye, and don't expect HMRC to cope - even half adequately - with all those additional self assessment forms.  As usual, it will end in tears ...