Sunday, 30 November 2008

See that there economy thingummyjiggerybobcat?

It would appear that Alistair Darling has a sense of irony unparalleled in modern politics - claiming that an independent Scotland might face some economic problems (no doubt it will) while admitting that he doesn't have a scoobies what to do about the incredible economic mess of the UK.

People really do look to him like some Moses figure who is going to lead them away from this economic mess to the promised land.
Imagine being able to say that with a straight face! I've just been listening to Norman Lamont on Straight Talk on the BBC News channel critiquing Labour's atrocious handling of the economy and the running of consecutive enormous fiscal deficits. He should know - he grew up on a croft near Lerwick called Loot ...

The person making the real movement, is Kevin Rudd, the Australian PM. Australia is so much better off than we are that there are Australians complaining that their budget surplus (yes, surplus) is only $5.2 billion (Oz dollars, so about £2.218 bn). The UK ran a £38.7 bn deficit last year. Likewise, Australia had a trade surplus of $1.5 bn in September while the UK had a deficit of £3.9 bn in the same month - which was a narrowing deficit.
Now then, advice for Ally the Chancellor from my position as pontificator to the wall -
1. There won't be a retail solution to this recession, people don't have the confidence to spend and a pitiful reduction in VAT for the first year of a three year recession just makes you look unambitious.

2. Small businesses will be the driver of the recovery but they'll have to survive first - then they'll need to have the space to grow - that means that they'll need plentiful and long-lasting help.

3. People on low incomes are suffering and deserve consideration by their Governments, they need to cop a real break.


So, here's what to change your rescue package to:

1. Sod your silly VAT cut. EU regulations won't let you cut it below 15%, so let's leave it where it is, eh? Instead, cut the basic rate of income tax for the lowest earners and give them a wee break, you could cut it to, perhaps, 10%. An increase in the top rate is fine - as would be an extra couple of percent on the basic rate for those on the average wage.

2. Let's not have that rise in corporation tax for small businesses. Instead, let's be brave, cut it by a percent or two. Even better, cut it for the smallest businesses by a good 5% and then start looking at ways of making it easier for them to grow - that'll require flexibility; different solutions for different business sectors and different regions.

3. There's action needed to cut food prices and heating prices - what about support for food co-ops, for example?
I'll be back later with more sage advice.

Mind how you go.

Legal challenge to Mandelson decision

Another champion is rising.

The Merger Action Group has launched a legal challenge to Mandelson's decision to railroad through the Lloyds TSB takeover of HBoS.

Sign up and support them I say!

Friday, 28 November 2008

You can always rely on George

Ah, the good Lord Foulkes in chamber yesterday not asking the question he wanted answered:

Department for International Development (Headquarters)

3. George Foulkes (Lothians) (Lab):
To ask the Scottish Executive what plans the Minister for Europe, External Affairs and Culture has to visit the headquarters of the Department for International Development in East Kilbride. (S3O-4977)
The Minister for Europe, External Affairs and Culture (Linda Fabiani): I have no plans to visit the headquarters of the Department for International Development in East Kilbride in the near future.
George Foulkes: I am absolutely astonished by that answer. The minister says that she has no plans to visit the headquarters, yet a few weeks ago she said that her international development plans were going to be closely integrated with the Department for International Development's work. Forty per cent of the DFID staff are at East Kilbride, including the civil society unit, which spends hundreds of millions of pounds in Malawi and elsewhere. When I was a minister there, I hosted a meeting with the President of Malawi.
The Presiding Officer: The member should ask a question, please.
George Foulkes: Would not the minister's rhetoric about integrating with the Department for International Development's programme and making her work complementary be more acceptable, and more like the reality, if she took the trouble to go to East Kilbride—it is not far away—to talk to the people who know what they are doing in international development, unlike her?
Linda Fabiani: I visited DFID's Scottish headquarters on Friday 7 November—three weeks ago. There are currently no plans to undertake another visit but, as always, we will continue to liaise with DFID.

Thursday, 27 November 2008

Baccalaureates Launched

The Scottish Language Baccalaureate and Scottish Science Baccalaureates have been launched. They'll give Scottish pupils a competitive edge in qualifications.

Another election promise delivered!

Suffer the Children

Those free school meals for tiny little hungry children ...
The Statutory Instrument passed through Parliament today - a good thing! Once again, Labour, Conservative and Lib Dem members spoke out against it.

Amendments to the motion to pass came from Labour and from the Conservatives (I can't understand Liz Smith's positioning on anything much, she's a strange fish - maybe it was being a teacher in the private sector that skewed her views on state education?), but neither of these amendments
When Labour's Karen Whitefield rose to her feet to oppose feeding small children I was dumfoonert. She even said she visited a school breakfast club this morning (leave those kids alone woman) and that the school she was at didn't have enough money to provide free school meals. That'll be why there's money in the local government settlement from 2010 to pay for it then, eh?
The Lib Dems waffled about means-testing these 5-year olds, missing the point entirely about not stigmatising children.

28 MSPs voted against the motion - voted to keep food out of the mouths of small people. The Lib Dems were whipped to vote against free school meals!

Wednesday, 26 November 2008

Dram right!

I see the Chancellor is reviewing his crazy plans for whisky duty.

Must be a result of my excellent reasoning, eh?

No control

Darling is on his feet in the chamber just now and has just claimed that neither he nor his Ministers had read the documents on the VAT change which were published with Stephen Timms' name on them.

I woudn't expect Ministers to read every word of every document that comes out from their departments, but surely they think that the proposed change to VAT is a wee bit important?

Tuesday, 25 November 2008

Och, that pre-budgetary stuff is all nonsense

Thank you Darling! He's made a pig's ear of it, and here's why:

VAT
Glenn Campbell on Newsnicht last night said that the VAT cut would be £10 off the price of a £400 telly and asked how that would encourage spending. A panel guest (I forget his name, sorry) said it was £12. Actually, it would be £8.52 off the price of a £400 telly, here's the sums - divide by 1.175 to remove the current rate of VAT (17.5), then multiply the result by 1.15 to add on the new rate of VAT (15%) - £400/1.175= £340.42 (rounded down) £340.42*1.15= £391.48. You could, of course, just multiply by 0.9787 to get the same result.

Anyway, that's not the point, this is the point - there will be no reduction in the price of retail goods. Shops set prices at a level that encourages sales rather than a level decided by a formula which includes VAT. For example, prices ending in 99 encourage more sales than prices ending otherwise (academics actually study this stuff) and a product's place in the range of prices gives customers an indication of its value and quality - malt whisky getting sold at the same price as Shuggie's Quality Own Brand will not sell - this manifests itself in some interesting ways. Some products will be kept at a higher price to convey an impression of quality to the consumer.

So big retail outlets won't be changing their prices, they'll just take that extra wee bit profit that Darling has offered them.
Additionally, of course, the reduction doesn't apply to anything which has VAT charged at something other than standard rate - sanitary products, domestic fuel and power, or the installation of energy-saving materials, for example.

It also doesn't apply to businesses on the agricultural flat rate scheme, and the other flat rate scheme has some businesses getting reductions and other businesses not getting any reductions. The flat rate scheme allows small businesses to pay a percentage of their turnover instead of having to work out VAT - have a look at Annexe E. Small businesses, in general, won't be seeing any benefit from the VAT reduction. You would have thought that the Government would be more interested in helping small businesses, wouldn't you?


National Insurance
Mrs Shuggie McDufflecoat has a small business. It's currently in a position where taking on an extra member of staff would help it to grow so Mrs Shuggie McDufflecoat is looking at her turnover and her costs and finds that employing a new member of staff is on the margins of affordability. The increase in NI may not be very large and it won't be coming in until after the general election (what a coincidence), but it will make it more difficult for small businesses to afford to expand, and employers thinking now about employing staff will have to take into account future costs.

The increase in National Insurance takes the employee's contribution up to 11.5% of the salary between £5,435 and £40,040 and the employer's contribution up to 13.3% - together that represents a sum equivalent 24.8% of an employee's salary between the two thresholds taken in National Insurance contributions (it reduces to 1% for the employee above the upper limit but the employer has the full whack to pay). That's before Income Tax.

You would have thought that the Government would be more interested in helping small businesses to grow, wouldn't you? Especially when we will need the growth of small businesses to help climb out of Labour's recession.

Income Tax
The cut in income tax - how good was that? Increase in the personal allowance will be £440, tax rates are staying the same (20% at this level), so the tax cut will amount to £88 a year or £1.69 a week. Stunning!

What about that restriction on the personal allowance for high earners? They'll lose personal allowance at the rate of 50% of the amount by which their income exceeds £100,000 up to a limit of half of the personal allowance until £140,000 where the thing kicks in again to remove the rest of the personal allowance.

Given that this will affect their tax liability on the lower rate and using the 2009 thresholds (since the 2010 ones haven't been set yet), the effect of this measure will be to increase tax by £647.50 (£12.45 a week) for people earning between £112,950 and £140,000 and by another £647.50 for people earning more than £152,950. The pips are going to squeak at £24.90 a week or so in 2010.

What about the increase to 45%? Well, it only applies above £150,000 (only 2% of the UK population earns more than £150,000), so you'd have to be earning £160,400 before you were paying an extra tenner a week. Of course, these earners will have lost their personal allowance.
Sin taxes
You'll notice that, while he was very clear about VAT coming down - and then going back up, Darling mentioned excise duties going up and then, well, nothing. Expect them to stay up. Darling did say that he was putting up duty to off-set the VAT reduction. Is that true?

Petrol and Diesel
Petrol and diesel will be going up by 2p a litre on December 1st (making the duty 52.35 pence on a litre of unleaded - same on diesel) and another 1.84 pence in April (I imagine the pump price will go up another full 2p).

Let's take 92.7p as the price of unleaded. The VAT on that at the moment is 13.8p. The price excluding VAT is 78.9p. Add on the 2p duty rise (December 1) so the price ex-VAT is 81.9p, the VAT on that at the new rate of 15% is 12.3p. The overall tax on petrol just went up. Add on April's rise and the VAT is 12.6p. Tax and duty on a litre of unleaded petrol will go up from the 64.1p that it is at present to 66.7p in April.

If you're on LPG instead of petrol, bad news - duty on that is going up by more than 4p in December and more than 4p in April. LPG is at 52.6p per litre, 44.8p ex-VAT. Add the 4.3p increase in duty in December and apply the 15% VAT - 56.5p and in April 61.2p. You're getting fleeced. Biofuels will pay duty at the same rate as petrol from 2010.

A business which uses motorised transport in the course of that business is going to be worse off. The costs of transportation will increase, leading to rises in the cost of food, clothes, etc. Labour - tough on businesses, tough on the customers of businesses.

Spirits
The duty on a bottle of whisky will be £6.454 (more if it's stronger than 40% abv). The duty is £23.05 per litre of pure alcohol (£23.05*0.4*0.7= £6.454). It's an 8% rise, indicating that the duty previously was around £5.976, a rise of 47.8p.

VAT on the old duty was £1.046 VAT on the new duty will be £0.968. Together, old duty and VAT on the duty was £7.022 and the new equivalent will be £7.422 (there's the VAT on the rest of the product to be considered as well.

When I looked here there was a bottle of Bells for £12.99. Take off VAT - £11.055; remove the duty - £5.079 is the actual product price. Add on the new duty - £11.533; add on the new VAT - £13.263. Whisky gets more expensive. Just matching the VAT reduction? Aye, right.

Tobacco
Ad Valorem duty (VAT on tobacco) is going up by 4% on products other than cigarettes and up from 22% to 24% on cigarettes. Cigarettes also have a specific duty of £112.07 per 1,000 cigarettes (£2.24 per 20 packet). Duties are now:
• cigarettes: 24 per cent of the retail price plus £112.07 per thousand cigarettes;
• hand-rolling tobacco: £122.01 per kilogram;
• cigars: £169.74 per kilogram;
• other smoking tobacco and chewing tobacco: £74.63 per kilogram.
More than off-setting the VAT cut.

Heating oils:
Duty is going up on heating oils. Not by much (less than 1p per litre) but the percentage increase there is fairly large, considering that rates are currently around 10p per litre. There's the wee note in there that, in future, these duties will rise at the same rate as road fuel duty - that means the Chancellor won't have to tell people when he's putting up the price of heating their homes.

Small businesses
We've seen that small businesses won't be getting the benefits that large businesses will get from the VAT cut and we know that the fuel duty rises will hurt them. Even turning to drink has just got more expensive for them. Time for a wee look at other effects on them.

The rise in small business corporation tax has been deferred for a year - good news except that it means that small businesses will be getting hit with a tax hike just when they're trying to repair the damage done by Labour's recession.

The trading loss carry-back is good, but I'm at a loss to understand why the Chancellor thinks that this tax cut will cost the public purse money for the first two years but then bring in £15 million in the third year (page 10). How will a mechanism to allow companies to write off losses against profits in previous years bring in money?

Actually, that same table shows that the Chancellor thinks that deferring the corporation tax increase for one year will continue to cost money even after it's been implemented.
Hang on!
Let's have a look at that costings table (they're always fun):

There's a cap being put on Housing Benefit to save the Government £5m next year and £15m in each of the two following years.

There's money expected as income to the Government from increasing Class 3 National Insurance contributions (they're the voluntary ones for people who have had career breaks to top up their pensions), but the blurb says:
the Government will change the class 3 voluntary national insurance contribution rules to allow those reaching state pension age between April 2008 and April 2015 with 20 qualifying national insurance years to purchase up to six additional years from 1975-76. The package is intended to be cost neutral overall and the class 3 rate will therefore rise accordingly to £12.05 a week in April 2009.
If it's cost neutral, where's the Government profit coming from?
Darling is to defer action on income shifting which is when a person ascribes part of their earnings to another person to avoid paying a high rate of tax on those earnings. Surely that should be illegal? Not according to Darling who will spend £485 million over the next three years taking no action on it. Build you own tax cuts with your friendly Labour Government - if you're already wealthy.

He'll only spend £170 million on giving higher Child Benefit payments (for three months).

Air Passenger duty
Page 125 of the full report:
reforming air passenger duty from 1 November 2009, moving from two to four distance bands to improve environmental signals. The Government has decided not to proceed with a per-plane tax in order to ensure greater stability and protect competitiveness at a time of economic uncertainty.
It's in 2,000 mile bands (from London, of course ...) from A to D, and two rates in each band, one for the cheapest seats, one for all other seats - unless there's only one class of seat in which case the higher rate applies (is this just to do in the budget airlines?). Here's the rates from November 2009:
A - £11 and £22
B - £45 and £90
C - £50 and £100
D - £55 and £110

Yes, that extra fiver really will dissuade everyone from flying that last 2,000 miles, right enough, but why is this indicated as a cost to Government when the rates are higher than the current rates? It can only be because the per-plane amount would have brought in more money. Environmental signals indeed - are there two doctors in the house to expand on this perchance?

Well then
All in all it's a rotten move, if you're not rich you'll get a tax cut of £1.69 a week which won't help you if you need to drive because fuel is about to go up again. Nor is there any action to bring food prices down, or energy prices or any of the other costs which have become painful recently. In fact, some of the measures will increase inflationary pressures on these items.

The VAT cut is a sham - it's pitifully small and won't result in price reductions in the shops.

Small businesses won't get any VAT benefit and will have to suffer fuel price increases before their corporation tax goes up in 2010.

Nearly everyone's taxes will be going up soon, you'd have to be earning less than £17,600 for the NI contributions increases to be less than your £88 a year tax cut - and the increases in duty couple with the return to 17.5% in VAT will catch most of us one way or another.
Not a drop of imagination in sight. Pitiful!

Monday, 24 November 2008

Pushmi-Pullyu Murphy

Jim Murphy, the London Government's Cabinet Secretary for keeping the Scots in their Place, has an amazing ability - he can look both ways at once.

He claimed that Darling's satsuma and 5p piece stocking filler would boost the Scottish budget by £2 bn - but there would be 'belt tightening'.

Right, then ...
We'll have extra money but we won't have as much.

Friday, 21 November 2008

When politicians fail

Sometimes politicians just fail to do what is right. There are times when it's not their fault, that their best efforts didn't quite match the needs of the situation. Other times it is their fault, through poor judgement, spotting the problem too late, acting with undue haste, or not acting fast enough.

It's possible to forgive much of that if it's an unusual occurrence, we can all appreciate human frailty and can forgive both the error of the politician on one side and the rush to judgement of the politician on the other. Where a mistake has been honestly made and efforts are made to put it right, forgiveness is easy.

There are situations in which politicians should not be forgiven, though. When a politician in a position of power makes a mistake, a mistake which is clear, and fails to take steps to put right that error their actions should not be excused, especially when they have a chance to rectify the situation before the full effects make a full impact.

Today Gordon Brown and Alistair Darling are in the dock, accused of hasty action over HBoS, encouraging a takeover which breached the letter, the word, the sentence and the paragraph of competition rules as well as the spirit of the rules. They further stand accused of failure to take action to remedy the situation when it became crystal clear that the takeover - bad for HBoS, bad for customers, bad for competitors, bad for jobs, and bad for the economy - was unnecessary and that the bank was in no worse a position than any other bank in the UK and in a better position than some.

Darling and Brown are, I say, guilty of breaking the first rule of good governance - always strive to do your best.

George Mathewson and Peter Burt released a statement today on the campaign website. I've reprinted it below.

Sir Peter Burt and Sir George Mathewson noted the Chancellor’s 18th November statement to Parliament on the recapitalization and funding terms on which the Government now is prepared to offer any bank, which sought assistance or sought to change the terms agreed in October. The Government’s statement has raised several hurdles very high and has made it crystal clear that they do not want and are not prepared to facilitate HBOS remaining independent. Accordingly Sir Peter and Sir George reluctantly decided to discontinue their campaign.

Notwithstanding this announcement Sir Peter and Sir George feel that the recapitalization scheme announced by the Government on 8th October was an excellent response to a deepening crisis.

Sir Peter and Sir George’s contention was that the Board of HBOS failed to explore the alternatives available to HBOS adequately at the time of the recapitalization scheme’s creation. The HBOS Board apparently failed to either argue for a better exchange ratio for HBOS shareholders from Lloyds or, at least to hold Lloyds to the
original terms of the deal. Prior to the Chancellor’s announcement we believed we could assist in this process.

The HBOS Board’s apparent apathy was further masked by the lack of transparency in the HBOS shareholder circular regarding the cost of keeping HBOS independent. Why hadn’t the Board of HBOS firmly established, as Lloyds have done, both the actual amount of the capital required by the FSA and the terms on which the Government were prepared to offer that capital? We still do not know. We can only surmise that either they did not ask or that it was the HBOS Board that failed to meet the hurdles for the funding set by Government at that time. At that point senior management changes at HBOS should have been made voluntarily.

What is particularly unfortunate is that there was an encouraging and increasing level of support, not least in financial terms. Although there was no prospect of raising all of the £11.5bn, which will be required to strengthen the new Lloyds Bank, from private sources we had offers of additional capital that would have raised more than the extra £500m needed to keep HBOS independent. Ironically the HBOS’ spokesman’s criticism that our proposal offered no additional money overlooked that fact that Lloyds themselves are providing no money at all and indeed will be in receipt of assistance at a level which is a relatively higher percentage of their capital base than
the £11.5bn is of HBOS’ capital.

However the rules have now been firmly established and Sir Peter and Sir George regret that an opportunity to keep HBOS independent, albeit with the Government as the (temporary) major shareholder, has been lost along with thousands of jobs, unnecessarily as the UK economy struggles with recession. The anticompetitive
nature of this takeover will be borne by the community at large.

Nevertheless we think that Lloyds seized a great opportunity and our congratulations go to Sir Victor Blank and his colleagues for having done so. It may well be ‘the deal of the Century!’ We sincerely wish them and all the staff at Lloyds Bank the best of luck.

Finally Sir Peter and Sir George would like to thank all those who wrote, emailed or
called with messages of support and encouragement and with offers of financial help.

Thursday, 20 November 2008

godtramit!

Hot on the heels of the news that line 1b has been scrapped (line 1a isn't looking too good either), the contractor on the Edinburgh tram project is running into difficulties with the subcontractors.

Wednesday, 19 November 2008

Free School Meals result

In the committee considering whether to provide nutritious meals free of charge to tiny little very hungry children (OK then, primaries 1, 2 and 3), there voted:

In favour of providing meals to hungry children:
The SNP

Against feeding the poor little mites:
The Conservatives
The Liberal Democrats

Don't really care so won't vote either way:
New Labour


Committee convener Karen Whitefield (Labour MSP) was upset that the SNP members of the committee were pleased that the instrument had passed, apparently.

Here she is:

Free School Meals

There's a nasty rumour going around - very nasty, it bit me - that Liz Smith MSP of the Conservatives is intending to vote against the School meals statutory instrument tomorrow (well, today, but I've not been to sleep yet so it's still tomorrow).

She has been quoted as saying
“It is possible that the SNP will lose tomorrow and suffer a major defeat on what it sees as a flagship policy”

Food for children or score a political point... Food for children or score a political point... You can see how it's a difficult decision, can't you?

The Labour MSPs has, apparently, started backing off as they realise what the political implications are of siding with the Conservatives to remove food from the mouths of children, but some within their group are still pressing for a 'no' vote in an attempt to try to beat the SNP on a vote - nothing to do with whether the policy is right or wrong, just try to win something.

Oh, how I wish Kezia's blog was still available with that lovely line of "Maggie Thatcher stole my milk" emblazoned across it (not true, of course, if I'm correct in assuming that Kezia went to school in Scotland - Thatcher was Education Minister for England at the time of the alleged offence).

Margaret Smith of the Lib Dems is, I am told, warbling on about bringing in a means-test and is still thinking about whether to vote against to win a political point.

Last time these three managed to gang up properly it was, of course, to push through a vanity project - a white elephant known as the Edinburgh Tram (singular) at a cost of half a billion quid and rising (but not for long).

Meanwhile, MSPs have received a letter encouraging a yes vote from organisations who full y support the steps - Douglas Hamilton at Save the Children, Ewan Aitken at the Church of Scotland, Dave Watson at Unison, Greg Dempster at the Association of Headteachers and Deputes Scotland, Agnes Tolmie of the Scottish Women's Convention, Peter Kelly of the Poverty Alliance, Marion Davies of One Parent Families Scotland, John Mulvey of the Scottish Local Government Forum Against Poverty, and John Dickie of the Child Poverty Action Group in Scotland. You may recognise these names from other public roles.

This is going to be interesting.

Tuesday, 18 November 2008

Did you hear that?

One's delicate lugs are exceedingly well attuned to the foreboding sound of breaking things (it usually means that I'm in trouble), so one was terribly interested earlier this evening to hear the grind of twisted ego and the crash of vanity as reality bit home.

Guess what?

Now the answers

Remember that quiz?
Here's the answers - just the question and the answer that is given as correct in the study material for the citizenship test (which you now need to take for indefinite leave to remain). My comments are italicised (because I'm like that).



What percentage of the workforce are women?
B 45%
No, I didn't know either.

What proportion of young people who became first-time voters in the 2001 general election actually used their vote?
C One in five
They are, of course, only first time voters if they actually vote ...

What percentage of Christians in the UK are Roman Catholic?
A 10%
A most useful piece of information that one, oh yes.

When is New Year celebrated in the United Kingdom?
A 1 January
Well, actually, most of us celebrate round about midnight between the 31st of December and the 1st of January. Some people celebrate it from slightly earlier than that until slightly later than that. As Sean McLeod pointed out in the comments to the original post, Old New Year is still celebrated (middle of January, I think - 13th?). There's also the point that Scots celebrations traditionally took in January 2nd - a tradition which appears to be falling by the wayside.

When are local government elections held?
C May each year
Only in England (and it should be May most years, so I'm told) - in Scotland there is not another local election due until 2012, and I don't know about Wales, but there were elections in all councils in Wales this year, so I'm assuming that the Welsh system is similar to ours (is it?)

Where can you get a mortgage from?
Select two correct answers from below
A A bank
B A building society
Well, how can I put this ...

On average, boys leave school with better qualifications than girls.
Is this statement true or false?
B False
This is a truly vital piece of information you'll need as a new member of our society, it will greatly enhance your small talk at your local cocktail parties.

When is the national day for Northern Ireland?
B 17 March
Northern Ireland is a nation?

If you are buying a home in Scotland who should you approach first?
A A bank
B A solicitor
C An estate agent
D Your local MP
I've left all the answers in here. The book's answer is B - personally, I'd avoid solicitors like the lumpy plague until it's unavoidable (which reminds me - I must respond to the solicitor who emailed me a couple of weeks ago). What's wrong with seeing your bank first?

What types of discrimination can the Equal Opportunities Commission help with?
D Sex discrimination
As Sean McLeod pointed out, though, the EOC doesn't exist anymore. The Equality and Human Rights Commission covers all of the areas in the possible answers.

Why was there a fall in the number of people migrating to the UK from the West Indies, India, Pakistan and Bangladesh in the late 1960s and early 1970s?
C New laws were introduced restricting immigration to Britain
Is the subtext "so be grateful that you're getting in"?

Which voting system is used to elect the Scottish Parliament and the Welsh Assembly?
D Proportional representation
Well, some people may take issue with that definition - it's certainly better at proportionality than FPTP but it's not a pure proportional system. It does have a name though, it's called the Additional Member System.

At what ages are the Key Stage Tests held in England?
D 7, 11 and 14
There you go, now you know.

If you have a problem with your neighbours, who can you go to in order to solve the problem without taking the case to court?
B Mediator
Police, councillor, Environmental Health Department (depends on the problem, right enough).

What is the name of the ministerial position that is responsible for legal affairs?
D Lord Chancellor
Surely they mean the running of the judiciary in England? Home Secretary was one of the other answers - an equally possible construal of the question. As Sean says, though, could be Kenny MacAskill (or Eilish Angiolini).

When did married women gain the right to retain ownership of their own money and property?
D 1882
Exactly what relevance does this have to someone who wants to come and live here? Is it a not-so-subtle dig at people who might be coming from 'backward' cultures? We were, after all, only following the Islamic tradition.

What percentage of children live within a stepfamily?
A 10%
Again - what relevance has this for immigration?

Hereditary peers have lost the right to attend the House of Lords.
Is this statement true or false?
A True
No it's not. 92 hereditary peers still have the right to attend the House of Lords.

What is the title of the King or Queen within the Church of England?
D Supreme Governor
Do you really need to know that if you're not a member of the CoE? I was quite happy not knowing that. No doubt I'll be happy again, but I was fine not knowing.

When might you need a CRB check?
B When applying for work that involves children or vulnerable people
Except in Scotland - SCRO Disclosure check here. (CRB is the Criminal Records Bureau - like a writing desk with Val Doonican LPs on it - and SCRO is the Scottish Criminal Record Office)

At what age do school children take their first national test in Wales?
D 14
Much as I love the Welsh and I greatly appreciated all the help they gave us when they came up in their hordes to help us in Glasgow East and Glenrothes (I thought they should use the train, but hordes did fine), I have no desire to know when they take school tests - and I have no idea why anyone wanting to settle anywhere else might want to know - and if you were settling in Wales someone would tell you - probably the teacher.

What is the distance from John O'Groats on the north coast of Scotland to Land's End in the south-west corner of England?
D Approximately 870 miles (1,400 kilometres)
Doesn't look that far on the map.

What is the name of the established church in Scotland?
D The Presbyterian Church
Eh? Which Presbyterian church? I was under the impression that the Church of Scotland was the established church in Scotland. Sean McLeod says it's a recognised church rather than an established church (it's the big spire, you can recognise it for miles around) but I don't know what a recognised church is. Again, though, what relevance does this have for an immigrant?

When will the British government adopt the euro as the UK's currency?
D When the British people vote for it in a referendum
The phrase 'howls of derision' comes to mind.

There are more men in study at university than women.
Is this statement true or false?
B False
Who cares? (other than those studying, their relatives, potential employers, workforce planners, government statisticians, and Eric from the paper shop on the corner of my street) and what relevance does it have to immigrants?

How many member states are there in the Commonwealth?
C 53 member states
A subtle hint to go settle elsewhere? "Look, 53 other countries, most with better weather than us. You'd be happier there, wouldn't you?"

What is the purpose of the Council of Europe?
D To develop conventions which focus on human rights, democracy, education, the environment, health and culture.
A fine institution.

The final point I want to make - the National Anthem is not 29 words long, listen.

Is the HBoS deal illegal?

Walk with me here, I've not quite got this pinned down, but I think I'm on the way.

I've already mentioned Hornby's £60,000 per month deal with Lloyds TSB if the deal goes through, and the very strange conditions in the Implementation Agreement. For the avoidance of doubt, Andy Hornby is a director of HBoS.

You see, I thought to myself "I wonder what the legal parameters are for directors?" What are they allowed to do, what is expressly forbidden, what is common law because of custom and repute, and so on. So I pondered where the best place to find such information would be. It came to me in a flash - my old mate Victor would know!

A fine man is Victor, there it is in glorious technicolour (I know, but I'm not American):

As a director, you have several duties:
...
To act in good faith to promote the success of the company for the benefit of its members. You must also have take into consideration employees, suppliers, customers, the environment and the community.
To carry out your duties with reasonable care and skill. Higher standards may be expected from executive directors who are responsible for an area in which they have a specialist or professional qualification.
...
To make sure that there is no conflict of interest and duty.
...
Not to benefit from a third party by reason of your being a director, or by doing or not doing something.
Not to act with intent to defraud creditors or for any other fraudulent purpose.
...
To carry out the statutory obligations imposed by the Companies Act 2006 and other legislation.
There's more in there, but this will do for a start. You'll note that directors should take into account, amongst other things, the community - that would be Edinburgh and Halifax primarily for HBoS.

More importantly, perhaps, is that duty to ensure that there is no conflict of interest (like writing your company into an impossible-to-escape Implementation Agreement), and the requirement not to benefit from a third party by reason of your being a director (surely a future sinecure is as important as anything else in this consideration?)

Then there's that requirement to be honest (not fraudulent) and to carry out the statutory obligations. In search of the truth, I set off on the long journey into the Companies Act 2006. I did so with some trepidation, considering just how much of a horrible beast the 1985 Act was, but it did not in any way prepare me for the full trauma of the 2006 Act - 1300 sections (that's not a typo, it's 1,300) and 16 schedules.

"Away an no be daft" I thought, and continued to peruse my extensive library (some people call it the internet) - I went to the obvious shelf (just above the flask of tea and the marmalade sandwiches), and peered in at the Companies House Guidance Booklets - pretty dry except for the bit in the Directors and Secretaries guidance which says:
A director’s general duties to the company are, for the first time, set out in the Companies Act 2006 but the relevant provisions are being commenced in two stages. Most of Chapter 2 of Part 10 of the 2006 Act (General duties of directors) was commenced with effect from 1 October 2007, but the sections relating to the duties to avoid conflicts of interest, not to accept benefits from third parties, and to declare an interest in a proposed transaction or arrangement with the company (and related provisions) will be commenced with effect from 1 October 2008. The general duties of directors were previously contained in case law. See the Department of Business, Enterprise & Regulatory Reform website www.berr.gov.uk for further details.
You can imagine how I felt.
If these provisions were not commenced until October 1st this year then there is a court argument to be had (let's not call it a legal argument, it's more like theatre) about whether the provisions should apply in this case, and you'd have to know a bit more about when the deals were offered and accepted than we currently do. We know, for example, that the Hornby deal was made public in early November, but when was it made?

I trudged off round the library shelves, pausing to move the economics textbooks into the fiction section, and found myself staring at the hallowed pages of the International Financial Law Review. Would it have anything on UK directors? Indeed it did. The information was much the same except for this titillating little piece:
A director (including a former director) must "avoid a situation in which he has a direct or indirect interest that conflicts or may conflict with the interest of the company". Directors are currently under a similar common law duty and can avoid liability for breach by obtaining the members' consent.
So it was a common law breach before it became a statutory breach - unless Hornby asked the shareholders for permission first. It's not definitive, though, and so it was back to the 2006 Act and started reading:
An Act to reform company law and restate the greater part of the enactments relating to companies; to make other provision relating to companies and other ...
And so it went on until I reached page 138 and the chapter on the general duties of directors where we find that the duties are based upon the common law rules and equitable principles and should be read as such.

A few specifics are often delicious:
175 Duty to avoid conflicts of interest
(1) A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.
Like not be working for both sides of a takeover.
176 Duty not to accept benefits from third parties
(1) A director of a company must not accept a benefit from a third party conferred by reason of—
(a) his being a director, or
(b) his doing (or not doing) anything as director.
Would a £720,000 a year job with a third party count as a benefit? You can see how the case stacks up. Then this happens:
178 Civil consequences of breach of general duties
(1) The consequences of breach (or threatened breach) of sections 171 to 177 are the same as would apply if the corresponding common law rule or equitable principle applied.
(2) The duties in those sections (with the exception of section 174 (duty to exercise reasonable care, skill and diligence)) are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors.
It's a civil wrong rather than a criminal wrong, so shareholders have to sue. The deal breaks the law because Hornby's actions in accepting a third party benefit run exactly counter to the law. Further, the duty to exercise independent judgement as imposed by Section 173 is an obligation not to fetter the exercise of their powers of discretion - as the Implementation Agreement does.
See Boulting versus the Association of Cinematograph, Television and Allied Technicians from 1963.
Shareholders should be able to interdict the takeover in order to have the case examined properly. Derivative Proceedings are examined in section 265 and onwards. A shareholder can also petition the court under section 994.

Personally, I'm off to read the HBoS articles of association and then, just for a laugh, I'll read the Lloyds one.

If you think our politics is dirty ...

Remember the story during the US Presidential campaign that claimed that Sarah Palin was a bit of a fool on foreign policy and things foreign in general? Remember that the claimed source for it was a disgruntled McCain adviser?

It was a hoax. Excuse the overblown language of the chap - he's obviously a wee bit upset...

Australian politics

It's not all broken arms and Ministers stripping off at the office party, you know, sometimes Australian politics can carry a bit of clout (reportedly, of course).

USA - world knowledge

The United States of ...

I am amazed

I have to admit to my flabber being entirely gasted when it was pointed out to me that a Google search for heisingers principle brought my blog up as a first pick. See here:
http://www.google.co.uk/search?q=heisingers%20principle&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-GB:official&client=firefox-a

How people know what other people search for on Google beats me, but I bet I wasn't half as surprised as the person who googled it (whom I assume is just starting out on a study of physics) and who reached this post:
http://calumcashley.blogspot.com/2008/02/wendy-alexander-is-schrdingers-cat.html

I almost feel guilty.

Almost.

Monday, 17 November 2008

A quiz!

The Beachcomber has brought to my attention a tome of great import. It's a quiz book of sorts, see if you can answer these questions which were selected at random (except for the careful choosing) and then I'll tell you what the quiz is:

What percentage of the workforce are women?
A 40%
B 45%
C 51%
D 65%

What proportion of young people who became first-time voters in the 2001 general election actually used their vote?
A One in two
B One in three
C One in five
D One in six
Note: the actual answer is 100%, but we know what they mean, don't we?

What percentage of Christians in the UK are Roman Catholic?
A 10%
B 20%
C 30%
D 40%

When is New Year celebrated in the United Kingdom?
A 1 January
B 1 March
C 25 December
D 31 December

When are local government elections held?
A April every two years
B June and December each year
C May each year
D September each year

Where can you get a mortgage from?
Select two correct answers from below
A A bank
B A building society
C An estate agent
D A housing association

On average, boys leave school with better qualifications than girls.
Is this statement true or false?
A True
B False

When is the national day for Northern Ireland?
A 1 March
B 17 March
C 23 April
D 30 November

If you are buying a home in Scotland who should you approach first?
A A bank
B A solicitor
C An estate agent
D Your local MP

What types of discrimination can the Equal Opportunities Commission help with?
A Discrimination related to disability
B Racial discrimination
C Religious discrimination
D Sex discrimination

Why was there a fall in the number of people migrating to the UK from the West Indies, India, Pakistan and Bangladesh in the late 1960s and early 1970s?
A A weak British currency made immigration less appealing
B It was becoming more difficult for immigrants to find employment in the UK
C New laws were introduced restricting immigration to Britain
D These countries were experiencing labour shortages

Which voting system is used to elect the Scottish Parliament and the Welsh Assembly?
A A ranking or preferential system
B Assembly members are chosen by the government
C 'First past the post'
D Proportional representation

At what ages are the Key Stage Tests held in England?
A 10, 12 and 14
B 11, 15 and 17
C 7 and 15
D 7, 11 and 14

If you have a problem with your neighbours, who can you go to in order to solve the problem without taking the case to court?
A Lawyer
B Mediator
C Justice of the Peace
D Magistrate

What is the name of the ministerial position that is responsible for legal affairs?
A Chancellor of the Exchequer
B Foreign Secretary
C Home Secretary
D Lord Chancellor

When did married women gain the right to retain ownership of their own money and property?
A 1752
B 1792
C 1810
D 1882

What percentage of children live within a stepfamily?
A 10%
B 25%
C 40%
D 55%

Hereditary peers have lost the right to attend the House of Lords. Is this statement true or false?
A True
B False

What is the title of the King or Queen within the Church of England?
A Archbishop of Canterbury
B Governor General
C Head Priest
D Supreme Governor

When might you need a CRB check?
A When applying for welfare benefits
B When applying for work that involves children or vulnerable people
C When buying a house
D When requesting medical treatment from the NHS

At what age do school children take their first national test in Wales?
A 7
B 9
C 11
D 14

What is the distance from John O'Groats on the north coast of Scotland to Land's End in the south-west corner of England?
A Approximately 1,100 miles (1,770 kilometres)
B Approximately 1,310 miles (2,110 kilometres)
C Approximately 500 miles (800 kilometres)
D Approximately 870 miles (1,400 kilometres)

What is the name of the established church in Scotland?
A The Anglican Church
B The Church of England
C The Episcopal Church
D The Presbyterian Church

When will the British government adopt the euro as the UK's currency?
A 2010
B 2015
C Never
D When the British people vote for it in a referendum

There are more men in study at university than women.
Is this statement true or false?
A True
B False

How many member states are there in the Commonwealth?
A 25 member states
B 39 member states
C 53 member states
D 75 member states

What is the purpose of the Council of Europe?
A To create a single market for members of the council
B To create new European regulations and directives
C To debate proposals, decisions and expenditure of the European Commission
D To develop conventions which focus on human rights, democracy, education, the environment, health and culture.

There you are - 27 questions. For the real quiz there are 24 selected from the database of about 400 (random selection by a computer - the quiz is completed on a computer as well). You get 45 minutes in which to get at least 18 correct answers. If you pass, you get to go onto the next stage where you swear the oath of allegiance:
I (name) swear by Almighty God that on becoming a British citizen, I will be faithful and bear true allegiance to Her Majesty Queen Elizabeth the Second, her Heirs and Successors, according to law.
(You can affirm instead), and then you make the citizenship pledge:
I will give my loyalty to the United Kingdom and respect its rights and freedoms. I will uphold its democratic values. I will observe its laws faithfully and fulfil my duties and obligations as a British citizen.
Then you have to sing the national anthem. As the book says:
all British citizens should know the words. It is very short - only 29 words long.
So there you have it - officially - that's what makes you British, knowing this kind of "fact" and swearing those oaths.
Doesn't it make you proud?

Friends of the Beachcomber will be delighted to know that the Doc passed.

Sunday, 16 November 2008

Lazy journalism?

There has been some criticism of Robert Peston recently. Let me add to it.

His recent blogpost on HBoS illustrates rather well my complaint. He repeats some of the text from the HBoS circular, the rather bizarre warning of nationalisation if the deal doesn't go through (funny how no-one is asking how that differs from the position about to be entered into with Lloyds TSB) acting like a reporter rather than a journalist, then he speculates rather idly about Mathewson and Burt and their campaign to save the bank.

Peston appears more willing to indulge in tittle-tattle, apparent leaks from the Treasury, and the repetition of rumour than in serious journalism. Why, for example, no examination of the Hornby deal with Lloyds TSB (£60,000 a month consultancy if the deal goes through); or the strange clauses in the implementation agreement; Blank's long-term predation on HBoS; the strange behaviour of the Treasury (which is even stranger considering the opinions of the Chief Executive of the FSA and of the OFT)?

It's not exactly Woodward and Bernstein territory that's needed, nothing earth-shaking, just a decent attempt at journalism would do.

Did she miss a memo?

I see that Labour MSP Pauline McNeill has refused to acknowledge the lesson of Ms Capulet. Her intervention in the Health debate from last week:
Pauline McNeill (Glasgow Kelvin) (Lab): On a point of order, Presiding Officer. The member cannot continue to misname the Scottish Labour Party as new Labour. Surely we are entitled to our proper title in this chamber.
Her party's website, however, sees things a little differently. In the top right hand corner she could find the legend "new Labour for Scotland". Or perhaps denial is no longer in Egypt?
Ee-aw, ee-aw, 'e always calls me that.

Don't bank on it!

HBoS has published its circular to its shareholders ahead of asking them to vote the bank out of existence.

Couple of things I noticed - it talks about the hard times in the global market and insists that
As a result of these factors, HBOS sought to restore confidence and stability through negotiating the proposed transaction with Lloyds TSB, as announced on 18 September 2008.

That's not what Victor Blank said - he said they'd been at it for years.

The circular also says:
While it is possible that the Proposed Government Funding might be available in the event that the Acquisition does not complete there can be no certainty that this will be the case or as to the terms on which it might be available.

Even Darling's given up on this rotten chestnut and admitted that any qualifying bank can apply.

Then there's this bit:
the boards of HBOS and Lloyds TSB announced that they intended to participate in the Proposed Government Funding by committing to raise £11.5 billion of new capital to be raised by HBOS (consisting of £8.5 billion in ordinary shares and £3 billion in preference shares (before costs and expenses)) and £5.5 billion of new capital to be raised by Lloyds TSB

Lloyds TSB (the smaller bank) requires £7 bn if the deal doesn't go through - 27% higher than its needs if the deal goes through.
On 11 October 2008 the FSA gave a preliminary indication to HBOS that if the Acquisition were not to occur, it would require HBOS to raise £12 billion of additional capital

An increase of £0.5 bn, or 4% higher. HBoS, of course, has a larger asset base than L-TSB.

HBoS is a healthier bank than Lloyds TSB - even with its current problems. Don't take my word for it:
However, despite higher funding costs, net interest income from banking businesses has increased and HBOS’s Insurance & Investment business has made a good contribution.

Good news from HBoS against:
The Lloyds TSB Group continues to trade well and deliver good income growth from its relationship businesses in an immensely challenging period for financial services companies. However, the impact of market dislocation, insurance related volatility and higher impairments, particularly in Lloyds TSB’s corporate lending portfolios, has led to a substantial reduction in statutory profit before tax in the first nine months of the year.

In other words, parts of L-TSB are losing money while the profitable bits are struggling to stay so. If the takeover goes through Lloyds TSB will be a drag on HBoS.

There's also this wee snippet:
If for any reason the Scheme does not become effective, the share capital reorganisation described above will be reversed and HBOS Shareholders will retain their current holdings of HBOS Shares and any Open Offer Shares which they have taken up. In such circumstances, HBOS has covenanted to HM Treasury to apply to
the UK Listing Authority for the Open Offer Shares and the HMT Preference Shares to be listed on the Official List and to the London Stock Exchange for the Open Offer Shares and the HMT Preference Shares to be admitted to trading on the London Stock Exchange’s main market for listed securities.

Good to see they're already prepared for the collapse of the deal and there will be some movement immediately after the collapse.

Anyone who, like me, wondered why HBoS directors were busy fending off alternative offers instead of seeking the best possible deal can find the answer in the Implementation Agreement:

Under the terms of the Implementation Agreement, HBOS has agreed to certain
non-solicitation commitments in favour of Lloyds TSB, including that HBOS shall not, directly or indirectly, solicit, encourage or otherwise seek to procure any competing offer for HBOS or enter into any inducement or break fee arrangement of any nature with any other party. Additionally, HBOS has agreed to pay Lloyds TSB an inducement fee (inclusive of value added tax, if any) of one per cent. of the offer value under the Acquisition (based on the Closing Price of a Lloyds TSB Share on the Business Day prior to the date of the occurrence of the relevant event set out below) if:
* the HBOS Directors do not unanimously and without qualification recommend the HBOS Shareholders to vote in favour of the Scheme and the resolutions to be passed at the HBOS General Meeting necessary to implement the Scheme or they (or any committee of the HBOS Directors) withdraw, or adversely modify, or qualify their
recommendation to HBOS Shareholders to vote in favour of the Scheme and/or the resolutions necessary to implement the Scheme at or prior to the HBOS General Meeting and the Court Meeting;
* at any time after approval of the Scheme by HBOS Shareholders at the Court Meeting but before the grant of the Court Orders, the HBOS Directors, in exercise of their fiduciary duties, decide not to proceed with the Scheme;

* without the consent of Lloyds TSB, HBOS withdraws the Scheme or takes steps to defer (or adjourn) the holding of the Court Meeting or the HBOS General Meeting or the Court Hearings to approve the Scheme to a date later than 28 February 2009; or
* a competing proposal is announced prior to the Scheme lapsing or being withdrawn, which competing proposal subsequently becomes or is declared wholly unconditional or is completed.


Yup, HBoS directors agreed with Lloyds TSB that they wouldn't fight for the best deal for their shareholders, staff, and customers. Meanwhile, Hornby makes sure he's OK with his deal to net him £60,000 a month if the deal goes through.

Saturday, 15 November 2008

Friday, 14 November 2008

Let's have a look at what we've learned

Respice, Prospice I say, mainly because sic transit gloria ...

So let's look at the evidence so far:

HBoS Chief Executive Andy Hornby is in line for a £60,000 a month (£720,000 a year - not bad kelly if you can get it) consultancy with Lloyds TSB if the merger goes through.

The merger could result in 60,000 job losses (although the Unite trade union seemed happy enough with the deal!) Jobs in the banking sector tend to have a higher salary than the average salary, so the impact on Edinburgh's economy, and therefore Scotland's economy, could be pretty painful.

A former director of Lloyds TSB is being moved in to run the company that Gordon Brown's Government has set up to administer the public stake in the banks.

There will be no place for the Scottish bankers in the new bank if the deal goes ahead.

Gordon Brown is insistent that the deal goes ahead.

There has been plenty of other interest in HBoS.

Concerns that HBoS directors were not acting properly has already been expressed.

That would be those directors who have admitted they were running this financial institution more like a stall in a flea market.

Many commentators are now calling for HBoS directors to go.

The Economist magazine has said the deal should be called off.

As has the Financial Times.

Lloyds TSB reckons it can make £1.5 billion in synergies.

HBoS is selling its Australian assets - giving the bank an immediate funding benefit of £8 billion, reducing its dependence on the Government bail-out. The deal was done in early October (subject to regulator approval) - with the backing of Lloyds TSB at a time when L-TSB valued HBoS at only £12.2 bn in total. That offer has subsequently been reviewed, of course, and with L-TSB's share price falling to around half of what it was at the time and the offer being amended to three quarters or so of the original offer, L-TSB is now valuing HBoS at around £4.5 bn.

We've had some of the best-known banking names in Scotland weighing in to say the Lloyds TSB deal is mince.

We've had the Chief Executive of the Financial Services Authority saying that there is no need for this deal to go through - that HBoS can continue to stand on its own.

We've had the OFT saying that the merger would be damaging.

There are indications that L-TSB is in this deal to strip the assets.

We know that L-TSB is already ignoring the requirement from the Treasury to forego bonus payments.

We know that Victor Blank and his troops at L-TSB were eyeing up HBoS two years ago:
Blank insists the two sides first talked two years ago but threw in the towel because competition issues would almost certainly have blocked the ambitious deal

All he needed, of course, was the permission of his mates:
Blank's political tentacles extend not just to Gordon and Sarah Brown, whom he calls his friends, but to Alastair Campbell and Tony Blair, and also to Sir John Major, the former Conservative prime minister whose friendship caused some controversy in Labour ranks when Blank was chairman of the publisher Trinity Mirror.

This wasn't the first time that Brown's Government gave preferential treatment to Blank's bank, though. L-TSB got first dabs on the Northern Rock mortgages held by that bank - after it had been nationalised.

When the deal was first mooted, L-TSB was seeking to smooth the path by promising to keep jobs in Scotland - not what Gordon Brown was saying to workers in Halifax, right enough.

There was also speculation that the 'leak' of the news of the merger which forced the pace was because other institutions were about to lend support which would have scuppered the need to waive the regulations on takeovers.

We know that the Government bail-out amounts to the equivalent of 2.5% of HBoS assets and 2.4% of L-TSB assets but that the amounts are massively different if we look at Tier 1 assets where L-TSB comes in as needing around a 60% bail-out while HBoS is down about 50%. That's for the 13th October Government announcement.

We know that HBoS raised another £2.4 bn in private money through a 2-year bond issue on the 29th of October - the same day that Darling said that the FSA could re-assess the deal if the merger didn't go ahead.

The truth, my dear, is out there - and it was published by Lloyds TSB in its circular to shareholders on the 3rd of November when it admitted that if the merger didn't go ahead L-TSB would be left £7 bn short of what it needs to keep going - even with the money it has already secured from the Government:

If the Acquisition and Placing and Open Offer do not complete, HM Treasury has stated that it would expect Lloyds TSB to take appropriate action to strengthen its capital position. The FSA has advised Lloyds TSB that if the Acquisition were not to occur, it would require Lloyds TSB to raise £7 billion of additional capital, made up of £5 billion of Core Tier 1 equity and £2 billion of Tier 1 instruments. Whilst Lloyds TSB would be able to seek to raise such additional new capital in the public markets, there can be no certainty that Lloyds TSB would be able to successfully raise such capital or as to the terms on which such capital could be raised, including the terms of
any participation by HM Treasury in any such capital raising, or as to whether any such fundraising would be on a pre-emptive basis.

There you have it - the truth is that it is Lloyds TSB which is bust according to the Financial Services Authority and that HBoS is 'bullet-proof' according to the Chief Executive of that body.

Don't let them grind you down, but do take a wee look at this website.

Toodle-pip!

Thursday, 13 November 2008

The HBoS aria

Just a few things rumbling about make me wonder.

I was under the impression that the Chief Executive of a company would be under some kind of obligation to get the very best deal possible for the customers and shareholders of that company and would be eager to avoid any conflict of interests or appearance of a conflict of interests.

I was surprised, therefore, on leafing through Banking Times to find out that Andy Hornby, our dear old friend from HBoS headquarters, is on a £60,000 a month sweetener from Lloyds TSB if the deal goes through. How, exactly, does he square that with a requirement to fight for the very best deal for HBoS interested parties?

The HBoS board has refused to countenance any deal other than the Lloyds TSB one, with board members saying that there is no other deal on the table. Methinks they do protest too much.

Wednesday, 12 November 2008

HBoS perfidy in the Treasury

The Scotsman reported that at least one of those parties interested in HBoS is being deterred by the Treasury.

Time the Treasury started getting honest and letting us know exactly what is going on.

It's time we all started asking some serious questions.

Cracking value

A couple of Parliamentary Questions asked by John Park have revealed the extraordinary value for money of the SNP Government's National Conversation (you know the National Conversation, the one that everyone can take part in - unlike the Commission for Repainting Devolution where you have to be invited).

Chopper Park asked how much National conversation events cost and how many people turned up, here you go:

4 February
First Minister launches Scotland in the World Forum at Aberdeen University
Costs met by organiser
100 people

13 February
First Minister National Conversation speech at Trinity College, Dublin
Costs met by organiser
100 people

12 March
SCVO National Conversation event in Edinburgh
*
45 people

26 March
First Minister launches National Conversation Civic engagement programme at Edinburgh University
£8,400
110 people

1 April
First Minister National Conversation speech Scotland Week University of Virginia address
Costs met by organiser
200 people

23 April
First Minister leads Scotland in Europe seminar
£1,700
60 people

3 May
Bruce Crawford Church Without Walls event
Costs met by organiser
205 people

19 June
Church leaders event in Parliament
£106
19 people

20 June
Bruce Crawford addresses SCVO event at SECC
*
45 people

29 July
First Minister and Cabinet event in Dumfries
NA
120 people

1 August
Young Scot event in East Ayrshire
*
100 people

5 August
First Minister and Cabinet event in Inverness
NA
100 people

7 August
Young Scot event in Stranraer
*
165 people

19 August
First Minister and Cabinet event in Pitlochry
NA
104 people

23 August
Young Scot event in Irvine
*
330 people

26 August
First Minister and Cabinet event in Skye
NA
105 people

30 August
Young Scot event in Inverurie
*
375 people

8 Sept
SCVO event in Uist
*
20 people

Note: *Costs met from within the allocation of Scottish Government funding to Young Scot and the SCVO.

It's your National Conversation - get involved I say!

Tuesday, 11 November 2008

HBoSing across the universe ...

I read with interest that the Financial Times is now backing the campaign to save HBoS from Gordon Brown's backroom deal.
If I may be so bold:
Conceived in the crucible of the financial crisis eight weeks ago, the proposed takeover of Halifax Bank of Scotland by Lloyds TSB now looks hasty, maybe even ill-judged.
Not only but also:
Nor is the merger an attractive short-term prospect.
I'm not done yet:
Assuming it is still viable, it could make more sense for the bank to remain independent. Sure, it would need more state support. But it could tap the government’s recapitalisation scheme for that. Some jobs might be saved and competition preserved as a result.
Then there's this:
Only investors can block the merger now. Rejecting the deal may lead to share price falls. But it is in the ultimate interests of consumers that they do.
Read the whole thing yourself, you'll enjoy it. I'm delighted to see that everyone is agreeing with me these days (well, except those who disagree). Hornby and Stevenson should go now and let people with the best interests of the bank at heart come in to do what they can.

Gordon Brown, of course, continues to support his mate's bid - which bolsters everyone else's opinion that Lloyds shouldn't be allowed near HBoS.
Of course, if you want the other take on this, read Alf 'irrepressible ray of sunshine' Young's piece in today's Herald (I can't find it online) where he alleges that these two elder statesmen of Scottish banking are coming out of retirement to protect their reputations. To use his own words,
for this long-term observer of both men, there's a strong self-justificatory streak in what they are about.
Read the whole article, though, it's an eye-opener, it's like he's been obsessed since his teens.

Personally, I can't wait for the website to go live.

HBoS - save the bank

Right, the Bank of China is interested in buying HBoS, joining Tim Goode's European American Capital in sniffing around the opportunities presented by the determination of the Labour Government to send HBoS to the dustbin of history.

Brown and Darling told us that no-one would invest in the bank, that the ba was on the slates, that Gordon's mate, Victor Blank, was doing us all a favour by taking this burden on. I take it that he will withdraw rapidly now that someone else is available, scuttling off down the corridor while wiping the sweat of fear from his forehead with a large spotted handkerchief? No, I don't think so either.
We've had George Mathewson and Peter Burt insisting that Lloyds TSB is in a worse state than HBoS, following on from the lead I gave some time ago (breathes on fingernails and buffs them on waistcoat) - although I suspect that they have looked into it somewhat more closely than I have.

I'll say it again - Lloyds TSB is broke. The Treasury has not disaggregated the figures for the bail-out of HBoS and L-TSB - and my suspicion is that this is because it would reveal just how fragile L-TSB is.
Labour's Government continues to insist that there is no alternative to the deal brokered between Brown and Blank on the sly (the New Labour equivalent of a smoke-filled room, I suppose), and they refuse to examine any proposal. It's not as if Burt and Mathewson are just punters like me pontificating on these grand affairs of state from a position of informed ignorance - they're serious punters in the banking arena.

They're right to call for Hornby and Stevenson to go now - this pair have ruined a perfectly decent building society and a fine bank by managing them in a manner more befitting a certain trading organisation based in Peckham. Instead of acting with honour and stepping down for the benefit of the customers and shareholders of HBoS, this pair are fighting back, claiming that Mathewson and Burt don't offer certainty or stability.

Hang on, says I, was it Burt and Mathewson who got HBoS into trouble? No, indeed it was not, it was Stevenson and Hornby, these are the jokers who got the bank hopelessly lost and are now claiming to have the map which will get the bank back out of the swamp. Who do you trust?
There is also, of course, Jim Spowart claiming that the L-TSB deal is cack. Another chap I'd trust a mile and a half ahead of those currently 'running' HBoS - and ahead of Brown's mate Victor Blank.
Then there's the OFT report saying that the deal isn't in the public interest, the interests of shareholders or the interests of consumers.

This stinks of a dodgy political fix for partisan advantage. I say that Spowart, Burt and Mathewson should be allowed to get on with sorting out the bank. In the meantime, we need the truth from Brown, Darling et al about what they are really up to.

Monday, 10 November 2008

Hing on a wee minute

I was sitting here watching some news roll by and it suddenly struck me. I did, of course, immediately ask "who threw that?" But I digress ...

Has there or has there not been a bit of a paradigm shift in Scottish politics when the SNP is disappointed at failing to overturn a 10,500 majority? We're a bit cheesed off at only increasing our share of the vote by 13%, sad that we only slashed the majority, gutted that we never took one of Labour's safest seats, pure miserable that we didn't sweep everything before us.

Jings, crivvens, help ma boab, we're still improving.

Right, back to cheese...

Repainting devolution

The Labour Government has delivered tins of paint to the Commission to Repaint Devolution. I can exclusively reveal that devolution is to be repainted a dull beige.

I am, however, intrigued by the recommendation on page 132 that "Scotland should be Independent".

I am pleased

I hear that the Labour party wants to talk to three quarters of the Scottish electorate (I've no idea what they've got against the other 25%).

Can I be the first to say - I'm delighted, bring on the Bristol model ...

Monday, 3 November 2008

Do as I say ...

Reading the Grauniad (as ye do), I was struck by a couple of stories. Let's fling them up in the air and see how they fly:


First, there's the tale about the people who face a complete ban on spending money - even the spare change in their pockets - because they are suspected of being involved in financing

terrorism - no conviction needed, you'll notice. There's a wee health warning - Orders in Council refers to decisions of the Privy Council.


Then there's the tale about Gordon Brown meeting former members of a terrorist organisation at a deradicalisation centre. At least those guys know what they were accused of.


Of course, Brown and his henchmen's heavy-handed oafishness has already branded Iceland a rogue state using secondary legislation - something which didn't go down too well amongst the average, ordinary, everyday terrorists in the streets of Reykjavik. They believe that Brown sacrificed Iceland's banks for the sake of his own political game. Surely not?

Libya's fine though (Brown later withdrew the invitation when it turned out that he had misjudged oil prices). Iran might be our pal - or might not, depending on the time of day. Syria's on our side - except if we're supporting the USA position.

The fight to cut off terrorist cash is very serious, of course. Responsibility for financial sanctions transferred to the Treasury on the 24th of October 2007. There's a fascinating list of those who have had their assets frozen.

As well as the fight against terror is the begging of wealth (no-one should mention cash for peerages at this point). For some reason, Brown thinks that oil producing countries should be rather well off these days (other than Scotland, of course, he still thinks we can't survive, we've only got 80% or so of Europe's oil, after all).

Satire is alive and well in Gordon Brown's hands.