Fiddling whilst democracy burns

Remind me not to go on holiday again unless it’s a parliamentary recess, will you?

Gordon Brown has said “mistakes” were made by MPs in their use of House of Commons expenses. The prime minister apologised on behalf of all political parties for some of the claims made and said public trust must be restored “immediately”.

Commons Speaker Michael Martin said “serious change” was needed and that the “spirit” of rules must be followed. An independent body auditing expenses claims would be set up “very soon”, he added…

Plans for an independent auditing body to oversee expenses claims are expected to be approved on Monday, following weeks of damaging stories. Senior Labour MP Sir Stuart Bell said this would analyse “every claim that is made”.

The Commons fees office is overseen by a committee made up of MPs and independent people – who in turn are overseen by the National Audit Office. The new body would be entirely independent and cost about £600,000 a year to run.

Millions of receipts backing up all MPs’ expenses claims under the second homes allowance are due to be published in July after a long freedom of information campaign.
But details have been leaked to the Telegraph – which has been publishing selected excerpts over the last few days.

There are concerns that the proposed change to the auditing system would mean MPs’ expenses would no longer have to be made public under the freedom of information ruling.

- BBC News

Budget 2009: We’re Broke

Alistair Darling has said the UK will have to borrow a record £175bn as he admitted the economy faces its worst year since the Second World War. The package would steer the UK through to recovery, he said.

The Tories said the economy was in an “utter mess”. Leader David Cameron said not enough had been done to get spending under control and “Britain simply cannot afford another five years of Labour”.

Total government debt will double to 79% of GDP by 2013 – the highest level since the Second World War. The annual budget deficit will rise sharply to £175bn for the next two years.

The Budget received a cool reception in the City with the pound down – and the Confederation of British Industry said it did not set out a “credible and rigorous” path to recovery.

Full coverage and analysis of the budget is available through BBC News

UK Economy “no longer in free fall”

The economy is no longer in free fall and a recovery next spring is likely, a renowned economic think tank has said.

Stabilising markets and the easing of credit conditions may well mean that the worst of the recession is over, the Ernst & Young Item Club said. It is forecasting the economy to shrink by 3.5% this year and by 0.1% in 2010.

However, it also said that the backdrop to Wednesday’s Budget is “bleak” and warned that the chancellor has “limited options” in his spending plans.

In the Budget, Alistair Darling is expected to predict economic contraction of about 3% of GDP this year – up from his earlier forecast in November of between 0.75% to 1.25%.

- BBC News

Greed is Good(win) redux

Directors of the Royal Bank of Scotland are to be rebuked by shareholders over their pay and pensions at the bank’s annual general meeting in Edinburgh.

A government agency, as majority shareholder, will register the public’s anger at the pension awarded to former chief executive Sir Fred Goodwin. Sir Fred resigned in October after the bank needed a government rescue but was still given a £703,000-a-year pension.

However the bank does not have to accept shareholders’ demands.

In February RBS reported it made a loss of £24.1bn in 2008 – the largest annual loss in UK corporate history. Following a huge input of taxpayer’s money to rescue the bank, the government now owns a 68% stake in the lender.

RBS has become the focus for public anger at the scale and expense of the finance sector’s excess after Sir Fred presided over the bank’s collapse and his settlement came to light. It is against this backdrop that the new team at the top will face shareholders later.

- BBC News

G20: Blondes have had too much fun

The leaders of France and Germany delivered a stunning ultimatum to Gordon Brown tonight when they demanded binding reform of world financial markets as the price of their support at tomorrow’s G20 summit.

Nicolas Sarkozy and Angela Merkel made the comments at a joint press conference at which they promised that they would “speak with one voice” at the meeting in London’s Docklands.

Having already scuppered Gordon Brown’s plans for the summit to agree on a massive and coordinated fiscal stimulus, the two European heavyweights are demanding that it now move to do away with the “light-touch” Anglo-Saxon model of regulation blamed for the current economic crisis…

The Franco-German intervention came after a day marked both by Barack Obama’s international summit debut and by violent protests in the City of London.

Police made at least 24 arrests as anti-capitalist protesters tried to upstage the G20. They included 11 demonstrators trying to drive an armoured personnel carrier towards the Bank of England.

- Times Online

Can it still accurately be called an “Anglo-Saxon” model of regulation, when the two principal proponents are a Scottish Celt and an African-American?

A game of hot (and toxic) potato

The US has announced details of a plan to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks’ balance sheets.

The “Public-Private Investment Programme” will purchase the troubled mortgages and securities that have been at the root of the credit crunch.

The Treasury has committed $75bn to $100bn to the programme and said the private sector would also contribute…

To encourage private investors to take part in the scheme, low-interest loans and guarantees will be offered to private investors via the Federal Reserve and the Federal Deposit Insurance Corp – a government agency that backs bank deposits.

This means that the private investors, which the US hopes will include private equity, individual investors, pension plans and insurance companies, will shoulder relatively little risk, with 93% borne by the government.

- BBC News

Scumbag millionaires

Amid a furor over corporate spending, JPMorgan Chase is considering spending $138 million to buy new corporate jets and a hangar to house them, ABC News reported Monday.

The firm has received $25 billion in money from the Troubled Asset Relief Program, money it has said it doesn’t need. A spokesman for JPMorgan told DealBook: “We will not purchase any replacement plane or make any related expenditure until after we have repaid TARP funds in full.”

The banking giant, one of the few firms to hold steady so far in the financial turmoil, plans to spend nearly $120 million for two Gulfstream 650 planes and an $18 million renovation for a hangar at Westchester Airport outside New York City, according to ABC News.

- New York Times

Money for nothing, and this dick’s scot free…

Harriet Harman has said former Royal Bank of Scotland (RBS) chief Sir Fred Goodwin should not “count on” keeping his full £650,000 a year pension.

The deputy Labour leader described the pension settlement – agreed by the RBS board – as “money for nothing”.

The sum was unacceptable in “the court of public opinion,” she told the BBC, and the government “would step in”…

Ms Harman said Sir Fred, 50, should agree to waive some of the cash, saying this was the most “honourable” thing to do.
“Sir Fred Goodwin should not count on being £650,000 a year better off because it is not going to happen,” she told BBC One’s Andrew Marr show.

Ministers have said they would be prepared to take legal action and other unspecified measures to recover some of the money, saying the pay-out is inconsistent with the disastrous state that Sir Fred left the bank in.

Before accepting the Andrew Marr interview and citing the “court of public opinion”, perhaps Harriet Harman should be reminded that the reason Fred Goodwin is able to take the money and run with no observable legal recourse (nobody is eager to empower the government to arbitrarily seize their pension) is Ministerial incompetence. Public wrath isn’t reserved exclusively for the banker and wont be ameliorate by a long court case should Goodwin exercise his right to defend a legal challenge.

The only real question is whether public appetite is genuinely hostile enough to free the government to bankrupt RBS and nationalise the bank entirely. This seems the only option to stop the pension arrangement.

Greed is Good(win)

Ex-banker Sir Fred Goodwin’s refusal to hand back his £16m pension has been condemned by the Treasury as “unfortunate and unacceptable”.

Sir Fred says ministers knew about the £693,000 a year deal for months and that it was approved by Lord Myners.

Lord Myners denies this and has said such a “huge reward” cannot be justified given the bank’s losses. RBS announced a record corporate loss of £24.1bn on Thursday and received a second taxpayer bail-out of £13bn.

Former chief executive Sir Fred’s pension pot doubled to £16m last October when the 50-year-old agreed to take early retirement…

Chancellor Alistair Darling said he discovered a week ago that the package was “discretionary” and could have been blocked. He said the government was now investigating ways of “clawing back” some of the money, amid mounting cross-party anger about rewards for failure.

But its appeal to Sir Fred to hand it back voluntarily was angrily rejected by the former banker, who claimed it had been approved by Treasury Minister Lord Myners.

Sir Fred said he had already given up a significant part of his salary as a “gesture” when he was negotiating his departure from the bank.

Robert Peston examines the culpability of RBS board members and publishes the correspondence between Goodwin and Myners on the BBC News website. Not surprisingly, Fred “the shred” isn’t very fond of Mr Peston at the moment.

The “Doh!” is in the oven

In these times of financial uncertainty people don’t have money to burn.

However, one Norfolk barman is now feeling the heat after he saw £1,000 in takings go up in smoke.

Luke Woolston feared his job at the Jolly Farmers at Ormesby St Margaret, near Yarmouth, may have been shot down in flames after he put a night’s profits in the pub’s oven to keep safe.

But, unfortunately, the 19-year-old did not realise the oven was turned on at a low heat and within an hour the crisp £10 and £20 notes had been burned or destroyed.

To make matters worse for Luke he had also placed part of the pub till in the oven and it soon melted around the money.

Following Thursday night’s blunder, Luke thought that landlord Martin Talbot would give him the boot for damaging and destroying the £1,000, after he came home and found the cash burning slowly in the oven.

Luckily, Mr Talbot showed his generous side by allowing his embarrassed employee to keep his post – although the barman is now being gently chided by the pub’s regulars for his mistake.

And to help Luke save face, the pub is taking down all the notes’ serial numbers so that, hopefully, the Bank of England can reissue them.

- EDP24. The BBC has film.