Wednesday, 28 June 2017

Mixed Messages

Household debt may be soaring but Britons are finding it easier to pay the bills. In the second half of last year, 63 percent said they are keeping up with their credit commitments without any difficulties compared with 59 percent in the previous two years, according to the latest Wealth and Assets Survey from the Office for National Statistics.

The figures may do little to ease concerns at the Bank of England though, which said yesterday that it plans to increase capital requirements for U.K. lenders to tackle the risks posed by consumer-credit growth.

Tuesday, 13 June 2017

Twitter and the President

President Donald Trump cannot be stopped from tweeting and otherwise talking about the Russia investigation. But by continuing to expostulate, he risks not only incriminating himself but irritating the prosecutor overseeing the probe.

Some observers speculated that the arrival of Trump’s personal lawyer, Marc Kasowitz, would spell the end of the president’s off-the-cuff comments. Not so. Whatever Kasowitz has told his long time client, the president is still running his mouth.

On Sunday morning, the president tweeted: “I believe the James Comey leaks will be far more prevalent than anyone ever thought possible. Totally illegal? Very ‘cowardly!’”

Two days earlier, during a testy Rose Garden press conference, he accused Comey of perjury during his testimony last Thursday before the Senate Intelligence Committee. In addition, Trump declared that the hearing failed to establish that he’d colluded with the Russians to manipulate the 2016 election or tried to stop the federal probe of whether Trump aides helped the Russians with their hacking. “No collusion. No obstruction. He is a leaker,” Trump said, the last part referring again to Comey, whom Trump fired as FBI director in May. Asked if he would testify under oath, Trump answered, “100 percent.”

So, why does this matter?

First, there’s the attorney’s rule of thumb that a client anywhere in the vicinity of a criminal investigation ought to keep his trap shut. “It is 100 percent clear that the rule in the normal criminal case is not a word from the client,” says Harry Litman, a former federal prosecutor who teaches at UCLA Law School and practices with the firm Constantine Cannon.

Trying to stop the President Donald Trump from tweeting will be the bigger challenge.

Tuesday, 11 April 2017

Paul Tucker is guilty

It has finally been broadcast by Panorama that the Libor fixing of 2008 was directed by Paul Tucker, the deputy governor of the Bank of England.

We knew this at the time but everyone being questioned whether by the press, media or parliament just lied as there was no actual evidence. That evidence is now available and Paul Tucker has to answer the question, why did you ruin so many people's lives back in 2008?

In July 2012 Paul Tucker sat in front of a parliamentary committee and said he did not lean on Bob Diamond the CEO of Barclays about setting Libor rates, he was right, he instructed Bob Diamond which is a totally different stance and one that makes Paul Tucker responsible.

Also in 2012 Sir Mervyn King, the Governor of the Bank of the Bank of England said: "Just as in 2008, there is a deep reluctance to admit the extent of the undercapitalisation of the banking system in many parts of the industrialised world." He added: "I am not sure that advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values and recapitalisation of their financial systems. Only then will it be possible to return to a more normal provision of the vital banking services so crucial to an economic recovery."

There is no evidence to suggest that Sir Mervyn King was responsible or that he colluded with or even directed the actions of Paul Tucker at that time.

If the SFO [Serious Fraud Office] really want to nail the man at the top, they need go no further than Paul Tucker.

Sunday, 19 March 2017

Cheque books

I have just received an email from my bank telling me that my cheque book will be taken away from me in May 2017. This is not because I have been bad but because cheques have out lived their usefulness.

Cheques have been in use for more than 350 years, but they now appear to be on their way out as the internet and other forms of electronic payment bring us closer towards a cashless society. But what does this mean for people who rely on cheques?

The tide began to turn in 2007, when cheque usage fell to its lowest level in the UK. It was calculated that personal cheques accounted for only 6 percent of all personal transactions that did not involve cash.

The move away from cheques and cash has not been as rapid as the industry originally expected. In the mid-noughties estimates were that non-cash electronic payments would overtake cash payments by 2011. Now, this has been pushed back to 2015.

Mobile phone payment systems are being heavily touted as the ‘next big thing’ for non-cash payments, whereby if, for example, you want to pay for a service such as an electrician you can do so by exchanging text messages via telephone numbers that act as bank account details.

Charities such as Age Concern have also protested against the phasing out of cheques, rightly pointing out that many more mature people are not comfortable with using these new technologies. They have argued that paper-based forms of payment such as cheques should not be phased out until suitable alternatives for people of all ages are agreed upon. The Government appears to agree, and recently announced a formal inquiry into the proposed abolition of cheques and publicly stated that cheques will only be phased out if adequate alternatives are in place. They also accepted that cheques are still widely in use for sole traders, skilled tradesmen, small businesses, charities and schools, however cheques are on their death knell.

Tuesday, 3 January 2017

Brexit 2016

A great deal of research has already been conducted on why the UK voted to leave the EU and which groups of voters were most likely to back leave and remain.

A large proportion of votes to leave the EU might be understood to be a visceral reaction from those who have felt increasingly powerless as a result of globalisation, widening economic inequalities and a failure of successive UK government administrations to redistribute income and wealth more equitably for more than thirty, almost forty years. This is a reaction that it is easier to have if you are older enough to remember more equitable times, when it was possible to find a home and start a family in your twenties or early thirties and when full employment was a reality.

There are some indications of a class divide in turnout. It has become commonplace in some mainstream circles to increasingly disregard the prevalence of class in Britain today. The EU referendum, challenges this. It would be more appropriate to suggest that there is a class ceiling firmly in place. There is a highly disproportionate middle class representation among those polled, across all ages. In contrast, the working class voice is diminished.

This raises questions about two key assumptions. First, it has been assumed that a despondent working-class vote drove Britain from EU membership. Secondly, it has also been taken for granted that the young were overwhelmingly Europhile. It could be suggested that the poorest in British society simply did not turn out to vote, whilst the loudest voices in favour of EU membership amongst the young were those more affluent.

Rising inequality in voter turnout by age is not a phenomenon taking place in isolation. it is being actively facilitated by political parties who do not see the cost-benefits of formulating policies to be aimed at the young. This is the politics of short-termism, and as time as shown, short-termism only leads to disaster. Ultimately this has resulted in the collapse of voter turnout of the most important generation, the supposed ‘future’. With a percentage turnout of 54% in the 2005 general election, this is more reminiscent of the Nineteenth Century electoral system, when suffrage had not even been extended to the vast majority of adults. We appear, sadly, to be heading back to this century, not just economically but politically and democratically. It is those who are members of an elite class who are highly active and politically organised and situated in the South East, after all, they have the most to preserve from globalisation.

The Brexit vote, therefore, did not take place in a vacuum. It was open to these socio-political and economic trends, which ultimately resulted in path dependency amongst the voting age groups. It seems logical, therefore, to suggest that decades of inequality and electoral mistrust has culminated in such a cataclysmic event.

Economic inequality, which has continued to widen in the UK for the last thirty, almost forty years, is a possible driver of differentiation. Those who are better educated might perceive the EU to be beneficial to them, both in terms of opportunities in other EU nation-states as well as in relation to the availability of research funding and access to the single market which makes more well-paid jobs in the service industry available to them.

There could be a double-movement of inequality based on age. The old, remembering more prosperous and equal times during the Post-War boom, collectively express such discontent through a vote to leave. Meanwhile the young, being equally discontent with levels of inequality which buck the trend of generational improvement, express such sentiments with a lower propensity to vote, but when they voted they were much more likely to vote Remain as they did not hold the EU at fault for where they find themselves today.

Antipathy towards immigration could be explained for two reasons. First, on the basis that it is perceived to be a threat to national identity. Second, on the basis that it is perceived to be placing pressure on wages, housing and public services, as well as depleting the bargaining power of trade unions as surplus workers are available. Greater economic equality and a higher basic standard of living might have prevented a vote to leave the EU, and even if it could not, it should now become a priority. Greater inequality tends to be associated with more immigration because there are many more ‘jobs at the bottom’ in a more unequal country.


Whilst many factors will have contributed to the Brexit vote, there is some sense in the phrase follow the money. Although there is generally a stark age divide amongst voters concerning the European Union, the same can potentially be said for divides along the lines of the spread and centralisation of wealth. The EU referendum has brought deep divisions in Britain to the surface, it appears economic inequality and its accompanying despondent effects on democracy were some of those. Perhaps if the trajectory beginning in the late 1970s of a society based around capital had been reversed with wealth redistribution and investment led growth instead of austerity, the current course of history may have been different.

Thursday, 29 December 2016


Today investors fret over elections, referendums, a slowdown in China, euro zone debt… the list is endless. Meanwhile journalists are always full of doom and gloom – it sells more papers.

During the week Sir Mervyn King [Fellow of the British Academy] former Governor of the Bank of England spelled out why we should be more confident in Brexit. We could do with a few more stalwarts to promote the same message after the remainers message of doom & gloom never materialised.

2016 has been the year of the improbable. According to Ladbrokes, a £1 bet on Leicester winning the Premier League, the UK voting to leave the EU and Donald Trump becoming US president could have returned over £4.5m.

This year feels like a crescendo of events that started with the 2008 financial crisis. Since it bottomed in 2009 the market has climbed what is often termed a ‘wall of worry’. Commentators have continually expected markets to fall, but instead they have climbed higher and higher. However, fear of falling markets has caused many investors to miss out on this bull market. Of course the smart money has been there.

With most investors in pessimistic mode, there is plenty of cash on the sidelines waiting for an opportunity to enter the market. This means that should markets fall by, say, five or ten percent, the dip could be heavily bought. We saw this with the Brexit referendum, where the market’s fall was quickly reversed.

Low interest rates add to the favourable backdrop for equities. In this environment it’s easy to see the attraction of equity income funds, many of which yield from 3 to 5% at present – albeit that unlike the security of cash, your capital will fluctuate, so you could get back less than you invest.

2017 should be a better year especially if the government coughs up a few bob for social services.

Monday, 12 December 2016

Health and Social Care

There is a lot of talk about NHS funding and services and there is a lot of talk about social care funding or lack of funding and services but rarely do I see the two linked and yet I consider Health and Social Care to have a symbiance with one another.

At the moment, health and social care – the help given mainly to old or disabled patients to help them continue to live at home rather than in hospital or nursing homes – are different systems in England. NHS medical treatment and domiciliary support, which is provided mainly by local councils, are usually not joined-up.

Adult social care has enjoyed an average annual real-terms growth of 5.1 per cent since 1994 but much of this has been absorbed by demographic pressures. Over the past five years spending on services for people with learning disabilities has risen by 20 per cent and for those with physical disabilities by nearly 14 per cent. But spending for older people has increased by less than 3 per cent and has not kept pace with demographic change, according to the Kings Fund.

Mounting demands on care budgets has led the government to identify additional resources in the Spending Review and to commission an independent review to recommend a more sustainable way of funding care for the future. But a tough spending settlement for local government suggests that a funding gap of at least £1.2 billion could open up by 2017 unless all councils can achieve unprecedented efficiency savings. What's more the last autumn statement made it very clear that there was no extra spending for social care in England.

The consequences are that even fewer people will receive the care and support they need. This will have knock-on effects for people needing NHS care as there will be more emergency admissions to hospital, delayed discharges and longer waits for treatment. Currently there is a battle between the hospitals [A&E] and social care. Someone is taking into hospital and treated medically, they are improved and the hospital wants their bed back, but unless the person can leave under their own steam or are moved by social services, bed-blocking can ensue and this is causing friction.

Social care is not simply an adjunct to the smooth running of the NHS. It is possible that under-investment in vital health services, such as continence and community nursing, may generate additional demand for social care support. A better understanding of the reciprocal relationship between spending in health and social care is essential to ensure that they operate as a whole system of care. NHS Health and Social Care have a symbiance with one another and until this is accepted little progress can be made.