Great news…

Britain’s accounting watchdog has launched a formal investigation into KPMG’s work as the auditor of the Co-op Bank ahead of the emergence of a £1.5bn capital shortfall at the lending arm of the country’s largest mutual society.

The Financial Reporting Council (FRC) said it would look at the way the Co-op Bank’s accounts were prepared, audited and approved in the years leading up to the discovery of a the capital black hole that threatened to put the lender out of business.

 And it’s not just the FRC…

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are undertaking their own investigations that could lead to formal action being taken against current and former senior managers and directors of the Co-op Bank.

Were there dodgy deals between beancounters and clients? We don’t know but at least with the FRC and FCA on the case if there was a lack of due diligence we should find out because an FRC/FCA investigation will be relentless….

What’s that? The boss at the FRC is Sir Win Bischoff, a former big cheese at Citigroup?

The City veteran is a contentious choice because he presided over astronomical ‘golden goodbyes’ to failed bankers during his two years on the Citi board. 

This included an eyewatering £40million payment for failure to former Citi chief Chuck Prince when he was forced out in 2007, despite steering the bank headlong into the toxic debt mire. 

Bischoff succeeded Prince on a temporary basis, then moved into the chairman’s job just months before Citi was bailed out by US taxpayers. 

 Surely this is not a case of the higher the title the weaker the talent pool?

Most people were underwhelmed when Sir Win Bischoff, former Citi chairman, was appointed as chairman of the Lloyds Banking Group to replace Sir Victor Blank. Bischoff never seemed to get to grips with Citi’s problems and gave the impression of hobbling along behind the bus rather than sitting upright at the steering wheel

After Citigroup Bischoff became chairman at Lloyds and was involved with the controversial sale of 600 Co-op Bank branches known as Project Verde.

Hmmmm

Still John Grifiths  Jones  at the FCA should be a safe pair of hands….shouldn’t he?

Questions have been raised about Mr Griffith-Jones because until last year he was chairman of KPMG, which is the Co-op Bank’s auditor. Last week, the Co-op Group launched an investigation into the bank’s £1.5bn capital shortfall including a review of “the role of the independent auditors”.

Tony Shearer, former chief executive of Singer & Friedlander, said Mr Griffith-Jones was “conflicted” as chairman of the banking regulator due to KPMG’s involvement with banks. The firm was also auditor of HBOS, Bradford & Bingley, and Kaupthing, all of which failed. Similar questions were raised in April about KPMG’s HBOS audit, by Mr Shearer and others.

 Are these really the men who should be investigating the KPMG/Co-op Bank affair?

In all the current “hang the bankers” frenzy (see BBC Question Time every week) coming out of left wing throats most of those voices seem to conveniently forget that Gordon Brown, from the moment he became Chancellor not only schmoozed with bankers but gave them the green light to encourage banks and building societies to lend money like a drunkard who has just won the lottery. We also know that Ed Balls, now shadow chancellor, was Brown’s creature from the very start. So yesterday’s statement from the Reverend Paul Flowers, Methodist minister, former Bradford Lalour Councillor and the ex Chairman of the collapsed Co-operative Bank that Ed Balls encouraged the bank to expand certainly rings true.

The Rev Paul Flowers, who was resigned as chairman of the Co-op Bank in June, said he had “absolutely no doubt” the lender had political and regulatory support for its 2009 takeover of the Britannia Building Society that has largely been blamed for putting a £1.5bn hole in the lender’s balance sheet. Rev Flowers said shadow chancellor Ed Balls had given his full support for the Britannia deal as a minister in the then Labour government

We also learned that that Rev Flowers authorised a payment of £10,000 to Ed Balls

Rev Flowers confirmed he had been involved in authorising the payment of £100,000 to Mr Balls and his Parliamentary office, though he said the money had come from the Co-op Group and not the Co-op Bank as the lender was “politically neutral”. “We believe in supporting our political friend,” he said, describing the donations to politicians as “small amounts of money”.

The hapless Reverend also had a confession to make

 Rev Flowers admitted during his evidence his only qualification for chairing the Co-op Bank was four years spent working in a bank after he left school and said his experience could be considered “out of date”.

Four years of working in the real world – doesn’t sound much does it? But it’s four years more than self proclaimed economic mastermind Ed Balls. Though one has to admit that Ed certainly displayed a mastery of financial legerdemain in the way he operated his parliamentary expenses…  

The row over energy prices and the green levy (6% for gas, 11% for electricity) has brought out the real David Cameron – the snake oil salesman who will say anything to sell his product (which is, of course, his and Sam’s continued tenure in No. 10.)

So what is the con this time?

telling voters that he’ll cut their bills by cutting “green charges” on energy. “We need to roll back some of the green regulations and charges,” he said.

Sounds good, doesn’t it – defying his masters in Brussels and giving the finger to his green loving coalition mates in the Lib Dem party…..and maybe scooping up a few UKIP voters at the same time.

Trouble is we all know the EU and Clegg & Co. wouldn’t let him do it. They, like Miliband are wedded and glued to high energy costs to combat the mythical monster of man made global warming. (Remember it was Labour who decommissioned coal fired power stations and introduced the green levies)

So Cameron slips into PR mode. He won’t “roll back” the green levies – he’ll pay for them out of general taxation. So essentially there won’t be any reduction of the green levy – but it will be paid for by taxpayers (i.e. “hard working families”) rather than energy users.

It’s a tax increase – but in the current moral panic nobody will notice…until the next moral panic.

Job done, PR style

Millionaire Nick Clegg is going to use taxpayers money to pay for free school meals for all under sevens in state schools, all 1.5 million of them. Of course nearly 500,000 of them already get free meals as a benefit for low income families so this means that higher income parents will be getting a share of the gravy as well.

I bet those middle class mums at mumsnet will be delighted – an extra £400 to spend per child, all courtesy of £600m from  the hard pressed taxpayer

Naturally the teachers unions are delighted

The National Union of Teachers said pupils of all ages should qualify, adding: ‘Children do not stop being hungry at seven.’

Here’s an idea. Finance this boondoggle from money set aside for teachers salary increases. I’m sure they would be delighted to take one for the kids……

Equalities Minister Maria Miller continued the Tory Party’s war on mothers with yet another attack on stay-at-home mums, hitting them with a double edged guilt trip

A shortage of successful women is holding Britain’s economy back, Cabinet Minister Maria Miller will warn today.

The equalities minister will warn that it is unacceptable that highly-skilled and talent women continue to languish behind men in the workplace.

More help will be offered to school girls to get ahead in business while employers will be urged to hire women over 50.

The call comes as a government-backed report says stay-at-home mothers should go back into the workforce to boost economic growth.

So,  selfish and bone idle mothers, you are not only being traitors to your country by sabotaging the economy – but you’re also betraying the sisterhood.

Ms Miller could even see into the future…..thanks to those marvellous “experts”

Getting those women back to work would boost economic growth by 0.5 per cent a year or 10 per cent by 2030 – vital if Britain is to emerge from the financial crisis, experts said.

Funny how those experts can be so specific about how women are needed to get us out of the financial crisis when they were unable to predict the crisis in the first place….

In truth the figures are meaningless, conjured up out of thin air like the cost/benefit analysis of HS2. Moreover, in a period when unemployment is still relatively high from where are these jobs expected to come?

It seems strange that at the very moment when the concept of the family is under attack – high divorce rates, more and more children being born out of wedlock,  the heterosexual nature of marriage being undermined – Tory politicians like Miller should be devaluing the nature of motherhood. Perhaps that’s one reason why the party is losing it’s core support.

The tragedy is that Maria Miller, unlike most of her Cabinet colleagues attended a comprehensive school  and  has considerable business experience. She should have been a bonus to the government – instead she is a damp squib.

This report is just busywork to give the impression of “something being done” – so just file it under PP….Permanent Pending because nothing will ever come of it…..apart from the fact it will make a few more stay-at-home mums (or dads) feel even more worthless…

Good analysis of Osborne’s 2013 Budget by Benedict Brogan and Jeremy Warner of the Telegraph. No histrionics, none of the “look at me, I’m the real star of the show” BBC Newsnight gotcha dramatics from the guy chairing the discussion.

Political TV for grown ups…..

Oh how we are laughing at those crazy Cypriots….debt and bank assets as a percentage of GDP equals a humungous 700%. No wonder they are caught between Merkel and Putin…

If you have a banking sector that size you’re asking for trouble – for how can a state guarantee for depositors be credible? If the banks go under the state wouldn’t be able to rescue the savers

How much better off we are in the UK with our own rock solid banking structure – we are just a mere 450% …..

WTF? 450%?

Worse than those basket cases in Spain and Italy?

No problem….you can always trust a British banker….lol

£30b, 20 years to completion – see what happens when politicians get seduced into vanity projects like HS2. Plenty of photo-ops of ministers poring over maps, futuristic graphics, promises of reviving the north….don’t they just love it.

Of course we can predict the reality – costs will double/treble, incompetent management will cause delays, unions will blackmail progress and, by 2032 technology might well have made the whole caboodle outdated.

But just, for a moment, imagine what we could do to improve our shambolic infrastructure with £30b over five years – improve thousands of choke point road junctions with right turn lanes, mini roundabouts, traffic lights. Upgrade existing track and signalling on our existing railway network. Above all convert the A11 into a motorway into the heart of East Anglia. Ensure that the pathetic A303, supposedly the main route between London and South West England, becomes a dual carriageway along its entire length with no roundabouts or junctions. Do the same with the A30 and A38 into the heart of Cornwall and, while you’re at it create a south coast expressway using the A27 and A35.

Our road network has remained frozen for the last thirty years – nothing much has changed (apart from the completion of the M25) since 1980 – which was the year I first began driving regularly in France. In those days the Autoroute network was fairly limited and centred almost exclusively on Paris – and few towns had a bypass. Since then the French have embarked on a steady programme of motorway development and traffic circulation projects that has transformed the whole transport system – as well as a state of the art intercity rail network.

Meanwhile Britain has been asleep at the wheel – often literally.

Still at least we can maybe invest now in a ticket to Leeds by HS2 and bequeath it to our heirs yet unborn to enjoy at some vague time in the future.

That sound? Don’t worry – its Brunel turning in his grave….

Sombre words of warning from the former Auditor General of Scotland, Bob Black and, more surprisingly, from the leader of the Scottish Labour Party, Johann Lamont. Although addressed to Alex Salmond and his SNP government in Scotland the message they convey should resonate not only across the border with England but even further afield in Europe and the USA.

Black called for a debate ‘as a society’ on spending plans for universal services, which in Scotland include free prescriptions and a council tax freeze. ‘We do have to revisit it. Every pound that goes on free services, such as bus passes for well-off older people, is not there to do other things,’ he said.

Lamont followed the same path

‘someone always pays in the end’ for universal services. She added: ‘I believe our resources must go to those in greatest need.

‘If we wish to continue some policies as they are then they come with a cost which has to be paid for either through increased taxation, direct charges or cuts elsewhere. If we do not confront these hard decisions soon, then the choice will be taken from us when we will be left with little options.’

In other words this is a debate that must be held at an adult level.

‘We need to get to a place where we can talk about these things quite frankly and openly, tolerate differences of opinion being expressed, and then allow the politicians to absorb that information, take it forward and develop the policies.

This would be a bitter pill for Salmond and the SNP tp swallow because their chip on the shoulder nationalist rhetoric has never been rooted in economic reality. Instead they have encouraged Scots to fall for the oldest confidence trick in the book – the free lunch.

Not that the Cameron/Clegg coalition in England is much better. For all the talk of “cuts” the fact is that government expenditure in the UK is increasing and will continue to increase over the next few years – but the increase will be a tad less than it would have been if Labour had been re-elected in 2010.

Moreover, although budgets have been reduced across several areas, Cameron has ring fenced spending in the NHS – the biggest “universal free service” of all – as well as pleasing the Guardianistas by protecting the overseas aid budget. In addition, of course, he and his government have dared not grasp the nettle of free bus passes and heating allowances for all old age pensioners, including those who holiday with Saga and overcrowd weekday golf courses.

But it’s not just politicians who have to face up to reality – it is also we the people. As Black has said there must be a “frank and open debate” with no histrionics, no bloody shrouds being waved by producer interest groups like doctors, teachers and local government workers, no sob stories commissioned by the BBC.

The tragedy is that none of the major UK political parties dares to ask the public to face the facts. Like the BBC over Jimmy Savile, our political elite prefers to pretend the problem doesn’t exist and, if they go ostrich, it will go away.

What an opportunity for UKIP to campaign on cold hard facts…..

Sorry but we can no longer afford to pay out so much money for benefits, “free” healthcare, protected public sector pensions, overseas aid, free bus passes for pensioners, arts subsidies etc etc. We believe it is immoral to pass on massive debts to our children and grandchildren. So this is what we promise. If you elect us we will reduce taxation but, in return, you must expect to pay a contribution for public services that were once “free”

I think such a manifesto might not be a political suicide note. Maybe, at last, we, the electorate, want to be treated, for the first time in decades , as adults….