Morning:
9°c
The Prime Minister has paid a visit to Canary Wharf, where he talked about wanting London to remain “one of the world's leading financial centres”.
It was, nonetheless, a reminder of the new balance of power between the Government and the City now that the Prime Minister has overseen the bailout of Britain's banks. The Treasury has injected £37 billion into HBOS, Lloyds TSB and Royal Bank of Scotland. Barclays may avoid the humiliation of a state bailout by raising £6.5 billion from private investors; even so, the Government will be underwriting the share issue. As for the Royal Bank of Scotland, its life-saving injection of £20 billion comfortably exceeds its valuation. In return, the majority of its shares will be state-owned; the same is true for HBOS. The market has so far responded well.
This is nationalisation. Indeed, if the Government has representatives on the boards of these banks who will determine their pay, dividends and loans policy, it is hard to see any other way of looking at it. But such influence is the price of state involvement. Meanwhile, the FSA is cracking down on bonuses.
The Prime Minister is claiming credit not just for rescuing Britain but for helping to rescue the Eurozone, too. The outlines of the deal which EU leaders agreed yesterday for recapitalising the banks and guaranteeing inter-bank loans are indeed based on the principles of Britain's bailout. In this paper, George Osborne, the shadow chancellor, casts a withering eye on Mr Brown's bid to be seen as a global troubleshooter. Indeed, the rise in Mr Brown's market value may be short-lived when electors remind themselves that the problems that brought us to this pass took place under his aegis and include his “light-touch” regulatory regime.
But if blame is being apportioned, it must be attributed squarely where it belongs, with the chief executives of the institutions which strayed disastrously outside their remit and competence. The directors of the companies who signed off their accounts, who never asked the right questions, must also be named and shamed. It seems extraordinary that the only big casualty to date has been the boss of RBS, Sir Fred Goodwin, and that it is possible that he could walk away from the debacle with his contractual pay-off. British investors may not engage in US-style litigation against culpable individuals but it is time for the blame game to begin.
Terror tussle
Today the Government faces defeat in the Lords on its controversial Counter-Terrorism Bill, which would extend the time that police can hold terror suspects without charge from 28 to 42 days.
Despite reports that the Government will drop the legislation if it falls, ministers insist that it will return to the Commons if defeated: the implication is that the Government will use the Parliament Act to ram the new law through.
Such bravado looks foolish. Terrorist investigations have indeed become more complex but ministers have not made a proper case for this time limit, or for why it is needed now. Many senior figures including the Director of Public Prosecutions, Sir Ken Macdonald, and the former Attorney General, Lord Goldsmith, are opposed to the change. If the Government loses today's vote, it should forget this contentious bill and accept defeat with good grace.
Grammar scrum
THE SPECTACLE of police being called to Wallington County Grammar School, in Sutton, as would-be pupils swamped the entrance exam, is a terrible indictment of London's secondary schools. Despite the large sums committed to city academies, deep-rooted problems remain. Greater disciplinary powers for heads and more setting and streaming would help raise standards. Yet Schools Secretary Ed Balls has often seemed keener on ritual denunciations of selective schools. The verdict is clear: until ministers can deliver real improvement in our secondaries, parents will ignore such rhetoric.
Reader views (1)
The currency, if that's the right term, of Royal Commissions or public inquiries into matters of public import has fallen into its own trough of curiosity rather than value in recent times. Akin to the three-penny piece.
However, surely the recent events charcterised by some as "economic war" deserve careful analysis and a set of reasoned recommendations to enable us to move forward.
Despite the column inches and the special programmes and, even, the benefits of the internet there is a yawning gap: a consensual, convincing assessment of how we got here and how we prevent a similar systems collapse in the future. There have been a lot of actors playing on this pitch recently and the rules of the game are still being devised.
It's worth remembering that no commentator has said they got it wrong and the political discolouration of a debate on the efficacy of regulation is not improving the confidence level of the public. Given that the tax payer (and some very ordinary members of the public) are going to FEEL the pain of tighter spending power, poorer public services and less choice in the market place it would seem only reasonable that an authentic, neutral narrative of how we got here is made available by the Establishment.
An open, evidence-based, debate as to what the system should look like post-2008 would be a welcome contrast to the elitist formulations of the top table that preceded this mess.
There is, after all, more at stake than the next election.
- P G Mahon, London, UK, 13/10/2008 20:55
Report abuse
