Archive for February, 2011

Is anybody surprised the Foreign Office has made a mess of the Libya evacuation?

Posted in Politics with tags , , on February 25, 2011 by Tom Leatherbarrow

General George S Patton, one of the great military leaders of WW2 and a man who knew North Africa like the back of his hand had a tremendous quote about plans, namely that “a good plan, violently executed now, is better than a perfect plan next week.”

If only the British Foreign Office had his foresight.  It is becoming increasingly clear that the window of opportunity for getting stranded Britons out Libya was probably a week ago.  Since then, the situation has deteriorated rapidly but many Britons remain stranded.  Some have yet to hear from any officials from this country.

Take this from the Guardian’s live blog today.  “10.14am: Helen Assaf, a freelance writer from Beirut has been in touch to say her friend Paul Butcher and 20 other Britons are stuck at the Nafoora oil field about 350km south-east of Benghazi.  “Basically they’ve heard nothing from the British embassy [says Helen], their food is running out, and since they have no TV, they don’t really know what’s going on outside so I have been sending a few updates/summaries from the Guardian’s live blog which is the only way any them are getting any news.”

So let’s get this straight.  A freelance journalist in Beirut is in touch with stranded Britons by mobile phone and is giving them updates from a British national newspaper, but the British Foreign Office hasn’t managed to get in touch yet? 

None of this is surprising to those who have long memories of Foreign Office performance in crisis situations.  I particularly remember reports from journalists inside the Superdome in New Orleans after Hurricane Katrina, detailing the plight of stranded Britons.  The Foreign Office, apparently, was unable to gain entry. 

By all accounts, the Prime Minister has now taken personal charge of the situation.  We are, apparently, considering intervention by Special Forces with French air cover.  I’ll be charitable, let’s assume that after Tunisia and Eqypt we had plans in place for the evacuation of Libya, because it didn’t take a genius to work out that there was probably a domino effect at work here.  That plan should have been implemented at the first sign of trouble, which is what Patton taught us.

The real point about Barclays’ tax bill

Posted in Banking, business with tags , , , on February 22, 2011 by Tom Leatherbarrow

Barclays have paid £113 million in Corporation Tax which equates to approximately 0.97 per cent of the company’s pre-tax profits of £11.3 billion

£113 million still sounds like a lot of money until you realise that the UK’s Corporation Tax rates currently stand at 28 per cent. What, I hear you ask, happened to all the money?

Apparently, Barclays wrote it off against losses in American subprime mortgage trading. Barclays excuse is that under UK Corporate Tax law losses made in any business division can be written off against Corporation Tax. So, in other words, Barclays played in the casino of mezzanine credit default swaps, lost and now the Exchequer is out a lot of money. (Those interested in casino banking and how our banks got involved in all of this this should read The Big Short by Michael Lewis).

Whilst this is a clear violation of the principle of risk and reward, the foundation upon which investment decisions are made, the real point is that all of this is legal. Successive Governments consistently promise to close tax loopholes, but instead leave this gaping chasm open to abuse.

Why don’t they close this loophole? Because our politicians are scared stiff that major corporates like Barclays and HSBC, who have already threatened to leave the country, will up sticks and set up in a low tax economy like the one just off our shores. It’s called Ireland and it has a Corporation Tax rate of 12.5 per cent.

So the next time you hear an Opposition party say that they are going to close tax loopholes when they get into Government treat it with the scorn it deserves

AV ‘No’ lobby needs to find a coherent argument

Posted in Politics with tags , , , , on February 18, 2011 by Tom Leatherbarrow

Today the Prime Minister will set out his reasons for voting against the Alternative Vote System in a Referendum in May. The electorate must now brace itself for nearly three months of political arguing and posturing over how we will elect our politicians in future.

The problem for the ‘No’ campaign in the coming referendum on AV is that a ‘No’ vote for AV (which actually is understandable in that it is by no means a perfect system) is also a ‘Yes’ vote for the First Past The Post (FPTP) system we currently use. As both Martin Kettle in the Guardian and Steve Richards in The Independent have pointed out in recent days, the anti-politics sentiment of much of the electorate is tipping the scales towards change, any change.

However, it also strikes me from listening to the opening skirmishes in this battle that the ‘No’ campaign is struggling to get its arguments straight.

Firstly, they argue that AV is undemocratic, in that voters have to choose a second and third choice who could, ultimately, emerge as the overall winner. Well yes, that could happen, but FPTP is hardly democratic either in that it virtually guarantees a job for life for MPs in vast numbers of constituencies around the country. As a case in point, the Conservative Party could set off a nuclear warhead in Bromsgrove High Street and the town would still vote Tory, in large part due to the boundary changes brought in many years ago which added the terribly nice suburb of Barnt Green into the boundaries of the constituency.

Secondly, the ‘No’ voters argue that AV leads to hung Parliaments and back room deals. Well, isn’t that what happened after May 6th? Is the Prime Minister going to stand up today and say he can’t countenance such grubby, undemocratic bartering of the type which got him into power after the last election?

Finally, it’s costly. The ‘No’ campaign argue that AV will cost us £250 million (this is a much disputed figure) and tell us on their website that it is a straight choice, schools or AV? Only it isn’t because my recollection is that the Government, elected under FPTP has already cancelled the Buildings Schools for The Future programme.

I’ve no doubt there are good reasons for rejecting AV, but the ‘No’ campaign needs to find them fast, because at the moment you can drive a bus through the holes in their arguments.

So the banks want to be loved – it’ll take more than a few press releases!

Posted in Banking Reform, business, PR with tags , , , on February 14, 2011 by Tom Leatherbarrow

Fascinating story in this week’s PR Week, namely that the entire banking sector is going to employ a PR agency to rehabilitate its reputation.

Apparently, there is great concern that bankers are no longer viewed as supportive by SMEs. That’s probably because bankers aren’t supportive of SMEs.

As a case in point, I recently visited a small precision engineering company in the North East which has won a major aerospace contract for the new Airbus. In order to fulfill the order more efficiently, the company decided to spend approximately £70-80,000 on new capital equipment, namely machine tools.

The MD made a big presentation to his bank (who shall remain nameless) and then nothing more was heard. Phone calls were not returned, emails were not answered. Finally, two months later the answer came back. “No, we think you are going to go bust.”

There was of course no evidence of this, the bank manager concerned just assumed that every company in the manufacturing sector must be teetering on the brink. How massively supportive?

In the end the MD turned to his own savings, credit cards and Finance For Industry to help him invest in the equipment needed and fulfill the promises made to his customer.

My point is that it is going to take a lot more than a barrage of press releases to rehabilitate the banks amongst SMEs. What is required is for the banks to regain the trust of the business community and the public in general by making credit, namely the principle of buy now pay later upon which modern society is founded, actually available, in the form of loans for capital equipment and mortgages for you and me.

Much was promised by Project Merlin last week, but even a cursory read of the fine print demonstrates that the banks have inserted plenty of caveats, which the more cynical amongst us believe will be used to renege on the promise to deliver £190 billion this year in credit for business.

Time will tell.