Election Budget

Today I’m angry……really angry.

 

The Budget didn’t see a caring, compassionate and visionary Government do what was right for the long term good of our great land. Instead it parked the election campaign bus outside of Parliament and flirted to the point of indecency with those they are really bothered about……the voters.

 

I’m angry……really angry.

 

The nature of my job sees me exposed to the frustrated public that are sick of the claustrophobic limitations of pensions at retirement, angered by the confusing and restrictive nature of ISA’s and angered by the banks refusing to give credible interest rates to elderly savers.

 

Yet, in one 60 minute speech where “support for savers is at the centre of this budget” he attacked this by:

 

1.     Removing the need for annuities at retirement and permitted full access to a pension by way of a full lump sum.

 

2.     Simplifying ISA’s and raising their limits.

 

3.     Setting aside £10bn of new fixed rate bonds at higher interest rates for those over 65.

 

So this is all good then right? Well……the ‘fixes’ to these problems were due years ago and this has to be good news with those with money in savings / pensions.

 

But we’re missing a point if we do not revisit the quote above……

 

“Support for savers is at the centre of this budget”.

 

But there was no support for savers……just more options for those that have already saved. ‘Support for savers’ is offering tax breaks to encourage those with little or no savings to save for their long term future.

 

Now I don’t want to say I told you so but I posted ‘Know Your Voters’ in January:

 

http://stevesmithlive.blogspot.co.uk/2014/01/know-your-voters.html

 

Now consider that 75% of the population over the age of 55 will be active voters next year. And remind me which group of people this is……it’s those with Pensions, ISA’s and poor interest rate bank accounts. Isn’t that a coincidence!

 

The quote should have been “support for those that already have savings that are really frustrated by their current position”.

 

So in one 60 minute speech, George Osborne effectively made an election give away in return for votes to those that are most likely to vote. And if that wasn’t enough……the introduction of these new rules will be delayed until as close to the General Election as possible so that it is fresh in voter minds!

 

In addition, there were no incentives to encourage people to save as (pure and simply) this demographic has a low probability of voting!

 

This was the most blatant attempt at vote winning I have ever seen at a Budget. All I want from any Government / Budget is to represent us well, do what is right and do what is needed for our long term prosperity instead of it being an Election Campaign Broadcast.

 

Is this really too much to ask?

 

I’m angry……really angry.

 

Political Aphrodisiac

As a proud Englishman, I have watched from distance Scotland’s quest for independence with intrigue. Whilst I am remaining open-minded on the subject, I keep coming back to the same subject……oil.

 

As the last few decades have shown, oil is a pretty big deal for world governments. It’s like an aphrodisiac for politicians. Billions have been spent on wars that didn’t need fighting leading to thousands of lives that didn’t need to be lost……all because of oil.

 

Here are the hard facts……there are up to 24 billion recoverable barrels of oil remaining in the North Sea with a wholesale value of over £1.5 trillion. Those figures meant nothing to me until I understood that this is more oil tax revenue still to come out of the North Sea than has already been generated. That’s a big deal……a colossal amount.

 

As we edge closer to the referendum date of 18 September 2014, always keep those 3 little letters in mind……as it will dominate many angles and agendas.  Don’t expect anything other than O I L to be at the forefront of aroused politician minds.

 

 

Lowballing Low Point

I discussed the issue of ‘lowballing’ a year ago (see link below) and things have a taken a further twist.

 

http://stevesmithlive.blogspot.co.uk/2013/03/lowballing.html

 

Lowballing was essentially a further banking scandal involving banks fraudulently (shock!) manipulating the interbank Libor lending rate for their own financial gain. This wasn’t policed properly by the regulator, an opportunity was found by the banks to make money illegally and (quelle surprise) money was made.

 

But here’s the twist……a year on and the Bank of England has now launched an internal investigation as it appears that staff “knew of or condoned” the fraudulent activity.

 

The Bank of England are the guardian of the UK’s currency and, as the main bank regulator, are responsible for ensuring the safety and soundness of UK banks. However, London can’t promote itself as a major financial hub (it is the largest foreign exchange trading platform in the world) yet be riddled with corruption that would make a third world country wince.

 

I can (to a point) accept incompetence from the bank regulator but I cannot accept knowingly being dishonest.

 

As we have seen over the past 5 years (and beyond), if you give the banking sector enough rope, it will ultimately hang itself.

 

Is it too much to ask for the regulator to avoid similar behaviour?

 

 

 

RBS – Banking By Numbers

Like it or not, you are an 81% shareholder in Royal Bank of Scotland. So the publication of their 2013 annual results is important on many levels.

 

Here’s all you need to know in numbers……

 

RBS made a loss of £8.2 billion during 2013. This is the 5th largest corporate loss in history (the biggest was £24 billion – also made by RBS).

 

Bonuses of £576 million have been paid to bank employees on the back of these results.

 

The Government bailout of RBS cost us £45 billion in 2008.

 

RBS have reported no profits and total losses of £40 billion since 2008.

 

RBS are currently worth £40 billion based on market capitalisation.

 

There is no prospect of any return prior to 2020.

 

I have looked at this objectively from many different angles but I cannot get beyond……what was the point of the bailout?

 

The numbers don’t lie.

 

RBS Spinning

Whether we like it or not, the Royal Bank of Scotland is a big deal.

 

For starters, it employs 100,000 people directly and no doubt feeds many other families indirectly that supply its many services, departments and branches.

 

Secondly, it is a key player in economic recovery as we are reliant on it to lend to consumers (personal and business) to spend. In a consumer driven economy, giving consumers money to spend is always key!

 

Thirdly, the public own 80% of RBS and we want a return on our investment.

 

Which makes the ‘strategic announcement’ to be made by the RBS chief-executive (Ross McEwan) this Thursday all the more intriguing. If you are charged with making us money, that makes you by definition a big deal in the taxpayer world.  

 

However, when you use Government tactics to manage public perception, it simply leaves some head scratching to be done and suspicion on every level.

 

What do I mean? Well, to limit ‘jolts’ to RBS’s share price, the theme of the announcement has been leaked in time for opening time of investment markets today. Not just the Government that likes to spin!

 

Would it surprise you if I suggested that the RBS board have salary / bonuses linked to the share price in addition to share options where the share price is critical? Sad but true.

 

With RBS to also announce profit / loss for Quarter 4 of 2013 this week as well, expect to be at very best underwhelmed and at worst flabbergasted that there is little prospect of returning a profit to us in the short term.

 

After 5 years since the bailout, should we not be expecting a little more?

 

 

Flowering Exception

I thought you might like a bit of an update on the Co-operative pantomime villain Paul Flowers. The link below will provide you with your 60 second recap……

 

http://stevesmithlive.blogspot.co.uk/2013/11/co-operative-flowering.html

 

Well the first thing to mention is that it was ‘gentlemen’ of the night not ‘ladies’. Sincere apologies for misleading.

 

Secondly, Paul Flowers no longer sits on Ed Miliband’s Labour Finance Advisory Group. You don’t want a loose cannon within a non-safe distance leading up to a General Election now would you!!!!!

 

Thirdly (and least surprisingly), nobody has / wants to take any responsibility for originally awarding Paul Flowers a ‘fit and proper’ person to run a banking institution in the UK. What is surprising though is that the Supervision Director (Clive Adamson) at the regulator has stated he has “no regrets” and “it wasn’t a mistake”. Really? Exactly which part wasn’t a mistake? 

 

Well, I was brought up to take responsibility for my actions, admit mistakes and learn from them. I naively assumed that others do the same but it appears there are too many in politics and financial regulation who don’t. What a shame……we would be a far better country for it.

 

I’ll just add it to the list of disappointments we ‘accept’ from those that represent us.

 

Monitory Policy U-turn

OK, let’s get straight to the point and round off all this nonsense……key headlines from yesterday’s announcement……  

 

Bank of England Governor Mark Carney has done the decent thing and announced yesterday that the measure for determining interesting rates will be ‘adjusted’.

 

Originally the measure was the rate of unemployment but it will now include “a wide range of factors”. Exactly what it should have done in the first place.

 

Carney warned that the UK recovery was not secure and that when rates rose, they would do so only "gradually".

 

Interest rates are unlikely to rise before next year’s election.So there you have it……the lobbying worked and the Bank of England took the embarrassing decision to perform a monitory policy u-turn. The big winners should be the housing market, businesses and panicking homeowners.

 

Our work here is done……well except some egg on the face of a few to be wiped off.