"When people of the same trade meet together... the conversation ends in a conspiracy against the public"

In the light of that Adam Smith misquote, let's cast a wry eye on this self-preening article in City AM:

There is no need for a “Hippocratic Oath” specifically in relation to tax, as McDonnell called for, since chartered accountants already ensure that taxpayers – individuals, companies, and others – pay the right amount of tax due under the law. In this way, we help reduce the tax gap by supporting good tax compliance.

Of course, it would be naive to hope anyone would take this purely on trust. Which is why, in addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics...

But what is rarely mentioned is that almost a third of registered tax advisers are not members of any professional body. This means they are not required to follow any ethical or professional standards at all. If politicians truly wish to get tough and raise standards, ensuring that the high bar set by the chartered profession is applied across the board would be a good start.

Sub-text: raise barriers to entry by "regulating" everybody who isn't a Chartered Accountant, who nobly "self-regulate".

How effective is that "self-regulation"..? From The Daily Mail:

Britain’s big four accountancy firms have been savaged by MPs who have accused them of “feasting on the carcass” of collapsed construction giant Carillion and collecting more than £70 million in the process...

Veteran Labour MP Frank Field, head of the Work and Pensions Committee, said: “The image of these companies feasting on what was soon to become a carcass will not be lost on decent citizens. The former directors of Carillion are, unlike their pensioners, suppliers and employees, alright.

“These figures show that, as ever, the Big Four are alright too. All of them did extensive – and expensive – work for Carillion. PwC managed to play all three sides – the company, pension schemes and the Government – to the tune of £21 million and are now being paid to preside over the carcass of the company as Special Managers.

“It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”

According to information published by the committees, KPMG has banked £20.2 million in fees since 2008, PwC £21.1 million, Deloitte £12 million and EY £18.3 million.

So 'not very' and yet again, we are presented with evidence that they are actually thieving scum.

Cow news

From The Daily Mail:

A fleet of supercars owned by Grace Mugabe have [sic] been involved in a pile-up as the disgraced former First Lady attempted to spirit them out of Zimbabwe.

A rare £250,000 Rolls Royce Ghost, a Porsche and a Range Rover were damaged as they were driven at night, in convoy through back roads of Botswana to a safe haven in South Africa.

Mrs Mugabe, who is known as ‘Gucci Grace’ and ‘Dis-Grace’ for her violent temper and extravagant spending habits, organised the transfer after fearing she will lose her ill-gotten gains in a crackdown on corruption in the wake of the bloodless coup which ended her husband Robert’s 37-year rule.

The 52-year-old’s attempt to put her supercar collection out of harm’s way backfired spectacularly last week when her son and his drivers were stopped for seven hours as they crossed over Zimbabwe’s border in Botswana...

However, some hours after they were given permission to drive on, the valuable convoy was involved in a freak collision after cows wandered onto their remote route, as they sped through the night.

Eyewitness Orabile Tebegano, who was also on the road at the time, told ZimEye.com; ‘There were cows passing and the guys in front of me stopped, but I looked into my rear view mirror and I saw a car spinning in the middle of the road, it was a white Corolla, and he hit the Porsche and the Range Rover.’

Yeah! Go cows!

I do hope that the cattle involved were not seriously hurt.

"It's grim"

From City AM:

REAL wages are still falling, on average, and nobody seems to know what to do about it…

There is a growing body of evidence – including an excellent new report from Towers Watson – that shows that rising non-wage employment costs are crowding out wages and are the primary structural cause of depressed wages.

Employers are paying more to employ people – but the staff aren't noticing because hidden taxes and especially employer pension contributions are crowding out wage hikes…

As the Towers Watson paper shows, this represents a transfer from those without pensions or with defined contribution pensions – typically low income or younger workers – to those with final salary pensions – older workers and pensioners.

I don't believe in generational warfare, but young people struggling to afford housing are also taking a pay cut to finance generous pensions of a sort that will never be accessible to them.

It's grim. Auto-enrolment will cut pay packets further in the years ahead.

As per usual, as long as Heath sticks to facts, figures and micro-economics, he makes good sense. He glosses over the fact that price-inflation is a deliberately engineered by governments to help transfer wealth from savers to landowners, and to act as a handy ex post justification for Home-Owner-Ism ("It's the only asset which beats inflation"), but hey.

One thing which is not clear, and probably not to him either, is his throwaway remark "I don't believe in generational warfare".

Does he mean he doesn't believe it exists (as in "I don't believe in God") or does he accept that it exists (having just provided plenty of evidence for it) but that he thinks it is A Bad Thing (as in "I don't believe in capital punishment")?

Sounds like he was well qualified for the job.

From The Daily Mail:

An NHS chief has been sacked from his £250,000-a-year job after it was revealed that he is a convicted armed robber.

Craig Alexander was jailed after holding up a busy Tesco Express store at gunpoint in 2001 and threatening staff and customers before fleeing with almost £1,250 in cash and cheques.

On his release he lied about his three-and-a-half-year stint in prison and was hired for the senior post of interim borough director at NHS Brent, where he was in charge of multi-million-pound taxpayer-funded budgets.

You can just imagine the interview:

NHS HR director: "I trust that you've done your research on how the NHS is funded. You've applied for a management post and you must realise we have certain guidelines here. So I have to start by asking: have you ever robbed the general public in order to line your own pockets?"

Candidate: "Well... I've done a couple of bank jobs, nothing special, but at least you know I've got the balls for it."

NHS HR Director: "OK Great, when can you start?"

Pensions annuities now pay out 2% per annum. To the annuity company.

Another one which BobE emailed in, from The Guardian:

The ONS figures, published in its Pensions Trends report, show that savers who want to achieve a larger retirement income have also seen big rises in the amount they need to have saved during their working life. To buy an inflation-linked retirement income of £25,000, less than the UK's average salary, now takes a pension fund of £763,900.

That is the figure given by the ONS (page 2), which we shall assume to be broadly correct.

For some strange reason, possibly EU related, the cost is now the same for men and women, even though women tend to live longer and so it should be more expensive for them. The result of this will be that men avoid buying an annuity and it's now a better deal for women, as a result of which the price will creep up a bit more and men will simply not buy annuities if at all possible.

To work out the annuity rate, all we need to know is average life expectancy at retirement, which is 21 for men and 27 for women = 24 years according to the ONS.

Bung "=PV(-0.0185,24,25000)" into a spreadsheet and you get a nice round present value of £764,000.

OK, that's index linked, which means the initial return will be lower than non-index linked, but I'm not sure how they justify paying out a negative return. If you were prepared to gamble on living exactly 24 years and inflation being 2% throughout, you could put the money under the mattress, not earning a penny in interest, spend £25,000 in the first year and increase the amount you spend every year by 2% to match inflation and you'd still end up with £4,000 left over to cover your funeral costs.

(I'm ignoring tax distortions in all of this).

I own land, give me money!

Emailed in by MBK from The Sunday Times:

A LANDLORD has collected taxpayer-funded rents of £3,550 a week by letting out two modest former council properties.

James Wiemer, 56, rented two three-bedroom properties in central London to two families — one with five children, the other with six. In one case he converted the property into five bedrooms and, in doing so, made it potentially eligible for housing allowance payments of up to £1,800 a week.

Wiemer, 56, who has received total rents of almost £400,000 in just over three years, has now joined the two families in a legal attempt to retain extra payments after the government imposed a £400-a-week cap.

Modern Alchemy

The pensions and insurance companies explain how to magically transform bad assets in to good ones in today's City AM:

The firms instead suggest the Bank of England use QE money to buy overvalued PFI and infrastructure assets from banks then sell them to pension funds at a lower price, unburdening banks and giving pension funds a good long-term asset in one action.

The notion that the government has some magical spare QE money sloshing around is infuriating enough - the government does not hold QE money as an asset; the government (or some department of the central bank) owes QE money. It has already spent it on buying back government bonds.

If we ignore that bit, what we get is a gift of free money to banks (overpaying for assets) and another free gift for the insurance companies (underpaying for assets).

By subtraction, UK government borrowing will go up. Of course this "unburdens" banks, in the same winning £1 million in the Lottery would unburden you or me.

But why are those "good long-term" assets not already "good long-term assets" from the point of view of the banks?

Maybe you bought some shares when they were 73p and I bought them today for £1.23. We own the same shares, they are as good as each other. The fact that you paid less than I did does not make the shares any better or any worse, does it?

And those "good long-term assets" like "PFI and infrastucture assets" are only worth what they are worth because the government is subsidising them. They themselves are pushing up public sector debt.

So what these geniuses are asking for is another two layers of subsidy (and increased government debt) to people who are already entitled to one layer of subsidy (the PFI or infrastructure assets, which themselves increased government debt).

FFS.

H/t Stillthinking at HPC.

Work Programme: an unalloyed success

Bob E spotted this comment in The Guardian on the topic of back-to-work providers:

The author says "there's a clear sense that in the context of a flatlining economy, the Work Programme's targets – indeed, its entire logic – are proving impossible".  

Nonsense. Its entire logic is based around facilitating the transfer of billions of pounds from the public purse into private company coffers where it can be transferred again to tax havens and divvied up later by the corrupt politicans and crooked businessmen behind it. There's the logic behind the whole of welfare reform. It's a raid on the public purse. That's all it's ever been.

It's way past time the people concerned should be appearing in the dock. For me, it's not just a case of where's the anger. Rather, it's where are the prosecutions?

We told you so.

Cyprus came top in last week's Fun Online Poll on which country would be bailed out next. Lo and behold:

Cyprus has told the European authorities that it intends to apply for financial assistance, the fifth eurozone member to do so.

It said it needs help to shore up its banks, which are heavily exposed to the Greek economy. The announcement came on another day of nervousness about the single currency.

So let's see if Italy is next - that country came a close second in the poll.

"Osborne unveils £140bn scheme to kick-start bank bonus season"

From The Telegraph:

George Osborne unveiled a £140 billion emergency scheme to try to avoid a second year of low bonuses in the City of London.

The Bank of England is to offer money to high-street banks to also try and prop up houses prices. Loans are currently being rationed for many families as the bankers have either lost all the money or just taken it all, the Chancellor announced. It comes after sharp rises in the costs of mortgages and other loans in recent months as banks struggle to raise money now that nobody trusts them any more.

Sir Mervyn King, the Bank of England Governor, said that the “corrupt governments in the industrialised world have thrown everything bar the kitchen sink” at the global meltdown in financial services sector salaries but that even “bolder action” was now required.

In the annual Mansion House speech in the City, the Chancellor said he was no longer prepared to “stand on the sidelines” and that the radical new “bank bonus funding scheme” will be launched within weeks.

"We are not powerless in the face of the euro-zone debt storm which they caused," Mr Osborne said. "We can deploy new firepower to defend the most important parts of our economy - banking and house prices - from the crisis on their doorstep. Funding for lending to the banker's family aspiring to own an even larger mansion and the business that wants to expand its directors' pension scheme The Government - with the help of the Bank of England – will not stand on the sidelines and do nothing as the storm gathers."

Workplace Pensions made easy

Click to enlarge: