Northern Rock: Privatise or Mutualise?

Northern Rock: Privatise or Mutualise.

Back in November 2009 I argued for mutualisation. 100 Members of Parliament supported mutualisation then. The arguments for were:
Savers got a more secure home for their savings, as opposes to retail bank engaged in complex financial instruments that were very risky.
More jobs might be created in the North East of England.
Existing jobs in Northern Rock would be more secure.
More competition from more mutuals against the retail banks.
There were too few mutual building societies without shareholders.

In March 2011 the new coalition Government wants to privatise, and not mutualise. Many jobs have already been lost, including another 680 today. Expensive merchant banks have been employed to advise on privatisation, or more plainly to find a new buyer. Reducing the cost base, or more plainly sacking more employees, will make the bank more attractive to a potential buyer. The bad loans have been hived off into a “bad bank”.

Who gains, and who loses from this privatisation?

The first gainer will be the new buyer. The price will have to take into account the existing losses of this “good bank”, so should be low. The second gainer will be the Government as they recoup from the new buyer some of the capital invested in Northern Rock to keep it from bankruptcy.
The first losers will be the staff who have already lost their jobs. The second losers will be customers of the new bank, which will have to make enough profit to pay its shareholders. This may result in customers paying more for their mortgages, and getting less for their savings.

As to creating investment in the area for businesses, and creating more jobs, Northern Rock will be as good, or as bad, as the other retail banks are currently.
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Work Capability Assessment: Saving taxpayers money or torturing the currently unemployed?

Work Capability Assessment: Saving tax payers money or torturing the currently unemployed?

This form contains over 130 questions. The questions cover ones physical health, and include

Getting up and down stairs
Difficulty using public transport
Specify your disability/illness
Using a wheelchair or hearing aid
Experience of heart attacks or strokes
Use of prescribed tablets with any side effects
Ability to move 50 metres without stopping
Stand/sit for one hour alone
Pick up 1 or 2 pint bottle
Controlling bowels and bladder
Ability to go out on your own.

These cover your ability to get to work , to pick things up, and to communicate with others. These abilities are indeed relevant to paid employment.

But there are other relevant abilities. The mathematical ability to compare ones wages to existing benefits. The legal knowledge about ones employers’ responsibilities to address your disability. Some knowledge about local employment patterns would be helpful.

The focus here is entirely the disabled individual. But this focus does not include the emotional strain in filling up this lengthy questionnaire, nor the potential embarrassment in revealing medical conditions. This raises questions about the reliability of all this information.

Further, there is no attempt to assess the interest in getting a job. No questions about previous employment experiences. Tax payers should be concerned about this use of their money. Trade unions should be offering help to the unemployed. Relatives of the unemployed will have pick up the pieces after this lengthy form filling, and possible subsequent interviews.

The Great Merlin Project. Part Two.

The Great Merlin Project: Part Two.
The Hong Kong and Shanghai Bank has just made the fullest disclosure yet of it’s bonuses, both in the UK and world wide.
Under Hong Kong rules “highest paid individually globally”, whether on the board of directors or not, received over £34 million in bonuses shares and pensions. But under UK Merlin rules the 5 highest paid “senior executives” received just over £12 million. This reveals that under Merlin rules banks can hide £22 million going to top traders.
This clearly undermines a Treasury claim that the Coalition Government had produced “world leading” disclosure on pay. The Treasury’s defence was that they were only interested in the 5 individuals reporting to the chief executive. So, directors pay is deemed to be more revealing traders pay. But if some traders pay is higher than some directors pay, this is in itself revealing about the Bank’s pay policy.
Further the bank has revealed, earlier than it need have done, that 186 UK employees have earned just over £1 million last year.
So the Treasury’s Merlin rules disclose much less about pay and bonuses than the Hong Kong rules. Further, will British based banks reveal traders bonuses as well as directors’ bonuses? Watch this space.