A few weeks ago, I spoke at an international conference on regulation. One of my fellow panellists told me, as we took our seats, that he was against regulation. I rubbed my hands with glee in anticipation that sparks would soon begin to fly. Sadly, the only sparks were the evidence of us getting on like a house on fire. He wasn’t against regulation; it was just bad regulation that he couldn’t tolerate. Me too.Read more
Marx out of ten for the attack on price caps?
When the Thatcher government privatised British Telecom in the 1980s, they created a regulator to cap prices. They did the same with the privatisation of water, electricity and gas. No one suggested then that Thatcher’s policy was Marxist or State intervention. So is there any justification for such accusations now that Theresa May is proposing that the energy regulator should reintroduce a cap?Read more
A horse. A zebra. Or maybe it’s a fish?
Regulatory dreams and economic nightmares
In the early days of my career, I occasionally dreamed that I had failed my professional exams and was being summoned back for a re-sit. Since I never actually practised in the discipline in which I qualified, I’m not sure what game my subconscious was playing with me. But last week I dreamed I was back at university… only to wake up and find that I was.Read more
Accountants in a tangle with Webb
Regular readers of this blog must be sick to death by now of me repeating how much damage accounting standards are doing to pension schemes (here, here, here and, even on video, here). So I’ll be brief this time – very, very brief. There is finally light at the end of the accounting tunnel.Read more
You mean we’re NOT supposed to avoid tax?
Tax avoidance has become a hot topic. The Times newspaper has recently unmasked a scheme in which income tax is avoided by the ludicrously simple means of saying the salary is only a loan which might have to be repaid (but never actually is). One of the newspaper’s columnists, David Aaronovitch, has been writing about the immorality of tax avoidance (both links behind a paywall).
I used to think it was easy to spot the moral dividing line when it came to tax avoidance. If our government had created the exemption, that meant they positively wanted us to take advantage of it. Anything else was almost certainly a loophole and morally objectionable, even if it was legal. But does that distinction still apply?Read more
Shoot the messenger!
Financial accounts are supposed to enable readers to understand the financial position of the entity under review. But, yesterday, the National Association of Pension Funds published a report attacking the notion that accounts provide neutral and reliable information about an employer’s pension scheme liabilities. The critique, written for the NAPF by Dr Iain Clacher and Professor Peter Moizer of Leeds University Business School, is pretty damning of the standard setters.Read more
Bankers cooking with Gas?
The separation of retail and investment banks is back in the news following the Chancellor’s recent Mansion House speech. Ever since the Government bail-out of Royal Bank of Scotland and Lloyds in 2008, there has been a pressing desire to ensure that tax-payers are never again called upon to rescue the financial system. The Independent Commission on Banking, chaired by Sir John Vickers, is looking at alternatives. The Chancellor has endorsed their interim report and awaits the final report in September.
Compulsory separation of business entities is not new. It has been used as a solution to behavioural business problems in many contexts, usually after a period of fierce debate during which the business(es) argue that separation is unnecessary and unworkable, or a combination of both. We are certainly seeing those arguments advanced in the case of the banks. Not just from the bankers: many commentators are unconvinced, too.Read more
Accountants becoming effective?
I think the three words at the end of the following sentence must be the most chilling – and the most heart-warming – I have ever read from an accounting standard-setter:Read more
It’s very disconcerting …
… to be giving a presentation whilst the audience is tweeting their comments onto a screen behind your head. Perhaps that’s going to be the way of the future.Read more