MISCONDUCT IN PUBLIC OFFICE

If misconduct in public office, why      

not recklessness in public office of the
now rarely seen former chancellor and            
prime minister?
 

He opened the floodgates of easy credit,

based on illusory growth, unlimited
immigration and unsustainable welfare
spending, in order to expand the client
state.This was reckless and premeditated
action for which he will remain personally
unaccountable.

Gordon Brown continues to draw his
MP's salary and a reported £100,000 for
each after-dinner speech. Not so with this
generation and probably the next, as we
continue pay the price of austerity for
his profligacy with taxpayers' and
borrowed money, which has made the
country a very different place.

THE LAW - ANCIENT TRADITIONS, MODERN REALITIES

The young lawyer arrives at the gates               

of Heaven and says to St Peter "I cannot

be dead, I'm only thirty-two." He heard                 
the reply "According to my records the
number of fee hours you've charged to
your clients makes you 395."

And, wasn't it always so? High fees for
what Dickens described as doing what
lawyers do best - making work for
themselves. Remember Jardine v.
Jardine in Bleak House, where a family
feud over an inheritance supported three
generations of lawyers, until the money
ran out?

That, of course, was then and this is
now. What Big Bang did for the
consumers of financial services is
about to transform a legal system that
is not fit for purpose. It is one that we
can no longer afford in an
over-lawyered country with an
escalating debt problem.

The legal profession is the last of the                     "Half of criminal law firms could disappear from
great British vested interests and the                      the High Street, as result of legal-aid reforms"
Government is right to bring it into
the twenty-first century. Fixed fees                                                           Solicitors' Journal
with more transparency for block
contracts awarded to major new
players in the market will replace
what the legal-aid budget will stand.

Supermarkets Tesco and Sainburys,
together with the Co-op and logistics
company, Eddy Stobart, will bring a
chill wind of competition and
economies of scale to the legal
services market.

Whether they can offer the same
professional and personal service,
within a computerised environment,
remains to be seen. The focus of a
re-cast legal profession working
within a changed business model
will be delivering advice to clients
in the most cost-effective manner. 

Have lawyers in the past acted in
the public interest over fees?
Adam Smith may well have had
the legal profession in mind when
he observed that when people of the
same trade meet, the conversation
ends in a conspiracy against the
public and connivance to raise
prices.

For public, read taxpayer, who has,
up until now, paid £2.1bn annually
in legal aid. This has grown
exponentially, partly the result of
EU-imposed human rights -
£865,000 paid to Abu Quatada to
fight extradition to Jordan - personal
injury and medical negligence.

The Lord Chancellor's refrain in
Gilbert and Sullivan's Iolanthe is
"The law is without fault or flaw
and I, my lords, embody the law."
Not anymore, it seems, as the cry
from the taxpayer is caveat emptor,
where paying for legal services is
concerned.

SOMETHING ROTTEN IN THE BODY POLITIC

Caesar's wife has rarely been less
above suspicion than in the alleged
cover-up of infant deaths by Jill
Finney and Julia Bowers, the two
top officials at the so-called Care
Quality Commission.

That a veil of secrecy should have
been drawn across such events is
truly shocking. Equally so, is how
these women were appointed to
head the NHS watchdog responsible
for patient protection.

Jill Finney qualified for her £140,000
a-year post as director of strategic
marketing and deputy chief executive
on the basis of her experience as a
promoter of spaghetti, cash and carry
and frozen foods. Another factor that
may have played a part in her
appointment was her husband, who
set up the CQC.

Cynthia Bower, on the other hand, did
come to her post as chief executive
with previous healthcare experience.
She was in charge of running the 
health trust, responsible for the
scandal-hit Stafford Hospital, where
at least 500 people died through
neglect.

The outcome of any public inquiry
and possible criminal prosecutions
remains to be seen. However, what
must be addressed by David Cameron
is the electorate's growing cynicism
and loss of confidence in the body 
politic. As we are seeing in Brazil
and elsewhere, this can have
disastrous consequences.  

Riven by bureaucratic waste,
incompetence and sometimes worse,
the State consumes almost half of
GDP and the public is getting poor
value for money.What is needed is
a renaissance in shared cultural
values, but who will clean out the
Augean stables? 














John Barker, MA, accepts commissions
to reseaarch and write articles on business,
economics and politics, together with market
research reports.

E-mail: executiveprofiles@btconnect.com



 

TAXATION - HARD CHOICES

The Government's moral position on corporate
taxation is changing, in order to accommodate
its inability to control the inexorable growth
in public spending. The first duty of the board
of any publicly-quoted company is,within
the law, to maximise returns for shareholders.

However, this is now being compromised
by the inference that tax liability should be
determined not by HMRC, but by public
opinion, based on what is considered fair.
This could indicate a move towards corporate
taxes being determined by plebiscite with
pedictable consequences. It could result
in British companies paying the equivalent of
corporation tax on the same profit in multiple
oversas jurisdictions. 

Much has been made of the role of financial
advisers at recent Parliamentary Select
Committee hearings. The Big Four UK
accountants operate, as is stated, within the
existing law, in assisting their clients to
maximise shareholder value.

In order to meet this requirement, they
advise companies on navigating the
the quagmire that is UK tax regulation.
Tolley's Tax Guide reveals that UK-based,
multi-nationals have had to comply with an
extra 11,000 pages of tax law since 1997.

This includes an additional 1100 pages of
regulations since the Coalition came to
Office in 2010. The position becomes even
more complicated with the EU courts'
increasing interpretation of UK legislation
relating to corporate tax liability.

.

A VACUUM IN POLITICAL LEADERSHIP

Gordon Brown. Increased national debt to £1.35 trillion
on borrowed money.

The outcome of the 2015 UK general

election is already clear: another hung
parliament. In common with other
leading economies, there is a paralysis
of leadership in Britain. It is caused by
an inability to address the political
consequences of dealing with an 
escalating national debt, nil growth,
more austerity and rising disaffection 
with the political class. 
               
According to the TaxPayers' Alliance, 
UK Government spending, as a
proportion of GDP, is almost 47%, 
compared with compared with an                             
OECD average of 41%.                                         

£120bn is squandered in the
public sector. Not included in this are
the huge amounts lost through health
tourism in an NHS on the verge of 
bankruptcy and the £11.8bn spent 
on overseas aid. Quantitative easing
continues to buy time, but for how
long?    

Circumstances are driving ideological
convergence between the political
parties and diminishing choice at
elections. This creates the perception
that all parties are the same, with 
most politicians putting their own
interests above those of public duty.

Voters are increasingly of the view 
that their opinions on such key issues                                                                           
as the EU and immigration are
ignored by the Government. They
feel disconnected from the democratic
process and ask themsleves what is                                     
the point of turning out to vote?

In the UK and Europe rising anger is     

compounded by an unelected and
unaccountable EU Commission,
which seeks to control ever aspect
of their lives. Millions who escaped
oppressive regimes find themselves
living under a new form of
totalitarianism. Economically, it
would be the yoke of German
hegemony.

The trend of political disengagement
is hardly new and can be seen in
countries across the western world. 
In Britain in 1950 the turnout was
around 85%. In 2010, it was 66%,
a trend which indicates that, in future,
neither of the main political parties is
ever likely to command an command
an overall majority in Parliament.

The resulting inability of Government
to reconcile the public's continuing
addiction to unsustainable levels of   
state spending with economic reality is
something for which the next
generation will pay a very high price.

.

THE HOUSING CRISIS - OVERLOOKING THE OBVIOUS....

Another recent Government initiative to
solve the housing crisis is the ill-thought-
out proposal that pensioners should be
encouraged to move from the family
home into sheltered accommodation.
The plan would be to free up private
housing stock, with the local authority
passing on any profit from letting the
property to pay the rent of a small
apartment.

This somewhat panglossian figment of

Secretary of State, Grant Shapp's fertile
imagination, poses the following questions.
How much profit would be available to pay
the rent after legions of staff had been
employed to administer the scheme and
how could the values of family homes be
protected from being converted to rented
accommodation on long and secure
tenures?
A viable alternative would be for local
authorities to be more efficient in their
use of housing stock by refurbishing
and letting the nearly half million
dwellings that remain unoccupied. In
addition, the 62,000 retail shops
predicted to close by 2018 could be
converted for domestic use, thus 
helping to relieve a situation that is  
clearly out of hand.

THE FINANCIAL MARKETS - INTO THE UNKNOWN

The difficulties facing our political
leaders in deciding how to navigate the
perilous economic waters are manifest.

As George Soros asserts in his book

The Credit Crisis of 2008 and what

it means - 'the prevailing paradigm for

financial markets - that markets tend

towards equilibrium and deviations

are random - is both false and is

misleading'.

He describes his theory of reflexivity

- that in seeking to understand a

complex world, financial players base

their investment decisions on imperfect

knowledge, compensating for their lack

of understanding of what is happening

at lightening speed in the interconnected

global financial markets 'with guesswork

based on experience, instinct, emotion,

ritual and other misconceptions'.

While these weaknesses in understanding

leave us largely at the mercy of the

unknown, what is certain is that Gordon

Brown's huge increases in public

spending and state control, occurring

within his constantly changing economic

cycle, bring into question the future of

free-market economics, with bureaucratic,

severely risk-averse banks cutting the

ground from under small businesses,

which are the backbone of our economy.

 

SWIMMING AU NATURALE

Running on empty...

As the UK Serious Fraud Office                                 

continues to uncover more cases of
serious financial wrong-doing, those
in the US are interestingly resonant

of of a passage from J K Galbraith's
The Great rash 1929.
"To the economist, embezzlement is
the most interesting of crimes. Alone
among the various forms of larceny,
it has a time parameter. Weeks,
months, or even years may elapse
between the commission of the crime
and its discovery. (This is a period when
the embezzler has his gain and the man
who has been embezzled feels no loss).

"At any given time there exists an
inventory of undiscovered
embezzlement and it amounts at
any moment to many millions of
dollars. It also varies in size with
the business cycle. In good times
people are relaxed, trusting and
money is plentiful.

"In these circumstances
embezzlement grows, the rate of
discovery falls off and the bezzle
increases rapidly. In depression all
this is reversed. Money is watched

with with a narrow suspicious eye.

Audits are penetrating and meticulous

and the bezzle shrinks."

Warren Buffett once famously
remarked that it is only when the tide
goes out that you discover who's
been swimming without clothes.