Brown hits the ground not running but sprinting

Another day, another stonker of an initiative from Gordon Brown, our new Chancellor. The way things are going, anyone would think he was the Prime Minister, not Tony Blair. Mr Brown has hit the ground not so much running as sprinting, and while this latest piece of reform may lack the same seismic, long-term import of his previous announcement affecting the Bank of England, this is none the less big-league stuff.

It is also an eminently sensible piece of institutional reorganisation, so much so that the real curiosity is that it has never seriously been contemplated before. For this we can largely blame the Bank of England, which until Howard Davies arrived as deputy governor a couple of years back refused to countenance any question of separating its monetary from its supervisory functions. Since then the Bank has been dropping heavy hints that it might be prepared to trade away these powers in return for independence, but even this was done with reluctance.

This dogged defence of turf has long been a cause of some bemusement, for being responsible for supervision has never brought the Bank anything but grief. Regulatory failure has to varying degrees been a contributory factor in all the last three big banking collapses, Johnson Matthey, BCCI and Barings. The effect has been to tarnish the Bank's reputation more generally and undermine its case for independence. If the Bank cannot be trusted with supervision, how could it be trusted with monetary policy, was the all too frequent observation.

Never mind the fact that the Bank is actually a rather good supervisor and getting better at it all the time. Per head of staff relative to banking failure, it is one of the most effective regulators in the world. However, it is not for the unpublicised successes that regulators get judged, but for those high-profile cases that slip through the net. Post Barings, the Bank has come to accept that there might be a reputational case for severing its links with supervision.

There are also some very practical reasons for doing so. First, it would not be appropriate for such an important regulatory function as banking supervision to be handled by an independent central bank. The Bank's insistence that great benefit is derived in the conduct of policy from what it learns in pursuing its duties as a supervisor was never a convincing one. Much better to make supervision directly accountable to government through an enhanced SIB (or Investor Protection Agency, as we may have to start calling this behemoth once it has absorbed all the other City regulators).

Second, globalisation and rapid growth of financial services and markets have blurred the borders between modern securities regulation and old style banking supervision. As Barings illustrated, this is already causing a dangerous confusion in lines of responsibility and action. The two functions, then, are in any case being driven together by a common need and purpose.

There is also one further good reason for going this route - it gives Howard Davies a big job to do. So much so that a cynic would suspect he might have had a hand in persuading Mr Brown of the sense of this approach. Not true. Although it looked as though Mr Davies had been left out in the cold by the announcement of operational independence for the Bank two weeks ago, he played no part in this latest development. All the same, it's good to see such an accomplished practitioner making the transition between governments, for in his brief reign as deputy governor he has made great strides in revitalising the Bank's demoralised supervisory ranks. We can expect more of the same once he takes over at the SIB.

As for the planned wider regulation of City regulation, there is thankfully going to be a period of public consultation on all that, both on its structure and funding. The new Government is none the less off to a good start. This isn't change for the sake of it, but rather, a long overdue and necessary reform.

Electricity reforms heading for more delays

The electricity supply industry has fallen foul of Professor Stephen Littlechild again, and 20 million domestic customers can but sit back and watch the sparks fly - unless of course the lights go out first.

The cause of the dispute this time is how much it will cost the regional electricity companies to gear up for 1998 when they lose their cosy monopolies and emerge blinking into the harsh light of competition. According to the RECs, the bill for all the new computers and software that will be needed to make the changeover a success works out at pounds 854m, or pounds 43 for each customer in the land The professor says it will, at most, cost pounds 383m. Clearly the RECs are trying it on.

Since electricity supply only accounts for 6 per cent of the total household bill, it is becoming apparent that, whatever the true costs, the benefits to customers of shopping around will be negligible.

The professor disputes this, insisting that competition in supply will give the RECs increased incentive to buy their electricity more cheaply. This will deliver meaningful price reductions because generation makes up a much bigger proportion of the average household bill.

The reality is that the RECs have got the professor over a barrel. In truth they are not interested, nor ever have been, in competing in anyone else's franchise market and have done their best to sabotage the whole project. Now some of them are telling the professor that if he is not prepared to make customers pay for their gold-plated computer systems then he had better put back the whole process or risk a meltdown.

Liberalising the market but failing to deliver worthwhile price cuts would be an embarrassment to the professor. But presiding over the collapse of the system would be unthinkable. Stand by for more delays to the timetable.

Perceptions of UK catch up with reality

What has changed in a year to cause Britain to scoot on up the World Economic Forum's league table of international competitiveness into seventh position? Not much is the honest answer, but these rankings never were a very objective or scientific exercise.

The text of the report claims Britain's progress is the reward for the upheaval of deregulation and privatisation, and for the two recessions that accompanied the creation of a flexible labour market. There are few experts who would argue any longer with the view that the reforms of the Thatcher years did boost the British economy's potential for growth, but the most important of them were in place by the late-1980s.

The truth is that the jump reported in the latest findings is the result of perceptions catching up with reality. Most of the hard figures that go into the construction of the rankings change very little year to year. What changes most is the results of the survey of international executives which also feeds into the league table. It is these executives who have realised at last that we are now well over the British disease.

Sport
Raheem Sterling and Luis Suarez celebrate during Liverpool's game with Norwich
sport Another hurdle is out of the way for Brendan Rodgers' side
Sport
Luis Suarez celebrates after scoring in Liverpool's 3-2 win over Norwich
Football Vine shows Suarez writhing in pain before launching counter attack
Arts & Entertainment
The original design with Charles' face clearly visible, which is on display around the capital
arts + ents The ad shows Prince Charles attired for his coronation in a crown and fur mantle with his mouth covered by a criss-cross of white duct tape
Sport
Steven Gerrard had to be talked into adopting a deeper role by his manager, Brendan Rodgers
sport LIVEFollow the latest news and scores from today's Premier League as Liverpool make a blistering start against Norwich
VIDEO
News
People White House officials refuse to make comment on 275,000 signatures that want Justin Bieber's US visa revoked
News
Sir Cliff Richard is to release his hundredth album at age 72
PEOPLESir Cliff Richard has used a candid appearance on an Australian talk show to address long-running speculation about his sexuality

Sport
Lukas Podolski celebrates one of his two goals in Arsenal's win over Hull

Arsenal strengthened their grip on a top-four finish with a straightforward 3-0 win over Hull City.

Arts & Entertainment
Quentin Tarantino, director
arts + ents Samuel L Jackson and Michael Madsen have taken part in a reading of Quentin Tarantino’s axed follow-up to Django Unchained.
News
The speeding train nearly hit this US politican during a lecture on rail safety
news As the saying goes, you have to practice what you preach
Sport
Mercedes Formula One driver Lewis Hamilton of Britain (front) drives ahead of Red Bull Formula One driver Daniel Ricciardo of Australia during the Chinese F1 Grand Prix at the Shanghai International circuit
sport Hamilton captured his third straight Formula One race with ease on Sunday, leading from start to finish to win the Chinese Grand Prix

Arts & Entertainment
Billie Jean King, who won the women’s Wimbledon title in 1967, when the first colour pictures were broadcast
tv
News
Snow has no plans to step back or reduce his workload
mediaIt's 25 years since Jon Snow first presented Channel 4 News, and his drive shows no sign of diminishing
Life & Style
food + drinkWhat’s not to like?
Voices
Clock off: France has had a 35‑hour working week since 1999
voicesThere's no truth to a law banning work emails after 6pm, but that didn’t stop media hysteria
Arts & Entertainment
Maisie Williams of Game of Thrones now
tvMajor roles that grow with their child actors are helping them to steal the show on TV
Arts & Entertainment
Kingdom Tower
architecture
Life & Style
Lana Del Rey, Alexa Chung and Cara Delevingne each carry their signature bag
fashionMulberry's decision to go for the super-rich backfired dramatically
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit