David Prosser: BP on track to restore dividend in 2011 but holds breath on negligence call

Investors will hope the assumption that BP has not underestimated its liabilities, as it did once before after the Texas City 2005 disaster, doesnot embarrass them


Outlook BP has had a good week so far. That might be an odd thing to say given the revelation on Wednesday that a rig worker might have been able to prevent the Deepwater Horizon disaster in the Gulf of Mexico had he not been on a cigarette break. Even odder, perhaps, given the fact that Bill Reilly, the man chairing the US National Commission on the oil spill, has just branded BP "breathtakingly inept".

Here's the thing though. The smoker who left his post was an employee of Halliburton, one of BP's partners in the Gulf, rather than the British company itself. And Mr Reilly's critique of BP was extended to Halliburton too, as well as to Transocean, the operator of the rig. In fact, Mr Reilly's harshest words were reserved for a fourth company, which he says is hindering his inquiry by failing to co-operate.

It is important that BP does not have to shoulder the full responsibility for the spill when Mr Reilly makes his final report to President Obama in the New Year. And not just because sharing the blame might leave BP feeling just a little less uncomfortable.

What is more important is that if Mr Reilly finds the British company only jointly culpable for what happened, he is much less likely to say it was guilty of gross negligence – the judgment that would quadruple the fines it is currently expecting to face, possibly to as much as $21bn.

Since the maelstrom of the summer, BP shares have recovered almost half the losses incurred in the aftermath of April's accident. Bob Dudley, the company's new chief executive, has also said that he hopes to be able to begin paying dividends again in the new year. Yet that aspiration – and the share price uplift – is based on BP's current estimate of a bill for Deepwater Horizon that comes in no higher than $40bn (£25bn) or so.

Investors will hope the assumption that BP has not underestimated its liabilities, as it did once before, following the Texas City disaster of 2005, does not embarrass them. A gross negligence verdict from the National Commission would certainly undermine the oil company's sums.



Coalition pension focus hardly fundamental

With so many pressing issues to confront, it is remarkable that the Coalition Government has made the abolition of compulsory annuity purchases such a priority, publishing its proposals for a change in the law yesterday just seven months after coming to office. All the more so since this is a reform that may have been demanded by a vociferous lobby but which actually benefits only a tiny number of people. Worse, it asks less well-off pension savers to subsidise a windfall for the wealthy.

The campaign for abolition of compulsory annuity purchase has always been based on two claims: that savers should be free to make their own decisions about what they do with their pension funds, and that people who die early on in retirement have handed over substantial wealth to an annuity provider that they might otherwise have been able to leave to dependents. The fact that annuity rates have fallen sharply in recent times has only added to the complaints, though in the context of low interest rates, the products do not look such poor value.

In fact, there are good counter-arguments to both these claims. Since taxpayers pay for generous reliefs on pension savings, it is only fair there are rules to ensure people do not spend their funds too quickly and then ask taxpayers to support them all over again via means-tested benefits. And those tax reliefs are there to help people provide for old age, not to finance large inheritances.

Still, leaving those arguments aside, some odd logic has been applied in the process of devising yesterday's proposals. For example, there will now be a tax charge of 55 per cent on pension fund savings passed on to heirs. Yet basic-rate taxpayers get an uplift of just 25 per cent on their savings from tax reliefs, while higher-rate taxpayers get 66 per cent.

Similarly, there are circumstances in which people will be able to pass on pension funds to their heirs free of tax, if they die before age 75 without having touched their savings. That will only apply to people wealthy enough to live off other income.

The broader point is that the vast majority of people will still end up using an annuity to convert their pension savings into income because the new regime is too unwieldy to bother with unless you have a large fund. Yet no reform of the annuity rules, which lock people into a single provider, often the default, poor-value option from the company with which they have saved, is proposed. As I say, this is a strange sense of priority.



Change the law and make RBS report public

Is Lord Turner, the chairman of the Financial Services Authority, in a minority of one in insisting the regulator cannot publish its report into the near collapse of Royal Bank of Scotland? Former City Minister Lord Myners wants the RBS report published. So does Business Minister Vince Cable. Even Sir Fred Goodwin, the man accused of running RBS into the ground, has let it be known he does not object.

Here's the problem, though. If Lord Turner has received advice that publishing the RBS report would break the law, he can't do it, even if, as he says, he feels "uncomfortable" with suppressing it. And instead of bellyaching about the regulator's failure to publish, people should be calling for a change in the law – particularly Mr Cable, who is presumably in a position to do something about it.

All the more so since there are reports to come on the demise of both HBOS and Bradford & Bingley. If the law has not been changed by the time they're completed, we'll presumably have to have the same row all over again.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Operations Manager

£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Day In a Page

Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk
Nepal earthquake: One man's desperate escape from Everest base camp after the disaster

Escape from Everest base camp

Nick Talbot was sitting in his tent when the tsunami of snow and rock hit. He was lucky to live, unlike his climbing partner just feet away...
Adopting high fibre diet could dramatically cut risk of bowel cancer, says study

What happened when 20 Americans swapped diets with 20 Africans?

Innovative study in the US produces remarkable results
Blake Lively and 'The Age of Adaline': Gossip Girl comes
of age

Gossip girl comes of age

Blake Lively is best known for playing an affluent teenager. Her role as a woman who is trapped forever at 29 is a greater challenge
Goat cuisine: Kid meat is coming to Ocado

Goat cuisine

It's loved by chefs, ethical, low in fat and delicious. So, will kid meat give lamb a run for its money?
14 best coat hooks

Hang on: 14 best coat hooks

Set the tone for the rest of your house with a stylish and functional coat rack in the hallway
Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?