Treasury covers itself in buckets of whitewash

LET no one accuse our financial elders of failing to give us all a good laugh. A fortnight ago we all enjoyed a giggle as Bank of England officials investigating Bank of England officials over the Barings collapse decided that it was - surprise, surprise - almost all someone else's fault. Last week, we had the absurd spectacle of Treasury officials investigating the conduct of, yes, Treasury officials during the shambolic power sell- off and ruling there was no evidence of wrongdoing. What next? General Mladic appointed to investigate his own war crimes?

The March power sell-off was an extraordinary episode, in that HMG stood accused of insider dealing. To recap, the Government was selling its remaining shares in the electricity generators National Power and PowerGen. Late in the privatisation process, it secretly learnt a key piece of information - that Professor Stephen Littlechild, the electricity regulator, was considering a fresh review to clamp down on the regional electricity companies. But it decided to press on without informing prospective buyers. The share sale went through, the Professor announced his review, and the share prices of the two generators plunged, leaving a lot of incensed investors.

The Treasury official responsible for the subsequent investigation exonerated everyone on the grounds that (1) Professor Littlechild had not firmly decided to launch his review and (2) no one could have foreseen that the threat of a review into the regional electrcity companies would hit the share prices of the electricity generators - different animals altogether. Neither excuse stands up to much scrutiny. True, Professor Littlechild had not firmly made up his mind, but the Government still knew a review was in the offing - more than the benighted punters who innocently bought its shares. There is no getting away from the fact that it possessed potentially important information not available to would-be investors.

As for point two, a 10-year-old could guess that a clampdown on A is likely to have an impact on B, where B depends on A for its livelihood. Maybe the Government's advisers Barclays de Zoete Wedd and Kleinwort Benson couldn't see this. But if not, one wonders whether they are worth the heavyweight fees they charged. (I hope the Treasury is at least demanding a refund.)

The recommendations of the Treasury report are as misguided as the conclusions were wrong. To prevent future mishaps, the Treasury suggests that regulators be gagged during sensitive moments in privatisations, recommending "blackout periods".

This is both shabby and dangerous. Shabby in that it implies that Professor Littlechild was wrong to open his mouth when he did, when it was the Government and its advisers who behaved dishonourably. Dangerous in that it sets a precedent that the stock market should be denied information to convenience a share issuer.

The Treasury report rather snootily opines that "regulators may wish to have access to appropriate expertise in the operation of the stock market and related matters". Perhaps it is the Treasury that is in most need of said expertise.

Power play

SIX DAYS into Scottish Power's pounds 1bn bid for Manweb, it is the predator which has made all the early running. Scottish Power was briefing City analysts on Manweb's shortcomings within hours of its dawn raid last Monday. It has succeeded in painting a vivid picture of the super-efficient Scots coming in to shake up the sleepy and inefficient Scousers.

But Manweb is not defeated yet. John Roberts, its chief executive, is clearly prepared to consider all options to repel Scottish or at least force a more generous offer. When I asked him what those options might include, he replied, in a voice heavy with meaning: "We've got a very strong balance sheet." If all else fails, expect a dividend bonanza along the lines of Northern Electric's wheeze.

Meanwhile, there remains the possibility of a reference to the Monopolies and Mergers Commission. Looked at narrowly, there is precious little justification for an investigation. But the wider industry is crying out for examination. Consumers have had a lousy deal vis-a-vis shareholders from the first five years of privatisation. We need to devise a better shape for the industry for the next five years. Some debate would be useful. It may be that the consolidation of the industry into four or five large players overseen by a tough regulator is the best structure for the consumer. But an objective analysis of this most regulated of industries is more likely to come up with the optimum solution than a bare-knuckle free-for- all.

Sir Brian walks alone

IT IS Sir Brian Pitman's willingness to plough a lonely furrow that has made him Britain's best regarded clearing banker. The Lloyds Bank chief spent the 1980s sticking doggedly to the boring business of delivering value to shareholders while his peers in other banks were having a much more exciting time flushing banknotes down the drain.

Sir Brian, the banker, is to be admired and heeded. But what about Sir Brian, the economist? He reckons the Government is not doing enough about inflation. He clearly believes interest rates should be raised, though, consummate politician that he is, he stops short of actually saying so. But in taking his stance, he is virtually alone among business leaders, as our straw poll on page 1 makes clear.

Of course, asking businessmen to approve interest rate hikes is a bit like asking turkeys to vote for Christmas. But the consensus is undoubtedly anti-Pitman. Even the CBI and the Institute of Directors agree on this one. We should know more this week when the Bank of England publishes its annual inflation report. But with both consumers and businesses set against any rise, Ken Clarke will need a lot of persuading. Sir Brian may be right, but like Cassandra, he looks fated to be ignored. For the moment, anyway.

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Sport
The giant banner displayed by Legia Warsaw supporters last night
football Polish side was ejected from Champions League
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
i100(and it's got nothing to do with the Great British Bake Off)
PROMOTED VIDEO
News
news It's not just the world that's a mess at the moment...
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
news
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
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

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Test Manager - Banking - Yorkshire - £450 per day

£400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone