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.

The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
voicesApple continually kill off smaller app developers, and that's no good for anyone
Arts and Entertainment
Liam Neeson said he wouldn't

Liam Neeson's Downton dreams

Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
ebooksAn unforgettable anthology of contemporary reportage
A 'Sir Alex Feguson' tattoo

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear

Thriller is set in the secret world of British espionage

Life and Style

ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week