Moral hazard

An interesting report by Norma Cohen in the FT this morning on a key test case involving Sea Containers’ legal challenge to a ruling made by the Pensions Regulator last June, when ‘the Bermuda-based, US-domiciled company, received the regulator’s first ever Financial Support Direction last year after the regulator, which is chaired by David Norgrove, concluded that the two schemes of the company’s GNER rail subsidiary were “in a parlous state”.’ Moral hazard involving pension schemes is a difficult concept it seems for corporates. Last year I had to advise an Austrian client and his lawyer on the powers of the UK Pensions Regulator. They didn’t believe it. All the managing director could say was, “No. Surely this cannot be right. This is like Romania”. At the time the received wisdom among pension lawyers (as Norma Cohen notes) was that the Pension Regulator’s ability to use his powers on overseas companies and those in bankruptcy were in doubt. And so I also advised. In the event, the Austrian client did not pursue the opportunity and we never had to decide how best to deal with a UK pension scheme in significant deficit. Probably just as well.

A fair cop?

Times are hard and it will be a difficult year (see my immediate past post, Stormy weather), but Gordon Brown was at his hectoring worst during PMQs today. Pressed on why the Home Secretary wouldn’t accept the recommendation from the independent tribunal on police pay, all he had to offer was his government’s anti-inflation strategy. If government is all about trust, then things are going from bad to worse. Badly done, Mr Brown.

Stormy weather

Mervyn King was very honest last night in his speech to the South West CBI-IoD dinner about what is in store for UK plc in 2008. Listening to him with upwards of 725 other South West businessmen was a sobering experience: no flashy delivery, no blinding with science, no self-congratulation on a job so far done well (how unlike Gordon Brown, who cannot resist telling us that even if things aren’t quite as good as they might be (a) it isn’t his fault and (b) that that it is as good as it is is all down to him and his best friend Prudence). Instead, from the Governor a critical summary of where we are, why and what is in store. Aside from the main points in his speech, and see an excellent report by Norma Cohen in today’s FT, two things remain in my mind: that as consumers we must save more and spend less (fairly obvious, but blindly ignored by most of us); and that the fear of what is still to come out of the sub-prime catastrophe in the US is as potent a destabilising force as what is already known.

It is all a matter of trust

An interesting column by Stefan Stern in the FT this morning on trust, and why deception is the real enemy of trust. He refers to a Gallup poll quoted by Mark Thompson (BBC DG) last week, that only 36% of UK citizens thought politicians were trying to do their best for the country. In the context of the government’s proposals for Northern Rock and Miliband defending the refusal to offer a referendum on the Lisbon treaty, we should not be surprised.

A curious incident

In his The RSPB View (February Birds, the RSPB’s Quarterly) Graham Wynne, the charity’s Chief Executive, returns to the story of a pair of hen harriers being shot on the Sandringham Estate. He writes, “The shooting of two hen harriers at Sandringham last October and the poisoning of a golden eagle in southern Scotland last summer were despicable acts and should be sources of shame for those responsible”. I could not agree more; but, Mr Wynne, there is still no evidence that two hen harriers were brought down, no close eye-witness, no dead birds and no charges brought. Although this doesn’t mean that it didn’t happen, is it the job of a responsible charity to repeat this canard? It is not so much the story as the innuendo, that the shooting involved the Royal Family, whether directly or indirectly. On 21 November, a month after the alleged shooting Charles Moore was continuing to draw attention to what he referred to this ‘curious incident’ in his Spectator column, and it seems surprising that two months later the RSPB still maintains that the hen harriers were shot.