Cable gets a twisted pair

Vince Cable objects to the government's planned range of measures to toughen welfare rules for EU migrants, including:

• New migrants not getting out-of-work benefits for the first three months 
• Payments being stopped after six months unless the claimant has a "genuine" chance of a job 
• New migrants not being able to claim housing benefit immediately 
• Deportation of those caught begging or sleeping rough, with no return within a year 
• Quadrupling fines for employers not paying the minimum wage

According to Mr Cable and his boss Clegg, these measures would be illegal and impossible to implement. Well not quite, unless you hadn't noticed Mr Cable, you are a minister in the government and the law is whatever the government (that is you) manages to push through parliament. So if you don't like the measures proposed by the rest of the cabinet you can always resign.  Oh but that would mean losing your ministerial salary and chauffeured car.

As for "impossible to implement", what can be difficult about not giving benefits to people who are currently not entitled to them?  Rather than taking away a right that is already established, the government simply has to deem that certain categories of immigrants are only entitled to receive benefits under tighter conditions than UK citizens, but less stringent conditiond than those from outside the EU.

As with most Lib Dem policy statements (as picked up by the BBC) this is no more than willie-waving. As Mr cable told Andrew Marr: "There is very little evidence of benefit tourism from people coming from eastern Europe. All the evidence suggests that they put far more into the economy in terms of tax than they take out in benefits."

In which case, then why is Cable making a fuss?

Fishy numbers from Salmond and Sturgeon

Buried in the Scottish Parliament's White Paper is the purported justification for independence, or at least the calculations that say that Scotland is a viable independent state, or to put it in Salmond's terms, marginally better off outside the UK.

Sadly as we larn all too often, when a politician gives you facts, they are probably lying, and this case is no different.

Take the offshore oil tax revenues.  remarkably, Salmond and Sturgeon claim that 94% of the current tax revenues would accrue to Scotland if the revenues were divided on a geographic basis.  Which is quite remarkable because 22% of all offshore production and 51% of all gas production (public figures) are on the English side of the border.  That implies that oil production is something like 5 times as profitable as gas production., which it isn't, so something funny is going on.

By geographic basis, the SNP mean working out which oil and gas fields would lie on either side of the border and calculating the tax that would arise based on production of each field.  Which isn't quite right, because the corporation tax and PRT arising on each field is a bit more complicated than that because both cortation tax and PRT are taxes on profits, but computed on a different basis with a different set of rules on what is allowable and when, and PRT is deductible as an expense in corporation tax calculations.  The only person who really knows the answer about how much CT is paid and where is HMRC, who say that in in 2011/12 and 2012/13 the percentage paid in England was about 17% (corporation tax is largely paid on an estimation basis so the figures for this year are already known).

Now 17% is quite a lot more than 4%, which implies that the corporation tax from offshore oil and gas attributable to Scotland is some £1.3 billion less than the SNP calculation.

Then we come to the PRT, which runs at about £2 billion a year.  According to the SNP 94% of this is attributable to Scotland, although they give no justification.  In fact PRT was abolished for all oil and gas fields that came online after 16 March, so that most current oil fields, the notable exception being Forties, are not subject to PRT, although most of the gas fields are.  I happen to know for a fact how what a large percentage of the PRT receipts come from just one field because several years ago I worked on a PRT scam that was so effective that the Oil Taxation Office took only e weeks after the oil company's semi-annual PRT return went in to come up with some legislation to shut it down - but not before we put together a second deal.  So rather than the £80 billion or so of PRT attributable to England, I would say the figure is closer to £.800 million, which puts the total overstatement of offshore revenues at £2 billion.

Then we com to the amount of corporation tax attributable to Scotland, and here we simply have to look at the distortion created by the banks.  In the SNP report dated March 2013, the amount of corporation tax attributable to Scotland was over £3 billion, which is strange because in the HMRC report of last month only £2.6 billion would occur in an independent Scotland.  Even this is likely to be an overstatement because of the number of people working south of the border in banks that are Scottish registered companies.  The HMRC analysis allocates the UK profits of groups according to where the NI is paid, but the reality is that all the London based trading activity would fall to be taxed in the UK as a business carried on by a foreign company acting through a UK branch, and while the Scots would be free to tax the same income again, in all likelihood if they took on the UK tax rules, the UK tax would be creditable against Scottish tax, so that little Scottish tax would be paid on those profits.

All in all maybe a £2.5 billion overstatement of Scottish sourced revenues, so when the Scottish government says that they contribute 9.4% of public revenue and receive 9.3% of public spending, you can see that they are overstating the case.  If the more accurate figure is that they supply more like 8.9% of public revenue and receive 9.3% of public spending, then we have a picture that more closely resembles perception.

The trends are:
• over 1998-2008 manufacturing exports from Scotland fell by 17% while they rose by 72% in the UK, 176% in Germany, 100% in France and 95% in the US.
• in 2010 Scotland accounted for 6.6% of UK manufacturing employment, well below its population share of 8.8%.
• 85% of the 212,000 growth of employment in Scotland over 1995-2008 was in Health and Social Work, Education and Administration, Defence and Social Security

The reality is that while spending per capita in the rest of the UK is £10,800 per head, in Scotland the figure is £12,100 and in future if they want the same services at the same cost, the Scots are going to have to find an extra £1,300 for themselves. Up until now, the rest of the UK has been funding them, and  for one will be happy to see them go.  It is a zero sum game.  Their loss is our gain, and we might even be able to raise the average IQ of the country as a result.

Never say you cant trust a Frenchman

.. or woman. Hats off to Doria Tillier for being as good as her word.

She can sing too. Not everybody's cup of tea but more talent than you see on British TV.

Are you up to the job?

There seems to be a debate as to whether teachers need a special qualification to be allowed into a government funded classroom.  I have looked up the senior members of staff at my former school and discovered that three of them do have a BA(Ed) or similar, but no PCGE's or whatever. Lord Denning (Maths) taught there for a year before he went on to do other things in The Law, and probably very interesting he was too.

Still, various MPs are raving about this in the media.  Of course, state funded MPs are paid more than state funded teachers. That wasn't always the case. Why are they paid more? Because, they would say, they do a more important job.

So where is the specific qualification that allows them to do this job.

Windfalls and thin slices

We have quite a big garden, and in that large space we have quite a few apple trees, which at this time of the year means we have a lot of apples, and this year's harvest has been as good as last year's which bodes well for this year's production of chutney, apple crumble and more.One of those mores, which will start next week when the Aga gets fired up will be the baking of thin slices of apple, which make a very healthy snack for the winter.  Think crisps without the salt and less starch.

Thinly sliced apples seems to be a metaphor for our times, or at least for the world famous phone manufacturer from Cupertino. A few weeks ago I bought a tablet.  Not one of the Californian wonder products, but a smaller version running a different operating system from a famous UK supermarket chain, at 25% of the price of a MacBook-without-a-keyboard. And very good it is too. It may not outperform a fully blown iWhatsit, but it is a lot better than the same size iWhatsit Mini that came out last year, at half the price (or even less with loyalty vouchers). And it is not the only offering at a similar price bracket.

This year Apple hit back - with a *thinner* model.  Well I have been buying technology for decades, following trends, buying when I though I could see the way things were going, but I have never, repeat never, chosen any technology simply because it was slimmer than the competition, and even more emphatically, I wouldn't pay twice the price for half the thickness.

Which is why I see the whole of Apple going the same way.  In the latest reported figures, sales are up, but margins are down.  Increased sales are mostly of the iPhone 5C, a model designed for mass sales in the Chinese market, but net margins have fallen below 35%: still eye-wateringly high but decreasingly rapidly.  The number of fools willing to pay over the odds for so-so technology has its limits, and the Chinese appear to fall outside that category.

My forecast for Apple is that their ability to screw more money from a fairly limited product range is not going to be enough to sustain the current Market Cap.  In the long term we are all dead, but in 2014 expect the maggots to show in the Apple share price.

Do the math, Miliband

The combined profits of the big 6 UK energy companies last year was £3.75 billion which is supposed to be a lot, but consider the following:

The average dual fuel bill last year was £1,420, and there are 26.4 million households so that works out at £37.488 billion of domestic fuel sales.  Of course not all of those energy sales were domestic.  We still have some industry and of course a lot of those sales were to government owned institutions such as schools, hospitals, the military and  government offices, so let us guess that only half of the profits were related to domestic sales, so that is profits of £1.85 billion on sales of £37.5 billion, or profits equal to 5% of sales.

Now consider the cost of the fuel, mostly gas.  Britain has had some of the cheapest gas in Europe because of the North Sea, and in fact at the moment it has the cheapest n Europe on average, and nearly half the cost of gas in Germany, but the difference is diminishing rapidly because North Sea gas production has been declining rapidly and we have had to import much more from Norway, from the Middle East via LNG carriers and from Siberia or Algeria via very long pipelines, all of which are much more expensive options than buying the gas that lies on our doorstep.

Why is that?

Because all the other suppliers always have the choice of selling to the rest of the world at the prevailing spot price delivered less delivery costs, and UK gas will always be sold at a price of world spot price delivered to the world market less delivery costs. In other words if a quantity Russian gas delivered to Germany costs 100 delivered, and it costs 20 to ship/pump the same quantity from the UK to Germany, then UK suppliers will happily sell to the UK market for 80 + a small bit.

On the other had if it costs 10 to ship from Norway to the UK and 25 to ship from Norway to Germany, the Norwegians will happily sell to the UK at 85+.

On the other other hand the Qataris will sell to the UK and Germany at about the same price because they bring their gas in by LNG and the Russians will probably charge the UK a bit more because the cost of shipping from Russia is higher to the Uk than from Germany.

So UK gas gives us cheap gas, but it is running out and the average wholesale price paid for gas is rising rapidly as more is imported, which is why average wholesale fuel prices have been rising at more than 10%.

So that in six months the likely rise in fuel prices (6/12 of 10%+ is probably greater than 5%) will wipe out most or perhaps all of the energy companies' profits, and a further 14 months retail price freeze will have them trading at a loss or going out of business.

Well done Miliband mi.  No idea what they teach on a PPE course but it doesn't seem to be Politics or Economics.  Must be a lot of Philosophy.

Scottish independence resolved

So Ed Miliband thinks he can control energy prices if he comes to power in 2015.  The only thing he can control is the price of hydrocarbons from the UK Continental Shelf.

And it's clear to see which way the Scots will vote now.

If Mr iliband is standing on an election promise of fixing energy prices, will he resign when it turns out that he can't.

As I was walking down the stair I met a tax that wasn't there

So the Labour Party say they are going to abolish the "bedroom tax". There is no such thing, so it shouldn't be too hard to abolish.

There's no such thing as a free lunch

Liberal Democrat Conference Stunt of the Day was the announcement of "free" school meals for the first three years of school.  Now it's never too early for our youngest students to learn that there is no such thing a s a free lunch (or dinner if you are up north or in a state school).

All these lunches have to be bought by the tax payer and cooked and served by paid staff (although the marginal cost of the latter may be relatively small if they were already working), and the cost of this will fall to the tax payer, or rather be added to the deficit.

So who is going to pay for it?  Why of course the very darlings who will be chomping the "gratis" Turkey Twizzler's, only they will be paying for it over 20 years with interest. Net gainers?  The middle class mums who will see their purses about £12 fuller every week?  The net losers?  The offspring of the "mostvunnerableinsociety" who will be paying for this mallarkey through the tax on beer & fags in 2035.

The value of nothing

I was struck by a claim at the BBC enquiry yesterday. In a typical piece of obfuscation Mark Thompson claimed that in laying off 227 managers in three years the BBC says it has spent £25 million over 3 years but saved £35 million in wages in the same period, and had thus saved money which is a good thing.

Maybe, but that isn't the whole picture because in saving £10 million the BBC loses up to 3 years of work per person, so it only makes a real saving if you assume that the work of those 227 senior managers had a value of less than £15,000 per year per person. Which makes you wonder why they were paid so much in the first place.

False economy

I've listened to it several times, but I must confess I am baffled by the suggestion.

Mark Thompson suggests that the BBC saved money by paying departing executives more than they were contractually entitled. The only way that works is on the assumption that BBC management are such bad negotiators that if they discussed paying less than the contractual obligation they would negotiate a figure that was far higher.

Oh how we laughed at Peston this morning

The idiot socialist who reports business for the BBC as though it is a crime gave us his low down on the Vodafone disposal of  its interest in Verizon Wireless.

There would be a substantial capital (true), which would be exempt from UK capital gains tax (true), because the shares in the US company were owned by a Dutch holding company (also true) and therefore outside the scope of UK Capital Gains Tax (no disposal by a UK company) and also exempt from Dutch tax (Peston didn'y go into theis but s called a Participation Exemption), If you really want to know  the participation exemption applies where a company holds at least 5% of the nominal paid-up capital of another company and the participation is not held as a portfolio investment or the company is subject to a tax on its profits that is reasonable according to Dutch standards or the aggregated assets of the subsidiary consist for more than 50% of business assets where the profits are taxed at a reasonable tax rate according to Dutch standards.

All bog standard tax planning, but likely to incur the ire of all the tax protesters of the world, particularly those who like camping outside big city churches that are handily placed for Starbucks.

So our joy was unconfined when Pesto came back on the radio at the next business broadcast to repeat the story, only adding this time, that if the disposal had been within the scope of UK Capital Gains Tax it would have been exempt under the Substantial Shareholdings Exemption, an invention of Gordon Brown.

The curious thing about the SSE, which I never really understood, was that according to the Scottish Fool who introduced it, it was supposed to encourage investment, yet rather than giving tax breaks when investments were made, the tax breaks arose when investments were sold, and applied equally to investments tat had already been made prior to the creation of the exemption. Still I am not the leader of a political party that was desperate for contributions from friends in the private equity business, and that's a story for another day.

Revenge is mine

Over 20 years ago I worked on a deal to fund a Spanish airline, well actually let's not beat about the bush, it was Iberia, and the deal was quite complicated, but it was probably the lowest cost source of funds that the Spaniards could have found anywhere in the world (seriously sub-LIBOR), but it entailed a certain amount of risk.

The downside would be that if the deal was terminated early Iberia would have kept their annual savings to date but would have to refinance under a different structure, probably with the same funders. As it happened I closed the same deal a few months later with an American airline, OK, let's not beat about the bush, it was American Airlines, to fund two MD-11 aircraft for about $146 million, a sweet deal for them and a $2 million fee for us as I recall, but let's not dwell on that.

Back to Iberia.  After several trips to Madrid explaining the deal, faxes (those were the days) of term sheets, mark ups and negotiations between the airline and the investor, a big party of lawyers, arrangers and investors set off for a meeting in Madrid with the airline, and in particular with the fairly recently appointed CFO, Sr Enrique Dupuy De Lômé Chávarri, to finalise terms.

As we are about to start the meeting, Sr Dupuy stood up and said he had read the term sheet and he had decided that while he liked the low cost funding on offer, he wanted the investor to take all the risks. At which point the lawyers, arrangers and investors all stood up, shook hands (they were, if nothing else, polite), walked out and went home. The shortest meeting I have ever attended.

But yesterday, I received notice of an Extraordinary Shareholders Meeting of International Airlines Group (the holding company for BA and Iberia), with five items on the agenda, the fourth being the appointment of the very same Enrique Dupuy De Lômé Chávarri as an executive director of IAG.

Will he get my vote? Dream on, pal.

Syria: follow the money

There is lots of waffle in Westminster circles about Syria, military action/intervention, chemical weapons and a whole lot more, but what is it really all about?

The UK government and quite a few others are up in arms about supposed chemical weapons used by the Assad government and they may be right about them, but they were less up in arms when rebel forces allegedly used sarin bombs four months ago. But why would they want to get involved in a civil war in a foreign country thousands of miles away?

On the one hand we have a Russian backed Alawite-regime that is strongly allied to Iran, while on the other we have a Sunni-muslim rebel/opposition front, financially supported by Qatar and Saudi, but mostly Qatari.

Neither side is likely to be particularly friendly to the west.  Anything that keeps Russia and Iran away from the Mediterranean is probably a good thing while the rebels are filled with revolutionary elements that are abhorrent to their sponsors, so do we really want to help either side?

Well to get the answer we have to look at the interests of the sponsors, particularly the Russians and the Qataris.  The Qataris would like to build a gas pipeline to Europe, which would reduce the cost of gas in Europe and would eliminate the Russian monopoly on supply.  The Russians obviously would not like that, and thus happily support the Assad regime that is willing to keep out the Qatari pipeline.

So there you have it.  What this is really about is that both the Qataris and the Russians are quite willing to oversee the deaths of 100,000 civilians in Syria in order to maximise their respective gas revenues.

However parliament votes tomorrow, they will be focussing on the wrong targets.

The organisation whose hypocrisy knows no bounds

is the BBC of course.

The organisation that is willing to criticise the salaries and bonuses of bankers but not the pay-offs paid to its own staff (currently under investigation by the SFO according to Reuters, but not reported on the BBC ho actually claim there was no crime, and I don't remember any police investigation of bankers' pay), the organisation that is willing to criticise the phone tampering of other journalists but is curiously uncensorious about the kiddie fiddling of its own staff, which it is quite likely they had know about for years, has done it again (if you can follow the logic of such a long sentence).

The ASA has decided to investigate the banners on the back the Home Office's "go home or face arrest" vans following 60 complaints, although the ASA say that since the BBC started reporting the story they have received many calls of support.  The BBC run with the idea that even though the vans clearly say that they only apply to illegal immigrants, they are clearly threatening.

Now let us compare that with the behaviour of TV Licensing, like this:

A fairly common letter from TV Licensing, and typical of the letters they send, but one which is clearly threatening the recipient, even though the only reason for sending a letter is that the recipient doesn't have a TV license, which of course he is not obliged to have if he doesn't have a TV.  Nor is he obliged to answer the BBC's persistent mail.  But that doesn't stop the BBC sending  people an "Official Warning" that they are being "investigated".

Batting rule #1

Duck if you can get out of the way, hook if you really must, but never slash at a bouncer, Mr Panesar.

Where is Bongo-Bongo land?

The President of Gabon from 1967 to 1973 was Albert-Bernard Bongo.  On his conversion to Islam he changed his name to Omar Bongo, and remained president for another 30 years. He was succeeded by El Hadj Omar Bongo.

There were two acting presidents in 2009, Didjob Divungi Di Ndinge and Rose Francine Rogombé. Didjob did the job for 5 weeks and Rose blossomed for the next five months before the current president, Ali Bongo Ondimba, took office.

On that basis Bongo-Bongo land is Gabon..

Gibraltar border row

The Spanish say that they are considering imposing a €50 fee for border crossings into Gibraltar.

There is of course only one sensible response to that.  Move the border 50 km further into Spanish territory.

Masters of the universe (part 2)

Remember Blythe Masters? Perhaps not, but then who has a long memory these days?

If you can cast your mind back 4 years you may remember one female Labour politician saying the 2008 crash wouldn't have happened if Lehman had been called Lehman Sisters. Silly claim because as we all knew the systemic disaster that is the credit default swap sprang from the loins of the derivatives team run by the ever so definitely female Blythe Masters at J.P. Morgan.

Quite an achievement, but where does a career go after that?  Well in Ms. Blythe's case, back to NY to build up the physical commodities business at JPM, and by all accounts it seemed to be goin fairly well with the business becoming one of the largest on Wall Street, active in electricity and gas trading. But then it all went horribly wrong .... again.

JPMorgan Chase has just agreed to pay $410 million to the nation’s energy regulator, a move that will allow the bank to settle allegations that traders in its Houston offices manipulated electricity markets in California and Michigan. The pact announced on Tuesday is a record settlement for the regulator, the Federal Energy Regulatory Commission, which has ramped up its policing of Wall Street trading in recent months.

While the regulator fined the bank, it stopped short of penalizing individual JPMorgan executives. That decision is a reversal from earlier this year, when the regulator warned JPMorgan that it might seek to sanction Blythe Masters, the influential leader of the bank’s commodities business. Initially, investigators also planned to recommend that the agency hold three of her employees “individually liable.”

The accusations of market manipulation initially surfaced this spring in a confidential commission document, reviewed by The New York Times. The document, a warning that investigators would recommend that the agency pursue civil charges, had originally concluded that Ms. Masters gave “false and misleading statements” under oath.

From the outset, JPMorgan argued that Ms. Masters never made false statements.

The accusations against JPMorgan originated from its rights to sell electricity from power plants that it acquired after the bank took over Bear Stearns in an emergency rescue in 2008.

The plants that the bank inherited were outdated and inefficient. Still, the regulator said, traders in Houston found a work around. To transform the power plants into profit generators, the agency said, JPMorgan’s traders adopted eight different “schemes” from September 2010 to June 2011.

The trading strategies offered electricity at prices that appeared falsely attractive to state energy authorities. The effort prompted authorities in California and Michigan to make excessive payments that helped drive up energy prices, the regulator said.

As part of the settlement on Tuesday, JPMorgan will pay a civil penalty of $285 million to the Treasury Department. JPMorgan will also pay $125 million in “unjust profits,” the energy regulator said on Tuesday. That money will go to ratepayers in both California and the Midwest, where JPMorgan’s trading practices, the agency said, drove up prices for electricity.

Honestly, these women.

You have to feel a bit sorry for Mohammed Morsi

After years of listening to the West talking about the value of democracy, the Egyptians hold what appear to be reasonably free and fair elections, and Mr Morsi wins.  Not the result perhaps that everyone in the west was generally hoping for, but hey, that's democracy and, fair enough Mr Mohrsi gets to take charge.

Fast forward a few years and things may not have run that smoothly.  There is serious rioting in the streets, and the army, as they often do, decides that as self appointed guardian of the nation, they have to step in and take over.

Which is not so good for Mr Morsi, particularly because he is carted off to some unknown place while the current boys in charge figure up some trumped up charges to put him on trial.  Of course he is generally immune from prosecution during his time as head of government so they have to try to dig up some dirt going back to 2011 accusing him of plotting with Hamas to free prisoners from Egyptian jails. Maybe he did, maybe he didn't, but if he did, Mr Morsi probably considers himself to be like those who stormed the Bastille.

Certainly this democracy thing is hard to figure out.

But then they really rub salt into the wound, because who should pop up to talk to Mr Morsi for a couple of hours in his salubrious oubliette than the unelected and unaccountable Lady Ashton, whose rise without trace echoes that of many of the leaders of the former National Democratic Party. Although, no doubt she was able to lecture him on the democratic systems of the west.

Once a slimeball always a slimeball

An email sent by the then British ambassador in Tripoli details how a prisoner transfer agreement would be signed once Libya “fulfils its promise” to buy an air defence system. The last Labour government, always insisted that Abdelbaset al-Megrahi’s release was not linked to commercial deals.

The email, which contained a briefing on the UK’s relations with Colonel Muammar Gaddafi’s regime, was sent on June 8 2008 by Sir Vincent Fean, the then UK ambassador, to Tony Blair’s private office, ahead of a visit soon after he stepped down as prime minister. Blair flew to Tripoli to meet Gaddafi on June 10, in a private jet provided by  Gaddafi  , one of at least six visits Blair made to Libya after leaving Downing Street.

The 1,300 word briefing explains how keen Britain was to do deals with Gaddafi. It also suggests that:

• the UK made it a key objective for Libya to invest its £80  billion sovereign wealth fund through the City of London
• the UK was privately critical of then President George Bush for “shooting the US in the foot” by continuing to put a block on Libyan assets in America, in the process scuppering business deals
• the Department for International Development was eager to use another Libyan fund worth £130 million to pay for schemes in Sierra Leone and other poverty-stricken countries.

The release of Megrahi in August 2009 caused a huge furore, with the Government insisting he had been released on compassionate grounds because he was suffering from terminal cancer, and that the decision was taken solely by the Scottish government.

Megrahi had been convicted in 2001 of the murder of 270 people when PanAm flight 103 from London to New York blew up over Lockerbie in Scotland in 1988. It remains Britain’s single worst terrorist atrocity.
Libya had been putting pressure on the UK to release Megrahi and in May 2007, just before he left Downing Street, Mr Blair travelled to Sirte to meet Gaddafi and Al-Baghdadi Ali al-Mahmoudi, Libya’s then prime minister.

At that meeting, according to Sir Vincent’s email, Mr Blair and Mr Baghdadi agreed that Libya would buy the missile defence system from MBDA, a weapons manufacturer part-owned by BAE Systems. The pair also signed a memorandum of understanding (MoU) for a prisoner transfer agreement (PTA), which the Libyans believed would pave the way for Megrahi’s release.

The British government initially intended the agreement to explicitly exclude Megrahi. However, ministers relented under pressure from Libya. In December 2007, Jack Straw, then justice secretary, told his Scottish counterpart that he had been unable to secure an exclusion, but said any application to transfer Megrahi under the agreement would still have to be signed off by Scottish ministers.

With Mr Blair returning in June 2008 — as a guest of Gaddafi on his private jet — the government appears to have used the chance to press its case for the arms deal to be sealed. At the time, Britain was on the brink of an economic and banking crisis, and Libya, through the Libyan Investment Authority, had billions of pounds in reserves.

Sir Vincent gave Mr Blair’s office a briefing on the state of relations with Libya. The email suggests that Mr Blair was being used as a conduit. Sir Vincent wrote: “There is one bilateral issue which I hope TB [Tony Blair] can raise, as a legacy issue. On 29 May 07 in Sirte, he and Libya’s PM agreed that Libya would buy an air defence system (Jernas) from the UK (MBDA). One year on, MBDA are now back in Tripoli (since 8 June) aiming to agree and sign the contract now — worth £400 million, and up to 2,000 jobs in the UK.

“Saif [Gaddafi’s son] says they are to come back to conclude; but there is opposition within the Libyan armed forces, from those in the Russian defence equipment camp. We think we have Col Q’s [Gaddafi’s] goodwill for this contract: it would be very helpful if he expressed it more clearly. This issue can also be raised with Libya’s PM, and the Planning Minister. It was PM Baghdadi who told the media on 29 May 07 that Libya would buy British.

“Linked (by Libya) is the issue of the 4 bilateral Justice agreements about which TB signed an MoU with Baghdadi on 29 May. The MoU says they will be negotiated within the year: they have been. They are all ready for signature in London as soon as Libya fulfils its promise on Jernas.”

The PTA was signed in November 2008 by Bill Rammell, a foreign office minister.

Megrahi was diagnosed with prostate cancer and released in August 2009 on compassionate grounds when he was given three months to live. He died in May 2012.

The Libyans never signed the arms deal, MBDA said yesterday. “MBDA operates, at all times, strictly within the limits of clearly defined export licensing regimes issued by the relevant Government authorities,” a spokesman said.

“All MBDA’s dealings with Libya were purely commercial and in accordance with the EU directive at the time.” The disclosure of the email, which was obtained by The Sunday Telegraph as a result of a Freedom of Information request, angered the relatives of victims of the bombing.

Pam Dix, whose brother Peter died at Lockerbie, said: “It appears from this email that the British government was making a clear correlation between arms dealing with Libya and the signing of the prisoner transfer agreement.

“We were told Megrahi’s release was a matter strictly for the Scottish government but this shows the dirty dealing that was going on behind the scenes.”

Mandelslime, who was business secretary when Megrahi was released, said he was unaware of any possible links between commercial deals and negotiations over a release.  Strange then that he should be all over the libyans and the Gadhaffi family, but totally ignorant of the UK ambassador's views.  But then we never did find how someone earning less than £150,000 a year before tax for all of his 40 year career could go from having to touch up Geoffrey Rodinson for a loan for a £300,000 flay in the 1990's to buying an £8 million house for cash 15 years later.

Jack Straw, who negotiated the PTA, said no deals were done over Megrahi, and it was always a decision for the Scottish government. Except that the ambassador's memo shows that deals were done.

The email from Sir Vincent also informed Mr Blair on the latest stage of Megrahi’s bid for release, and urged him to fend off any demands that he be sent back. By 2008, Megrahi was appealing against his conviction for mass murder. “Col Q may very well raise Megrahi,” wrote Sir Vincent, “Saif [Gaddafi’s son] raised the case … last week. It is now before the Scottish Appeal Court and sub-judice.

A spokesman for Blair said that the prisoner transfer agreements did not relate to Megrahi. The email, he added, did not show “that the UK government was trying to link the defence deal and Megrahi. Actually it shows the opposite — that any linkage was from the Libyan side."

Which is actually a travesty of the truth.  The memo mentions Magrahi by name, not that that would mean anything to the lying shyster.

An excessive build-up of mucus

At least that is how my dictionary describes catarrh, or to give it its modern Arabic spelling, Qatar.

And that is how the current debate over the 2022 World Cup sounds. Well we all know how the Qataris won the bidding.  It wasn't down to their excellent record in the competition - they have never qualified.  Nor was it down to the excellent quality of their stadiums and practice facilities - they have 3 and they are not fit for purpose.

Nor was it even due to their climate. As everyone else realised at the time and it is now dawning on FIFA, 50C is no temperature to watch football, let alone play it. And after a few years the Qataris now say that they would like to interrupt the European football season, requesting that the various leagues interrupt their multi-billion TV schedules so their audiences can watch Tunisia v Bolivia or Taiwan v Costa Rica.

The reason of course, as is always the case in modern global sport, was money, lots of money.  Possibly due to the bribery of football associations who were promised stadiums by the Qataris. Possibly due to the bribery of  the representatives f those associations, and possibly due to the bribery of Blatter and his muckers.  They have plenty of form as Panorama exposed two years ago.

In any event, the one set of interested parties that has always been overlooked is the fans.  Assuming that the tournament is played in the summer but not at the peak of the summer in June, allowing some time for post-season acclimatisation, that would imply the usual three week mid to late July timetable. Still thirsty weather, which is a shame for the average beer drinking fan.  Alcohol is usually available in the swankier restaurants in Qatar at 3 to 5 times the price in the same sort of venue in London, and is also available to licensed expats. But it is not available at all during Ramadan, which in 2022 begins on July 10th.

How the state lies to you

A fascinating story on the BBC about the failures of the NHS, notable not so much for the way the NHS has covered up its failings so much as the way that such dishonesty is endemic in parts of the state sector.

The headline reads

NHS failings 'suppressed for electoral reasons'

which seems fairly clear. It goes on to say

An independent expert on mortality rates has suggested that ministers have suppressed details of NHS failings to avoid losing votes.
Prof Sir Brian Jarman said a "basic problem" with the NHS was that the government both provided health services and monitored them.

Now I don't know how you read that, but to a simple reader like me, it would appear that this is a failing of current ministers.  But no, although the article does mention Andy Burnham a few times, you have to read down to paragraph 11 before you find that the BBC admits that this was actually a story about suppression of bad performance by ministers in the previous Labour government.

However, not content with misleading us about how much the last Labour government misinformed us about the failings of the state run health system, the Bolshevik Broadcasting Corporation gives its political masters to cover itself with a spin doctor's fig leaf.

Not so, says Andy Burnham, the last government "established independence" by setting up the independent regulator and that "was not the move of a government that wanted to hide".

Which is the least convincing piece of logic I have heard in a long time. Because they set up an independent regulator they can't have suppressed any reports.  Pull the other one. We know that the Care Quality Commission pulled bad reports and we know that they acted under pressure from ministers.

The trouble is that the BBC lets Labour get away with this flimsy thinking, Not surprising when their reporting is so stilted as evidence by the article.

And this is a crime?

"The wife of a convicted terrorist has pleaded guilty to failing to provide information that might have helped in his arrest and prosecution."

Or so says the meejah.  But there must be more to it than that. I think I would be guilty of the same offence, even though I have never met the guy, becuase I have also failed to provide any information that might have helped in his arrest and prosecution.

Location, location, location

I always think the property market is built on hype and unrealistic expectations, but now there is some good news for the global property market.

I refer of course to the news from America:

Our Solar System's Milky Way neighborhood just went upscale. We reside between two major spiral arms of our home galaxy, in a structure called the Local Arm. New research using the ultra-sharp radio vision of the National Science Foundation's Very Long Baseline Array (VLBA) indicates that the Local Arm, previously thought to be only a small spur, instead is much more like the adjacent major arms, and is likely a significant branch of one of them.

"Our new evidence suggests that the Local Arm should appear as a prominent feature of the Milky Way," said Alberto Sanna, of the Max-Planck Institute for Radio Astronomy. Sanna and his colleagues presented their findings to the American Astronomical Society's meeting in Indianapolis, Indiana.

If Mr Sanna is correct then every estate agent can update their material to begin "Conveniently located on a prominent feature of the Milky Way", which probably adds 5p to the value of your house.

Pull the other one, Mr Schmidt. It's got bells on.

Google's executive chairman Eric Schmidt has said he is "perplexed" by the ongoing debate over the company's tax contributions in the UK. Mr Schmidt told the BBC that the company did what was "legally required" to pay the right amount of taxes. Google paid £10 million in UK corporate taxes between 2006 and 2011, despite revenues of £11.9 billion.

I say despite, not on, because we all know that corporation tax is payable on profits, not revenues, or to be more precise it is a tax on the taxable profits of limited companies and clubs, societies, associations, co-operatives, charities and other unincorporated bodies. Taxable profits for corporation tax include trading profits, investment profits and capital gains. Companies within the charge to corporation tax include foreign registered companies that are resident in the UK, usually by virtue of their management and control, and foreign companies that carry on a trade in the UK through a permanent establishment.

Now Mr Schmidt may try to sound "perplexed", but the reality is that it is quite tricky to fall outside the scope of corporation tax, unless you really want to. That is not to say that it is impossible to do so, but that if anybody has UK sourced revenues of £11.9 billion, a permanent office in the UK from which sales and marketing take place then they had probably take a bit of advice from their lawyers and accountants.

Make that a lot of advice from their lawyers and accountants, which is going to cost a fair bit and someone has to approve the bills.  Which is why you're fooling no-one, Mr Schmidt.

Well they would say that wouldn't they

A West Yorkshire Police report has found "no evidence" Jimmy Savile was protected from arrest or prosecution by his relationship with the force.

Well that's hardly surprising. Picture the scene down at 't Batley Cop Shop.

"Ay oop Sarge. Another lass saying she's been you know what wi' long-haired cigar-chomping kiddie fidler off 't radio"

"Right lad, tha's goin nowhere. File it wi' all others in 't bin. The lad pays us enough into Coppers Ball Fund."

"Righto Sarge, and should I put a record on't file."

"No you daft ha'porth. You want this showing up in 15 years when I am about to draw my pension".

One for Dr Who fans

According to this sign at Paddington station, the "facilities" now cater for women, men, the disabled and daleks.

Hodge Podge

The irrepressible (shame really) Margaret Hodge and her PAC has come up with what she claims is a damning report on the cosy relationship between the Big 4 and government.

True enough, while one side of the accounting firms is picking the pocket of government departments  advising on PFI and privatisations, another side is marketng tax avoidance to its corporate clients.  Reminds me of a story I heard about Glenda Jackson at a party in London before she was famous, but that dear reader, is a story for another day.

Anyway, the relationship between the Big 4 and government is not that cosy, simply because the respective government departments never talk, neither do the partners in the Big 4 talk across departments, or at least not very much.  On the one hand they have the audit departments who do pretty much wha it says on the tin, plus sometimes some generic technical accounting advice for non-audit clients.  And when companies can no longer get their accounts signed off as a going concern, the Big  have their Corporate Recovery and Insolvency practices.

Then there is the tax department, often with a legal bit attached, which is there primarily to review the tax accounting for audit clients, but also helps individuals and companies in tax compliance, tax disputes.  They also come up with tax ideas, tax avoidance if you will, and offer companies help in "structuring ther affairs".  Last of all comes the corporate finance arm, which also includes a bit of whatever consulting they can do without falling foul of Sarbanes-Oxley.

Note to David Cameron:  that last bit was where your hot whizz-kid "accountant" Chloe Smith, fast tracked into a ministerial position worked on a spreadsheet jockey desk at Deloittes.  She may not know about insolvency, which side of a T-account to put a debit, nor whether a liabilty to capital gains tax may be reduced by a brought forward deficit on non-trading loan realtionships, but she does know that cell C1 is probably equal to A1 + B1.

Anyway, back to La Hodge.  Her main complaint is that one of the tax spivs at KPMG worked for the gummint on a draft of tax legislation designed to incentivise R&D by giving tax breaks.  No complaints about the work that was done for the Treasury, but shock horror, when the bean counter went back to his old job, his firm started selling his services as an expert on the subject, putting out marketing materials asking clients "What's in it for you?".

God forbid that after the government has decided to promote investment through tax breaks that any accountant should go round offering his services to explain how the new legislation actually works.

A partnership of unequals

So Alec Salmond wants to use the British currency in an independent Scotland.

Go on, nothing's stopping you.  You could use the dollar instead, or even the euro, but if you go for sterling, don't expect us to take Scottish economics into account when setting interest rates.  No, the rest-of-the-UK politicians will set interest rates to set their poltical cycle, not yours.  If you want Scottish interests to be aken into account, then you will have to join a formal currency union, where by definition, if it is a seterling union, Scotland will be the junior partner.  If you think it should be a partnership of equals, look at Germany in the eurozone and think again.

So faced with the reality that the UK would only allow Scotland into a currency union on the UK's terms, Scotland accuses the Westminster of being provocative, and in the next breath, threatens to walk away from its share of the National Debt.  Actually we shouldn't be asking Scotland to assume part of our debts, because that isn't fair on the lenders.  They should be raising that amount of money on their own account and buying pack 10% of the National Debt from the market.

Walk away from that and we will take their oilfields if we haven't already sold them to the Norwegians.