Financial Services

Blair – Brown – Darling – Were Warned in 2004 That The British Economy Was About To Go Bust -They Did Nothing To Avert The Crisis – Then Had The Audacity To Blame The Royal Bank Of Scotland


2007-2008: Financial Disaster

In the period 2004-2008 Gordon Brown then Alistair Darling ignored much repeated advice and public warnings issued by Lyndon H Laroche JR, many other eminent economists and Mervyn King, Governor of the Bank of England of the rapidly overheating British economy.

The financial “blow out” that hit the world financial markets in 2007 was brought about by defaulting mortgage holders in the USA and the UK who had been contracting to significant additional debt against their properties through excessive loans creating an unsustainable housing bubble.

Brown and Darling, conspired to divert blame away from the Labour government and had the audacity to blame the Royal Bank of Scotland for the financial disaster that befell the UK when it was clear the mismanagement of the economy was entirely the fault of a Labour Party leadership who had been warned in 2004 of an impending financial wipeout.

At a time the UK should have been introducing measures taking the heat out of the economy Brown and Darling instead played fast and loose with the electorate pushing on with a wilful expansion of the financial market, approving bank mergers funded by borrowing, looking forward only to the next General Election.



2004: Warnings Ignored – Warnings Ignored – Warnings Ignored – Warnings Ignored – Warnings Ignored

Lyndon H Larouche jr. ranks highly among the world’s most influential international political figures. His exceptional qualifications as a long-range economic forecaster, was confirmed when, in 2004 he forewarned in the “Executive Intelligence Review” of the erupting, global systemic crisis of the world’s economy.

2004: Local and European Election Fiasco – Blair Takes A Kicking

British Prime Minister Tony Blair suffered his worst humiliation, in 10 June 2004 local elections and European Parliament contests across England and Wales, since he was elected in May 1997. The result of Blair’s Labour Party’s miserable showing in both, is that the Prime Minister is now, at best, a lame duck, In the local council elections, ripe to be removed from power at some early date in the coming months.

In London on June 15, Blair showed the strain in his monthly press conference; he was rambling, losing track of his thoughts in mid-sentence, and issuing contradictory politi-cal assertions. British press the next day noted that the best indication that Blair is losing it, was that he broke down amidst the subject he loves best: praising himself and the great domestic “successes” of his New Labour regime.



2004: Warning of Unsustainable House Prices

House prices in Southern England are at the outrageous level of 7.5 times local earnings. Nationwide, the multiple is 5.6. Since 2001, house prices have risen by one-third in greater London, but almost two-thirds in the rest of Britain. Halifax Bank, Britain’s biggest mortgage lender, reported that the average British property now costs nearly £158,000.

British householders are borrowing heavily on this bubble. In April, they took out a record £6.4 billion against the value of their houses, pushing net mortgage borrowing up 27% over April 2003; 60% over April 2002; and a breathtaking 131% over April 2001! Household debt is at a record 120% of disposal income, up from 100% during the pre-crash 1980s. In France, by comparison, household debt is 58.7% of disposable income. Which will burst first, this debt bubble, or Tony Blair’s political career.


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2004: Economy Overheating – Brown And Darling Dithering

Then, there is the economy. The Bank of England (BoE) chose 10 June 2004 to announce it was raising interest rates by a quarter-point for the second time in two months. This was
even a greater blow for Blair. BoE Governor Mervyn King followed up, four days later, with a blunt speech warning price inflation is now over 20% a year in Britain. With credit
card and other debt added on to mortgage obligations, British households are £1 trillion ($1.835 trillion) in debt — a bubble just as bad, per capita, as that in America. One trillion pounds debt equals Britain’s annual output, the Financial Times noted sourly on 2 June 2004.


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2004: Britain’s Housing Bubble Surfaces.

Already, the Bank of England has carried out four 0.25% to bring its base rate up to 4.5%, and there is widespread discussion that the rate will be raised to 5% before the year is out. BOE Governor Mervyn King’s June 14 statement that British home prices are not sustainable shook up the financial markets, and in a limited way, acknowledged the problem. But while King and Greenspan make different public statements, both they and their respective central banks have indicated that they hope for a miraculous soft landing for their twin housing bubbles. That is a fantasy wish; such highly-leveraged, immense housing will experience a hard landing. Synarchists Cheney and Blair must prepare to experience their very brief last days in office.



Click to access eirv31n25-20040625_068-election_fiasco_kicks_blair_new.pdf

Click to access eirv31n25-20040625_072-united_states_britain_housing_bu.pdf

Financial Services Uncategorized

Lin Homer – Civil Servant Deemed Unfit For Service in a Banana Republic Gets Her Reward – Early Retirement – a Damehood and a £2.2Million Pension Pot







Whitehall mandarin made a Dame in the 2016 New Year’s Honours list despite coming under fire for mishandling of tax-dodgers is standing down

The head of HM Revenue and Customs quit  the Civil Service with a £2.2million pension pot (one of the biggest in the Civil Service, swelled by an additional £70,000 to £75,000 last year) and a promise not to take a job in the private sector which will embarrass ministers.

Dame Lin Homer, who has run HMRC since 2012, will leave in April after MPs criticised a series of failings and “abysmal” levels of customer service for members of the public.

Dame Lin was also under fire for securing only one prosecution from a list of 6,800 UK-related secret Swiss bank accounts provided in 2010 by French authorities. In her previous job running the UK Border Agency, Dame Lin was censured by MPs for her “catastrophic leadership failure”.

Homer epitomised all that is wrong with the UK Civil Service.  Unaccountable Civil Service mandarins enjoying self-congratulatory praise whilst abusing the protection of the State, covering up massive cock-ups costing the UK taxpayer many billions.  A summary of her worst efforts follows.

Additionally a number of unsavoury incidents (some involving Cameron’s sidekick, Chief Civil Servant, Sir Jeremy Heywood) occurred in the course of the Scottish Independence Campaign giving urgent notice that the Scottish parliament must have authority over Civil Servants working  in Scotland. The Smith Commission failed to address the issue and it needs to be raised with Westminster soon.








A Scottish, civil service, with no ties to Westminster, clear of the tentacles of “Common Purpose” would better serve Scotland.

The marked increasing incidence of recurring catastrophic leadership disasters in the, “UK Civil Service” is of concern. Very many inadequate civil servants are/have been promoted well beyond their abilities, through their shadowy, “Common Purpose” network contacts. Hence the increasing number of financial, transport, media, immigration and other disasters which have and continue to blight the UK. The UK civil service, put in place by the public, charged with the mission always to serve their needs is not fit for purpose.



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March 26 2013; Who are her backers? The Unstoppable Rise of Lin Homer, (Common Purpose Member)

Born in Norfolk, Lin Homer studied law at University College London, before working at Reading Council for two years then Hertfordshire Council, where over a period of 15 years, she rose to the position of Director of Corporate Services. Now a member of “Common Purpose” This provided the springboard for her first major town hall job, in 1998, as chief executive of Suffolk Council.






4 April 2005; Judge upholds vote-rigging claims – Lin Homer Threw rule book out the window,

Homer was parachuted into the same post at Birmingham City Council, on a jaw-dropping £174,000-year.

In 2005 she was accused of throwing ‘the rule book out of the window’ in a major postal votes scandal in Birmingham that ended up before the courts.

Election judge Richard Mawrey said fraud in the city ‘would have disgraced a banana republic’.

He described Mrs Homer’s decision to allow postal ballot papers to be transported to the count in shopping bags as ‘the direst folly’.








25 March 2013; Jerry Hayes – Solicitor and ex Tory MP – Lin Homer, eat my shorts.  Allah UKBA!

What is even more fascinating is how LIn Homer has soared effortlessly to the Whitehall stratosphere.

I first came across her in 2005 and found her perfectly agreeable. She was the Chief Executive of Birmingham Council and I was parachuted in to represent two Labour councillors accused of electoral fraud.

It was the first electoral commission in one hundred years. It was as a result of a petition moved by the splendid John Hemming, now a Lib Dem MP.

It was an eye opener exposing the corruption of the postal ballot system which according to the Commissioner, Richard Maurey QC “would have disgraced a banana republic”.

Let me set the scene:

“My chaps were found in a warehouse in the dead of night in front of a table groaning with postal ballot forms, pens and tipex. As we say in the trade this caused one or two evidential problems. Worse, heads of Asian families were hoovering up votes within their households. And (not connected with my clients) there were accusations that postmen laden with postal ballots had been threatened with having their throats cut if they didn’t hand them over.

It didn’t say a lot about British democracy. It spoke volumes.

But most shocking of all was the utter chaos of the count. The Commissioner remarked that the transportation of voting papers via carrier bags was the “direst folly”.

And after the Lib Dems had raised an almighty stink it was discovered that Tesco bags of uncounted votes were discovered in council offices.

The Commissioner commented that Lin Homer as Chief returning Officer had “thrown away the electoral rule book”.








18 Nov 2013; United Kingdom Border Agency savaged by MPs

But later that year she was chosen by the Home Office to run what was then called the Immigration and Nationality Directorate – this time on £200,000, plus bonuses

Already in chaos, it was on her watch in 2006 that we learned of the mistaken release of 1,000 foreign criminals.

It later emerged some 450,000 asylum cases had not been dealt with but left in boxes at the Home Office.

Appearing before the Home Affairs committee Homer, now head of the newly formed UKBA gave an undertaking to fix things.

But despite promises from former chief executive Lin Homer and her successors as head of the UKBA since the UKBA was founded in 2008, nothing was being done to try to find asylum seekers whose claims had been rejected and to remove them from the country.

The UKBA had supplied wrong and misleading statistics to the Home Affairs Committee since it was formed in 2008.

Senior UK staff ‘misled’ the Committee; The UKBA’s senior staff misled the Committee on so many occasions that it was clear that senior staff were either deliberately misleading the Committee or thoroughly incompetent.

Files were so poorly compiled and were missing so much information that it was impossible to carry out security checks on applicants for asylum.

Progress in dealing with historic cases had been slow and poorly performed. The Committee expressed doubt that checks on archives of historic cases to try to determine whether the applicants were still in the country were carried out properly.

The UKBA was not working properly with the police to find and detain foreign nationals who are awaiting prosecution for criminal offences.

The Committee was especially scathing in its criticism of Lin Homer. It accused her of trying to ‘evade responsibility for her failings’.

Ms Homer told the committee in January that she had always given the committee all the figures that had been requested as soon as she had them. The committee refutes this.

The new UKBA was meant to clear up the mess, and Mrs Homer became its first chief executive, on an astonishing £208,000 a year.

But among a fresh run of scandals was the revelation that nearly 400 of the 1,000 foreign prisoners were told they could stay in Britain and dozens remained untraced.

She was quizzed over more than 100,000 items of mail left unopened as staff struggled to deal with 147,000 immigration case files, some dating back to the Nineties, parked in a ‘controlled archive’. It later emerged that in 40,000 cases, individuals could still be in the country and were potentially untraceable.

Ms Homer apologised that the cases had not been checked against up to 19 databases, including the Police National Computer and anti-terrorist watchlist, and said she regretted she may have ‘inadvertently misled’ the committee over the size of the backlog and whether security checks had been carried out.

Mr Vaz accepted her apology – but said if it happened again it would be reported to Parliament as a ‘contempt of the House’.

Tomorrow’s report is expected to express MPs’ fury that Ms Homer, 56, does not appear to accept she failed during her time as head of the UKBA – and cast doubt on her ability to carry out her duties at HMRC.

She was paid almost £1 million in salary and bonuses during her time at the beleaguered agency.

The report is expected to conclude Parliament should be given a stronger role in appointing top civil servants – a view likely to be shared by No 10, where senior figures have expressed frustration at the way Whitehall tries to block key reforms and rejects interference over its appointments. (includes video report)




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10 Oct 2012; Rewarding Failure – permanent secretary of the UK Transport Department Lin Homer lasts barely a year.

Millionaire mandarin Lin Homer, Permanent Secretary at the DfT throughout 2011 when details of the new rail franchise business model were being thrashed out was today named by Sir Richard Branson as one of a handful of officials at the department whom his Virgin Rail team met during 2011 to voice concerns over the bid process.

Those concerns were ignored, said the rail boss whose warnings proved correct last week when the Government U-turned on its decision to award the lucrative franchise to his rival First Group due to an alleged catastrophic business model error.

The mistake is estimated to cost taxpayers £100million and the DfT has now been labelled “not fit for purpose”.

Ms Homer’s meteoric rise through the civil service — she received another promotion last January — prompted one MP last night to question whether there was an unchecked “reward for failure” culture at the heart of Whitehall.








25 March 2013; Appointment of HMRC head Lin Homer raises ‘serious concerns’

The Commons’ Home Affairs committee said in a report published today, it was “astounded” at Homer’s appointment to chief executive and permanent secretary at HMRC at “what is a challenging time for that organisation”.

It added that the appointment raises “serious concerns about the accountability of the most senior civil servants to Parliament”.—regulation/appointment-of-hmrc-head-lin-homer-raises









6 November 2013; Public being charge extortionate telephone premium rates in calls to HMRC

Homer admitted to MP’s that tax payers are charged premium call rates upon telephone enquiries made direct to HMRC and that there was an inordinate time taken to answer enquiries. But she was dealing with the matter.

Homer decided that HMRC will close all 281 of their Enquiry Centres before the end of 2014. Replacing the service with an updated, “super dooper” call centre system, passing the buck to the Citizens Advice Bureau and other voluntary organisations to provide tax advice to the public.

Watch Lin Homer (Chief Executive & Permanent Secretary) and Ruth Owen (Director General Personal TAX HMRC) squirm when Ms Hodge has a go at them about 0845 numbers! Priceless!!!









5 November 2012; Homer admits Government powerless to force multinationals to declare profits

Homer briefed MPs that over half of Britain’s biggest 770 firms funnel profits overseas and the Government is unable at the present time to prevent these big international corporations from paying almost no tax on their profits in this country.

She offered that they achieve this by declaring their profits in foreign countries with tiny tax rates – even if they made those profits in this country.









30 July 2013; £135 million collected from leaked Swiss list

HM Revenue and Customs (HMRC) has recovered £135 million in lost tax from individuals named on a leaked list of HSBC’s private banking operation in Switzerland.

This is considerably less than the amount pulled in by the Spanish and French tax authorities, who have recouped £220 million and £188 million respectively.

Speaking at a hearing of the Public Accounts Committee (PAC), HMRC chief executive Lin Homer said that 130,000 names were on the so-called Falciani list – named after the former employee of the bank who handed over the details.

Of the 130,000, HMRC had identified 6,800 UK-based entities at some 5,000 UK addresses.

Ms Homer said however that the poor quality of the data meant that just 3,400 taxpayers have been contacted so far – resulting in a yield of just £135m. She said however that HMRC’s efforts “were not yet finished.”

Asked about the Lagarde list – a subset of the larger HSBC database – Ms Homer said that “major progress” had been made in tackling 15 live cases. Of these, two have been settled as civil cases, four remain open, five have settled within the Swiss disclosure agreement and four are still being negotiated.

HMRC’s actions over the Liberty tax avoidance scheme were also considered by the PAC, with Ms Homer confirming that £400 million of tax was at stake.

According to HMRC data, of the approximately 2,000 users of the scheme, the tax authority had failed to serve Section 9 notices in 30 cases, which HMRC’s internal review suggested had put ‘well below’ £10m of tax at risk.

HMRC were also censured over errors which saw the department overstate the amount of extra revenue collected by £1.9bn compared to targets. Ms Homer apologised for the mistake, which she said was down to an incorrect calculation of the baseline from which later calculations were taken.

She is under pressure from the, “Commons Public Accounts Committee”, who asked about, “sweetheart” deals she authorised, giving immunity to around 6,000 British names linked to HSBC bank accounts in Geneva.

At least 500 of these wealthy tax dodgers are being or have been investigated but it is expected they will be offered immunity in exchange for payment of a penalty AND their tax bills AND allowed to keep their identities hidden AND be protected from prosecution”?








11 February 2015; MPs debate HSBC scandal: Politics Live blog

MPs from the Commons public accounts committee have launched a withering attack on HM Revenue and Customs over its response to information it received about clients of HSBC’s Swiss division dodging tax.

Margaret Hodge, the Labour MP who chairs the committee, said accused Lin Homer, the HMRC chief executive, of a “pathetic” response.

Hodge also said HMRC was sending out a “really rotten message” to people considering evading tax because its action was so weak.

She said HMRC was sending out the message that “it’s a risk worth taking – the worst that can happen to you if HMRC can be bothered to catch up with you is that you may have to pay, you won’t have a prosecution, you won’t have any shame, you won’t be an example to anybody else, you’ll get away with it”.

She went on: That’s a terrible message to get out to British taxpayers, it’s a really rotten message. (Video coverage of the debates) <a href=”








Financial Services Uncategorized

State Pension Bombshell – Less Than Half British Retirees To Get Full Pension – So the 55 Year Old Plus No Voters Get Their Return – Listen to Gordon Brown at Your peril- He Will Return Towards the End of the GE Campaign To Promise you more Goodies


January 2014; Three quarters of women fear the struggle to survive in old age over pension uncertainty

Three-quarters of women fear they will struggle to get by when they reach retirement age because their current income is too low for a decent pension, a study shows. Research also showed widespread confusion among working age women over the effect of changes to the pension system and the rising retirement age. The study by the Pensions Advisory Service found that almost four in 10 women did not know when they would be able to draw their pension, because of changes to the qualifying age, and six in 10 had no idea if they had paid enough National Insurance.

Overall, it showed that seven in 10 did not feel confident about making decisions when saving for retirement. Meanwhile 76 per cent do not believe they will have enough income to be financially comfortable once stopping work.

Around 40 million people currently of working age will receive the new single-tier pension, which is due to come into effect in 2016, simplifying the state pension arrangements. It will run alongside the Government’s landmark plans to automatically enrol people into workplace pensions.

Michelle Cracknell, chief executive of the Pensions Advisory Service said: “The odds of women being able to provide for a comfortable retirement are stacked against them from the start. “Women are much more likely than men to have career breaks, work part-time and have low-paid service sector jobs. “The price they pay is an incomplete state pension in their own right and not much, if any, private pension to add to it.”


April 2014; Government to give life expectancy estimates with pensions advice

Pensions minister Steve Webb has announced plans to give retirees rough estimates of their life expectancy as part of pensions advice from April 2015.

Specialist pensions experts will calculate how long older people have to live, based on their gender, lifestyle and location. The move is a reaction to concerns people will be irresponsible with their pensions, now that there are fewer restrictions around withdrawing their pot in one go.

The news comes a day after Office of National Statistics (ONS) figures revealed people in the UK are living longer, but stark regional contrasts persist. The area with the highest life expectancy is Purbeck in Dorset, where the average woman will now live to 86.6. The figure is 82.9 years for a man in the same region.

In Glasgow life expectancy is 72.6 for men and 78.5 for women.

Webb highlighted this geographical contrast, along with lifestyle considerations, as one of the main reasons behind the policy.

“The idea is that you come to think about retiring, but you don’t know how long that retirement is going to be,” he said. “My idea is to say to somebody, look, someone of your generation, living in this part of the country, you’ve not smoked, you could easily live for 27 years.”

Webb added the consultations would not be bespoke, but based on a chart for people with similar circumstances. He also said the Government was conscious the consultations should not be “crass and insensitive”.


February 2014; The new state pension winners and losers – and what you can do about it

Single-tier pension winners;

• People who contracted out into a personal pension.

• The self-employed. Currently they are only entitled to the basic state pension of £110.15. Under the new system they will get the full £147 provided they notch up 35 qualifying years.

• Women and part-time workers. Broken work histories and low part-time earnings have meant many have not built up full state pension in the past.

Single-tier pension losers

• People who have never contracted out of the state system.

• Young people. Losses increase over time: someone aged 49 on £26,000 a year will be £29 a week worse off, while someone in their mid-30s will be £40 a week worse off by the time they retire, according to the TUC.

• Existing pensioners. Anyone who reaches state pension before 5 April 2016 will be excluded from the single-tier pension. Some could have got more under the new rules
You win and you lose.

• People in private-sector final salary schemes that are contracted out will get more state pension but will pay more national insurance. Employees currently contracted out will see an increase of 1.4% in their NI contributions from 2016 because their schemes will become contracted in.

What can you do

So if you are a pension loser, is there anything you can do about it? Find out what you have built up so far, so you can work out how much more you need to save. To receive an estimate of your future state pension go to;

Think about buying extra years. Millions of people may be able to buy up to £25 a week of extra state pension. It is aimed at pensioners and those due to reach state pension age before April 2016, and will allow people to swap a cash lump sum for extra state pension worth between £1 and £25 a week. It is suggested pensioners will be allowed to pay from £900 to as much as £25,000 to top up their pension.

You may be entitled to top up your state pension with voluntary national insurance contributions (NICs). The 2014/2015 top-up is expected to be around £850 for standard class 3 voluntary NICs. However, you have to be eligible. Those entitled to pay class 3 voluntary NICs include everyone who has reached state pension age (though you can only pay for the past six years), plus some other groups. For more information;


January 2015; Fewer than half retirees will receive full state pension

The government has admitted that fewer than half of all pensioners will receive the full £150-a-week new “flat rate” state pension from 2016 despite promises by the work and pensions secretary, Iain Duncan Smith that it will give workers “clarity” about their retirement income. In response to a freedom of information request, the Department for Work and Pensions said only 45% of the 3.5 million people who will retire between 2016 and 2020 will receive the full £150 a week.

The new single-tier pension will from April 2016 replace the existing two-part system of basic state pension plus the state second pension (also known as Serps). A final figure for the combined pensions will be released nearer to the date of introduction, but is expected to be around £150 a week. However it is confirmed that because millions of workers are “contracted out”, they will not be entitled to the full amount.

Under contracting out, employees used a rebate of national insurance contributions to build up a separate private pension pot. Others, such as mothers and the self-employed, have frequently failed to build up a sufficiently long national insurance record to qualify for the full amount. Under the new system, employees will need to have 35 years’ of NI contributions to obtain a full pension, compared to 30 before. The figures reveal that one in three retiring workers will be paid a state pension of no more than £133.56 a week rather than the £150 many have been led to expect.

A pensions advisor said: It is imperative individuals receive a proper state pension forecast. Without this, they could get a nasty shock when they do reach state pension age.” It is possible to obtain an estimate of the state pension you will get at retirement from, which also has information on how to pay in extra now to qualify for the full pension. The government says you are more likely to be contracted out – and therefore not eligible for the full new state pension – if you work in public sector organisations such as the NHS, local councils, the civil service or in teaching;


January 2015; Less than half British retirees to get full pension

The UK government admits that less than half of all British pensioners will receive their full £150-a-week state pension from 2016. The Department for Work and Pensions says only 45% of the 3.5 million people who will retire between 2016 and 2020 will receive the full annuity. The new single-tier pension will from April 2016 replace the existing two-part system of basic state pension plus the state second pension (also known as Serps).

Now Rodney Shakespeare, a London-based professor of economy and political commentator, believes the pension system is being manipulated. “The pension system is part of a general cutback in state benefits of one source and another. Behind this is a collapse of the real economy, and that is because the UK system like that of Europe and in the Western system generally does not put any money supply into productive capacity. It only puts it into the banks and those who have existing assets and it all ends up in a sucking up of wealth to the one percent.”

“Just about half of the people who are retiring in the next year or two are going to have much less in state pension and they had been conned and they had been deceived. They were allowed in the past, in addition to their taxes not to pay an element of the national insurance pension contribution,” Shakespeare went on to say. Under the new system, employees will need to have 35 years’ of National Insurance (NI) contributions to obtain a full pension, compared to 30 before. The figures reveal that one in three retiring workers will be paid a state pension of no more than £133.56 a week rather than the £150 many have been led to expect.

Financial Services

Bank of England Financial Policy and Relocation of Banking Headquarters to England

1. Scottish Banks to Relocate Headquarters to England, (not much change then since 80% of the functions are already there)

a. The dirty tricks campaigners continue their single minded targetting of Scotland in pursuit of the removal from UK financial services of any risk to the Bank of England and Westminster. It now appears that Scottish banks are intent upon relocating their headquarters to London despite getting the, “no” vote they vociferously advocated, assisted by Sir Jeremy Heywood and his dirty tricks team in HM Treasury. A kick in the teeth for those that fell for the hype.

b. Jeremy Peat opened his article stating, ” A senior figure in the finance sector has warned that firms could move their legal headquarters out of Scotland due to continued uncertainty over independence”.

c. Peat accepted that the vast bulk of regulations applicable to the financial sector in Scotland are in place in support of financial control systems outwith London. Approximately 70% emanates from the European Union and this would be placed at risk in the event of a European referendum. To facilitate it’s continuing function he conceded that Scotland would need to focus on the retention of highly-skilled, highly-paid jobs particularly in the asset management sector, where Scotland already has an excellent reputation and large firms including Aberdeen Asset Management and Standard Life Investments.

d. John Finney commented; “We continue to see the advantages of Scotland being a full participant in the European markets and what the EU referendum threatens to do is to jeopardise that direct relationship between Scottish companies and European markets.”

2. Extract and Summary of a Meeting of the Financial Policy Committee 26 September 2014

a. Stability of the financial markets in of utmost importance and to facilitate this briefing information will be widely distributed, through the media, banks and other information distribution organisations/systems.

b. In the event of a ‘yes’ vote the Bank of England will issue a statement immediately reaffirming its responsibilities for financial stability, prudential regulation, banknotes and monetary policy in the entire United Kingdom, including Scotland, until legislation enacting independence comes into force. This statement will be coordinated with the Financial Services Compensation Scheme (FSCS) and HM Treasury, as appropriate, to provide a comprehensive explanation of financial stability arrangements during any transition period.

c. The incidence of risks will be much reduced if Scottish-domiciled banks chose to, and announce without undue delay, their intent to redomicile their holding companies into the rest of the United Kingdom. To this end and ahead of the vote, a number of Scottish based financial services firms had announced that they would redomicile in the event of a ‘yes’ vote. Prudential Regulation Authority (PRA) supervisors have been working with these firms to understand their intentions and ensure their operational readiness.

d.The Bank of England have in place arrangements to meet any potential increased demand for Bank of England notes from holders of Scottish notes and provisions will remain in place providing that Scottish banknotes are backed fully by their issuers’ holdings of Bank of England notes, UK coin and deposits at the Bank of England. This would have been a key public message in the event of a ‘yes’ vote.

e. It is noteworthy that large UK banks are required and maintain significant liquid asset buffers and that their Discount Window allows banks to access liquidity against the substantial amounts of pre-positioned collateral.

3. Record of Financial Policy Committee Meeting Held On 26 September 2014

a. The Committee reviewed economic prospects and the outlook for financial stability , as summarized below. Scottish referendum 2. In the United Kingdom, there had been intense focus on the referendum on Scottish independence. The Committee had discussed and received briefings on the possible financial stability risks associated with the Scottish referendum and associated contingency planning by the Bank in June, July and September. At those sessions, the Committee had reviewed the developments relating to the Scottish referendum focusing on financial stability implications. In July the Committee had received a detailed briefing on the Bank’s contingency planning.

b. The Committee had noted the possible impact of a ‘yes’ vote on market perceptions of the United Kingdom’s creditworthiness. If an independent Scotland were not to accept its
proportionate share of the debt, the Committee felt this could have modest implications for the United Kingdom’s sovereign credit rating. The implications for the implied credit rating of an independent Scotland could have been more material.

c. The impact of a ‘yes’ vote on regulated firms would likely have been varied. No significant concerns had been identified for UK financial market infrastructures but there could have been significant effects for those major UK banks and insurers which were domiciled in Scotland or had substantial Scottish assets and liabilities. The main financial stability risks would have arisen if: ? a lack of sufficient clarity over deposit insurance arrangements and/or credibility of central bank liquidity support had led depositors and other creditors of Scottish institutions to transfer their business to other financial firms; and/or ? Scottish-domiciled banks had been subject to ratings downgrades, as implied home government support was reduced, potentially affecting their ability to act as counter parties to other institutions and/or to access wholesale funding markets.

d. The Committee had noted that the main parties in the Westminster Parliament had ruled out a formal currency union with an independent Scotland. It had also noted the potential instability of any informal currency arrangement, such as sterlingisation. In the absence of credible institutions and resources to back financial stability and fiscal credibility, such arrangements could have led to expectations of future redenomination, particularly if an independent Scotland were seen to be on an overall path of economic
divergence from the rest of the United Kingdom.

e. In the extreme, it was possible that the prospect of that risk materialising in the future could have threatened financial stability in the present. If depositors, policy holders and other creditors believed that an independent Scotland would adopt a new currency, they might have preferred not to take the risk that their assets might be redenominated into that new currency. If financial companies believed they would face currency mismatches and therefore potential capital losses in the event that Scotland adopted a new currency, they too might have preferred to reduce their exposures to Scottish assets.

f. The Committee had noted that affected firms were undertaking extensive contingency planning – in liaison with the Prudential Regulation Authority (PRA) – in areas such as liquidity management, operations and communications.

g. A number of risks would have been enmitigated if Scottish-domiciled banks chose, and were able to announce quickly, and with credibility, their intention to redomicile their holding companies into the rest of the United Kingdom. Prudential Regulation Authority (PRA) supervisors had been working with those firms to understand their intentions and ensure their operational readiness. Ahead of the vote, a number of Scottish-based financial services firms had announced that they would redomicile in the event of a ‘yes’ vote.

h. The Committee had discussed the practical issues associated with redomiciling. It had judged that both the speed and certainty with which firms would be able to redomicile could be significantly improved by new legislation. Any such legislation would have been a matter for the Westminster Parliament, whose view could not be pre-supposed.

i. The Committee noted that redomiciling would not mitigate all risks to financial stability. For example, currency risk could also affect holders of Scottish assets or financial instruments (such as asset-backed securities) which contained underlying Scottish assets. The Prudential Regulation Authority (PRA) had been discussing with firms how they would manage their potential currency exposures.

j. Based on regular liquidity monitoring, the Prudential Regulation Authority (PRA) had assessed that the large UK banks’ wholesale funding positions were stable. Nonetheless, a key element of the Bank’s contingency planning work concerned the potential provision of liquidity support to individual institutions. The Committee had noted that the large UK banks had significant liquid asset buffers and that the Bank’s Discount Window allowed banks to access liquidity against substantial amounts of pre-positioned collateral.

k. A routine market-wide Indexed Long-Term Repo operation (ILTR) had been scheduled for 7 October, but the Bank was ready and able to announce extra operations at very short notice. It was subsequently decided by the Bank that, in the event of a ‘yes’ vote, and as a precautionary measure to backstop sterling money market liquidity, the Bank would immediately announce its intention to conduct additional operations in each of the two succeeding weeks, bridging to the already scheduled 7 October operation.

l. The Committee noted that the Bank had in place arrangements to meet potential increased demand for Bank of England notes from holders of Scottish notes. Under current arrangements, Scottish banknotes are backed fully by their issuers’ holdings of Bank of England notes, UK coin and deposits at the Bank of England. This would have been a key public message in the event of a ‘yes’ vote.

m. The Committee noted that the Bank had been developing and implementing its post-referendum communication plans. In the event of a ‘yes’ vote it would issue a statement
immediately reaffirming its responsibilities for financial stability, prudential regulation, banknotes and monetary policy in the entire United Kingdom, including Scotland, until legislation enacting independence came into force. This statement would be co-ordinated with the Financial Services Compensation Scheme (FSCS) and HM Treasury, as appropriate, to provide a comprehensive explanation of financial stability arrangements during any transition period.

n. The Committee welcomed the contingency measures taken by the Bank and emphasised the importance of readiness of the Bank, in conjunction where appropriate with HM Treasury, to take steps rapidly in the event of a ‘yes’ vote. It also recognised the need for careful communications in advance of the referendum, both to maintain the political independence of the Bank and to avoid inadvertently triggering the very risks the contingency planning was designed to mitigate.

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