Just to annoy the many Tories out there:

Labour is launching a campaign to save Britain’s high streets, calling for urgent action to help retailers, protect jobs and give people a real say over their local high street.
http://www.labour.org.uk...o-save-our-high-streets

I think the real problem is that out of town is cheaper for the multiples with big sheds. Small shops are less economic. Unfortunately the third of the population without ready access to cars has to pay the inflated prices and face the limited choice on the High Street. Perhaps the solution is to even up business rates so that a shed in town is no more expensive to run than a shed on a trading estate. That does not address all the access problems and availability of large empty spaces to build sheds in some town centres.

Prof

A doctor helps you stay fit for work. This service increase your wealth by ensuring you get pay rather than a miserable dole.

An accountant helps you minimise your tax bill - increasing your wealth.

Bin men limit the spread of diseases from rotting waste and plague carrying rats.

They allow the rest of us to be as productive as we can.

Redundancies among the big banks in the City are to cost the tax man £1.3 billion.

There is a natural limit to the growth of non-exportable, non-essential services and that is the desire and ability of customers to pay. You do not need to plan ways to curb the growth in the number of sun-bed franchises or nail bars. It will happen all on its own. Their very existence shows that in aggregate we are still a wealthy country. Our problems include maldistribution of wealth and incomes.

Oxbridge students study PPE, Politics, Philosophy and Economics because there is no reasonable way of separating them. Philosophy is about how you should live your life, politics decides on the allocation of state resources and the legal framework for the economic actors who make and sell things and services.

Response to Jeremy Bosk #248

At risk of seeming over familiar you strike me as a very competent person who can evaluate difficult financial issues and make a reasoned, prudential judgement. You argue that more should be like you.Take responsibility etc.

When I was a law lecturer I had a pretty extensive hobby rebuilding old sports cars. A friend, who was one of the brightest lawyers I ever met, asked me to repair his rusty road car. He wanted to help so I carefully explained how an air chisel worked, and pointed out the exact place he need to start. He got it completely wrong and was hugely embarrassed. He made this error because it was all completely strange to him, and he stopped thinking rationally; further he did not wish to appear a fool by asking for a repeat explanation.

Now imagine an expert panel beater, who is entirely comfortable shaping a wing, going into his building society for his mortgage. He is introduced, by the smooth be-suited expert mortgage adviser, to the idea that a straight mortgage is a bit old hat; much better that he has one of these new endowment mortgages. He might well be talking to a representative of that pillar of respectability the Halifax. The adviser might sell him a Standard Life policy - he or she would avoid revealing that the management charges applied by Standard Life were in fact greater than those shown in the SL projections used to sell the endowment (this admission was only wrestled from SL and others by the Information Commissioner, after a bitter battle) Thus a shortfall in the endowment maturity value was guaranteed from the outset. The same bunch at Halifax might later churn the endowment and, again, he might miss this because he is in a completely unfamiliar world - just like my clever lawyer friend was with the air chisel. Except that it costs the panel beater thousands. And it was not just the panel beater. Most of us got caught by the same sales pitch.

Moving on, he might be one of those unfortunates mis-sold an Equitable life policy. Have a look at the case histories referred to in Lord Neil's report, done at the behest of the Equitable Life Action Group - these were sensible, careful people, who apparently didn't get it. If the FSA and the auditors could not spot the fact that this was little more than a Ponzi scheme how could the customers? Why was Bernie Madoff able to get away with it for so long- this in the USA, a country with, supposedly, very aggressive staff at the SEC who were given repeated warnings by a third party?

The problem for me (and I suspect for Prof Eman and others) is that we are convinced that no lessons have been learned. The bonus culture is unchanged and the demand for profits is the same. Nor do I believe that auditors will be the saviour, much less the FSA. They ignored the most obvious excesses in the past, why should the future be any different, once the furore has died down? Perhaps we should ban Cool Aid.

Ring fencing is going to be a fudge because the ICB proposals will leave the bank, as an entity, liable in the total loss scenario. Conceivably this is why both Vince Cable and Mervyn King regard the ICB interim proposals as insufficient. I believe that we will still, as a country, be called upon to bail out the banks if they mess up big-time again, unless we act more rigorously and make them fail safe.

I can vividly remember the expression on the Halifax mortgage manager's face as he told me I was making a great mistake by not signing up to a Standard Life endowment mortgage rather than an interest-only one - the expression of thwarted high pressure salesmen the world over. I dodged the Equitable Life bullet only by inertia. And I dodged more of the swindle that my occupational pension has become for the same reason. OK, I paid more tax as a result, but at least some of that was in a good cause...
Given the last 30+ years of scandals over the misselling of pensions and lately the retrospective writing down of benefits, I would not put more into an occupational pension than the amount that attracts a greater amount of employer contributions, and I wouldn't touch any other pension over which I did not have full control over the investments. I see people beggaring themselves now to keep up contributions to pension schemes that may never pay out in years to come. They would be far better off enjoying jam today and letting tomorrow take care of itself.

Response to Jeremy Bosk #257

I agree profoundly with everything you say (apart from para 1) but remain unconvinced that you have provided an answer. How, as a matter of interest, can the taxpayer interfere in a bonus arrangement agreed in a contract to which he is a third party? If remuneration committees continue to authorise grossly inflated bonuses, all we can do is say: "We cannot stop you doing this in a free society, but, if you get it wrong it no longer affects us"

Part of the problem is that that many people (including the FSA and the FOS) share your view that the behaviour, of which the banks stand convicted in the recent past, was merely "unethical" whereas I think it amounted to fraud.You say: "....most top financial services people stay within the letter of the law..." this was not true of most banks and building societies in the run up to the crash. Prior to the Financial Services act 1986 banks did not generally disclose the fact that they were paid a commission on the the sale of an endowment policy. Thus when the mortgage adviser said: "We really recommend this form of mortgage security, as the best for you, he/she omitted to tell the customer that the bank was receiving, in most cases, a share of the commission for saying it. This was a breach of well established civil law, confirmed in Lister v Stubbs 1890, ie that an agent must not make a secret profit. With respect, many of us think the level of wrongdoing evident in the past is a pointer to what may happen in the future. All trust has gone, and, in a way, you make the argument for me - we must, you say, allow unreconstructed banks to continue to take risks. My argument is that we know that in the immediate past they lied, gambled and lost. Future activities may be subject to scrutiny by an "underpaid bunch", paid for by the very banks they are, supposedly, investigating but is that good enough?

My problem is that your solutions, logical and effective though they might be (cut the bonuses and limit commission based selling) have not been adopted nor, in my view, will they be. See the extract below from the discussion that followed the Panorama programme (bad in itself, I agree) "Can You Trust Your Bank":-

"6. At 21:49 13th Jun 2011, MajorBarbara wrote:
I was a Lloyds Bank manager who was glad to take early retirement in 1992, when the rot had already set in. As an example, shortly before I retired, Lloyds managers were told the bank prohibited them to grant a personal loan to a customer unless Payment Protection Insurance was sold, although customers could not to be told of this requirement as it was illegal.

Rewards to bank staff for selling "products" should be banned, all staff should be on salaries only

Representatives of the British Bankers Association (no doubt highly paid) have appeared on television for many years to ward off detailed and justified complaints about banks. They are like politicians, skilled at waffle, and never give a straight answer to a straight question. If they are allowed to appear on television in future, there should also be a translation of their replies in plain English."

I do not believe we can tighten up the auditing and regulation to prevent a recurrence of the problem. It will always resemble the present state of internet security - breach followed by repair, followed by breach followed by...

We need to assume failure and prepare for it.