Category Archives: Britain

Britain, Government, Intelligence, National Security, Society, Technology, United States

The appearance of the heads of Britain’s Secret Intelligence Services before Parliament…

A WELCOME STEP

Yesterday, the heads of the three intelligence services in Britain – MI5, MI6 and GCHQ – gave evidence in public for the first time before Parliament’s Intelligence and Security Committee (ISC).

Underlying the examination was one of the oldest questions about the nature of state-sponsored surveillance: who monitors and regulates the watchers? An analysis of what was said should glean that we did not learn a great deal that we did not already know. The transparency element, for example, went only so far. They appeared suitably nondescript, too, with faces you would quickly forget in a crowd, a prerequisite for any spymaster.

MI6 chief Sir John Sawers, GCHQ chief Sir Iain Lobban and Andrew Parker, who handles intelligence agents in the UK, deserve some credit for showing up, given their keen professional aversion to public exposure in a political theatre. This should be seen as a welcome step in the right direction if the work of the agencies is to be more open and less susceptible to caricature by conspiracy theorists.

Three developments compelled yesterday’s momentous public appearance. The first is the leaks by the former US national security contractor Edward Snowden which revealed extensive spying by GCHQ and the US National Security Agency. The scope and extent of this surveillance, its modus operandi and authorisation frameworks are matters of high public interest and concern given our historic traditions of personal privacy and public angst over the monitoring activities of government into citizens’ lives.

The second is the revolution wrought by communications technology with subsequent and resultant concerns over data protection. And the third is the sizeable increase to the budget of the security services to combat ‘terrorist’ threats. Balancing the duty to protect the public from dangerous and highly-organised would-be killers with how that objective is achieved by SIS (Security & Intelligence Services) is bound to create conflicts.

For spymasters, whose stock in trade is secrecy, it is perhaps too much for others to expect answers to be given in public about what they do. Such shortcomings soon became apparent during exchanges about the impact of the leaks perpetrated by Mr Snowden. Sir Iain Lobban denounced the way the disclosure of thousands of covert documents had hampered his agency’s efforts to thwart the nation’s enemies. Sir Iain claimed it had put the security effort back many years. In a similar vein, Sir John Sawers insisted our adversaries were ‘rubbing their hands with glee’ as a result. When asked, though, for specific details they retreated behind a cloak of secrecy, saying that to divulge such information would compound the damage.

Because of the synthetic nature of the exercise, the imperfections exposed matters that could not be revealed and which the public would not expect to be told. It is from this point, then, where we have to rely on systems of parliamentary oversight and surveillance protocols to work effectively.

It is indicative that the parliamentary committee for security and intelligence hold the chiefs accountable in private for the allegations they have made and to establish whether their concerns are substantively genuine. The ISC should then report its findings to the public.

The issue of mass surveillance was also raised at a time when it is becoming increasingly difficult to keep an appropriate balance between intrusion and security because communications technology is developing so rapidly. On being asked how legislation setting out their powers can possibly be relevant today when it was last updated 13 years ago, Mr Parker of MI5 said the law was a matter for parliament, not the intelligence chiefs. They also punctured the notion that simply because something is secret does not mean it is also sinister.

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Banking, Britain, Economic, Financial Markets, Government, Society

Statements by RBS are clear on two points…

ROYAL BANK OF SCOTLAND

A series of rash statements issued yesterday by the Royal Bank of Scotland is clear on two points. Firstly, the decision taken to create an internal ‘bad bank’ with toxic loans amounting to £38 billion will hardly provide an instant cure. It will take a further three years of write-downs and bank disposals before the institution will even be considered to have recovered from its 2008 financial collapse and taxpayer funded rescue.

The second relates to serious deficiencies in the day-to-day management of RBS – from its chronic failure to meet targets on lending to small and medium sized firms, through shortcomings in service to personal customers, and to the provision of £250 million made by the bank for mis-selling payment protection insurance.

It is extremely unlikely there will be any start to the sale of the bank back to the private sector until well after the General Election.

RBS has announced a bottom-line loss of £634m for the three months to September. Far from the internal ‘bad bank’ resolution being hailed as a panacea, it is little wonder that shares in RBS have slumped. Even in its darkest hour of 2008, few would have believed that the recovery of what was then the UK’s largest bank would have taken eight years and a massive restructuring and shrinkage of its business. RBS has suffered a major curtailment in much of its global business and activities, not just the unwinding of the vainglorious acquisitions of the Fred Goodwin era but is also shorn of the overseas expansion delivered by his predecessor, Sir George Mathewson.

The protracted period of indecision on whether the bank’s bad loans – much of them incurred in Ireland by Ulster Bank – should have been left with the government or treated as a separate entity, is a nettle that should have been grasped in 2009 rather than allowed to have festered for the length of time it has. Chancellor George Osborne had had to recognise that RBS’ problems – structural and cultural – will take far longer to resolve than the government first anticipated before a share sale can be undertaken.

The traumatic legacy of its near-collapse remains problematic today. This induced a deep reluctance within the bank to lend, in particular to small and medium-sized businesses. A highly critical report by Sir Andrew Large found RBS was performing so erroneously it was not even in a position to meet its own targets. In the meantime, a review by RBS into how it serves its personal customers is scheduled to report next year.

The bank still has a mountainous task ahead under its new chief executive, Ross McEwan. There is much to do to overhaul the bank’s lending practices; by moving away, for instance, from the sales target-driven excesses of the previous era and by making major improvements to its overall service to customers.

RBS will eventually revert to being a domestically focused retail bank, stripped down to those core banking competencies it should never have deserted in the first place. The biggest challenge ahead will be to rebuild customer and investor trust. The bank’s widespread loss of confidence makes that a daunting and difficult task.

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Britain, Consumer Affairs, Economic, Energy, Government, Politics, Society

Addressing the massive public concern over rising energy bills…

ENERGY SUPPLY FIRMS

The Government has made known its intention to make it a lot easier for energy consumers to switch their supplier. Ed Davey, the Energy and climate change secretary, wants consumers to be able to do it within a day instead of the present arrangements which can take up to five weeks. Mr Davey’s suggestion certainly sounds like a positive move and one which will be embraced by all energy customers seeking better deals elsewhere in the market.

But is the real issue not more to do with consumer inertia and one that is caused by the belief that banal paperwork is tedious and that some cost may be involved, rather than the time taken to complete such a move? If so, then the additional competition which the Government is craving for – which should drive down prices – may not occur at all.

Of more significance, though, is Mr Davey’s plan to make the probing of the accounts of the ‘Big Six’ energy supply firms a lot easier. They have been accused and arraigned of utilising networks of subsidiary companies to purchase and sell fuel and services – effectively from and to themselves. This has allowed them to inflate prices and to boost profits while claiming that they are faced with soaring costs.

Whilst more transparent accounting practices could put a stop to this, a cautionary note would also be required to be issued. Based on recent experience of other big corporates’ activities, however clever state legislators and the tax authorities think they are, big company lawyers and accountants will always be one step ahead of them. That is pretty much a given.

But in a politically astute move, Mr Davey is also considering increasing the size and weight of the political baton he can wave at energy companies. This could lead to their executives being liable to face criminal prosecution if the evidence proves that they have been engaged in unfair and illegal price-fixing, as well as bill-inflating practices.

Most of the action that can be taken against companies to punish such activities is currently undertaken by regulators. This is done for the very good reason that regulators have a sophisticated understanding of the very complex methods that companies use. Because of that, the financial penalties and fines that OFGEM and other public regulators impose are rarely challenged.

Some commentators may argue that putting that material in front of a lay jury and expecting them to understand it, and following it through a trial which may last for several months, might be a sanction too far. Complex fraud trials are few and far between because of this very problem. However, if executives know that some underhand and deceitful practice might lead to such a trial with all the public ramifications and consequences that could follow – including imprisonment – it could also be a powerful deterrent.

In a game of fast moving politics, politicians are attempting to outbid each other in seeking to address the energy crisis problem. But action which brings results in the form of lower bills for consumers as opposed to instant popularity and votes should be the guiding principle.

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