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The ravings of an individual, UK voter frustrated with our politicians

Archive for October 2008

Could smoking ban be extended to homes and private cars?

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It is hard to believe in a free and democratic country that I am even asking this question, unless of course, you look at the backdrop to the recent National Health Service consultation on such a ban. But, before that, I would just like to ask who the hell they think they are, the NHS are care providers, a public service paid for by taxes, not a political party. According to their own figures, which are always exaggerated to include fixed, rather that just variable costs, smoking related illnesses cost the NHS £1.7bn a year.

So lets put that in perspective. Under the guise of attempting to protect smokers from themselves, successive governments have introduced duties and tax on all tobacco related products. So, much so, that they now rake in £10.5bn a year, so even excluding the so called ‘cost’ to the NHS, the smoking pimps, sorry, the government still profit to the tune of nearly £9bn every year. Or to put it another way, if every smoker was to give up tomorrow, the NHS would not hand back the £1.7bnand the basic rate of income tax would have to rise by 3% to cover the loss of tobacco taxes. Just for the readers own edification, duties and VAT on alcohol products, raises another £9bn a year..or if you prefer a figure equal to 3% on our basic rate of tax.

There are an estimated 9.5m smokers in the UK, equivalent to approximately 20% of the adult population. By no means a minority. However, imagine any other group of people being subjected to such draconian legislation? I agree, that a ban on smoking in the workplace was an excellent idea, but equally, many organisations had already introduced this without the need for ‘nanny state’ legislation. But, to extend this legislation to include all public places, company owned vehicles, pubs, clubs and restaurants was a step too far. Any government that were to offer support to the consultation process currently under discussion at the National Health Service, (to ban smoking in private cars and homes) would be committing political suicide.

This Labour government was so short-sighted, that it did not take account of, or it was so arrogant, that it chose to ignore the effects of their legislation. It is estimated by the BBPA that some 36 pubs a week are closing, for the most part, as a direct result of the smoking ban. Each closure has real people affected, families, people wanting to try and do their own thing (tenants), real living and breathing individuals! But it is not just pubs, it is companies that supply services to pubs, soft drinks, food suppliers, beermat printers, caterers, the list goes on. This government could have allowed pubs to opt out, or become ‘smoking clubs’, as they have in Germany, instead, they insisted on a one-size fits all strategy. Clubs, entertainment centres and restaurants across the country are suffering and closing as a direct consequence of this ill considered legislation. This Labour government, once again, pandered to the PC brigade, another crusade, one day, coming to the rescue of foxes, the next day targeting smokers.

As I have already stated, I believe that non-smokers have a right to enjoy a meal, or a pint in a smoke-free environment. In fact, in my personal experience, most smokers, were always cognisant of the feelings of non-smokers and refrained from smoking in their presence. But the adult population make their choices, some may choose to drink in a club, others at a wine bar and another group may prefer a public house. Similarly, given the choice, the same adult population could, given the choice, opted to decide whether they wanted to go to a pub, club, bar or restaurant that permitted smoking or one that did not. There was no need to treat all of us like children and no justification in taking the law so far, as to turn 9.5m people into a colony of lepers. It was and remains an appalling piece of legislation, the New Labour government got so caught up in their own sense of power and invincibility that they went ahead and drove through legislation that far, far exceeded their election manifesto commitment.

I am a smoker and I know as many smokers as non-smokers. I have run businesses in this country and abroad. If I received complaints about smoking in the workplace, I always allowed the matter to go to a secret vote, with the only proviso, that there must be a majority in favour a change. On each occasion I did this, without exception, there was a vote in favour of a ban (with smokers catered for) and a good proportion, perhaps, up to 50%, of the smokers voted for the ban…yes for! In other words, left to their own devices, the adult population can and will act responsibly, decisively and collectively. These groups did not need, nor did they seek a Big Brother approach from a nanny state.

Treating adults like children is likely to lead to a temper tantrum and no government, particularly one that is prone to look down its nose at the very people that are paying the bills, can afford to ignore the affects of such draconian legislation. This government needs to tell those pampered, isolated, busybodies at the National Health Service to wind their collective necks in and keep out of politics. Then I would suggest this governent looks at some exemptions to this smoking ban, before it is too late and they end up killing the golden goose.

Before I get the anti-smoking lobby knocking at my door with the usual rhetoric, I want to make the following points. Smoking maybe a choice, but it is also a habit. I do not advocate smoking in the workplace, nor do I believe it is right to smoke where non-smokers congregate, if the non-smokers have no choice but to inhabit the same space. My argument is that the legislation went too far and in particular, much further than was proposed in the manifesto. 

9.5m smokers also have rights, to go out and enjoy themselves in a smoke-filled environment, if they so choose. Businesses, should have the right to apply and receive exemption, leaving non-smokers the choice of whether or not they will provide said businesses with their patronage. Our freedom and civil liberties were hard-fought for and won, but we are also supposed to have a tolerant society. If any government had targeted 9.5m ethnic or other minority groups in the same way as they have the smokers in this country, there would be worldwide condemnation. It would not be a retrograde step to allow exemptions, it would show political maturity and demonstrate that non-smokers can show the same level of maturity and good grace that the smokers offered them, when I asked them to vote on whether to smoke in the workplace, before the legislation was imposed.

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Big Brother Britain by Stealth

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Proof, if any were needed, that this Labour government will bring in ID cards by any means necessary was provided by a recent statement given by Home Office Minister, Meg Hillier at the Biometrics Conference.

She was quoted as saying that there was “nothing to stop” drivers’ licences or other documents from being designated to work as ID cards and went on to say “In time it is possible to designate the driving licence or other documents to be counted as an ID card.” The only conciliatory note in her comments was that there were no plans to do so before 2012. Cold comfort for those who believe, as I do, that this Labour government is simply obsessed with gaining more and more control over the views, activities, intentions and minds of the electorate.

As Cornelius Tacitus, senator and historian of the Roman Empire was quoted as saying “In a free society, the rights and laws protect the individual from the government. In a dictatorship, the rights and laws protect the government from the people. The more corrupt the state, the more numerous the laws.”

Hillier explained that once an ID Card system was in place, it would be used for proof of age, criminal records bureau checks, for bank loan applications, for employers, as well as maternity allowances, tax returns, TV licences and incapacity or unemployment benefit claims. Of course, we all know that this will also include biometric data.

Under the Identity Card Act 2006, the Home Secretary can designate documents that will require anybody applying for them to be placed on the National Identity Register (NIR), the backbone of the ID card scheme. In other words, they could refuse to issue, for example, passports, drivers licenses and so on, unless, or until we agree to join the National Identity Register. This, presumably is designed, to counteract the growing movement of disobedience, where people are signing a pledge not to do anything to support the introduction of identity cards.

Phil Booth, national co-ordinator for pressure group NO2ID, said: “It is clearly a compulsory scheme if in order to continue driving, travelling abroad or get a loan you have to be registered on the scheme“.  He added that “it is coercion up to the point of compulsion.”

Add this database, with the Big Brother Database, monitoring all forms of communications, mobile calls, text messages, email and internet browsing, together with the children’s database, ContactPoint and the mobile phone register, added to vehicle tracking through ANPR (Automatic Number Plate Recognition), 4.2m CCTV cameras and a National Health Database that will hold all of our medical records for our lifetime and you really start to get a picture of just how much control this government wants overs its citizens. We need to ask ourselves why, what are they so afraid of? It cannot be to protect us against terrorism, because lets face it, for 100’s of years, this country has been under threat from outside influences, yet we have survived and prospered, without this level of state intelligence and policing.

If we value our civil liberties, which clearly this government does not, then we need to be vocal and we should consider supporting pressure groups such as NO2ID, Statewatch and The Open Rights Group.

UK affairs, do the British care anymore?

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Yes, it is a rhetorical question, but I found myself asking this last night. At a time when the UK PLc is supposed to have racked up debt of some £1.3 trillion, or if you prefer, over £50k per household. At a time when the engine house of our economic activity and employment, small and medium sized businesses are suffering. At a time when the UK government seeks to gain more and more control overs its citizens in the latest Big Brother Britain move. What do we find time to complain about? Yes, you guessed it, Russell Brand & Jonathan Ross and their cheap prank.

It is no big deal whether you think this prank is funny or not, I personally think it was a cheap, cowardly attack on a 78 year old man. But I did not find the need to join 10,000 other people and complain to the BBC. Why? Well, does it really matter, Sachs is quite capable of demanding an apology and any more airtime given to Ross and Brand, just boosts their egos and raises their profiles? It is the proverbial storm in a teacup.

But, what I would really like to know is what motivates 10,000 people to complain about a couple of pranksters, when you couldn’t get a fraction of that number to write to their MP about the plight of small business, the state of our economy, or the  ‘Big Brother Britain’ state intrusion into our everyday lives? Really, has the world gone mad. If this was not enough, what of the prime minister, the leader of the opposition and other cabinet ministers and members of parliament. They all managed to spend time to offer up their opinion and what they think should be done about this little spat.

So, how come, when Gordon Brown or David Cameron are asked about serious issues like the the plight of small business, they skirt the issues with bland statements, such as “we will do what is necessary” (GB), or “small business needs help with what’s going to be an extraordinarily tough time” (DC)? Yet, when it comes to this small spat between celebrities, they can’t wait to tell us what they think and then what they would do (or they think others should do) to address the issue. On this issues, they are unequivocal and unambiguous. So how come they can answer direct questions with clear answers, when it comes to minor issues such as a celebrity spat, but when they are asked questions about things that matter, they ignore the question, or offer a bland, generic response?

Little wonder then, that so many voters feel so disenfranchised and disconnected from government, politics and politicians, when they set the priorities in such a inane way. That said, it is high time the public started to bite back, our politicians are in a privileged positions, we must demand and expect that they act in our interests, not their own. If 648 politicians want to lord it over 65m people, then they must demonstrate that they have the capability and are in touch with the electorate. They need to be coming up with constructive proposals to deal with the financial and economic crisis we are facing. They need to keep clear of celebrity.

It may just be me, but I feel a chill in the air, not from the deteriorating weather, but by a growing number of people that still care about what happens to our Country and are willing to be more vocal, forthright and action orientated to ensure that our politicians earn their keep or lose their jobs!

Government needs to reduce taxes not spend

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Gordon Brown & Co have indicated that they will borrow in order that they can spend their way out of this recession, but in all honesty, I think this is a bit simplistic. Firstly, I do not believe that you can spend your way out of a recession. But secondly and as importantly, any spend would be on infrastructure projects and this would, surely, limit any benefit to the construction sector.

In my opinion, recession is about people having less to spend and a lack of confidence in the economy. I am sure there are other factors, but these are the two that tend to come up time and again. Spending on infrastructure projects is likely to cost £100’s billions and will have to paid over the next 25 to 30 years. This option has limited appeal to the masses. On the other hand a bold government, or an effective opposition party, could propose something more significant.

One of the reasons people feel so poor, is that the money they have left over after they have paid their taxes and national insurance contributions buys much less. Added to that, millions more people today, than say, 20 years ago, are directly affected by the mortgage market and therefore, interest rates. My plan is a relatively simple one, because you do not have to have complex solutions to simple problems.

Government should reduce direct taxation by 5p in the £. This would cost no more than £8bn per year and would therefore be much cheaper than investing in infrastructure projects. This would immediately help people feel richer, more flush and they are therefore, more likely to spend their money. I do not think this should be done via increased allowances, or tax rebates, because these are seen as, respectively, something that can easily be eroded or a temporary bonus. Socialist should forget the fact that everyone would benefit from the 5p tax cut, who cares, if it means that those that need it most are included.

In addition, I would go for a substantial cut in interest rates, perhaps 2.5%. Inflationary pressures are on the eane and the benefit to households of a 2.5% cuts would be immediate, tangible and above all welcome in these difficult times. Banks should be instructed to adopt the 2.5% rate cut. Combined, these two move would provide the public with a massive confidence boost, they would feel more able to spend and the feel good factor would return. My solution does not rely on bringing forward PFI projects that are expensive in their makeup. Instead, it aims to put more money into peoples pockets, at a relatively low cost to the government, taxes could for example, rise in 5 years or so when the economy improves. Over 5 years, this measure would cost less that £40bn. And, lets face it, this is our money in the first place.

A substantial reduction in interest rates will aid a quicker recovery of the property market. To avoid another property boom, interest rates could be managed, but the initial boost in confidence would be incalculable. In addition, is the market starts to recover and property prices more affordable, then first time buyers will start bargain hunting, because they will feel that the decline has been halted. This would allow an exponential increase in property prices at a sustainable rate.

Simultaneously, the government needs to look its legacy of wasteful initiatives over the past 11 years. It is estimates that this alone has cost the taxpayers some £110billion. If they addressed this, then there would be no need to recoup the 5% tax cut at a later date: https://britishpolitics.wordpress.com/2008/09/09/gordon-brown-legacy-economic-competence/

I am happy for people to pick holes in my argument, but unlike this government which just want to spend more on projects no-one wants, or the opposition party that recognises there are real problems, but offers no tangible solutions, mine is simple and effective. If anyone has any better ideas, please feel free to post here! I made clear in a previous article that this country needs wholesale tax reform: https://britishpolitics.wordpress.com/2008/09/15/tax-benefit-reforms-uk/

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UK government seek more control over citizens

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I have decided to take up the offer of fellow UK Politics blogger, Power to the People and copy, verbatim, his article in relation to the latest Data Communications Bill, due to be debated in parliament and supported by Jacqui Smith. This Bill seeks to further erode our right to privacy and to be free from state interference, with sweeping new laws regarding the storage of all email, internet browsing habits, telephone calls and text messages of the British Public. This government has spent 11 years, introducing law after law, permitting more state inteference, less privacy and causing blatant infringments to our civil liberties.

I wholeheartedly support the views of PttP and would also urge people to view his proposed letter, vary it, personalise it and then send it to your MP. Maybe we can have a voice after all?

Enough is enough, the UK is becoming a police state by our control obsessed government and we are sitting back and allowing it to happen. It makes me angry to see such lethargy. Everytime a new act is brought in, far more sinister aspects are buried in the detail, which further curtail our civil liberties, freedom and privacy. This has got to stop and now, state should not be permitted to control the people, it should be the other way around. As it stands, just 650 members of parliament are pushing some 65m people around, yes, I mean 650, because whilst this government may have a majority, the MP’s from other parties are not making enough noise about this massive intrusion into our lives, they should be fired, the lot of them. We are quick to condemn the bankers (rightly so in many cases), but we do nothing about the MP’s that have consistently introduced or supported Acts of Parliament that intrude into our lives, in a way that will affect us for many years to come. We must put a stop to it.

It is expected that plans to collect more data on people’s phone, e-mail and web-browsing habits will be included in the innocuouslysounding “Communications Data Bill”, due to be introduced in the Queen’s Speech in November. By all accounts, these proposals are supported by Home Secretary Jacqui Smith, Gordon Brown and much of the Labour government. Once again, the government is expected to justify this gross intrusion into the personal lives of 65m people under the auspices of ‘counter-terrorism’, this is utter garbage, they know it and we know it. Yes, there are terrorists out there and they don’t wear badges, but this country has faced terrorism before and the security forces managed to investigate and prosecute without such laws.

I don’t know how many terrorists are out there, but it is not 65m and is probably less that a couple of thousand, why should the privacy and personal of 65m people be invaded by this government because of a few people that mean us harm? This whole thing needs to be put in perspective, more people in the UK die on the roads than as a result of terrorism, more soldiers are killed abroad, that in the UK as a result of terrorism, in fact, more people are killed in farming accidents that as a consequence of terrorism. This government have invested massively in the security services, allowing them to go on a substantial recruitment drive, there should be no need for a massive Big Brother surveillance operation of the entire population of the UK. Before some smart-arse suggests that it is this surveillance and investment in the security services that has reduced the number of terrorist incidents in the UK, I would ask them to provide further evidence that this is the case and then to put it into perspective. For example, it is well know that the airline industry work out whether safety mechanisms are worth introducing on their planes on the basis of a cost/benefit analysis. In other words, will the costs associated with an accident outweigh the cost of implementing the safety programmes. Fact of life, they all do it, they just rarely tell us!

Of course the government will issue the usual platitudes and assurances that they will not misuse this information, but can we believe them. The Icelandic authorities had their assets frozen using anti-terror laws, in spite of the fact that there were other laws that could have been used and would have been just as effective. A local council used anti-terror legislation to spy on the parents of a child that they throught was in the wrong ‘catchment area’. This list, trust me, goes on and on. We also know that this government ant it’s private sector partners are incapable of securing data, which means our personal lives could be open to all and sundry. Some will argue that if you have nothing to hide, then there is nothing to hide, these same people probably still believe in Father Christmas. As we know information, any information can be used in different ways, depending on the the intepretation of the recipient, how many times have we said or done something that was completely misrepresented?

I have nothing to hide, but I object strongly to my personal calls, web browsing habits and email being monitored and invaded by the state. Government’s could even misuse this information to find out how we intend to vote! It is an appalling proposal and it is high time the British public called time on the control obsessed government and it’s supporters, irrespective of which party they represent. This goes beyond party politics, it is a direct attack on the very fabric of our society and no-one will be safe from government interference if it is allowed to pass into law. If the government believe that this act is so important, then they should allow the British people to vote on it through a referendum, I believe they will get a resounding No…and they know it!

People often tell me that there is “not much we can do”, but there is. Our members of parliament are worried sick that they may lose their seat at the next election, we must emphasise to them that if they support this attack on our civil liberties that we guarantee they will. We must demonstrate to our MP’s that they should be more in fear of the wrath of the British public that the Chief Whip of their own parties. Opposition MP’s should do their jobs and oppose this draconian piece of legislation. We must also warn our local members of parliament that if they vote for this Act, that we will not vote for them, we must make it clear, that we have a voice, not once every 5 years, but throughout their tenure and that we will have it heard. Everyone that feels this Act is a direct infringement of our civil liberties, right to privacy and an attack on the very fabric of our society, should write to their MP and tell them so. I have provided a ‘draft letter’ which can be viewed, personalised and sent to your MP. Draft Letter to MP

I would also invite all fellow bloggers that feel as strongly as I do on this issue to reproduce this article in part or full, topped and tailed if they wish, to publicise this issue to as many people as possible. Let us all stand up and fight in this issue, and remind this government who is actually in charge.

Full Article: Power to the People

 

RESIST!

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UK public turn their backs on home ownership

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Okay, okay I know this is not today’s headline, but there must be a real risk, that in the not too distant future, we will see such a headline. Since Margaret Thatcher persuaded millions of people that home ownership was a goal worth aiming for and, lead the way with a massive sale of local authority owned houses, the British public have had a massive appetite for home ownership. But given the last property crash and the current turmoil, will this continue?

The term ‘negative equity’ entered the vocabulary of the masses in the early nineties when, in no small part due to interest rates rising to 15%, property owners watched as the value of their property tumbled. Worst affected, were those that had bought at the top of the market and/or had already over-stretched themselves in order that they could jump on the property ladder. Some people were forced to watch as their mortgage repayments virtually doubled and they had no way to extract themselves, because the property was worth less than what they had paid.

Fast forward another 16 years or so and we are witnessing the same issue of negative equity, albeit for different reasons. Now, whilst interest rates are low, people can’t afford to sell, many others are forced to live in houses that are no longer suitable, perhaps because they have more kids, or less kids! Maybe they need to move because of a job, whatever, these people are trapped, with no simple way out. Now, I am covering an issue that has been dealt with elsewhere, but he is my prediction for the future.

My Prediction for the Future of the Housing Market
I believe that it will be a case of, once bitten twice shy, anyone that has been a ‘victim’ of the housing market twice in less than 2 years and for that matter, others that have witnessed the stress and strain of people suffering, will think twice before buying a home. Why for example would anyone want to see a house increase in value, because, unless you are in a position where you can buy it, live in it and sell it at the right time and move into rented accommodation, there is no real benefit?

The government spout on about “social mobility”, yet having to sell a property and buy another reduces social mobility. In addition, the cost associated, even based on ‘average’ prices is substantial. Most people will find their costs in terms of agents fees, solicitors costs and stamp duty will be far in excess of £10,000. So, if you need to move to a larger or smaller house, you want to move closer to family, move to another job, or even for a better school, you have the major headache of having to sell your home and buy another, something that has been adjudged to be one of the top two most stressful situations a person is likely to have to endure.

In many countries, such as Germany, property ownership is not seen as something people should aspire to, therefore the vast majority rent their family accommodation. This means that it is easy to move house when the need arises and that it is far easier for families to budget their living expenses. Rented homes tend are not subject to the vagaries of ever changing interest rates, nor do they come with the responsibility of high, often unexpected repair bills, at least not for the tenant. Yes, people do not benefit from an increase in property values, but then they do not suffer during downturns either. If someone was to do the maths, even with properties averaging a capital increase of 10% per annum, it is quite possible that people are no better off with property ownership. Because, if you factor in other costs, such a higher monthly repayments, building insurance, repair and maintenance costs, purchase and sale costs, moving house 2 or 3 times in 10 years and any ‘profit’ is likely to be quickly lost.

I believe that we will now see a raft of new, very large property companies forming, who will take on the risks associated with owning property and a substantial rise in people renting. No longer will people be so easily fooled into feeling wealthy if their property values increase, because it will be clear that any value taken out of the property in terms of equity, will be little more than a loan, unless they expect to be in the position of being able to sell the property in the future without having to buy another.

The so called stigma associated with not being a property owner is going to fall away, there will be a whole new perspective on property ownership, people will start to see that it is a potential albatross, that has the potential to restrict mobility and therefore, quality of life. People that rent will be able to move to areas where the best jobs are, where the best schools are or where their family or friends live. Tenants will be able to budget with confidence, knowing that at worst, they will see a small increase in their rental costs, but with a dearth of companies to choose a property to rent from, prices will be kept competitive and choice will be much increased.

Property ownership is a mindset, the last two generations have been brought up with the belief that if you don’t won a property, you have failed, or you haven’t made it, but we must all ask ourselves if this is really the case. I believe people will and this mindset will change. Government must also change their approach, especially if they truly want social mobility to work, they must promote the notion that a happy and settled home is far more important than whether it is owned or rented, they must make clear that people that choose to rent rather than own are not second class citizens and above all, they must offer that same levels of protection and incentives to people renting properties as those owning.

As repossessions rise, there will be a dearth of properties for sale and many of these will be bought up by property speculators at a discount of 25% of their ‘current’ market values. Unlike the previous speculators that wanted to set up a pension scheme using ‘buy to let schemes’, these businesses will be serious about owning properties for their rental incomes, rather than their potential capital gains. They will look at rental yields, much the same as the owners of industrial and commercial properties do. In other words, they will be professional landlords, operating in the home rental market. Admittedly, some of these companies, may be small to start with, but it is quite likely that they many will merge and/or sell to similar organisations and within a short period of time, we will see a number of large, professional home property rental companies. This is where I predict the future will be in 5-10 years from now.

The British love affair with property ownership will, for the most part, die away with this current property crash. They will start to see the real benefits of property rental, in the same way, that many people lease their vehicles for 3 years, rather than owning them. They will start to realise that quality of life is measured by happiness, living in the right type of home that meets their current needs and not to determine their place on the social scale by the worth of their house or the equity locked away within it. If my prediction comes true, then I believe it will be no bad thing, because quality of life, is far more important than quantity.

Bank auditors should also be held responsible

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I find it difficult to disagree with anything stated in this article from Power to the People, which I have reproduced in case anyone has missed it. The reality is, auditors do have a major responsibility to shareholder’s, who rely on their reports being objective and searching, surely the auditors can’t claim that they cannot he held liable for the fact that they have missed completely or failed to understand the risks involved with the strategy employed by some banking and financial institutions. I feel sure some ‘auditor’ will come in at some stage, in defence of his profession and I look forward to the response, assuming he or she is not too busy dealing with company administrations and liquidations!

At the moment one day pretty much blends into another, but on one of the evening news programmes this week, another fat cat, fee-earner had the temerity to say, when questioned, that auditors had played no part in the financial mire that is the bane of every UK taxpayer. I have to admit, that I wanted to throw something at him, because I have been arguing for weeks that the auditors have failed in their duty to the shareholders and worst still, shall be one of the few ’industries’ that will make money out of this fiasco, through company administrations, receivership’s, consultancy fees and so on.

Lets look at the generally accepted definition of a Finance Audit:
The process of verifying a company’s financial information. Auditors are certified public accountants who are independent of the corporation. An auditor examines a company’s accounting books and records in order to determine whether the company is following appropriate account procedures. An auditor issues an opinion in a report that says whether the financial statements present fairly the company’s financial position and its operational results in accordance with Generally Accepted Accounting Principles (GAAP).

And here is a common definition of an Auditor
Auditor is the person appointed to conduct an examination of the records, to form an opinion about the authenticity and correctness of such records, by verifying the correctness and reliability of the recorded transactions from the evidences available, opinion and inference reachable based on his expertise.

Most, if not all, stock market listed companies in this country and, for that matter, around the world, use the services of one of the so called ‘Big Four’ accountancy firms. These big firms charge huge sums for their audits, often running into £millions, and the audit teams are lead by high ranking ‘fee earners’. In other words, as the businesses, banks and financial institutions they audited expanded, so have the fees earned by the auditors and yet, not one audit firm appears to have asked any questions about what is now being described as “questionable accounting” practices within the financial services and banking sectors.

For example, do we know of any audit firm that qualified a set of accounts within the banking sector because of the heavy reliance on a particular financial model, such as in the case of Northern Rock? Has an audit firm raised any prior concern over the way that ‘bundled’ mortgage debt was traded, sold and then re-sold, with each party taking a profit or commission, without really knowing the risks or true value of the asset.

You would think that after Enron and Worldcom, auditors would be even more cautious, especially given investors and business people alike, will have increasingly come to rely on the expertise and the independence of the auditors before they make financial investment decisions related to the company being audited. It is absolutely essential that the audits of company’s that rely on external investors for funding are wide-ranging, thorough and probing, a failure to do this and ask questions, is, in my impinion a dereliction of the auditors responsibility to the shareholders. If an audit is not indepependent, or in-depth, why on earth do so many companies pay so much money out every year for their audits?

I personally believe that, when the investigation begins, as it surely will, the part played by company auditors also needs investigating. Given they will be the only party to have profited in the ‘boom’ as well as profited out of the ‘bust’, yet they were also the only party, other that the regulatory authorities, that had a duty to ensure that they reported the facts, discovered questionable practices and reported their findings in an open, direct and a frank manner. I do not say that any of these accountancy firms are culpable, because I would have nothing to back this up with (other than logic of course), but I can say that, I believe they have failed, for the most part, in their duty to appropriately and competently assess the risks associated with some of the more questionable practices adopted by the banking and financial industries.

I also believe that shareholders that have lost money should consider individual or class actions against any audit firms that are left wanting in this current mess. For them to be preening themselves in front of the cameras, whilst rubbing their hands with glee, behind the scenes, is stomach churning. If there job was not to highlight risks, operating and reporting practices, asset values and profit claims, what on earth were they charging such massive audit fees for? The Audit Firms must not be allowed to extract themselves from any form of responsibility whilst the rest of us are left to pick up the tab and the pieces of what is left.

Article Source: Power to the People