Sir Alexander Belloc-Brayne reflects on a tumultuous month in the City and beyond and ponders a new bid for inclusion on the Honours List.

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Sir Alexander and Lady Belloc-Brayne (and Nurse) extend the compliments of the season to all readers.

December 2007

December, how…shall we discourse the freezing hours away? Lady Belloc-Brayne and Nurse have been doing their bit for our beleaguered economy by joining in the great contra-cyclical £800-per-second post-Boxing Day spending round. Her Ladyship seems determined to counter institutional short-selling in the securities markets by taking a “long position” in the high street and insists that conversion of my cash into haute couture and gold bijouterie is a perfectly rational response to the inflation outlook and a sinking pound.

It seems that the magi have arrived early at Goldman Sachs, bearing a $20bn bonus pool – the fruits of some contrarian wagers in the US sub-prime sector. Mind you, there are signs of an early Epiphany at the Treasury, too, where an army of advisers have rung up fees of £50m to date putting Northern Rock to rights – with (happily) no end in sight. Congratulations to the Olivant group for winning equal preferred-bidder status in recognition, perhaps, of their philanthropic plan to “profit” the taxpayer by granting the Bank of England the right to buy 5% of The Rock at a premium to a rights-issue share price. Apparently “equality” means that the Olivant and Virgin consortia are entitled to a £5m Treasury subsidy apiece even if The Rock is nationalised – a figure that contains an element of “time value” reflecting the degree to which the rescue is running behind schedule and which will surely incentivise their advisers to pick up the pace. Pardon me if I do not dwell overlong on this wretched credit crisis which seems to be traversing the same ground with increasing severity. I am relieved, though, to read of the Bernanke plan to end reckless lending practices by forcing mortgagees to consider affordability and verify income and assets – revolutionary measures that will surely guarantee that the burnt Fool’s bandaged finger never goes wabbling back to the Fire.

I must say that I prefer a more spiritual dimension to my Yuletide, although the prospect of the proverbial money-changers being turned over is a trifle fundamentalist for my taste. Encouragingly, our Government seems determined to engineer an “inclusive” Christmas by trailing a ground breaking Sukuk bond for the guilt-free enrichment of our Islamic citizens. Her Ladyship (somewhat bewilderingly) discerns echoes of the Stakeholder ethos – presumably in the sense that there was “no interest” in that either. I confess, however, that I was moved by a Daily Telegraph case-study in which a believer declared that Shariah-compliant financial products would provide alternatives to her Premium Bonds and would allow her to follow her religion “through my bank account”. O ye of little faith…

I do declare that it has been a grand month for financial services, led by a Pensions Bill that introduces default enrolment into Personal Accounts in lieu of membership of a “good” employer’s pension scheme. Alas, it seems that we are already at odds with EU law, which forbids auto-enrolment into a “good” Group Personal Pension. I have written to the PM urging him to score his signature out of the Lisbon Treaty unless Brussels relents – if he ever catches up with his European peers, that is. I must say that I regret the consolidation of multiple generations of State Additional Pension benefits, being one of the happy few to have amassed Graduated State Pension, SERPS and State Second Pension rights which, the way I see it, should entitle me to a bonus for collecting the full set. Her Ladyship, meanwhile, is livid at the retreat over legislation that would have allowed working mothers to make up nine years worth of Basic State Pension premiums – a u-turn that seems to have surprised the entire House of Lords which was under the united illusion that it had endorsed the measure in July.

Delighted that the Government has finally brought the Financial Assistance Scheme into line with the Pension Protection Fund at a cost of £725m, after first spinning the diversionary line that Messrs Brown and Darling were blocking the move in favour of a cheaper model. Mind you, we still await publication of the seminal Young Commission report promised for November 2007 but which will not see the light of day until well into 2008. I hear that the Ombudsman’s report into Equitable Life has been delayed for the third time to incorporate “substantial representations” from the usual suspects. At any rate, rumour is that the Equitable is up for sale – by when the long grass will have flourished into impenetrable jungle. The way I see it, though, they should bundle Equitable with Northern Rock. Good thinking, Belloc-Brayne! A top post awaits at The Equitable Rock. I shall write to the FSA urging a spot of fast-track regulation, and to the Virgin Branson mob suggesting that they apply for that banking licence tout de suite, without which they cannot accept deposits – a potential Achilles’ heel given that The Rock’s plight is said to stem from over-reliance on the wholesale money market.

Word is that the FSA may soon be eclipsed by a European Super Regulator which could bring the City under foreign control and enhance our sovereignty further. “We didn’t have people lining up outside the banks and we didn’t have to hand out liquidity to a bank,” quoth Economics Commissioner Joaquin Almunia. Well, he may have a point notwithstanding the €348.6bn distributed by the ECB to 300 banks this month – and when Eurozone inflation has broken through the 3% barrier. “It’s worth noting because there are people who think they can give us lessons in monetary policy,” says Mr Almunia – and quite right too! Incidentally, I see that the Union Bank of Switzerland has just flogged SF19.4bn worth of convertible notes to the Singapore Investment Corporation and an “unnamed” Middle Eastern investor at a “triple-A” 9% coupon rate. Mind you, Switzerland isn’t in the Eurozone, which probably explains it.

Anyway, how good it is to watch our FSA justifying its existence with some eye-catching initiatives such as the insider-dealing investigation into the Pearl Assurance takeover of The Resolution Group. Nice touch to demand that the suspects conduct the inquiry themselves. Equally impressive was the raid on the offices of sub-prime broker Black & White, with ten police officers diverted from the war on terror to block the exits – a fine example of light-touch regulation.

By the way, I hear that Norwich Union has been fined £1.26m after the fraudulent surrender of £3.3bn worth of life assurance policies in 2006 using policyholders’ details obtained via its helpful call centres. Meanwhile, the Datagate saga seems to be playing itself out rather nicely in the public sector with HMRC losing the details of 6,500 Country Assurance clients (held on a “pensions cartridge” in plaintext, sans password protection), the Department for Work and Pensions suspending all “data exchanges” with local authorities (after mislaying discs containing council tax and housing benefit claimant details) and 3m British learner-driver records going walkabout in Iowa! Something in my water tells me that there will be no great purge of the Mandarins, prompted by the spectacle of former HMRC head, Mr Paul Gray (who resigned over the loss of 25m client records) amicably serving out his notice in the Cabinet Office on “special projects to develop civil service skills” – which presumably embrace IT security. No hard feelings!

Damn and blast! Her Ladyship tells me that I am not on the New Year Honours List - again! Nurse suggests that we now approach an outfit called Noble Titles to petition His Majesty David Drew Howe, the newly self-crowned King of the Isle of Man for a dukedom, a countship or a viscountship. Apparently it is all perfectly legal as Noble Titles does not actually sell the honours but merely solicits the Lord Advocate’s Office of the Monarch on our behalf. Word is that the modest £50k to £90k fee goes to a “non-profit” charity in sub-Saharan Africa, although Her Ladyship and I will make a point of visiting the Kwaze-Kwasa project in Malawi during our annual tour of Southern Africa, prior to any investment. Meanwhile, I have dropped a note to the Labour Party…

Must rush. Lady Belloc-Brayne has found a loophole in the Chancellor’s simplified capital gains tax regime, allowing crystallisation of past indexation if one’s assets are passed to a spouse before April 2008. Her Ladyship demands action but I smell a rat!