Diamond in the rough
Pressure is mounting on Barclays group executive Bob Diamond to resign after details emerged of systematic attempts to manipulate interest rates over a period of seven years. In the UK, the bank has been hit with fines of £59.5m from the Financial Services Authority (FSA). Meanwhile, US authorities have imposed a penalty of £230m. The fines came after investigations showed that Barclays traders artificially altered the price of two key interest rates: The London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR).
Those rates are a guide to the expected cost of inter-bank borrowing, which then feeds into the wider market, forming the bedrock of other financial contracts and worldwide interest rates. Information provided by banks helps to determine the rates, but it appears that Barclays submitted incorrect information at key intervals, enabling its traders to make profits by speculating on LIBOR and EURIBOR. Barclays also sought to delude the media that it had greater liquidity during the 2008 financial crisis by setting its expected borrowing costs too low. Diamond – and three other high-rankers – have forfeited their 2012 bonuses, but will still be in line for huge share payouts. However, after Barclays’ former chief Executive Martin Taylor described the practice as “systematic dishonesty”, pressure will mount for Diamond to pay with his job. It seems that Britain has a new Fred Goodwin to attack.
Tony Blair marked five years since his resignation as Prime Minister this week by guest editing the London Evening Standard on Wednesday. In its pages, he gave a remarkably candid interview, reflecting on his time as Britain’s leader and his activities since then. Blair resigned on 27 June 2007 after leading Labour to three consecutive election victories, passing the baton to the ultimately doomed Gordon Brown. Since then, he has travelled the world, working on his charitable foundations and as an unpaid envoy to the Middle East – a position not without irony or controversy, given the main event of his premiership was the hotly debated war with Iraq.
Tellingly, one of the key moments in the interview comes when Blair states: “One of my regrets is that what I have learned in the last five years would have been so useful to me. Because when you see how the world is developing you get a far clearer picture of some of the issues our country is grappling with.” He subsequently admits that he would happily have another crack at being prime minister, but thinks it’s unlikely that it will ever happen.
Blair became PM when he was just 42, becoming the youngest premier since 1812. The influence of his dynamic image has not left British Politics: youth and relevance are still seen as key. David Cameron is only 45. Nick Clegg is the same age, and Ed Miliband is 42. But is this youthfulness at the cost of experience? Society at large has been obsessed with youth for the past generation, but perhaps the tide is turning: Vince Cable, at 69, is far more respected than Clegg, while even the England football manager’s job is now viewed as one for a more seasoned hand (Roy Hodgson is 64). Balancing youthful vigour with enough experience is always a crucial managerial decision – and Blair suggests that he, and the country, may have got it slightly wrong.
Contract for work
Deputy Prime Minister Nick Clegg has announced plans to accelerate the government’s youth contract scheme in the 20 areas most affected by youth unemployment. All of those areas are in Scotland, South Wales and the North of England – including North Ayrshire, Caerphilly and Hartlepool. Originally announced in April and now active nationwide, the scheme pledged £1bn to help the 160,000 young unemployed by encouraging businesses to take them on. The government funds part of their wages, amounting to £2,275 per person (half the minimum wage) for six months.
In the relevant locations, the time that a person aged 18 to 24 has to be unemployed to be eligible for the scheme has been slashed from nine to six months. Opinion is divided on whether the policy will genuinely help to equip young people with work-related skills to enable them re-enter the workforce in permanent jobs, or simply be used by companies as a means of cheap labour. Clegg, naturally, is positive, but also admitted that it was too early to tell if the scheme was working yet.