Loose talk leads to panic
SOME UK trade groups and businesses can’t help themselves. The willingness to trash Britain as it bounces back from the deepest recession since the 1930s is incredible.
The very idea that somehow the UK is an exception and supply bottlenecks are causing more problems here than across the world is a gross distortion. Midlands-based transport firm Europa Worldwide Group is so outraged about the Road Haulage Association’s panicky briefings on fuel supplies and Brexit that it has resigned from the trade body, crying foul.
Delivery firm Parcelhero is demonstrating it is anything but heroic by putting out a press release claiming we can ‘forget Christmas’ because the build-up at Felixstowe means that containers are being diverted to EU ports instead. It is if it wants to encourage shortages rather than accept that there are other UK container ports such as Southampton. Clearly, with the right energy and willpower, supply shortages will dissipate.
The notion that this is all some kind of strange British disease is a myth. We should be cheering from the rafters that output in
Britain expanded by 0.4pc in August when the EU was stagnating. Industrial output dropped by 1.6pc across the Eurozone with manufacturing in Germany down by 4.1pc.
The US is in a fix too with labour market data showing shortages are getting worse, driving up wages (a good thing) but holding back the pace of Covid recovery. Among the reasons why energy prices are elevated is because China is experiencing power shortage and therefore sucking in liquid natural gas and coal, driving up market prices.
In Britain we are good at emphasising the negative. The rise in GDP lifted sterling higher on the foreign exchange markets and overseas sovereign wealth funds are queuing up to buy British government debt.
Crisis, what crisis?
Audit trail
THERE can be few more devastating reports challenging the integrity of a major audit firm than the accounting watchdog’s tribunal findings on KPMG and its work on the insolvency of Silentnight.
The auditor is accused by the Financial Reporting Council of ‘untruthful’ behaviour, conflicts of interest and hiding a treasure trove of 2,367 documents from investigators. Some business was conducted on private email out of the reach of regulators.
Remarkably, KPMG was working for vendors Silentnight and buyers private equity outfit HIG Capital at the same time. This is beyond belief. It makes Philip Green’s disputed sale of BHS, where there were advisers on both sides, look like a tea party.
An appalling consequence of the crass and unethical behaviour of the partner concerned, David Costley-Wood, is that lowpaid pensioners at Silentnight were deprived of their future income.
The fund was closed and passed on to the Pension Protection Fund, leading to valuation cuts of up to 30pc. What really rankles is that before Costley-Wood stepped down from KPMG’s Manchester practice he was paid £800,000 in each of the past two years.
The case for legal action to recover gains is overwhelming.
It is amazing given KPMG’s terrible record as an auditor, ranging from foul-ups at the Co-op Bank to the Carillion collapse, that any clients are willing to let the firm anywhere near the books. Weak standards, ineffective compliance and cover-ups render it untrustworthy. Cumulatively, the mistakes are of Arthur Andersen proportions and that firm was forced to shut up shop.
The FRC has smartened up its act and bringing its case against KPMG before the tribunal shows a determination to put an ineffectual past behind it.
How much better it would be had the Tories moved to power up accounting regulation through the creation of a new Audit, Reporting and Governance Authority as proposed more than two years ago. The conflict of interest explains why separation of audit and consulting practices must happen. Cleaner capitalism requires immediate reform.
Soft boiled
IS THE Hut Group becoming the new We Work? A deal with Softbank to spin out tech offshoot Ingenuity was meant to add stardust. Instead the shares have plummeted 57pc since the start of the month.
Founder Matt Moulding could start mending the roof by recruiting an independent chairman and a chief operating officer. That would give Moulding space to develop the enterprise. But he must act fast.