Lib Dem MEP Catherine Bearder on Lord Hill’s EU appointment: “A victory for British influence in Europe”

Catherine Bearder - Photo by DAVID ILIFF. License: CC-BY-SA 3.0When David Cameron appointed Lord (Jonathan) Hill, an influential but anonymous Tory peer more used to operating in the background, the fear was he’d be sidelined by new European Commission President Jean-Claude Juncker – especially after David Cameron’s attempt to veto Juncker’s candidacy. The portfolio for paper-clips (or trombones as they’d be known in Brussels) or some such. But, as ITV News reports:

In fact he’s been given one of the big economic jobs, and perhaps the one best suited to a UK Commissioner: financial services. Given London’s dominance and the EU’s known desire to clamp-down on everything from bonuses to a Financial Transaction Tax, this could hardly be better. It has long been the UK’s view that financial services regulation is best, where possible, left to the domestic regulator, and we can expect Lord Hill to take policy very much in that direction. The Chancellor George Osborne immediately tweeted: “Great news for the UK”, and spoke of “looking forward to a safer and more competitive financial sector”. Especially more competitive.

And the Lib Dems’ lone MEP, the South-East of England’s Catherine Bearder added her congratulations:

“Today’s appointment demonstrates that Britain continues to wield significant influence in Europe. Despite the bumpy start to our relationship, President Juncker has shown he is prepared to work closely with the UK and take on board British concerns. The UK is the world’s biggest exporter of financial services, much of which go to the EU, and so this is clearly an area that is central to our national interest. I now look forward to working with Lord Hill to lead reform of the EU in services and to give a huge boost to jobs and growth in Britain and across Europe.”

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  • David Allen 10th Sep '14 - 4:28pm

    “Given London’s dominance and the EU’s known desire to clamp-down on everything from bonuses to a Financial Transaction Tax, this could hardly be better.”

    So we’re cheerleading for big bankers’ bonuses then?

  • It has long been the UK’s view that financial services regulation is best, where possible, left to the domestic regulator

    Good news for the City of London, perhaps, but more generally I am less certain. However, I would also note that such an approach would be good news for Luxembourg too., so it might not have been quite so hard for Her Juncker to have given Hill this post.

  • An unelected lord, appointed by an unelected Juncker, sitting at the head of an unelected EU.
    Spot the emerging problem?

  • David Allen
    That is actually an ITV News quote about bonuses and FTT. It does emphasise, however, that Lib Dems are more than a bit split in our reactions to such things as city bonuses and FTT. I hope Catherine Bearder treads a distinctive path now she is our only UK MEP – if she just goes along a well trodden “corporate” pathway, she won’t communicate to our media that she is anything different from a “gravy train” Tory MEP.

  • “A victory for British influence in Europe”

    A victory for the City more like. This is the sort of reaction I would expect from a payroll Tory backbencher but not a Lib Dem. Is Catherine Bearder’s view really that being British trumps being Liberal?

    This just goes to show – as if proof were needed – that there is no European polity.

  • And Lord Hill’s democratic mandate comes from where exactly?

  • David Allen

    “So we’re cheerleading for big bankers’ bonuses then?”


    However it may be worth noting banning a symptom is not the solution, fixing the cause is the right approach.

    A lack of competition has made bankers bonuses so uneconomically high, improving the competitive environment would do a lot more (reduce bonuses but that is not my primary concern, getting the sector better catering to the needs of citizens and the wider economy is more important).

    Technologies will put pressure on trading activity and will continue to do so for years to come. The advisory activity is a more complex fish but repeated competition interventions should gradually erode that, with a bit of technological intervention to help.

    Our domestic regulator has only had competition objective and powers for a short time, the use of competition regulation in the sector is fairly untested. Getting very rules based too early could be counter productive.

  • George Potter :
    If I don’t like what Cameron is doing, I get a periodic opportunity, along with millions of my fellow countrymen, to *get rid*. However, if I don’t like what Juncker is doing, how do I as a UK voting individual, *democratically*, get shut of him? It’s impossible,…. because the EU is purposely structured to make it impossible? Indeed, the whole EU is founded on a defecit of democracy. That’s why we need OUT?

  • Andi Ali

    That is a concern with the structure of Europe. Also it depends on whether you want the commission seeing it self as the government of Europe (I don’t) of more of a hybrid Civil Service type organ.

    If you want it to be a government see George Potters comment.

  • Juncker was elected by the European centre right group, then elected Heads of governments voted for him after which the elected MEPs voted that he be European Commission President. Does John Dunn have a problem with all this voting?

    Hill is only the appointed nominee of an elected government, but at least of a government whose combined electoral votes are more than half the voting electorate. However I do wonder how much say Nick Clegg had in the matter. I imagine he had the right to veto very unsuitable candidates.

    I suppose there is nothing to stop any country that so wishes to elect its nominees, but since the Commission forms part of the executive, this would make a poor precedent. By contrast I cannot see why the Council President should not be elected, providing a workable mechanism for putting forward candidates could be found. A restriction to one candidate per member state might work.

  • Psi,

    Well, no doubt you’ll dismiss this comment as coming from a financial illiterate who should shut up and go away. However… Your jargon-filled three paragraphs on why the solution to all our banking problems is improved competition just looks like gobbledegook to me. Can you, or anyone else, provide a translation for dummies please?

  • David Allen asks a good question and identifies real gobbledygook.

  • The European Union is at present a confederation, in which each member state remains sovereign, as opposed to a federation where the union itself is sovereign. Therefore the question as to who leads it is first and foremost a matter for the elected heads of those sovereign member states.

    For that reason, the Council President is chosen by agreement between said elected heads to set an overall direction for the organisation and represent it to its members and to the world. The Commission President has a role in leading the legislative process for those areas of law and governance that the members have decided cannot be effectively handled at the national level. Because of this, a democratic mandate is now sought to confirm the selection of the sovereign states. But any step towards the sort of Prime Ministerial role with the repeated ballots bypassing national leaders entirely, that John Dunn says he wants, would erode the confederal settlement and lead us to the situation where a single European democracy competes with its constitutionally sovereign members for legitimacy. We’d be looking at a constitutional crisis and a big leap towards federation in one package. Probably not what he’s after, really.

    As for the actual news here, well, its a good sign that the EU is serious about keeping the UK on board. My main concern is that it might be willing to sacrifice too much in the pursuit of that goal, as I do not agree with the UK government’s line that financial regulations should be an international race to the bottom.

    I also have a serious problem with the mandate of Lord Hill, who as an appointed life peer is now the least democratically mandated politician working in the European Union system. Which is something coming from the member state that has spent so much time complaining about the lack of a democratic mandate.

  • Adam Robertson 11th Sep '14 - 6:39am

    I welcome the fact, that the European Union, have engaged with the UK, to give them a key portfolio. It is important that we have a strong voice within the table at the Commission. I think Lord Hill, will be able to work with other member states to be constructive, to ensure a stronger Union, which also reflects the diversity of the Union.

    I think also through the lines, in the short-term, maybe being a signal to Scottish Voters to vote NO in the Referendum. Although, the EU, is neutral on the issue of Scotland being independent, due to diplomatic protocol, would prefer Scotland to stay in the UK. This is because if Scotland goes independent, rightly if YES wins the Referendum, this may set a precedent within the EU. Catalonia wants to be independent from Spain, with the regional government calling for a referendum on statehood, but being rejected by the Spanish Government.

    Therefore, the Spanish, may well block Scotland from joining the EU, because of setting a new precedent of creating new member-states within ‘old member-states of the EU’. This could be part of Juncker’s way of nullifying this, by saying the UK has a big role to play, which will soothe Cameron for the short-term, while immediately keeping the UK together. That would be preferred for the EU.

  • You would have thought that the current battle in Scotland to see *a true democratic representation*, would give some clue to LibDems in to the fact that their notion of democracy falls well short of what the public consider to be true democracy. ?
    But clearly Lib Dems still can’t grasp this *democracy thing*? The Liberal Democrat idea of democracy is so layered with (unrepresentative ~ representatives), that, it leaves us [the voter], with such a remote and diluted voice in our true governance as to be ‘homeopathic’.?
    The kernel for true democracy, is when the average voter has the *real opportunity*, to make a change in their *governance*. And the very structure of the EU, was designed to ensure that such a real democratic legitimacy is ~ impossible to achieve!.
    Is it not time for Liberal Democrats to just come clean and drop ‘Democrats’, from your party’s name, because it’s obvious to everyone now, that true democracy appears to be an abhorrence within LibDem thinking and narrative?

  • Steve Griffiths 11th Sep '14 - 11:36am

    @George Potter

    Where’s Whitney?

  • Rita Giannini 11th Sep '14 - 11:44am

    you need a time machine and go back to Athens 2500 years ago to get the democracy you want, and then you would have a problem with who has the right to vote (no women ore earners under 50 000 dracmas, thank you)

  • George Potter:
    You skirt around the issue of real democracy.
    Let me point out how democracy works ‘properly’, and then overlay *your EU brand of democracy* to see if there is an equivalent *power* in the ordinary UK voters hands?
    In May, the man and woman on UK streets [ UK voter !], achieved the success, of decimating Lib Dem council power, erased Lib Dem MEP’s to a rump of one!, and installed the greatest number of Ukip MEP’s ever achieved before, including *one in Wales*, and *one in Scotland*.?
    That’s how democracy should work in the real world George.? (Power in the hands of People?) In contrast, we see that your EU, is designed to care NOT, what the man or woman on the streets thinks, because they [EU], have stitched up any possibility of democratic accountability. (NO power to the people?) That’s why we need the In/Out referendum, in order to teach and show misguided Lib Dems and your unaccountable EU, what true democracy smells like?

  • John Dunn, let me get this right, you’re saying that the EU is undemocratic because this May your party made a breakthrough in the EU Parliament that would be impossible in the UK one at the voteshare and distribution you got.

    So, the EU is undemocratic because it is democratic?

    You’ve also completely missed the point that the EU is made up of sovereign members who have the primary democratic mandates. You hate that Europe doesn’t behave like a nation-state democracy. Of course it doesn’t, its not a nation-state. But, despite your protestations, it has now developed to the point where the Commission draws a democratic mandate from the popular vote as well as indirectly from the national leaders. Improvement, certainly, but only the beginning of the process of opening up an institution designed for the use of national governments to the wider peoples of Europe.

  • Adam Robertson, the Spanish government has no vested interest in blocking Scottish accession. It has said this already. If Madrid doesn’t want to lose Catalonia, it must simply refrain from passing similar legislation to the order in court issued by Westminster to legally empower the Scottish referendum. Other than that, the two situations have no relevance to eachother.

  • “So, the EU is undemocratic because it is democratic?”

    No, it is undemocratic because it is undemocratic.

    1. Although more powerful than hitherto (not hard) the European Parliament is not a democratic legislature in the way, say, Congress or Westminster is. Moreover it is too large and supranational to have any connection with the individual voter, in, say, Clacton.

    2. Because the EU is an unwieldy conglomeration of nations which have widely divergent national interests , (and have spent centuries fighting each other) there is no way an individual voter in say, Clacton can be democratically represented by the horse trading of the Council of Ministers.

    3. The European Commission is not subject to robust democratic control. The individual voter, in say, Clacton cannot kick them out if they don’t agree with some stupid directive on hair dryers.

    They aren’t elected by the people. To you TJ, that may be democratic. And to the Commissars aboard the Brussels gravy train it certainly is.

    To the people of Europe, not so much.

  • “There’s nothing rational, or logical about those arguments. ”

    There is nothing rational or logical about the EU.

  • @ George and T-J
    Is this ~ ‘set up a straw man argument day’?
    The point, which ought to be obvious by now , is that the voter [ man in the street!], decides what they approve of, and what they don’t, and vote accordingly? Which is why Lib Dems were decimated in May. (i.e. democracy worked (?) and got rid of all but one of your MEP’s ?)
    However democracy [ for the man in the street!], doesn’t work in the EU.
    That opportunity to voice their approval/ disapproval, has no similar mechanism in the EU structure. Indeed democracy was purposely *designed out of the process*, with EU governance structures.
    If I’m wrong, (and no more straw men please, it’s tedious!), if I as a voter, dislike what Juncker is doing, by what mechanism can I *get rid of him*.

  • Malcolm Todd 11th Sep '14 - 3:06pm


    “There’s nothing rational, or logical about those arguments. ”
    There is nothing rational or logical about the EU.

    As an argument, that’s about as mature and meaningful as “Yeah, so’s your face.” Logic isn’t a property of institutions, it’s a property of arguments. George Potter correctly skewered the illogic and inconsistency of John Dunn’s arguments.

    As to your own attempt to paint the EU as undemocratic (and god knows, it shouldn’t be as hard to do as you ‘kippers seem to be finding it today) – you say that “The European Commission is not subject to robust democratic control. The individual voter, in say, Clacton cannot kick them out if they don’t agree with some stupid directive on hair dryers.” Well, no, and the individual voter in Clacton can’t kick out the British government or even Douglas Carswell; nor can all voters get the government of their choice. Democracy simply doesn’t mean that you get whatever government you want; it means you get (more or less) what most people want. If you can get enough people to vote for a party promising withdrawal from the EU, then you’ll get that; your failure to achieve that outcome isn’t a failure of democracy but the very essence of it.

  • David Evershed 11th Sep '14 - 3:11pm

    Britain has to earn its way in the world. But currently we have a massive trade deficit in manufacrured goods partly offset by a surplus in services such as banking and insurance in which we are strong.

    Other countries want to eat our lunch and take banking and insurance business away from London. One way to do this is to introduce EU laws such as imposing EU financial transaction taxes on business done in London.

    Having a business friendly UK Commissioner in charge of EU Financial Services is helpful to this country. Lib Dems should support him.

  • “As an argument, that’s about as mature and meaningful as “Yeah, so’s your face.” Logic isn’t a property of institutions, it’s a property of arguments.”

    It wasn’t an argument but an observation. And I notice you made no attempt to rebut it because, I suspect, you know it to be true. Kafka himself would have been hard pressed to describe an organisation as absurd irrational and ridiculous as the EU.

    As for your attempts to legitimise the Commission on democratic grounds, they were, if you don’t mind my saying (or even if you do), frankly risible.

    What public office has Lord Hill been elected to exactly? Explain to us all how he isn’t just a Cameron crony. How about Catherine Ashton? Explain to us all how she wasn’t just a Labour Party crony. And those are the British Commissioners, for crying out loud.

    Plus Baroness Ashton is widely regarded, throughout Europe as having been a failure, an embarrassment even. What procedure exists, existed, to bring her to account for her egregious ineffectiveness?

    The EU stands accused on two counts actually. It isn’t just the lack of democratic accountability though that in itself ought to be fatal. Its byzantine system promotes non entities to really important, powerful positions.

  • “If you can get enough people to vote for a party promising withdrawal from the EU, then you’ll get that;”

    That is kind of the plan. Clever of you to have rumbled it. 🙂

    Btw, remind me, what is your party’s current position on a referendum? Being so democratic and all, you support one, right?

  • This is YOUR dear leader explaining how he believes the British electorate’s views on Europe to be sacrosanct. From 5.34.—26th-march-87667


  • Malcolm Todd 11th Sep '14 - 5:06pm

    I stand corrected. I should have said, “As an observation, that’s about as mature and meaningful as “Yeah, so’s your face.” Logic isn’t a property of institutions, it’s a property of arguments.” And that is a rebuttal, rather obviously: if your claim is shown to be meaningless, it doesn’t stand.

    And I didn’t “attempt to legitimise the Commission on democratic grounds”, I simply pointed out what nonsense your own arguments were. You can hardly claim to find risible arguments that simply haven’t been made.

    So: is there a democratic input to the membership of the Commission? Sure, in that the members are appointed by democratically elected governments, the appointment of the President is conditional on approval of a democratically elected parliament and that parliament also has the right to dismiss the entire Commission. The fact that the Commissioners are not, individually, elected to their posts doesn’t mean that the EU is not a democratic body. The Commission is, in my view, an uncomfortable hybrid of administrative, legislative and political authority which should be substantially reformed. However, it is not an EU Government: the European Council, consisting of democratically elected governments, has the supreme political authority, and the elected European Parliament has a power of veto. It is certainly not a well-designed democracy, but it’s not some sort of dictatorship either.

    I leave aside your comment about “non entities” — as if politics would be better if everyone involved were a celebrity, for pity’s sake!

  • Malcolm Todd 11th Sep '14 - 5:15pm

    Gee, gosh. Is it really? I’d never have guessed. Of course, that only has a chance of succeeding because of all that democracy you seem to think doesn’t exist…

    As for “What is your party’s current position on a referendum? Being so democratic and all, you support one, right?” — for a start, it’s not my party. I don’t do party politics very well — I’ve been a member but it doesn’t seem to stick. The Lib Dems’ position on a referendum is, currently, incoherent. But the idea that if you’re a democrat you must be in favour of holding a referendum on whether to do something that you don’t believe you should do in the first place is just — what was that word again? — oh yes, risible. If people want to leave the EU, they can vote for a party that promises to take them out of the EU. Just because one party has that as it’s policy doesn’t mean that every other party is obliged to offer a referendum on it. Is the government undemocratic because it doesn’t offer a referendum on, say, Cornish independence? Or on Labour’s proposed freeze on utility prices? Perhaps the Lib Dems should offer a referendum on abolishing parliament and handing government over to a directly elected President, just to prove they’re democrats?

    For essentially pragmatic reasons, I think it would possibly be a good idea to hold a referendum on Britain’s EU membership. But referendums aren’t fundamentally a matter of democratic principle, unless you believe that only Athenian democracy is truly democratic. I suggest you go and read up a bit on how well that worked before you try arguing for it.

  • Always good to hear from Catherine Bearder MEP, who comes fom the EU Lib Dem group which thanks to Nick Clegg is 100% female.

  • “Logic isn’t a property of institutions, it’s a property of arguments”

    The institution that we call the European Union is run, and operated by human beings. Berleymont isn’t subject to rationality or logic, and neither is the EU as an abstract concept. The Commissioners and MEP’s and bureaucrats and Heads of State who all comprise it, however, very definitely should work in rational and logical ways.

    Do you argue that it is unreasonable to expect, say, the CAP to be rational and logical? Is it?

    Your statement was actually the meaningless one. And you rebutted nothing.

    “The Commission is, in my view, an uncomfortable hybrid of administrative, legislative and political authority which should be substantially reformed. ”

    Thank you for accepting my argument, at last. Uncomfortable is one way to describe it. I think most people in Europe, especially the south, have a rather more direct word.

    “leave aside your comment about “non entities” — as if politics would be better if everyone involved were a celebrity, for pity’s sake!”

    I am not asking for Miley Cyrus (although she probably could do a job. 🙂 ) But for this great nation to come up with Ashton and Hill (and earlier Kinnock) is really rather sad.

    And for Europe to come up with Juncker and the rest of the gang is worse than sad.

  • “But the idea that if you’re a democrat you must be in favour of holding a referendum on whether to do something that you don’t believe you should do in the first place is just — what was that word again? — oh yes, risible.”

    You certainly didn’t like that word, did you? 🙂

    On this side of the debate we argue that the three main parties, indeed the whole national establishment , has been in favour of the EU since the late sixties.

    Well, the Tories are wavering now, but that WAS their position.

    So there was a complete lack of democracy on this subject, with the system as it is. It was impossible to elect a government which took us out of the EU. The option wasn’t presented.

    Accordingly there should now be a referendum to restore that democracy. It seems you agree, although not necessarily on these democratic grounds.

    As far as I am concerned, your agreement on whatever basis, is fine by me. And your party should follow, hopefully it will…


  • “Always good to hear from Catherine Bearder MEP, who comes fom the EU Lib Dem group which thanks to Nick Clegg is 100% female.”

    And one twenty fourth the size of UKIP’s…

    All together now: “We are the party of in. You are the party of”

  • Wait, John, so you are saying that the EU is bad for British democracy because Britain sent a member from its unelected Chamber to represent it?

    Leaving aside that everybody (including the EU itself) believes that the EU does need reforming, I think the problem there may not be with the EU.

    What is Ukip’s policy on the Lords, anyway?

  • Malcolm Todd 11th Sep '14 - 11:33pm

    On the contrary, simon, I think “risible” is an excellent word. I think I have a better idea than you of when its use is appropriate, is all. That it would be a good description of your claim that “there was a complete lack of democracy on this subject” is amply demonstrated by George Potter’s comment. (He says “nonsense”, but I think “risible” is better.) If people care enough about this to want out, they can vote UKIP. So far, you’re not remotely close to the level of support you’d need to get your way and I don’t think it’s going to happen, but no doubt we’ll see.
    And again — it’s pointless to talk about what “my party” should do, as I don’t have one.

  • simon
    And one twenty fourth the size of UKIP’s…

    The election of 24 UKIP charlatans is a national disgrace. Clegg, Cameron and Milband all share the blame for allowing the BbC to shamelessly promote UKIP. Now these 24 wreckers are drawing their fabulous salaries and expenses what ar they doing for their constituents? If they do as little work as Farage, the charlatan in chief, I will not be surprised.

  • George

    I am not going to argue the finer points of the CAP and Common Fisheries Policies because, well my eyes glaze over at the arcane detail but more importantly the whole subject makes me angry whenever I look into it.

    That really is a microcosm of how the whole “European project” works. It is so complicated and boring that the Europhiles get away with their crappery because no-one sane and sensible can be bothered with it all. EXCEPT IN THE SENSE THAT WE HAVE LOST OUR SOVEREIGNTY AND NATIONAL FREEDOM. Which some of us care about quite a bit.

    But let me ask you this. How did it come about that a policy was designed, approved and implemented that threw dead fish back into the sea in the first place? Talk us through that please, It is no good saying well we have sorted it out now. It should never have happened. Justify its implementation if you can, I’d be interested. (But not holding my breath).

    More importantly, and this is rather more a matter of economic life and death than the fish sad, though that is. How did it come about that the EU implemented a common currency WITHOUT full economic and political union?

    These are the culpable idiocies of policy which a dysfunctional organisation such as the EU comes out with to the disastrous detroment of all the citizens of Europe.. They had a political imperative for a common currency, (going back to the days of Roy Jenkins if you read his European Diaries) but didn’t consider the economics.

    Talk us through how this wonderfully democratic and effortlessly efficient body came up with that lulu? It was a great success, huh?

  • George

    Jean Claude Juncker, scion of a Nazi, ex PM of a territory the size of Bristol, in his own words…

    “We should discuss…in secret…I am for secret dark debates.”

    According to your definition of democracy (the looking glass world of the EU’s definition, natch) he was democratically appointed though the exercise of our sovereignty, though our elected government, maybe?

    Except our Prime Minister opposed him, forced a vote (very bad form) and was defeated. Apparently the European Parliament exercised some sort of Rousseauesque “General Will” on all our behalf because he was the candidate of the majority grouping there, and then supported by Merkel, which was all that counted.

    Yep, that is democracy, you Euro fanatics are really winning the case intellectually…

  • Malcolm Todd 12th Sep '14 - 1:05pm

    “the European Parliament exercised some sort of Rousseauesque “General Will” on all our behalf because he was the candidate of the majority grouping there, … Yep, that is democracy”

    Besides the bizarre reference to ‘Rousseauesque “General Will”’ (presumable Colonel Nutt wasn’t available), that sounds about right. The candidate of the majority grouping got the job … Yep, that is democracy.

  • Alex Macfie 12th Sep '14 - 1:57pm

    It isn’t the “majority” grouping, it’s the largest grouping. I don’t see why there couldn’t have been an actual contest in the European Parliament for the post.

  • Malcolm Todd 12th Sep '14 - 2:29pm

    Alex Macfie
    You’re right; but there’s no legal basis for such a contest, any more than there is for electing a prime minister in the UK. Given the legal position and the agreed principles, appointing the candidate of the largest grouping was the right thing to do; just as appointing the leader of the largest party in parliament as Prime Minister was the right thing to do in 2010. In both cases, the existence of a majority in the relevant party was assumed on the basis of declared intentions, and confirmed by the parliament’s choosing not to reject the appointed person.
    Of course, the constitution could be changed in either case, to provide for direct election by the parliament. Whether that would be appropriate for the EC president depends on what you think the role of the Commission should be.

  • “Jean Claude Juncker, scion of a Nazi”

    There really is no hope, is there? Simon, Godwin would not know whether to laugh or cry with you, would he?

    His father, like many fathers throughout history, was conscripted into the army. He was no more a Nazi than the previous Pope was a Nazi.

    Furthermore, what you have just said is disgusting beyond words and makes me ashamed to be British. Considering the horrors that many Luxembourgers – including Juncker’s father – suffered under Nazi oppression, you really need to start questioning the words you use, Simon.

    Also, you should note that what you have just said could constitute libel, Simon.

  • As for your rant about fishes. I think we can sum that up in less than a paragraph.

    “I do not understand it. It must, therefore, be bad.”

    If simplicity is a prerequisite for all UKIP policies, that does explain why your previous manifesto was such a mess that your leader had to disown it.

    The truth is, Simon, that the world is not a simple place and any person’s inability to comprehend it (or more likely, them being to lazy to try and comprehend it) does not change that fact.

  • David Allen

    “Well, no doubt you’ll dismiss this comment as coming from a financial illiterate who should shut up and go away.”

    Well you certainly know how to ask a question in a way where you clearly don’t want an answer. I make my case upon the basis that the arguments are right not that they are best explained, so sorry but you will get an answer.

    “the solution to all our banking problems is improved competition”

    To clarify, not all banking problems can be cured by competition. Financial Services (as this is much wider than just banking) has many problems fraud, money laundering are crimes which often use the system these are not solved by competition, the EU directive for money laundering is a start on this (there are many other steps that are needed but they have a start with the directive). Resolution (the approach where normal bankruptcy would apply in the past) is also a matter that is not likely to be sufficiently improved by competition. I could go on but that is not the point at issue here.

    The point is whether Lord Hill will be help the way the EU gets the best out of Financial Services.

    “translation for dummies please?”

    The first point is that the average salaries in financial services are too high as several sections of the industry are too operationally profitable, of which staff are then able to extract a distriportionate amount.

    It basically starts with the agency problem in Asset Management firms (Pension funds, savings products, etc), which then in turn mean that too much is extracted from peoples pensions and savings, both by the asset managers and then also by the other firms (like the banks) get away with providing poor products at too high a cost.

    As to my technological comments, some activities such as market making (supplying securities [shares, bonds etc] to clients) have seen profit margins squeezed and are likely to be squeezed further which will reduce the amount of highly paid people in those areas.

    On the “advisory” side (such as IPOs like the post office privatisation) it is disturbing how currently old asset allocation processes are used (advisory firms suggesting the price and who to sell to) when in people everyday lives we have products such as ebay which uses simple auction programs that could be used to ensure a better outcome for the buyers and sellers along with removing some of the claims of “special expertise” for which the banks claims such big fees (and hence pay).

    So how does this relate to the EU?

    The way the EU has tried to address the issues that it believes to exist are to pass ever more “rules” such as the pointless bonus ratio limit (which simply increases base salaries). Other interventions only increase the barriers further enabling the exploitation of the monopolistic position to continue and potentially preventing some of the changes that would improve the quality of the service provided.

    The UK has recently changed its approach to regulation adding “competition” to the role on one of its regulators (in fairness it wasn’t the treasury but the TSC that made this change) which the EU has not caught up with. If Lord Hill is effective he should be able to actually come at the industry with a open mind about solutions, rather than just passing rules in response to every (real or perceived) problem. To assume that our commissioner is simply an industry patsy because they come from the UK is not a sensible assumption.

    I have no idea if Lord Hill will have the positive impact that a good commissioner in this area could have (there are many ways to be rubbish in the role). Not believing in a very static rules based approach (which incidentally is a very American approach) does not mean that you are in favour on large bankers bonuses.

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