Lord Stephenson - dishonest or delusional?

Ex-chairman of HBOS called to account.

The Bank of England has said that the economic impact of the financial crisis was on a par with the Second World War. And the wannabe Inglorious Basterds on the Parliamentary Commission on Banking Standards continue to call to account the war criminals.

It all feels a bit like old news now… We know full well that HBOS was badly run. We know about the secret bailouts, the “spirit of optimism” that led to disaster.

This week it was the turn of Lord Stephenson. The ex-chairman of HBOS was - and still is - suave and silver-tongued. He is the kind of man who you believe when he says something like

..there was just no way we [the HBOS leadership] were encouraging a culture of excessive risk-taking.

But one committee member – Lord Lawson – wasn’t having any of it. “You are living in cloud cuckoo land,” he said.

And to remind ourselves just how risk-averse HBOS was in the lead-up to the melt-down, we should recall the story of Benny Higgins. A bona fide banking superstar, Benny Higgins joined HBOS in 2006 from RBS, where he had overseen the successful integration of NatWest into the group.

After less than two years, he left HBOS under a cloud, having presided over the dramatic reduction of the bank’s  mortgage book. With hindsight it sounds prudent and praiseworthy action. At the time, however, he was universally pilloried for presiding over such a huge loss in market share.

And in the wake of this “disaster”, silver-tongued Stephenson was there to reassure twitchy stakeholders that the bank would bounce back and regain its position in residential mortgages. Not only that, but he wrote to the FSA (a letter since published by the Commission), emphasising that HBOS was a “highly conservative institution”.

I am not aware of any lurking horrors in our business or our balance sheet. Quite the reverse ... HBOS in an admittedly uncertain and insecure world is in as secure a position as it could be.

Happy to be crossed questioned on this but I hope you know me well enough to know this is neither a bravura nor an ill considered statement.

There you are – a man in control… Confident and reassuring. A year later the bank had been merged with Lloyds and was being bailed out by the taxpayer to the tune of £17 bn.

We could rely on Lord Lawson to remind Stephenson just how much bravura there was in that statement. “Either you were being dishonest when you wrote that or, if you believed it, you were delusional,” he said.

“Spirit of optimism” at HBOS: Photograph: Getty Images

James Ratcliff is Group Editor of  Cards and Payments at VRL Financial News.

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Labour is launching a stealthy Scottish comeback - thanks to Jeremy Corbyn and the Daily Mail

The Scottish Labour strategy is paying off - and hard evidence that it works may be more plentiful come 8 June 2017

When I suggested to a senior Scottish Labour figure earlier this year that the party was a car crash, he rejected my assertion.

“We’re past that,” he said gloomily. “Now we’re the burnt-out wreck in a field that no-one even notices anymore.”

And yet, just as the election campaign has seen Jeremy Corbyn transformed from an outdated jalopy into Chitty Chitty Bang Bang magically soaring in the polls, Scottish Labour is beginning to look roadworthy again.

And it’s all down to two apparently contradictory forces – Corbyn and The Daily Mail.

Kezia Dugdale’s decision to hire Alan Roden, then the Scottish Daily Mail’s political editor, as her spin doctor in chief last summer was said to have lost her some party members. It may win her some new members of parliament just nine months later.

Roden’s undoubted nose for a story and nous in driving the news agenda, learned in his years at the Mail, has seen Nicola Sturgeon repeatedly forced to defend her government record on health and education in recent weeks, even though her Holyrood administration is not up for election next month.

On ITV’s leaders debate she confessed that, despite 10 years in power, the Scottish education system is in need of some attention. And a few days later she was taken to task during a BBC debate involving the Scottish leaders by a nurse who told her she had to visit a food bank to get by. The subsequent SNP attempt to smear that nurse was a pathetic mis-step by the party that suggested their media operation had gone awry.

It’s not the Tories putting Sturgeon on the defence. They, like the SNP, are happy to contend the general election on constitutional issues in the hope of corralling the unionist vote or even just the votes of those that don’t yet want a second independence referendum. It is Labour who are spotting the opportunities and maximising them.

However, that would not be enough alone. For although folk like Dugdale as a person – as evidenced in Lord Ashcroft’s latest polling - she lacks the policy chops to build on that. Witness her dopey proposal ahead of the last Holyrood election to raise income tax.

Dugdale may be a self-confessed Blairite but what’s powering Scottish Labour just now is Jeremy Corbyn’s more left-wing policy platform.

For as Brexit has dropped down the agenda at this election, and bread and butter stuff like health and education has moved centre stage, Scots are seeing that for all the SNP’s left wing rhetoric, after 10 years in power in Holyrood, there’s not a lot of progressive policy to show for it.

Corbyn’s manifesto, even though huge chunks of it won’t apply in Scotland, is progressive. The evidence is anecdotal at the moment, but it seems some Scots voters find it more attractive than the timid managerialism of the SNP. This is particularly the case with another independence referendum looking very unlikely before the 2020s, on either the nationalists' or the Conservatives' timetable.

Evidence that the Scottish Labour strategy has worked may be more plentiful come 8 June 2017. The polls, albeit with small sample sizes so best approached with caution, have Ian Murray streets ahead in the battle to defend Edinburgh South. There’s a lot of optimism in East Lothian where Labour won the council earlier in May and MSP Iain Gray increased his majority at the Scottish election last year. Labour have chosen their local candidate well in local teacher Martin Whitfield, and if the unionist vote swings behind him he could overhaul sitting MP George Kerevan’s 7,000 majority. (As we learned in 2015, apparently safe majorities mean nothing in the face of larger electoral forces). In East Renfrewshire, Labour's Blair McDougall, the man who led Better Together in 2014, can out-unionist the Tory candidate.

But, while in April, it was suggested that these three seats would be the sole focus of the Scottish Labour campaign, that attitude has changed after the local elections. Labour lost Glasgow but did not implode. In chunks of their former west of Scotland heartlands there was signs of life.

Mhairi Black’s a media darling, but her reputation as a local MP rather than a local celebrity is not great. Labour would love to unseat her, in what would be a huge upset, or perhaps more realistically go after Gavin Newlands in the neighbouring Paisley seat.

They are also sniffing Glasgow East. With Natalie McGarry’s stint as MP ending in tears – a police investigation, voting in her wedding dress and fainting in the chamber sums up her two years in Westminster – Labour ought to be in with a chance in the deprived neighbourhoods of Glasgow’s east end.

Labour in Scotland doesn’t feel like such a wreck anymore. Alan Roden’s Daily Mail-honed media nous has grabbed attention. Corbyn’s progressive policies have put fuel in the tank.

After polling day, the party will be able to fit all its Scottish MPs comfortably in a small hatchback, compared to the double decker bus necessary just a few years back.

But this general election could give the party the necessary shove to get on to the long road back.

James Millar is a political journalist and founder of the Political Yeti's Politics Podcast. He is co-author of The Gender Agenda, which will be published July 21 by Jessica Kingsley Publishing.

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