BT isn’t happy and Ofcom still has the ultimate weapon up its sleeve

Ofcom has “bottled it,” declared Liberal Democrat leader Tim Farron, and he was by no means alone in taking shots at the regulator for stopping short of breaking up BT.

After a once-in-a decade review of Britain’s digital infrastructure – one that could have huge implications for the nation’s economic success – Ofcom’s proposals might be called “separation lite”.

It wants BT’s Openreach, the business that supplies Britain’s digital infrastructure, to be run at arm’s length from the group. This would include the creation of an independent board charged with overseeing an obligation to offer enhanced access to Openreach’s, ahem, ducts and poles.

BT says its rivals already have that and could use them to set up rival fibre networks if they wanted to. They say the reason they haven’t is that BT makes it expensive and bureaucratic. Will this now change?

All sides “welcomed” the watchdog’s conclusions, but they always do that. However, the tenor of my conversations suggests that rivals welcome this outcome rather more than BT does – a point that Ofcom’s critics might care to ponder.

Although Openreach is staying within the fold, the arm’s length bit is causing serious unhappiness at BT, just as it did when banks were ordered to ring-fence their retail arms under independent boards.

Nick Delfas at the broker Redburn is a contrarian who thinks this new settlement might actually work. He pointed us towards this statement from the regulator: “We intend to put as much weight behind ducts and poles access as we did behind unbundled local loop 10 years ago.”

Mr Delfas said that if Ofcom brings BT to heel, “the case for a new entrant will be strong”. But it will have to act quickly, and that’s something regulators aren’t always good at.

BT doesn’t seem inclined to help it out there. Perhaps that is why full separation remains on the table. As a threat. But is Ofcom willing to use it to call BT’s bluff? We might be able to find out.

Start a recession and we’ll solve the migrant ‘crisis’

How do we fix the immigration “crisis”? The Institute of Directors has a solution: crash the economy.

Ushering in a recession isn’t that hard to do. You could persuade the Bank of England to start raising interest rates tomorrow. You could introduce light-touch regulation of the banks and let them make hay. Oh hang on, we’ve tried that one; it worked rather well.

One of the chief attractions of creating a recession as an immigration solution is that any fool could do it (some already have).

Moving on to the practicalities, a recession would cause unemployment, repossessions, business closures and gloom. That would cause people to start wondering if the UK is where they really want to be. Those who could leave would leave, increasing outward migration. On the other side, immigration would start to slow; who wants to move to a basket case? So the number of net incomers would fall rapidly. Problem solved!

There’s a challenge. Make a commitment to recession in your manifesto and see how it works.

Of course there are measures in place to tackle the issue. But they are having negative consequences, like putting off foreign students who prop up our higher education system, and staff who are desperately needed by our NHS. So we’re on our way.

Of course, we could view the net migration figures with a degree of quiet pride, as a mark of our economic success. The Government could even cite them as evidence of its economic skill. But it would be politically challenging. Even courageous. Pity.

Put PPI into extra time: bankers have got away with it

Earlier this week I highlighted the bewildering array of legal and regulatory issues faced by HSBC. Lloyds Bank, by contrast, has only one real nasty, but it’s a biggie. Britain’s biggest retail bank has just topped up its provisions for the mis-selling of payment protection insurance by another £2bn. The increase pushed the bank into a fourth-quarter loss and contributed to a 7 per cent fall in annual profits.

Not that its chief executive Antonio Horta-Osorio has much to worry about with his near-£9m pay package. But the special dividend he’s unveiled ought to buy off shareholders when the AGM comes around.

Mr Horta-Osorio isn’t, of course, responsible for the PPI debacle, although he does have poor progress on the clean-up on his docket (for which Lloyds has been fined). No, the responsibility for PPI lies with previous executives at Lloyds and HBOS, most of whom are gone while Lloyds shareholders pick up a tab that now stands at £16bn.

HSBC has some PPI, but even including it, and also assuming all the issues it warns of in its annual report result in penalties of some sort, the bill probably won’t come close to what Lloyds has racked up through PPI.

The clawbacks and penalties imposed on bankers’ pay were designed for a scandal such as PPI, but come far too late for those involved in it to be clobbered. And they surely deserve to be clobbered.

Under the rules, pay can now be clawed back for misdeeds or foul-ups that emerge for seven years after the event. The period can be extended to 10 if a bank is under investigation.

Given that much of the PPI mis-selling occurred before 2008, it perhaps ought to be even longer than that.