Tag: 1999

The press release issued by HM Treasury on 29 April 1999.

The Treasury welcomed publication today of the report of a pre-legislative joint Scrutiny Committee of the Lords and Commons, chaired by Lord Burns.

Economic Secretary Patricia Hewitt said :

“This report shows that our innovative and open approach to consultation and pre-legislative scrutiny is really working. Its publication sets the scene for introduction of the Bill into Parliament.

“We commend the Committee for a very thorough inquiry, and are grateful to the many organisations which gave evidence. The Committee has broadly endorsed the approach to reform set out in the draft Bill published last year, and the improvements announced in the light of public consultation. They have also made constructive recommendations for further improvements, which we will consider carefully before responding.”

The Committee has proposed a limited extension of its inquiry to enable it to complete its inquiries into possible implications of the European Convention on Human Rights for the new fines regime for market abuse. It will report on these issues by the end of May.

Supporting the proposal, Ms Hewitt said:

“The Government attaches great importance to compatibility with the ECHR, which is why we acted to incorporate the Convention into UK law. We agree that the Committee should have the opportunity to examine fully this aspect of the draft Bill before it is introduced, and we shall be submitting further evidence to the Committee. The further report they will then make will be another important step in getting the Bill into law”

The press release issued by HM Treasury on 26 April 1999.

Dr Sushil Wadhwani has been appointed to the Bank of England’s Monetary Policy Committee, the Chancellor Gordon Brown announced today.

Dr Wadhwani is currently Director of Research at Tudor Proprietary Trading L.L.C., a fund management company. He is also a partner and a member of the management committee of the Tudor Group.

He was educated at the London School of Economics (LSE), was Reader in the Working of Financial Markets at the LSE from 1984-91 and subsequently Director of Equity Strategy at Goldman Sachs International from 1991-4.

Dr Wadhwani will take up his membership of the MPC on 1 June. He will replace Sir Alan Budd who has been appointed Provost of The Queen’s College, Oxford.

The Chancellor also announced that Ian Plenderleith (Executive Director, Financial Market Operations at the Bank) has been reappointed to the MPC for a further three year term.

Gordon Brown said:

“I am delighted that Sushil Wadhwani has agreed to join the Monetary Policy Committee. He will bring not only recognised expertise in the field of labour market economics, but also considerable experience of financial markets.

“I am very grateful to Alan Budd for his invaluable contribution to the Committee’s work in its formative first years, and wish him well in his new post at Oxford.”

NOTES TO EDITORS

1. Dr Wadhwani’s CV is attached.

2. The Chancellor announced the establishment of the MPC as part of a new framework for monetary policy on 6 May 1997.

3. Operational decisions on interest rate policy are made by the MPC. It comprises the Governor of the Bank of England, the two deputy Governors, two members of the Bank with responsibility in the Bank for monetary policy and market operations and four outside members with relevant expertise who are appointed by the Chancellor.

4. Members of the MPC are appointed to the Bank staff. However they may engage, with the permission of the Chancellor, in outside activities which do not present a conflict of interest. In Dr Wadhwani’s case, on taking up his new role he will cease to be an employee of Tudor.

CURRICULUM VITAE

Name: SUSHIL B WADHWANI

Date of Birth: 7 December 1959

Nationality: British

UNIVERSITY EDUCATION

The London School of Economics, Houghton Street, London WC2A 2AE

1. 1977-1980 BSc Economics
Special Subject: Mathematical Economics and Econometrics
1st Class

2. 1980-1982 MSc Economics
Econometrics
Distinction

3. 1985 PhD

EMPLOYMENT

1. Current Position – February 1995 – Date

Director of Research and Partner of The Tudor Group

2. March 1991- January 1995

Director of Equity Strategy at Goldman Sachs International Ltd Ranked as No.1 Strategist in the Institutional Investor Survey

3. October 1984- September 1992

Reader/Lecturer in Economics at the London School of Economics

(On special leave during March 1991 – September 1992)

OTHER ACTIVITIES

1. Member of HM Treasury’s Academic Panel on Product Markets (1995-1997)

2. Member of the Clare Group of economists (Since October 1986)

3. Research Fellow, Centre for Economic Policy Research (1986-1997)

4. Editorial Board member of New Economy (1994- )

5. Member of the Editorial Board of the Review of Economic Studies (January 1987- March 1991)

6. Assistant Editor of Economic Policy (October 1987 – October 1988)

7. Academic Consultant to Goldman, Sachs & Co. (July 1987 – February 1991)

8. Visiting Lecturer to City University Business School (MBA, Stock Exchange Programme, 1987-1989)

9. Academic Consultant to HM Treasury’s Company Sector Research Group (1985-1987)

Academic Awards

Allyn Young Prize
CS MacTaggart Scholarship
Clothworkers’ Company Exhibition
Gonner Prize
Raynes Undergraduate Prize
Sir Edward Stern Scholarship
Ely Devons Prize
Sayers Prize

Research Papers Published:

‘Incomes Policy in a Political Environment: A Structural Model for the UK, 1961-1980’, with M Desai and M Keil, in A Hughes-Hallett (ed), Applied Decisions Analysis and Economic Behaviour; Advanced Studies in Theoretical and Applied Econometrics, Kluwer and Neijhoff, 1984.

‘Wage Inflation in the UK’, Economica, May 1985.

‘Inflation, Bankruptcy, Default Premia and the Stock Market’, Economic Journal, March 1986.

‘The UK Capital Stock – New Estimates of Premature Scrapping’ with Martin Wall, Oxford Review of Economic Policy, August 1986

‘The Effect of Inflation & Real Wages on Employment’, Economica, February 1987

‘The Macroeconomic Implications of Profit-Sharing: Some Empirical Evidence’, Economic Journal, March 1987.

‘Profit-Sharing & Employee Share Ownership’, (with Saul Estrin and Paul Grout), Economic Policy, April 1987.

‘Profit-Sharing as a Cure of Unemployment: Some Doubts’, International Journal of Industrial Organisation, March 1988.

‘Profit-Sharing & Meade’s Discriminating Labour-Capital Partnerships: A Review Article’, Oxford Economic Papers, September 1987.

‘Unions, Wages and Employment: Some Test on Micro-Data’, with S J Nickell, European Economic Review, paper and proceedings, 1988.

‘Incomes Policies: The British Experience’, in the International Economic Association volume on Incomes Policies.

‘The Stock Market & Investment: A Comparative Study’ with Mark Mullins, invited paper at International Seminar on Macroeconomics, European Economic Review, 1989.

‘The Economic Effects of Industrial Relations Legislation since 1979’, with W Brown, National Institute Economic Review, February 1990 (Clare Group Paper)

‘The Effects of Profit-Sharing on Employment, Wages, Stock Returns & Productivity’ with Martin Wall, Economic Journal, March 1990.

‘Insider Forces & Wage Determination’, with Stephen J Nickell, Economic Journal, June 1990.

‘Transmission of Volatility Between Markets’, with Mervyn A King, Review of Financial Studies, 1990.

‘The Effects of Unions on Productivity Growth, Investment & Employment: A Report on Some Recent Work’, British Journal of Industrial Relations, November 1990.

‘The Effects of Unions on Investment & Innovation: Evidence from WIRS’, with S Machin, Economic Journal, March 1991.

‘The Effects of Unions on Organisation Change & Employment: Evidence from WIRS’, with S Machin, Economic Journal, June 1991.

‘A Direct Test of the Efficiency Wage Model Using UK Micro-Data’, with Martin Wall, Oxford Economic Papers, 1992

‘Semi-parametric Estimation and the Predictability of Stock Market Returns: Some Lessons from Japan’, (with E Sentana) Review of Economic Studies, 1991

‘Employment Determination in Industry: Evidence from Micro-Data’, with Stephen J Nickell, Review of Economic Studies, 1991.

‘Productivity Growth in Britain, 1974-86: Evidence from Company Accounts Data’, with S Nickell and M Wall, European Economic Review, 1992.

‘Feedback Traders & Stock Return Autocorrelations’, with E Sentana, Economic Journal, March 1992.

‘A Heteroscedastic Factor Model of Asset Returns & Risk Premia with Time-Varying Volatility: An Application to 16 World Stock Markets’, with M A King and E Sentana, Econometrica, 1994.

‘The US Stock Market and the Global Economic Crisis’, National Institute Economic Review, No.167, January 1999.

Research Papers (Unpublished)

‘Risk & The Predictability of Stock Market Returns: Evidence from the UK’, with O Attanasio, LSE Financial Markets Group Discussion Paper No.49.

‘Can the CAPM Explain Why the Dividend Yield Helps Predict Stock Returns?’, with O Attanasio.

‘The Determinants of Wage Flexibility; Some Lessons from a Comparison Between the UK & Japan Using Micro-Data’, with G Brunello, Centre for Labour Economics, 2nd revision with Quarterly Journal of Economics.

‘The Effects of Inflation & Interest Rates of Stock Returns: Evidence from 3 Centuries of UK Data’, with M Mullins, LSE Financial Markets Group Discussion Paper.

‘Some International Evidence on Labour Cost Flexibility & Output Variability’, with Lawrence H Summers, Centre for Labour Economics Working Paper No.981.

‘The Effect of the Term Spread, Dividend Yield & Activity on Stocks Returns; Evidence from 15 Countries’, with M Shah, LSE Financial Markets Group Discussion Paper.

‘Has the ERM reduced the Cost of Capital?’ with E Sentana and M Shah, LSE Financial Markets Group Discussion Paper.

Other Published Papers

‘Will Profit-Sharing Work?’ with Saul Estrin, Employment Institute Pamphlet, October 1986.

‘On the Inefficiency of Financial Markets’, LSE Quarterly, March 1988.

‘Comment’ on R Roll ‘Price Volatility, International Market Links & Their Implications for Regulatory Policies’, Journal of Financial Services, 1989

The press release issued by HM Treasury on 21 April 1999.

The launch of the second Invest to Save Budget (ISB) bidding round, promised in the Modernising Government White Paper, was announced today by Chief Secretary to the Treasury, Alan Milburn, and Minister for the Cabinet Office, Jack Cunningham.

The ISB is allocating £230m over the next three years for projects which look for new ways of delivering public services through joint working between public sector bodies.

Commenting on the launch, Mr Milburn said:

“The first bidding round demonstrated how the Invest to Save Budget can kickstart new and exciting ways of delivering public services. 33 projects are being supported which will deliver better and higher quality services through collaboration in the public sector.

We want to build on this positive start in Round Two. We have thrown open the competition to the public sector as a whole. This will enable local authorities and health authorities, among others, to bid for funds alongside Government departments.

This will tap the huge potential for new alliances to be forged across traditional service boundaries. Such cooperation will bring improvements both in quality and efficiency. Invest to Save encourages public sector managers to think imaginatively about how they provide services. The beneficiaries are public service users and the taxpayer.”

Adding to this, Dr Cunningham said:

” Our White Paper on Modernising Government, published on 30 March, set out our commitment to delivering services and programmes which are not only efficient and effective but are also joined-up and responsive. People are rightly impatient about the barriers to effective and convenient service which stem simply from the way government is organised.

The White Paper set out how we intend to deliver services that respond to users’ needs. The second ISB bidding round is one of the first steps we are taking to carry this forward.

The ISB supports working examples of what we mean by modern public services. And it helps to pilot new ways of collaborative working which have the potential for wider application.”

The press release issued by HM Treasury on 21 April 1999.

The Chancellor Gordon Brown today called for work on the international financial architecture to move into a new phase.

He set our proposals in three areas including agreement on codes of conduct as set out in the G7 timetable for reform, a new IMF surveillance unit to assess publicly how well countries are doing in implementing these new rules of the game, and a new approach to crisis prevention including enhanced rights and responsibilities for the private sector.

The Chancellor said:

“I believe we need three interlocking reforms to rediscover the public purpose and high ideals of 1945 and to help create a new stability in the international financial system for the twenty first century.

“First we need a framework of internationally agreed codes and standards accepted and implemented by countries which participate in the international financial system. It is only by taking the right actions in their own jurisdictions that the countries of the international financial community can deliver financial stability at a global level. It is only in this way that we can achieve global stability consistent with national sovereignty. These codes and standards are the foundations of the new architecture. We must ensure that these are completed and agreed according to the timetable set out by the G7 in February.”

Following the G7 Declaration last October, the International Financial Institutions have been working to develop internationally agreed codes and standards:

• the IMF has finalised the code of good practice on fiscal transparency;
• a draft of the monetary and financial code will be presented to the interim committee next week;
• the IMF’s Special Data Dissemination Standard has been enhanced to require greater disclosure on reserves;
• the OECD has published its draft code of corporate governance, which will be discussed at the OECD Ministerial in May.

The Chancellor continued:

“Second, we must have a new enhanced surveillance process. We need to refocus our existing international institutions and make them work more coherently together to provide effective, transparent surveillance of the framework of internationally agreed codes and standards.

“To coordinate this surveillance, I will propose next week the creation of a new surveillance unit based at the IMF. This will be charged with ensuring that the Article IV process provides effective surveillance of all codes and standards, as well as ensuring effective coordination between the IMF, World Bank and other institutions to achieve this aim.

“The new Financial Stability forum which met for the first time last week in Washington demonstrates the ability of the international community to respond to new challenges through enhanced cooperation. In time, the Forum can become the world’s early warning system for regional and global financial risk.”

The UK has emphasised that the new framework of codes and standards requires an enhanced mechanism for international surveillance to ensure they are implemented:

• we need an enhanced mechanism for international surveillance of codes and standards. This should be centred on the IMF Article IV process, but involve enhanced cooperation between the IMF and other standard setting bodies. The results of this surveillance should be published. The Chancellor will propose next week the creation of a new surveillance unit based at the IMF to coordinate this work;
• the publication of the IMF’s Transparency report on the UK demonstrates the UK’s commitment to putting in place a mechanism for the transparent surveillance of codes and standards; and
• the IMF should undertake further Transparency Reports and make them a central part of the surveillance process.

The Chancellor also called for a new crisis prevention mechanism based on partnership between the public and private sector. He said:

“Third, I believe we should move beyond general statements on the importance of involving the private sector in crisis resolution. We need a new framework to provide the right incentives and ensure that all parties which benefit from the international financial system play their part in maintaining stability.

“Next week I will propose that the international community should draw up explicit rules of the game for involving public and private sectors in crisis resolution, and a new timetable for taking this forward.”

This would include:

• a new approach to crisis resolution: in which explicit rules of the game are set out in advance designed to promote orderly and co-operative management of crises; which addresses the creditor moral hazard concerns associated with public sector rescue packages; and in which both public and private sectors contribute to maintaining financial stability;
• the official community should provide enhanced support in times of trouble for countries making efforts to implement the codes and standards and to establish closer relationships with the private sector. The IMF precautionary facility will provide support for countries that are the victims of contagion, and provide incentives for all countries to implement sound policies.
• countries must forge regular contacts and lasting relationships with their private investors: modern investor networks;
• similarly, the IMF and other international institutions should do more to explain their practices and procedures to the public and the private sector;
• countries should increase their efforts to put in place high frequency debt monitoring systems, to enable national authorities to improve their surveillance of short-term capital flows and obtain early warnings of developing problems;
• we should encourage more countries and their creditors to agree contingent lines of credit which can be drawn down in the event of a deterioration in market conditions;
• we should encourage greater use of collective action clauses in bond contracts to promote orderly workouts for countries unable to meet their obligations even over time; and
• countries that do not follow these procedures or act on advice cannot expect that they and their private sectors will secure the same degree and speed of crisis support – the moral hazard would be to guarantee such support independent of whether they do the right things.

The press release issued by HM Treasury on 21 April 1999.

Improvements in UK economic decision making and transparency and accountability in four key areas of economic policy and decision making are highlighted in an International Monetary Fund (IMF) report published this week.

Welcoming the report, Chancellor of the Exchequer Gordon Brown said:

“Transparency provides a sound basis for policy. It ensures that both Parliament and public can scrutinise the Government’s economic and fiscal plans, and supports the efficient operation of financial systems.

“The IMF has taken the lead in developing international standards against which we, and other countries, can evaluate decision-making practice. Independent assessments of transparency, such as this report, can play an important role in promoting efficient financial markets and transparent policy.

“This report recognises the Government’s efforts to promote transparency, which have produced an open and accountable decision-making framework. We will continue to move in this direction to ensure that all policy decisions are made in Britain’s best interest.”

The IMF report identifies important strides in enhancing UK transparency practices in key areas of economic policy, with high levels of transparency in four areas assessed: data dissemination; fiscal policy; monetary and financial policy; and disclosure aspects of banking supervision.

It indicates that the UK exceeds many requirements of the IMF Code of Good Practices on Fiscal Transparency, and is highly transparent regarding underlying principles of the Code of Good Practices on Transparency in Monetary and Financial Policies.

The IMF also identified some areas where further improvements might be made: some aspects of the Special Data Dissemination Standard, better integration of information on contingent liabilities, and a more detailed breakdown of government spending.

The press release issued by HM Treasury on 19 April 1999.

The Treasury has issued a formal notice to financial institutions, drawing attention to deficiencies in the anti-money laundering system in the Caribbean state of Antigua and Barbuda.

Commenting on the notice, Economic Secretary Patricia Hewitt said :

“The UK is determined to take a global approach to combat money laundering. As part of the G7 initiative on financial crime, we have signalled our willingness to identify jurisdictions which fail to meet minimum standards.

In doing so, we also help protect UK financial institutions from corruption by criminal money, as well as helping to address the insidious influence of global organised crime.”

Also welcoming the move, Foreign Office Minister Baroness Symons said :

“The UK will continue to impress upon the government of Antigua the importance that we lace upon effective action to counter money laundering. We have also provided technical assistance to Antigua, and to the region as a whole; we welcome recent moves by the Antiguan government in respect of possible changes to its legislative and regulatory regime; and will continue to play a leading role in international initiatives to improve standards in this and other areas.”

The Treasury expresses concern about amendments to the anti-money laundering law, and to legislation governing international financial services in Antigua and Barbuda. These amendments strengthen bank secrecy, restrict cooperation with overseas law enforcement authorities, and seriously erode the ability of Antigua to counter the threat from money launderers. There are also, in the Treasury’s view, serious concerns about the independence and integrity of the system of financial regulation.

In the light of these concerns, financial institutions (including professionals – such as lawyers and accountants – engaged in financial business) are asked to pay particular attention to transactions involving Antiguan off-shore financial institutions, and other institutions for which the Antiguan authorities have sole supervisory responsibility.

Where financial institutions regard transactions as suspicious, taking into account the Treasury’s concerns about the anti-money laundering system in Antigua, they should report the transaction to the National Criminal Intelligence Service. It is not necessary to issue a suspicions ransaction  report in respect of all transaction involving Antigua, and financial institutions are not asked to avoid business with citizens of Antigua. But they should pay particular attention to large or unusual transactions for which their is no clear economic purpose.

The UK government will support actions that the Antiguan government agrees to undertake to address these concerns, and will continue the dialogue. In particular, the Caribbean Financial Action Task Force on money laundering, which the UK part-funds and on which we are an observer member, will be taking the lead in monitoring their compliance with international standards.

The press release issued by HM Treasury on 16 April 1999.

The UK Government has today called on the EU to make their contribution to meeting the costs of providing faster, wider and deeper debt relief for the world’s poorest countries.

The Chancellor Gordon Brown and the International Development Secretary Clare Short have written to the European Commission have written with two suggestions:

• an EC contribution, at country level, to the multilateral debt funds set up to help countries such as Mozambique meet their debt servicing costs in advance of receipt of Heavily Indebted Poor Countries (HIPC) debt relief; or
• an EC contribution directly to the HIPC Trust Fund.

The press release issued by HM Treasury on 14 April 1999.

Further Clauses of the draft Financial Services and Markets Bill were sent to the Joint Committee of the Houses of Lords and Commons by the Treasury today. This will enable the Committee to complete their deliberations on the basis of a more complete draft than was available when the Bill was published last Summer. The draft clauses relate to proposals in last July’s consultation document on the Bill but were not available for consultation at the time.

Commenting on the publication of the clauses, Economic Secretary Patricia Hewitt said,

“This is a further very important stage in getting into place comprehensive legislation to achieve our objectives in reforming financial regulation”.

The additional Parts of the Bill sent to the Joint Committee are:

• official listing
• collective investment schemes
• disclosure of information
• insolvency.

The Joint Committee is due to report on the Bill by the end of April, after which the Government intends that it will be introduced into Parliament as soon as possible.

The press release issued by HM Treasury on 14 April 1999.

New guidance on Trading Funds’ participation in Joint Ventures was launched today by Financial Secretary Barbara Roche to make it easier for some public research establishments and institutes to unlock the potential of science and to commercialise their research through equity joint ventures.

Speaking at a joint Treasury and Arthur Andersen conference at Islington’s Design Centre to promote the commercialisation of public sector intellectual property, Barbara Roche called for better use of public assets and for groups of public sector
research establishments to enter into partnerships through selling their services into the wider market place.

“Science is one area that offers huge potential for the development of new partnerships between public and private sectors. We need to develop ways in which they can work closer together to exploit our many under-used public sector resources.

“Links between university research and business are well advanced. But there are many research institutes and agencies run by departments and Research Councils. These institutes and the role they play is less widely understood than that of the universities but potentially very important for the economy.

“By making better use of publicly-funded research and development we can stimulate the development of leading edge British companies and high quality employment. Today’s conference marks another important step in the development of our science base.”

The purpose of the guidance note is to provide a source of reference on whether and how the operations of Government Departments financed through trading funds can be discharged through joint ventures under the terms of the Government Trading Funds Act 1973. It considers:

• the legal status of trading funds;
• the implications for joint ventures;
• some potential risks and difficulties associated with joint ventures;
• some pointers for minimising difficulties.

The press release issued by HM Treasury on 13 April 1999.

Investment in modernising Britain’s infrastructure is set to double over the next three years, the Government announced today.

Launching a summary of new Departmental Investment Strategies, Chief Secretary Alan Milburn highlighted capital funding for schools, hospitals, transport and housing as key priorities.

He commented:

“When this Government was elected we inherited a legacy of under investment in the nation’s infrastructure. Hospitals, schools, transport and housing had all been neglected.

“We are reversing that decline in a way that is consistent with our prudent approach to public spending.

“There is now an emphasis on long term capital investment as part of the Government’s modernisation programme for our key public services.

“We are investing for the future.”

Public sector net capital investment will double between 1999 and 2002, with an extra £12.5 billion being made available. On top of that, public private partnerships, including the Private Finance Initiative, will lever in a further £11 billion.

Each Government Department has drawn up a Departmental Investment Strategy (DIS) to set out how extra capital investment will be spent, assets managed and use of public private partnerships encouraged. Each DIS explains how capital investment will contribute towards tangible improvements in public services.

Today’s summary document highlights some of the key investment areas, including;

• £1.5 billion to modernise schools including £700 million on IT investment. This is on top of the £1.3 billion of windfall tax revenues allocated to the New Deal for Schools from which 7,500 schools have benefited
• an extra £1.0 billion for the NHS on top of the biggest ever new hospital building programme. Since May 1997, 31 major hospital projects have been given the go ahead. 8 of these will be in service by 2001
• an additional £1.7 billion to underpin a new integrated transport strategy
• over 1.5 million council houses to benefit from the extra £3.6 billion made available to start tackling a backlog of investment.

The Government’s new emphasis on long term capital investment will see public sector net investment rising from 0.4% of GDP to 1% of GDP by 2002.

This increased investment in Britain’s infrastructure will also help tackle the productivity gap that has opened up between this country and our competitors.