The Business7 Blog

Quantitative easing: Plan A isn't working

2012-02-10T11:57:26Z

The Bank of England has agreed to pump another £50 billion of made up money into the flagging UK economy in an effort to kick-start economic growth.

UK interest rates have also been held at a record low of 0.5 per cent - the rate it has been since March 2009.

This, of course, is terrible news for savers, and indeed pensioners, as the buying up of gilts - UK government bonds - artificially depresses annuity rates.

Quantitative easing is basically the creation of new money - literally out of thin air.

The Bank of England creates this new money by way of a sale of Treasury investment bonds - basically a promise to pay later for cash now.

]]> Those bonds, backed by a guarantee from the taxpayer, are then 'sold' on the London Stock Exchange to investors, insurance firms and banks.

They in turn swap this promise to pay in the future for cash now, which the government agrees to pay back over a set period, at a hefty rate of interest.

The Bank of England then buys those bonds from banks, which is supposed to free up cash for the banks so they can lend again.

That's the plan at least.

However, a report published by economist Dhaval Joshi in 2011, suggests quantitative easing is really a way of paying the rich at the expense of the poor.

Joshi argued real wages in the UK and United States - where quantitative easing is being used to boost economic growth - have fallen in real terms.

The sudden influx of newly created money also pushes up the price of commodities, and food and oil prices have risen as a result.

Joshi said: "Real wages and salaries have fallen by £4 billion. Profits are up by £11 billion.

"The spoils of the recovery have been shared in the most unequal of ways."

And there is evidence of this profiteering, with the six biggest energy suppliers reported to have increased their profit margins by 733 per cent in just three months of last year.

The announcement by the Bank of England's Monetary Policy Committee (MPC) to increase the size of this stimulus programme by another £50 billion on Thursday takes the value of the programme since its 2009 launch to £325 billion.

To look at it more simply, quantitative easing is a grand scale version of the consumer credit cycle - its akin to using a new credit card to pay the interest on a card which has reached its credit limit.

Of course, engaging in this type of debt management - sorry fiscal stimulus - doesn't address the principal debt.

In simple casino terms - because that's what the markets have degenerated into - it's essentially creating new money to fund another spin of the wheel in the hope you win. If not, just create more until you do win, seems to be the policy being promoted by the Bank of England.

The belief is the injection of new capital will encourage the banks to lend again, but it doesn't force them to. There is nothing to stop the banks hoarding this cash to bolster their own battered balance sheets.

However, the only way the UK Government can keep the many plates of debt spinning and have any hope of paying back the huge public debt in the meantime is to raise more in taxes.

That won't be easy given a Tax Justice Network report, published in November 2011 estimates UK tax evasion is somewhere in the region of £70 billion a year.

Of course, both the UK Government and HM Revenue and Customs contests these figures, believing the total figure for tax evasion and avoidance runs at around £35 billion a year.

To put this into context, the UK will have to pay £43 billion in interest on its current debt this year, which works out at around £1,800 in tax for every household - just to pay the interest, not the principal debt owed.

However, some high profile so-called 'sweetheart deals' HMRC has struck with big business recently suggest the playing field is far from level.

Mobile phone giant Vodafone secured a £5 billion tax write off from HMRC in what was one of the largest ever tax avoidance investigations it had conducted.

HMRC permanent secretary Dave Hartnett dismissed HMRC's own lawyers from the case and brought in tax consultant David Cruickshank of Deloitte to broker an agreement with Vodafone.

Vodafone eventually agreed to pay £800 million of an estimated £6 billion tax bill, with a further £450 million to be paid over five years.

Investment bank Goldman Sachs was also reported to have brokered a deal with HMRC which let it off with a reported £10 million in interest payments on a failed tax avoidance scheme it had set up for its employees.

Details also emerged last year of a truly audacious plan to give a tax exemption on profits made by the overseas branches of UK-based companies, meaning big business - and of course banks - will benefit to the tune of billions of pounds a year.

How? Because those same UK-based companies will be allowed to claim the cost of running their overseas operations against the tax they pay in the UK.

How necessary are such measures, given Barclays Bank's stunning admission it paid just £113 million in corporation tax in 2009 in a year it made profits of £11.6 billion?

Lloyds Banking Group, which is 41 per cent taxpayer-owned, paid no corporation tax at all on its £2.2 billion of profits.

Likewise, 83 per cent taxpayer-owned Royal Bank of Scotland paid no corporation tax last year, and because the bank has posted losses of £38 billion and counting since 2008, won't be paying any tax for years to come, even if it returns to profit.

UK national debt is now standing at £1.02 trillion pounds, not including bank bailouts.

If we add in all of the taxpayer-backed bailouts and guarantees of bank assets, the debt figure is more than double at £2.26 trillion as of December 2011.

That means UK debt, not including bank bailouts and guarantees, is running at 64 per cent of UK GDP - the sum our economy generates from all economic activity.

Add in the bank bailouts and guarantees, and the debt levels - known as the unadjusted measure of public sector net debt - is currently running at 148 per cent of GDP.

And if we add bond debt and pension liabilities, known as the Whole of Government Accounts, the true level of debt reportedly exceeds £5 trillion.

Simply put, we're spending far more than the country produces to break even.

If you earn £100 a week and spend £148 a week without making a dent in your existing debts you are, quite simply, on the way to bankruptcy.

The government's answer is to create more debt in the form of new money in an effort to stimulate the economy, despite the fact there is little evidence on the ground to show the £275 billion already created in stimulus money has had any positive effect.

Now the programme has swelled to £325 billion - the Chancellor's insistence on sticking to his plan A is looking increasingly desperate, and looks increasingly like present and future generations of taxpayers will be footing the bill.

Can new owners boost McEwan's?

2011-10-04T11:08:01Z

When a new owner takes on an iconic brand thoughts quite quickly turn to what will happen next.

Under the control of Bedford based Wells and Young's it would appear McEwan's will be given a bit more attention than it was in the Heineken years.

The independent brewing firm seems a more natural home for the likes of 80 Shilling and Export than the vast machine of a multinational drinks company.

The new owners have promised "significant" investment in marketing and are in the process of setting up a dedicated Scottish office.

]]> All well and good.

I wonder however if the famous Laughing Cavalier which adorns McEwan's ales could be on the way out.

Although the brand is still strong (a long association with Rangers means generations of Scots wore the lager logo on their replica sportswear) it does suffer from certain perception problems.

Even back in the later 1990s when I was taking my first legal alcoholic drinks in pubs McEwan's was seen as something of an old man's tipple.

I don't see that situation has changed much even if my palate is a bit more receptive to it now.

The most recent advertising campaigns hardly suggested a drink which had found a comfortable niche in 21st century Scotland.

I'm not suggesting all the history and tradition of the brand needs to be ditched.

But one way to generate publicity and buzz around the beers would be by offering a modern revamp of the brand and by association the packaging.

Wells and Young's have a varied portfolio - including Red Stripe, Bombardier, Kirin Ichiban, Young's and Courage - with a range of marketing strategies at work.

I'm sure they won't lack for ideas and will have a clear vision mapped out.

They wouldn't have spent the money - understood to be several million pounds - otherwise.

So at a time when Scotland's craft beer scene is flourishing - Brewdog, Innis and Gunn, Arran Brewery, West, William Brothers and Inveralmond to name just a few - it will be interesting to see how one of the old stagers progresses with new blood driving it forward.

When are bonuses ok?

2011-03-31T13:32:10Z

It has been interesting watching the reaction over the past few weeks to some fairly hefty payouts across the corporate sector.

Bankers like Bob Diamond, Stephen Hester and Eric Daniels all walked away with millions of pounds worth of benefits and shares.

Alongside them hundreds of other bankers were paid more than £1 million each to a collective outcry of horror.

Compare and contrast this to the joyous outpourings shown in newspapers and broadcast media when John Lewis announced all of its staff - including the executive team - were getting the equivalent of 18 per cent of their salary.

]]> Now it's not rocket science to figure out why bankers = bad and greedy bankers = even worse.

Some of my contacts who work in financial services have often commented on the bonus culture which is prevalent in that sector with many workers expecting an extra payment as part of their own annual budget planning.

Few people would begrudge a contact centre operator on a low salary some extra money.

What riles us is seeing executives on six and seven figure basic wages taking home rewards worth several times their salary.

Perhaps that's why the John Lewis model struck such a chord.

The idea of a proportional bonus across the business seems in some ways fairer.

While reform of the bonus culture in banking has begun there is still an awful lot more to do.

It will certainly be a long time before banking bonuses are greeted in the same way as John Lewis.

Taxing oil

2011-03-23T16:33:31Z

You have to wonder at the logic the Chancellor George Osborne applied to the Supplementary Rate of Corporation Tax for the North Sea oil and gas sector, pushing the rate up from 20 to 32 per cent in an attempt to appease the public on rocketing fuel costs.

For an oil and gas region which has already reached peak production, this could be a massive blow if the big players decide to mothball their UK North Sea operations until we reach the Chancellors hallowed $75 a barrel oil cut off.

Derek Leith, oil and gas partner at Ernst & Young believes the Government has backtracked on a commitment last year to ensuring investment in the North Sea by creating a stable and fair UK oil and gas tax regime.

Leith says, that script has been binned.

He said the rise from 20 to 32 per cent "demonstrates to industry in an unambiguous fashion that there is no real concept of fiscal stability in the UK."

Leith adds: "It is hard to comprehend that mature oil and gas fields, which already pay petroleum revenue tax as well as corporation tax, will now suffer a marginal tax rate of 81 per cent. Many companies will be frantically re-appraising their plans for capital investment in the UKCS in the coming days.

"The prospect that the rate will reduce if the oil price falls before a certain level, and the possibility of some measure of relief for new gas fields will carry little weight with oil companies in the light of such a significant increase in tax."

]]> Analysts believe the tax hike will have little effect on the two biggest players in the North Sea - BP and Royal Dutch Shell - as they have both reduced their operations in the region over the years.

However, for the smaller firms, many of which are based in Scotland, the Chancellor's tax grab will undoubtedly have an impact, despite the rise being offset to some degree by a reduction in corporation tax to 23 per cent within the next three years.

Figures from the industry trade group Oil & Gas UK suggest North Sea output is still more than two million barrels a day, with a number of new North Sea finds yet to come online.

UK Brent is currently trading at $114 a barrel, so the chances of the oil and gas firms seeing this tax rate drop in the near future are remote at best.

But how poor a hand has been dealt to the oil and gas firms?

On the face of it a rise from 20 to 32 per cent on the Supplementary Charge seems almost oppressive until we look back to historical averages.

In 1975-76, Petroleum Revenue tax - which is a direct tax - stood at 75 per cent and corporation tax at 52 per cent.

The Petroleum Revenue Tax (PRT) was introduced under the Oil Taxation Act 1975 to ensure "a fairer share of the profits for the nation" and a suitable return for the oil and gas firms.

PRT is charged on top of corporation tax on what are called "super profits" oil and gas firms make from individual oil and gas fields, though losses from poorly performing fields could not be offset against the best performing ones.

PRT was abolished in 1993 for new fields given development consent, and the rate was reduced from 75 per cent to 50 per cent for those fields already producing which remained subject to the original levy.

HMRC historically took a flat 12.5 per cent Royalties Tax on the gross value of oil and gas extracted, which stood unchanged from 1975 until 2002, when the 10 per cent Supplementary Charge was first introduced.

The Supplementary Charge rose from 10 per cent to 20 per cent in 2005 and has remained at the same rate since.

In 1993, the Petroleum Revenue tax dropped from 75 per cent to 50 per cent, where it has remained ever since.

Corporation Tax fell from 52 per cent in 1975 to 50 per cent in 1983 and to 35 per cent by 1986.

Four cuts in corporation tax between 1983 and 1999 took the corporation tax to 30 per cent, where it has remained ever since.

So in real terms, Petroleum Revenue tax, Corporation tax and the Supplementary Charge hasn't changed since 2005, though the price of oil and gas most definitely has.

The price of a barrel of oil remained fairly stable from the mid-1980's until 2003 at $25 a barrel, but by 2005 the price of oil had more than doubled to $60 a barrel, and then climbed steadily to the peak of $147 a barrel in July, 2008.

So, between the mid-1980's to 2008, the price of oil rose 488 per cent whilst the rate of Petroleum tax fell from 75 to 50 per cent and corporation tax from 50 to 30 per cent.

Royalty rates remained at 12.5 per cent from 1975 to 2003 before the introduction of the Supplementary Charge at 10 per cent in 2002, rising to 20 per cent in 2005.

Corporation tax will fall from 30 to 23 per cent within the next three years which will offset the Supplementary Charge rise to some degree.

The Chancellor seems very keen to get the Treasury's hand in the pockets of the oil and gas firms operating in the North Sea.

While it is difficult to gauge how much of the current oil price spike is speculative rather than resource led, results from a Scottish oil and gas firm operating overseas posted today hints at the profits to be made in black gold.

Melrose Resource reported its profits on a barrel of oil rose from $6.64 in 2009 to $11.59 last year, a 74.5 per cent increase.

BP, before its disastrous management of its Gulf of Mexico drilling exploits, made a profit of £21.6 billion when oil prices peaked in 2008, which fell by nearly £5 billion 2009 as oil prices stabilised.

So, while the Chancellor may well have upset the oil and gas firms operating in the North Sea, the profits to be made in the present market still make extraction extremely attractive.

Quality will shine through

2011-03-02T14:57:53Z

On Saturday I was lucky enough to be having dinner with my wife in the Rhubarb restaurant at Prestonfield House Hotel in Edinburgh.

A gift voucher we had which had been languishing on a shelf was finally being put to good use.

It was only the second time I had eaten at James Thompson's lavishly decorated and opulent sanctum.

Even though the decoration has the capacity to overwhelm what I noticed most was that when we arrived at 6.30pm the dining rooms and bar areas were extremely busy.

]]>

That didn't change over three delightful courses and as parties left they were quickly replaced.

Indeed after we had finished eating staff had to help find a nook for us to sit and have some coffee.

Now when one of the more upmarket eateries in the capital is clearly having a bumper night at the tail end of February surely it's cause for celebration.

I'm sure it was for the management at least until the till system collapsed.

That electronic failure left many customers waiting far longer than normal to pay bills.

But kudos to the excellent staff who were very attentive and regularly came to apologise people who had been waiting patiently

Yet sitting in the whisky room at Prestonfield it occurred to me that these people - taken from all walks of life and a broad age range - were here to have a good time.

They would dress up, eat well and maybe even have a few drinks. Fears about inflation, cost of living and public sector cuts seemed a million miles away.

A lot of people still have money to spend. It's just they are going to be far more careful about where they spend it.

Other business could have learnt a lot from the staff at Rhubarb about how to deal with what could have been a disastrous IT failure.

Even though we waited for more than 30 minutes for our bill I still felt the staff had looked after us as best they could and a lovely evening had been prolonged rather spoiled.

And that kind of service will undoubtedly lead to repeat business at some point.

Deals, deals, deals

2011-01-27T14:34:54Z

There were signs in the final few months of 2010 the deals market was hotting up again.

The Wood Group deal for PSN and Sir Tom Hunter disposing of Office grabbed a lot of the headlines and rightly so.

While most players in the market felt 2011 would see that pick up continuing there was always a nervousness about whether the recovery was really under way (possibly not if the latest GDP stats are looked at).

But there have already been a string of interesting transactions in January.

]]> As headline grabbers go sticking a figure of $1 billion on an exit ideal isn't a bad way to start.

Certainly Scottish Equity Partners was delighted with the return it got from the BioVex acquisition by Amgen.

Importantly it gives the whole venture capital and business angel community a confidence boost.

The £7 million sale of Forth Dimension Displays, which was snapped up by US-giant Kopin Group, is another example of a good deal in the technology sector.

And there have been numerous others in more traditional sectors including a management buy-in at mobile phone recycler Redeem and a management buy out at manufacturer Soapworks.

There's a definite feeling - whether speaking to lawyers and accountants or VCs and investors - that more deals are on the way.

Now whether we say any Scottish IPOs this year remains to be seen.

It would be good to start increasing the number of listed businesses in the country after a several losses in recent time.

However if I was a betting man I wouldn't be laying a lot of money on there being a flood of flotations.

The few companies which might consider floating are probably not actually at the stage when it might be a good idea.

Meanwhile most advisers believe IPOs will be fairly difficult and there's a reason clients pay for that advice.

I'm not sure flotation have every been easy but the feeling persists the conditions are not yet right particularly on the AIM and PLUS markets.

But as long as there is a steady upward trend in trade sales, buy-outs, buy-ins and equity investments then I'm sure the professional services community won't be complaining too much.

No photo, no business?

2011-01-11T15:34:58Z

Once again this is a blog post sparked off by some of the great discussion over in the Business7 and Insider group on Linkedin.

Mary-Jo Devlin's topic on 'Would you do business with individual who has no photo on their LinkedIn profile?' has sparked more than 30 responses.

And it is something of a mixed bag from outright no and yes to musings on the power of looking attractive.

One reply suggested being on a social network without a photo was like leaving your date of birth out of a cv as the omission immediately makes people suspicious.

]]> All fascinating stuff but perhaps the most realistic comments were the ones which said not having a photo would not be a deal breaker.

Sensible medicine in the current climate.

It was further pointed out that in most cases you would want a face to face meeting with someone before doing business anyway.

I'm sure that is the case for Scotland (and probably the UK) but face to face with someone from further afield can certainly be more problematic.

In my own experience not having seen a photograph of someone I am interviewing on the phone doesn't really matter.

However I'm only trying to extract information. I'm not putting together deals which could be crucial to my businesses, lifestyle or wellbeing.

Put in that situation I think I would want to know exactly who I was dealing with.

Not having a photo on a social network or company website wouldn't put me off but I might tread just a little more cautiously.

Lunch with Lord Chadlington

2010-10-18T10:34:27Z

I was recently invited along to a lunch held by the Public Relations Consultants Association in Glasgow.

Speaker for the event was Lord Chadlington, the extremely fascinating and wildly entertaining chief executive of PR giant Hunstworth.

By sheer fluke I ended up on the same table as this public relations doyen as well as PRCA chief executive Francis Ingham.

It was an eye opening couple of hours in the basement room of Brian Maule's Chardon d'Or restaurant.

Lord Chadlington regaled the table then the room with his tales of the Mad Men type culture ("the programme underplays the amount of drinking which went on") which pervaded public relations when he started out.

]]> He feels much of the fun has been sucked out of the industry in the years since.

There was also an impassioned plea for the sector to start charging higher fees while his tips for pitching have been covered here.

One thing which really stuck out though was his admission the average annual fee for a Huntsworth client was around £59,000.

I think most people in the room also started looking at their own pay packet when Lord Chadlington described that as the annual salary of a secretary at his company.

However he moved the discussion on when he talked about the healthcare division.

Within that more than a third of the staff are PhD qualified in a specialist area which means they can talk to clients with a degree of authoritative knowledge.

But the investment in the staff is paying off with the average annual client fee in healthcare standing at £600,000.

Impressive stuff and something to ponder for some of the leaders from the Scottish industry who were in attendance.

Diary of a start-up - Safetray makes its Festival debut

2010-08-27T09:27:15Z

My nails dramatically decreased in size during the month of July. I nervously nibbled as I awaited the first production units arriving from China, desperate for Safetray to play its own part in the largest arts festival in the world - a showcase in front of an international audience within my beloved hometown during Edinburgh's multiple festivals.

Leading up to the arrival I had been fed worrying snippets of information regarding the progress with the mould tool. The initial photographs were kept from me - Fearsomengine quite rightly deciding that a snapshot image of a mangled piece of plastic might be more upsetting than informative - and so it was a relief indeed to finally see (a fortnight ago) a physical embodiment of the Safetray looking actually rather handsome.

]]> And so it was, at a stall in the glorious sunshine at Edinburgh's Foodies Festival in Holyrood Park, the very first Safetrays - hot off our production tool - were let loose on the general public; and what a reaction we received.

The most common reaction from people was the suggestion that we should go on Dragons' Den; the second was one of surprise that nobody had ever thought of it before.

A new reaction - limited to a handful of people, exclusively Scottish - was that Safetray is 'cheating'. A remnant of our Calvinist past, I imagine: if it makes our lives easier, it must be immoral. Curiously, I quite liked that perspective. Maybe it's the Calvinist Scot in me welcoming criticism.

The majority were overwhelmingly supportive and excited by the concept - especially those who were hospitality professionals. Our pre-order book was bulging by the end of the weekend, filled with trade buyers and consumers alike. With a few amendments to be made and our first substantial volume of the Safetrays only arriving in October, I was just sorry that we were not able to sell them on the spot.

An added bonus to Foodies was the amount of people who entered our competition: 'Should have used a Safetray'. The task? To be filmed recounting a tale of an accident involving a toppled tray. The prize for the most spectacular story was a bottle of Pol Roger Champagne, the winner of which is to be announced when we launch our retailing website with video-embeds via YouTube.

Over thirty people told us their stories. There were stories of A-list celebrities with food in their laps; a girl so fresh from a coffee spill accident that she was still wearing the bandages; red wine over a white shirt at a restaurant opening and an accident involving a customer being set alight with a toppled tray of flaming Sambucas. Yowzers.

We chose The Famous Spiegeltent to be the first venue to use the Safetrays in situ. One of only handful of its kind left in the world, this stunningly beautiful mirrored tent seemed a fantastic launch pad for our trays. Amidst acrobats hanging from ropes, strong men flinging scantily-clad ladies, jazz chanteuses singing their delicate standards and magicians turning doves into ducks, the Safetray made its own seemingly gravity-defying debut.

Glasshouse Events, who this year manage the bars in the Spiegel Garden, also work on the Golf Open, the Six Nations Rugby and The Grand National. It's exciting to think of the all events at which the trusty Safetray might be acting as a silent partner in service in the not too distant future.

Our final involvement in what has been a fantastic Edinburgh Festival for us was as finalists in the International Marketing Festival's Brands of the Future competition which took place at the Assembly @ Assembly Hall on the Mound.

I had felt slightly guilty asking friends and family along to what I thought would be a tedious morning of dry business presentations filled with cashflow sheets and buzz words from a bunch of poker-faced suits - not exactly a typical Fringe experience. It was, however, unexpectedly entertaining.

I found myself feeling utterly humbled onstage beside some truly inspirational Scottish businesses: the brilliant language website for children, GrowStoryGrow; fabulous tea house, Loopy Lorna's; parental godsend, Labels4Kids; the super-sexy bikers dream, Dakota Motorcycles; and, ultimate winners, the stylishly ethical Blue Marmalade.

Hosted by the personable and effortlessly funny Simon Fanshawe, the panel of judges included Bill Jamieson, Executive Editor of The Scotsman, and Graham Birse, deputy chief executive of Edinburgh Chamber of Commerce.

It's easy to forget, when working so much of the time on my own, speaking to Fearsomengine mainly by phone, trying to fit more tasks into a day than I ever felt possible, that there are other ambitious (AKA completely stark raving bonkers) business men and women out there taking similar risks, becoming familiar with the same small hours and writing their own updated business plan and forecast for the forty billionth time.

And it's also easy to forget, in the middle of a festival famous for celebrating creative talent from all over the world, that we've got no small amount of talent and spirit right here on our very own doorstep.

Aberdeen retail stakes are being upped

2010-08-19T10:40:49Z

The battle of the malls in Aberdeen is definitely being stepped up.

The opening of Hammerson owned Union Square last year was something of a landmark with several new brands such as Apple and Hollister coming to the city.

Footfall has been impressive and informal chats with some of the retailers trading in the centre suggest they are happy with their numbers.

However the Scottish Retail Property Limited Partnership (SRPLP) - a Land Securities and British Land joint venture - is not resting on its laurels.

It spent £2m in the refurbishment of the St Nicholas shopping centre in 2009 and has just announced a £6m upgrade of the neighbouring Bon Accord centre.

]]> The facelift includes stripping away the existing finishes to replace them with clean white and glass designs (as seen below) plus new lighting and furniture.

Glasgow firm Gareth Hoskins Architects has been given the brief for the update.

While Bon Accord has't exactly been struggling - recent tenants include Swarovski, Jo Malone and Hobbs - it is a sensible step to start improving it given the competition in the city.

With a shopping catchment of more than 400,000 - half of those in the ABC1 category - there is certainly plenty of custom to fight over.

I'm sure Aberdonians won't be moaning about the increased choice they now have.

STV keeps eye on America

2010-08-02T15:04:05Z

Hot on the heels of its link up with YouTube STV is once again going to the US market.

This time it's a format sharing partnership with Kinetic Content.

The deal means STV Productions will licence original Kinetic shows in the UK and vice versa.

Both companies also intend to work together to develop new formats for broadcast in Britain and the US.

]]> Santa Monica based Kinetic was founded earlier this year and is headed by former RDF America boss Chris Coelen.

Coelen and his RDF team - some of whom came with him in the new venture - sold more than 30 shows between 2006 and 2009 so it seems like a good way in to the US networks for STV.

A member of STV staff will also be based in Kinetic's Los Angeles headquarters to develop projects.

One of the more intriguing aspects of the deal is the possibility of flagship STV shows like Taggart and Rebus being remade for the US.

Ceolen certainly has previous form in that regard setting up BBC show Being Human for a transatlantic makeover.

Other programmes in the STV locker - including Antiques Road Trip, DNA Stories, Missing Mums; and Extreme Celebrity Detox - could also be ripe to make the transition.

It will certainly be interesting to see the first fruits from this partnership as Ceolen oversaw the creation of various US adaptations of British shows, including a version of the BBC's Being Human for Syfy.

No suggestion of any imminent remakes at this stage but never say never.

What it will mean is STV has a good foot in the door to get its content into the myriad broadcast networks in the States.

The toxic carousel

2010-07-16T16:21:33Z

Royal bank of Scotland will take little comfort from its $100 million settlement award from the US Securities and Exchange Commission from Goldman Sachs admission it was economical with the truth in its selling of toxic bond deals wrapped up in Abacus 2007-AC1.

RBS is now "considering all options" which obviously includes the possibility of pursuing Goldman's for a considerably larger chunk of the $870 million it lost in the Abacus investment deal.

Those losses stemmed from the fraudulent omission Goldman's hedge fund client, Paulson & Co was not only selecting mortgages for the portfolio, but was also making side bets those mortgages would drop in value.

A very cosy arrangement for Goldman's, which also charged Paulson & Co $15 million for the privilege of selecting mortgage backed securities to go into Abacus both Goldmans and Paulson must have known were at the very least suspect.

]]> This raises some fundamental questions as to the extent of the due diligence carried out by RBS prior to its investment in the Abacus toxic time bomb of collateralised debt obligations (CDO).

Those CDO's were marketed by Goldman's - with the help of a triple-A investment rating from Moody's - and then sold on as triple-A grade 'investments' to RBS investment traders, who where then paid handsome bonuses for their involvement in such deals.

RBS is likely to have a mountain to climb proving the CDO's it purchased from Goldman Sachs were indeed shoddy, given the only people who can access CDO performance data are investors in CDO's, who are also subject to non-disclosure agreements.

Goldman Sachs relationship with RBS soured somewhat back in 2008 when its former chief executive, Sir Fred Goodwin, was negotiating the banks initial £12bn rights issue.

Goldman's, hired as a key underwriter to the rights issue, was at the same time betting against its struggling client by taking short positions on RBS shares.

What Goldman Sachs settlement with the SEC lays out this week is it set up one customer (RBS) to be the fall guy for another customers (Paulson & Co) who paid Goldman $15 million in fees so it could choose some of the investments for a portfolio - in secret - to then go on to short its positions against that same portfolio, again in secret.

Of course, Goldman's also picked up massive fees at both ends of the deal.

And since the CDO's are in themselves secretive agreements, traded in an unregulated over the counter derivatives market, the chances of RBS winning a case against Goldman's are shaky at best.

The government-led investment vehicle managing the tax payer stake in both RBS and Lloyds - UK Financial Investment Limited - has already expressed a willingness to purse Goldman for a settlement for its overall losses in the Abacus deal.

So it will be interesting to see what RBS head of strategy, Jennifer Hill makes of all of this, and if RBS will pursue 'the giant vampire squid' for the remainder of the losses.

The SEC has said the gates are now open to other claims now Goldman has admitted the omission from the marketing literature omitting Paulson & Co's involvement in Abacus was "a mistake".

Hill was the former managing director of Goldman Sachs in London and New York and was also the former CFO of Goldman's European Investment Banking division before joining RBS - so no pressure.

Edinburgh airport drop off charge is a nonsense

2010-07-16T07:32:52Z

If you haven't heard BAA want to charge £1 for passengers to be dropped off by the terminal building at Edinburgh airport. They say the charge is to pay for improvements to the drop off area. But the amount raised by this charge will surely pay for much more than that. It is just another way to get extra revenue. Surely they must be getting enough from the extortionate charges they already make for parking by the terminal.
I think BAA have done a great job with Edinburgh airport which is world class. But I think to impose a charge when many people are worried about their jobs and income is extraordinarily bad timing and a PR disaster.

Don't forget what is on your doorstep

2010-07-15T14:57:10Z

My wife and I recently spent a very pleasant weekend on the Isle of Mull. The scenery was stunning and the whole experience was very relaxing. We stayed at the Highland Cottage in Tobermory run by hotel industry veterans David and Jo Currie and were treated to superb food in their intimate little restaurant.
Like many people in the tourist industry in Scotland they have worked hard to create high standards and deserve to do well. Sadly the weekend we stayed the restaurant was not full though it deserved to be. It is more important than ever for us to support businesses like these and I can assure you I enjoyed the car and ferry journey to Mull much more than the many hours I have hung around airports in recent times! Don't forget what's on your doorstep.

Diary of a start-up - The IP Minefield

2010-07-11T15:06:25Z

This week I thought I should talk about the various steps that were required to protect not just Safetray as a physical product but also our brand, before we were able to start shouting from the rooftops.

I, like all inventors, had to keep my idea a secret right up to the point of patent application. Non-disclosure agreements (or confidential disclosure agreements) can be acquired from the IPO website and signed by anybody you need to discuss your idea with before you are otherwise protected.

I had several friends try to push me into telling them what I had invented. Facetious guesses ranged from 'cancer-free cigarettes' to 'the wheel' to objects of pleasure not appropriate for inclusion in a business blog.

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A visit to ICASS (Innovators Counselling and Advisory Service for Scotland) to meet with Alan Garratt was my first step in learning how to protect my idea and the Safetray brand. A qualified and highly experienced mechanical and production engineer, Garratt was at that time responsible for innovators based in the East of Scotland.

He explained that the four main areas of intellectual property protection are patents, registered designs, trademarks and copyright.

Many innovators make the mistake of opting for the lengthy and highly expensive patenting process without realising the complexities of this system.

The majority of new product designs, no matter how unique and innovative in form, do not fulfil the patenting requirements set out by the UK-IPO (formerly the Patent Office). The four criteria an invention needs to meet in order to secure its patent are that it must be novel, involve an inventive step, be capable of industrial application and must not fall within one of the categories specifically excluded (software, for instance, can be patented in the US but not in the UK).

Several searches through some of the world's most extensive databases of patents assured us that nothing like the Safetray had ever existed. The closest thing to it was a patent from the early-1920s involving a strap nailed to the bottom of a tray.

It filled me with a sense of both pride and wonder to think that nobody had thought to advance the concept for almost ninety years. I ponder now how many other inventions there might be floating around, yet undiscovered and unclaimed, awaiting their recipient's flash of inspiration.

With our 'novelty' factor confirmed, patent attorneys, Haseltine Lake, entered into discussions with us to ensure our 'inventive step' was fully explained and justified in our application.

Just the other day, we received a positive report back from the IPO examiner stating that they hadn't found any documents that might hinder our application. It was a relief indeed.

I can't imagine how devastating it must be to plough the best part of a year and all your life savings (and more) into a project only to discover someone on the other side of the world has thought of it two months before you did, but there are numerous instances of that happening since the history of patents began.

Design registration is a cheaper, simpler way to protect a product innovation if the value lies in its appearance rather than its function. It's important to note that you cannot apply for design registration before you apply for a patent - a fact that was thankfully pointed out to me by Alan Garratt. Design registration is particularly useful if your product's distinction from your competitors is visual.

The iPod, for instance, uses technology that was known for many years before Apple produced its version but an instantly recognisable design combined with their weighty brand is what made the product both successful and immediately identifiable.

Which leads me to our branding - quite a project in itself.

With quotes for an outsourced logo design coming in at around a thousand pounds, we decided to combine the creative efforts of myself and Fearsomengine and come up with our own design.

One of the early front runners in our hunt for a logo was of a waiter (we called him 'Logoman') stepping (or running) out of a warning triangle whilst holding a tray.

Although we liked Logoman and chortled inwardly about 'thinking outside of the triangle', we decided that having a warning symbol on our logo might not induce quite the emotional responses we were looking for.

After endless debates and design files being sent backwards and forwards, the font was chosen by Fearsomengine, I then extended the cross in the 't' and placed a bottle and glass on it, and Fearsomengine created an overlap to make it look more contemporary. Using a white logo on a black background was chosen for its impact and ease of use within the hospitality industry.

We were all happy with the result - or perhaps just so sick of discussing it that we had no energy left to even look at other possibilities. Whichever it was, the logo was well received and didn't cost us a penny.

With the logo immediately plastered all over business cards and rapidly handed out at various meetings and events, I worriedly looked out the notes I had taken on trademarks.

One concern I had with registering the logo was whether 'Safetray' would be considered fairly self-explanatory. You can't register a trademark that literally describes the product.

For instance, my journalist friend was joking about inventing a bra for men the other day. If she were to turn her joke into a reality, under the current UK trademark rules she couldn't register 'male bras' for her brand name but she could probably go for 'moob tube'.

You are also prevented from registering a logo with an image that is too descriptive. Our Logoman, for instance, would have ended up being rejected.

A quick call to Alan Garratt assured me that so long as the extended 't' logo was stylised with the bottle and glass on top, it wouldn't matter that it was a safe tray called 'Safetray'.

Just to be sure, I used the IPO's Right Start Examination Service. This service allows you to have your trademark examined before you commit to submitting it. You still pay half the money up front, but it means you won't lose the whole lot if your application is unsuccessful.

I submitted the logo online and heard a few weeks later that it had met the requirements of the IPO. I was delighted.

I would always recommend using a patent attorney for your patent if you think you have a good chance of having it registered, but having learnt the process for trademarks - and receiving invaluable support from Alan Garratt at ICASS - my opinion is that expensive legal support for protecting your logo is unnecessary.

Besides, like a lot of the experiences through the Safetray journey to date, it was more of an adventure to learn how to do it myself.