One of the most significant consequences of Co-op Bank's near-collapse, from a public policy perspective, was the collapse of Lloyds Banking Group's planned divestment under Project Verde. Co-op Bank's withdrawal forced Lloyds to resort to its fallback option of an Initial Public Offering. The result is a new bank, TSB, which, not having an existing banking presence of its own, consists solely of the business divested by Lloyds. Accordingly, it has a personal current account market share not of 7 per cent, but of 4.2 per cent. There is a risk that a bank of this size might struggle to grow significantly and to act as a true challenger in the market. Had Co-op Bank's resulting capital shortfall been uncovered earlier, it is likely that the bank would not have progressed so far with Verde. As it was, the rapid and late emergence of the capital problem led to Co-op's withdrawal from the Verde process at a relatively late stage. The Committee recommends that the FRC investigation and the independent inquiry into the events at Co-op Bank consider the role of KPMG and the FSA in relation to the late emergence of loan impairment and IT losses. On the basis of these findings, the independent inquiry into the events at Co-op Bank should also form a view on whether Co-op's Verde bid could or should have been halted sooner. While it may not have been fully transparent from the start that Co-op Bank's bid was doomed to failure, it was beset by problems from an early stage. But it was not these problems that killed the deal-it was the capital shortfall that emerged only late in the day. It is important, from every angle to determine why the capital shortfall was not uncovered earlier.

One of the most significant consequences of Co-op Bank's near-collapse, from a public policy perspective, was the collapse of Lloyds Banking Group's planned divestment under Project Verde. Co-op Bank's withdrawal forced Lloyds to resort to its fallback option of an Initial Public Offering. The result is a new bank, TSB, which, not having an existing banking presence of its own, consists solely of the business divested by Lloyds. Accordingly, it has a personal current account market share not of 7 per cent, but of 4.2 per cent. There is a risk that a bank of this size might struggle to grow significantly and to act as a true challenger in the market. Had Co-op Bank's resulting capital shortfall been uncovered earlier, it is likely that the bank would not have progressed so far with Verde. As it was, the rapid and late emergence of the capital problem led to Co-op's withdrawal from the Verde process at a relatively late stage. The Committee recommends that the FRC investigation and the independent inquiry into the events at Co-op Bank consider the role of KPMG and the FSA in relation to the late emergence of loan impairment and IT losses. On the basis of these findings, the independent inquiry into the events at Co-op Bank should also form a view on whether Co-op's Verde bid could or should have been halted sooner. While it may not have been fully transparent from the start that Co-op Bank's bid was doomed to failure, it was beset by problems from an early stage. But it was not these problems that killed the deal-it was the capital shortfall that emerged only late in the day. It is important, from every angle to determine why the capital shortfall was not uncovered earlier.

A fascinating analysis of the critical role commercial property investment played in the economic boom and bust during the global financial crisis The unprecedented financial boom stretching from the mid-1990s through 2008 ultimately led to the deepest recession in modern times and one of the slowest economic recoveries in history. It also resulted in the emergence of the draconian austerity policies that have swept across Europe in recent years. Property Boom and Banking Bust offers an expert insight into the complex property market dynamics that contributed to the Great Financial Crisis of 2008 and its devastating economic consequences. It is the first book to focus on a woefully underreported dimension of the crisis, namely, the significant role that lending on commercial property development played in the crisis. Among other key topics, the authors explore the philosophical and behavioral factors that propelled irresponsible bank lending and the property boom; how it led to the downfall of the banks; the impact of the credit crunch on the real estate industry generally in the wake of the financial crisis; the catastrophic effects the property bust had on property investors, both large and small; and how the financial institutions have sought to recover in the wake of the financial crisis. Provides valuable insights into what happened in previous booms and busts, particularly in the 1970s and 1980s, and how they compare with the most recent one Offers an expert assessment of the consequences of the global financial crisis for the banking system and the commercial property industry Examines strategies banks have used to recover their positions and manage the overhang of indebtedness and bad property assets Addresses strategies the real estate industry have used to recover from the collapse in property values Written in an accessible style, and featuring numerous insider case accounts from property bankers, Property Boom and Banking Bust disentangles the complex, tightly-woven factors that led to the Great Financial Crisis of 2008, while offering powerful lessons for property industry professionals on how to avoid having history repeat itself.

The Treasury has again been unable to provide all the information needed by deadlines agreed with the OBR. The Government may, as the Chairman of the Office for Budget Responsibility suggested, have decided that for political reasons this was a "price worth paying." This would set an undesirable precedent. The work of the Office for Budget Responsibility depends on the Treasury meeting the agreed deadlines. The Committee welcomes the OBR's innovation of providing uncertainty ratings for policy costings. The Committee recommends in future that the OBR publish a breakdown of the uncertainty rating assessment against the three criteria for all announced measures at Autumn Statements and Budgets. The Committee also welcomes the Government's continued publication of the distributional analysis of the Government's policy changes and recommends that the next Government continue with this important aid to transparency. The current inflation target set by the Government is symmetrical, and is 2 per cent at all times. Several witnesses alluded to the risks of very low inflation and subsequent deflation, including the Chancellor. The Chancellor has publicly welcomed the current level of inflation. This is not likely to help anchor inflationary expectations. The Governor of the Bank of England is required to write to explain to the Chancellor why inflation has fallen below 1 per cent. It is important to avoid mixed messages on inflation targeting. The Bank of England should undertake research on the effect of net migration, and the potential for future net migration, on the supply of labour and wage growth as part of the work on meeting the MPC's remit. The Treasury should ensure that discussions within Government on immigration policy fully consider the requirements of the economy.

On 17 October 2014, the European Commission informed HM Treasury that the UK would have to make an additional contribution to the EU budget of approximately 2.1 billion euro. This additional contribution had been prompted by revisions to EU Member States' historic Gross National Income (GNI) data, dating back to 1995. Member States make several annual contributions to the EU budget, by far the most significant being a levy on GNI. This levy is charged as a percentage rate on Member States' annual GNI, with the rate set at a level designed to cover exactly the portion of the EU Budget which remains unfunded once the other sources of income - namely Traditional Own Resources' and VAT-based resources - have been taken into account. The result is that an individual Member State contributes to this portion of the budget in proportion to its share of total GNI across all Member States. In 2013, GNI-based contributions amounted to 74 per cent of the EU's total budget. Emerging from the ECOFIN summit of 7 November 2014, the Chancellor claimed to have "halved the bill" of £1.7 billion demanded by the EU. He later described this as the result of "hard-fought negotiation" with the Commission to ensure that the consequential change to the UK's rebate would apply. The calculation of the rebate, and the circumstances in which it applies, are embedded in EU law. This is set out in detail in Council Decision 2007/436/EC and the supporting Council document on the UK correction. These documents establish the precise method for calculating the rebate. On the basis of the evidence the Committee has seen, it should have been unambiguously clear to the Treasury, well in advance of ECOFIN on 7 November 2014, that the UK was entitled to a rebate on any additional budget contributions that could arise from the GNI revisions.