Issue 30:2015 11 26:contents

26 November 2015: Issue 30

Week in Brief            



November NZ                             photo Janis Higgie




Stone Him! by John Watson

Those who express the wrong views must be punished

Serious Consequences by Neil Tidmarsh

President Putin reaches for the Paracetamol. Again

Bonkers bankers by M J Horast

A more constructine approach to the HBOS affair is neede


pub board

November sheffield            photo Andrew Kenning

The quality of justice by J.R.Thomas

How the magistrate dealt with the killers of Franz Joseph

Is your pension manager leaving you underfunded? by Frank O’Nomics

Are costs swallowing up the returns?

Weather by Chin Chin

God’s gift to the English


 Kevin Hurley TD

John Watson interviews the Police and Crime Commissioner for Surrey


Square Eyes

Solution to last week’s crossword “Any fule kno”

Earlier Editions

A medium 600x271 stamp prompting the reader to join the subscription list


Issue 24: 15 October 2015

Issue 26: 29 October 2015

Issue 27: 05 November 2015

Issue 28: 12 November 2015

Issue29: 19 November 2015

Issue 30: Crossword – Square Eyes

26 November 2015

Crossword by Boffles

Square Eyes

To see a printable version of this crossword

Issue 30: Crossword – Square Eyes – printable

26 November 2015

Crossword by Boffles

Square Eyes

SS30 grid



    1  Open apparatus used to record reactions to practical jokes (6)

    3  Hill one had the blues (6)

    8  He watches your every move when grown up (7)

  10  Dell Boy or the sort of thing he engaged in when peace is taken away (5)

  11  Aggressive but comic bird (3)

  12  ‘Drop the Dead Donkey’ and ‘Dad’s Army’ for example (7)

  13  Invitation to tread a measure a huge success if issued exactly (4,7)

  18  Stage for Torvill and Dean show (3)

  19  Person to whom complaint about heat (see 16dn) was addressed (3)

  20  Contestants in TGBBO need to be able to (5)

  22  Transport Michael Portillo catches because he missed the political bus? (5)

  23  TV Guide inter alia that announces a break (4,3)

  24  Family centre stage in ‘Wolf Hall’ (6)

  25  Where Morse drowned his sorrows (6)



    1  Frequent opponent of the Doctor (6)

    2  Eccentric who watched the sky at night (5)

    4  Prerequisite (2,3)

    5  Period dramas often set in the Victorian one (3)

    6  Reggie Perrin’s Joan’s job (6)

    7  Played a big part in ‘Breaking Bad’ (7,4)

    9  Bad tempered American doctor played by English comedian (5)

  14  Mrs who served a nice cup of tea in ‘Acorn Antiques’ (7)

  15  Plays a big part in ‘The Great British Bake Off’ (4,3)

  16  It —- half hot (4)

  17  Programmes are in preparation for viewing (6)

  19  Add reptile for cult comedy (5)

  21  Did Reggie or CJ have the bigger one? (3)

Issue 29:2015 11 19: Contents

19 November 2015: Issue 29

Week in Brief            






All French now

Paris by John Watson

Blocking the road from hell

Blessed are the Peacemakers by Neil Tidmarsh

History is being made by good men in Vienna, not by bad men in Paris

On Yer Bikes by J.R. Thomas

Just how did Boris do at County Hall?

The Art of Procuring by John Watson

Keeping down the cost of submarines


dull november

Dull November      photo Jasper Fell-Clark

Noise Off by J.R.Thomas

The Republicans prepare for Iowa

L’Affaire des Chemises Arrachées by Richard Pooley

“La hiérarchie” breeds disruption at Air France

Property is not a Pension by Frank O’Nomics

Residential may not cut it over the full cycle 

Dull November by Chin Chin

Tax returns: more entertaining than perversions



Macbeth (film), reviewed by Neil Tidmarsh


“Any fule kno”

Solution to last weeks’s crossword “Thrillers of one sort or another”

Earlier EditionsA medium 600x271 stamp prompting the reader to join the subscription list

Issue 24: 15 October 2015

Issue 25: 22 October 2015

Issue 26: 29 October 2015

Issue 27: 05 November 2015

Issue 28: 12 November 2015

Issue 30:2015 11 26:Interview Kevin Hurley

26 November 2015

Kevin Hurley speaks to the Shaw Sheet

Kevin Serious

Kevin Hurley

John Watson talks to Kevin Hurley TD, Police and Crime Commissioner for Surrey about challenges facing the police.

Kevin Hurley has policing in his blood. Coming from a family which has produced three generations of police officers, no one can have been surprised when, despite his degree in Civil Engineering, he joined the Metropolitan Police in 1979. He rose to the rank of Detective Chief Superintendent and retired in 2011 as Borough Commander for Hammersmith and Fulham.

Quite apart from his broad career in civilian policing – he was from 2001 to 2005 the Head of the Counter Terrorism and Public Order Department of the City Police – he also gained experience of a different sort when, as a major in the Royal Military Police, Territorial Army, he served as CBRN adviser to the commander of 16 Air Assault Brigade in the 2003 invasion of Iraq. With such a strong policing background he was an obvious choice to be one of the new Police and Crime Commissioners in 2012 and the voters of Surrey thought so as well, electing him as PCC for Surrey.

A Police and Crime Commissioner is a political officer whose principal function is to secure the maintenance of an effective police force in the area and to hold the Chief Constable to account. Responsibilities also include the production of the Police and Crime Plan, which sets the objectives for the local police force to pursue. Out of the forty-one PCCs in England and Wales, only seven have a background in policing and five of those are independents. Kevin Hurley is one of them and he regards being an independent as an important adjunct to his experience. It means that his views are seen as being free of political bias; also that everyone, regardless of their politics, feels able to speak to him.

Surrey, as a policing authority, has advantages. Because it is such a wealthy area, an unusually high proportion of police funding (54%, the figure in neighbouring Sussex is 35%) comes from local taxation rather than government grant. That means that, when grant is reduced, it is less vulnerable than those areas which are more heavily grant dependant. Still, the reduction in police funding is a major worry and Hurley is particularly concerned about the effect on the capacity and the capability of the Surrey force. There are a number of issues which build on each other. The first is that Surrey will lose about 10% of its personnel and that will inevitably reduce what the force is able to do. Less officers means less visibility but it will also reduce what he describes as “the force’s footprint”, its level of contact with the community. That in turn limits its ability to gather intelligence and to prevent crime.
But it isn’t just the reduction of numbers which worries Kevin Hurley. Cuts undermine the quality of the force as well as its size. The package offered to policemen has reduced in value since 2010. Wage rises have been kept to one percent a year and mandatory contributions to the pension fund have hit the policeman’s pocket. Without retirement at thirty years service, the career has become less attractive and the result is that it has become harder to attract the best recruits. Worse still he sees good experienced officers leaving the force.

Unfortunately it doesn’t stop there. Training too has been cut back and a Detective Constable now gets four weeks training when he would have had ten. The Police Staff College at Bramshill has been closed and the six-month periods of training for newly promoted senior officers is a thing of the past. It worries Hurley that Surrey will have fewer officers, of lower calibre and less well-trained, and all at a time when the demands falling on the police service are growing.

Some of this growth is an indication of success. Hurley points to the increase in reported sex offences as showing how confidence in the force has improved. Now people believe that if they report such offences they will be properly investigated. Still it places further demands on Surrey police, as does cybercrime and the need to round up migrants who escape into Surrey. As he points out, if ten men escape it takes many times that number of officers to catch them. The terrorist threat following Paris is likely to involve more offices in firearms training and there are always the many functions the police carry out as the “helper of last resort” – some with little real link to enforcing the law.

How then can more resources be made available? Hurley points to the duplication of having forty-three separate police authorities, all with their own administration. What is the point? In his experience nobody cares what badges the officers attending an incident wear. They just want them to deal with it. He points out that McDonalds produce the same product across the country through a large number of outlets with a single central administration and asks why the police cannot do the same.
The answer, he says, lies in the funding. As long as much of the cost of policing can be met by the rate payer, it falls outside central government funding and is effectively hidden from the government’s financial critics. Local funding means local police. In his view savings worth maybe £2billion are being sacrificed to cosmetics.

Meanwhile, however, he and his Chief Constable, Lynne Owens, do what they can by sharing a number of functions such as dogs and firearms teams with neighbouring Sussex, an innovation which he is hoping to extend further. Quite apart from the reduction of cost, this fits in with Hurley’s general philosophy of working closely with other agencies – such as the local authority – to improve results.
The interview being shortly after the Paris attacks, I asked Kevin Hurley what lessons there might be there for British policing. He replied that what stuck in his mind was the sound of automatic firing as the French Police moved into the Bataclan Theatre to take on the killers. The old ideas of containing terrorists and then negotiating with them are simply no use against this sort of attack. Any soldier would tell you that it is crucial to have sufficient firepower to pin the enemy down and then destroy it. That means a revision in tactics. It also means new weaponry.

Kevin Hurley would love the opportunity to advise the Home Secretary on police policy. Until he gets that role, however, he will continue to press for the changes he believes to be necessary and to work with the Chief Constable of Surrey to deliver the best possible service.

Why does he do it? Well, there’s his interest in the subject of course but there is also something deeper than that; a belief that a properly policed and law-abiding society is essential to the way we live and that you cannot have prosperity without it. That is one of the lessons he took home from Iraq.

Kevin Hurley has always fought for his vision of policing, zero tolerant, linked up, community-related, practical. As PCC for Surrey he continues to do so. Will he stand again in 2016? I think he will.

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Issue 30: 2015 11 26:Is your pension manager leaving you underfunded?

26 November 2015

Is your pension manager leaving you underfunded?

by Frank O’Nomics

UK pension schemes face significant shortfalls.  As of the end of April, the aggregate deficit of 6000 defined benefit pension schemes in the UK was calculated (by the Pension Protection Fund) at £243bn, up from £215bn 3 years earlier, and this despite £44bn of extra contributions.  This growing shortfall is generally deemed to be the result of a double-whammy of moderate asset price growth and low interest rates inhibiting the asset side, with increasing longevity pushing up scheme liabilities.  But what if there are other aspects which are causing the shortfall?  And what if these aspects could be addressed to correct the asset-liability imbalance?

Consider the costs of running your fund: if the industry’s stated norm of 0.75% (the level set in recent legislation on auto-enrolment) is really as much as 3%, compounding effects would mean that the impact over the life of a 35 year pension fund could account for most of the shortfall.  There is no evidence to prove that Einstein really did describe compound interest as the most powerful force in human history but , when you consider that a 1% additional cost over the life of a fund is estimated to reduce its final value by 24%, you can see why he might have.  Most of us, when confronted by pension documents, skip over the bit about the impact of charges as the percentage always seems quite small, even though the cumulative effects over the life of an investment can be quite large.  There is a serious debate as to whether we are being given the true extent of the costs involved in managing our pensions; the 0.75% cap does not include the transaction costs of managing the fund, and efforts to find answers seem to be confronted by a wall of silence from the fund management industry.

Only last month, Daniel Godfrey was ousted from his role as the head of the Investment Association after his calls for greater clarity on fees and costs (among other reforms) led to two major asset managers threatening to leave the association.  So just how much does it cost to run our pension funds and what impact is this having on the prospective returns?

Getting to the bottom of the numbers is not easy but, via the use of the Freedom of Information Act, some details have been obtained regarding Local Authority Funds.  At the outset there is a cost issue here given that the 89 UK Local Authorities themselves duplicate internal costs by having 89 different boards looking after funds which are generally managed by around just 10 large investment managers.  Just think how much the pooling of funds could save, given that the objectives are generally the same.

But a greater costs burden becomes apparent when one investigates the degree to which the investment managers turn over these pension portfolios. For funds which are supposed to generate long-term stable returns one would expect investments to also be for the long-term.  However, when the funds were asked for details as to fund turnover, researchers found that most traded the full size of their assets more than once a year, and some disclosed that they traded a staggering 38 times the size of the portfolio per year. Why does this matter?  Well, over and above the costs of administering the funds, trading costs (custody and FX charges, stamp duty etc) will be significant.  It seems that the time horizons used by the fund managers, trying to generate strong short-term returns, are totally out of line with the long-term objectives of pension fund managers.

Further, some of these costs are seen as producing dubious benefit; for example, funds turning over equities to generate soft commission so that they can receive more research from banks, or plan sponsors paying money to consultants to assess the best fund manager to select.  On this latter point, a group at the Said Business School in Oxford examined what drove the recommendations of consultants and how much value their process added to plan sponsors, with the finding showing that their recommendations relied on ‘soft’ factors, with no evidence that they added value to fund performance.  Taking all of this together, it is not hard to see why some estimate that true fund management costs are some 4 times the figure which has been suggested by the industry itself.

Help may be at hand in the form of a new Transparency Task Force, headed by Andy Agathangelou.  He has identified 18 areas of concern surrounding workplace pensions, one of which is transaction costs and charges.  He said at a recent meeting of the organization: “Transparency will happen because consumer groups and the regulator want it to.”  He may be correct, but how quickly this happens will be very important.

The Dutch have set a good example of how to address the issue, by threatening high penalties for those schemes which fail to disclose the full extent of management costs.  They start with a much more appropriate balance of cost allocation, with around one third for management and two thirds for performance, whereas the UK operates on the opposite balance.  Investors will be happy to pay more if their funds perform better, and this is the case in Holland.  Dutch pension schemes are around 112% funded as opposed to a figure of 80% in the UK.

One would hope that threats from the authorities will not be necessary in the UK, but the elements that pushed out Daniel Godfrey may take some shifting.  Once we know the full extent of the costs we can properly engage in a debate as to how they can be contained.  Indeed, the very process of analysis and disclosure should encourage asset managers to put their houses in order.  We must hope that Mr Agathangelou has some early success, or maybe we should all just move to Holland…

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Issue 30: 2015 11 26: Stone Him!

26 November 2015

Stone Him!

Those who express the wrong views must be punished

by John Watson


One commentator has written that the debate about dropping David Starkey from the Cambridge University fund-raising video is not about free speech.  I’m not sure that is completely right but it is probably fair to say that free speech is not the main issue.  The real point is quite a different one.

Let’s start with some background.  David Starkey is a very distinguished historian and a well-known expert on the Tudors.  He is also a private individual and has views which some  find offensive on a number of subjects.  He was invited by Cambridge to participate in a video which forms part of a campaign to raise £2 billion for the University.  His inclusion was considered so offensive by some that it prompted a campaign to have the video withdrawn and an open letter was circulated by Malachi McIntosh (director of English at King’s) and others, urging this course.  Staff, undergraduates, postgraduates, alumni etc were invited to sign it.  Many did.  Sarah Dillon, an English lecturer who had appeared in the video with Starkey, asked to be edited out.  In the face of all this the video was withdrawn, but pressure is now being put on the University to follow that with an apology to its staff, its alumni and its students.

So why did so many people feel so strongly?  What was it that they felt should bar David Starkey from participation in this fund-raising exercise?  Judging from the terms of the letter itself, there are two issues.  The first, of which a number of examples are given, is that he holds and has expressed the “belief that members of different racial or ethnic groups possess specific characteristics, abilities or qualities, which can be compared and evaluated.”  The second is that he has made sexist statements about the value of female researchers.

This isn’t the place to debate whether his views are correct – although one can imagine that Darwin might have supported the first of them.  Perhaps it isn’t just the views anyway.  Perhaps it is as much the acerbic way in which they were expressed that has given offence.  Be that as it may, the point is surely that when Starkey was asked to participate in the video he was not asked as a geneticist or because of his views on the value of female researchers but as a historian, and no one denies that he is a very eminent one.  What on earth have his personal views on other subjects got to do with it?

At this stage, and I hope she will not feel picked on, we should turn to the position of Sarah Dillon.  Asked to appear on the same “platform” with David Starkey, she was unwilling to do so, not as I understand it because he was not sufficiently eminent but because his views on other matters made him a pariah – a bad person, someone one would not wish to be associated with.  Presumably a much worse person than Sarah Dillon herself.

One cannot but envy Sarah her self-belief.  She must be a quite exceptional individual.  Most of us, looking back on our lives, see some things of which we are ashamed.  Perhaps there were times when we were inconsiderate, vicious, unkind, mean or just plain nasty.  Perhaps we took credit when we should not have or passed by on the other side when we could have helped.  Hopefully there are some good things as well but it would be a brave man or woman who is confident that he or she is really much better than someone else.  Well, I’m sure that Sarah has good grounds for thinking herself a wonderful human being but I do have some doubts about whether the same can be said for everyone who appended their signature to that open letter.  No doubt there are sadists among them, thugs, wife beaters, liars, thieves hypocrites and all the rest; yet they have all signed a letter indicating that they would not want to be associated with someone who is so bad that they have expressed views with which they disagree.  What a crowd of Pharisees they must be.

“Hold the right political opinion on sensitive matters and you are automatically better than someone who disagrees with you.”  Yes, that’s quite a statement.  It involves blanking out who a person is and looking at them in terms of one test only – in this case their political views, but of course it could be their race or their sex.

The Starkey affair is one in a series where people have been ostracised for their views.  In many of them, that of Germaine Greer for example, the most important issue is free speech and that is what people talk about.  Where that isn’t the case, however, we get the opportunity to look further under the stone and what lives there is not particularly pleasant.  Take Tim Hunt and his famous after-dinner speech.  A man makes jokes you do not like?  Stone him!  Take Starkey.  A man has views you do not like?  Stone him!  A man is black?  Stone him!  It’s a woman in a man’s world?  Stone her!

Cambridge University really should be able to do better than this.

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Issue 30: 2011 11 26: Week in Brief: International

26 November 2015



ARGENTINA: In the election’s second round of voting, opposition leader Mauricio Macri, the Buenas Aires mayor who stands for centre-right free-market liberalism, defeated the left-wing protectionist Daniel Scioli, the protégé of the out-going President Kirchner.

AUSTRALIA: Bushfires, thought to have been started by lightning, killed a farmer and three German tourists in Western Australia. High temperatures for early summer are being recorded and forecast across the country.

Australia has blocked the sale of the ‘Kidman estate’ – an area of private land almost half the size of Britain consisting largely of cattle ranches – to a Chinese investment firm, on the grounds of national security as part of it is inside the Woomera Prohibited Area, a military weapons-testing range. Australia was criticised this week by President Obama for leasing Darwin’s commercial port to a Chinese firm, as it could allow China to spy on defence facilities used by warships from the US and other countries.

BANGLADESH: An Italian priest cycling to church was shot in the head at close range by three men on a motorbike. Piero Arolari, who is also a doctor and has lived in Dinajpur for 35 years and treats the local poor at a missionary hospital, is in a critical condition. The bombs, bullets and blades of Jihadists have killed 17 people and injured 103 others in a score of attacks this year in Bangladesh.

BELGIUM: The prime minister announced an 18 point package of strong anti-terrorism measures, including the automatic imprisonment of jihadists returning from Syria or Iraq. Emergency measures remain in place in Brussels, though the underground is re-opening. The police have made dozens of anti-terror raids and arrests in the search for Salah Abdeslam, the only member of the Paris gang to remain at large.

BURMA: A collapsing spoil heap at a jade mine killed at least 100 people.

CANADA: The University of Ottawa has banned yoga classes because students consider the teaching and practice of yoga by Westerners to be cultural appropriation, a legacy of imperialism and colonialism.

CHINA: Police have broken a network of illegal gambling websites used by millions of gamblers to place bets worth billions of pounds. Gambling is popular in China but is illegal everywhere except Macau.

EGYPT: Russia signed a deal with Egypt to build a new nuclear power station in Dabaa, northern Egypt.

Airport authorities claim to have foiled a bomb plot when X-ray security equipment at Cairo airport spotted explosive materials in two parcels to be sent to the US via London.

EU: The EU’s border policies are in chaos following suggestions that terrorists have been able to enter and travel through the EU freely. Holland is proposing a core zone of Austria, Germany, Belgium, Luxembourg and the Netherlands with a strong external border and no internal borders.

FRANCE: Abdelhamid Abaaoud, the man thought to have planned the Paris attacks, was confirmed dead in the police raid on the St Denis apartment building. The search for Salah Abdeslam the last attacker to remain at large, continues. A suicide vest, thought to have been abandoned by him, was found in a rubbish bin. School trips to France were cancelled, on advice from French government. Further attacks (including chemical) are feared. A Jewish teacher stabbed by Isis members in Marseilles.

France drafted a UN resolution to eradicate Isis, which was endorsed by UN Security Council. President Hollande met with David Cameron, Angela Merkel, President Obama and the Kremlin to build alliance against Isis.

A migrants’ camp on the outskirts of Dunkirk has been cleared and dismantled after reports that it is being run by British criminals to smuggle immigrants over the channel on ferries.

GERMANY: A note released by the Kremlin appears to suggest that Germany has struck a deal with Russia to put down two more Baltic gas pipelines in defiance of EU aims to reduce reliance on Russian power.

One of the Paris bombers registered as a refugee in Germany last October, according to press reports.

GREECE: No refugees arrived on Greek shores in the three days following the Paris murders, as people-traffickers lay low.

A bomb exploded at the Federation of Greek Enterprises building in the centre of Athens. Greek anarchists are suspected to be responsible.

INDIA: A helicopter crash killed 7 people – 6 passengers and the pilot – near the Vishnu Devi Hindu shrine in the Trikuta mountains in northern India.

IRAN: The International Atomic Energy Agency (the UN’s nuclear watchdog) reported that Iran has begun to dismantle two of its uranium enrichment sites.

ISRAEL: An Israeli woman was stabbed to death by a Palestinian.

ITALY: Milan prosecutors accused Sivio Berlusconi of bribing witnesses in his prostitution trial, and called for him and 30 others to be tried on allegations of perverting the course of justice.

The FBI warned Italian police that a team of five suspected Islamic terrorists are planning an attack on tourist sites in Rome.

The police claim to have foiled an attempt by the mafia to murder the interior minister Angelino Alfano .

Three armed and masked men stole 17 paintings worth €15 million – including works by Rubens, Tintoretto, Bellini and Andrea Mantegna – from the Castelvecchio museum in Verona. They also stole the security guard’s car and used it as their getaway vehicle.

JAPAN: Prime minister Shinzo Abe announced that he is setting up a new intelligence agency to counter the threat of Islamic terrorism inside and outside Japan.

MACEDONIA: Macedonia is increasing border controls and preparing to build a fence along its border with Greece. Other Balkan countries – Serbia, Croatia and Slovenia – are also imposing border controls on migrants and refugees.

MALI: A terrorist attack on the Radisson hotel in Bamako killed more than 20 people. Mali, French and US troops stormed the hotel and killed the gunmen. Many Islamist extremist groups are operating in West Africa.

NEW ZEALAND: Voting began to choose a new national flag.

A helicopter crash on Fox Glacier in the Westland National Park killed its six passengers (including four Britons) and pilot.

NIGERIA: Sambo Dasuki, a former lieutenant-colonel and national security adviser, has been accused by President Buhari of appropriating over $2billion from funds allocated to fighting Boko Haram.

Two female suicide bombers murdered at least 15 people and wounded many more in northern Kenya. At least 34 people were murdered in a separate Boko Haram attack in western Nigeria.

NORTH KOREA: Kim Jong Un has purged another of his top aides. Marshal Choe Ryong Hae has been blamed for the collapse of a tunnel at a power station and has been sent to work at a collective farm, for ‘re-education’.

PAKISTAN: Four security guards outside a mosque in Karachi were murdered by gunmen on motorcycles.

PORTUGAL: President Cavaco Silva has asked the Socialist party leader Antonio Costa to form a government with the Socialist’s leftwing allies, the Communists and Left Bloc. The president asked for guarantees that the new government would keep to the fiscal reforms promised to the EU and not seek to remove Portugal from Nato.

PHILIPPINES: At the Asia-Pacific Economic Co-operation summit in Manila, President Obama called on China to stop land reclamation and militarisation in the disputed areas of the South China Seas. Riot police were deployed to control thousands of anti-globalisation protesters.

RUSSIA: Metrojet Flight 9268 was brought down by a bomb made from a soft-drinks can and smuggled on board, according to Isis.

Power-lines to Crimea were blown up, leaving it without energy and in a state of emergency. Crimea still relies on Ukraine for most of its food and energy.

A Russian court has banned the Church of Scientology in Moscow, ruling that it is not a religion.

SAUDI ARABIA: Human Rights Watch has reported that a Saudi poet and artist, Ashraf Fayadh, who was jailed and sentenced to 800 lashes for apostasy last year, has been sentenced to death by an appeal judge.

SENEGAL: The government is planning to ban the burka and the niqab, to prevent female suicide bombers from using them as cover. Senegal has a Muslim majority. Gabon, Chad, Congo (Brazzaville) and northern Cameroon have already banned them.

SOUTH AFRICA: Investigative journalists have claimed that President Zuma accepted the help of criminal gang leaders in Cape Town who promised to secure votes for him in return for dropping investigations against them by the South African Revenue Services.

SPAIN: Interior minister Jorge Fernandez Diaz has awarded the gold medal of merit to a statue of the Virgin Mary. The gold medal of merit is Spain’s highest police medal and is usually awarded to officers who are killed in the line of duty. The award was challenged by a secular group, but the National Court of Spain ruled in favour of the minister.

SYRIA: Russia and the USA continue to target oil installations and convoys of oil tanker lorries in an attempt to disrupt Isis’ oil-smuggling operations.

Anti-government forces have reported that Assad government artillery units are giving battlefield support to the Syrian Democratic Forces militia against Isis. The SDA is largely Kurdish and is backed by the USA. Although the Kurds are less anti-Assad than other groups, it is an indication of disparate forces in Syria beginning to come together against the common enemy, Isis, in an ad hoc way.

A Russian Sukhoi Su-24 fighter jet crashed in northern Syria, near the border with Turkey, shot down by a Turkish F-16 jet. Turkey claims that the Russian plane was violating Turkish airspace when it was shot, and had been warned to leave ten times in the preceding five minutes. The fate of the two pilots in uncertain; the anti-Assad Turkmen fighters who were the jet’s intended targets claim to have shot one of them as he parachuted down (an illegal act under international law). They also destroyed one of the Russian helicopters sent to the area on a search-and-rescue mission. Turkey has repeatedly asked Russia to stop violating its airspace, and only days before had protested to the Russian ambassador and to the UN Security Council about Russian airstrikes against Turkmen villages. See comment article.

TUNISIA: A bomb exploded on a military bus carrying presidential guards in Tunis. At least 12 people were killed and 20 injured. Islamist militants are suspected. A state of emergency was declared.

TURKEY: Police have arrested a Belgian of Moroccan descent, suspected of helping the Paris attack. Two Syrians were arrested with him.

UKRAINE: The recent renewal of fighting between pro-Moscow rebels and Kiev government forces is intensifying.

USA: A new national historical park – the Manhattan Project park – has been established. It consists of the three sites where the atomic bomb was developed. They will be developed as visitor attractions, though the work of producing nuclear weapons still continues there.

The House of Representatives has passed legislation to obstruct the White House’s pledge to allow 10,000 Syrian refugees into the US. The Republican-led House of Representatives’ new bill insists that the FBI vets and passes every single refugee, which would be impractical. More than half of state governors and US citizens oppose the acceptance of refugees.

The number of Cubans migrating to the USA since the recent Cuban/USA détente has surged. Since 1995, few Cubans who make it to the USA are returned, but now Republicans in the House of Representatives are arguing that Cubans should be bound by the same immigration rules as everyone else. Tougher action by authorities in Florida has encouraged Cubans to seek entry via Mexico instead.

Donald Trump has caused further outrage by apparently advocating a database to keep track of all American Muslims, and continues to make controversial comments about race, gender and the 9/11 attack.

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Issue 30:2015 11 26:Business and the City

26 November 2015


NEWS, the word in pink on a grey background

BIGGER AND FASTER: Jaguar Land Rover is one of the great success stories of modern UK motor manufacturing. Since its take-over in 2008 by Tata, the Indian owned diversified group, it has grown rapidly, modernising its range of luxury cars and building a truly premium brand. This week it announced further investment, by way of £450m for expansion of its engine factory at Wolverhampton. This plant, which opened in 2014 produces ultra low emissions diesel engines, which motor industry experts see, in spite of the recent scandal of misleading testing at Volkswagen Group, as key to greater engine economy combined with less emissions. This extra investment will take the total spent on the new plant to around £1bn. JLR says it is already taking the number of workers on site up to 1,400 by end of 2016, and the new investment will produce a requirement for several hundred extra jobs.
JLR have recently said that they intend to double the number of cars they produce by 2020, but there has been concern in the UK that much of that expansion will be in cheaper locations. The company has a new plant now operating in China, is building one in Brazil, and has announced plans for a third in Slovakia. But this announcement does reinforce the company’s expressed intent that the UK will remain at the core of its luxury car business. Land Rover has been an undoubted success with its meld of luxury and off road capable vehicles, but historically Jaguar has struggled to compete in the saloon business against brands such as Mercedes and BMW. However, the new Jaguar models which have been introduced recently, have proved very popular with buyers, and the word is that new smaller Jaguar, the XE, is selling very well. Around eighty percent of Land Rover production now goes for export – China is a particularly strong market – and JLR now sees similar prospects for Jaguars of all sizes.

A RUBBISH INVESTMENT: From luxury to rubbish – another British success story is Biffa, who are believed to be the largest waste management business in the UK – you have almost certainly been held up by one of their waste trucks collecting household detritus in a street near you. Their most visible customers are local authorities, whose demands are increasingly complex as modern regulations on sorting and handling waste into various recyclable types require increasing care in handling and processing. But municipal work is actually only about a quarter of their business – Biffa also provides waste disposal services for many large corporates, key customers being J Sainsbury, Royal Mail, and Pret a Manger, the City types’ sandwich bars of choice, and many smaller customers.

Biffa is no new boy on the bins – it was founded in 1912 by Richard Biffa when it went into business removing (and indeed, recycling into road construction) ash and clinker from power stations. It remained family controlled until 1971 and then passed through a series of owners until it was sold at the very peak of the market in 2008 to a consortium of venture funds using a very high leverage, which gave the over geared business a few difficult years. In 2013 it was sold to a new consortium of investors who have sorted things out, invested new money – the business now has 2,500 trucks and 6,000 employees – and got it back on the customer acquisition trail.
So the owners are thinking about cashing in at least some of their investment and word is that they are looking at an IPO. Expect to see investment bankers riding the dustcarts over the next few weeks as they do their due diligence for a spring float.

BEDDING IN: There seems to be no end to IKEA’s ability to go on producing further growth in both turnover and profits. The Swedish privately owned furniture and household items retailer has become a staple of many British homes, and its clean Scandinavian styles will no doubt be regarded as symbolic of early C21st living. All that has been very good for the IKEA UK business, which has announced that turnover is up again, making four years of consecutive growth, the last two being in double digits. Sales in the year ended 31st August this year showed growth of eleven per cent. Bedroom furniture and furnishings were especially strong sellers –mattresses were up thirty percent. The company has not opened any new stores in the UK for seven years, preferring to sweat the existing stores with longer opening hours and new customer friendly services such as delivery and assisted assembly. Now though it has decided to increase its coverage, is building a new superstore at Reading to open next year, and has also bought sites for further stores in Sheffield, Greenwich and Exeter, all areas where it sees gaps in its coverage. Somewhat surprisingly, given that its products seem to be in every home, IKEA estimates that it has under eight per cent of the UK market, so there is plenty of scope for growth yet

OFFICE SUPPLIES: The boom in construction in London goes on – and indeed it is difficult to miss in both the West End and especially the City, where every street, it seems, features tower cranes and scaffolding. The latest statistics prove the impression; over eleven million square feet of commercial space, mostly offices, is under construction. Half of that is in the City; and that does not include a lot more space coming down the track which has planning consent but where work has not yet begun (most notably the Stuart Lipton/AXA building formerly known as the Helter Skelter, now a redesigned square block containing another million square feet of offices, given consent by the City last week). That maybe because the developers are still trying to get their funding in place, and as the banks, traditionally a major source of short term development finance, are still cautious about construction risk, that may constrain things a little. On the other hand, equity is very widely available, and comparatively cheap….

The letting agents are pretty confident that this space can all be let, and more. Current rents, reaching record heights all over London, are reflecting strong demand , but Deloittes, who have been perusing the market, sounded a note of caution – their best guess is that in each of 2017, 2018, and 2019 some seven to nine million square feet of office space will be completed – that could be twenty seven million square feet in a market where the long-term average take-up is perhaps half that. Most of what is under construction now is pre-let, and there is undoubtedly a continuing strong demand, but the difference between feast and famine in the letting markets is narrow, and can have dramatic effects on rents and yields.

MAKING YOUR POT: New challenges for the IPO market are always welcome, and this one must surely be a first. Golden Leaf Holdings is looking to float on the New York market before the end of this year, and on either the London or German markets early next. But the product may cause a few raised eyebrows, not to say glassy looks – it is one of the largest cannabis oil producers in the USA. The business though is not dealing the product at the back of concert halls or in the toilets of crowded bars – it is mainly producing the oil for its many medical applications and some food uses. But as more and more American states legalise cannabis use for recreational purposes, it sees a potentially large market opening up and wants to raise new capital to get in there before the tobacco companies diversify into something more fragrant. Cool, man, cool.

KEY MARKET INDICES: (at 25th November 2015; comments refer to change on week; $ is US$)
Interest Rates:
UK£ Base rate: 0.5%, unchanged: 3 month 0.57% (steady); 5 year 1.26% (falling).
Euro€: 1 mth -0.10% (rising); 3 mth-0.04% (rising); 5 year 0.05% (falling)
US$: 1 mth 0.48% (rising); 3 mth 0.66% (rising); 5 year 1.55% (easing)
Currency Exchanges:
£/Euro: 1.42, £ steady
£/$: 1.51, £ steady
Euro/$: 1.07, € steady
Gold, oz: $1,075, steady
Aluminium, tonne: £951 falling
Copper, tonne: £3,004, falling
Oil, Brent Crude barrel: $46.12, falling
Wheat, tonne: £112, steady
London Stock Exchange: FTSE 100: 6,277 (steady). FTSE Allshare: 3,441 (rise)
Briefly: The FTSE indices have steadied after last weeks falls on security and consequent business concerns. Short interest rates moved up in both Euros and dollars but continue steady in sterling, but all five year rates are falling, quite dramatically in the case of sterling – to recent record lows. Commodities generally are also still falling, with copper in particular sinking fast – it dropped below £3,000 a tonne during the week, though has recovered slightly since.

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