15 March 2018
Lens on the Week
UK
SPRING IS SPRUNG: Well perhaps. Chancellor Philip Hammond stated that debt would begin to fall as a proportion of GDP (85.5% as against 85.6%) and then on down to 77.9% for 2022-23. That isn’t an absolute drop in cash terms of course, the debt creeps on up, we still borrow £1 in every £18 spent but it is the debt/GDP figure which reflects sustainability. The trouble is that the forecast is vulnerable in two ways: we may spend more than expected or the GDP figure may drop. Either would push the ratio back up. Still the figures are slightly better than those we saw in the autumn, albeit not enough to be able to relax austerity yet.
There was a recital of a number of policies (largely existing policies) too, confirmation that progress had been made towards last autumn’s promise of 300,000 houses a year by the mid 2020s, talk about how digital connectivity and regional aid programmes are being implemented and a consultations on a single use plastic tax. The Government is to set aside £20 million from existing budgets to fund research on the effect of plastics on the environment. It is hard to quarrel with that.
WHERE IS GEORGE SMILEY? Just when we need him most. John Le Carré’s hero turns out to be fictional. And yet it is his sort of stuff. An ex double agent Sergei Skripal, and his daughter are found slumped in Salisbury, poisoned with a Russian nerve agent Novichok so powerful that the policeman who went to their help is still in a serious condition. Russia denies responsibility, demanding proof of its involvement, but is not believed. Initial repercussions involve the expulsion of thirty-one diplomats.
The obvious question is why? Mr Skripal was released to the UK in 2010 as part of a spy swap after being imprisoned for passing secrets to MI6. That is surely done and dusted. So why would the Russians not only decide to kill him now but decide to do so in a way which would inevitably be traced back to them? Was he still passing useful information to the British security services? It seems unlikely. Presumably you only do a spy swap once the spy in question is no longer a threat. Was a message being sent? Possibly, but if so what message? If it was intended as a warning to other double agents a bullet would have sufficed, and been far more politically deniable. Surely the perpetrator of this outrage must have intended that the UK would be provoked into a response. In whose interest is that? Let’s hope those clever chaps down at the foreign office and MI6 have some idea. If only George Smiley was there.
STEPHEN HAWKING RIP: Few of us will not have a copy of the “Brief History of Time” on the bookshelves. Often it is only part read but even those who never completed it will be aware of its importance in the popularisation of science. Explaining complicated ideas to the masses requires great clarity of vision and Stephen Hawking was very, very good at it. For many of us, though, it is the ability to overcome extraordinary disabilities which stands out most. It was an heroic performance by both Hawking and his doctors. The fact that he reached the age of seventy-six says something about how having an important contribution to make can help you to fight against the nastiest of diseases.
International
WHAT’S IN A NAME? In Germany, Chancellor Merkel’s new government has renamed its enlarged interior ministry as Heimat (‘Homeland’), to indicate its new task of promoting “cohesion in society”, according to the new minister Horst Seehofer. Critics have pointed out that the word ‘heimat’ was used by the Nazis and still has Nazi connotations, however, and have suggested that the government might be hoping that it will help them steal some of Alternative for Germany’s thunder and win them anti-immigration voters. Chancellor Merkel’s open-door policy of two years ago is believed to have lost her CDU party many votes in last year’s election.
In France, Marine Le Pen attempted to re-launch her far-right party the Front National by giving it a new name – the Rassemblement National – in a fresh attempt to distance it from the extremism of its deposed and outcast founder, her father Jean-Marie Le Pen. Warfare between father and daughter resumed, however, with Jean-Marie pointing out that he himself used the name Rassemblement National (‘National Rally’) in 1986, for an alliance of parties which he led in parliamentary elections. In the 1950’s, a far-right party had also called itself Rassemblement National; the man who claims to have been its president and Marine Le Pen’s party have apparently reached a legal agreement about the name’s use, but another man is also claiming to have been its president and is challenging the agreement.
In Italy, the far-right party the Northern League changed its name to the League before the recent elections, in a bid to transform itself into a national party and to win votes in the south. Italy has a north/south divide, between the rich north and the poor south; some northerners stigmatise southerners as lazy/criminal/ignorant; the Northern League had previously campaigned for some kind of northern secession from the south. In the event, however, the south voted overwhelmingly for the League’s rivals, the Five Star Movement.
In Colombia last year, the Revolutionary Armed Forces of Colombia (Farc) signed a peace deal with the government and surrendered their weapons. It changed its name to the Revolutionary Alternative Common Force and stood in parliamentary elections last week as a political party. It won less than 1% of the vote. Clearly it takes more than a change of name to make people vote for a group which terrorised them in a half-century of conflict which claimed almost a quarter of a million lives.
In a world dominated by scares about fake news, electoral interference and voter manipulation, all the above stories are hugely reassuring; it seems that it’s not so easy to fool the public or to pull the wool over voters’ eyes, after all.
Financial
LET SLIP THE HODS: Everybody is getting involved in the house building business now – from the government down. Mrs May is adding to all her other cares and responsibilities by taking on a personal involvement in providing more housing. No, she’s not setting up with her husband to build a couple of units in her back garden, but she is going to be directly involved in the review and amendment of the National Planning Policy Framework now underway, with the aim of proving a lot more new homes, preferably for sale, preferably in the South-East, preferably for first time buyers. Not just houses for sale, also for private renting. The thrust of this is that development in urban locations and on brownfield sites will become denser, that private rented schemes, especially those designed for the elderly or disabled will be favoured ( to encourage mobility), and that greenfield sites around transport hubs (especially railway stations) will be prioritised. There is though, no intention to permit any significant development in the greenbelt planning areas which are seen as a vital component of the government’s environmental strategy (and are generally in Tory Parliamentary seats).
In addition to this increased enablement, sharp sticks will be deployed – councils will have added to their look forward targets (how many units they are planning to give consent to), backward looking tests – how many units of those that were consented actually got built. Councils that fail those targets – especially the latter – may find their planning powers removed in the direction of Whitehall. It has not yet been explained how the person from Whitehall will be any better at compelling builders to build than local councillors – house builders are after all in for a profit and are keening than anybody to getting putting brick on brick if there is money in it.
BOLD STEPS, WITH SHOVEL: As an example of how house building is increasingly seen as an opportunity far from its traditional roots, Legal and General, who most readers will think of as an insurance company, announced on Monday that it was taking 100% ownership of Cala Homes. L&G already owned 48% of Cala, the balance being owned by Patron Capital Partners. Patron is a noted property investment fund in the UK, managing the money of several American institutions – most notably Harvard University; it is noted for its approach of being an active investor in properties which have occupational angles – nursing homes, hotels, and indeed housing. It is selling out for £315m to give L&G complete control.
Cala is one of the UK’s more upmarket housebuilders, with total revenue of £750m in 2017, from 1,300 sales, and a reputation for quality. It was founded in 1875 and is active mainly in the English regional market, although with a significant presence in Scotland – indeed its head office is in Edinburgh. At an average price of around £500,000 per unit, these are not starter homes, although about 20% of what it builds are categorised as “affordable” – generally building them to satisfy conditions of planning consents. With the backing of two well-resourced shareholders and a rising regional market, turnover has trebled in four years, (that includes the acquisition of rival Banner Homes three years ago) although profits have grown less quickly. L&G say that they believe there are further opportunities to grow the business in the current housing market and it intends to support the business for continuing growth in turnover and profits.
It is understood that the deal also contains incentive arrangements to encourage and indeed, retain, the senior management of the business; and also to recognise Patron’s level of active contribution to the growth of the Cala business over the last five years
