20 September 2017
Lens on the Week
UK
SALTZBURG: Nature abhors a vacuum so it must very much dislike the EU negotiations. In the absence of real information as to what is going on in the meeting rooms, everyone is throwing in his or her two pennyworth on the basis of imagined outcomes. Thornberry is reported as saying that Labour will vote against the government’s deal. Surely that must depend on what the deal is, although to do her justice what she actually said was that she didn’t think the government would be able to negotiate a deal they could support. Still, the bolder headline filled space on the front page more effectively. Industrialists worry that new immigration rules will leave them short of workers. Well, possibly, but it rather depends on how they are applied. Pundits forecast a drop in the pound if we leave without a deal. Yes but will we actually do that?
The mouths clack on as mouths are wont to do. Politicians, savants, businessmen and even us, Ladies and Gentlemen, all feel we have to express a view. Calls for new referenda, technology-based border controls, preferences for EU workers and the opposites of all those things and others rend the air. When will we escape from all this and achieve some resolution, a base from which to move on? Will it be at this week’s summit in Saltzburg? There are signs of movement certainly – particularly on the Irish border issue where it is being suggested that non physical border controls may not be as difficult as originally thought. But deals like this are never done until one minute to midnight on the last day. Alas there are a few weeks yet to run.
BBC SUBSIDY: The board of the BBC is to meet later this week to discuss the future of the system under which those aged over 75 do not have to pay the £150.50 per annum licence fee. Originally this cost was met by the government but austerity put a stop to that and the combination of that and a freeze in the licence fee itself from 2010 to 2017 has meant substantial cuts. The licence fee will be discussed in 2020 and there will also need to be a discussion of what it is right for the BBC to provide in these days of Netflix etc and at what cost.
AID: £13.9bn is a large sum of money; it is also the amount which Britain disbursed in foreign aid in 2017. You could do a lot with that, transform the NHS for example, but only some of it goes to alleviate poverty. Some of it is simply wasted. The £245bn received by Nigeria since independence in 1960 is a substantial proportion of the aid it has received. No wonder that there are those in the Conservative Party calling for the commitment to spend 0.7% of GDP on aid to be reduced. No wonder too that the Government is seeking to get something back for the country by linking aid to trade deals.
Cutting the budget would send all the wrong signals, a country contracting into itself, withdrawing its helping hand to the underdog. It is morally unattractive too, but linking it to trade? Often that would be wholly inappropriate because the recipient has nothing to give in return but it isn’t always like that. Should we fund a dam to be built by French contractors not British ones? Surely this is case by case stuff and not a moment for the aid agencies to start grandstanding.
International
NATURAL DISASTERS: Typhoon Mangkhut, one of the most intense storms to hit the area recently, killed at least 50 people when it swept through the Philippines last weekend. It produced a record tidal surge of more than 11 feet in Hong Kong, injured at least 100 people, closed the international airport, toppled trees, smashed windows and damaged buildings. It killed at least four people in China, causing widespread flooding and damage, before it was downgraded to a tropical storm as it moved inland. More people were killed in the Philippines in its aftermath: it set off a landslide which buried dozens of people who were sheltering in a chapel and other buildings in a mining area. More than forty bodies have been recovered, and more than 20 people are missing.
Hurricane Florence was downgraded to a tropical storm just before it hit the east coast of the USA, but has still claimed more than twenty lives and produced record rainfall, floods, power-cuts and devastation in the Carolinas. It continues to move northwards and is expected to cause havoc in Virginia before returning to the Atlantic.
Heavy rainfall has caused severe flooding in central and southern Nigeria, where the River Niger and the River Benue have burst their banks. More than 100 people have been killed and tens of thousands are trapped by the rising waters. President Bouhari has declared a national disaster.
SYRIA: President Erdogan of Turkey and President Putin of Russia met in Sochi to discuss the impending showdown in Idlib. Erdogan was keen to delay the expected regime assault so that civilians (there are more than three million of them in the province) and moderate rebels (an estimated 50,000), whom Turkey supports, could distance themselves from the extremists (an estimated 10,000) which the Assad regime and its allies Russia and Iran are ostensibly attacking. The two presidents reached an agreement: a buffer zone will be created around Idlib, before a deadline of October 15. The conflict in Syria has seen a number of such deals brokered, but none of them have been effective. Let’s hope that this one is different, and that a bloodbath in Idlib (potentially the worst in the whole war) and yet another humanitarian disaster and mass migration can be prevented this time.
OUT OF THIS WORLD: A solar observatory in New Mexico, USA, was suddenly and mysteriously evacuated and closed down last week, reportedly by the security services. Had the aliens landed? Speculation and conspiracy theories ran riot on the internet. The centre was reopened this week. Perhaps the Trump regime told the aliens, being illegal immigrants, to clear off. I hope they didn’t have any children with them, otherwise they’d have had to leave them behind in cages.
Financial
PRUNING ALL THE BRANCHES: As Homebase undergoes financial reconstruction under its new owners, more trouble in the world of the indoors and outdoors. Wyevale Garden Centres, which currently owns 145 sites mostly trading under the Wyevale name, and is owned by investment fund Terra Firma, is offering itself for sale, and is willing to consider a multiplicity of approaches. Ideal would be a sale of the whole, but Terra Firma thinks that is unlikely to appeal as the centres vary greatly in size and type, (and the business is loss making, being supported by Terra Firma) so it is willing to consider offers right down to individual outlets. £700m will buy the lot, or if that is a bit much for your trug, £35m will buy Woodcote Green centre in Surrey. If you fancy a more cautious approach, there are several priced at around £200,000. It is expected that not all will continue as garden retailers – some may re-emerge as other forms of out of town retail, but others have clear value as residential development sites, if planning can be obtained. Wyevale says that trading conditions are very competitive and that it is often better for sites to be run locally where a better response to varying local conditions can be made. Also blamed is this summer’s very dry weather with customers preferring to sit in their gardens than to buy things for them.
RE – CYCLING: Another hobby business where the wheels look as they may be starting to come off: – cycling. Last week we discussed Halfords’ half year results where cycle related sales seemed to have plateaued whilst car parts showed strong growth. Now, more signs of trouble in the bike business. Evans Cycles, one of the larger independents, with a strong presence in London and the south east, has appointed a restructuring specialist to help it restore its business to profitability. Evans has run out of working capital and needs to find £10m of new money quick. And Rapha, which sells upmarket cycle clothing, has announced that with immediate effect it is closing a large number of its outlets and sacking many staff. Both businesses are owned by investment funds and both are believed to be (financially) quite highly geared. But their troubles and the stagnant figures at Halfords do suggest that the passion for cycling may have pedalled its course.
JACKING IT UP: The reshaping of Tesco continues apace. Rumoured and now arriving – at the unlikely first location of Chatteris in Cambridgeshire – Tesco’s new downmarket – or as they would say, value based, brand, Jack’s. There will be two this year, and possibly up another 15 in 2019. The idea is to take the food and household essentials fight with Aldi and Lidl head-on, to match their cut price offers with Jack’s. The concept is very much no frills, and back to Jack Cohen’s original Tesco concept of “pile it high and sell it cheap”. Tesco has been trialling a number of new brands in Tesco with the intent of selling them in Jack’s, and now will be rolling out more dedicated brands for their new baby, to differentiate between what it hopes will be two distinctly different concepts. If the early trials are good the intention is to convert a number of Tesco stores – especially Tesco Metro’s – to Jack’s, but also to look at gaps in the national network where Tesco has feared to tread but Jack’s might succeed. Jack Cohen would be very pleased to see the reversion of his business to its roots – under his name.
