Issue 194: 2019 03 21: Lens on the Week

21 March 2019

Lens on the Week

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UK

BREXIT: The Government’s proposal to put Mrs May’s agreement to the house of Commons for a third time has been disrupted by a ruling from the Speaker, John Bercow, that a failed resolution may not be put again in the same parliamentary session.  This did not bar the proposal being put for a second time because comfort from the EU had changed the position.  At first the ruling appeared to be a problem with one commentator referring to it as “immense”.  In reality, however, the House can change its standing orders so that if there was support for the deal it could be pushed through.

Yesterday Mr Tusk said that the EU will only postpone Brexit if Mrs May’s deal is passed by the Commons.  The effect of that is discussed in detail in “White Knuckle Ride” below.

GODDARD TRIAL: The trial of James Goddard, charged with harassment after calling Anne Soubry a nazi and traitor, had to be adjourned following protests by Goddard’s supporters.  There were also demonstrations in favour of Goddard outside the attorney general’s office.  The trouble is, of course, that apart from his general loutishness Goddard is not really a criminal and there is a danger that the Courts will get used for political propaganda.  Still, having taken him to court the authorities must clearly see it through, presumably excluding the public (but not the press) from the courtroom.

ENVIRONMENT: Damian Hinds, the education secretary, said that the children who demonstrated would have been better employed at their lessons.  Perhaps that is what education secretaries have to say.  Mr Gove applauded the demonstrators but then, like him or not, Mr Gove is a genuine reformer and, of course, Secretary of State for the Environment.

International

NEW ZEALAND: An attack by a suspected white supremacist and nationalist extremist on the al-Noor and Linwood mosques in Christchurch left fifty dead and many more wounded.  One man – an Australian – has been arrested.  The attacker was armed with automatic weapons and filmed the murders, broadcasting them live on social media.  Social media companies have removed them, but not before they were copied and re-broadcast by other users.  President Erdogan has played footage of the massacre to crowds at election rallies in Turkey; he has been criticised for appearing to use the massacres to win the votes of nationalists, and for apparently threatening New Zealanders with reprisals; “Your grandfathers came and some of them returned in coffins” he said about the Anzacs in World War I’s Battle for Gallipoli. “If you come as well, like your grandfathers, be sure that you will be gone like your grandfathers.”  New Zealand’s foreign minister has expressed concerns to Turkey’s vice-president and foreign minister, and Australia’s prime minister has demanded an explanation from the Turkish ambassador.

MOZAMBIQUE: Cyclone Idai flooded the country, created huge lakes many miles in length, submerging villages and engulfing the port city of Beira, one of the biggest in Mozambique with a population of 500,000.  Thousands are thought to be homeless and without food or drinking water, and thousands are thought to be dead.  The town of Buzi in the centre of the country is also in danger.  The cyclone has also flooded neighbouring Malawi (at least 56 dead) and Zimbabwe (at least 98 dead).

GAZA: War was narrowly averted after two rockets were fired from Gaza towards Tel Aviv for the first time since the war five years ago, and Israel retaliated by hitting one hundred Hamas-related targets in the Strip.  Hamas (whose representatives had been meeting Egyptian officials for talks about a cease-fire when the rockets went off) apologised, saying that the rockets had been fired by mistake – they were accidentally set-off during routine maintenance.  Israel accepted the explanation.  Last October, a rocket strike was accidentally set off when struck by a bolt of lightening.

Financial

 LACK OF ENERGY:  Deregulated markets go through characteristic behavioural changes and one day no doubt various theses will be written on the UK energy market, which so far is behaving in a predictable way.  Originally there were a small number of powerful suppliers to business and domestic consumers; then the market was opened to effectively admit all-comers, and come they did.  The seriously competitive and commercial; the green and ethical; the suppliers to specialist users: the local co-ops. Some estimated fifty new suppliers popped up, or threatened to (not all made it).  Soon, a number failed because their supplies were insufficiently tied up at the right prices, or because they failed to attract enough customers, or they hadn’t enough capital to get them through the start-up phase – we have recorded some of those here.  The number of suppliers is shrinking quite fast – but that does not mean the old and powerful companies are having a good time.  Not only are there huge pressures on pricing, the government regulator has introduced a price cap which has restricted their manoeuvrability – and the costs of energy production have been rising. Two sets of 2018 results published last week by industry giants showed the scale of their problem.  Npower says it has lost 650,000 customers in 2018, giving it a loss of €72m for the year (it lost €63m the year before). Rival E.On only lost €1m – but it had made €108m the year before.  Both companies are European owned and account in Euros.  Both say they are looking for economies in operation and to regain market share.

ASHLEY CORNER:  The Sports Direct owner continues his stalk of Debenhams.  Debenhams announced they were seeking refinancing of £150m of debt; Mr Ashley then countered that he would provide such a loan from Sports Direct, and on better terms.  It could be, he said, either interest free, providing Debenhams issued another 5% of ordinary shares to the Ashley interests, (taking Mr A to 34% ownership of the retail group) or it could be at 3% interest.  Given the terms Debenhams bankers are demanding, which are rumoured to include debt for equity swaps, the Ashley loans are likely to be commercially more attractive than those from the banks.  That must be putting the Debenham’s board in a very tricky place.

NO TIME TO BURY BAD NEWS:  Dignity is the second largest funeral service in the UK (the Co-op is the largest, its consistently most successful business).  But it now faces the outcome of an enquiry by the Competition and Markets Authority (“CMA”) into the rapid rise in funeral costs over the last ten years – by more than three times the rate of inflation.  Bereavement services were traditionally the preserve of small local firms, usually family owned, but many of these have quietly sold out to the big operators.  The CMA believes that this has reduced competition to unacceptable levels – for customers who are often not focussed on shopping round for competitive quotes at the time they procure the service – and thinks the industry is profiteering.  It has especially pointed to the Co-op and Dignity in this regard.  Dignity’s recent financial results tell a slightly different story though.  2018 turnover was down 3%, and profits down 43% to £40m.  This reflects a growing movement to sales of more basic, no frills, funerals, and a price war with the Co-op, especially at that value end.  The trend in the number of deaths though is up – 16% last year (though some of that is blamed on weather stress), so demand is strong and supply continues relatively restricted.

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