12 September 2019
Lens on the Week
UK
THE IRISH QUESTION: Ever since the days of Strongbow, English politics have been complicated by Ireland and here we are again. Boris Johnson has been shuttling between Dublin and Belfast seeking a successful backstop arrangement in the light of the new reality. That is that the government has lost its majority and so is no longer dependent on the DUP to maintain it. A Northern Ireland only backstop is therefore no longer out of the question. Of course it would involve the eating of words and the crossing of old red lines but needs must when the devil drives and ‘no deal’ is a pretty unappetising alternative.
NEW SPEAKER: John Bercow is to retire on 31 October 2019 following a controversial run as speaker of the House of Commons. Originally a Tory MP he was much criticised by his erstwhile colleagues for favouring Labour. Still, his place in the history books is likely to hang on his role in the politics of Brexit and his fight not to let Parliamant be railroaded by the executive. Possible replacements include Labour veteran Harriet Harman and Tory backbencher Sir Edward Leign. Both are generally well respected.
ELECTION POSTPONED: The opposition parties have succeeded in passing legislation which in default of parliamentary agreement or a new agreement with Brussels before 19 October obliges the Prime Minister to write to the EU seeking a three month extension to the Brexit timetable. Faced with the prospect of legal action, the government has said that it will adhere to the law but reserved the right to look for loopholes. Sophie van der Leyen, the Chairman of the EU Commission, has said that such a request could only be entertained if the UK appoints a Commissioner.
SCOTTISH LITIGATION: The Inner House of the Court of Session (equivalent to the English Court of Appeal) has overturned the decision of Lord Docherty (equivalent to an English high court judge) and has ruled that the Prime Minister’s advice to the Queen to prorogue Parliament was illegal because its purpose was to frustrate the Parliamentary process. On that basis the prorogation itself would be invalid. However equivalent litigation in the English courts has come to the opposite conclusion and The Supreme Court of the UK (which fortunately is the final court of appeal in both England and Scotland) will hear the matter on Tuesday.
RUDDERLESS: Amber Rudd, the Secretary of State for Work and Pensions and Minister for Women and Equalities and a leading Remainer, has resigned from the cabinet on the basis that the government is currently working on the consequences of “no deal” rather than on obtaining a deal and in protest at the withdrawal of the expulsion from the Conservative Parliamentary Party of 21 of her colleagues. She has surrendered the whip and expects to stand as an independent conservative at the next election. Meanwhile John Mann, the veteran labour MP who chairs the all-party parliamentary group against anti-semitism, has declared that he will not stand again and that Jeremy Corbyn is not a fit leader. Mr Mann will take up a full time role as the government’s anti-semitism tsar. The Prime Minister’s brother Jo Johnson has resigned too but that seems long ago now.
IMMIGRATION: The Home Office has announced that foreign students can remain in the country for two years after they graduate, replacing the previous limit of four months. This will give them time to establish themselves and satisfy the conditions for continued residence under a skilled work visa (job earning at least £20,800), a high-value migrant visa or another student visa.
IRAN: Two British Australians travelling in Iran have been taken hostage by the authorities there. The Australian government is leading in the negotiations.
International
AFGHANISTAN: Peace talks between the Taliban and the USA appear to have collapsed. Reports last week suggested that a deal was close, after months of negotiation, but this week President Trump tweeted that he’d called off the initiative. Disagreement within the White House seems to have precipitated the breakdown; US secretary of state Mike Pompeo reportedly refused to sign the deal, and when Trump proposed inviting Taliban leaders to Camp David to complete the talks he was apparently opposed by his vice-president Mike Pence and national security adviser John Bolton.
Trump is eager to end the 18 year war and bring US troops home before the next election, but political opposition to a peace deal has been growing in recent weeks: opponents are concerned that the Taliban has so far made no concessions; that it continues to launch terror attacks (at least five last week, including a suicide bombing in Kabul which killed twelve people including a US paratrooper) presumably to strengthen its bargaining power; that the withdrawal of 5000 US troops would result in the collapse of democratic structures; that hard-liners in the Taliban have vowed to fight on and even threatened to join al-Qaeda if their leaders declare a cease-fire; that hosting terrorist leaders at a summit in Camp David during the anniversary of the 9/11 terror attacks would have been extremely insensitive; and that the Afghan government in Kabul has been excluded from the negotiations (the Taliban refuses to talk to it).
This issue wasn’t the first time that John Bolton proved too hawkish for Trump, and this week the president finally sacked him. He was Trump’s third national security adviser, lasting seventeen months in the job; his predecessor H R McMaster was sacked after thirteen months and his predecessor Michael Flynn was sacked after twenty-four days.
Presidential elections are due to take place in Afghanistan later this month. It’s feared that the Taliban will use the occasion to further punish and terrorise the Afghan people.
RUSSIA: President Putin’s governing United Russia party lost ground in the weekend’s regional elections, particularly in Moscow where its presence in the 45-seat city douma was reduced from 38 seats to 25. It was toppled in the far eastern region of Khabarovsky. Even though it maintained its control of most areas, its reduced majorities are a significant set-back considering that many opposition candidates were prevented from standing, that opposition rallies were forbidden or brutally suppressed, and that there were widespread claims of fraud at the ballot-box. Some United Russia candidates, fearing that their party is increasingly seen as toxic, appear to have masqueraded as independents instead. It doesn’t bode well for President Putin in the national parliamentary elections in two years time or the presidential elections three years after that.
FRANCE: A man, away from home on business, died from a heart attack while having casual sex in a hotel bedroom. Who was responsible? His employers, according to appeal court judges. French law says that any accident which happens to a worker anywhere and at any time while he or she is away from home on business is an accident du travail, a work-place accident, and that benefits and pension payments must be made accordingly. Two years ago, appeal court judges similarly ruled that a French executive who injured his hand in China – falling over while dancing in a disco at 2 o’clock in the morning – was also the victim of an accident du travail.
Financial
HEADS YOU WIN: The deadline for PPI claims against your friendly local high street bank has now closed, so no more annoying adverts from dubious radio advertisers offering to help you with your claim – even if you can’t find the paperwork, can’t remember signing up for the cover, and maybe never took out a loan or had a bank account. Though the banks have already made large provisions for losses resulting from the claims, a large surge in the last month saw a rumoured extra two million claims, meaning that Barclays and Lloyds have both had to set more money aside to deal with the sudden upswing. Barclays say that they will need to provide an extra £1.2bn, or more, in the current quarter, and Lloyds, looking at a similar figure, have decided to suspend their intended share buyback programme. RBS joined the not so merry throng, warning that it will increase its current £5.3bn provision by £600m. PPI cover insured against unemployment or illness preventing the repayment of loans. Claimants for compensation say that the policies were difficult to understand, and in many cases not necessary; let’s hope the claims programme is not extended to car insurance.
OUT OF INTU? We have been following quoted shopping centre owner Intu for some time; it is one of the largest investors in shopping malls in the UK, owning some of the biggest, including Braehead in Scotland, Eldon Square and the Metro Centre on Tyneside, and Lakeside to the east of London. Unfortunately, after years of growth, things in retail are not good. Tenants are struggling, especially in fashion, rents are going down, and the customers increasingly seem to prefer to sit at home and shop on-line. Intu lost over £800m last year and the lines on the graph still point downwards. Deputy chairman and major shareholder John Whitaker tried to take it private last year but his offer failed. Now a new potential private purchaser has appeared, the acquisitive private equity fund Orion, who are said to be trying to put together a bid; perhaps, or perhaps not, with Mr Whitaker (who also owns Peel Group, one of the largest land and property owners in north-west England). That has done wonders for the share price, up 20% just on the rumours, but there is a way to go yet – including how the providers of Peel’s external debt will feel about delisting.
WORKING HARD: The latest statistics on the UK economy ought to be cheering PM Boris up a bit – especially with an election on the horizon. The unemployment rate is the lowest since 1974, another year of two Prime Ministers – Edward Heath at the beginning, Harold Wilson at the end – and although the rate of new job creation is slowing, it was still a reasonably healthy 31,000 new jobs in the quarter ending in June. Wage increases on an annualised basis are almost 4%, comfortably above inflation, which means that those in work are benefitting from the trend; economists looking for bad news, as economists generally do, noted the number of job vacancies continues to fall, and that the rate of job creation is slowing down, but overall it is a pretty healthy picture, and one perhaps contributing to a feel good factor for the employed. One big difference with 1974 is in the number of days lost to industrial action – strikes – which in 1974 saw 14.8 million days lost. June 2018 to June 2019 saw 100,000 days lost – even the British Airways pilot’s strike should not take current figures anywhere near those of 1974.
