26 September 2019
Lens on the Week
UK
SUPREME COURT DECISION: The Supreme Court has decided that the prorogation of Parliament was unlawful because it was intended to restrict Parliament’s role. On that basis the advice given to the Queen was illegal and the Order in Council effecting the prorogation void. Despite the hoo-ha, it is hard to see what has changed in relation to leaving the EU. Johnson has said he will push for Brexit do or die and that involves playing every trick in the book to force it through. It is no surprise the that he went too far in proroguing parliament, presumably believing, as was held by the High Court and at the initial hearing of the Court of Session, that he was entitled to do so. It turns out he was wrong and that Parliament will be recalled on Wednesday. What difference will that make and what has now changed? Will they now pass the motion of no confidence they baulked earlier? Will there be a general election after all? Is someone in the opposition strong enough to put together a coalition? Or will there just be a lot of noise?
THE QUEEN: The supreme court judgement is bad news for the Crown, not because Her Majesty has behaved other than with scrupulous correctness but because the quashing of an Order in Council underlines the formal nature of her role. Worse however is the claim in David Cameron’s book that he approached the monarch for help over the Scottish referendum so that her otherwise innocuous comment that she hoped people would consider the matter carefully is made to look partisan. Conversations between monarch and prime minister are supposed to be confidential and have been treated as such by leaders of both parties. What on earth did Cameron think he was doing? Surely he is wealthy enough not to need to boost the royalties. And he was a member of White’s too. How sad.
LABOUR PARTY CONFERENCE: Labour began their conference with a power struggle as John Landsmann and merry men from Momentum sought to unseat Capcom Watson the deputy leader. Watson differs from Jeremy Corbyn on a number of issues and would like the party to take an unequivocal Remainer position. He cannot be sacked, however, because he is directly elected by the party membership. Answer: abolish his post. In the end it didn’t go through but the air given to his perfectly sensible comments will have done Mr Watson’s career a great deal of good.
Still on the Game of Thrones theme, Andrew Fisher, Mr Corbyn’s head of policy has announced that he will leave before the end of the year to “spend more time with his family.” Quite so.
Against this sparkling backdrop, the policy side of the conference is a little depressing. A Labour government would abolish prescription charges, presumably undermining the finances of the NHS and making the public even more drug dependent. OFSTED will go too, pleasing the teaching profession at the expense of the nation’s children and presumably handing British jobs to our better educated competitors. Of course Angela Rayner does have a point when she says that the information given by the grading system takes too little account of a school circumstances. Still, the reporting system is currently being improved to deal with that. As we saw when Andrew Lansley was in charge of the NHS, root and branch reform driven by politicians anxious to make their mark is seldom a success.
While wrecking the state schools to please the teachers, Ms Rayner will go for the double by abolishing the private schools too. There is certainly a strong case for trying to merge the two systems but destroying the one which works best is an odd way to start. Maybe, however, she has a cunning plan. Back in the 70s those running local authorities tried to entrench their majorities through social engineering (keeping up the number of council tenants in labour authorities and selling off council properties in Tory ones). Perhaps Labour calculates that if the electorate is ill educated enough they will gain an electoral advantage.
The party has rejected the proposal that it commit to Remain, taking the line that if elected it would support a referendum offering a viable deal – perhaps Mrs May’s?
THOMAS COOK: The bankruptcy of Thomas Cook with its accompanying loss of jobs and holidays has led to a focus on the remuneration received by its executives and the accounting by which that remuneration was assessed. See the full Article “Thomas Cook’s Final Tour” by Frank O’Nomics in this Issue and ‘Got Away’ under Financial below.
International
USA: Nancy Pelosi, the Speaker of the House of Representatives, has begun impeachment proceedings against President Trump for allegedly preventing a whistleblower’s complaint from reaching Congress, which would be “a violation of law”.
The whistleblower, a member of the intelligence community, claims that the President had asked President Zelensky of Ukraine to investigate allegations of corruption against Hunter Biden (the son of former Vice-President Jo Biden) who was a board member of Burisma Holdings in Ukraine for five years. There are also claims that President Trump withheld $400 million of military aid from Ukraine while he was making the requests to the Ukraine President. Jo Biden is a Democratic rival of Donald Trump for the presidency. Trump’s opponents accuse the President of an abuse of power in pursuing damaging material against the Bidens which would benefit him politically.
President Trump admitted that he had telephone conversations with Zelensky about Hunter Biden, but insists that withholding the military aid had nothing to do with the issue. Trump supporters claim that Jo Biden, when he was Vice President, threatened to withhold a $1 billion loan to Ukraine unless the prosecutor investigating Burisma Holdings for corruption was sacked.
Ms Pelosi has demanded that the whistleblower’s complaint must be released to the House. The acting Director of National Intelligence (the complaint was made to an internal watchdog of the intelligence services) is now legally obliged to do so. Trump, faced by Democrats preparing a subpoena, has agreed to release a transcript of the phone call between him and President Zelensky.
The impeachment enquiry will give extra powers to the six committees in the House of Representatives already looking into allegations against the President. Articles of impeachment would be drawn up by the House of Representatives judiciary committee if it considers the evidence to be of sufficient weight, and the house would then vote to impeach the President. A simple majority would see the case pass to the Senate for trial, where a two-thirds majority would be needed for the President to be found guilty.
Financial
GOT AWAY: Alas, Thomas Cook did not make it (see our piece in last week’s “Lens”). So near and yet so far – £200m far apparently . A lot of money, though in the context not such a lot, and an amount that had been flagged not by the banks (they say they were not told) but by the company (they say the banks were). Odd people, bankers, for persons so good at figures they do seem to get them wrong a lot. As always with these busts in the travel business the problem seems to be known weeks in advance, but nobody seems able to do anything about it. A sad end for the oldest travel agency in the world.
NOT GETTING IT AWAY: What is it about £200m? That is also the scale of the problem at challenger bank Metro Bank. The bank was in the market this week hoping to raise £200m in a bond sale to strengthen its capital base. But investors were reluctant to come forward (perhaps they went on Thomas Cook holidays and have not made it back yet) and although apparently the canvass got to £175m, that was not enough, so the bank pulled the raise. The share price dropped 25% – now 11% of what it was at the opening of the year. The failure to raise the extra money creates a further problem for Metro Bank, which was criticised earlier in 2019 for some misleading accounting relating to credit rating, in that the regulator will now see a greater risk and raise capital requirements (or force it to lower lending volumes) to protect depositors. Metro has been one of the most innovative of the new banks, with high standards of customer service. Here’s hoping it resolves its problems.
GOING AWAY: The executives of Marks and Spencer, so it seems. Gordon Mowat, head of supply and logistics – that means getting the stock in the shops and to the on-line customers, has “been asked to leave”, only a couple of months after Jill McDonald, head of clothing and homewares was also handed the P45 and cardboard box. And last week Humphrey Singer, the chief financial officer, announced that he was also off. In the spring M&S lost two of its senior fashion buyers, key executives for the business. The chief executive, Steve Rowe, who joined 30 months ago and got a 48% pay increase this spring, has made his whole career at M&S, and says he has the full support of chairman Archie Norman to revitalise and modernise the business and, presumably, get it back in the FTSE100 list, from which it was booted earlier this month.
GOING THE WRONG WAY? Another challenger unpopular with its regulator is Uber, the US owned on-line taxi service. Although Uber has taken the London ride market by storm (notice how polite black cab drivers have become?) it has struggled to open in many UK cities which won’t give it licences, and in London it is operating on a series of short licences after Transport for London (“TfL”), its regulator who also operates competing public transport services (though not cabs), refused to give a permanent licence. Uber’s temporary operating licence expired yesterday and TfL have given it only a two month extension. TfL say it has concerns over the safety of passengers and also over the firm’s environmental policies, though customers generally praise the firm for both, and it has been successful in mostly driving out the unlicensed operators who were a feature of the late night taxi market – and not a pleasant one.
