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Tuesday, 25 March 2014

Can we have our money back please, Mr Hall?

The BBC likes to say that they would lose a lot of money if non-payment of the licence fee was decriminalised. Perhaps, but if they are that sensitive, perhaps they would like to consider repaying some of the money the government pays them to broadcast to the dead. Here is the BBC position on refunds:

What to do if the licence holder dies

The death of someone is always a difficult time. We try and make it as simple as possible to make the necessary changes to the TV Licence.

If a TV Licence is still needed at the address

Anyone who was living with the deceased licence holder will still be covered by the current TV Licence. If the licence is not a Free Over 75 TV Licence, please send a short statement in writing that the licensee has died. Please also let us know the name of the person still residing at the address. Future correspondence about the licence will be addressed to them.
The address to write to is:
Customer Services
TV Licensing
Darlington
DL98 1TL
A copy of the death certificate is not required.
If the bank account details for the Direct Debit need to be changed, please enclose these with the same letter. The bank account holder must also sign the letter.

If the licence is a Free Over 75 TV Licence

A Free Over 75 TV Licence will remain valid for that year. In the following year the person still residing at the address will have to renew the licence. If that person is, or will be, over 75 years old by the time of renewal then it is best to apply now for their Free Over 75 TV Licence. You can do this by using acontact form to tell us their name, date of birth and National Insurance number. If the person still residing at the address will not be over 75 then we just need to know their name. We will send a renewal at the appropriate time.
You can also call us with the details on 0300 790 6131. Find out more information on call centre opening times.

If the TV Licence needs to be cancelled

If the licence is not a Free Over 75 TV Licence there may be a refund due to the estate. Refunds are given on any quarters (3, 6 or 9 months) left on the licence. Please complete an online refund form if you are an executor for the estate.
To just cancel the licence, please use a contact form to provide the title, initial, last name, address and licence number (where possible) of the deceased person.

If the licence is a Free Over 75 TV Licence

We’ll simply cancel the over 75 TV Licence. Please use a contact form to tell us the name, address and TV Licence number (where possible) of the deceased person. As the Over 75 licence is issued free of charge, there is no refund.
See that? Nothing to repay for the dead Over 75s, because it is issued "free of charge". Actually not so. It may be free to the user, but it costs the government (i.e. tax payers) £550 million to pay for the licenses of the over 75s. With an average life expectancy of 5 years, that implies a 20% chance of dying in any given year or 10% of the license going unused.

That is a £55 million annual windfall to the BBC in unrefunded license fees.

Monday, 24 March 2014

Solving two problems for the price of one #4

A funding crisis and increased demand for care means general practice as patients know it in the UK is "under severe threat of extinction", the head of the Royal College of GPs has warned.
The royal college's president, Dr Maureen Baker, said failing to properly fund GP surgeries could have an impact on the sustainability of the NHS.
Some practices were already closing due to lack of staff, she said.
The Department of Health said it recognised the "vital" job GPs do.
Fraud is costing the NHS £5bn a year, with a further £2bn lost to errors, the former head of its anti-fraud section says.
The amount lost to fraud alone could pay for nearly 250,000 new nurses, a report seen by Panorama suggests.
The NHS must "get on with tackling the problem", said Jim Gee, co-author of the Portsmouth University study and ex-director of NHS Counter Fraud Services.
The Department of Health said it "did not recognise" the figures.

Friday, 21 March 2014

Solving 2 problems for the price of one #3

We seem to be spending a lot of time and effort banning lots of Russian bureaucrats fromtravelling to the EU and the US and making orders to freeze assets that they don't hold here and over which we have no control.

The Russians, on the other hand, have stopped reciprocating because they can see that the whole exercise is more trouble than it is worth.

Which is a shame, and a danger to the West, because it allows the Russians to bear a grudge. It is a boil that needs to be lanced, by  a pointless act of vindictive retribution. Hopefully one that can set the Russians in a good light and show them as a nation that we can work with.

I suggest a Russian ban on travel by Tony Blair and Gordon Brown, and a freezing of their assets. I might even start a campaign on Facebook.

Wednesday, 5 March 2014

Solving 2 problems for the price of one #2

A tidal barrage at Bridgwater and dredging on the Somerset Levels form part of a £100m capital plan to combat flooding, the BBC understands. Villages on the Levels have been cut off for more than two months following the wettest winter on record.BBC Three is to be dropped from TV schedules and will move online, as part of the BBC's cost-cutting plans. The channel's service budget was £85m in 2013/14 - although moving the channel online would not eradicate those annual costs entirely.
I think I may have an answer

Tuesday, 4 March 2014

Solving 2 problems for the price of one

Many parents in Britain are paying more for childcare annually than the average mortgage bill, according to a report. The Family and Childcare Trust's annual report says average fees for one child in part-time nursery and another in an after-school club are £7,549 per year. Full-time childcare cost for a family with a two-year-old and a five-year-old child are estimated at £11,700 a year. The report compares the costs to the average annual UK mortgage payment, which was estimated at £7,207 in 2012.Two-thirds of households in England affected by the bedroom tax have fallen into rent arrears since the policy was introduced in April, while one in seven families have received eviction risk letters and face losing their homes, a survey claims. The National Housing Federation (NHF) said its survey demonstrated that the bedroom tax was "heaping misery and hardship" on already struggling families who were unable to pay their rent but unable to find anywhere cheaper to live because of a shortage of smaller homes.

I think I may have an answer

Sunday, 16 February 2014

Actions speak louder than words at the BBC

The BBC paid a total of £2.6 million to 11 departing executives in the five months after Lord Hall of Birkenhead took over as the Director-General last year.  The former managers received more than the £150,000 cap that Lord Hall has imposed on redundancy payments after the disclosure that dozens of former senior managers had walked off with six-figure sums in recent years prompted allegations of cronyism and misuse of public money.

The latest payoffs, averaging £234,720, were made despite Lord Hall’s promises to crack down on big severance deals, because the departing executives had already been promised te generous payoffs.

So that's OK then.

Sunday, 2 February 2014

This is what happens with a female Home Secretary

There will be no national extension of pub licensing hours during England's opening World Cup match, the Home Office has confirmed.

The British Beer and Pub Association (BBPA) had asked for serving times to be extended on two weekends during the tournament in Brazil this summer.

But the Home Office rejected the bid, saying the World Cup was not a "one-off" event like the Queen's Jubilee.

So the Jubilee was a "one-off"?  I seem to remember there was one 25 years previously, and God willing, there will be another one 9 years from now.

Wednesday, 29 January 2014

Rotting from the core

Last October I wrote:

Which is why I see the whole of Apple going the same way.  In the latest reported figures, sales are up, but margins are down.  Increased sales are mostly of the iPhone 5C, a model designed for mass sales in the Chinese market, but net margins have fallen below 35%: still eye-wateringly high but decreasingly rapidly.  The number of fools willing to pay over the odds for so-so technology has its limits, and the Chinese appear to fall outside that category.

My forecast for Apple is that their ability to screw more money from a fairly limited product range is not going to be enough to sustain the current Market Cap.  In the long term we are all dead, but in 2014 expect the maggots to show in the Apple share price.

Yesterday shares in Apple fell close to 9% in after-hours trading after the firm reported flat profits of $13.1bn (£7.9bn) during the quarter ending 28 December. iPod sales have dipped: 52% down on this time last year, with further drops expected.

I keep telling people, that technology is just a tool, like a screwdriver, and fancy design is never going to get the *entire* population of the USA to spend over the odds to the tune of $1,000 (i.e. $1,000 *more* than they would otherwise have spent), which is what you need to justify a $455 billion market cap, after deducting the $150 billion pile of cash.

To put that in perspective, total iPod sales ever was 350 million.  At $40 profit per unit, call that $30 after tax (all my guesses), that would have been $10 billion of shareholder value, give or take a bit.  Hard to see where the future value that give a current discounted value of $455 billion are going to come from. If we have to wait a year, then that future dividend stream has to have a value next year of $500 billion. Personally, I don't see it happening.

Monday, 27 January 2014

The wheels on the bus go round and round

So Ed balls wants to put up the top rate of tax to 50%.  I don't have to much of an issue with that.  The purpose of taxation is to pluck the maximum amount of feathers from the goose with the minimum of hissing, and as has often been pointed out, democracy is a discussion between two foxes and a goose about what to have for dinner.

But if we are going to have a tax rate of 50% for any income over £150,000, there seems to be little point in paying *anybody* working for the government or the NHS or local government or any quango or or the BBC more than £150,000 if half of the extra just disappears back into the government's coffers.  You might just as well triple their pay and tax them at 85%.

Actually, there's an idea.  All government paid salaries above £150,000 get taxed at 100%..........

Sunday, 19 January 2014

Spot the difference

The running order in this morning's news:

ITV News
1, 'Rosdeep Kular charged' in connection with son's death
2, British man killed in St Lucia after attack on a boat
3. Leaked inquiry: BBC 'turned a blind eye' to Savile abuse
4. Former aide to Nick Clegg quits Lib Dems over Lord Rennard row
5. Two Brits among 21 killed in Kabul suicide bomb blast
6. Ukip 'now Britain's favourite party'
7. Syrian political opposition agrees to peace talks
8. Two Britons among family of five killed in Utah, USA
9. Former Tory deputy chairman Lord McAlpine dies
10. France's First Lady 'leaves hospital'

Sky News 
1. Mikaeel Kular's Mother Charged Over His Death
2. British Man Murdered In St Lucia Attack
3. BBC Staff 'Turned Blind Eye' To Savile Abuse
4. Dennis Rodman In Rehab For Alcohol Abuse
5. Child Marriage 'Legitimises Lifetime Of Abuse'
6. Two Britons Among Five Dead In Murder-Suicide
7. UKIP To Purge Extreme Candidates Before Poll
8. Bomb Threat Forces Plane's Landing In Brazil
9. SAG Awards: American Hustle Hauls In Top Honour
10. Batman Vs Superman Film Delayed Until 2016

BBC News 
1. Mikaeel mother charged over death
2. US hails Syria opposition talks move
3. Ivanovic stuns Williams in Melbourne
4. British man murdered in St Lucia
5. Rennard could face new investigation
6. Deadly blast hits convoy in Pakistan
7. State school fees call for wealthy
8. Obama tries to allay German concerns
9. Defiant Ukraine protesters to rally
10. BBC World TV's Komla Dumor dies

Vacuous and tedious

With 1% knocked off the share price of the taxpayer owned banks, Ed Miliband shows us how he is going to wreck the economy if he ever gets into power.

I am no fan of the UK high street banks, but Miliband's pathetic posturing does no good. HSBC, Barclays, RBS, Santander and Lloyds Banking Group account for the majority of bank customers and lending.  This Mr Miliband thinks is a bad thing, so he proposes to force them to sell off soe of their branches to a "challenger bank".

Obviously Mr Miliband has never worked in banking nor has he done much banking on behalf of an organisation.  First of all, it doesn't matter much where branches are located these days, unless you have to go to the bank and make a lot of deposits as many businesses do.  If as a business your branch gets sold, then you have the choice of either transferring to the new bank (upheaval as you start to deal with people who don't know you or your business) or ou change to a new branch of the old bank (ditto). Either way bad news.

Ah, but says Mr Miliband, the major banks have too much power. Well blow me.  Let's not forget why one bank has 30 million personal accounts.  I seem to remember that Gordon Brown and Victor Blank thought it would be a good idea if Lloyds took over HBOS. But is it really that bad? With 5 major banks and quite a few more minor banks and building societies competing in every town, and often 2 or more from the same banking group.

Five not enough for you, or maybe that's actually ten in the town where you live?  Then you can always use one of the internet banks such as Egg (actually Yorkshire Building Society) or First Direct (HSBC), failing which you can always open an account at one of the banks operated by the Co-op, Tesco, Sainsbury's, M&S or Harrods, and if that still doesn't work for you there are a few dozen foreign banks operating in London that offer personal current accounts to anyone who wants one.  So that is a choice of about 50, and Mr Miliband thinks there is a lack of competition.

Mr Miliband says he wants to cut the size of banks because there is a law that does te same in the US.  Well not quite.  There is a proposal to restrict the amount of non-deposit liabilities that major banks can take on, which would address the liquidity issues that caused problems for many UK banks, but that means more deposit taking branches not fewer.

The US  used to have restrictions on "interstate banking", i.e. banks that accepted deposits in more than one state.  That (largely repealed) provision was designed to avoid the "too big to fail" issue and to restrict a banking collapse to a limited area.  But why was it repealed?  Because within a state the number of banks that could operate profitably was limited, and the result was a lack of consume choice.


Micro-brain

Ed Miliband is on the Andrew Marr show.  He says he wants to start two new banks.  He went to a micro-brewery last week and hey couldn't get a bank loan.

You want to know why?  Because micro-breweries sell mostly to pubs as guest ales, without the benefit of long term contracts.  They are relatively undifferentiated and the micro-brewery business has relatively low barriers to entry - the only thing keeping most of them afloat is the fact that it isn't easy for wannabe new entrants to get a loan.

But the worst factor is the decline of the English pub, largely as a result of the smoking ban introduced by the last Labour government.

Tuesday, 14 January 2014

French farce

I am not a completely heartless bastard, and I have a fair amount of sympathy for Valerie Trierweiler, although some might say that what goes around comes around, but I think we should all be grateful to her for one thing: shoing us the value and purpose of marriage.

Now, don't get me wrong.  Marriage isn't for everyone and I have no objection to those who in former times would have been described a "living in sin" or more recently as cohabiting.  I quite appreciate that some people just don't want to make a commitment (but please spare me the waffle about loving relationships: we all have those and not just with our pets).

But what gets my goat is when people who are not married attempt to wear the mantle of marriage.  At this point I should declare an interest. I have numerous siblings and siblings in law.  Some are married, most of the others are in some sort of relationship.  Some of the unwed relationships have borne children.  I have a simple rule.  The married partners are accorded the status of aunts and uncles and my daughters are their nieces, but the unwed partners are not. I, on the other hand, am the uncle of their children.  I can't help that. It is just a matter if the operation of the law, even if the reverse is not true. They are simply the boyfriend/ girlfriend of my sibling, very welcome etc, but not family.

Why do I do this?  Well you have to draw the line somewhere and in a big family, you can't treat one branch one way and another branch differently.  Not if you want to live long and prosper.  So I draw the line at the same point as the law, on the basis that if a couple doesn't manifest any binding commitment why should the rest of us treat them as a legal couple. They might not want to be and it isn't up to us to second guess these matters.

Which brings us back to Ms Trierweiler, who has been living it up in the Elysee Palace as the first lady of France. According to Ms T marriage is "a right not a duty", which as I mentioned above is a perfectly reasonable position to take.  But on the other hand, in my book without marriage Ms Trierwiler's right to spend thousands of euros of public money, to live in the Elysee while her non-husband is off canoodling on his scooter, and to be treated as a spouse at the meetings of world leaders looks extremely tenuous.

With marriage, her right to do so pro tem would have been maintained,although if the President wanted to go through the effort and expense of a divorce it might be short lived. But without marriage, the French tax payer would be entitled to insist that having been demoted to second lady she should be out of the house before er feet can touch the ground.

In short, if you can't show commitment, why should the rest of us do so? 

Sunday, 22 December 2013

Cable gets a twisted pair

Vince Cable objects to the government's planned range of measures to toughen welfare rules for EU migrants, including:

  • New migrants not getting out-of-work benefits for the first three months 
  • Payments being stopped after six months unless the claimant has a "genuine" chance of a job 
  • New migrants not being able to claim housing benefit immediately 
  • Deportation of those caught begging or sleeping rough, with no return within a year 
  • Quadrupling fines for employers not paying the minimum wage
According to Mr Cable and his boss Clegg, these measures would be illegal and impossible to implement. Well not quite, unless you hadn't noticed Mr Cable, you are a minister in the government and the law is whatever the government (that is you) manages to push through parliament. So if you don't like the measures proposed by the rest of the cabinet you can always resign.  Oh but that would mean losing your ministerial salary and chauffeured car.

As for "impossible to implement", what can be difficult about not giving benefits to people who are currently not entitled to them?  Rather than taking away a right that is already established, the government simply has to deem that certain categories of immigrants are only entitled to receive benefits under tighter conditions than UK citizens, but less stringent conditiond than those from outside the EU.

As with most Lib Dem policy statements (as picked up by the BBC) this is no more than willie-waving. As Mr cable told Andrew Marr: "There is very little evidence of benefit tourism from people coming from eastern Europe. All the evidence suggests that they put far more into the economy in terms of tax than they take out in benefits."

In which case, then why is Cable making a fuss?


Wednesday, 27 November 2013

Fishy numbers from Salmond and Sturgeon


Buried in the Scottish Parliament's White Paper is the purported justification for independence, or at least the calculations that say that Scotland is a viable independent state, or to put it in Salmond's terms, marginally better off outside the UK.

Sadly as we larn all too often, when a politician gives you facts, they are probably lying, and this case is no different.

Take the offshore oil tax revenues.  remarkably, Salmond and Sturgeon claim that 94% of the current tax revenues would accrue to Scotland if the revenues were divided on a geographic basis.  Which is quite remarkable because 22% of all offshore production and 51% of all gas production (public figures) are on the English side of the border.  That implies that oil production is something like 5 times as profitable as gas production., which it isn't, so something funny is going on.

By geographic basis, the SNP mean working out which oil and gas fields would lie on either side of the border and calculating the tax that would arise based on production of each field.  Which isn't quite right, because the corporation tax and PRT arising on each field is a bit more complicated than that because both cortation tax and PRT are taxes on profits, but computed on a different basis with a different set of rules on what is allowable and when, and PRT is deductible as an expense in corporation tax calculations.  The only person who really knows the answer about how much CT is paid and where is HMRC, who say that in in 2011/12 and 2012/13 the percentage paid in England was about 17% (corporation tax is largely paid on an estimation basis so the figures for this year are already known).

Now 17% is quite a lot more than 4%, which implies that the corporation tax from offshore oil and gas attributable to Scotland is some £1.3 billion less than the SNP calculation.

Then we come to the PRT, which runs at about £2 billion a year.  According to the SNP 94% of this is attributable to Scotland, although they give no justification.  In fact PRT was abolished for all oil and gas fields that came online after 16 March, so that most current oil fields, the notable exception being Forties, are not subject to PRT, although most of the gas fields are.  I happen to know for a fact how what a large percentage of the PRT receipts come from just one field because several years ago I worked on a PRT scam that was so effective that the Oil Taxation Office took only e weeks after the oil company's semi-annual PRT return went in to come up with some legislation to shut it down - but not before we put together a second deal.  So rather than the £80 billion or so of PRT attributable to England, I would say the figure is closer to £.800 million, which puts the total overstatement of offshore revenues at £2 billion.

Then we com to the amount of corporation tax attributable to Scotland, and here we simply have to look at the distortion created by the banks.  In the SNP report dated March 2013, the amount of corporation tax attributable to Scotland was over £3 billion, which is strange because in the HMRC report of last month only £2.6 billion would occur in an independent Scotland.  Even this is likely to be an overstatement because of the number of people working south of the border in banks that are Scottish registered companies.  The HMRC analysis allocates the UK profits of groups according to where the NI is paid, but the reality is that all the London based trading activity would fall to be taxed in the UK as a business carried on by a foreign company acting through a UK branch, and while the Scots would be free to tax the same income again, in all likelihood if they took on the UK tax rules, the UK tax would be creditable against Scottish tax, so that little Scottish tax would be paid on those profits.

All in all maybe a £2.5 billion overstatement of Scottish sourced revenues, so when the Scottish government says that they contribute 9.4% of public revenue and receive 9.3% of public spending, you can see that they are overstating the case.  If the more accurate figure is that they supply more like 8.9% of public revenue and receive 9.3% of public spending, then we have a picture that more closely resembles perception.

The trends are:
over 1998-2008 manufacturing exports from Scotland fell by 17% while they rose by 72% in the UK, 176% in Germany, 100% in France and 95% in the US.
in 2010 Scotland accounted for 6.6% of UK manufacturing employment, well below its population share of 8.8%.
85% of the 212,000 growth of employment in Scotland over 1995-2008 was in Health and Social Work, Education and Administration, Defence and Social Security

The reality is that while spending per capita in the rest of the UK is £10,800 per head, in Scotland the figure is £12,100 and in future if they want the same services at the same cost, the Scots are going to have to find an extra £1,300 for themselves. Up until now, the rest of the UK has been funding them, and  for one will be happy to see them go.  It is a zero sum game.  Their loss is our gain, and we might even be able to raise the average IQ of the country as a result.

Friday, 22 November 2013

Never say you cant trust a Frenchman

.. or woman. Hats off to Doria Tillier for being as good as her word.

She can sing too. Not everybody's cup of tea but more talent than you see on British TV.

Thursday, 31 October 2013

Are you up to the job?

There seems to be a debate as to whether teachers need a special qualification to be allowed into a government funded classroom.  I have looked up the senior members of staff at my former school and discovered that three of them do have a BA(Ed) or similar, but no PCGE's or whatever. Lord Denning (Maths) taught there for a year before he went on to do other things in The Law, and probably very interesting he was too.

Still, various MPs are raving about this in the media.  Of course, state funded MPs are paid more than state funded teachers. That wasn't always the case. Why are they paid more? Because, they would say, they do a more important job.

So where is the specific qualification that allows them to do this job.

Wednesday, 30 October 2013

Windfalls and thin slices

We have quite a big garden, and in that large space we have quite a few apple trees, which at this time of the year means we have a lot of apples, and this year's harvest has been as good as last year's which bodes well for this year's production of chutney, apple crumble and more.One of those mores, which will start next week when the Aga gets fired up will be the baking of thin slices of apple, which make a very healthy snack for the winter.  Think crisps without the salt and less starch.

Thinly sliced apples seems to be a metaphor for our times, or at least for the world famous phone manufacturer from Cupertino. A few weeks ago I bought a tablet.  Not one of the Californian wonder products, but a smaller version running a different operating system from a famous UK supermarket chain, at 25% of the price of a MacBook-without-a-keyboard. And very good it is too. It may not outperform a fully blown iWhatsit, but it is a lot better than the same size iWhatsit Mini that came out last year, at half the price (or even less with loyalty vouchers). And it is not the only offering at a similar price bracket.

This year Apple hit back - with a *thinner* model.  Well I have been buying technology for decades, following trends, buying when I though I could see the way things were going, but I have never, repeat never, chosen any technology simply because it was slimmer than the competition, and even more emphatically, I wouldn't pay twice the price for half the thickness.

Which is why I see the whole of Apple going the same way.  In the latest reported figures, sales are up, but margins are down.  Increased sales are mostly of the iPhone 5C, a model designed for mass sales in the Chinese market, but net margins have fallen below 35%: still eye-wateringly high but decreasingly rapidly.  The number of fools willing to pay over the odds for so-so technology has its limits, and the Chinese appear to fall outside that category.

My forecast for Apple is that their ability to screw more money from a fairly limited product range is not going to be enough to sustain the current Market Cap.  In the long term we are all dead, but in 2014 expect the maggots to show in the Apple share price.

Wednesday, 25 September 2013

Do the math, Miliband

The combined profits of the big 6 UK energy companies last year was £3.75 billion which is supposed to be a lot, but consider the following:

The average dual fuel bill last year was £1,420, and there are 26.4 million households so that works out at £37.488 billion of domestic fuel sales.  Of course not all of those energy sales were domestic.  We still have some industry and of course a lot of those sales were to government owned institutions such as schools, hospitals, the military and  government offices, so let us guess that only half of the profits were related to domestic sales, so that is profits of £1.85 billion on sales of £37.5 billion, or profits equal to 5% of sales.

Now consider the cost of the fuel, mostly gas.  Britain has had some of the cheapest gas in Europe because of the North Sea, and in fact at the moment it has the cheapest n Europe on average, and nearly half the cost of gas in Germany, but the difference is diminishing rapidly because North Sea gas production has been declining rapidly and we have had to import much more from Norway, from the Middle East via LNG carriers and from Siberia or Algeria via very long pipelines, all of which are much more expensive options than buying the gas that lies on our doorstep.

Why is that?

Because all the other suppliers always have the choice of selling to the rest of the world at the prevailing spot price delivered less delivery costs, and UK gas will always be sold at a price of world spot price delivered to the world market less delivery costs. In other words if a quantity Russian gas delivered to Germany costs 100 delivered, and it costs 20 to ship/pump the same quantity from the UK to Germany, then UK suppliers will happily sell to the UK market for 80 + a small bit.

On the other had if it costs 10 to ship from Norway to the UK and 25 to ship from Norway to Germany, the Norwegians will happily sell to the UK at 85+.

On the other other hand the Qataris will sell to the UK and Germany at about the same price because they bring their gas in by LNG and the Russians will probably charge the UK a bit more because the cost of shipping from Russia is higher to the Uk than from Germany.

So UK gas gives us cheap gas, but it is running out and the average wholesale price paid for gas is rising rapidly as more is imported, which is why average wholesale fuel prices have been rising at more than 10%.

So that in six months the likely rise in fuel prices (6/12 of 10%+ is probably greater than 5%) will wipe out most or perhaps all of the energy companies' profits, and a further 14 months retail price freeze will have them trading at a loss or going out of business.

Well done Miliband mi.  No idea what they teach on a PPE course but it doesn't seem to be Politics or Economics.  Must be a lot of Philosophy.

Tuesday, 24 September 2013

Scottish independence resolved

So Ed Miliband thinks he can control energy prices if he comes to power in 2015.  The only thing he can control is the price of hydrocarbons from the UK Continental Shelf.

And it's clear to see which way the Scots will vote now.

If Mr iliband is standing on an election promise of fixing energy prices, will he resign when it turns out that he can't.

Friday, 20 September 2013

As I was walking down the stair I met a tax that wasn't there

So the Labour Party say they are going to abolish the "bedroom tax". There is no such thing, so it shouldn't be too hard to abolish.

Wednesday, 18 September 2013

There's no such thing as a free lunch

Liberal Democrat Conference Stunt of the Day was the announcement of "free" school meals for the first three years of school.  Now it's never too early for our youngest students to learn that there is no such thing a s a free lunch (or dinner if you are up north or in a state school).

All these lunches have to be bought by the tax payer and cooked and served by paid staff (although the marginal cost of the latter may be relatively small if they were already working), and the cost of this will fall to the tax payer, or rather be added to the deficit.

So who is going to pay for it?  Why of course the very darlings who will be chomping the "gratis" Turkey Twizzler's, only they will be paying for it over 20 years with interest. Net gainers?  The middle class mums who will see their purses about £12 fuller every week?  The net losers?  The offspring of the "mostvunnerableinsociety" who will be paying for this mallarkey through the tax on beer & fags in 2035.

Tuesday, 10 September 2013

The value of nothing

I was struck by a claim at the BBC enquiry yesterday. In a typical piece of obfuscation Mark Thompson claimed that in laying off 227 managers in three years the BBC says it has spent £25 million over 3 years but saved £35 million in wages in the same period, and had thus saved money which is a good thing.

Maybe, but that isn't the whole picture because in saving £10 million the BBC loses up to 3 years of work per person, so it only makes a real saving if you assume that the work of those 227 senior managers had a value of less than £15,000 per year per person. Which makes you wonder why they were paid so much in the first place.

Monday, 9 September 2013

False economy

I've listened to it several times, but I must confess I am baffled by the suggestion.

Mark Thompson suggests that the BBC saved money by paying departing executives more than they were contractually entitled. The only way that works is on the assumption that BBC management are such bad negotiators that if they discussed paying less than the contractual obligation they would negotiate a figure that was far higher.

Monday, 2 September 2013

Oh how we laughed at Peston this morning

The idiot socialist who reports business for the BBC as though it is a crime gave us his low down on the Vodafone disposal of  its interest in Verizon Wireless.

There would be a substantial capital (true), which would be exempt from UK capital gains tax (true), because the shares in the US company were owned by a Dutch holding company (also true) and therefore outside the scope of UK Capital Gains Tax (no disposal by a UK company) and also exempt from Dutch tax (Peston didn'y go into theis but s called a Participation Exemption), If you really want to know  the participation exemption applies where a company holds at least 5% of the nominal paid-up capital of another company and the participation is not held as a portfolio investment or the company is subject to a tax on its profits that is reasonable according to Dutch standards or the aggregated assets of the subsidiary consist for more than 50% of business assets where the profits are taxed at a reasonable tax rate according to Dutch standards.

All bog standard tax planning, but likely to incur the ire of all the tax protesters of the world, particularly those who like camping outside big city churches that are handily placed for Starbucks.

So our joy was unconfined when Pesto came back on the radio at the next business broadcast to repeat the story, only adding this time, that if the disposal had been within the scope of UK Capital Gains Tax it would have been exempt under the Substantial Shareholdings Exemption, an invention of Gordon Brown.

The curious thing about the SSE, which I never really understood, was that according to the Scottish Fool who introduced it, it was supposed to encourage investment, yet rather than giving tax breaks when investments were made, the tax breaks arose when investments were sold, and applied equally to investments tat had already been made prior to the creation of the exemption. Still I am not the leader of a political party that was desperate for contributions from friends in the private equity business, and that's a story for another day.

Friday, 30 August 2013

Revenge is mine

Over 20 years ago I worked on a deal to fund a Spanish airline, well actually let's not beat about the bush, it was Iberia, and the deal was quite complicated, but it was probably the lowest cost source of funds that the Spaniards could have found anywhere in the world (seriously sub-LIBOR), but it entailed a certain amount of risk.

The downside would be that if the deal was terminated early Iberia would have kept their annual savings to date but would have to refinance under a different structure, probably with the same funders. As it happened I closed the same deal a few months later with an American airline, OK, let's not beat about the bush, it was American Airlines, to fund two MD-11 aircraft for about $146 million, a sweet deal for them and a $2 million fee for us as I recall, but let's not dwell on that.

Back to Iberia.  After several trips to Madrid explaining the deal, faxes (those were the days) of term sheets, mark ups and negotiations between the airline and the investor, a big party of lawyers, arrangers and investors set off for a meeting in Madrid with the airline, and in particular with the fairly recently appointed CFO, Sr Enrique Dupuy De Lômé Chávarri, to finalise terms.

As we are about to start the meeting, Sr Dupuy stood up and said he had read the term sheet and he had decided that while he liked the low cost funding on offer, he wanted the investor to take all the risks. At which point the lawyers, arrangers and investors all stood up, shook hands (they were, if nothing else, polite), walked out and went home. The shortest meeting I have ever attended.

But yesterday, I received notice of an Extraordinary Shareholders Meeting of International Airlines Group (the holding company for BA and Iberia), with five items on the agenda, the fourth being the appointment of the very same Enrique Dupuy De Lômé Chávarri as an executive director of IAG.

Will he get my vote? Dream on, pal.


Wednesday, 28 August 2013

Syria: follow the money

There is lots of waffle in Westminster circles about Syria, military action/intervention, chemical weapons and a whole lot more, but what is it really all about?

The UK government and quite a few others are up in arms about supposed chemical weapons used by the Assad government and they may be right about them, but they were less up in arms when rebel forces allegedly used sarin bombs four months ago. But why would they want to get involved in a civil war in a foreign country thousands of miles away?

On the one hand we have a Russian backed Alawite-regime that is strongly allied to Iran, while on the other we have a Sunni-muslim rebel/opposition front, financially supported by Qatar and Saudi, but mostly Qatari.

Neither side is likely to be particularly friendly to the west.  Anything that keeps Russia and Iran away from the Mediterranean is probably a good thing while the rebels are filled with revolutionary elements that are abhorrent to their sponsors, so do we really want to help either side?

Well to get the answer we have to look at the interests of the sponsors, particularly the Russians and the Qataris.  The Qataris would like to build a gas pipeline to Europe, which would reduce the cost of gas in Europe and would eliminate the Russian monopoly on supply.  The Russians obviously would not like that, and thus happily support the Assad regime that is willing to keep out the Qatari pipeline.

So there you have it.  What this is really about is that both the Qataris and the Russians are quite willing to oversee the deaths of 100,000 civilians in Syria in order to maximise their respective gas revenues.

However parliament votes tomorrow, they will be focussing on the wrong targets.

Friday, 9 August 2013

The organisation whose hypocrisy knows no bounds

is the BBC of course.

The organisation that is willing to criticise the salaries and bonuses of bankers but not the pay-offs paid to its own staff (currently under investigation by the SFO according to Reuters, but not reported on the BBC ho actually claim there was no crime, and I don't remember any police investigation of bankers' pay), the organisation that is willing to criticise the phone tampering of other journalists but is curiously uncensorious about the kiddie fiddling of its own staff, which it is quite likely they had know about for years, has done it again (if you can follow the logic of such a long sentence).

The ASA has decided to investigate the banners on the back the Home Office's "go home or face arrest" vans following 60 complaints, although the ASA say that since the BBC started reporting the story they have received many calls of support.  The BBC run with the idea that even though the vans clearly say that they only apply to illegal immigrants, they are clearly threatening.

Now let us compare that with the behaviour of TV Licensing, like this:

A fairly common letter from TV Licensing, and typical of the letters they send, but one which is clearly threatening the recipient, even though the only reason for sending a letter is that the recipient doesn't have a TV license, which of course he is not obliged to have if he doesn't have a TV.  Nor is he obliged to answer the BBC's persistent mail.  But that doesn't stop the BBC sending  people an "Official Warning" that they are being "investigated".

Wednesday, 7 August 2013

Batting rule #1


Duck if you can get out of the way, hook if you really must, but never slash at a bouncer, Mr Panesar.

Where is Bongo-Bongo land?

The President of Gabon from 1967 to 1973 was Albert-Bernard Bongo.  On his conversion to Islam he changed his name to Omar Bongo, and remained president for another 30 years. He was succeeded by El Hadj Omar Bongo.

There were two acting presidents in 2009, Didjob Divungi Di Ndinge and Rose Francine Rogombé. Didjob did the job for 5 weeks and Rose blossomed for the next five months before the current president, Ali Bongo Ondimba, took office.

On that basis Bongo-Bongo land is Gabon..