Net Zero and Rishi Sunak

In Rishi Sunak’s speech yesterday he is clearly still committed to “net zero” by 2050 to tackle climate change, even though the UK cutting carbon emissions is unlikely to have any significant impact on the worldwide figures. It’s a pointless gesture which will mean we incur enormous costs which the public has not been informed about and to which they have certainly not consented.

But reality has been creeping in after people have discovered that their gas boiler plus their radiators will need replacing by inefficient electric heat pumps. Likewise new sales of oil/petrol powered vehicles were to be banned from 2030, ahead of most other countries, when electric vehicles are still more expensive, don’t hold their resale values and are inflexible in use.

Rishi’s speech is seen as a vote winner but it’s in essence a more pragmatic approach to reducing carbon emissions and relieving the burden on certain households.

It’s certainly worth reading his speech in full (link below) which was only reported in simplistic sound bites in the national media. He concludes by saying: “We are going to change the way our politics works. We are going to make different decisions. We won’t take the easy way out. There will be resistance, and we will meet it”. That surely means he is going to face down the idealists who don’t live in the real world.

But will Rishi manage to take the Conservative Party and Civil Service with him? That is the key question the answer to which we will see in due course. That’s assuming the Labour Party don’t win the next election and reverse the direction of travel.

My view is that this speech is well argued and veers well from extremes. But he will have difficulty convincing the environmental fanatics who have not been listening to reason for some time.

Rishi Sunak speech in full:

Roger Lawson (Twitter  )

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Good Articles in Latest ShareSoc Informer Newsletter

Are you fed up with reading about the antics of media personalities in the national press? I know I am. For some more intelligent and useful material, ShareSoc has just published its latest Informer Newsletter on stock market events.

It does include a couple of short articles from me which is not unusual but other interesting ones cover:

  • Can AI give me an edge by Marcus Breese. His conclusions seem to be similar to mine, i.e. probably not as AI cannot be relied upon to give the right answers.
  • A report on the “digital only” AGM of Marks & Spencer by Cliff Weight. Amusing to see my former colleague Gavin Palmer turned up physically regardless. It’s clear that digital-only meetings are unsatisfactory in several regards. Hybrid events are surely preferable.
  • Some comments on the Flint Interim Report on digitisation which is quite rightly called “a betrayal” as the recommendations therein might remove shareholder rights and defeat shareholder democracy.
  • A note on the threat to investors in SIPPs if the manager goes into administration based on events at the Hartley Pensions manager. This certainly needs pursuing.

In summary, an exceedingly useful newsletter and shows how ShareSoc is doing a great job at representing retail shareholders’ interests.

Roger Lawson (Twitter  )

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Wars in Europe – Lessons from History

One of my summer reading books was “How far from Austerlitz” by Alistair Horne. With the war in Ukraine apparently bogged down in trench warfare with both sides claiming minor victories but in summary a quite static frontline for months it is worth considering how Napoleon managed to win his battles in central Europe.

The book covers the period 1805-1815 when Napoleon and his French led armies defeated several coalitions of Polish, Prussian, Austrian and Russian armies with England financing them but otherwise taking a back seat in the land battles until Waterloo.

How did Napoleon manage to defeat his opposition when he was often outnumbered? In summary by manoeuvre rather than fighting battles of attrition. A unified and single-minded command structure helped the French but ultimately the weight of overall numbers and economic realities defeated Napoleon.

There are a number of lessons to be learned from this book which I would recommend as an easy read even at 430 pages long.

As I said back in March: “The longer the war goes on, the more difficult it will be to reach an amicable solution as attitudes harden on both sides……” (see ). The war in Ukraine is financially very damaging and has resulted in very high energy and food prices. It needs to be settled in some way and getting stuck in trench warfare which is what is happening is certainly not the solution.

Roger Lawson (Twitter  )

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Sondrel – Another Disappointing IPO, and Grant Shapps Appointment

This morning saw the share price of Sondrel (SND) collapse by over 60%. It only listed in October 2022. Revenue forecasts are shot and losses will no doubt be substantial. This is what Camtab had to say on it on Stockopedia: “I am just amazed that people wonder why the City of London is losing credibility in the world. Sondrel are a fantastic example of the duplicity, stupidity and greed inherent. Float October 22 mentioning semi conductor (oh must be good then!) lots of prospects (brilliant) loads of opportunity (great!!). Less than a year later a profits warning on this scale. I gave up investing in IPOs years ago recognising that you only list on UK markets now if its a sh&tshow. Sorry to be so down about but it is so depressing and I don’t think people do hit brokers or markets enough for devaluing one of our main income providers in this country. Still keep devaluing it on this scale and we can always fall back on our resources (oh!) well we have some fantastic multi-national businesses (didn’t we sell those to someone)…………oh, well perhaps we could bottle fresh air then”.

There are several key messages here: 1) never trust a company with a volatile financial history; 2) recurring revenue is very important; 3) the semiconductor market is particularly tricky due to rapid obsolescence; all IPOs are risky as it’s easy to spin a good story about future prospects.

This was a company lined up to fail in my view and could well now be taken private again. Why do people invest in such dogs? Because there are lots of people who are suckers for a good tale is the reason.

The other surprising news today was the promotion of Grant Shapps to Defence Secretary. Someone who had made a hash of his previous job of Transport Secretary by promoting LTNs and then backtracking when they proved so unpopular (and impractical), a supporter of the impossible Net Zero policy and managed to change jobs so rapidly that his mistakes never caught up with him. His profile on Wikipedia also makes for interesting reading.

UK politics is beyond salvation if Rishi Sunak could not find someone better to take on the job.

Roger Lawson (Twitter  )

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A Political Manifesto

A few years ago I penned some policy suggestions for a new political party. I just had a clear out of some of my old files and thought it was worth publishing as it’s still very topical.

Reference Policy Suggestions My suggestions for policies in those areas and others are below:


1.       The personal taxation system is way too complicated and needs drastically simplifying. At the lower end the tax credit system is wide open to fraud while those on low incomes are taxed when they should not be. The personal tax allowance, both the basic rates, and higher rates, need to be raised to take more people out of tax altogether.

2.       The taxation of capital gains is also now too complicated, while tax is paid on capital gains that simply arise from inflation, which are not real gains at all. They should revert to being indexed as they were some years ago. For almost anyone, calculating your own tax that is payable is now way too difficult and hence requiring the paid services of accountants using specialist software.

3.       Inheritance tax is another over-complex system that wealthy people avoid by taking expert advice while the middle class end up paying it. It certainly needs grossly simplifying, or scrapping altogether as a relatively small amount of tax is actually collected from it.

4.       The taxation of businesses is inequitable with the growth of the internet. Small businesses, particularly retailers, pay a disproportionate level of tax in business rates while their internet competitors often avoid VAT via imports. VAT is now wide open to fraud and other types of abuse such as under-declarations, partly because of the EU VAT arrangements. VAT is in principle a simple tax and the alternative of a sales tax would create anomalies but VAT does need to be reformed and simplified.

5.       All the above tax simplifications would enable HMRC to be reduced in size and wasted time in form filling by individuals and businesses reduced. Everyone would be a winner, and wasted resources and expenditure reduced.  

6.       The taxation of company dividends on shares is now an example of the same profits being taxed twice – once in Corporation Tax on the company, and then again when those profits are distributed to shareholders. This has been enormously damaging to those who receive dividends and the lack of tax credits has also undermined defined benefit pension funds. The taxation of dividends should revert to how it once was.

7.       The regulation of companies and financial institutions needs very substantial reform with much tougher laws against fraud on investors. Not only are the current laws weak but the enforcement of them by the FCA/FRC is too slow and ineffective. Although some reforms have recently been proposed, they do not go far enough. Individual directors and senior managers in companies are not held to account for gross errors or downright fraud, or when they are, they get off too lightly. We need a much more effective system like they have in the USA, and better laws.

8.       Shareholder rights as regards voting and the receipt of information have been undermined by the use of nominee accounts. This has made it difficult for individual shareholders to vote and that is one reason why investors have not been able to control the excesses in director pay recently. The system of shareholding and voting needs reform, with changes to the Companies Act to bring it into the modern electronic world.

9.       The pay of directors and senior managers in companies and other organisations has got wildly out of hand in recent years, thus generating a lot of criticism by the lower paid. This has created social divisions and led partly to the rise of extreme left socialist tendencies. This problem needs tackling.

10.     Governance of companies needs to be reformed to ensure that directors do not set their own pay, as happens at present, but that shareholders and other stakeholders do so. Likewise shareholders and other stakeholders should appoint the directors.

11.     Insolvency law needs reform to outlaw “pre-pack” administrations which have been very damaging to many small businesses. They are an abuse of insolvency law.


1.       Way too much money is spent on rail transport and trams which cannot be justified on any cost/benefit analysis. HS2 is just one extreme example of this. Meanwhile the road system does not receive enough investment – this has resulted in traffic congestion, wasted time which is damaging to the economy and lots of poorly maintained roads (e.g. potholes). Only 25% of direct tax on vehicles is spent on the roads.

2.       Public transport should generally pay for itself. In London alone there is a subsidy of £1 billion per year on buses which is totally unjustified. Many of these subsidies are given to people who could afford to pay for their travel, even when they are receiving social security benefits.

3.       Road safety has flat-lined due to an excessive focus on speed reduction and the perversion of the law by the use of police waivers to force people to take useless “education” courses. Policies have been distorted to enable the police to make money from drivers, while improving the roads, better education and other policies to reduce road casualties have been ignored.

4.       Charging of drivers via road pricing to reduce congestion should be opposed (as it does not work and is just a money-making taxation scheme). Likewise Clean Air Zones where drivers are taxed for driving some vehicles, all of which were legal when purchased, should be stopped and the whole focus of environmental legislation should be reviewed. EU regulations in this area have made illegal air pollution levels when there is no real evidence of danger from them. ULEZ and CAZ schemes are just a way to raise taxes with little real benefit on health grounds and no cost/benefit justification.

5.       Likewise the EU has mandated speed limiters (ISA – Intelligent Speed Adaptation) for all vehicles in future which will delay vehicles and not contribute to road safety, while generating millions of speeding fines on innocent drivers. There should be a commitment not to follow the EUs lead on such legislation.


1.       Education should be free for all those who can justify they will benefit from it. At present too many people go to university who will be unlikely to benefit from it and they should be redirected to lower cost vocational courses.

2.       Loans to support students taking courses should be interest free.

3.       There needs to be a much stronger focus on technology education in the UK as only people with such education will contribute positively to the economy.

4.       There needs to be more emphasis on the use of technology in teaching to improve the productivity of that profession which has basically not changed in hundreds of years. The use of on-line resources can assist and would enable teachers to be more productive and hence be paid more.

Environmental, Climate Change, Population and Housing

1.       There should be more attention paid to the real science of environmental impact rather than the hysteria of left-wing campaign groups.

2.       Mrs May’s commitment to a zero-carbon economy, which is financially unaffordable, should be scrapped because there is no practical way to achieve it and it is based on very dubious scientific analyses.

3.       The population of the UK needs to be controlled, if not reduced, to improve living conditions and ensure a healthy economy. This can be achieved by tougher limits on immigration (along with better enforcement of existing rules), and encouraging the population to procreate less.

4.       Housing costs, and the inability to find suitable accommodation, are major problems for the young. Controlling/reducing population would help but other measures need also be considered including the financing of more social/rented housing.

Local Councils and London

1.       The funding of local authorities, and some of their important functions such as providing social care, needs to be reformed. At present they are too dependent on central Government funding which means obligations are often put on them without the funds to cover the cost.

2.       There are wide variations between the efficiencies of different local councils with many being wasteful. They should have guidelines and limits on how they spend their money, laid down by central Government, to avoid waste.

3.       London is a particular problem where it has become dominated by populist Mayors (both Labour and Conservative) and where elections are driven by national politics rather than local issues. The most recent Mayor, Sadiq Khan, has been pursuing a “gerrymandering” policy of increasing immigration to gain more people that are likely to vote for him, thus making London even less acceptable as a place to live than it has been for years. Crime, transport and housing are all in a major crisis. I suggest the position of the Mayor, and the Greater London Authority be scrapped as Mrs Thatcher did with the GLC when Ken Livingstone became so damaging. In other words it should revert to central Government control, with the local boroughs having more control over their own affairs. That would no doubt be popular with London borough councillors.

4.       Transport for London should be taken out of the control of the Mayor be made an independent body with an objective of making it a profit centre rather than a consumer of enormous subsidies. They should also lose control of the road network (the TLRN) where they currently have a perverse incentive to make the road network unfit for purpose so that more people use public transport from which they gain income.

I hope you find the above useful.

Yours Roger W. Lawson, M.B.A., M.B.C.S. ++++++++++++++++++++++++++++++++++++++

Roger Lawson (Twitter:  )

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Babylon Healthcare and WeWork Collapsing

A report in the Daily Telegraph has suggested that Babylon Health is close to collapse. Babylon have developed an innovative software product for diagnosis in a GP environment and has been used by the NHS. The company listed in the USA in 2021 and was one of the UK tech hopefuls for which a bright future was foreseen. It was even backed by the Government as it might relieve pressure on GP services. But the party is over it seems. I am not clear why it is failing – lack of cost control may be the problem.

I have been using the NHS a lot of late due to declining kidney function (25-year-old transplant is failing) and had a fistula added in readiness for dialysis last week. Am apparently not fit enough for another transplant at present. I am receiving lots of advice about improving mobility and health from an “elderly person’s review” at Guys Hospital and from local social services (albeit 3 months too late). My short-term memory is clearly declining not helped by the drugs I am taking but I can cope with that. If we meet don’t be surprised if I can’t remember your name!

Another past shooting star that has fallen back to earth is WeWork which I commented on in previous blog posts – see The FT has reported that “substantial doubt exists about the Company’s ability to continue as a going concern”. This is a property company in essence, renting out short-term office space with a dubious business model particularly when New York and other major cities are now awash with empty office space.

Bearing in mind I am averaging two hospital appointments per week at present, you may find my blog posts become less frequent. Just had another call to arrange a heart scan.

The NHS, particularly Guys Hospital, are generally efficient and do not deserve all the criticism they get although they could certainly use more technology.

Can’t say the same about other hospitals or GP services.

Roger Lawson (Twitter:  )


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Reflections on the NHS, and Managing its Resources

Many people are celebrating the 75th anniversary of the founding of the National Health Service (NHS). As someone who has relied on it to keep me alive for the last 75 years, I am not however applauding it.

The NHS was certainly an improvement on health care provision in the UK before 1948 which I recall my parents talking about, but it does not compare well against the systems in most countries now. This was made very clear in a recently published report by the Kings Fund – see

To quote from it: “The UK has less medical equipment and fewer beds. Spending on health care increased substantially in the UK during the Covid-19 pandemic. But despite this, spending per person remains lower than the average [of comparable countries]. This impacts on the patient experience. For example, although there is no objectively ‘ideal’ number of scanners, the UK has fewer CT and MRI scanners than any of the comparator countries, which could be a reason – alongside shortages of imaging staff – for why diagnostic waits in the UK are so high.

The UK also has fewer hospital beds; 2.5 beds per 1,000 people, compared to an average of 3.2 beds per 1,000 in our basket. Again, fewer beds are not necessarily bad – this could reflect shorter hospital stays – but the high occupancy rates of beds in the UK (88 per cent in 2022/23, above recommended levels, and third highest in our basket) implies there is a shortage”.

There are clearly shortages of staff and long waits for non-urgent treatment which is driving people to pay privately for treatment. The Government has recently announced a new “long-term” plan for NHS staffing – see which includes this statement: “For the first time the Plan sets out long term workforce projections. Staffing shortfalls have been an issue since the foundation of the NHS and vacancies now stand at 112,000. The growing and ageing population, coupled with new treatments and therapies, means that without action, the gap could grow up to 360,000 by 2037”. Is it not astonishing that there has been no long-term plan before to match recruitment and training of staff to match likely demand?

As someone who has been a big user of the NHS over the last 75 years I have seen the problems in person. I have had a long history of kidney disease and other problems and a visit this week seems to suggest that the NHS is managing demand in a new way.

I have been on kidney dialysis before and had a transplant 25 years ago. But I either need another transplant or need to go on dialysis again. A meeting with a consultant last week was somewhat disconcerting. He explained how tedious dialysis can be, which I already knew. Without spelling it out, he seemed to be suggesting that at the age of 77, did I really want to stay alive much longer?

Is this another way to manage demand on the NHS? Persuade patients to give up hope? Dialysis is an expensive process for the NHS – more expensive than a kidney transplant but I am allegedly not fit enough for that. I am not keen to give up living just yet but the NHS appears to be managing its resources in a new way.

There is one thing for certain. The NHS is very bad at planning and managing its capacity. Last year I spent two weeks in Farnborough hospital which was an absolute waste of my time and hospital resources when I could have been treated as an out-patient while the ward conditions in a heatwave were very uncomfortable. This is simply not good enough in the modern world.

The NHS needs much more substantial reform to make it fit for the future. More money alone is not the solution. It needs major management reforms.

Roger Lawson (Twitter:  )

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Should Pension Funds Invest More In Equities?

This article was prompted by an item in Investors Chronicle entitled “Should pension funds be used to prop up UK markets? I think the simple answer is NO. But apparently City Minister Andrew Griffith said at a conference that “the Chancellor is spending a lot of time looking at how we can better unlock the billions of pounds held in UK pension schemes”.

Certainly one major concern is that the share of the stock market now owned by pension funds and insurance companies has fallen in the last 25 years from 53% to 6%.

Before the last war, pension funds invested almost exclusively in fixed income bonds and shares. But in the 1950s and 60s this situation was reversed as high inflation made fixed income securities less attractive. George Henry Ross Goobey, pension manager of the Imperial Tobacco pension fund, was one of the leaders of this revolution.  In 1955, Ross Goobey persuaded the trustees of Imperial Tobacco’s defined-benefit pension fund, one of the largest pension funds in the U.K., to adopt an idiosyncratic investment policy investing exclusively in equities. Due to the subsequently stellar performance of the pension fund, Ross Goobey acquired a reputation as “one of the most successful professional investors of all time” and, through his public advocacy of equity investment by pension funds, as the “father of the cult of equity – see Reference 1.

But company directors and pension fund trustees have become much more risk averse in the face of tougher regulations and such scandals as the collapse of the BHS pension fund where company directors tried to get rid of their pension liabilities.

We have now swung to the other extreme where pension fund managers are looking to have guarantees that they can match their future pension liabilities with no risk. That typically means buying gilts. But this has meant that investment firms have adopted leveraged Liability Driven Investment schemes (LDIs) which aim to produce higher returns than gilts. This came to a sticky end when interest rates rose sharply and pension funds had to dispose of holdings to match their collateral liabilities.

There is no way you can avoid risk if you wish to get a decent return. Investing in equities is more likely to give a good long-term return that is better than fixed interest, particularly in periods of high inflation which is where we are now.

The cult of the equity may have gone too far in the 1970s but the reversal is just as disconcerting and has led to the lack of investment in UK companies that we now have.

How do you fix the problem of lack of investment? Obviously you could do it by juggling the tax system to provide more returns on risk investments like equities. But the Government needs to look at why pension fund trustees and managers have become more risk averse which has resulted in lower returns. Excessive regulation is certainly one issue to look at.

More direct intervention in what pension funds can invest in is surely a mistake. Bureaucrats always fail to pick the commercial winners and forcing more investment in equities will undermine the market equilibrium.

Ref. 1 Cult of Equity

Roger Lawson (Twitter:  )

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It’s Definitely the Silly Season

It’s that time in Summer when the sun has come out and media staff take their holidays. The stock market is just bouncing around with no clear direction of travel although large tech stocks are going up while small cap stocks remain in the doldrums.

Politics are just getting to be ridiculous while media stories have nothing better to talk about than what will Boris Johnson do next? Write for the Daily Mail is one new job apparently.

The hot weather encourages quick decisions but I think Boris would do best to ponder his future at some length. One commentator suggested Boris was trying to emulate Winston Churchill by becoming a famous writer until called back into politics when the country needed him but being in the wilderness for a while may be a good sabbatical for Boris I suggest.

As an example of how impulsive the current market is yesterday GB Group (GBG), in which I have a holding, fell about 10% but rose by 7% this morning. The fall was due to a large write down of goodwill apparently as a result of over-paying for a recent acquisition. This will be a non-cash charge in the accounts of course but it does not inspire confidence in the management while there are the usual several explanations for the poor results. Is this a temporary blip which is bound to happen when a company chooses to make a big acquisition for strategic reasons? Or is it a management failing?

Is this company faced with slower growth in what must be becoming a crowded sector for identity verification? Revenue still grew last year by 8.6% but free cash flow was down. I am beginning not to like the financial profile of this company and the share price chart over the last 5 years looks horrible but I will give them time to fix things. In the meantime, I suspect this is a sector where consolidation may soon be taking place.

Instead of spending money on holidays or putting it into the stock market I have bought a second-hand car and some other “mobility” aids. I got a surprisingly good trade-in value for my ten-year old Jaguar XF so I bought a newish Jaguar XE. Should last me as long as my life expectancy according to an optimistic doctor I saw recently.

But the vehicle is so complex you need to read a 130-page manual to figure out all the controls. As a former IT professional, I am not in the habit of reading the manual first for any new product but just like to dive in.

Roger Lawson (Twitter:  )

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Inflation Not Under Control

Back in March I said: “As I suggested in my comments on the budget, the probability of inflation falling to 2.9% by the end of the year is a grossly optimistic forecast”. And so it has turned out to be. Instead of inflation falling below its 2 per cent target within a year, which the Bank of England had forecast, the Bank now thinks it will only hit the goal in 2025. So Bank Rate has been raised again to 4.5%.

It really brings into question the competence of Andrew Bailey and Bank of England forecasters when an amateur financial commentator like me can be more accurate.

Inflation is always very sticky. When people see prices rising they adjust the prices they expect to pay and the wages they demand. And companies pay little attention to the exhortations of politicians.

Roger Lawson (Twitter:  )

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