London Plan Published

I mainly comment on financial matters, but if you live or work in London you should pay attention to the “London Plan” that Mayor Sadiq Khan has recently published. Indeed if you live in other large conurbations you might wish to review it also because the policies he is promoting might spread elsewhere.

What’s the London Plan? It’s a document that sets the “spatial development” strategy for London over the next few years and has legal implications for planning developments, housing construction, transport infrastructure, and many other aspects of our lives.

The Mayor makes it plain that London needs to cope with the rapidly expanding population and business activity. The population of London might reach 10.5 million by 2041 he says (currently 8.8 million). That means a lot more houses have to be built (66,000 per annum he says) and support for more workplaces.

In addition it has major implications for transport infrastructure while at the same time he wants to clean up London’s air. He wants to make London a “zero carbon” city by 2050, although no doubt he will be long gone by then. As part of this he aims to reduce “car dependency” (an emotive and inaccurate phrase disparaging people who have made a rational or personal choice about how they travel when you don’t see this said about those who rely on cycles for their daily travel needs).

Why has the population of London grown so rapidly in recent years and continues to do so? Page 12 of the Plan explains why. It says 40 per cent of Londoners were born outside the UK, and the city is now home to 1 million EU citizens, no doubt attracted by the vibrant London economy. This has put a major strain on housing, transport, social services and other infrastructure (incidentally an unbelievable 1.2 million Londoners are apparently “disabled”).

This state of affairs has come about because of national policies on immigration with no effective policies to distribute that more widely across the country compounded no doubt by a desire by some politicians to improve their chances of being elected.

Specifically looking at transport, the Mayor’s target is for 80% of all journeys to be made by walking, cycling and public transport (that of course includes the 14% of Londoners who are disabled!). It’s currently 64%. This is going to mean an aggressive set of policies to reduce car use – hence the campaign against the Mayor’s Transport Strategy which supports the London Plan run by the Alliance of British Drivers – see http://www.freedomfordrivers.org/against-mts.htm

The Mayor highlights the health inequalities in London, with deprived areas of London having reduced life expectancies (as much as 15 years for men and 19 years for women) surely an astonishing statistic. What is the reason for this? Poor housing conditions are certainly one, but lack of daily activity is allegedly another so the Mayor wants us all to be walking and cycling.

The Mayor does have plans to improve public transport including proposals for Crossrail 2 and extension of the Bakerloo line but these proposals will do relatively little to soak up the increased demand, and with no proposals of significance to improve the road network, hence no doubt the need to encourage us all to walk or cycle.

The Mayor’s plans to support the need for more housing include targets for every London borough (for example over 2,000 new homes every year in Barnet, Brent, Ealing, Greenwich, Hounslow, Newham, Southwark, and Tower Hamlets). This includes high concentration developments in locations with good public transport access levels (PTALs), particularly inner London boroughs. Outer London boroughs might see a relaxation of planning regulations to allow more “in-fill” developments including building on back gardens as the Conservatives promptly complained about. There will be more encouragement for smaller builders, more efficient building techniques and “proactive” intervention in London’s land market (more “compulsory purchase” perhaps).

One aspect of transport infrastructure that the London Plan covers is that of parking provision for new housing, office or shop developments. It wants most developments to be “car free” (i.e. no parking provision), particularly those with high PTAL levels. The details of what this means in practice are not clear, but it looks like the intention is to reduce parking provision substantially, thus resulting in more on-street parking and obstruction.

The Mayor concludes his near 500-page tome on the subject of the “Funding Gap”. By this he means the gap between the public sector funding required to support London’s growth (and his plans) and the money currently committed. In other words, he wants more money, including a bigger share of taxation collected from Londoners. For example, he repeats his call for control of Vehicle Excise Duty (VED) which any right-thinking person should surely oppose. Yes the Mayor wants more money and more power. Unfortunately the establishment of directly elected Mayors such as Mr Khan has resulted in empire building of the worst kind. They are effectively dictators within their realms with no effective democratic constraints on their policies and negligible public accountability.

In summary, it is not clear that the building of lots of new homes (which of course will emit more pollutants, particularly during constructions, more than offsetting any reduction from restraining car use), of a fairly low standard in dense conurbations, is going to improve the quality of life for Londoners. It is undoubtedly the case that more new homes are needed in London but building new homes without complementary improvements to the transport infrastructure, which has consistently lagged behind the growth in London’s population, does not make much sense.

As is already seen in the statistics, older London residents are moving out and being replaced by immigrants. Some readers might wish to consider doing the same given the outlook for the quality of life in London. Simply reacting to the population growth in London without trying to constrain it, or divert it elsewhere, is surely a mistake.

You can submit your comments on the London Plan to the public consultation by going here: https://www.london.gov.uk/what-we-do/planning/london-plan/new-london-plan/comment-draft-london-plan . Please be sure to do so. 

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

Industrial Strategy – Is It More Than a PR Document?

Yesterday the Government published their “Industrial Strategy” – subtitled “Building a Britain fit for the future”. This is a “White Paper” that lays out how the Government plans to tackle the issues identified in a previous “Green Paper”. Does it have any relevance to investors views of the prospects for UK companies and the economy as a whole? I will try to answer that question later.

It certainly reads positively with glowing comments on the history of innovation in the UK, the great business environment, record levels of employment, vibrant culture, best universities in the world…….I could go on but you can read the whole 255 page document if you want more of the same.

But there are four “grand challenges” it focuses upon as key themes in improving our competitiveness and productivity:

  • Artificial intelligence and big data.
  • Clean growth.
  • The future of mobility.
  • Meeting the needs of an ageing population.

These will be supported by investment via an “Industrial Strategy Challenge Fund” (Government funding but matched by commercial investment), plus increasing R&D tax credits and putting more money into R&D investment. Education in STEM subjects (Science, Technology, Engineering and Mathematics) will be enhanced with the establishment of a technical education system and a National Retraining Scheme. This is surely all sound (speaking as an engineer by education) because it is surely clear that poor productivity in the UK is the result of poor education and skills compounded by cultural biases against technology.

There is a big emphasis on improving productivity in this document which is definitely to be applauded. We cannot grow the economy by simply opening more cafés and gastro pubs.

As regards infrastructure there is money to support 5G and fibre optic networks, and support for electric vehicles. In addition the Government expects self-driving cars to be on our roads by 2021 – that’s only four years away. I am sceptical of what might happen when my top of the range SATNAV (not that inbuilt in the car which is hopeless) managed to get me lost in London only yesterday. As John Thornhill said in an interesting article in the FT today that “technology promises to free us from the human touch that caused millions of deaths [on the roads worldwide], but then quoted one tech executive as saying “the assumption that you can go from 1m road deaths to zero is very naive”.

There is also a commitment to “transform construction techniques” where old fashioned methods of house building, which are hopelessly labour intensive, remain in use. In another sector they will improve teaching of computer science and invest £20m in a new “Institute of Coding”, presumably to teach computer programming. I have to advise them as a former programmer that coding is an inefficient way of developing applications and teaching folks how to do it rather than implement systems in other ways is a retrograde step. This is surely a case of the Government fighting the new economic wars with old tactics.

Likewise a commitment to invest in AI, when it’s been around for many years but has yet to revolutionise the world, could be seen as unreal when it is unclear how that will have a big impact. AI is a myriad of technologies that might have impacts in many cumulative minor ways, but it’s the detail that matters.

In many ways this document is big on vision, but short on specifics (other than the few things I have mentioned above). It will take consistent follow through to make a concrete success of these policies – not something our existing political system is best designed to achieve.

So my conclusion is that it is a valiant attempt to guide the UK economy in the right future direction. Whether it will have a major impact or success remains to be seen. It may have little impact on the decisions by UK companies, who are always wary of Government hand-outs or policy changes.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

Budget Feedback, the Patient Capital Review and Productivity

My last post was on the Chancellors Budget which was written quickly but seems to have covered most of the important points. Perhaps one significant item missed was the additional liability of foreign investors for capital gains tax on property sales, although institutional investors may be exempt. This might have some impact but as the details are not yet clear, it remains to be seen what.

Otherwise the media feedback on the budget was generally positive although there was a big emphasis on the poor economic forecast for growth that the Chancellor announced. The OBR has substantially reduced growth forecasts which is one reason why debt will not be falling as quickly as previously indicated and future tax revenues will likewise be lower. Part of the problem is a failure to improve productivity. This also means that average wages in real terms may not grow as expected.

Why did I not comment on this? Because firstly economic forecasts (the OBR or anyone else’s) are notoriously unreliable, and secondly it makes little difference to most UK investors. It might suggest it would be wiser to invest more in overseas companies than UK ones, but in reality many UK companies have major revenues and profits from abroad. In any case, a lot of investors have already hedged their portfolios against the possible damage of a “hard Brexit” by adjusting their portfolios somewhat.

My experience is that investing based on country economic forecasts is very questionable. Good companies do well irrespective of the state of the general economy.

Patient Capital Review

On Budget day the Government (HM Treasury) also published their consultation response to the “Patient Capital Review” – or “Financing Growth in Innovative Firms” as it is officially called. You can find it on the internet. This review was aimed to review incentives to invest in early stage companies with a view to promoting more investment in such companies as part of the attempt to improve productivity in the UK economy. It potentially had significant impacts for investors – for example on the EIS and VCT tax reliefs. What follows is an attempt to bring out the key points:

The review considered not just the tax incentives, and whether they were effective, but whether more direct investment (supported directly or indirectly by the Government) should be undertaken. They got more than 200 written responses to the original consultation on this subject (see mine here: http://www.roliscon.com/Roliscon-Response-to-Financing-Growth-in-Innovative-Firms.pdf ), plus some on-line responses and they also used a panel of industry experts.

Although they have not published all the responses or broken them down in detail, one gets the impression that most respondents considered that the VCT/EIS regime was generally effective in stimulating investment in early stage companies and that there were few abuses. But the Treasury had expressed concern about some of the investments made in EIS/VCT companies which were often focussed more on “asset preservation” than in funding new growing businesses. So the rules are being tightened in that regard – see below.

A personal note: having invested in two EIS schemes that promoted country pubs the asset preservation capability might have made for a good sales pitch by the promoters but they subsequently turned out to be very poor investments even after the generous EIS tax reliefs. One is being wound up with the assets being sold for much less than purchased while the other one only made any money after it turned into a bailiff business subsequent to a shareholder revolt. The Government’s policy of ensuring a focus on “riskier” investments might actually be good for the investors as well as the economy! It will avoid inexperienced investors getting sucked into dubious investments by sharp promoters who can make even lemons sound attractive because of the generous tax reliefs.

On the support for new investment front, the Government is taking these steps:

  • Establishing a new £2.5 billion Investment Fund incubated in the British Business Bank with the intention to float or sell once it has established a sufficient track record. By co-investing with the private sector, a total of £7.5 billion of investment will be supported.
  • Significantly expanding the support that innovative knowledge-intensive companies can receive through the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) while introducing a test to reduce the scope for and redirect low-risk investment, together unlocking over £7 billion of new investment in high-growth firms through EIS and VCTs.
  • Investing in a series of private sector fund of funds of scale. The British Business Bank will seed the first wave of investment with up to £500m, unlocking double its investment in private capital. Up to three waves will be launched, attracting a total of up to a total of £4 billion of investment.
  • Backing first-time and emerging fund managers through the British Business Bank’s established Enterprise Capital Fund programme, supporting at least £1.5 billion of new investment.
  • Backing overseas investment in UK venture capital through the Department for International Trade, expected to drive £1 billion of investment.
  • Launching a National Security Strategic Investment Fund of up to £85m to invest in advanced technologies that contribute to our national security mission.

In addition the Pensions Regulator will clarify guidance on inclusion of venture capital, infrastructure and other illiquid assets in portfolios and HM Treasury will encourage defined contribution pension savers to invest in such assets.

Entrepreneur’s Relief rules will be changed to reduce the disincentive to accept more outside investment, and the Government will also look at a guarantee programme modelled on the US “Small Business Investment Company”.

They will also work with the Intellectual Property Office on overcoming the barriers to high growth in the creative and digital sector. What this implies is not clear. Does that mean they are suggesting introducing software patents perhaps?

Several gaps in the investment market for early stage or follow-on funding were identified but one telling comment from the expert panel was this: “…the UK venture capital market has historically delivered poor returns; this results in less capital being attracted to the asset class, which in turn results in less talent being attracted to the patient capital sector; this then depresses returns, completing the circle”. But they did suggest this could be fixed.

There apparently were many comments on the importance of the EIS/SEIS schemes for funding innovative businesses – for example: “EIS and SEIS incentives have been particularly effective at stimulating investment and are extremely valuable to bioscience investors”. But I suspect that has been of more benefit to companies raising capital than it has been in terms of achieving long-term positive returns for investors. It is a pity not more evidence was provided on that.

The Treasury response is to double the annual investment limit to £2 million for EIS investors, so long as any amount over £1 million is invested in knowledge-intensive companies. Also the annual investment limit for knowledge-intensive firms will be doubled from £5 million to £10 million for EIS and VCT companies, and a new fund structure for such firms will be consulted upon. There will also be more flexibility on how the “age limit” is applied for companies applying. Question: what is a knowledge-intensive company? The answer is not given in the Treasury’s response.

A “principles-based” test will be introduced for all tax-advantaged venture capital schemes. This will ensure that the schemes are focussed “towards investment in companies seeking investment for long-term growth and development”. Tax motivated investments where the tax relief provides most of the returns to investors will be ruled out in future. There must be “a risk to capital” for firms to qualify. Detailed guidance will be published on this and there are some examples given in the response document, although it is far from clear from those what the rules might be. Comment: as this is going to be “principle-based” rather than based on specific rules it looks like a case of the Treasury saying “we can’t say what is objectionable now but we will know when we see it”. This might create a lot of uncertainty among VCT and EIS fund managers and company advisors.

The rules for VCT investments will also be tightened up with the following changes:

  • from 6 April 2018 certain historic rules that provide more favourable conditions for some VCTs (“grandfathered” provisions) will be removed
  • from 6 April 2018, VCTs will be required to invest at least 30% of funds raised in qualifying holdings within 12 months after the end of the accounting period
  • from Royal Assent of the Finance Bill, a new-anti abuse rule will be introduced to prevent loans being used to preserve and return equity capital to investors. Loans will be have to be unsecured and will be assessed on a principled basis. Safe harbour rules will provide certainty to VCTs using debt investments that return no more than 10% on average over a five year period
  • with effect on or after 6 April 2019 the percentage of funds VCTs must hold in qualifying holdings will increase to 80% from 70%
  • with effect on or after 6 April 2019 the period VCTs have to reinvest gains will be doubled from 6 months to 12 months

Comment: these changes would not seem to cause great difficulties for VCT managers and should not affect the returns to investors. Some of the changes might be helpful. The feedback from VCT managers is awaited.

But the income and capital gains tax reliefs for investors are basically unchanged, as is Business Property Relief on “unlisted” companies such as AIM stocks which were both mooted as being under consideration. As I wrote in my previous blog post on the budget, at least the Chancellor and the Treasury seem to have minimised the changes which is always helpful for investors. Being unable to plan many years ahead because of taxation rules and levels continually changing has been a major problem for investors. So on that score alone, the budget is to be welcomed.

As regards Entrepreneurs’ Relief, the government is concerned that the qualifying rules of Entrepreneurs’ Relief should encourage long-term business growth. The rules will therefore be changed to ensure that entrepreneurs are not discouraged from seeking external investment through the dilution of their shareholding. This will take the form of allowing individuals to elect to be treated as disposing of and reacquiring their shares at the then market-value. The government will consult on the technical detail. Comment: this seems to be yet another complication to taxation rules which is unfortunate.

Productivity

These changes to the tax incentivised schemes, and the Government investment in funds, may assist to improve the productivity of the UK population by focussing on high growth technology businesses. One cannot improve productivity by employing more coffee bar baristas, and such jobs are always likely to remain low paid. The budget change to increase the National Living Wage (the Minimum Wage) from next April will also promote improvement in productivity as it will make employers consider investment in automation rather than simply employing more staff.

There is also investment in infrastructure committed to in the budget, which might assist. Is it not the case that productivity is reduced because of the distances and time wasted in commuting in the South-East of England? The transport network (road or rail) is truly abysmal in the UK and has been getting worse. This means that folks are tired before they even get into work. The encouragement of commuting by cycle also surely results in tired and unproductive staff. It might be fashionable, and good for their health in the long term, but is it good for the economy? Unfortunately the housing market has been made more inflexible in recent years in some respects so people cannot move nearer to their workplace. Stamp duty increases have deterred moving to reduce travel costs, and higher house prices in some areas have not helped. For example, this writer recently met someone who lives in Southampton when his employer was based in Oxford – he could not afford to move. The reduction in stamp duty for first-time buyers in the Budget is not going to make a big difference to these problems.

So overall the Budget changes are more “nudges” in the right direction to improve the economy, while not being revolutionary. The Government’s tax base is not undermined and investors tax planning not significantly affected, so Philip Hammond may find he is in the job longer than expected after all.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

A Quick Guide to New Issues, SMRs, Car Market and Brexit

In today’s Financial Times (11/11/2017) Neil Collins gave a quick guide to new issues which is worth repeating. This is what he said: “Do not buy into an initial public offering if most of the capital raised is going out of the business, or if it replaces existing debt (because the capital has already left). Do not buy if private equity is selling. Do not believe any forward-looking statements, because if the prospects really were that good, the vendors would wait and get a higher price. Do not buy any share that has been listed for less than a year. You will miss some bargains but you will avoid many more disappointments. Leave it to the professionals to lose other people’s money.”

Those are wise words indeed. He also made some ascerbic comments on small nuclear power stations which he says have been rebranded as “small modular reactors” (SMRs) to make them less scary. Rolls-Royce, who have produced such reactors for submarines, have touted them as a potential future business growth area for several years, but the FT’s in-depth review of the subject last week suggested that they are not likely to be put into production any time soon. Meanwhile the share price of Rolls-Royce is still below where it was in 2014.

Neil Collins also commented on the car market. You probably don’t need to be told that new car sales have slumped. The share prices of car dealers are cheap as chips and even my shares in Auto Trader are down substantially this year. Indeed one could apply Neil’s comments about IPOs to the company although it has taken a couple of years to reveal that the debt when listed is handicapping the company now. The car market is inherently cyclical which is one reason why car dealers are normally not valued highly, and they also show low barriers to entry with the car manufacturers controlling the market to a large extent and limiting the profits that dealers make. But Auto Trader is similar to Rightmove in the property market. High margins, dominant market position and a business with great network effects with the result that competitors find it difficult to muscle in on their market. I think I’ll stick with it for a while yet.

I am not convinced that we have reached “peak car” as some have suggested. There seem to be more cars on the road than ever although traffic volumes have slowed in London where most such commentators live. But that is as much about political policies that have limited road space and caused congestion, mostly irrational, than car buyers desires. Another good analysis in the FT recently was about how “green” various car types actually are. On total life emissions, some smaller petrol/diesel vehicles can beat “all-electric” cars. How is that? Because the manufacture and decommissioning of electric vehicles generate large emissions, and producing the electricity for them often does also.

With all these plugs I just gave for the FT, it is unfortunate that it coninues to publish such tosh about Brexit. Most of their writers predict the financial outcome will be calamitous. Whether that will be the outcome or not, I don’t have the space to provide a full analysis here, but most people who voted for Brexit did not consider the financial issue as conclusive. Consider an American colonialist in the year 1775, before their declaration of independance. No doubt with an economy very reliant on trade with Great Britain many people would have counselled against leaving the protection of their parent country. Did that deter them? No because they valued freedom more highly. They wanted control over their own affairs including that over taxes, and not to be ruled by a remote and undemocratic regime where they had minimal representation. That is the analogy that all the remainers should think about.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

 

Back to the Jeremy Corbyn Future

With the latest revelations from the Labour Party conference, we now know what their policies are likely to be if elected. These include

  • Nationalisation of the railways and utilities (including National Grid).
  • Scrapping all Private Finance Initiative (PFI) deals by buying out the owners with Government debt.
  • Rent controls in the private housing sector.
  • Reform of leaseholds.
  • Workers in the gig economy will get full employment rights.
  • The NHS will get more money.
  • Student loan debts will be written off (at least it’s an “ambition”).

Now some of these policies are not totally daft (the last four for example), even if the cost is probably unaffordable at tens of billions of pounds. But for those of my readers who do not remember the times when we had rent controls, and nationalised industries back in the 1960s and 70s, let me remind you.

Rent controls meant that rents stayed low, but private rented housing pretty well disappeared as a result over the years from 1950 to 1960. Nobody would invest in rented housing when they could get better returns on other investments. Or it promoted the spread of Rachmanism where landlords would allow properties to run down and then use aggressive tactics to remove sitting tenants. In other words, a great example of the usual “unintended consequences” of economically illiterate policies.

The control of industries by politicians and civil servants created hopelessly inefficient industries like the nationalised railways, the car industry and the coal industry which should have been shrunk in size well before Mrs Thatcher took steps to do so.

There would of course be an enormous flight of capital from the UK if these policies were implemented, and it seems the shadow chancellor is already anticipating a run on the pound. What he could do about it other than get the IMF to bail us out is not clear. To remind my younger readers, this is exactly what happened back in 1976 under Prime Minister James Callaghan when the IMF enforced massive cuts in the UK’s budget deficit as a condition of a large loan (the UK had been living beyond its means for some years, and building up large debts, very much like recent years under another socialist government who invented PFI deals to enable them to borrow money without putting it on the Government balance sheet – but the interest payable has now caught up with us). Would a new socialist Government simply default on the contracts or borrow even more money to get out of the PFI deals? Either way it looks a grim financial future for UK Plc.

The last Labour Government made a big mistake when they nationalised a small UK bank called Northern Rock – we just passed the year anniversary of that event. That proved disastrous when other banks such as Bradford & Bingley, RBS, HBOS, et al, who were dependent on short term money market lending needed liquidity. Nobody was keen to lend to UK institutions so British banks and the UK economy were some of the hardest hit worldwide by the events of 2008/9.

As for renationalising the railways, they may get more subsidies from the Government now than they did when they were last nationalised, but ridership has increased, new tracks are being laid, and services improved. The problem was surely the nature of the privatisation and the fact that all railways are horribly inefficient and an inflexible means of moving goods and people around. Old technology, beloved by users who do not have to face up to paying the real cost of the service.

So the policies of Mr Corbyn and his colleagues may be exhilarating for LabourParty supporters, but no I don’t want to go back to a future set in the 1960s. Been there, done that, and no thanks.

But if the Conservatives wish to win the next election, they certainly need to look at tackling employment law to bring it up to date for the gig economy, to tackle the problem of funding education and relieve students of the enormous debts they are now incurring, to deal with the problem of insufficient housing in the South-East (and associated over-population which is the cause) which is leading to demands for rent controls, and tackle the thorny question of funding the NHS. Yes we need some new ideas, not old policies recycled Mr Corbyn.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

Interest Rates and the Gig Economy

You probably don’t need to be told that interest rates are at their lowest for several centuries, if not in recorded history. The fact that the Bank of England is making noises about possibly raising base rate could just be a way to try and rein back inflation (a higher base rate, or prospect of it, causes the pound to rise and that makes imports cheaper – and import costs have been one of the factors in inflation rising). But unemployment is also at its lowest level for 40 years which usually indicates a booming economy and the prospect of higher inflation to come.

Inflation is now at 2.9% measured by the C.P.I., or 3.9% based on R.P.I. which a lot of us like to use instead. Now to me the really astonishing item of news last week was that the large City of London Investment Trust managed to borrow £50 million at a fixed rate of 2.94% for 32 years (I do hold some of their shares). That’s must be one of the best deals ever surely, and shows how investment trusts have the advantage of being able to gear up by borrowing money – and why not when interest rates are so low?

In reality, the lender is not even getting a real positive rate of interest at current inflation rates, and is also betting that it won’t get any worse for the next 32 years. Astonishing, and just shows how the world economy is awash with cash.

Another couple of interesting items of news last week were that Deliveroo lost £129 million in 2016 according to accounts filed at Companies House, on revenue of £129 million. In other words, for every pound paid by customers, they lost a pound. It’s raised $472 million from investors to achieve this wonderful business model (source: FT).

Deliveroo use “self-employed” bike couriers to deliver restaurant meals. Another exponent of this “gig-economy” model is Uber who received the bad news last week that Transport for London were terminating their license to operate in London. More information on that in this blog post I wrote for the ABD: https://abdlondon.wordpress.com/2017/09/23/uber-kicked-out-of-london/ . In there I praised the merits of the service and suggested people sign the petition against it (which is rapidly heading for a million signatures).

But one reason that it is so low cost is because like Deliveroo, Uber loses money in a big way at present. To quote from one report on its financials, “Uber is cheap because the company is heavily subsidising each trip” where it was suggested that Uber’s losses as a percentage of revenue were 129% in the last quarter of 2016. Like Deliveroo, revenue is rising rapidly though.

Do we mind if these companies lose money hand over fist? If they are fool enough to do so in the race to dominate a new market why not let them. But the long term viability of both when there are obviously lots of competitors providing similar services does raise doubts about these businesses, even if London Mayor Sadiq Khan relents over Uber’s license.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

A Vision in a Dream, After Coleridge

The following manuscript has recently come to light, perhaps written by an acolyte of poet Samuel Taylor Coleridge.

Roger Lawson

<A Fragment>

In London did Sadiq Khan

A stately Transport Strategy decree:

Where the Thames, the sacred river, ran

Through caverns measureless to man

   Down to a sunless sea.

So twice five miles of fertile ground

With walls and tower blocks girdled round;

And there were gardens bright with sinuous rills,

Where blossomed many a conker tree;

And here were roads ancient as the Romans,

Enfolding sunny spots of greenery.

But oh! that deep romantic chasm which slanted

Down among the City streets!

A savage place! As Mammon rampaged free

As e’er beneath a waning moon was haunted

By women wailing for West End shopping!

And from this chasm, with ceaseless turmoil seething,

As if this earth in fast thick pants were breathing,

A mighty fountain momently was forced:

Amid whose swift half-intermitted burst

Huge fragments vaulted like rebounding hail,

Or chaffy grain beneath the thresher’s flail:

And mid these dancing rocks at once and ever

It flung up momently the sacred river.

Fifty miles meandering with a mazy motion

Through East End industry and London’s suburbs,

Then reached the caverns measureless to man,

And sank in tumult to a polluted North Sea;

And ’mid this tumult Sadiq heard from far

Ancestral voices prophesying air pollution doom!

   The shadow of the dome of the GLA

   Located nigh the sacred river;

   Where was heard the mingled pleas

   From politicians left and right.

It was a miracle of rare device,

An un-costed Transport Strategy at the behest of Sadiq!

    A damsel with a dulcimer

   In a vision once I saw:

   It was an East European maid

   And on her dulcimer she played,

   Singing of Mount Street Mayfair.

   Could I revive within me

   Her symphony and song,

   To such a deep delight ’twould win me,

That with music loud and long,

I would build anew that dome,

Upon a new democratic model!

With freedom to ride the roads at will,

And all should cry, Beware the wrath of Khan!

His flashing eyes, his floating hair!

Weave a circle round him thrice,

And close your eyes with holy dread

For he on honey-dew hath fed,

And drunk the milk of Paradise.

<End>

The Alliance of British Drivers’ comments on Sadiq Khan’s London Transport Strategy are present here: http://www.freedomfordrivers.org/against-mts.htm . Please register your opposition.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.