Educating the Young on Finance and Another Petition Rejected

Did you get a basic education in finance at school? Most people do not. As a result, as soon as they have any spare cash, those new to investing put their money into get rich schemes, crypto coins, gold derivatives or other high-risk ventures. Finance and how the world works needs to be taught in schools, when the young are more likely to imbibe and hold on to their lessons.

There is a worthwhile Parliamentary petition you can sign on this subject which would make it a compulsory subject for schools. See https://petition.parliament.uk/petitions/701663  

Climate Change Act

The Government has rejected another Parliamentary petition calling for repeal of the Climate Change Act. See https://petition.parliament.uk/petitions/701600 . The Government has rejected this petition with this summary comment: “There is no ‘two-sided’ debate on anthropogenic climate change. The Government’s policy to support ambitious action on climate change reflects the overwhelming scientific consensus”. Meanwhile most of the rest of the world, including the biggest emitters of CO2 continue to ignore it while the UK incurs very substantial costs in trying to meet an impossible target.

The UK population have never had the opportunity to vote on this subject. Why not?

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

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Clamping Down on Disability Benefits

An article in the FT said this: “The rising cost of support for people with long-term health conditions — set to rise to a staggering £100bn by 2029-30 in cash terms on current projections — has become a huge source of pressure on the public finances for a government fighting to meet its fiscal rules”.

The rules on disability benefits are so complex I won’t even attempt to explain them. But clearly the cost of those benefits has been rising, particularly from mental health claims. There is a strong incentive to claim benefits on health grounds rather than simply being unemployed as the rewards are higher and can last a lot longer. And mental illness is easy to fake.

The Government would like to get everyone who can work (even if only in lower paid jobs with minimal skills required) back to work. But there is currently a strong incentive to create imaginary ills. Even the BBC reported that “Some people on benefits are ‘taking the mickey’, Work and Pensions Secretary Liz Kendall has said, as the government seeks ways to curb welfare spending.

Incidentally I am one of the beneficiaries of the generous Government support for disabled people. I actually get an “Attendance Allowance” worth about £290 per month from the state because I have a minor physical disability. But I am aged 79 now so I hope the Government does not expect me to go back to work, from which I retired over 25 years ago. There is no means testing of Attendance Allowances which might be worth reviewing but I doubt such a review would substantially cut the cost.

In essence this is a difficult problem to solve. If there is something for nothing then folks will exploit it. There is a feeling that recent immigrants are often claiming benefits with no expectations of actually working or repaying the state for its generosity.

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

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UK Politics and Stock Market Review

According to a report in the FT, the development of the Jackdaw gas field is not quite as dead as I suggested in a previous blog post, which was based on a decision in the Scottish courts. The FT says:

“The government is currently drawing up new guidance for environmental impact assessments in response to the Finch decision, which will be published in the spring. The guidance is expected to set the bar higher for fossil fuel projects. The energy companies will then have to resubmit environmental impact assessments to the Offshore Petroleum Regulator for Environment and Decommissioning, a quango which answers to Miliband.

But Rachel Reeves said last week that ‘we were really clear in our [election] manifesto that we would honour all existing licences including at Rosebank and Jackdaw and we will stick by those commitments’”.

This is all very well but the companies involved are surely going to have difficulties planning future capital expenditure given the outstanding uncertainty as to whether Labour politicians such as Miliband will stick to their party’s commitments. Foreign companies and investors will surely be scared off by this duplicity and dissimulation.

The UK stock market has been trending down. Is this the post-Christmas hangover or just the trend following caused by index tracking funds? I don’t know as Paul Scott might say. He wrote a very amusing blog post recently putting the boot into an AIM company who shall remain nameless that claims to have a cure for erectile dysfunction. He simply said he had tried it and it did not work. I certainly recommend doing some shopping to try products and services before investing in a company.

Meanwhile, AIM continues to lose companies via de-listing or moves to the Main Market. The ones delisting are generally too small to be on AIM where listing and regulation costs are too high. They should rightly leave.

The ones moving to the Main LSE market (see GlobalData today) do not seem to justify the reputational problem of being on AIM compounded by the recently reduced tax benefits. The AIM market has a major problem and will continue to decline unless it is substantially changed with improved and tighter regulations. A change of name would also help.

The Reform Party is now on a roll and is leading in opinion polls. This may not last as people tend to support minority parties between general elections when their minds get more focussed on reality. But Reform is certainly proving more credible even if not everyone likes Nigel Farage. The Labour Government is even panicking to the extent of cancelling elections in some local councils on the basis that the pending local government elections will mean some votes will be wasted as boundaries are redrawn. They are also gerrymandering by proposing to reduce the voting age and allowing anyone who is UK resident to vote (i.e. not UK citizens alone). These moves are certainly very deplorable to anyone who believes in democracy.

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

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Tariff Wars and Book Review

We woke up this morning to the news that President Trump is getting tough on trade tariffs to reduce US imports. With up to 25% on imports from China, Mexico and Canada this could be seriously damaging to their economies and raise the cost of living in the USA. Although it is not clear what the impact will be on the UK or the rest of Europe we cannot expect to get off completely free.

Trump is aiming to reinvigorate US industry by ensuring it can compete with economies where labour costs are lower. That is not an unreasonable proposition but the method chosen is a very blunt instrument. It has already had an impact on worldwide stock markets (my own stock market portfolio is down 1.6% today at the time of writing and it was down also on Friday).

Some of the damage done is from the aggressive rhetoric that Trump has chosen which may fade over time as countries affected retaliate but clearly some sectors of the economy could be badly affected.

The world is now a very complex economy with industries and countries very dependent on each other. A recently published book that explains some of this is the book “Material World”.

Book Review: Material World by Ed Conway (subtitled: A Substantial Story of Our Past and Future).  

This is an educational tome which explains what the sources and uses of common products such as sand are – in that case in the semiconductor industry in the form of silicon.

It’s certainly a very good analysis of some industries but at 501 pages it is yet another book that is too long for my liking. However it helps to explain why countries are so interdependent. Although interfering in the free economies can often be worked around at pace (as happened in World War II when Germany had to invent substitutes for some products as it lost access to oil and rubber) it is economically damaging in the short-term.

Free trade is important to maintain if you want a vibrant economy.

The UK has just decided to damage its own economy by a decision in a Scottish court that permits for oil and gas exploration should take into account end-user emissions. This is judges taking decisions that should be reserved for politicians and the electorate. This could be very damaging for companies such as Shell who planned to develop the Jackdaw gas field. Let us hope that this decision is overturned but with Ed Millibrain as Secretary of State for Energy and Climate Change I am not hopeful that the UK Government will see sense.

Meanwhile China and the USA are expanding energy production (hundreds of more coal mines in China for example) while the UK simply reduces its own energy sources and becomes more reliant on foreign imports. We cannot replace electricity production by wind and solar farms alone and expanding the electricity grid is not a short-term fix.

Politicians need to read the Conway book for enlightenment.

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

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Heathrow Expansion, Lower Thames Crossing and Just Stop Oil Sentences

The Chancellor is backing the expansion of London Heathrow Airport with a third runway. This has of course been proposed in the past but plans have always been thwarted by political and legal opposition. Rachel Reeves believes it would assist her plans to grow the economy, and it should be pushed through. Even if she manages to overcome all the hurdles it could be many years before we see the new runway.

Is it necessary and a good thing? The issue to my mind has always been the increased noise and pollution from expanding this airport in a London suburb. A much better plan has always been to build a new airport to the east of London on Maplin Sands or elsewhere in Essex/Kent.  

Other alternatives are expansion of Stansted, Luton or Gatwick airports, or even better, expand regional airports. Is it really necessary to have people travelling from all over the UK to Heathrow just to catch a plane to their ultimate destination? It is not and the financial cost of expanding Heathrow is enormous – for example it requires major alterations to the M25/M4 which will add months of disruption to key roads.

I have always opposed Heathrow expansion and will continue to do so because of opposition to the noise that it causes that affects a very wide area of London. Heathrow Airport is also one to avoid in my opinion by any sensible traveller.

Lower Thames Crossing

Apparently the Chancellor is looking at a private finance deal to get the Lower Thames Crossing built. This is a tunnel near Tilbury to divert traffic from the Channel ports to avoid them using the M25 and Dartford Crossing. This is a very worthwhile project that makes a lot more sense than expanding Heathrow Airport.

Just Stop Oil Appeals

Yesterday appeals were heard in the Court of Appeal over the sentences on Just Stop Oil protestors who blocked the M25 for 4 days. That included 5 years for Roger Hallam who helped to organise the protest. Were the sentences justified? Well the cost imposed on the millions of road users who use the M25, and the general inconvenience caused do justify stiff sentences in my opinion. That is particularly so after Hallam in April 2024 was given a suspended two-year sentence for attempting to block Heathrow Airport with drones. Basically he and his supporters are persistently attempting to disrupt normal life. These are not “peaceful” protests – they aim to cause the maximum disruption they can just in the cause of bringing their views into public attention.

I hope the Appeal Court will not be sympathetic.

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

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UK Population Growth is Way Too High

The ONS has forecast that the UK population will rise by 5 million people to 73 million by 2032. This is being driven by immigration which in my opinion is way too high. The only positive aspect is that it will increase the working population which might help to cut the need to raise taxes. But it will place a heavy burden on social services, doctors, schools, etc, which are already over-stretched.

The transport network is a major problem with insufficient capacity to cope with the number of houses being built to house the increased population. I live in the London suburbs and traffic congestion has already increased substantially in the last few years and it is obviously going to get a lot worse as there are no plans to improve the road network. Don’t expect Sadiq Khan to do anything about it.

Where are the additional 5 million people going to be housed? We need another few cities the size of Birmingham so where are they going to go? England’s green and pleasant land will soon disappear.

There is also a looming problem with the capacity of the electricity network which faces increased demand from electrification to meet irrational net-zero carbon emissions.

But the current Government seems to have no clear plan to curb population growth. They may be attacking “illegal migration” but most of the inward migration is people on work visas or family relatives. There are also many “asylum” seekers who are really economic migrants.  There are no clear targets or plans for how to stop the population growth which we desperately need. I have said this before and the scenario does not change.

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

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Are Undisclosed Car Insurance Commissions Reasonable or Not?

In 2021, the Financial Conduct Authority (FCA) banned deals in which the dealer received a commission from the lender, based on the interest rate charged to the customer. This was upheld in the Court of Appeal based on the fact the commissions were not disclosed, but why should they be?

Car insurers are faced with very large, multi-million pound costs, if customers claim compensation on that basis. But Rachel Reeves, Chancellor, may intervene to protect the insurance industry.

It is surely daft that customers who bought insurance with their eyes wide open should be able to claim anything. They presumably were happy with the costs and level of cover, so the fact there were undisclosed commissions is irrelevant.

This is yet another example of the courts inventing new principles and undermining contract law. It also another example of the incompetence of the FCA.

See BBC Report here: https://www.bbc.co.uk/news/articles/cre8qr91w75o  

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

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Voting on Saba Proposals and Voting Difficulties

US investor Saba Capital is proposing revolutions at several investment trusts – replacement boards and new fund managers. They suggest the performance of the trusts has been poor and vigorous steps have not been taken to improve shareholder value.

There are seven general meetings being requisitioned and the trusts affected are Baillie Gifford’s Edinburgh Worldwide (EWI), Baillie Gifford US Growth (USA), and Keystone Positive Change (KPC), Henderson Opportunities (HOT) and European Smaller Companies (ESCT) trusts plus Herald (HR1) and CQS Natural Resources Growth & Income (CYN).

ShareSoc, the UK’s premier organisation for individual investors, has serious concerns about the governance risks posed by Saba’s proposals, which seek to replace independent boards with its own non-independent representatives in all 7 trusts, award itself the investment management mandates, combine the trusts into a larger vehicle and use that vehicle to acquire further trusts at a discount. See comments here: https://www.sharesoc.org/sharesoc-news/sharesoc-warns-of-serious-governance-issues-in-saba-capitals-proposals/

The AIC which represents investment companies also has concerns and is encouraging shareholders in the trusts to vote – see https://www.theaic.co.uk/aic/news/press-releases/six-unanswered-questions-about-saba-proposals . Information on how to vote is usefully included.

What’s my view? I am generally in favour of such revolutions where past performance is clearly an issue. For example I supported changes at Alliance Trust promoted by another activist investor. But this example is not nearly as clear cut. I don’t personally hold any of these trusts but I think the proposed changes need to be spelled out and justified more clearly.

But shareholders certainly need to vote on the proposals and the boards need to spell out what their defence is or any alternative proposals.

Baronsmead VCT Voting

But voting at General Meetings of companies is not always easy. For example, yesterday I tried to vote at the AGMs of Baronsmead Venture Trust (BVT) and Second Venture Trust (BMD). After twenty minutes of trying to follow the instructions I received in a letter, I gave up. I have sent a complaint to the registrar (The City Partnership (UK) Limited) about the way too complex log-in procedure and even after logging in it was not obvious how to vote.

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

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Trump Inauguration – What Might it Mean?

On Monday Donald Trump will be inaugurated as US President – for the second time. It was interesting watching a repeat of an episode of “Through the Keyhole” yesterday. This was a popular game programme from about 20 years ago where a panel of three people had to guess the owner of a house after a video tour of the interior.

In the episode I watched (which is available on BBC iPlayer) the guest was a young Donald Trump and the house was his villa at Mar-a-Lago in Florida. It was somewhat garish in the decorations. Let us hope that he does not revamp the White House in the same fashion.

What other impacts might he have on the economy and UK relations? Mainly positive on the US economy I would think as he believes in deregulation and may ignore concerns about global warming and greenhouse gas emissions. But he may increase tariffs against foreign imports which might damage the UK economy. But the impact on the UK stock market may not be great.

He may make it plain that the US can dictate foreign policy to the UK. We may find that out quickly if he blocks the Chagos deal and rejects Mandelson as UK ambassador. He will probably encourage a peace settlement in Ukraine which is well overdue and he did get the USA out of Afghanistan which was surely a wise move when he was last in office.

I look forward to Trump as US President as I consider it is likely to be an improvement over the senile and weak Biden.

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

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Climate and Nature Bill – More Political Lunacy

I happened to run across the Climate and Nature Bill that is currently going through Parliament. It’s a private member’s bill so may go nowhere as most don’t. but it is getting a lot of signatories in support.

The Bill aims to force the Secretary of State to achieve net zero GHG, limit global mean temperature (as if any government can do that) and reverse the “loss of nature in the UK….”. Is there any evidence of that? In essence no.

If any nature has been lost it is where the countryside has been built over to provide more housing to meet the demands of population growth and immigration, which the government persists in doing nothing about.

It also aims to establish an “expert independent body” to create a “Climate and Nature Assembly” which would appear to be an unelected body of individuals who will determine future strategy. In other words, this is yet another attempt to bypass parliament and democratic elections by establishing an unelected body of “experts” who might just happen to have a certain political leaning.

You can read more about this Bill here:

Click to access climate-and-nature-bill.pdf

I shall be writing to my M.P. to ask him to vote against this Bill and I suggest you do the same. You can do so easily via this web site:   https://www.writetothem.com/

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

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