Open Orphan, Operation Yellowhammer and a Bridge to Ireland

Last night I attended a ShareSoc company presentation seminar. One of the companies that presented was Open Orphan (ORPH) which used to be called Venn Life Sciences but changed name after a reverse takeover of Open Orphan and a change of CEO. The new focus is on orphan drugs which are those medications that are focused on rare diseases, i.e. those with relatively few patients and where historically there have been few treatments available and typically very little research. Big pharma tends not to spend money researching such drugs because the likely revenue from them is small. As a sufferer from a rare disease this presentation was of particular interest to me.

As the presentation indicated, Venn was historically loss-making and was viewed as “under-capitalised”. Market cap of ORPH is only £17 million when forecast revenue this year is £16.5 million.

Open Orphan’s new strategy is to concentrate on launching additional services focused on orphan drugs and develop a proprietary data platform. That includes building a database of patient and genomic data. They are also developing a “virtual sales rep” service to enable lower cost sales to specialists in orphan diseases. This seems to be a telemarking operation supported by webinars. I was surprised to learn that drug sales in big pharma are still promoted by personal visits from highly-paid sales staff when in other fields a more “hybrid” approach is long established.

There is clearly a lot of work going into digital health platforms and databases – Renalytix which I covered in a previous report is one company focused on doing this for renal disease. So there are no doubt opportunities here although the presentation was short on information on the likely cost of developing such a platform and building the databases. Future fund raising looks a distinct possibility.

One question raised by the audience was whether patients would volunteer their own data (which in Europe they “own”). But I don’t think they will have objections because the chance of assisting development of treatments when there may currently be none will incentivize them to do so.

I suggest Open Orphan is a company to keep an eye on for the future. It’s still at an early stage of development.

Which brings me onto the subject of Operation Yellowhammer, the Government report which has now been published on the impact of a “hard” Brexit, or the “Reasonable Worst Case Planning Assumptions” as they headline the document (see https://tinyurl.com/yy2oll7p for the full document – it’s only 5 pages). As I am personally dependent on drugs to stay alive, the scare stories being propagated by some people about shortages on a hard Brexit are not just of academic interest.

The report suggests some disruption at Channel ports, including possibly up to 2.5-day delays to HGVs in Kent, i.e. similar to past disruptions caused by strikes in France which had no obvious impact on consumers although it might have some impact on “just-in-time” operations of manufacturing businesses.

But three-quarters of medicines come by the Channel straits which might have an impact on the supply of medicines and medical supplies, if unmitigated. As Nigel Farage has pointed out, the UK has 100 ports so alternatives to the Channel ports are readily available. Only a minority of drugs are time-sensitive and those could possibly be transported by air freight.

Pharmacy2U, one of the biggest prescription suppliers have published this note which covers patient concerns about Brexit: https://tinyurl.com/yxubdlsu . It basically says “don’t panic”, and carry on as normal. There are often problems with drug supplies due to complex supply chains, manufacturing or regulatory issues so this will be nothing new.

The report says demand for energy will be met as there will be no disruption to electricity or gas interconnectors but there may be rises in electricity prices. But it does warn about the availability of fresh foods, e.g. salad products from southern Europe which may be reduced. Are you worried about not being able to purchase tomatoes at Christmas? I cannot say I am.

In summary the Yellowhammer document is not something that will put off Brexit supporters from wanting to exit the EU on October 31st regardless.

One way around the problem of the Irish “Backstop” in the Withdrawal Agreement is to simply move the customs border to the Irish sea. This won’t please the DUP party of course but can they be bought off with the sop of a new bridge linking Northern Ireland to Great Britain? Or is this another of Boris Johnson’s bridge fantasies like the Garden Bridge in London? Is it even practical?

The Daily Telegraph published an analysis by a civil engineering expert. In essence it is possible because there are similar bridges in terms of length (13 miles or more depending on the chosen crossing point) elsewhere in the world. Even the deep water, up to 160 metres on one possible route, can be done. The cost might be £15 billion. So it’s perfectly feasible and probably better value than HS2.

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

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Watch Your SIPP REIT Dividends, RPI Change and Brexit

Many shareholders hold Real Estate Investment Trusts (REITs) as they provide a high level of dividends, partly because they have an obligation to distribute most of their income to shareholders as Property Income Dividends (PIDs). These are taxed in a different way to other dividends. They incur a tax charge of 20% which is like a withholding tax. But if you hold the shares in a SIPP then the SIPP can reclaim the 20% tax from HMRC.

I hold two SIPPs. One operator routinely refunds the REIT tax but the other one (operated by Curtis Banks) appears to have no system to do so. I have had to chase them more than once about outstanding refunds going back several years. Currently they are saying that they have to wait until the year end before they can submit a reclaim because they cannot submit claims of less than £5,000 during the year.

Shareholders who have REITs in their SIPP portfolios need to keep an eye on such refunds otherwise you could be losing hundreds if not thousands of pounds in missing tax claims.

Yesterday, among other activity by the Chancellor of the Exchequer, he issued a letter indicating that despite demands to revise the calculation of the Retail Price Index (RPI) he is putting off consent for any change until at least 2025 with consultation on when it might be implemented. See the letter here: https://tinyurl.com/y3muwr3g

There is of course strong opposition from some people to any change in the calculation of RPI. For example it might impact the returns on Index Linked Gilts that use it as it is generally seen as giving slightly higher figures than other inflation indices. But other people would welcome a change because it affects the cost of rail fares for example. It does appear wise to me to have extensive consultation on such a change before it is implemented, particularly where it affects people who have purchased investments such as index linked gilts or national savings certificates on the basis of the current formula.

The Chancellor, Savid Javid, did of course deliver a Spending Round review document to the Commons yesterday – you may have missed it among all the Brexit debates. In summary it commits to higher expenditure on schools, the NHS, the police, on social care, on defence and on other crowd-pleasing measures – a total of £13.8 billion. This should help to boost the economy, and might be seen as a typical pre-election attempt to win votes.

I watched the debates in Parliament yesterday and am baffled by what MPs have decided to do. One Bill (the European Union (Withdrawal) (No.6) Bill if you wish to read it) which seems likely to be approved demands that the Prime Minister sends a letter to the European Council requesting a further extension past October for Brexit. The proposed letter is specifically worded.

But under the UK’s, albeit unwritten, constitution the Prime Minister’s powers include: “Relationships with other heads of government” – see https://tinyurl.com/y3wneo9s for more on the Prime Minister’s powers. In effect MPs seem to want to take over executive powers in our relationship with foreign powers such as the EU. But the Prime Minister can surely contradict any such letter or undermine it in other ways because he alone has the powers to negotiate with the EU (as Mrs May negotiated the proposed Withdrawal Agreement”). This just gets us into a constitutional and political crisis.

The second decision by MPs was not to support the Prime Minister’s request for a General Election which would be one way out of the impasse. That leaves the Prime Minister and his Government in an impossible situation, particularly as now the Government has no overall majority in Parliament. In effect they may find it impossible to get any business through. This can surely not continue for long.

Whether you are a Brexiteer or a Remainer, surely you should be concerned by this turn of events which seems to be driven more by emotions about Brexit and opinions on the merits of the Prime Minister than any rational consideration of the constitutional crisis that is being created and the overall wishes of the electorate.

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

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Victoria AGM, Dunelm Results and Brexit Impacts

I attended the Annual General Meeting of Victoria (VCP) in central London yesterday. I have held a few shares in this producer of carpets and tiles since the revolution that installed Geoff Wilding as Executive Chairman a few years ago. He did a great job of turning the business around but the share price fell back sharply last October over concerns about the level of debt and a failed bond issue to replace bank debt which cost £7.3 million As Mr Wilding says in the Annual Report: “There is no way to view the majority of these costs other than, with the benefit of hindsight, a waste of money”. The Annual Report is certainly worth reading as it is a good example of the Chairman and CEO revealing their thoughts on many issues rather than the polished and anodyne statements you see in most such reports.

The company has subsequently issued some loan notes with a five-year term and fixed rate of interest to replace some of the bank debt. These were described as “covenant light” in the meeting. The company has adopted the use of high debt levels (net debt/EBITDA ratio of 3.2) to finance acquisitions and to finance substantial restructuring of its operations. There is extensive justification of this policy in the Annual Report but there are clearly still concerns among investors.

Last year the company reported a loss of £7.9 million despite reporting an operating profit of £24 million because of the exceptional finance costs, restructuring costs and amortisation of acquired intangibles. This is one of those companies where it is best to look at the cash flow statement to see what is going on as the accounts are otherwise quite confusing. The company did generate £52 million in cash from operations last year.

An announcement from the company on the morning of the AGM contained positive comments and they expect to meet market expectations for the full year. They are also continuing to look at further acquisitions although it states “mindful of financial leverage levels, the Board is proceeding cautiously”. I would certainly like to see some reduction in debt levels with fewer exceptional costs for a period of time.

There were less than a dozen shareholders at the AGM. There were only a few questions. One was on the attributes of new non-executive director Zachary Sternberg, and what he will be contributing. Apparently he is the investment manager of a US fund who have a 15% stake in Victoria. It was said he is very good at financial analysis but is not a flooring expert.

I asked about the breakdown of sales. Turf (i.e. artificial grass) is now 4% and growing. Otherwise it’s about two thirds tiles to one third carpet. In Europe hard flooring (not just tiles but wood/laminates) is growing but the demand varies between countries. That surely is has been a long-term but slow trend in recent years in the UK for example. Even my wife wants to replace our hall carpet with something else because she is tired of cleaning it but other areas are likely to remain carpet.

I also asked about the impact of Brexit, hard or otherwise. Earlier in the year they built up stock in case of disruption and are now doing this again. But the CEO said they might be able to take advantage by increasing prices. He did not appear too concerned about the prospects.

In summary a useful meeting, but investing in this company is very much dependent on one’s trust in Geoff Wilding to manage the debt levels and its business operations wisely. Mr Wilding has a beneficial interest in 18% of the shares although he did dispose of some shares last year.

Another company I hold is Dunelm (DNLM). The company issued preliminary results this morning and at the time of writing the share price is down about 8%. That may be surprising because the earnings were slightly better than forecast and a special dividend was also declared. Like-for-like revenue was up 10.7% and market share is increasing in the homewares sector. The company appears to have been successful in moving into “multi-channel” operations with internet sales rapidly increasing. So why would shareholders be concerned about the announcement?

One comment in the announcement was “Whilst trading performance has continued to be strong, we remain cautious about the full year outlook due to ongoing Brexit uncertainty and specifically the impact it may have on consumer spending as we enter out peak period”. They go into more detail on the impact of Brexit, especially a “no-deal” version which might disrupt imports after the possible Oct 31st date. But if Boris Johnson loses his fight against the “remainers” this evening then it could be put off yet again, even into “never-never” land. Comment: What a shambles and the House of Commons is descending into anarchy. I hope Mr Johnson manages to call a General Election to get this matter settled finally. But at least a Scottish Court has rejected the challenge to the Government’s ability to prorogue Parliament which was surely misconceived. Legal cases driven by emotion are never a good idea.

As regards Dunelm, perhaps another issue that rattled investors was the adoption of IFRS16 which will apparently reduce group pre-tax profit by approximately £3 million (i.e. by about 2.3%) but with no impact on cash flows. However EBITDA will increase. IFRS16 concerns accounting for leases and has surely been well known about for some time so it is odd if this was the cause of the share price fall.

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

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Burford, Channel Island Registrations and Brexit

Firstly lets talk about Burford Capital (BUR). Tom Winnifrith, who has been complaining about the accounts and other issues at that company for a long time, sent a letter of complaint to the FCA and FRC (the Financial Reporting Council) asking them to investigate the allegations of Muddy Waters. The FRC have responded with this comment: “Burford Capital is incorporated under the Companies (Guernsey) Law 2008 and is accordingly not subject to the requirements of the Companies Act 2006”. They also said that the shares are traded on AIM which is not a regulated market. The FRC’s Corporate Reporting Review Team therefore does not have powers to make enquiries about the matters raised.

In summary, although the FCA and the FRC have some powers relating to the company’s directors and its auditor, Mr Winnifrith will have to complain to the Guernsey Financial Services Commission who are the regulatory authority.

As I said in my recently published book, company domicile does matter and is definitely worth checking before investing in a company. I specifically said: “In general for UK listed companies, any domicile outside the UK adds to the risk of investing in a company. Domicile in the Channel Islands or Isle of Man is also not ideal [see Chapter 7]”. So that’s yet another reason why I would not have invested in Burford, apart from my doubts about the prudence of their accounting.

Brexit

At the risk of offending half (approximately) of my readers, here are a few comments on the latest political situation and the prorogation of Parliament. Speaker John Bercow has said that “shutting down parliament would be an offence against the democratic process and the rights of parliamentarians….” while there was an editorial in the Financial Times today that said “it was an affront to democracy” and that Mr Johnson had “detonated a bomb under the constitutional apparatus of the United Kingdom”. But I tend to side with Leader of the House Jacob Rees-Mogg who called it “completely constitutional and proper”. Suspension after a near record long parliamentary session to allow the Government to put forward its programme in a new Queen’s Speech is entirely appropriate and not unusual. There is also time before the suspension, and after, for Parliament to debate whatever they want before Brexit date on October 31st. Also Parliament is often closed down in September for the party conferences so this is not unusual.

It’s simply a case of sour grapes from remainers who realise they may not be able to stop Brexit or cause further trouble in resolving the impasse in Parliament. John Bercow is particularly to be criticised because he is supposed to be independent and should not be making such comments on a well-established procedure supported by precedent.

Parliament has been debating Brexit for many months and it is time to draw such debates to a conclusion because it gives the false hope to the EU that the UK will change its mind over leaving. The UK voted to leave and we should get on it with, preferably with some kind of Withdrawal Agreement, or otherwise none. Business is damaged by the on-going uncertainty which is why the pound has been falling. Boris Johnson is simply forcing the pace which is quite right.

If the opposition parties or remainers in the Conservative party do not like what is happening they can call for a vote of no confidence. It that was passed then a general election would no doubt be called, which the Conservatives might actually win, or the election might take place after the Brexit date which would put the remainers in a very difficult position. That is why they are so clamorous. They simply don’t like the position they find themselves in which has actually been caused by those in Parliament who have wanted to debate the matter endlessly without coming to a conclusion.

There are some possible legal challenges but should, or will, the judiciary interfere in what is happening in Parliament? I don’t think they should and I doubt they will. Are Scottish judges, where one challenge is being heard, really going to attempt to rule on a matter of UK wide importance? This seems unlikely in the extreme.

In summary, I think everyone should calm down and let the matter take its course. Those who are not happy with the turn of events can challenge it in Parliament via their elected representatives if they wish. But Brexit needs to be resolved on Oct 31st, one way or another. Not delayed yet again. There are so many other issues that Parliament needs to deal with that more debate on the matter is simply unacceptable.

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

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Brexit Investment Strategies

Investors may have noticed that the pound is in free fall and heading towards US$1.20. That’s near the low after the initial Brexit vote. Pundits, not that they can be relied on for forex forecasts, suggest it could go lower now that we seem to be heading for a “no-deal” Brexit.

With the pound falling, and potential damage to the UK economy from a hard Brexit, investors should surely have been avoiding companies reliant on UK sales, or UK consumers, or those such as engineers and manufacturers that rely on just-in-time deliveries from Europe. The key has been to invest in those UK listed companies that make most of their sales overseas in areas other than the EU.

One such company that announced interim results today is 4Imprint (FOUR), a supplier of promotional merchandise. Most of its sales are in the USA and its accounts are in dollars. Revenue in dollar terms was up 16% at the half year and pre-tax profit up 22%. The share price rose 6.5% yesterday and more this morning but the former suggests the good news leaked out surely. With the added boost from currency movements, this is the kind of company in which to invest but there are many other companies with similar profiles. For example, many software companies have a very international spread of business, or specialist manufacturers such as Judges Scientific (JDG). Those are the kind of companies that have done well and are likely to continue to do so in my view if the US economy remains buoyant and the dollar exchange rate remains favourable.

The other alternative to investing in specific UK listed companies with large export revenues and profits is of course to invest directly in companies listed in the USA or other markets. But that can be tricky so the other option is to invest in funds such as investment trusts that have a global spread of investments with a big emphasis on the USA. Companies such as Alliance Trust (ATST), Scottish Mortgage (SMT) or Polar Capital Technology Trust (PCT) come to mind. Alliance Trust has a one-year share price total return of 11% according to the AIC and the share price discount is still about 5%. I received the Annual Report of PCT yesterday and it makes for interesting reading. Net asset total return up 24.7% last year and it again beat its benchmark index. The investment team there has been led by Ben Rogoff for many years and what he has to say about the technology sector is always worth reading. Apparently the new technology to watch is “software containerisation” which is compared to the containerisation of cargo shipments in its revolutionary impact.

Another interesting comment is from the Chairman complimenting Ben on having the skill of buying shares and holding those which go on to outperform, but also knowing when to sell at the right time which the Chairman suggests is not common in fund managers.

Another hedge against a hard Brexit is to invest in companies that own warehouses because a lot more stockpiling is already taking place as a protection around the Brexit date by importers, but also more will be required to hold buffer stocks for manufacturers in the future. Companies such as Segro (SGRO), Tritax Big Box (BBOX), and Urban Logistics (SHED) have been doing well for that reason. They have also been helped by the trend to internet shopping which requires more warehousing space and less retail space. These trends are likely to continue in my view and the retail sector is likely to remain difficult for those retailers reliant on physical shops. You can see that from the results from Next (NXT) this morning. Shop sales down while internet sales up with the overall outcome better than expected as on-line sales grew rapidly. Anyone who expects the high street or shopping malls to revive is surely to going to be disappointed in my view.

There are bound to be some problems for particular sectors if we have a hard Brexit. The plight of Welsh sheep farmers was well covered by the BBC as Boris Johnson visited Wales yesterday. Most of their production currently goes to Europe but they may face 40% tariffs in future. The Prime Minister has promised assistance to help them but they have been heavily reliant on subsidies in the past in any case. There will need to be some difficult decisions made about the viability of farming on marginal land in future.

The falling pound has other implications of course. It will help exporters but importers will face higher prices with the result that inflation may rise. However, there are few products from Europe that cannot be substituted by home grown or produced equivalents, or by lower cost products from the rest of the world. With import tariffs lowered on many imports the net effect may be very low in the long term. But it will take time for producers and consumers to adjust. Tim Martin of JD Wetherspoon is well advanced in that process so you can see just how easy it will be to adapt.

In summary, investors should be looking at their current portfolios and how they might be impacted by Brexit now, if they have not already done so. There will clearly be winners and losers from the break with Europe and investors should not rely on any last-minute deal with the EU even if Boris is expecting one. Any solution may only be a temporary fix and the policies suggested above of international diversification are surely wise regardless of the political outcome.

Note: the author holds some of the stocks mentioned.

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

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Removing Directors, Ventus VCTs, Rent Controls and HS2

Replacing the directors of companies by shareholders can be enormously difficult. Although I have been instrumental in the past in helping that process in several companies, it takes enormous effort and a lengthy timescale to achieve it. ShareSoc director Cliff Weight has published a very perceptive article on the problems of doing so at the Ventus VCTs.

Problems faced by shareholders who are unhappy with the directors of a company are a) communicating with all other shareholders now that many are in nominee accounts and the costly process of writing to shareholders on the register via post (and processing the register into usable format for mailing); b) the existing directors of a company using the resources of the company (i.e. shareholders funds) to campaign actively against any change including the use of expensive proxy advisors to contact shareholders via telephone; c) the role of IFAs who advise their clients or who manage their portfolios and who can influence the shareholder voting; and d) the inertia of institutional investors (or to quote someone from the FT today: about 60% of company investors are passive shareholders and ‘don’t care’).

In the case of the Ventus VCTs, some shareholders are unhappy with the management fees as no new investments are being made by the company and are unhappy with the actions of the directors. They have tabled requisitions for the Annual General Meetings at Ventus VCT and Ventus 2 VCT on the 8th August to remove all the directors and appoint new ones. Of particular concern is the current two-year termination notice on the management agreement which is now being proposed to extend further. It is never a good idea for investment trusts to have long termination periods in contracts with the manager.

You can read Cliff Weight’s blog article here: https://tinyurl.com/y2de9vaa . There is also an article covering this topic in this weeks Investor’s Chronicle under the title “Limits of Influence”. It’s well worth reading.

How to solve these problems? I suggest the following: a) a reform to put all shareholders (including beneficial owners) on the register of companies; b) put shareholders email addresses on the register so that communicating with them can be done at reasonable cost – it’s surely unreasonable in the modern age to only have postal addresses which adds to costs enormously; c) limit how much can be spent on proxy advisors to oppose shareholder requisitions; and d) exclude passive institutional investors who have no interest as owners from voting.

Rent Controls

The Mayor of London, Sadiq Khan, is intending to develop proposals for rent controls in London so as to “stabilise” or reduce property rents in London (or make them “more affordable” as he puts it). That’s despite the fact that he has no legal powers to do so and a Conservative government would likely block such proposals. But Jeremy Corbyn supports the idea. The Mayor clearly sees this as a vote winner for his re-election campaign next year as he claims 68% of Londoner’s support rent controls!

Some of my readers probably invest in buy-to-let properties so such proposals will worry them considerably. On the other hand, those who rent houses or flats in London are undoubtedly concerned about the cost of renting and the rapid rise in rents in London. Some are being forced out of London or have to move to smaller properties.

But rent controls never work and create all kinds of negative side-effects, or unintended consequences. When I moved to London in the 1960s, rent controls were in place and had been since 1945 in various forms (there is good coverage of the history of rent controls in London on Wikipedia). In the 1960s, unfurnished properties were almost impossible to find or were horribly expensive as landlords had withdrawn from the market. Rachmanism to force tenants out of rent controlled properties was also rife and what property there was available for rent on the market was often in very poor condition because landlords simply could not justify spending money on maintenance. We definitely do not want to return to the 1960s despite Jeremy Corbyn’s desire to put us there!

Rent controls are not the answer, as many studies of such schemes has shown. The Mayor needs to do more to tackle the housing problem in London by ensuring more home are built, encouraging movement of people out of London, and discouraging new immigration into the capital from elsewhere. But you can read the Mayor’s press release here if you wish to learn more about his plans: https://www.london.gov.uk/press-releases/mayoral/to-tackle-affordability-crisis

HS2 and Brexit

The latest report that HS2 may cost an extra £30bn, meaning it could cost as much as £85bn in total, surely makes it even less justifiable. Enabling a very few people to save a few minutes on the train journey time from London to Birmingham at that cost makes no sense, although there might be more justification for expanding capacity and speed on routes in the North of England. However, it would surely be much better to spend that kind of money on an improved road network where the benefits are much greater. The Alliance of British Drivers has just published an analysis of road expenditure versus taxation which includes a comparison of road versus rail expenditure. It’s well worth reading – see here: https://www.abd.org.uk/road-investment-and-road-user-taxation-the-truth/ .

Now the Office of Budget Responsibility (OBR) have recently suggested that a “no-deal” Brexit would blow a £30bn hole in the public finances. Even if you accept that is true, and many do not, there appears to be a simple solution therefore. Cancel HS2 just to be on the safe side.

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

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Tory Leadership Contest and Brexit

It’s Sunday morning and time to talk politics, which I have not done for some time. A satisfactory resolution of Brexit is of some relevance to the performance of many UK companies which is a key focus of my readers.

How did we get into the current mess? Weak leadership and a lack of consensus both among Government ministers and in Parliament. Our negotiating position with the EU was confusing with changes of policy and people leading the team changing whereas the EU Commission decided what they wanted and stuck to it. The EU insisted early on that any post exit trade relationship would not be part of the withdrawal negotiations which the UK meekly conceded. The Withdrawal Agreement looks like it was drafted by the EU as a result.

It was very interesting watching the Storyville TV documentary that followed Guy Verhofstadt, MEP and leader of the EU Parliament team during the Brexit negotiations. Consistently it seemed that Britain did not know what they wanted. It was also clear of course that in the EU elected Parliament members (MEPs) have little influence and the Commission and the Council dictate policy – a good example of how undemocratic an institution it is.

Where to from here? Firstly the Conservative party need to elect a new leader who will be appointed as Prime Minister. The bookies seem to be tipping Boris Johnson who is popular among Tory party members. He also managed to get elected twice as Mayor of London despite London being generally very left wing in outlook due to the number of immigrants now living there. For those readers who do not live in London, here’s a brief summary of his record there. He removed the Western extension of the Congestion Charge, a popular move, but retained it otherwise and proposed a ULEZ scheme for the central zone. On the Environment his steps were reasonable but he fell in love with cycling and cycle superhighways which has made traffic congestion much worse. His support for the Garden Bridge was a mistake but he otherwise did keep the TfL budget in some kind of order, unlike his successor, and public transport was improved. He did not make unwise promises to the electorate to ensure his election. His record on crime and policing was OK, and better than his successor, but housing in London remained a major issue mainly because of the policies of his predecessor (and since followed by his successor), to encourage immigration and more business development when the needed infrastructure and housing lagged behind.

As Foreign Minister Boris was prone to gaffs and he is certainly not appreciated by some. My wife’s latest comment on him was: “he just needs to grow up”. His chances of unifying the Tory party behind him seem low.

Another leading contender is Dominic Raab, but like all the others, he lacks a lot of public recognition. But he did give a very polished performance on the Andrew Marr show this morning. He was very definite about wanting Brexit to happen on the 29th October with no further delays, and would accept a “No Deal” Brexit if it is impossible to change the Withdrawal Agreement before then. That to my mind is the right approach to take and I do not see a No Deal Brexit as a disaster like some. The economy would soon recover from any temporary disruption and the money saved from our EU contributions would help a great deal.

Some are tipping Michael Gove but I just do not see him as a personality that could win a general election for the Tories. Sajid Javid might be a better bet, but none of the other declared runners looks a winner to me.

The ability to win a general election, and face down Nigel Farage and his Brexit Party, is quite essential because Jeremy Corbyn is still fence sitting in the hope of forcing a General Election. He is 70 today so must realise that his chance of winning power may be slipping away.

Any new prime minister needs to tackle the issue of the Irish border and the “backstop” in the withdrawal agreement. He needs to appoint a cabinet that will back his chosen approach and either conclude that with the DUP or call a general election. That needs to be done quickly if it is to take place before October 29th when we exit the EU unless something else is put into law.

Apart from the Irish backstop proposal in the Withdrawal Agreement, which tied the UK into a Customs Union potentially for ever, there were other aspects of it which were not favourable. If the EU sits on its hands and refuses to renegotiate it a No Deal exit might be best so we can go back to square one and settle on a new trading relationship with them.

Economically the EU needs a good trading deal with the UK just as much as the UK needs one with the EU, if not more so taking into account the balance of trade. But if you have weak, inconsistent or muddled leadership then the chance of the UK getting what it wants is low. To my mind, Dominic Raab might be a better bet to achieve that than Boris Johnson.

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

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