Monthly Archives: June 2018

Must-Read Letter In The FT Today

 We are a 95 per cent export manufacturer of high tech instrumentation, so we have a lot of experience in overseas trade. On May 24 the head of HM Revenue & Customs estimated that post-Brexit, import-export may cost industry £20bn extra at UK borders. With £10m of exports, 75 per cent outside the EU, and £1.5m of imports, 85% non-EU, we are in a good position to give a realistic figure for these costs.

All imports enter under Inward Processing Relief, and no taxes are paid at the border. Goods may remain in the UK for up to nine months free of duty and value added tax. Duty and VAT become payable if the goods are sold within the EU, but not if they are exported outside. When we sell our equipment to a Japanese company, we invoice free of VAT as an export. It collects ex-works and delivers worldwide, sometimes direct to a customer within the EU. It will invoice without VAT as, being based in Japan, it is not VAT registered. It is that company’s customer who must record and pay VAT, on the basis that it is an import even though the goods may have crossed no frontiers.

Our VAT and tax returns are made on a monthly and quarterly basis, with payment by direct debit. Every two to three years, HMRC audits our record-keeping. Maintaining this system requires a skilled person for one or two days a week at a £50 hourly rate for 500 hours per year, the annual cost is £25,000. We also employ shipping agents at a £70,000 annual cost, of which over 90 per cent is transport charges. Our cost for import-export paperwork is about £32,000.

Our largest tax is the 20 per cent VAT charged on importing goods from the EU, just as from the US or Japan. This will not change after Brexit, although there may be a 3-5 per cent duty if no deal is done. The cost in additional paperwork will therefore be no more than 10 per cent of the present £32,000. We will incur an average 4 per cent duty on our £225,000 of EU imports, but will recover 95 per cent of this on exporting, so duties will cost the company about £500. Assuming we do business with the EU on terms no worse than the rest of the world, the cost will be around £3,700, or 0.04 per cent of our £10m turnover. Compared to currency exposure where rates can change by 1 per cent daily, this is a negligible figure, so Brexit on any terms will not change our business.

Jeremy Good 
Director, Cryogenic Ltd, London W3, UK

From The Sublime To The Ridiculous

LCC gritters are in action to stop roads melting . There’s not a snowflake in sight but Lancashire’s gritters have been busy treating the roads this week, to stop them melting in the heat. The current heatwave has led to road surfaces softening in some places, which can then stick to vehicle tyres, and make the surface slippery.

Gritters have been putting down granite dust on sticky spots to provide a protective layer, and improve skid resistance. County Councillor Keith Iddon, cabinet member for highways and transport, said “The prolonged spell of hot weather is causing the bitumen to soften on roads all over the country. The problem is that it can start to stick to car tyres, damaging the road by stripping the surface off, and become slippery, which is a potential safety problem.

“We’ve been using around six of our gritting fleet to apply granite dust where this is happening. This creates a barrier to stop it sticking to people’s tyres, and improve skid resistance. Now this problem has started it will carry on until the weather cools off so we’re sending the gritters out every day at the moment to those places where we know this is a problem, as well as responding to any new locations picked up by our inspectors or reported by the public.

“In some places we’re also putting out signs with advisory speed limits to encourage vehicles to slow down for safety. It’s not the first time we’ve had to do this in Lancashire, and our climate means that it doesn’t happen very often. If permanent damage is caused to any of the network, and once the weather cools down, we’ll assess these locations for any repairs which may be needed. In the meantime, I’d ask people to take particular care on the roads, observe any advisory speed limits in place, and report any problems to us which we may not already be aware of”. 

Lancashire County Council “Misled” NHS Trusts

The Lancashire Post reports how a judge has criticised Lancashire County Council for “misleading” NHS Trusts over the £104m Virgin contract. The comments come from the High Court case brought by two Lancashire NHS trusts against the county council in relation to the awarding of a contract for community healthcare services to private firm Virgin.

Once the council had made the decision, Lancashire Care NHS Trust and Blackpool Teaching Hospitals Trust who previously held the contract for services such as school nurses, took legal action. Last week Mr Justice Stuart-Smith  blocked the awarding of the contract to Virgin after concerns were raised about the tendering process. The ruling means the process may now have to be run all over again and it could also expose the council to legal action brought by Virgin.

The judge said there was “no consistency” in the way in which the bids put in by Virgin and the NHS trusts were discussed by the council’s marking panel. He ruled that members of the panel were not collectively shown notes of the marking process until the NHS trusts launched legal action. The judge added that “Later, when the trusts were pressing for information, the council misled them by first redacting the dates and then backdating three of the individual members’ evaluation notes. To describe this, as the council did, as merely a ‘regrettable episode of poor administration’ is, to my mind, an unacceptable understatement”.

The judge said the council’s reasoning process was so unclear, it was impossible to say whether the marking process had been infected by “manifest error”.

Poor administration in LCC? At what level? It is beyond belief that some of the highest paid officers in local government are making LCC a laughing stock. Worse, the chance of Virgin now seeking its pound of flesh from we taxpayers is too horrific to contemplate!

Fewer Councillors And More Police?

Janet Ingman has written to the Champion  to ask how we might be able to afford to let a new councillor resign and spend about £8,000 on a by-election but not put more money into policing. The short answer is the two matters are not locally related. Funding of local councils and funding of policing come from different pots. Janet Ingman surely makes a good point, as anyone could, about the short career of the Labour politician who resigned. As with the other case, the Tory in Hesketh-with-Becconsall, the public are paying for political party failures, but the bill should be sent to them, not us.

As for why do we pay so much for so many councillors, and are they the way to cut back on unnecessary spending, I simply quote again the case of Wally Westley in his Cabinet pomp, when he stated on the same day two answers. Asked in August 2010 “Why do we need 54 councillors? Surely we could get rid of about one third of them with a little judicious thought? That would lead to a smaller council, a smaller cabinet (less expenses) and a smaller administration, smaller salaries for the highly paid senior staff who would have less responsibility, smaller premises and the sale of some of the capital assets we own” he replied “The number of Borough Councillors is set by the Government and the Boundary Commission. My personal view is that there are too many and that the number could be reduced by 50%”. But when asked “As for the number of councillors, why don’t you instigate a review of WLBC with the Boundary Commission?” he replied “I would not want to waste money on a Boundary Commission Review or the resultant election. There are far more important matters and it would only be an unnecessary distraction”. Truly unbelievable until you realise the calibre of the man!

Janet Ingman mentions neighbourhood watch but doesn’t hear of them now. They do exist, with difficulty as any current NHW co-ordinator will tell her. Encouraged to organise watches, people are now disillusioned by lack of support. By chance, also in the Champion, is a headline  that “Deadline looms for bids for funding of projects to tackle reoffending”, from a “police commissioner’s £200k pot”. It beggars belief that Mr Grunshaw received a massive rise from us for his police budget, only for us now to discover HE wants to spend OUR money doing what the Home Secretary should pay for, reducing reoffending. It’s bad enough that while police bills go up police officer numbers reduce. We can only wonder what salary is paid to the Independent chair of the Reoffending Boards who just happens to be a recent Chief Constable in Cumbria?

It’s In The Bag For Care Home Residents

NHS West Lancashire Clinical Commissioning Group (CCG) is introducing an innovative new ‘red bag’  pilot scheme to help support care home residents when admitted to hospital. The bags, which contain key paperwork, medication and personal items like glasses, slippers and dentures, are handed to ambulance crews by carers and travel with patients to hospital where they are then handed to the doctor.

This scheme is just one NHS initiative taking place to make care more proactive in care homes; through the Enhanced Health in Care Homes Vanguard, total bed days have dropped by 4.5 percent as opposed to an increase in areas without the scheme of 1.4 per cent. As well as giving reassurance to patients, the red bags provide hospital staff with quick, up-to-date information and medication requirements for the patient, avoiding unnecessary phone calls.

John Caine, a local GP in West Lancashire and chair at NHS West Lancashire CCG, said “This is an example of where a joined-up approach is helping to improve patient care and speed up a stay in hospital for all the right reasons. Sometimes it’s the personal touch that makes a big difference to patients, especially if they’re elderly, and the red bag helps people feel reassured and more at home. Doing more of the obvious is key to improving all our experiences of care.”

In West Lancashire, the pilot will initially launch at the start of July 2018 at the Cleveland House Care Home in Banks, with an aim to roll out fully across the region in September 2018. Mike Maguire, chief officer at NHS West Lancashire CCG, said “Nationally, there are half a million more people aged over 75 than there were in 2010 – and there will be two million more in ten years’ time. They are also spending more years in ill-health than ever before. This scheme is a great example of how the NHS is integrating care and working in partnership with social care, to ensure that our elderly patients will only have to tell their story once”.

An EU Citizen No More

The Government’s Brexit legislation received its Royal Assent yesterday when the Queen formally signed it into law. Lest we forget, Section 1 of the now European Union (Withdrawal) Act 2018 states “The European Communities Act 1972 is repealed on exit day” with exit day explicitly defined in the Act “as 29 March 2019 at 11.00pm”. And for my pleasure the EU citizenship imposed on me by the will of the EU, against my own wish, will exist no longer.

Meanwhile, it is reported that a young woman rail passenger, Lucy Harris, carrying a bag with the motto “The EU is not my bag”  faced a furious tirade from a “lawyer” who told her “You’re either racist or thick, I don’t know which one”. The man added “Your bag is disgusting you’re taking away my EU citizenship”. Reported to be a “Staunch Europhile, American-British, Londoner, lawyer” perhaps he is collecting citizenships like we used to collect fag cards when we were kids?

Well, it’s a point of view, I suppose. In 1992, forty years after the European Union was established, the Maastricht Treaty introduced the notion of a “European citizen”. Denmark was so furious that the European Council had to release a statement in order to confirm that “citizenship of the Union is a political and legal concept which is entirely different from national citizenship”. In the same year, the European Commission sought ways to create common EU symbols but faced strong resistance from the Member States. A good example of this was the Commission’s proposals to have athletes from all Member States appear as one delegation during the opening ceremony of the Olympic Games. Utter bollocks, if you will pardon the expression.

What the young harassed lady must not do is carry anything that could provoke such a reaction, as the provocateur said “Lucy’s bag invited debate” which he, naturally, exploited for his own reasons. Who needs fellow citizens like him with his prejudice-based bullying?

And the idiotic comments of EU officials reached levels like this “It is not my intention to spoil your mood” said Donald Duck [sorry Tusk] “Unfortunately we are dealing with something much more difficult than the game against Panama”.

The Toxic EU?

The EU has €900 billion of bad loans, which makes me shudder when I think what we have paid for membership of the appallingly inept EU that’s the sole reason young people living in it have no employment and no hope of employment. By 2015 Britain had contributed nearly half a trillion pounds to the European Union budget since it joined in 1973 and we would have to pay a further £100 billion in the next five years. Intra-EU trade accounts for 59% of Germany’s exports (France 8%, United Kingdom 7% and the Netherlands 7%) while outside the EU 9% go to the United States and 6% to China.

Not since the early 1980s has the UK run a surplus on goods, and at the last count the annual deficit was running at £135bn. The deficit in manufactured products alone stood at £95bn. Britain’s trade performance with the rest of the EU has been woeful. According to data produced by the House of Commons library, it has run a trade deficit in goods and services combined in every year since 1999. What’s more, the deficit is getting bigger over time, doubling from £41bn to £82bn between 2012 and 2016.

Clash of political, economic and social cultures within eurozone is more toxic now than at any time since Greek  crisis erupted eight years ago. There is a conviction among European Union officials that in much the same way as the euro and Greek debt crisis was ‘fixed’ after 2010, so with right minded policies the catastrophic migration problems can be resolved now. The trouble with this narrative is that it is a gross distortion. A €15 billion loan package may have been agreed between the Greek government and EU at the end of last week as part of a broader debt deal. But the underlying social and economic fissures are as wide as ever.

There have been 95 eurogroup finance meetings on Greece since 2010 and the results have been catastrophic. National output has fallen 25 per cent. Adult unemployment stands at 20 per cent, jobless young people at 43.2 per cent and three generations of families are being forced to live cheek by jowl in the same crowded apartments while Russian oligarchs buy up swathes of the country. Why is there no marching in London against this? By comparison with Greece the UK unemployment rate (the proportion of the economically active population who are unemployed) for 16-24 year olds was 11.9%, down from 12.5% a year ago [Source House of Commons library].

Sweeping Greek’s surrender to euro-fanaticism aside is easy because it represents a small part of the euro area’s output, budget and prosperity. But the notion that the economic basket case that is Italy, now in the hands of extremist parties, can somehow be contained and made good troubles even the most devoted EU enthusiasts.

When Italy  became the third largest country in the euro at its birth in 1999-2000, it pledged to reduce national debt from 120 per cent of total output to 60 per cent by 2009. It currently stands at 130 per cent after several years when it actually managed small budget surpluses. The economy has barely grown. Domestic output is 8 per cent below the level it was in 2007 at the onset of the financial crisis and just 4 per cent above where it was a decade earlier.

If the new Italian Prime Minister Giuseppe Conte sticks with the economic policies on which the coalition of the 5 Star movement and the League was elected, it faces a brutal clash with Brussels. Among the measures pledged are lower and flatter taxes, a citizens income for everyone and a roll back of the pensions reforms of previous governments.

The difficulties of Italy dwarf those of Greece. Much of Europe’s €900 billion of bad loans are concentrated in Italy. Rome is the biggest recipient of European Central Bank monetary support and is currently in receipt of some €444 billion. Italy, like most of the southern tier of the eurozone, is simply unable to live with a single currency that keeps German motor cars competitive across the world but is too rich for the more dysfunctional euro-area states.

French officials and others are urging Italy’s populist government to stick with the eurozone playbook. That is going to be enormously difficult given that most of the policies on which it was elected move in the opposite direction. Italy’s problems, including immigration, cannot be passed off as an aberration. The surplus on the current budget looks as if it will be rolled back if the government pushes ahead with its radical agenda. With adult unemployment at 11.2 per cent and youth unemployment at 33.1 per cent the country is too socially divided already for another bout of imposed austerity. 

The bullshit about an Irish  customs problem is just that. Ireland conducts the lowest level of physical inspection in the world (1 per cent) and 95-99 per cent of goods traded between developed countries avoid any physical inspection at all. Most trade, which arrives from countries which are members of neither the single market nor the EU customs union, suffers little or no hold up at the border when entering the EU. There is no reason for this to change after Brexit. Just get on with it!