Season of election letters

There has been a great deal of letter writing going on in recent days. Much of this is posturing ahead of the election. The Investment Association is calling on FTSe 350 boards to throw out opaque pay packages in the boardroom.

Business Secretary Angela Leadsom has told private equity outfit Advent that there are hurdles to be crossed if it wants to buy aerospace firm Cobham.

The Financial reporting Council has written to auditors telling them that they are failing to meet the high standards necessary. And City regulator the Financial Conduct Authority is warning fund managers that after the Neil Woodford debacle they need to make sure that there is enough cash on hand to pay out redemptions.

Much of this has the feel of ministers and officials inoculating themselves against campaign crossfire.

The incredible gullibility of Woodford has been on display this week when Patient Capital Trust wrote down the value of its investment in cold fusion firm Industrial heat. The search for cold fusion is a modern version of alchemy and already led to several scientific researchers being sidelined.

It won’t be of much comfort to Woodford investors, but on a far bigger scale Masayoshi Son’s Softbank has made some equally bonkers bets, causing confidence to drain away from the $100bn Vision Fund.

Softbank has just pumped $10bn into We Work which some analysts value at zero. The $7.7bn bet on Uber is going nowhere fast and analysts warn that the lack of disclosure on the value of speculative investments cannot go on.

The $36bn purchase of Britain’s smart chip champion Arm holdings in 2016 for $32bn is also looking dodgy. It has moved from profits to loss and its Chinese arm was sold off at a bargain-basement price.

That is a terrific reason for the current Government to be careful about overseas takeovers of high tech.

Family fortunes

NEXT time a Labour politician thinks that attacks on billionaires are a good idea perhaps they should cast their eyes over Associated British Foods, the owner of Primark.

Much of the dividend income from ABF is paid into the Garfield Weston Foundation which is Britain’s second-largest charitable giver. The protection of family control (the Westons have 54pc of the stock) means that it is not under the same quarter-to-quarter scrutiny as its competitors.

It is able to ride through the ups and downs of the sugar market and the obstacles put in its way by the Common Agricultural Policy.

In 2018 ABF earned £123m from sugar and this year just £26m. Chief executive George Weston is forecasting a better outcome in 2020, with African consumption helping to drive growth.

elsewhere, ABF is putting effort into improving the supply chain for no-frills clothing at Primark by investing around £ 10m in 160,000 cotton producers, encouraging them to adopt more sustainable cotton.

Most of the investor focus on expansion has been in the US where Primark has renewed its management and horizons, expanding into Chicago and Florida with smaller stores. As important, is the push into europe. Primark still only has four stores in Italy so there is room there.

The next frontier is eastern europe and Weston has the Czech republic and Poland in his sights.

Primark finds the high Street much less challenging than most of its competitors and has not been as vocal on business rates. It wants to see pure online retailers paying their fair whack. That would be a much better target for Labour than wealth creators.

Hammond examined

The decline and falling out with the Tory Party of former Chancellor Philip hammond has been remarkably swift.

That some Brexiteers see his remain views and behaviour as abhorrent should not be allowed to cloud judgement of his period at the Treasury.

he presided carefully over the public finances, which ought to be the first priority of any Chancellor, and oversaw the fall in unemployment rate to its lowest level since the 1970s at a time when joblessness across europe was disgustingly high.

Indeed, had Theresa May’s deal, which this paper supported, won approval, hammond reckoned it would free some £30bn, to fund an end to austerity.

eeyore never had the chance to become Tigger.