Hammond’s growth push
ANYONE expecting Philip Hammond to flash his contactless payment card on November 23, when he delivers the Autumn Statement, likely will be disappointed.Britain’s deficit and debt problems, and concerns about the impact on the market for gilts, UK government stocks, make that tricky. It is certain, however, that the Chancellor is not going to present the punishment budget proposed by George Osborne with the support of his predecessor Alistair Darling as part of the Remain campaign. The 3p on income tax and higher wealth taxes was as big a fiction as Leave’s £350m extra for the NHS.
Hammond was wise not to follow the postelection tradition of delivering an emergency budget in July. We now know that the immediate post-Brexit data was unreliable and the economy has shown the kind of underlying strength of which devastated eurozone nations can only dream.
In the effort to boost output and productivity, and at the same time fall in line with current fashionable remedies, Hammond is likely to earmark quick-to-deliver infrastructure by bringing forward planned road schemes and investing more heavily in rail. Electrification of trans-Pennine routes, a precursor to HS3, is the kind of thing. The Chancellor also indicates that measures to improve the supply of housing are in the pipeline.
What then about the big, longer-term infrastructure projects? A decision on airport expansion is due next month and since no taxpayer money is directly involved, the best thing the authorities can do is speed planning by a fast track process. No-one should tolerate Terminal 5-style delays. The go-ahead for the £18bn Hinkley point nuclear plant remains up in the air. Still, there is no reason why other nuclear projects, such as Hitachi’s plans for Anglesey in North Wales, shouldn’t get the green light.
HS2 is sequenced to pick up momentum when Crossrail is finished. The Thames Tideway is essential to keep London and the Thames hygienic as the population expands.
By delivering the statement in November, rather than early December as was Osborne’s habit, Hammond will allow the country to focus on Christmas a little earlier.
We should not count on Father Bountiful. It is as well to remember that before the 2010 election Hammond was being lined up to be budget cutter extraordinary. The need for coalition changed that, but it does not mean the Chancellor’s axe has been blunted. The biggest favour he could do the country is to stop trying to micro-manage Britain from the Treasury with a statement made heavy by proposals reaching every part of government, ranging from education to Help for Heroes and more radical pension reforms.
Short, to the point and simple is needed. Tolley’s tax guide doesn’t need a whole bunch of new chapters.
Coming home
WE shouldn’t kid ourselves Micro Focus will not suddenly become the new Arm (carelessly sold to SoftBank) or revert to chipmaker Autonomy as a result of its absorption of Hewlett Packard Enterprise.
As executive chairman Kevin Loosemore notes his approach to digital is more about ‘marginal gains’ – the kind of thing that has kept the UK cycling teams in gold medals – rather than radical changes. Nevertheless, the $8.8bn (£6bn) deal with the Silicon Valley giant will be transformative.
It will resurrect some of the chip and software skills that shifted to Silicon Valley when Mike Lynch sold Autonomy to HP in a deal still tainted by litigation. But it also allows Micro Focus to bulk up in more traditional areas of expertise, including software for big data, enterprise management and governance and IT operations. It is a big leap forward for a firm which began life in 1976 with the idea that corporate Britain and the world needed a firm that could deliver the migration of the IBMstyle computer room to the desktop PC. It has carried on in that vein for four decades.
Being thrust into the top half of the FTSE 100 could make life harder for Loosemore. As an executive chairman he will be a sitting target for the governance mavens, who demand separation of roles. That is one of the many challenges ahead. At least he has investors on side with the share price shooting up. Bravo.
Saddling up
THE Americans have never really taken to Formula 1, preferring Indy car racing, Nascar and other rowdy motor sports to Bernie Ecclestone’s modern techie creation.
In much the way as with the help of ESPN and others, the US has come to enjoy Major League Soccer, plus a good helping of games from the Premier League, cable king John Malone clearly thinks they can be educated to F1 and is paying a hell of a price for doing so.
Liberty certainly has the delivery channels in the shape of cable and satellite across the American space, a good grip on broadband in Europe as well as cable operations that extent into 17 or so territories, including Virgin Media in the UK. As long as F1 doesn’t run out of teams, competition and drivers, the heavy price tag of £6bn could yet be justified.
But it may mean moving races from Baku to North American locations where the crowds and sponsorship will come pouring in.