Friday, 26 September 2014

Greedy Fund Managers

Neil Woodford recently said "Choosing my words carefully, I think the industry has overcharged in many aspects. I mean, it is quite clear in the banking industry – and indeed in my own industry – that too often the industry has been guilty of charging active fees for index performance or worse".

He also said “Fund managers are constrained by the fear that if they were to under perform the index for a three, six or 12-month period, their careers would be in jeopardy.” However, this just raises the point that Fund Managers are habitually lazy in their approach towards their client accounts and have no intention of putting themselves out to provide future innovation in the fund market.

Neil Woodford graduated from Exeter University with a degree in Economics in 1981 and started working in the City at Dominion Insurance later that year. He joined Reed Pension Fund as a trainee equity analyst in 1983 and, after a spell in a corporate finance role for TSB, started managing money at Eagle Star in 1987. The following year, Neil joined the UK equities team at Perpetual in Henley-on-Thames, where he spent the next 26 years of his career crafting his distinctive investment approach and developing a reputation as one of the most highly respected and trusted fund managers in the industry. Neil Woodford was awarded the CBE in 2013 for services to the economy.

Neil Woodford, who launched his own business this year after leaving one of the largest fund managers in Britain, Invesco Perpetual, where he worked for more than 25 years, said some fund fees were too high when consumers could instead buy a tracker fund for a much lower cost.

Tuesday, 23 September 2014

The price of oil

This year has noticed a marked drop in the price of oil, in the last three months the price of crude has dropped from 114 to 97, this is mostly due to more production from countries like Iraq adding to global stock piles.

My reason for remarking on it now is I am curious how this is affecting Vladimir Putin and Russia?

Russia relies on oil and gas for around two-thirds of exports and half of federal budget revenues. Over the course of a year, each $1 fall in the oil price wipes around $1.4 billion off federal tax revenues apparently. The oil sector, along with finance and defence, is also among the targets of western sanctions against Russia over its annexation of Crimea and what the United States and European Union say is its backing for separatist rebels in east Ukraine.

The question is did Putin move into the Crimea and Ukraine because of what he foresaw might happen to oil prices or is the drop only just starting to hit now?

What does a rat do when it is cornered, usually attack...

Does this mean that Russia is currently planning more expansion in the world, probably, so where would they strike next?

Monday, 22 September 2014

The West Lothian question

We keep hearing this statement being thrown around at the moment, so what is the West Lothian question?

The question was posed by Tam Dalyell in 1977 over non-English MPs' role at Westminster.

Simply put, it asks why Scottish, Welsh or indeed Northern Irish MPs have the same right to vote at Westminster as any English MP now that large areas of policy are devolved to national parliaments and assemblies in areas such as health, housing, schools and policing.

The question itself is famously attributed to the then Labour MP for West Lothian, Tam Dalyell, who raised it in 1977 when Jim Callaghan's Labour government proposed a devolved assembly in Edinburgh. An anti-devolutionist, Dalyell argued it would be unfair for Scottish MPs to have equal rights to vote on English-only legislation. Callaghan's plan failed to win a large enough Scottish majority in a referendum, and collapsed.

After last weeks Scottish referendum this question has raised its head once again and it is possible it is more difficult for the Labour party that the coalition parties because Labour have 41 active Scottish MPs and if the current suggestions went ahead, Labour would have even less power in parliament than they have now and with just over six months to the general election next May, this must be very tricky for Ed Miliband and his team.

Sunday, 21 September 2014

Lessons learned

I have recently been in a meeting with HO concerning the next store opening and one of the points I raised with them was establishing a brief from the last store opening in a lessons learned risk assessment format. They seemed to portray that HO was well up to date with the issues of the previous store's initial progress, but I was not convinced.

Learning from the past is the key to getting it right in the future but its more than just writing a lessons learned report that will gather dust in the filing cabinet. Hard won lessons learned, need life beyond the end of project party. They need to be retold to others so that they too may avoid the same pitfalls. In a world where the pitfalls cost money, the value of lessons learned can mean the difference between profit or loss.

To start with you need an audience. There is no point gathering up all this experience if no one is going to read it. Identify key parties within the organisation or even the key suppliers who will be interested parties. These can be other project managers, the audit team, PM methodology team, quality assurance staff or even senior managers who will play the role of Project Executive in the up and coming projects.

Next you importantly need to make your point heard. If you think simply writing a report will do the trick, do not be surprised to find the organisation making the same mistake. So be proactive and setup a meeting with your standards teams, senior managers and colleagues to present and discuss the lessons learned report and make sure the key people required to action them are present.

Finally you need to follow it up. They may have heard you but did they actually put it into practice? This is my concern and in November I might find out whether my concerns are justified at the opening of another store.

Friday, 19 September 2014

Scottish Independence

This has been an interesting couple of years. Lots of things have happened, and if we are going to carry on together, which by the way we are very happy about, we need to sort a few things out.

Yesterday was always going to be difficult. No matter which way it went approximately half of you were going to hate it. Personally I blame Alex Salmond for putting the idea in your head in the first place when the result could only ever be division.

Perhaps it needed doing, and perhaps it did not. What is important now is to keep the best things from the referendum debate, and dump the bits that are frankly unbearable one moment longer.

Last night 84.5% of people expressed an opinion about the way their country was run. In the last general election it was just  63.8% and in 2001 it was a mere 58.2%. It's more than in the referendums held in 1997 or 1979.

Both sides in this vote used fear. Fear of what will happen if you go, and fear of what will happen if you stay. Salmond in particular blamed everyone else for all of Scotland's problems - poverty, problems in the NHS, even low turnouts were the fault of Westminster politicians. Neither side used logic and reason. It would be nice if they had, and I'll bet you anything the silent majority that didn't butt into every news programme would have appreciated it.

Alex Salmond said that it is a great day for democracy when 1.6 million people cannot have what they want, an independent Scotland. I hate to think how much all this has cost.

Monday, 15 September 2014

Phones 4U

It seems that our fragile recovery can still claim victims.

The good news:
Phones 4U is the UK’s second largest independent mobile phone retailer behind Carphone Warehouse, with some 500 high street shops in 2012. In 2010 sales increased by 20.4% to just under £750m, bolstered by further expansion of the in-store units at Dixons.

The bad news:
Vodafone hangs up on Phones 4U and ups distribution with Dixons Carphone.

There was nothing wrong with the business, however, the supplier has pulled the plug and the business has nothing to provide!

Carphone's decision this year to merge with electricals retailer Dixons is thought to have been prompted by growing unrest among its biggest customers – the mobile networks whose connections it sells. Three pulled its business from Carphone earlier this year. Hammered by the financial crisis and regulated price cuts to the cost of phone calls, with Europe tackling bill shock by imposing strict limits on how much customers can be charged for using their phones on holiday, networks have been looking for savings. An obvious place to cut was in the use of third-party resellers, who have enjoyed healthy margins in the UK compared with elsewhere in Europe. Vodafone has invested heavily in expanding its own-brand stores, making it less reliant on Phones 4u and Carphone.

Phones 4U said it remained profitable, with turnover of more than £1bn, underlying earnings of £105m in 2013 and significant cash in the bank, while credit rating agency Moody's, which downgraded its outlook for the company's ability to repay its debts last week, said Phones 4u had £205m in notes due by 2019, £430m due in 2018, and a £125m revolving credit facility.

Tuesday, 9 September 2014

Federal England

What is Great Britain, after all? You could call it the non-existent national core of the state, the United Kingdom; or the alter ego of England as the unacknowledged heart of the UK state. Although the ‘national’ UK politicians make great capital out of Great Britain or Britain as the personality of the state, does Great Britain actually exist in the present in any fundamental national, political or constitutional sense? Great Britain is indeed the ‘foundation’ of the UK state because that state’s parliament was constituted as the parliament of the Kingdom of Great Britain through the Acts of Union between England [including Wales] and Scotland in 1707. When Ireland [later reduced to Northern Ireland] was added 100 years later to form the United Kingdom of Great Britain and Ireland, this was essentially an extension of the jurisdiction of the Great Britain parliament and government to include Ireland. So the UK, on this basis, remained Great Britain at its core.

The 1998 devolution legislation has changed the Union radically. The changes will be the permanent and most important achievement of the Blair government. However they have also unbalanced the Union to such a degree -by leaving England out of devolution altogether and by providing Wales with a mere fraction of what has been granted to Scotland- that unless balance is restored, the Union will come apart. The essence of a balanced Union is for each of the constituent parts to stand in the same relationship to the Union itself and to each other. That can be achieved in a very straightforward way by granting to both England and Wales their own parliaments with the same powers and executive as the Scottish Parliament, and the Union Parliament retaining the reserved powers it has now in relation to Scotland. The relationship of Scotland to the Union Parliament is the blueprint; and balance and justice can be easily achieved by extending it to England and Wales.

So Great Britain / Britain is just a ‘nation name’ or ‘national persona’ for the UK, not a formal nation in its own right. If you wanted to finesse this argument further, you could say that the reason why ‘Britain’ rather than ‘Great Britain’ tends to be used nowadays to evoke a national identity for the non-nation state of the UK is that ‘Great Britain’ refers back to the historical nation – ‘kingdom’ – of Great Britain about which people are vaguely aware that it ended when Ireland came on board; and that it is not, consequently, inclusive of Northern Ireland. So ‘Britain’ is used precisely because it is not the formal name of a state or a nation that does or does not exist in the present. Indeed, one might say that the power of the name ‘Britain’ to evoke feelings and ideas of nationhood is in inverse proportion to the actual existence, past or present, of such a state or nation.

Change has always happen and it will continue to happen, the question at the moment is will the Island be destroyed by federalism? I think not.

Friday, 5 September 2014

The Iraq/Syria problem

Rumours abound that our government is about to do a deal with Bashar al-Assad so that we would be able to fly into Syrian air space without being shot at, fair enough you might say, but what are the details?

This is what I have said about the Syrian situation in the past:-

While it might be right to deal with the infection at the root cause, one has to wonder how the infection started in the first place. One reason might be that Bashar al-Assad treated his people so badly that a faction started which has now grown out of all proportions to the local region and is consequently spreading across the globe.

Perhaps we should bear this in mind while making deals with tyrants!

Thursday, 4 September 2014

What Police Force!

Crime victims are increasingly being told by some police forces to carry out their own investigations by speaking to neighbours, checking for CCTV images and seeing if their stolen property has been put up for sale on second hand websites, the official police watchdog has warned.

Her Majesty's Inspectorate of Constabulary [HMIC] says that for some high-volume types of offences, such as car crime, criminal damage and non-residential burglaries, this "DIY" approach to tackling crime is an "emerging trend" among some forces. They warn that in areas where the police have given up investigating these offences, they are "on the verge of being decriminalised".

The HMIC's report on the use of police time says that in too many cases once the victim had been asked to carry out their own investigation by police call handlers, the crime report was filed away without any further contact with the victim. The police have been given powers and resources to investigate crime by the public, and there should be no expectation on the part of the police that an inversion of that responsibility is acceptable.

Inspector of Constabulary, Roger Baker, who led the inspection, said: "It's more a mindset that we no longer deal with these things. Effectively what's happened is, a number of crimes are on the verge of being decriminalised. So it's not the fault of the individual staff – it's a mindset thing that's crept in to policing to say, 'We've almost given up.'"

He added: "When a crime has been committed, it's the job of the police service to go and find out who's done it and bring them to justice. They're the cops and we expect the cops to catch people, and my proposition to you is that unless you've got the powers of Mystic Meg or something like that, you not turning up and using your skills … it's going to be mightily difficult to bring people to justice."

Of course the police will just point the finger at the Government and say that austerity is the root of
their problems, and continue to bury their heads in the sand.

Tuesday, 2 September 2014

London Airport

A plan for a brand new airport for London championed by the city's mayor has failed to secure the backing of a commission studying how to add hub capacity in the UK. The commission found that the likely "obstacles to delivery, high costs and uncertain benefits" are in line with today’s thinking that a London airport in deepest Kent is pointless, as well as outrageously expensive.

The commission said “While we recognise the need for a hub airport, we believe this should be a part of an effective system of competing airports to meet the needs of a widely spread and diverse market like London's. There are serious doubts about the delivery and operation of a very large hub airport in the estuary. The economic disruption would be huge and there are environmental hurdles which it may prove impossible, or very time-consuming to surmount.”

Time and public money should never have been spent on a project whose costs have been put at up to £100 billion. This is more than what they want to spend on HS2! The proposals must be cost-effective and offer value for money. There needs to be a credible funding mechanism based on realistic forecasts and today's passengers must not be expected to pay for tomorrow's infrastructure.

London, with five main commercial airports, has struggled with Heathrow, the U.K.'s principal long-haul airport, which has little margin to absorb operational or weather-induced disruptions. Advocates of more capacity have said an inability to accommodate new flights to routes into growth markets such as China puts the U.K.'s economic development at risk.

The rejection of the estuary scheme will leave just three options - two additional runway plans at Heathrow and one at Gatwick - still on the table for consideration by the commission, which is charged with recommending where airport expansion should come.

Expanding Gatwick will ensure the U.K. is served by two successful world class airports. It can liberate hub capacity at Heathrow and open up the opportunities for affordable long haul travel to emerging markets for the benefit of everyone. It already has an excellent connection to London with first class rail travel taking a mere 30 minutes from London Victoria. There is more than enough room to expand without disturbing the local populous.