FFrom where Rishi Sunak sits, he might consider Taylor Wimpey’s exceptional first half set of numbers a triumph of policymaking. The Chancellor paid subsidies to the housing market during the pandemic in the form of stamp duty holidays and was probably hoping to see what has now come to fruition: record house completions and the UK’s third largest builder speaking of improved earnings and “great mid-term momentum”.
From a political point of view, however, the correct way to look at events is the exact opposite: the stamp duty donation was a waste of public money. The savings inevitably hang on the seller as much as the buyer, and, as it should be clear by now, the big home builders didn’t need a helping hand getting through the foreclosure.
The boom would have happened anyway because the basic ingredients of a useful business environment were in place. Interest rates were at their lowest, mortgage availability was good, and pent-up post-Brexit demand continued to be released.
Suddenly, one could argue that the initial holidays, announced at the start of the pandemic, have helped to create a little confidence in a sensitive corner of the British economy. But the extension, announced by Sunak in its budget in March of this year, was indefensible. By then the take-off had taken place and the house builders were once again busy buying land. Indeed, Taylor Wimpey, wisely, had raised Â£ 500million from investors in mid-2020 to get ahead of the rush.
The company has never been a member of the industry chorus bullying Sunak by talking about a “cliff edge” if the holidays weren’t extended, it has to be said. Others were, however, and the Chancellor should have ignored them and instead considered how much the 20% (more in some cases) profit margins were coming back.
The net cost of the extension has been estimated at Â£ 1.3 billion by the Treasury for the current fiscal year. This is small beer in the context of the global Covid support package for businesses, but it is still money that could have been directed to sectors in real need. Sunak was naive.
Why not sell the Arm chip company to the United States?
Is the UK really on the verge of blocking the $ 40 billion sale of Arm, the famous Cambridge-based chip designer, to US Nvidia on national security grounds? The verdict of Oliver Dowden, the digital secretary, is eagerly awaited – he has already received an assessment from the Market and Competition Authority – but Bloomberg cited sources this week as saying “the UK is currently inclined to reject the redemption â.
An outright rejection would be bizarre since it was a Conservative government in 2016 that hailed the sale of Arm to SoftBank of Japan as the case of a foreign investor “supporting Brexit Britain”. The bragging was silly, but it’s hard to see why American property should have more security concerns than the Japanese.
The biggest worry, you think, is the competition. Would Arm’s famous neutral open license model be threatened by being owned by a major chipmaker? This debate is hotly contested, but Dowden is also expected to take note of the argument from Arm’s CEO Simon Segars that the Cambridge facility needs investment to adapt to the intelligence age. artificial and that the money is most likely to arrive under Nvidia.
Segars has to say it, of course, but he might also be right. SoftBank wouldn’t necessarily list Arm in the UK. It could simply play an ineffective role, which would not help the cause of UK investment.
Maybe Dowden has received new facts, but the best outcome of this saga still seems to be a deal in which Nvidia is forced to make long-term promises on supporting jobs and research at Cambridge. Life would be easier if Arm had never been sold to SoftBank, but this ship has sailed.
Openness needed if Mike Ashley gives Frasers job to likely son-in-law
Mike Ashley doesn’t do corporate governance, so no one should be surprised if he’s about to name his potential 31-year-old son-in-law as chief executive of Frasers, which owns Sports Direct, as reported by The Telegraph. . Michael Murray has been the man of the frame since Ashley gave him the bizarre title of “head of elevation”.
However, we must be careful of accusations of nepotism. There was a stir 20 years ago, when a 33-year-old, fresh-faced young man became CEO of Next, where his father had served as chairman until a few years earlier. Simon Wolfson turned out to be OK. He’s still around, is considered the smartest retailer in town, and Next is now worth almost four times as much as Marks & Spencer.
That doesn’t guarantee Murray will be a success, obviously. It just means it’s hard to tell until they start.