Ross Clark | The Spectator columnists & writers

The bogus companies exploiting Britain’s registration rules

Britain appears to be enjoying a surge of entrepreneurialism, with more than 200,000 start-ups registered at Companies House between April and June this year alone. However, while many of these are genuine cases of people taking the plunge and embarking on their dream of opening a tea shop, launching a webinar app or whatever, an awful lot are not going to be contributing any cherries to our national pie – and some might well be pilfering a few. Among those unlikely to be contributing are the 36 companies registered last year to a single address in Bristol – not a business park but a small semi-detached house. Or the 95 registered, apparently by Romanian nationals, at 65 different houses in the same Herefordshire street since January last year.

The case for letting council tax rise

We have now been primed for so many tax rises that Thursday’s autumn statement will inevitably come as some form of relief. Whatever Jeremy Hunt announces is sure to be milder than the possibilities fed to us over the past few weeks. But there is one suggested tax rise which is far too mild, and far too reasonable. Local authorities, it has been floated, may be allowed to put up their council tax bills by up to 5 per cent without having to put it to the public in a referendum (a referendum which, needless to say, would swallow up a good slice of any extra revenue gained).Five percent would amount to a sharp rise in council tax compared with recent years. For the past few years councils have not been allowed to put up their bills by more than 3 per cent without having to hold a referendum.

Crypto is being hoisted by its own petard

Like Liz Truss, Sam Bankman-Fried will be the stuff of pub quizzes: who lost his entire $16 billion fortune in days? A quick trawl of the internet suggest his only real challenger in losing so much money so quickly was Masayoshi Son, the founder of Softbank, who was estimated to have made a paper loss of $70 billion in the dotcom crash. But he wasn’t completely wiped out, and retained considerable wealth as Softbank rose again. Bankman-Fried, on the other hand, is believed now to be worth pretty much zero following last week’s collapse of the crypto exchange he founded, FTX. At its peak, Bankman-Fried’s stake is estimated to have been worth $26 billion, and it was still worth many billions in the days before its sudden collapse.

Are there signs inflation has peaked?

Is the inflationary spike past its peak? That is the obvious reaction to the news that US inflation fell to 7.7 per cent in October, down from 8.2 per cent in September and significantly lower than the 8.0 per cent that markets had been expecting. Clearly, inflation remains high, but US inflation is now lower than at any stage since January. A further couple of months of falls would seem to indicate that, for now, inflation has been tamed.It ought to come as no surprise. The US Federal Reserve has been fighting inflation aggressively all year with interest rates. It is some way ahead of the curve being followed by the Bank of England and the European Central Bank. Moreover, a slowing economy ought to bring down prices as consumers draw in their horns.

Would a lower foreign aid target be so bad?

Whatever happened to David Cameron’s promise to spend 0.7 per cent of GDP on foreign aid? Amid much criticism, it survived Cameron and Osborne’s (failed) efforts to bring the public finances back into balance. Then, following Covid, the then-Chancellor Rishi Sunak cut the target to 0.5 per cent, saying that it would be restored to 0.7 per cent once the government was no longer having to borrow money to fund day-to-day spending.But could it be reduced further still in the Autumn Statement? That is what some fear. Indeed, it has been argued that Britain’s overseas aid budget has already dropped to far lower than 0.5 per cent of our national output. Stefan Dercon, professor of economic policy at Oxford University’s Blavatnik School of Government, argues that when you take subtract the £3 billion of the £11 billion aid budget being spent housing refugees physically within Britain, we are spending only 0.

Brexit isn’t to blame for today’s economic collapse

We can be grateful for small mercies. 4 November 2022 will go down as the day when a presenter on the Today programme finally challenged a dodgy statistic trying to blame economic collapse on Brexit. The statistic in question was put forward by former Bank of England governor Mark Carney in an interview with the Financial Times last month in which he said: 'Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent.' Mishal Husain, to her credit, put this to Carney this morning, pointing out that economists had challenged this figure. In particular, Jonathan Portes of Kings College London (whom Husain felt the need to point out is ‘absolutely not a Brexiteer’ because Brexiteers of course cannot be trusted) had explained what was wrong with the 'zombie statistic'.

Nicola Sturgeon’s oil paradox

Is oil extraction a form of environmental vandalism which threatens life on the planet, or a source of revenue which could propel Scotland and its people to new levels of wealth? It is little use asking Nicola Sturgeon: she appears to believe it is both.Three years ago, when striking schoolchildren and Extinction Rebellion were telling us that the world must become carbon-neutral by 2025 or face massive loss of life, she told the SNP spring conference:‘I met some of the young climate change campaigners who’ve gone on strike from school to raise awareness of their cause. They want governments around the world to declare a climate emergency. They say that’s what the science tells us. And they are right. So today, as First Minister of Scotland, I am declaring that there is a climate emergency.

Why is Rishi Sunak going to Cop?

Whoever Rishi Sunak is taking his advice from, evidently it isn’t me. Last Friday I wrote here supporting his decision to skip Cop27 in Egypt, arguing that it is futile trying to persuade the big carbon emitters like China and the US to follow our example and make a legal commitment to eliminating net carbon emissions by 2050 or by any other date – unlike us they simply aren’t going to take a blind leap into a green future without first knowing how they are going to achieve it without ruining their economies. This week’s announcement by German industrials giant BASF that it is to reduce operations in Europe, where it says energy has become too expensive, and invest in a £10 billion factory in China instead ought to come as a very loud warning that Europe is in danger of simply exporting its industry as it doggedly tries to stick to unachievable net zero targets.

What BP’s soaring profits tell us about our dependence on oil

So much for those ‘stranded assets’ which former Bank of England governor Mark Carney and many others tried to warn us about. It wasn’t long ago that climate activists were urging the world to dump shares in oil companies, not just because we should want to punish them for climate change but because, they said, oil companies’ fortunes were on a downward trajectory as the world turned green. ‘The exposure of UK investors, including insurance companies, to these shifts is potentially huge,’ Carney said in 2015. ‘Once climate change becomes a defining issue for financial stability, it may already be too late.’ But that’s not how it looked in BP’s boardroom this morning as it announced profits of £7.1 billion ($8.2 billion) in the third quarter.

Sunak is right to stay away from COP27

Rishi Sunak deserves one of those ‘climate champion’ badges they hand out at primary schools. Why? Because he is not going to fly to the COP27 summit in Egypt – thereby saving 1.65 tonnes of carbon emissions, according to the World Land Trust’s carbon calculator. So what if Ed Miliband thinks it is a failure of leadership? There is no point in any UK Prime Minister travelling to any more of these summits when the world’s largest carbon emitters have made it perfectly plain that they have no intention of copying Britain’s example. They will not be putting themselves under legal commitment to eliminate net carbon emissions by 2050 or any other hard date. Xi Jinping, whose country is responsible for a third of the world’s emissions, won’t be going.

Might Sunak regret his Budget delay?

Given the swift defenestration of his predecessor after her mini-Budget panicked the markets, it is not surprising that Rishi Sunak has delayed the Treasury’s autumn statement until 17 November. No set of fiscal plans will satisfy everyone, but markets and public opinion do seem to be especially sensitive to changes in fiscal policy at present. And there’s this: left-leaning thinktank the Resolution Foundation this morning said delaying the statement for just two weeks will reduce the apparent black hole in the public finances as the cost of government borrowing comes down. The two-week delay could create the illusion of an extra £15 billion in the government’s coffers (or rather £15 billion less borrowing), mitigating the need for spending cuts and tax rises.

Why are Europe’s gas prices falling?

Is Europe’s chilly winter destined to become another Millennium bug – a much-feared disaster that never transpires? Only a few weeks ago wholesale gas prices were surging, leading to predictions of blackouts, rationing and people unable to heat their homes. Throughout August, analysts produced forecasts (extrapolated from wholesale gas prices) which showed eye-watering energy prices throughout winter and spring. Governments reacted by hurriedly announcing extremely expensive schemes to cap prices for consumers. This, in part, contributed to the rapid fall of Liz Truss as markets panicked that her government would be unable to fund her £100 billion plus energy price guarantee. Yet, since then, wholesale gas prices have plummeted.

Rishi Sunak faces an impossible job

Well, good luck, Rishi. You’ll need it – and not just because, as backbench Tory MP Sir Christopher Chope put it this morning, the Conservative party has become ‘ungovernable’. The whole job of prime minister has become impossible. There are too many demands on the person who holds that position, and too much blame placed on them when people’s lives fail to live up to expectation. Liz Truss made a huge error in announcing a huge £100 billion welfare programme (the energy price guarantee) in conjunction with £45 billion of tax cuts, all uncosted. But would her premiership have proved much more successful had she been a bit more careful with her fiscal policy? Hardly. Had she been less generous with her energy price guarantee, she would have been accused of letting people freeze to death, or starve.

Is Britain heading for a painful recession?

Is Penny Mordaunt the Stop Boris candidate?

Here’s a little mystery: whatever happened to that nice, sensible foursome whom all week we were led to believe were ready to seize the reins of power from Liz Truss: Rishi Sunak, Jeremy Hunt, Penny Mordaunt and Ben Wallace? If Truss resigned, we were told, the Tory party would behave in the same grown-up fashion that it did when it elected Michael Howard as leader unopposed in 2003. Yet come Truss’s resignation the fab four was nowhere to be seen. Instead, Penny Mordaunt quickly made it plain that she didn’t want to play second fiddle to Sunak and believed that she could run in her own right. There are two possible explanations for this. Firstly, that Mordaunt’s personal ambition is stronger than her desire to establish Conservative party unity.

How Truss’s resignation moved the markets

If anyone was expecting markets to be in jubilant mood after Liz Truss’s resignation, they will be feeling a little disappointed. True, the pound has risen and gilt yields have fallen this afternoon – but not by much. They moved far further on Monday when most of Truss and Kwasi Kwarteng’s mini-Budget was ditched, which is perhaps only to be expected. At 3.30 p.m. yields on the UK government’s ten-year gilt stood at 3.85 per cent, down from just below 4 per cent early this morning. This time last week, when Kwarteng was still chancellor, they topped 4.4 per cent. They began Truss’s brief premiership at 3.3 per cent. Rising gilt yields, though, long pre-date Truss. At the beginning of the year, they were at 1 per cent.

Kill the Bill!

Britain needs more honesty about unemployment

Is low unemployment causing us more problems than we realise? The suggestion might seem absurd, offensive even. It’s reminiscent of the days of Mrs Thatcher’s supposedly ‘cruel’ monetarism, when we had three million unemployed. Some on the fringes liked to argue that unemployment was good for the economy because it made people work harder, being fearful for their jobs.Mass redundancies would not, of course, help the economy now or at any other time. If a million people were to lose their jobs, as happened in the early 1980s, that would be a million households suffering a collapse in the spending power. As well as a human tragedy, it would be an economic one, too.But then who mentioned anyone losing their jobs? We could have a far higher – not to mention healthier and more honest – unemployment figure without anyone losing a single job.

The markets have rebounded – but how long for?

So, no Black Friday. The pound is steady, the FTSE100 up 1.5 per cent, the FTSE250 up more than 3 per cent. Just as fears grew that the end of the Bank of England’s gilt-buying programme could send pension funds to the brink and precipitate a fresh market crisis, the opposite happens: markets embark on a rebound. It won’t necessarily last, of course. The long, miserable decline of stock markets and gilt markets this year has been punctuated, as ever, by periods of optimism, only for a fresh slide to begin. But for the moment it seems as if the big story that is driving markets is the expectation that Kwasi Kwarteng’s mini-Budget will see more U-turns – possibly as early as today – or even be dumped altogether.

Five things market-watchers should look out for tomorrow

All financial crises have their peak days, the moment of drama when everything comes to a head. Think of Black Monday – 19 October 1987 – when the bottom fell out of global stock markets, or Black Wednesday – 16 September 1992 – when the pound crashed out of the Exchange Rate Mechanism. With the Bank of England saying that it will cease emergency purchases of gilts tomorrow (although it is reported to have told pension fund managers a different thing in private) could we be facing a Black Friday? Some things to look out for tomorrow morning…. Gilts crash (ie yields rise sharply)? This afternoon, things have been going in the other direction. Gilts have been perky, as confidence rises that pension funds have succeeded in offloading sufficient gilts, and raising sufficient cash, to keep themselves out of trouble.

Is it time to sack Andrew Bailey?

Kwasi Kwarteng’s mini-Budget was botched and the government has lost control of public spending. But this morning Jacob Rees-Mogg was not wrong to deflect at least some of the blame for current market turmoil on the Bank of England. The bank has been hopelessly behind the curve on inflation – in May last year it was still confidently predicting that the Consumer Prices Index would rise no higher than 2 per cent this year. Shortly before Kwarteng’s budget it showed that it was still lagging behind by raising interest rates by 0.5 per cent rather than the 0.75 per cent which markets had been expecting. But it is the bank’s latest fiasco that has really unsettled markets. Speaking in Washington on Tuesday, the bank’s governor, Andrew Bailey, ruled out extending beyond Friday the emergency gilt purchases which the bank has been undertaking to shore up the pensions industry.

What’s wrong with Shell sponsoring British Cycling?

If I were boss of Shell I would be tempted to take the company overseas and live a quiet life. Do a Thungela Resources, in other words – the South African-based coal miner spun out of Anglo American in June 2021, dumped by British funds on its first day of trading. But, as coal power stations are fired up around the world in reaction to the energy crisis, it has quietly gone on to become one of the best investments anyone could make over the past year. Its shares have risen tenfold in the 16 months since – while attracting barely a whimper of protest from environmental activists in Britain. Why go out of your way to attract the opprobrium which has been heaped on Shell as a result of its decision to sponsor British Cycling for the next eight years? According to Friends of the Earth, 'cycling is the epitome of environmentally-friendly travel.

Why the economy can’t get real

Markets, we are told, are rebelling against the government’s irresponsible fiscal policy, not least the now-abandoned plan to abolish the 45p tax rate. If that is what they are doing, it marks a sharp change in their behaviour. For most of the past decade they have whooped with delight whenever a fantastically expensive stimulus package has been announced and gone into a sulk whenever there have been rumours that the punch bowl is about to be withdrawn. In this Alice in Wonderland world, good news became bad and bad news became good. Why? Because bad news means greater likelihood of a stimulus package; good news means stimulus is likely to be withdrawn. And of course, the extra billions pumped into the economy through stimulus – whether it be quantitative-easing or Joe Biden’s blatant helicopter money – had a tendency to be sucked into inflated asset prices.

Truss is foolish to block Rees Mogg’s energy saving campaign

When you have defined yourself against the nanny state and scorned the idea of limiting supermarket ‘two for one’ offers, it is only natural that you will go on to reject the case for a £15 million public information campaign to try to persuade people to take fewer baths and turn their thermostats down. The Prime Minister has rejected such a campaign in spite of it being backed by her business secretary, Jacob Rees Mogg – putting Rees Mogg in the unlikely position of the nation’s nanny-in-chief. These kind of campaigns have a bit of a poor history, as anyone who remembers the 1976 drought will recall. Hapless minister for drought Dennis Howell was ridiculed for telling us he was sharing baths with his wife Brenda and that we should do the same (presumably with our own wives, not with Brenda).

Oil giants aren’t government cash cows

According to Labour, solving the energy crisis is really very simple. Rather than funding an energy price cap through borrowing, as Liz Truss wants to do, it should be funded by a windfall tax on oil giants instead. In other words, let’s grab some of more of the gargantuan profits being made by these polluting companies and use it for the social good. But hang on a minute. Is there really such a bottomless well of money to be exploited? This morning’s profit warning from Shell suggests otherwise. We have been conditioned into thinking that companies such as Shell have been coining it in all year – not least thanks to the foolish remarks by BP chief executive Bernard Looney in February comparing his company to ‘a cash machine’.

Scrapping inheritance tax is a terrible idea

There is no hole deep enough that a Conservative minister cannot muster the spadework to excavate it to even greater depths. No sooner had Kwasi Kwarteng announced that he was dropping his proposed reduction in the upper rate of income tax, than Andrew Griffith, one of his ministers at the Treasury, declared that he would like to see inheritance tax abolished. ‘I have lots of my fantastic local association [members] with me here and they will know because they asked me at my selection meeting 27 months ago which tax, if I had the choice, I would most like to see eliminated. History will record it was inheritance tax, ’he told Conservative party conference. Dropping the 45 pence tax rate to 40 pence was at least the right policy, albeit at the wrong time – it was politically explosive at a moment when you are demanding that workers make do with below-inflation pay rises.

The problem with nationalising energy

Is nationalisation the vote-winner which Keir Starmer believes it to be? We will find out in due course, but my hunch is that the British public as a whole care a lot less about who owns the train carriages they ride in and the power stations which generate their electricity than Labour MPs do. What they care about rather more, surely, is whether their trains arrive on time and whether their lights stay on. No one who remembers British Rail will be under any illusions that public ownership is a panacea for a functioning railway, and neither will anyone who remembers the three-day week be fooled into thinking a public-owned power industry guarantees keeping the lights on. So what to make of Labour’s plan for Great British Energy – a public-owned company which would invest in wind, solar and possibly tidal energy? There is no reason that a public-owned company cannot operate wind farms, but there is no reason, either, to suppose that Keir Starmer has even addressed, still less solved, the fundamental problem of trying to operate a national grid based on intermittent wind and solar energy.

Slashing stamp duty would be a wise move

The ‘rabbit out of the hat’ in Kwasi Kwarteng’s mini budget this Friday is likely to be a cut in stamp duty on property purchases. If so, it will be a popular and wise decision. Not only might it help generate extra activity in a housing market which looks like flagging as interest rates bite – or maybe mitigate a decline in activity – it should help to promote labour mobility by making it easier for job-seekers to move around the country to look for work or further their careers. Moreover, depending on at what level it is set, a stamp duty cut might well generate extra revenue, too. Never was there a better demonstration of the Laffer Curve in action than with stamp duty in the UK property market.

Is a weak pound bad for Britain?

Should we despair that the pound has slumped again today, falling below $1.14 for the first time since 1985? Or should we rejoice? It was, after all, a collapse in the pound following Black Wednesday in 1992 – along with dramatically lowered interest rates -- which precipitated a lasting economic recovery. It is all too easy to see the value of the pound as a national virility symbol, and think that the stronger it is, the better. In reality, a weak pound – or let’s say a pound set at a realistic level, which properly reflects the costs of wages, goods and services in Britain – can help stimulate the economy by making our exports relatively cheap. Trouble is that in order to benefit from a weak pound you need export industries which are poised to seize advantage.