Any other business

Rishi’s stamp duty gimmick did little but help greedy builders

28 August 2021

9:00 AM

28 August 2021

9:00 AM

The Hundred — some sort of pimped-up cricket tournament, I gather — passed me by entirely, but I’ve been admiring the spin bowling of the Clayton, Dubilier & Rice team in another big contest, namely the bid battle for Morrisons. When CD&R made its initial 230p per share offer in June, there was much talk of the ruthless financial wizardry this New York private equity firm might apply to the supermarket group to extract maximum profit within a short timescale. But there was no more than a passing mention of the role as CD&R’s adviser of the former Tesco chief executive Sir Terry Leahy.

Now the offer has been raised to 285p — capping another US bidder, Fortress — while the script has been rewritten to present CD&R’s approach as a personal mission on Leahy’s part to protect the legacy of his hero, the late Sir Ken Morrison, who built the eponymous family business into a nationwide chain. ‘There was genuine respect and affection between the two of them,’ we’re told. In that spirit, CD&R says it has no plans to cut Morrisons’ staff, or their pension rights, or to milk cash from its property portfolio via sale-and-leasebacks.

That all sounds warm and fluffy. But let’s remember that Leahy’s competition-crushing 14-year reign at Tesco was marked by fanatical pursuit of market share and constant squeezing of lower prices from suppliers — and that gruff old Sir Ken would have been the last man to succumb to love bombing in the midst of a bid battle. Morrisons’ board last week dumped Fortress to accept the increased CD&R offer valuing the business at £7 billion. But the shares continued climbing above 290p in anticipation of more to come, whether from Fortress or elsewhere.

Meanwhile Apollo Global Management, tipped last month as a third potential American bidder for Morrisons, is rumoured instead to have hungry eyes on Sainsbury’s, whose shares jumped 14 per cent in response on Monday. Wise investors will wait for more twists in this story.

Petits projets please


It’s no surprise to hear that the branch of HS2 which would have connected Birmingham to Leeds via Nottingham and Sheffield (and on which work has already been halted) is about to be ‘mothballed’ sine die for a saving of some £40 billion. There are also rumours that the axe may fall on the proposed Northern Powerhouse fast rail service between Manchester and Leeds when the Department for Transport’s ironically titled Integrated Rail Plan is belatedly published this autumn. The real surprise will be if the DfT finds any more cash at all for major improvements north of the M25 within the life of this overspent government, except of course for the main stretch of HS2, which ministers are too embarrassed to cancel.

But if we can’t have grands projetslet’s at least have small ones that bring useful improvements. Suggestions, as ever, to martin@spectator.co.uk — and here’s one for starters, from a northern digital entrepreneur who’s the very model of the citizen Whitehall aims to please. ‘Revamp the dreadful mobile and broadband connections on the last 20 minutes into London on main lines through the tunnels from the north. Then I’d care a lot less how long the journey takes and I wouldn’t arrive in a furious rage.’

Misguided giveaway?

Was Rishi Sunak’s stamp-duty giveaway, which ends next month, worth the £5 billion or so it will have cost the Treasury? The housing market has certainly been hot ever since it re-opened with the duty relief booster last summer. But a 13 per cent average price rise in the year to June means that, for all but the first flurry of buyers, tax savings will have been more than consumed by higher prices — which have delivered rising profits for house-builders and buckets of champagne for estate agents.

What’s more, a study by the Resolution Foundation tells us the stamp-duty gimmick didn’t really drive the buying surge. Instead, it had more to do with low interest rates and pandemic psychology: similar price rises occurred in North America and Europe, while UK regions with higher stamp-duty savings saw lower price rises, and vice versa. The net result, with anti-inflationary rate rises also in prospect, is that once the last slice of stamp-duty relief has gone, first-time home-buying will be more painful than ever. But let’s be honest — we all thought the giveaway looked good at the time.

Come to the tables

I’m grateful to readers who responded to my essay last week about moving from rural Yorkshire to urban Seven Dials. When asked in The Spectator’s Edition podcast what had changed most in the three decades since I last had a home in the capital, I said that traffic on the thoroughfares is now worse even than Tokyo’s when I lived there in the mid-1980s, but that the ambience of side streets and byways reclaimed by pedestrians and cafés is much more fun than it used to be.

I didn’t realise, however, that one corner of my neighbourhood, the Long Acre junction with St Martin’s Lane and Garrick Street, was about to be reclaimed by Extinction Rebellion climate protestors and blocked with a giant pink structure carrying the slogan ‘Come to the Table’. Its effect will of course be to deter potential customers from coming to the tables of the many hospitality venues in the vicinity that are struggling to reclaim their trade.

The area’s leading commercial landlord, Shaftesbury, reports that footfall, held back by absent tourists and office workers, has so far returned to 50-60 per cent of pre-pandemic levels and that just 55 per cent of contracted rents were collected in July. The West End may feel relatively lively but it is only halfway to recovery. A fortnight of disruptive protest will do far more harm to local businesses than it will do good for the planet. I trust Garrick members will take the pink-table exhortation literally and set an example by forcing their way to the club.

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