BP’s ‘underlying’ first-quarter profit of $6.2 billion, compared with $2.6 billion in the first quarter of 2021, was a direct reflection of the surge in global energy prices. Coming 48 hours before polling day, it also looked like a gift-wrapped on-time delivery for Sir Keir Starmer and his claim that a windfall tax on ‘excess’ profits of North Sea oil and gas extractors would knock £600 off the energy bills of ‘those who need it most’. Perhaps anticipating the BP announcement, Rishi Sunak last week seemed to trim his opposition to a windfall tax, telling Mumsnet ‘of course that’s something I would look at’ if energy companies fail to invest in the right sort of projects.
But it’s the ‘if’ that matters there. BP’s net result for the period was in fact a colossal loss, after taking $25 billion of charges from writing off its stake in the Russian oil giant Rosneft. And if world-leading companies are to transform their operations to provide cleaner, more secure fuel for the next generation, they need extraordinary resilience, capital and shareholder support to do so. To quote the Prime Minister, what they don’t need is ‘clobbering’ with opportunist one-off levies. Nothing has changed in the case against windfall taxes.
The real Brexit problem
‘Brexit’s first success’, was the headline on our leading article last week praising changed patterns of immigration since the UK left the EU, while acknowledging that trade figures are ‘disappointing’. Jacob Rees-Mogg, apparently sharing that concern as ‘Brexit opportunities’ minister but looking at it through the wrong end of his binoculars, has announced a further delay – the fourth so far – in the imposition of full border checks on food and other imports from the EU. This leaves our own farmers facing Kafkaesque barriers to sending British produce across the Channel while shipments in the other direction remain largely unhindered.
But perhaps the minister was influenced by recent statistics (from the LSE, among others) showing that since Brexit took effect in January 2021, UK export volumes to the EU have stayed much the same, while imports from the EU relative to the rest of the world have fallen by 25 per cent. So why bother to discourage them, provoking shortages in supermarkets or on assembly lines?
What he ought also to have noticed, however, is that surprisingly favourable export volumes conceal a 30 per cent reduction in the number of ‘export relationships’ – telling us that while large exporters, driven by the imperatives of multinational operation, have found ways to cope with border costs and delays, many smaller exporters have abandoned the challenge of trying to reach European markets at all. That’s a major setback for the hardy breed of UK entrepreneurs who will build our future prosperity. If Rees-Mogg is worth his ministerial title, he should offer small exporters urgent help.
Don’t split HSBC
Having spent three decades arguing that bigness is a perpetual peril of banking, I might be expected to align myself with shareholders who are badgering HSBC – which claims 40 million customers in 64 countries – to break itself up. This is the institution that labelled itself ‘the world’s local bank’, based on a robust model of delegation to territorial managers that enabled it to operate at scale first across Asia, then in the UK, the Middle East and the Americas. But a series of scandals over the past decade – allegations of money-laundering in Mexico, sanctions-busting for Iran, servicing tax-dodgers in Geneva – told a different story: of an organisation so vast that its bosses could no longer control what its remote offshoots were up to.
And as China brutalised Hong Kong, where HSBC was born and maintains a flagship operation, the political and regulatory tensions of owning a huge China-facing business within a London-based global bank became increasingly obvious. Hence the case proposed by Ping An, China’s biggest insurer and the owner of 8 per cent of HSBC, for a splitting off of the bank’s Asian operations.
That might make sense were it not for another recent news story, about Beijing officials ordering banks to find ways to protect the country’s assets against international sanctions akin to those now imposed on Russia. China’s opaque financial institutions are tools of Xi Jinping’s hostile regime, which they help to sustain in power. This is no time to turn half of HSBC into another of them.
No nostalgia for BT
Should we be upset that ‘BT’ as a brand name for consumer mobile and broadband – in which the B still stands vestigially for British – is to be phased out by the parent BT Group and replaced by ‘EE’, which originally stood for Everything Everywhere, possibly to disguise that fact that it was a Franco-German incursion into the UK telecoms market? I think not.
Reports of the rebranding made play of supposed lingering nostalgia for Maureen Lipman’s BT ads from the late 1980s – and my own memory goes back to cartoon Buzby telling us to ‘Make someone happy’ a decade before that. But in truth BT is no KitKat or Ribena in terms of brand affection, and the group’s current ragbag – including the network maintenance arm Openreach, which might as well be rebranded Out-of-reach and ought to be a separate business – cries out for rationalisation.
All most of us care about is how quickly we get through to a call centre or wifi is installed. On that front I can report that BT made a good impression when I moved into my London flat last year – not for service but for honesty. ‘There’s a fibreoptic company claiming it’ll deliver 150 megabits per second if it can cable the building, or a cheap Virgin offer of 30 megs with connection next week,’ I told the call-centre operative. ‘Can you do better?’ ‘Nah,’ she replied, ‘BT’s still on copper wire in your part of town. Best we can do is nine megs per second. If I was you, I’d go with Virgin.’