10 ★ FT Weekend 22 February/23 February 2020
Give our universities
another go at moonshots
Tim Harford bemoans the lack of an
institution or institutions in the UK
capable of doing high-risk, high pay-off
research (“Why moonshots elude the
timid of heart”, February 25). “Let’s
give it a try,” he says. But isn’t this what
universities in this country did
successfully for many years? That was
before they were forced by
ideologically driven governments to
model themselves on private sector
companies and become narrowly
focused on the short-term aim of
producing graduates with at least a
chance of earning enough to repay
their student loans.
Why not give them another go?
Timothy Beecroft
St Albans, Herts, UKPolicy on audit needs to
be clear — and consistent
Your report “Watchdog threatens audit
firms with extra reforms” (February
19) quotes a senior director of the
Competition and Markets Authority in
warning that the CMA’s resolve to
expand the pool of firms “from four to
more” is not in doubt. Unfortunately
there seems a direct conflict between
their aims and those of the reports by
Sir John Kingman and Sir Donald
Brydon. The former proposes
additional regulation of auditors, the
latter additional responsibilities for
auditors. Both of these will significantly
raise the hurdle for new entrants into
the audit sector generally and the large
corporate audit market in particular.
While we may need more large-firm
auditors, three separate reports on
audit with overlapping and somewhat
conflicting aims are two too many. The
government needs a clear, consistent
policy before the industry can take any
decisive steps into the future.
Malcolm Bacchus
Principal, Baccma Consulting,
London SE14, UKSunak has opportunity to
rebuild the UK tax system
Further to “Pressure grows on Sunak to
review fiscal rules and open spending
taps” (February 19): opinion seems
divided as to whether workers in the
UK pay too little tax (the UK tax wedge
is well below EU average) or too much
(perception of the domestic burden is
that it is increasing). Similarly,
businesses stand accused of paying too
little tax on the one hand, while others
file for administration citing the tax
burden as the cause.
The behavioural impact of tax on
business is clear, as the response to
perceived risks and administrative
burdens of the new private sector IR
regime have shown. The answer lies in
a rebalancing of what we tax, and why.
The taxes paid on business profits
are a tiny proportion of the economicactivity required to generate them.
Guiding businesses to make their
profits responsibly would be far better
for our society than encouraging them
to cut labour costs while increasing
resource use, then looking to the tiny
receipts from profit taxation to make
good the problems that causes. Instead,
the focus should be on pollution and
consumption, with a shift of the tax
burden from labour to natural resource
use.
Amid the constitutional and
economic turmoil ahead, seizing this
opportunity to rebuild the UK tax
system to fit a 21st century economy
would be the most valuable legacy that
any chancellor could leave.
Jason Piper
Head of Tax and Business Law —
Professional Insights, ACCANostalgia is getting in the
way of cost-effectiveness
Nostalgia seems to be replacing
analysis when it comes to proposals to
reverse the Beeching cuts to Britain’s
rail network. Reopening the line to
Bedlington in Northumberland is to
cost £162m (“Rail enthusiasts track
PM’s levelling-up pledge”, February
18). With a population of about 18,
at the last census, Bedlington is
therefore getting a rail investment of
about £9,000 per head — before taking
account of any continuing annual
revenue subsidy not mentioned in your
report.
Can this really be a cost-effective use
of taxpayers’ money or the best way to
boost the prosperity of Bedlington?
Paul McIntyre
London N19, UKA happy interlude
at Barclays Bank
Philip Augar’s article “Running
Barclays is like riding a rollercoaster”
(February 15) neatly fits your headline.
But the history of previous chief
executives is not quite as the article
reads. Mr Augar makes no mention of
the five-year period from late 1998 to
2004, when Sir Peter Middleton, acting
(and very effective) CEO for 11
months, followed by Matt Barrett until
2004, steadied the “rollercoaster” ride.
Not so much the regular rhythm of
“Brit, Yank, Brit, Yank”, but more a
happy interlude of “Yorkshireman,
Canadian”!
Grant Phillips
Oxford, UKLet’s drink to that
I enjoyed reading Simon Kuper on
drinking (“How much is too much?”,
February 8), largely because I
remembered Churchill’s comment on
his own capacious thirst: “I’ve taken
more out of drink than drink’s taken
out of me.” Cheers!
Dr Clark McGinn
Harrow-on-the-Hill, Middx, UKWhat a disappointing
human is Eric Li
I would like to comment on the Lunch
with Eric Li (February 8). Perhaps Mr
Li should be more modest about
himself and China in his choice of
restaurant in the light of how the
coronavirus started.
It is believed to be linked to China’s
unsavoury relationship with live wild
animals in the food markets, and the
Chinese appetite for all species in a
time of species extinction. As we
know, the endangered pangolin has
been linked to the current coronavirus
outbreak.
Perhaps Mr Li should be more
circumspect about consuming abalone,
which is also endangered. So is lobster
— if it is wild not farmed, as is probably
the case in the Yu Zhi Lan restaurant.
Sea cucumber is also under threat.
Such showing-off on Mr Li’s part, but
oh my word, such a disappointing
human.
What upsets me the most is that the
FT did not mention the choices on the
menu alongside the Rmb4,066 (£450)
bill, the fancy chef — the “new emperor
of Chinese gastronomy” — and the VIP
room. When are we going to start
challenging chefs on their choices of
ingredients? Lan Guijun will no doubt
say that his produce is sustainable.
Abalone is not sustainable in any way.
Use creates demand. Poaching is at its
peak and the tipping point is upon us.
Adrienne Sparks
Durban, South AfricaFurther to Dr Richard Carter’s letter
(February 15), I would like to add the
Sino-Vietnamese war in 1979, when the
Chinese army invaded its southern
neighbour’s border, to refute Eric Li’s
claim (Lunch with the FT, February 8)
that the rise of China did not involve
shots being fired and countries being
invaded.
Casualty figures vary, but according
to Vietnam’s main newspaper 10,
Vietnamese civilians lost their lives,
while China’s sources estimated that
Vietnam lost 57,000 soldiers and
70,000 militia members.
Alex Kingsley
Telham, E Sussex, UKSurfin’ Bundoran!
The resort of Bundoran, on Ireland’s
north-west coast, is ranked as the fifth
best surfing destination in the world by
the well-respected platform Travelers
Today. It describes “the shimmering
green waters with their rolling waves
that are shaped by bouncing off the
headlands and flat reefs... making
this one of the best surfing spots in
Europe”.
What a pity that it was omitted from
“The birth of surf” (February 15), an
otherwise excellent feature on the
world’s top surfing spots.
Cormac Meehan
Bundoran, Co Donegal, IrelandLetters
S AT U R DAY 2 2 F E B R UA R Y 2 0 2 0Email:[email protected]
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If you are not satisfied with the FT’s response to your complaint, you can appeal
to the FT Editorial Complaints Commissioner: [email protected]Corrections
cThe acquisition of ETrade would cut
Morgan Stanley’s funding costs by
$150m within two years, not $150bn
as wrongly stated in an article on
February 21.cThe source for a chart accompanying
Martin Wolf’s column on February 19
showing the falling costs of renewable
electricity was BloombergNEF, not the
Energy Transition Commission.Frank Vogl’s assertion that “most
Germans have thought to evade the
toughest questions for decades”
(Letters, February 15) is not borne out
by my experience. When I was growing
up in Germany in the 1960s and 70s
not a month seemed to go by without
school, TV or newspapers reminding
Germans of their collective
responsibility. This included visits to
concentration camps and a frequent
focus on the topic in history, German
and arts lessons at school.
There have always been prominent
reminders, including one just outsidethe KaDeWe, Berlin’s premier
department store. In Berlin’s central
areas every few hundred metres you
come across theStolpersteine, brass
blocks that replaced small paving
stones with the names of Jewish people
who were dragged from their homes
around the city. Walking around Berlin
on the evening of November 9 2019, the
anniversary of Kristallnacht in 1938
when synagogues, Jewish shops and
people were attacked on a massive
scale, you could witness many
residents of Berlin, with their children,
on their knees on the pavementpolishing these brass stones and
placing candles.
Holocaust memorials of all sorts are
ever present, including the excellent
“Wir waren Nachbarn” (We were
Neighbours) permanent exhibition in
Rathaus Schöneberg, documenting the
lives and some lucky escapes of Jewish
people in and around the borough of
Schöneberg.
Mr Vogl, if you ever pass though
Berlin, please let me take you on a tour
(dinner included).
Stefan Zehle
London W14, UKHolocaust memorials are ever present
Recent studies suggest
we have enough homes
Liam Halligan (“How to fix Britain’s
housing problem”, February 15)
appears to confuse affordability issues
with the notion that the UK has too few
homes, when in reality recent studies
suggest we have the appropriate
number of homes. The Bank of
England last year and David Miles (a
former member of the monetary policy
committee) last month have both used
research papers to point to the UK
rental markets as some of the best
indicators of our need for more homes;
both papers found there has been an
almost negligible rise in real rental
yields in any of the UK’s major rental
markets since 2009, suggesting there
has been little or no increase in
demand for homes.
It is the fall in interest rates since
2009 that is the primary driver of
house price inflation; it is this and
weak wage growth that has led to some
now finding home ownership
unaffordable.
Politicians and housebuilders
apparently prefer to believe that it is
the lack of supply, rather than
recognise that historically low interest
rates are the main driver of
affordability issues.
Charles Fairhurst
Fairhurst Associates,
London W8, UKWe need to accept that
renting is the way forward
Liam Halligan’s op-ed “How to fix
Britain’s housing problem” (February
15) contains much that is sound,
relating to the greenbelt and the
treatment of planning gain. But it still
seems to be bogged down in its implicit
assumption that universal home
ownership is the desirable aim. This
was always a myth — the idea that
long-term borrowing, sustained by a
reliable income source over half a
lifetime, was appropriate for more than
a modest proportion of the population.
And with the advance of the gig
economy, the assumption is less and
less tenable.
What we need is an acceptance that
renting is the way forward: to do this,
we need to bring in legislation
protecting the rights of (good) tenants,
while restoring the image of the
professional landlord. It would help if
politicians and journalists could resolve
to avoid the tired old image of “the
housing ladder”.
John Bates
Abingdon, Oxon, UKSome may welcome Liam Halligan’s
recommendation (Comment, February
15) that the “peers should now call for
a full Competition Commission
inquiry” into the UK housebuilding
industry. Except that the Competition
Commission was closed on April 1
2014, its functions rolled into the
(then) newly created Competition and
Markets Authority.
Alex Hough
Trainee Solicitor (England and Wales),
Clifford Chance,
Paris, FranceThe old thought experiment about how
a butterfly flapping its wings in China
can cause a tornado on the other side of
the world has become economic real-
ity. The effects of the Chinese govern-
ment’s attempts to contain the spread
of the new strain of coronavirus are rip-
pling through global supply chains. For
the moment, the world economy has
been relatively robust. That will not
last if the virus continues to proliferate.
Where politicians failed to decouple
the Middle Kingdom from the west,
mother nature is succeeding. The
introduction of tariffs by US president
Donald Trump attempted to renation-
alise supply chains and encourage busi-
nesses to bring jobs and factories back
to the west. Apart from a few compa-
nies moving to other Asian economies,
such as Vietnam and Thailand, to avoid
the duties, trading patterns have
remained largely in place, although US-
China volumes declined slightly.
Now the extended lunar new year
holiday in what is, on some measures,
the world’s largest economy could start
to shut down western factories that
depend on Chinese components.
Efforts by Beijing to contain the virus
include restricting non-essential trips
outside in Wuhan, the city where the
outbreak originated, and closing
factories in nearby provinces.
This has disrupted production on the
other side of the planet. Jaguar Land
Rover, the British carmaker, is flying
components out of China in suitcases.
JCB, the digger manufacturer, has cut
production and working hours at its
UK factories. Fiat Chrysler warned this
month that one of its French plants was
just weeks away from having to shut
down. Western companies that pro-
duce in China, such as Apple, have also
warned investors about the potential
effect on revenues.
So far the impact on western econo-
mies appears to be limited, although
purchasing managers’ indices pub-
lished yesterday flatter to deceive.
While figures for the Japanese and Aus-
tralian economies pointed to a sharp
slowdown, the data for Europe has
been better. That is partly because the
indices treat lengthening delivery
times for parts as a sign of healthy
demand rather than of disruption,
helping to boost the indicator.
This explains about half of the recov-
ery in the industrial powerhouse of
Germany, with the rest due to an
improvement in domestic orders.
Export orders, however, fell at the fast-
est rate for three months, potentially
reflecting the impact of the virus.
Similarly, many factories have so far
been able to run down inventories of
components rather than cease produc-
tion altogether. If the lockdown in
China continues, these stockpiles will
eventually run dry. China’s ambassa-
dor to Moscow said Beijing will “liqui-
date” the virus by April. That will be
too late for many businesses.
The disruption may accelerate
attempts by companies to diversify
away from China. Yet there is no
economy that can easily replace it:
Vietnam is too small, embedded in
Chinese supply chains, and has closed
off a part of one province after a cluster
of infections there.
Some officials appear to want to use
the virus to encourage deglobalisation.
Peter Navarro, a sceptic of interna-
tional trade who works for the White
House, has warned US medical sup-
plies may be disrupted by China’s shut-
downs. He has urged drugs companies
to “buy American” and reduce their
reliance on imports even from allies.
If the virus continues to spread at the
same rate, supply chains will inevitably
break apart and factories will start to
close. The best hope for the global
economy is that the rate of infections
starts to drop, and fast.Coronavirus succeeds where politicians failed to curtail globalisation
With the smoke still clearing from Aus-
tralia’s devastating wildfires, and thou-
sands of British householders squelch-
ing through flood-ravaged homes,
some of the world’s richest companies
and individuals are finding their cli-
mate conscience. Jeff Bezos, the Ama-
zon founder and the world’s wealthiest
man, this week pledged a $10bn fund t o
support “scientists, activists, NGOs” or
“any effort” with a realistic chance of
helping to protect the natural world.
His move followed last month’s
promise by Microsoft — the world’s
most valuable company by market
capitalisation — to launch a $1bn inno-
vation fund and to go “carbon nega-
tive” by 2030, with the aim of offsetting
by 2050 all the carbon emissions it has
made since its founding in 1975.
US business, including Big Tech, is
waking up to the risks of climate
change — and trusting in science to find
solutions. Donations such as these can
give a vital boost to research into tech-
nology that could be transformative in
the long-term battle to halt rising glo-
bal temperatures.
Improving battery storage, for exam-
ple, could transform the shipping
industry. Technology to enable the
cheaper production of environmental-
ly-friendly hydrogen could lower the
cost of clean energy generation, domes-
tic heating and various modes of trans-
port. Better carbon capture knowhow
is vital to cleaning up the atmosphere.
A true “moonshot”-style approach
would include grants to research into
nuclear fusion, an elusive technology
that has truly transformative possibili-
ties. Microsoft’s founder Bill Gates has
long been a fusion advocate.
Yet there are dangers in being
seduced by tech entrepreneurs’ belief
that innovation can find silver bullets.
Even $10bn is a drop in the ever-rising
ocean when it comes to the invest-
ments needed to tackle the climate
challenge. Governments and the finan-
cial sector will have to mobilise
resources on a vastly bigger scale to
fund the creation of low-emission pub-
lic transport networks, the shift to
renewable energy sources and the insu-
lation of homes and businesses.
Their owners’ philanthropic efforts
should not distract from technology
companies’ need to change their own
practices. While cyber space and the
“cloud” may be ethereal concepts, the
impact of data centres and computing
on the physical world is very tangible.
Information and communications
technology is estimated to consume
between 5 and 9 per cent of the world’s
electricity.
For all its technological sophistica-
tion, moreover, Amazon is still a
retailer — one that delivers 10bn items
a year. Its supply chain relies heavily on
diesel vans for door-to-door deliveries.
It ordered 20,000 such vans from Mer-
cedes-Benz in 2018 as part of its invest-
ment in faster deliveries for Prime
members, though Mr Bezos told staff
last year it was ordering 100,000 elec-
tric delivery vehicles due to enter its
fleet in 2024.
The Amazon chief’s generosity is also
related to the power of employee pres-
sure. More than 8,700 Amazon staff
last April signed an open letter to the
founder demanding the company cut
its carbon emissions, end its use of fos-
sil fuels, and stop providing “custom
solutions” using its technology to help
with oil and gas extraction and explora-
tion. Mr Bezos responded with a range
of efforts to cut Amazon’s carbon foot-
print — a day before thousands of
employees staged a walkout to high-
light their criticism of its climate prac-
tices. As popular anger builds, com-
pany bosses will find out that enacting
eco-friendly policies is a business
necessity rather than a branding
exercise.New innovations can only go so far in tackling global warming
The virus crisis and the
decoupling of trade
Tech titans find their
climate conscience
FEBRUARY 22 2020 Section:Features Time: 21/2/2020 - 18: 44 User: alistair.hayes Page Name: LEADER, Part,Page,Edition: LON, 10 , 1