the times | Wednesday October 14 2020 2GM 37
Business
The World Trade Organisation has
ruled that the European Union can
retaliate against the United States over
its support for Boeing, the aircraft
maker, in the latest twist of the world’s
largest corporate trade dispute.
Brussels can now legally impose
tariffs on American goods worth $4 bil-
lion, although it emphasised yesterday
that its “strong preference” was to end a
16-year transatlantic trade battle over
illegal subsidies for Boeing and Airbus,
the European manufacturer.
The WTO’s intervention comes a year
after the Trump administration was
ALAMY; CORNISH LITHIUM
Unemployed people who wish to
launch a business would be given £100
every week for 12 months to help them
to get start-ups off the ground under a
proposal backed by Sajid Javid, the
former chancellor.
A report from Policy Exchange, the
centre-right think tank, calls for a new
version of the “enterprise allowance”,
based on the scheme with the same
name that began in the 1980s during an
unemployment crisis.
The proposed scheme would be
available to anyone not presently
employed, with a viable business idea
and access to £2,000 in start-up capital,
Policy Exchange said. Any income
Eighties revival can
be big hit today
T
he narrative of the
pandemic is starting to
change. Until now, the
numbers mesmerising the
nation have been deaths,
cases and the viral reproduction rate
or R number. Now a fourth is being
added: job losses.
The latest official unemployment
figures are probably just the foretaste
of what is to come. Furloughing has
softened the blow thus far, but not
for much longer (report, page 40).
The rise in the jobless rate from 4.1
per cent to a worse-than-expected
4.5 per cent in the space of a quarter
is dismal enough. Unemployment
has risen to 1.5 million people, while
227,000 have been made redundant
in the last quarter, the worst figure
for 11 years.
Compared with other periods and
other nations, the UK is not doing
too badly. And there are still some
promising signs — like a relatively
healthy number of job vacancies. But
as the lockdown tightens once again,
there is only one direction for the
unemployment statistics.
Three million, the number of
unemployed in the recession of 1982,
was the defining factoid of the early
Thatcher era. Something similar will
be in store here as and when the
jobless numbers pass some key
milestones.
Policymakers have focused on
preserving old jobs in existing firms.
We need to be creating new ones in
new businesses that can prosper in a
distanced world. We also need to do
more about helping the young: the
16-to-24 age group has been hit
hardest, according to the Office for
National Statistics.
One solution is being proposed by
a man in the thick of it in those
Thatcher years, Lord Young of
Graffham, who was employment
secretary. Bring back the Enterprise
Allowance Scheme, he says in a
preface to a new report from the
Policy Exchange think tank. This
was the scheme that gave
unemployed youngsters with a viable
business idea and access to a bit of
start-up capital an income for a year,
slightly higher than dole money, and
some hand-holding from a business
mentor.
There was criticism at the time
that it was a ploy to flatter the
unemployment statistics, but it
worked, according to Policy
Exchange. More than 100,000
people a year used it at its peak and
it gave a leg-up to entrepreneurs
including Julian Dunkerton, of
Superdry, and Alan McGee, of
Creation Records. It also provided
purpose and a baptism of fire in
running a small business to
youngsters who otherwise would be
doing nothing. This is one 1980s
throwback worth reviving.
The business case
S
peaking of new start-ups, it’s
pretty much impossible for a
new business to open a bank
account these days. Metro Bank has
joined the list of banks that have
temporarily put the shutters down
on new business account openings.
It is an extraordinary state of
affairs. A firm without a bank
account is like a house with no
plumbing. No new business can
possibly function without one.
Yet Lloyds, HSBC and Santander
are not accepting new business
customers, Natwest is only allowing
new account openings from existing
business customers, while Barclays
has warned of a six-week delay.
Banks blame bounce back loans
and flood of applications that they
say are swamping them. They are,
they say, focusing on existing
customers at the expense of winning
new ones. That’s the official
message.
The unofficial view is that
fraudsters in large numbers have
seized on bounce back loans as easy
money. One of the few safeguards
stopping criminal gangs applying for
these £50,000-a-pop payments is
that they have to have a suitable
bank account. Freezing new account
openings is one way to stop them.
Banks, in theory, face no risk. The
loans, interest-free for the first year,
are 100 per cent guaranteed by the
government. But banks inevitably
will come under fire if they come to
be seen as having done nothing to
protect taxpayers.
It must not go on. The banks and
the Treasury need to find a different
way to stop the fraud. Bona fide new
businesses need the plumbing.
Power to the people
F
irst there was all that fertiliser
just waiting to be dug out from
under the North York Moors.
Now it’s lithium under Cornwall.
Retail investors flocked to back
Sirius Minerals last year, and lost
most of their money. They are now
piling into Cornish Lithium, despite
the slim chance of success.
Some investors want to back local
businesses they can understand,
long-odds projects that capture the
imagination and might even provide
jobs for their neighbours and a boost
to their towns. So long as the wealth
warnings are flagged and
understood, that’s a good thing.
Pouring money in
S
imon Illingworth has a dream: a
fleet of battery-powered robot
submarines, each the length of a
human arm, silently patrolling the
ocean floor. They will withstand
immense pressures and stay
submerged for 80 days at a time.
They will do the seismic work that
identifies promising new subsea oil
discoveries for a fraction of the
present cost and less risk to human
life. The same technology could be
used for greener projects, like
identifying suitable caverns for
carbon capture and storage.
BP and other backers have sunk
£10 million into the business, which
has relocated from Australia to
Britain and is hiring. We hear a lot
about drones, but let’s hear it for
their underwater cousins — an
industry few of us knew existed, but
one where the UK, already a leader
in offshore energy technology, might
one day lead the world.
Alistair Osborne is away
business commentary Patrick Hosking
Riggers at the Jubilee Pool
in Penzance and, far left,
near St Austell. Elon Musk,
below, has secured lithium
mining rights in Nevada
has no revenues
and is several years
away from reaching
commercial
production levels,
which is likely to
require it to raise tens of
millions of pounds more,
in turn diluting the
holdings of existing
investors. It also has
warned prospective
investors that there is no
assurance it will
encounter deposits that
are commercially viable
to produce. “While the
discovery of
commercially
exploitable mineral
deposits may result in
substantial rewards,
investors should be
aware that few
properties that are
explored are ultimately
developed into
production,” it said.
Mr Wrathall said that
the company was
targeting a flotation,
likely to be on Aim,
London’s junior stock
market, within the next
two years. Before this
crowdfunding, the
company had raised
around £4.2 million,
comprising about
£2 million from angel
investors and the
founders, an initial
£1.4 million
crowdfunding last
summer priced at 5.3p a
share and a further
near-£900,000 raised
from shareholders in
July. It is now selling
shares at 9p and
Crowdcube advertises a
pre-raise valuation of
£40 million.
Mr Wrathall said: “We
set out to raise
£1.5 million, but because
there has been so much
interest we have allowed
it to continue to
overfund, which is an
unusual quirk of
crowdfunding. At the
moment we know that if
we raise more money we
can accelerate our
exploration programmes
considerably.”
Speaking as the total
neared £3.8 million
yesterday morning, he
said that the directors
expected to close the
fundraising “fairly soon”.
£100 a week to jobless entrepreneurs
James Hurley Enterprise Editor
earned from the start-up would not
affect what the founder might receive
via universal credit benefits, the report
recommends.
The original enterprise allowance,
set up by Margaret Thatcher’s govern-
ment and launched nationwide in 1983,
went on to fund more than 325,000
individuals, including Julian Dunker-
ton, the Superdry founder, Alan
McGee, the Creation Records entre-
preneur, and Simon and Chris Donald,
founders of Viz magazine.
The scheme’s proponents say that it
supported entrepreneurship during a
period of mass unemployment. Critics
argue that one in six of the start-ups
taking part failed in their first year and
that it made no significant dent in
unemployment since most of the
businesses created were sole-trading
operations.
The original scheme proved popular
with young people, with a quarter of
participants being under 25, and a new
version should be marketed at under-
30s, Policy Exchange said.
Mr Javid wrote in the report that such
a scheme “has excellent potential for
harnessing the entrepreneurial spirit of
those who know how to take advantage
of new sectors and changing markets”.
Lord Young of Graffham, who
helped to create the original scheme,
said: “I believe that the devastating
effect of the pandemic upon business
life in this country will open up new
opportunities.”
EU gets go-ahead for $4bn US tariffs
Callum Jones Trade Correspondent
granted permission to introduce duties
on EU products worth up to $7.5 billion
over the bloc’s support for Airbus.
Guillaume Faury, chief executive of
Airbus, said: “The WTO has now
spoken, the EU can implement its
countermeasures. It is time to find a
solution now so that tariffs can be
removed on both sides of the Atlantic.”
Valdis Dombrovskis, vice-president
of the European Commission, said that
it would “immediately re-engage” with
the US in a “positive and constructive”
fashion. “Our strong preference is for a
negotiated settlement,” he said, urging
America to “wipe the slate clean” and
repeal last year’s duties. “Otherwise, we
will be forced to defend our interests and
respond in a proportionate way.”
Robert Lighthizer, the US trade rep-
resentative, argued that the EU had “no
valid basis” to legally introduce the new
$4 billion wave of tariffs, as the WTO
decision had been based on a state tax
break that has since been repealed. Any
new import levies would be “plainly
contrary to WTO principles and will
force a US response”, he warned.
Should the EU impose duties, Britain
will need to decide whether to continue
to charge them on US goods after it
leaves the bloc at the turn of the year.
Boeing shares sank by 3.1 per cent in
New York. Airbus dropped 3.5 per cent.
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