Cheltenham Gold Cup - Quarterbridge

The bookmakers odds for the May 7th general election are all over the place. The outcome looks the least predictable for decades now that coalition government and fixed-term parliaments have become the norm.

Turnout should be good though as more people tend to vote in a general election if the result is uncertain.

Depending on where you live you could have the choice of up to 12 mainstream parties to choose from: Conservative, Labour, Lib-Dem, SNP etc., plus up to 21 fringe parties such as the Yorkshire Devolution Party and CISTA – which sounds like an unpleasant personal infection. But if you live in the constituency of the Speaker of the House of Commons like wot I do then it’s much more boring. The mainstream guys have a gentlemans agreement not to field a competing candidate so we’ve only got the Greens and UKIP. And Nigel Farage isn’t the candidate here again as last time he had a nasty accident in an aeroplane. Turnout should be good though as more people tend to vote in a general election if the result is uncertain. In 2001 a mere 59% of registered electors bothered to vote after Labour’s previous 1997 landslide win. In 2010 after the financial crisis the figure rose to 65% but not in central Manchester, Leeds or Birmingham where more than half still couldn’t be arsed to vote. Mind you that’s better than in Lithuania where only 37% turned-out for their last general election and a lot worse than in Australia where 94% did so. But in Oz it’s a legal obligation to do your civic duty and vote or you get fined £12 and thrown to the crocodiles.

If you’re feeling as interested as a Lithuanian but want to understand everyone’s policies and impress your mates down at the pub then go to the BBC’s excellent ‘policies at a glance’ website at http://www.bbc.co.uk/news/election/2015/manifesto-guide

‘Which county has created more jobs than the whole of France?..’

MP’s were waiting eagerly in March for the Chancellors pre-election budget. They expected a last-minute knock-down ‘Chancellors special’ but in the event came away disappointed. George Osborne sat back and rested on the Government laurels of the fastest growing post-recession economy in Europe. The Yorkshire Devolution Party (No MP’s, yet) was ecstatic when he announced ‘Which county has created more jobs than the whole of France? The great county of Yorkshire!’. George glossed-over the need to pay-down the governments £1.4 trillion of debt after the deficit has been sorted but did throw in a few morsels such as tax breaks for North Sea oil companies and reduced duty on beer and wine. The only real cheers were for fuel duty (no increase) and abolition of annual tax returns and national insurance contributions for the self-employed. Sadly, George didn’t lift the threshold for Vat registration and boost the ‘engine room of the economy’ as he calls small businesses.

The PM has announced plans for a ‘Northern powerhouse’

The government is definitely twitchy about accusations that a ‘Metropolitan elite’ is running the country and doing ‘nowt for the north’. To do something for marginal northern constituencies the PM has announced plans for a ‘Northern powerhouse’ fuelled by allowing Greater Manchester to keep 100% of the growth in local business rates and benefit from another high speed rail link – HS3. This would extend HS2 from Manchester and Leeds up to Newcastle, but quite how it can be financially-justified is another matter.

‘little more than a costly vanity project’

That has already been pointed out by the Commons Public Accounts Committee and the free-market think-tank the Institute of Economic Affairs. It’s spokesperson described it as ‘little more than a costly vanity project’ which is how Lord Mandelson has described it’s conception in the dying days of the last Labour administration.

The Small Business Rates Relief scheme is extended until 31st March 2016

Anyway, putting aside HS2’s unwelcome lack of a business case the government has moved to safer ground by confirming the Small Business Rates Relief scheme is extended until 31st March 2016. Most market businesses qualify for this waiver on rates payable so if you’re not already receiving it I strongly recommend you check with the rating office at your local council. If the rateable value of your premises is below £6,000 you’ll pay nothing at all and to encourage you to grow into bigger premises you’ll now receive the relief for 12 months after you occupy an additional property. This news was delivered at the same time as Danny Alexander, Chief Secretary to the Treasury announced a ‘radical review’ of the business rates system with its outcome to be announced in 2016. ‘The time has come for a radical review of this important tax. We want to ensure the system is fair, efficient and effective’ he said, which was nice to hear. But those of us with long memories will remember previous government attempts to reform the rating system have been torpedoed by the civil servants of the Valuation Office which employs lots of keen young surveyors to administer the system.

Just as exciting and unpredictable as the result of the general election was the result of this year’s Cheltenham Gold Cup.

Just as exciting and unpredictable as the result of the general election was the result of this year’s Cheltenham Gold Cup. Unfortunately my foolproof system to ‘Back the jockey – not the horse’ came unzipped, yet again. Tony McCoy and Carlingford Lough trundled in at ninth place whilst Nico de Boinville on Coneygree romped home to a well-deserved length and a half victory.

McCoy has announced he won’t be riding at Cheltenham again. I can see a pattern emerging here.

A couple of interesting news events emerged from the ‘Big Four’ Supermarkets in March – Morrisons are going online and Tesco have bought-into the Restaurant chain ‘Giraffe’. Look and learn.

Firstly, Morrisons – the Bradford-based chain is definitely worth watching. They announced as from 2014 they’ll be selling online so are negotiating a delivery deal with Ocado. For the last 13 years their management was sceptical about online sales but that has now changed. In the meantime they’ve swallowed-up the Safeway chain with less difficulty than predicted, dodged the horsemeat scandal because they run their own abbatoirs and developed their in-store ‘Market Street’ offer which, I have to say, is not bad at all.

But last year Morrisons lost market share from 12.4% to 11.8% and like-for-like sales fell by 2%. The resulting 7% fall in before-tax profits was their first for several years although sales in London and the South East grew strongly. But they recognised they had a couple of problems and announced in February:

‘We are at a structural disadvantage as we do not yet have a meaningful presence in either convenience stores or in online, the two fastest-growing sectors of the market.’

Not for long though, because they then snapped-up 62 stores in the South East from failed retailers Jessops, Blockbuster and HMV. This was much to the relief of High Street landlords and town centre managers. They were acquired at rock-bottom prices thanks to the recession and will now be converted into ‘M Local’ convenience stores. Nice timing.

So what else made Morrisons’ change their mind about online sales? Maybe because they recognised it as THE growth area in retailing and maybe because they’d done their homework. The essence of running a profitable supermarket is keeping overheads down e.g. food handling (use self-service) and transport to the consumer (offer free parking and get them to come to you).

Morrisons hit on the strategy of purchasing a 10% stake in New York-based online grocer Fresh Direct.

The problem with selling online is you get lumbered with the costs for stock-picking and deliveries, so an ever-cautious Morrisons hit on the strategy of purchasing a 10% stake in New York-based online grocer Fresh Direct. They then sent a team to the USA to learn how to run online sales profitably and are now using that experience to put the screws on Ocado. That’s the way to do it – learn from someone else’s experience.

Secondly, Tesco: The Company announced a purchase of the 50-unit Giraffe restaurant chain for some £48million as part of it’s strategy to turn Supermarkets into ‘all-day destinations’.

This is common enough in Europe where edge-of-town Supermarkets often occupy the same building as smaller shops – jewellers, bakers, newsagents etc – and Tesco have already tied-into coffeehouse chain Harris and Hoole, bakery group Euphorium and online film service Blinkbox.

Their commercial director, Kevin Grace said: ‘We’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop. With more general merchandise moving online we have a great opportunity to rethink how we use the space in some of our larger stores. We want the dining experience to feel separate from the weekly shop because it’s a place where customers can take a break and relax.’

Being stuck all day in a Tesco sounds like the stuff of nightmares to me, similar to searching for an exit in an Ikea store. I’d question whether this can work outside the South East where retail sales are still buoyant. It all sounds a bit London’ish to me.

So finally, what lessons can be learnt from this: Self-service, free parking, online sales with a delivery service or a more leisure-based experience? Now that you have a long queue of impatient shoppers waiting to be served the dilemma is: How many tills do you need to provide?

At this point you need to study so-called queuing theory developed by Danish statistician Agner Erlang to improve the Copenhagen telephone exchange. Look it up on Wikipedia – this is heavyweight statistical probability stuff used by Supermarkets to calculate how many checkouts they need. It takes into account factors like balking (customers refusing to join a long queue), reneging (leaving a slow-moving queue) and jockeying (switching between queues). Somehow a Poisson comes into it as well – isn’t that French for ‘Fish’? You can also entertain yourself by testing the theory on your customers e.g. who has the sharpest elbows or heaviest handbag etc and gets served first?

Which got me wondering – could queuing theory be used to outwit Bookies? If there are X number of horses in a race over Y number of hurdles then making allowance for balking, reneging and jockeying will queuing theory predict which horse comes in first? I tried this at Cheltenham Gold Cup instead of my usual ‘bet on the jockey, not the horse’ system. And I lost the lot. Boo Hoo. The theory didn’t know that Barry Geraghty and Bobs Worth had won the Hennessy Gold Cup back in December but the Bookies did.

The Gold Cup destroyed my belief in queuing theory and replaced it with barefoot theory. This predicts that you will never see a Bookie’s children walking around in bare feet.