Steady

Budget Summary

I despair at the state of the UK and UK politics generally. Probably global politics. Was that even a UK budget? I’ve already forgotten most of it. I don’t need to remember much because I know most of what was said was just hot air.

• A new British ISA – I know this isn’t going to happen, within 1 week it’s already been placed on the back burner until 2025.
• An attack on holiday property entrepreneurs from 2025 – I’ve no idea who else will be buying these former run down properties. I expect seaside towns and other beauty spots to decline without this inward investment. Formerly poor areas will now lose a large part of their much needed tourist economy. Sure local property prices will become more affordable as “out of towners” retreat, but without those tourist jobs the locals will not have the income to be able to buy a local property.
• Non-Doms told to leave in 2025 – like the Conservative Party even has a say in this. they will be toast probably by November this year. It was always Labour policy to do this. I’ve looked at this area in some detail. Non-Doms do pay tax, pay VAT on their outsized purchases and stump up oodles of stamp duty land tax on multi-million pound property purchases. Non-Doms also employ a small army of accountants, solicitors, financial advisors and investment managers (not me), cleaners, gardeners, hairdressers, manicurists, dog walkers and property maintainers. All of which will lose customers – meaning lower VAT receipts and lower income tax on profits. They are not tax dodgers, just because the investment income they earn and leave abroad isn’t also taxed in the UK. Where does any political party expect to replace all of this lost revenue?
• Plus some other drivel set to come into force in 2025 & 2026. Who believes any of that will happen with a change in Government?
• The NHS is broken, let’s throw another £3.6bn at it in the future (a future which we are all sure doesn’t include a Conservative Party). More empty promises.
• Oh yes – there was the bribe of a reduction of 2% in NI for those working below the age of 66. The trouble is, 1 in 5 eligible “workers” do not work in the UK or register for benefits of any kind. They don’t pay tax or NI. Obviously it is the 4 in 5 that do work that pay all of the taxes. Will £10 a week per worker change any voters mind? I doubt it.

By the way this isn’t a party political broadcast and so I will stop now. Except to say we are due 13 years more of being ruled, not by a democratically elected government, but by a ingrained left of centre civil service and administration system that overseas all public bodies in the UK.

Thankfully we don’t invest in governments, neither do we invest in socialism, we invest in capitalism. We need to, because we need to remain financially independent and stand on our own two feet. Nobody in government is coming to help us. In fact they tend to hinder us wherever possible.

 “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

Winston Churchill

Room for Optimism.

I was reminded this week that capitalism still works. As we all age we face different challenges. Thirty seven years ago when I began in the profession, the challenge was getting clients on the property ladder, ensuring loved ones were OK financially if breadwinners died, helping them save income tax by starting to save what was left after bringing up families. Today my weeks seem to taken up by helping those same clients navigate personal crises. Death of a spouse, the cost of having elderly parents in care, degenerative cognitive illnesses, cancers. Throw in the worry about WWIII and the highest level of UK tax in a generation; All pretty de-motivating stuff. I am still able to advise and help, but the work is far removed from where I began. I used to bring happiness, now the best I can offer is relief.

Between us the £90 million saved cannot numb the pain brought about by these everyday crises.

But this week the old playbook came out again. I was holding a review with a couple who reminded me on a micro-scale why capitalism works. Her self employed business was continuing to build, after the best year ever. He was just forming a limited company and going it alone. Neither were afraid of hard work on top of looking after their teenage girls, in return for a better financial reward. Their enthusiasm was contagious and a much needed tonic for all of us in the office. It reminded me that every company we jointly invest in, is full of such individuals, employing their skills and experience, building much needed products and services to generate profit. Our part in this worldwide undertaking is to help provide the capital needed to grow these businesses in return for a share of their increasing profits.

Our capital + their skills and hard work = A profitable partnership = Capitalism

Imagine, helping to provide the capital needed to create the next breakthrough drug in the fight against cancer or Alzheimers; the ammunition needed to protect the frightened families of Ukraine; the development of the next generation of nuclear reactors to ensure the UK has electricity when the wind stops blowing (or blows too much). We help to do all of that in return for a potential share of the profit. Sure we help fund luxury goods manufacturers, wineries and distilleries, the development of AI, weight reducing drugs, diabetes and opioid abuse treatments, aircraft manufacturers, wholesalers and retailers. All staffed by millions and millions of workers who also believe in capitalism.

Patience

It’s a long road with pot holes along the way. It’s our belief in capitalism that binds us and holds us steady. The return on our investments must be measured in years and decades because of the long term nature of what we are helping to build. The sentiment of our co-investors dictate our returns. I am not responsible for our recent upturn in portfolio values. I do shoulder the burden when markets under-perform our expectations, but I cannot prevent short term market losses. My job is to keep us on a steady course, a course that has been travelled by investors since the Limited Liability Act was passed in the UK in 1855.

If capitalism is distorted in the UK through increased government intervention, expect the steady course to be diverted to other distant waters.