davidsberry

The continuing legacy of hard-core brexiteering under BoJo has yet to show much by way of advantage to the general public. But what it has done is weaken links forged with the Continent over half a century of EU membership, especially when it comes to travel of more than a week or two. Two weeks in Torremolinos or Tenerife may go as before. But those with property, relatives or friends across Europe now run into residence difficulties.

Having left the EU, UK residents are treated as any other foreigner. This means, they must comply with Schengen rules. They state that you may visit the EU only 90 days within any 180-day period and may not return at all during the following 90 days. Those who were already resident in the EU had their residency “grandfathered in”. For anyone else wishing to spend time there, a visa has become necessary.

One company was quick to spot the business opportunity in this. Originally based in India, VFS Global, headquartered in Dubai, UAE, developed a Swiss parentage by becoming a portfolio company of EQT, a private equity firm. EQT funds have invested in portfolio companies globally. Their portfolio companies grew to generate total sales of €19 billion and employing 110,000 people. The Swiss-based Kuoni and Hugentobler Foundation had minor a stakes in VFS Global.

“While working in India for the Switzerland-based Kuoni Group we had first-hand knowledge of the challenges travellers faced while applying for visas.”

—Zubin Karkaria, Founder and CEO, VFS Global

The niche that enabled VFS Global to become the world’s largest visa outsourcing specialist for governments and diplomatic missions worldwide was  managing the administrative, non-judgmental tasks related to visa, passport and consular services. This allows client governments to focus on the task of assessment itself. Established in 2001, it now operates 3,516 application centres across 149 countries on behalf of 67 client governments.

A quarter century ago, Karkaria clearly identified a huge business opportunity. The 1990s saw a huge surge in global travel which continues to this day. Most countries require a visa for entry. As few provide such visas on arrival, embassies in the originating country must first deal with applications prior to travel. Most require a complex set of validated documents before issuing a visa. Encountering this complex process for the first time, applicants typically make mistakes. By outsourcing to VFS Global, embassies save on staff, who typically enjoy job security, as well as vacation, sick leave and pension benefits.

It is unlikely that employees enjoy such benefits, the job security or the working conditions of the embassy staff who formerly did the job. Indeed, Karkaria and his board apply the “boiler room” techniques typical of Indian call centres and garment sweat shops. Judging from their offices in Edinburgh and London (both run by their GVC subsidiary), almost all staff are foreign nationals, probably on work visas themselves. Many appear to have scant training and an idiosyncratic grasp of English. They work long hours in a half-dozen cramped cubicles with room only for a desk and a chair for the applicant and a curtain for “privacy”.

They claim to run an appointment system, which must be made online and to offer a “Premium” service for £60 (on top of their £210 visa fee) for assistance in compiling the complex package of documents to be submitted to the relevant embassy of the applicant’s behalf.

At the Edinburgh office, not only is the Premium service unavailable, but the appointment time is a fallacy. On finding the building in the office block wasteland that is Leith Docklands, you are given a number at the reception desk and pile into a waiting room of 60 people sharing 45 seats to spend several hours until the sequential number is called. There are no refreshments; the water cooler does not work and a single toilet is some distance away.

Once squeezed inside a booth and the document package examined, any deficiencies are pointed out, invariably leading to another appointment needing to be made and the same day-long procedure repeated. What is not said is any indication of which other documents may lapse in validity before the next appointment, so running the risk of further visits being necessary.

Although suffering poor working conditions, staff are generally affable, but a lack of competent organisation and management makes the application process an ordeal for all concerned.

Despite this third-world level of operation, in December 20923, VFS Global was appointed to deliver UK Government Visa and Passport services across 149 countries where it operates. No doubt there are financial advantages in outsourcing. But the level of service offered is notably poor and might even be a deliberate disincentive to visit.

In October 2021, Blackstone acquired a 75% stake in VFS Global for $1.3 bn. Blackstone bills itself as “the world’s largest alternative asset manager”. It is also an astute collector of “cash cows” that pay big profits but little tax. By registering as a company in the tax haven of Mauritius, there is minimum transparency, especially regarding its finances. Senior management hide profits behind a smokescreen of vacuous management-speak.

“To lead and set the standard in the visa and consular services industry, through innovation, technology and customer service excellence.”

—VFS Global Vision

“We make people’s cross border mobility simple and convenient through highly secure, reliable, efficient, and innovative technology solutions.”

—VFS Global Mission Statement

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But the most ambitiously Teflon of this sordid little group must be Baroness Diane Mary “Dido” Harding of Winscombe. She has shrewdly exploited being the most “connected” among them. Her father was John Harding, 2nd Baron Harding of Petherton and she has made the most of being friends with David Cameron while both were at Oxford.

From the start, Harding has used this start to cultivate the kind of useful links that help further careers, including:

• Trustee of DotEveryone. (A charity focussed on ensuring the digital revolution works for all of society)
• Advisory Board of The Fore Trust. (A charitable trust providing funding to early-stage charities and social enterprises)
• UK Holocaust Memorial Foundation. 
• Cross-party Advisory Board, with specific brief to assist with digital activities.
• Court of the Bank of England, incl. Chair of Remuneration Committe
• Director, British Land PLC 
• Member of Telecoms Industry Security Advisory Council
• Member of the Prime Minister’s Business Advisory Group
• Director of Cheltenham Racecourse
• Director of the Jockey Club 

Unquestionably bright, as well as ambitious, she holds a 1st Class BA Honours Degree in Politics, Philosophy and Economics from Magdalen College, Oxford, followed by a Masters in Business Administration (MBA) from Harvard Business School. She parlayed these heavy-duty qualifications into work as a Consultant and Engagement Manager, at the prestigious McKinsey and Company, followed by a post as Retail Marketing Director, Thomas Cook Group.

Harding then moved swiftly through a retail career with Woolworth, Kingfisher and Tesco, before she became CEO of TalkTalk Telecom Group PLC, a £1.8bn company, in 2010. It was there that she developed many of the links listed above and developed a political network that has served her well.

While running TalkTalk, she faced calls for her to resign. In October 2015, TalkTalk experienced a cyber-attack, during which personal and banking details of up to four million customers, not all of which were encrypted, were thought to have been accessed. The company was subsequently fined £400,000 by the Information Commissioner’s Office for its negligence.

When asked during an interview on City FM if the affected customer data was encrypted or not, she replied: “The awful truth is that I don’t know“. Her inflexible line on termination fees was also criticised. In all, the company admitted the incident had cost it £60 million and lost it 95,000 customers.

“The TalkTalk boss Dido Harding’s utter ignorance is a lesson to us all.”—Marketing, 29 October2015

“It has been a tough week for TalkTalk boss Dido Harding, facing complaints from customers and calls for her head“

—Evening Standard, 28 October 2015

In February 2017, Harding stepped down as CEO, explaining it was “to focus more on my public service activities”. (see bulleted list above)

As a longstanding member of the Conservative Party and friend of David Cameron, Harding was appointed to the House of Lords in 2014. During time there, she never voted against the party.  In 1996, she married John Penrose, now Conservative MP who is a neighbour of Jacob Rees-Mogg, both representing Weston-Super-Mare. Penrose had to resign as Anti-Corruption Champion due to his involvement in the Boris Johnson partygate scandal

But her own retreat to “Weston-les-deux-Églises” did not last long. In October 2017—the same year she quit TalkTalk—Harding was appointed chair of NHS Improvement, responsible for overseeing all NHS hospitals, comprising foundation trusts and NHS trusts in England.

From there, it was a short step when the Covid pandemic hit for Health Secretary Matt Hancock to announce in May 2020, that Harding was to be put in charge of the “track, test and trace” programme. Renamed “NHS Test and Trace”, this would prove to be as big a white elephant and black hole for public money as the PPE procurement fiasco. Both cost the public purse at least £40 million, for which no-one—including Harding—has ever been called to account.

“What we’ve done in really rigorously testing both our own COVID-19 app and the Google-Apple version is demonstrate that none of them are working sufficiently well to be actually reliable to determine whether any of us should self-isolate.”

—Dido Harding

In November 2020, a case was lodged to challenge the legality of her appointment.  In February 2022, two High Court judges ruled that Hancock had failed to comply with the Equality Act 2010 when appointing Harding, and also when appointing Mike Coupe as director of testing in September 2020. The court was told that Harding intervened to add Coupe, a former colleague of hers at Sainsbury’s, to the shortlist of candidates.

“Test and Trace has cost the taxpayer £22bn. It has repeatedly failed to achieve targets it has been set. It was once heralded as The Thing That Would Defeat Covid, but nobody talks about it much any more.”

—The Times, December 13, 2020

Despite all this, Harding went on to several other government appointments, including an (unsuccessful) bid to be CEO of Public Health England. Since then, she has kept a low profile, with her loyalties now focussed on money-spinning private American healthcare companies. Harding has taken on a consultancy job at Carna Health, an ambitious Massachusetts-based company that claims to be ushering in “a new era of healthcare”.Harding is also offering her “expertise” more widely through her personal consultancy, Avalon Enterprises, and through speaking gigs for Chartwell Speakers. Away from healthcare, she has also accepted a consultancy role at Vitrifi, a new telecoms business that regularly donates to the Tory Party. 

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On Sky’s Sunday with Trevor Philips, Business Secretary Kemi Badenoch dismissed speculation about her becoming Tory leader and professed loyalty to Rishi Sunak for having “halved inflation and grown the economy”. Really? In which fiscal fantasy world is the UK government now living?

Right-wing Conservatives are scathing about anyone who dares to “talk the country down”. But what if that is deserved? At what point does their positive post-Brexit cheerleading become the economic equivalent of putting fingers in ears and loudly singing “Rule Britannia”? Over the New Year, several articles in the Torygraphcrowed how much better UK expected to be over that “engine of EU growth” Germany. This is indeed true, but paints a slanted picture.

“I just don’t agree with the narrative that Brexit has ‘severely damaged’ our economy. Every major country, especially in Europe, has faced significant economic challenges over the last few years. We should stop taking ourselves down, and instead talk ourselves up.”

—Kemi Badenoch speech, November 7th 20323

Indeed, the OECD has said global growth had been stronger than expected in 2023, but that growth will remain modest in 2024 and 2025. In contrast to Kemi’s upbeat assertions, the OECD calculates UK GDP grew by 0.5% in 2023 and by 0.7% in 2024. Its overview figures for the G7 in 2023 are shown in Chart 1 below. 

While this chart confirms the UK doing better than Germany, this contest for last place should be an embarrassment, rather than something to crow about. Far more revealing would be to admit sluggishness and see what we could learn from the leaders.

A recent report from the US Bureau of Economic Analysis showed strong economic growth of 3.3% in the U.S. in the fourth quarter of 2023, setting growth for the year at 3.1%. This is greater than that shown above. But even at five, rather than six times the UK’s growth, it rates the UK economy as “sickly” as opposed to “strong”. It also shows Biden’s leadership in a strong light; in the first three years of Trump’s term, before the pandemic, growth was 2.5%). A year ago, economists projected that the U.S. would have a recession in 2023 and forecast growth of 0.2%.  US unemployment remains low, wages high, and inflation is receding (3.4% for the year, vs the UK’s 4.0%). 

“The final three months of the year looked a lot like the soft landing Fed officials are seeking to achieve.”

—Gabriel T. Rubin, Wall Street Journal

 There is a major political story behind this impressive economic one. Since 1981, US lawmakers have insisted that cutting taxes, regulation, and the social safety net would create much faster and more efficient growth than was possible under the system in place between 1933 and 1981. This is echoed by prominent Tories like Jacob Rees-Mogg and John Redwood, who still preach the discredited lesson sof “Reaganomics”.

In the earlier era, lawmakers regulated business, imposed progressive taxes, and supported workers to make sure that ordinary Americans had the resources to fuel the economy through their desire for homes, consumer goods, and so on. But with the election of Republican president Ronald Reagan, lawmakers claimed that concentrating wealth on the “supply side” of the economy would enable wealthy investors and businessmen to manage the economy more efficiently than was possible when the government meddled, and the resulting economic growth would make the entire country more prosperous. 

The problem was that this system never produced the economic boom it promised. Instead, it moved money dramatically upward and hollowed out the American middle class while leaving poorer Americans significantly worse-off. 

When he took office, Biden rejected “supply side” economics and vowed to restore buying power to the demand side of the economy. His policies invested in manufacturing, infrastructure, small businesses, and workers’ rights. After years in which pundits said these policies would never work, the U.S. economy appears very strong.

With December’s UK government borrowing at “only” £7.8 billion, Chancellor Hunt is being pressured by supply-side Tories to use this unexpected “headroom” to cut taxes. This would be foolish and counterproductive. Another £7.8bn added to the existing £2,685 billion of public debt may not seem much.

But it represents another £409 million in annual interest, on top of the £14,100 million already being paid. Put another way, £14 more of taxes paid by each UK household will be diverted to service our massive debt.

Had Kemi Badenoch been right in parroting the party line that UK GDP is growing like the US’s, then debt would diminish as a fraction of GDP—and perhaps justify even more borrowing.

As it stands it is wilful denial on a national scale.

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