Brexit and the waning days of the United Kingdom

[Josquius]

https://www.bbc.com/news/business-63457813

Will you look at that.

UK battery start-up Britishvolt could run out of money and go into administration after the government rejected a £30m advance in funding.

The firm wants to build a factory in Blyth in Northumberland which would build batteries for electric vehicles.

The government, which had championed the development, had committed a total £100m to Britishvolt for the project.

It is understood the firm wanted to draw down nearly a third of the funding early but the government refused.

It has left the £3.8bn project, which has already been delayed several times, in doubt.

Britishvolt has struggled to find investors to help fund the construction of its so called gigafactory in Blyth which was expected to create 3,000 jobs.

It had been heralded by ministers as an example of "levelling up", a Conservative aim of investing in communities to reduce economic imbalances with other parts of the country.

Blyth made election history in 2019 when it changed from Labour to the Conservatives.

The firm, which is yet to make any revenue, has in recent months held urgent talks to try to secure fresh funds to stay afloat.

A Britishvolt spokesperson said the company was "aware of market speculation" and was "actively working on several potential scenarios that offer the required stability".

"We have no further comment at this time," they added.

Electric car battery plant gets millions in funding
Mini move to China unfortunate, minister says
Ian Lavery, the Labour MP for Wansbeck, where the site is based, told the BBC he had spoken to the chairman of Britishvolt on Monday who said the company asked the government for £30m for the project to continue.

He said: "The chairman informs me that the government have replied overnight [with] Grant Shapps the new Business Secretary, saying that they are not prepared to do that and as a consequence it very likely that Britishvolt will go into administration."

Mr Lavery added: "It is fairly and squarely at the door of the government for basically not agreeing to bring monies forward which will ensure that this project will continue. It is absolutely outrageous - what happened to levelling up?"

The Department for Business, Energy and Industrial Strategy said the government was "determined to ensure the UK remains one of the best locations in the world for automotive manufacturing as we transition to electric vehicles, while ensuring taxpayer money is used responsibly and provides best-value".

A spokesperson said the government would not comment on "speculation or the commercial affairs of private companies".

'Levelling up'
In January, the government pledged £100m to Britishvolt to help it build its battery plant, as well attract more private investment in the development.

At the time, former Prime Minister Boris Johnson hailed the investment as a "levelling up opportunity" which would bring "thousands of new highly-skilled jobs to communities in our industrial heartlands".

The then Business Secretary Kwasi Kwarteng said the factory and the jobs it was forecast to create was "exactly what levelling up looks like".

However, Britishvolt was recently forced to delay the start of production at the plant for a second time. It had been scheduled to begin by the end of next year but this was pushed back to the end of 2024.

Then in August, the company announced it would be delayed again until the middle of 2025.

At the time the firm blamed "difficult external economic headwinds including rampant inflation and rising interest rates".

The original promise of government funding had helped Britishvolt raise a further £1.7bn from private investors. These included UK asset investment giant Abrdn and fund manager Tritax.

From 2030, sales of new petrol and diesel cars in the UK will be banned and manufacturers are switching to making electric vehicles which requires an increase in battery production.

Britishvolt had already struck memorandums of understanding to make batteries for UK car firms Aston Martin and Lotus.

When I first heard about this it smelled seriously off. Massive whiff of brexity bull shit to try and bang the drum. Surprisingly it turned out to actually have legs and the project stumbled on for quite some time...
But now it seems the initial sniff test was right.

[Sheilbh]

I feel like I can already see the headlines in 2029 as Britain faces a massively expensive and disruptive shortage of essential batteries/hit to battery supply chains traceable to a decision not to move the timeline for giving a subsidy

[PJL]

It wouldn't surprise me to see a lot of infrastructure investments be axed/scaled back in the next few months in order to balance the books. Just like last time.

[Sheilbh]

It wouldn't surprise me to see a lot of infrastructure investments be axed/scaled back in the next few months in order to balance the books. Just like last time.

Yep - already seen the stuff about HS2 being "under review"

A couple more years of penny wise, pound foolish decisions pitched as prudence.

[The Larch]

A very British political turnmoil. 

'Don't embarrass the king': Liz Truss told to forgo a lengthy honours list
Former prime minister could be told to limit rewards for allies and friends after her disastrous seven-week tenure

Liz Truss will be advised by Buckingham Palace not to present a long list of resignation honours after her short and disastrous premiership, according to senior figures with experience of the system.

One source with close knowledge of honours protocol told the Observer that, given her time in No 10 lasted just seven weeks and was marred by economic crisis and U-turns, rewarding lots of allies and friends would be seen as inappropriate by the Palace, by cabinet secretary Simon Case and almost certainly by the new prime minister, Rishi Sunak.

"These things are done in a very British way," said the source. "I think it will be clear that this would not be right. It will a be a case of ... you don't want to embarrass the king, do you?

"This situation is completely unprecedented. I am sure a lot of people will be saying to Liz you can have an honours list but it has to be a pretty small, not everyone in your office, not what David Cameron did.

He added: "She was a bona fide prime minister. She can do it but there will be a lot of pressure on her from the Palace, from the Cabinet Office, saying keep the numbers down, not using it to give out honours to lots of people. Simon Case would be saying, 'Do it but don't go mad.'"

Another senior figure who has served at the highest levels in Whitehall said there was no doubt that Truss, having been rightfully chosen and served as prime minister, had a right to draw up a resignation honours list, and that her successor – in this case, Sunak – would not be expected to stand in her way. While there are no formal rules, the system is governed by convention which dictates that whatever is proposed by an outgoing prime minister would be expected to be unopposed by his or her successor.

But the senior Whitehall figure added: "I think people would be having a word with the prime minister to make clear that in this case he should be making clear it that had to be quite modest. There would discussions. Ultimately they are in the gift or the monarchs and there would be lots of discussions."

Since Truss left office last Tuesday, there have been rumours about the names on a potential Truss list, and suggestions that she may want to elevate her close friend and chancellor Kwasi Kwarteng, who she sacked over the mini-budget fiasco, to the House of Lords.

Friends of Kwarteng deny that he would want a peerage and insist he wants to remain as an MP.

With Boris Johnson yet to submit his resignation honours list after being ousted in the summer, there is growing concern among some existing peers that the upper house faces a major new influx, when the aim is to reduce numbers.

When David Cameron left office in 2016 he caused disquiet by giving honours to large numbers of his staff. His successor, Theresa May, was known to have been angered by the number and identity of the names on Cameron's list, but concluded that she could not stand in her predecessor's way, as this would set a dangerous precedent.

It's also quite fun to see that Boris, even being out of Downing street for a couple of months already, has not yet presented his own Honours list, so maybe Sunak will have to approve of two (Johnson's and Truss') Honours lists in short succession.

[The Larch]

Also on the topic of cuts...

UK on collision course with Joe Biden over cuts to aid pledge
Refugee costs mean Britain could halve world health fund donation as other countries increase their contributions

Britain is on a collision course with Joe Biden and other prominent international allies as it prepares to unveil a dramatically reduced contribution to a major global fund to tackle deadly diseases, the Observer understands.

All countries are being asked to improve on their last contributions to the Global Fund, set up to tackle malaria, tuberculosis and Aids in the world's poorest countries. Most G7 countries have already announced plans to do so, and Biden raised the issue during talks with Liz Truss last month. Britain gave £1.4bn to the fund during the last pledging round in 2019.

Now Britain is being asked to find £1.8bn for the fund over the next three years but is thought to be considering a contribution in the region of £800m – less than half the requested amount. It is likely that Britain will be the only major world power not to increase its donation.

Several sources have told the Observer that the UK's overseas development assistance (ODA) budget is now in disarray because so much of it is being spent on the accommodation and other costs related to asylum seekers and refugees in Britain. Experts believe more is now being spent within the UK than in the poor nations that need it.

The aid bill for the programmes to help those from Ukraine and Afghanistan alone is said to run into billions. Officials have been raising concerns for some time that the Home Office's failure to control housing costs is effectively draining the aid budget. However, it is only now that ministers are beginning to get a grip of the costs that are actually being racked up.

Because the aid budget is fixed at 0.5% of gross national income, the huge costs of the domestic asylum-seeker programmes mean that cuts will have to be made in other areas of aid spending. The first major casualty is set to be the Global Fund contribution.

Andrew Mitchell, the new international development minister, who had been a leading advocate for Britain's overseas aid work as a backbench MP, is now going through a detailed audit of Britain's aid budget and is said to be trying to prioritise the UK's Global Fund contribution. However, he now has severely limited resources at his disposal as a result of the chaotic way in which the aid budget has been allocated.

Officials battling for the UK government to make a large contribution have been arguing that Britain has a strong record as a central player in the fund, with two-thirds of the money spent in Commonwealth countries. The US has already committed to contributing $6bn to the Global Fund over the next three years, a 30% increase on its last donation. Canada, Germany and the European Commission have also increased their pledges by 30% as requested.

It comes after two former government advisers said that they believed that the UK was now spending more of its foreign aid budget in Britain than in poor countries, once contributions to bodies like the World Bank are excluded. As much as £4bn is now being spent domestically, they believe, largely on costs related to asylum seekers and refugees. The Home Office has been paying millions a day to house some in hotels with funding taken from the foreign aid budget.

Stefan Dercon, former chief economist at the Department of International Development, told the Observer: "You can't squeeze everything into development while claiming you don't do it on the back of the poor. You have to just admit that and be honest. The Home Office has no incentive to be careful. There are concerns within the FCDO [Foreign, Commonwealth and Development Office]. These eye-watering costs are terrifying, because you end up giving a blank cheque to one department on your own budget. Unless something is done, it's going to be a disaster. This is billions, and that's why the concern is there."

Ranil Dissanayake, policy fellow at the Center for Global Development thinktank and another former government adviser, said: "We should be generous to refugees who arrived on our shores, and we should support them. But those things aren't the same as what we think of as development – helping other countries to improve their economies, lifting people out of poverty, feeding people, giving them healthcare and improving education. All of that stuff is getting squeezed. This isn't terminal. They really can turn this around. It requires that they make a choice to stop using the aid budget as a kitty for the rest of government."

A spokesperson for the FCDO said: "Across government, there are significant pressures on the 0.5% ODA budget due to the costs of accepting refugees from Afghanistan and Ukraine as well as wider migration challenges. How many refugees arrive in any particular period is not certain, so there is not a fixed cost. We remain one of the largest global aid donors, spending more than £11bn in aid in 2021, and UK aid has recently gone towards those in need in the Horn of Africa and Pakistan."

A couple of things strike me as unwise in terms of how the UK manages its foreign aid, why is there a cap at 0'5% of the budget? And why is money for overseas development being employed in dealing with refugees arriving tot he UK?

It seems that another of Brexit's "Project Fear" dangers is coming to be realized, UK's standing on the global level is due to be greatly reduced in the coming years.

[Tamas]

It's also important to understand that for the people in charge of the Tory party at the moment, being mean to refugees and immigrants is its own reward.

[Sheilbh]

A couple of things strike me as unwise in terms of how the UK manages its foreign aid, why is there a cap at 0'5% of the budget? And why is money for overseas development being employed in dealing with refugees arriving tot he UK?

The UK aid budget was at 0.7% under New Labour - which meant the UK was one of about 5 countries who met the UN target for development aid (basically the UK plus the Nordics - with Germany fluctuating around that level).

Cameron "enshrined" that in law. It's not a cap but basically how the aid budget is set is as fixed % of GDP. International development don't have to justify or submit budgets for Treasury approval in the way other spending departments do for spending reviews - it's just a calculation. During the pandemic Sunak "temporarily" cut that to 0.5% of GDP - obviously in practice as it's a % of GDP that meant that there was already a very significant cut in aid funding given the economic impact of the pandemic.

Under the rules for calculating ODA in accordance with the UN target, it can include the cost of hosting refugees and most countries cover some of those costs with their aid budget. What's unusual about the UK is that - and, again, this was a decision of Sunak as Chancellor - the entire cost of Afghan and Ukrainian refugee programs are coming from the aid budget.

It is worth pointing out though that Sunak has now appointed Andrew Mitchell as Minister for Development in charge of aid. Mitchell rebelled against all of those changes made by Sunak and campaigned against them - he was also Shadow Secretary of International Development for five years under Cameron and then International Development Secretary for over two years (until plebgate). So he knows this area very well - but given Sunak's changes and the general austerity 2.0 that we're probably in store for I imagine there'll be further cuts.

It seems that another of Brexit's "Project Fear" dangers is coming to be realized, UK's standing on the global level is due to be greatly reduced in the coming years.

Yeah this is again an area where the UK was a genuine global leader. But as a percent of GDP the UK teneded to spend more on aid than any other G7 country - and it is still basically it and Germany at the top. It was an area where the UK was genuinely pretty impressive, from people who work in the field - DfID were globally respected. That's been trashed under Johnson who got rid of DfID as a standalone department and then presided over the cut to 0.5% during the pandemic.

It's another example of the government in many ways undermining strengths of the UK/not really liking the things we're actually good at.

Having said that I do always get a little bit annoyed when I see stories - and this isn't the first - about American politicianss getting annoyed about British aid cuts given the US spends under 0.2% of GDP on development aid.

[PDH]

Day 7 of this interminable stay in office of the PM, when will this national nightmare end?

[Tamas]

Day 7 of this interminable stay in office of the PM, when will this national nightmare end?

He is proving resilient, this one.

[mongers]

Day 7 of this interminable stay in office of the PM, when will this national nightmare end?

He is proving resilient, this one.

He's still likely to loose one of his principle government ministers within the next week or so.

[Richard Hakluyt]

Well the tories do indeed have loose principles and it will be a happy day when Sunak loses the principal minister in question 

She is a bad'un and ineffective, a particularly bad combination.

[Jacob]

She is a bad'un and ineffective, a particularly bad combination.

I'd think a bad'un who's effective could be even worse?

[Richard Hakluyt]

I guess...maybe...

There is a genuine and pressing problem at the moment though; people are being held at an inadequate reception camp in Kent for long periods https://www.bbc.co.uk/news/explainers-63456015

Whatever we should be doing about the people arriving by small boats there is no way that this can be any part of the solution.

[Zanza]

When I first heard about this it smelled seriously off. Massive whiff of brexity bull shit to try and bang the drum. Surprisingly it turned out to actually have legs and the project stumbled on for quite some time...
But now it seems the initial sniff test was right.

Britain exports most cars it makes to the EU or US.

Especially the latter is fairly protectionist when it comes to BEV through a huge tax incentives for American made electric vehicles in a recent Biden initiative. And there's no way the US signs an FTA including cars.

The UK-EU TCA has a provision on tariff free import for BEV, but that necessitates a high share of local (or EU) value add. So selling a British made car with an EU battery to the EU is tariff free. But selling it any other market will not be tariff free as other markets would not accept EU batteries as local British value add. So if you want to make a car and export it, it is better to make it in the EU, so that you have tariff free market access to UK and EU, but also have enough local content to fulfill the requirements of the EU FTAs. The UK just does not have enough local supply chain to fulfill these requirements towards other markets.

So the British car industry (other than super exotic cars like RR, Bentley, Aston Martin, McLaren, Lotus) will struggle.

Maybe that makes big battery plants unattractive.