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Westlake Legal Group > Small Business

Richard Patient: At last the Conservatives have realised the CBI is the voice of big business, not all business

Richard Patient is an entrepreneur, and founder of property communications company Thorncliffe | Your Shout.  He was London Chairman of Business for Britain during the EU referendum.

It will surprise no one to learn of the antipathy towards the Confederation of British Industry held by Dominic Cummings, given the well-publicised stunt at the CBI conference four years ago.  Then Vote Leave portrayed the CBI as the ‘Voice of Brussels’, in a dig at the Confederation’s then (and since dropped) slogan ‘Voice of Business’.

What may come as a surprise to some is the general scepticism towards the CBI of many high-ranking advisers in Number 10, and not just among the Vote Leave alumni.

Of course, the CBI were never the Voice of Business, merely the voice of their members, and they remain a well-funded and still well-respected lobby group.  The fact that the Prime Minister chose their conference for a major speech will be a source of contentment for their bosses, but is mainly due to the media pack being there rather than any general good-will towards the organisation.

Number 10 know that when Labour attack big business, they are onto something.  Our new voters, those from the working class constituencies that the Tories will be relying on to form their majority, at not just this election but also the next, still recoil from the 2008 banking crisis when the banks feathered their nests at the expense of the rest of us.

These voters know that homes are too expensive, yet see Persimmon bosses awarding themselves over £100 million bonuses.

They see private companies recoiling from risk, but taking the profit, in the case of PFI hospitals and Carillion.

And they see high streets failing, whilst the big e-commerce companies like Amazon offshore their profits to other countries.

That’s not to say the Tories are not the party of business – they are, and always will be.  Business continues to fund much of the Conservative party – but go to dinners like the Carlton Club political dinner last night and you will find there is a massive leaning towards entrepreneurs, those who have started their own business or who lead their companies to make them world-class.

Take Ben Elliot, the Co-Chairman of the Party, who not only started his international luxury lifestyle company Quintessentially, but is also a non-executive of another British success story, YouGov.

Look at Peter Cruddas, a former Party Treasurer – the son of a Smithfield Market worker, he founded CMC Markets and is also a major philanthropist.

Or Anthony Bamford, who still runs the award-winning and acclaimed JCB.

What Number 10 knows is that big business will always lobby for special privileges for this market or that.  Of course they will always couch the argument in terms of quality, standards or safety.  They have been very good at that, particularly within Brussels and the Single Market, which imposes standards for all irrespective of the good for each country or market.  Coming out of the EU and driving trade deals with other countries will halt some of the inexorable demand for new regulations, and over time will reduce burdensome regulations in the UK.

Not so long ago, SMEs and companies smaller than 20 employees – which constitute a massive proportion of the UK economy – were shielded from much of the regulation that faces large companies.  Now, all companies face the same legislation, so a company with five employees has to face the same burdensome laws as a company with 20,000 employees.  Of course larger companies prefer this, as they can employ armies of compliance officers, HR teams and environmental health officers, whilst the MD of the small company has to be a master of everything.

That’s not to say regulations on quality, standards or safety, will go down.  They won’t, and the Government has made that plain in terms of environmental and employment criteria.  That also fits in with their need to keep long-term the once-Labour voters that they appear to be winning during this election.  In some cases, pressure from new voters will mean the Government will impose higher standards, and intervene more.  But if they do so, they should remember that they are imposing burdens not just on the larger businesses that can cope but also on the smaller ones that find it harder.

Over the past 30 years, it has been easy for ministers to take regard of the voices of the CBI and their members.  They are the ones who employ lobbyists and they are the ones that find it easier to gain an audience with politicians, both Labour and Conservative.

But the general direction of many in Number 10 is to widen out this reach.  Take housing, where a revolution needs to take place.  We’re likely to only be able to build the number of homes we need if the Government makes it easier for smaller companies to become major players in the market.

Look at procurement, too.  The Government faces a choice soon as to whether it replicates the OJEU regulations, or makes the system much less onerous, open to a wider pool of companies.

Or take ecommerce, where a tax system needs to be devised to help smaller companies compete.

There are senior people in Downing Street who understand all of this, some of whom have come from big business themselves and who now want to turn gamekeeper.  The CBI will have to work harder and smarter if it wants to retain tits once formidable influence.

The Conservatives have always been the Party of the entrepreneur and the smaller business.  What better way to show this that to go after these SMEs and smaller entrepreneurs and form an army that will help give an intellectual backing and funding to the party as it prepares the big battle towards the next election in 2024.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Sponsored Post: Simon McVicker: Why the UK’s five million freelancers are key for the Conservatives this election

Simon McVicker, Director of Policy and External Affairs at IPSE (the Association of Independent Professionals and the Self-Employed).

This election is about Brexit. That’s what everyone is saying: there’s a deal on the table, and this election is for the country to decide on that deal. But that must not be the sole focus.

Behind all the Brexit noise, there is still a country and an economy to run. There are still millions of businesses across the UK looking from party to party to decide who will represent their interests, and who will run the economy best.

At their forefront are the UK’s five million self-employed. For a majority, the Conservatives must win the support of the country’s small businesses and self-employed.

Freelancers and the self-employed are vital to the economy. Not only do they contribute £305 billion to it every year; they also bring flexibility and productivity to businesses across the country. That should be reason enough for the Conservatives, the party of business and responsible economics, to support the interests of the self-employed. But it is also worth remembering that they are five million votes up for grabs.

To win those votes, the Conservatives must commit to policies that will genuinely support the self-employed – particularly when it comes to taxing their business.

Fundamentally, the current UK tax system simply does not work for the self-employed. It is an outdated system built with just two groups in mind: employees and employers. Now, it is struggling to keep up with modern kinds of working like self-employment.

Instead of redesigning the tax system to incorporate modern ways of working, governments over the last 20 years have tried to tinker with it. Rather than grasping the root of the problem, they have made it worse with cumbersome and damaging policies like IR35 and the hugely controversial “Loan Charge”.

Not only do these add to the already nightmarish complexity of self-employed taxes: they unjustly penalise freelancers, one of the most dynamic and productive groups in our workforce. If the Conservatives want to secure freelance votes, they must commit to turn this around. They must halt these hugely damaging policies and pledge to redesign the tax system based on employees, employers and the self-employed.

Nor is it just our outdated tax system freelancers are struggling with: there is also poor payment culture. Shockingly, IPSE research shows the average freelancer spends 20 days a year chasing clients who have not paid them on time. Worse, nearly half (43 per cent) have done work their clients have failed to pay them for. This is unacceptable.

To win the support of the self-employed, the Conservatives must pledge to turn this around. They must commit to giving more powers to the Small Business Commissioner (a post they must also fill again as quickly as possible), including fining the worst offenders.

This election, the Conservatives can make a profound difference to the self-employed, and in doing so, win the support of this five million-strong sector. It is time they stood up proudly as the party of all business: from big corporations to the small businesses and freelancers that are the beating heart of our economy.

IPSE (the Association of Independent Professionals and the Self-Employed) have developed a manifesto for the self-employed, with recommendations for how parties can secure freelancers’ #5millionvotes. It includes ways to support them across everything from the tax system to pensions and parental rights. Read it here.

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James Frayne: To win working-class voters, Conservatives must start talking tax

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

This coming election’s most important coherent block of swing voters live in provincial England. They’re mostly older and female, they’re mostly working class (C2/D), and they’re highly eurosceptic.

Other groups matter too, of course – such as the mostly Southern, suburban professionals – but they’re smaller in number. Things might change but, painful as it is for some to accept, this election will primarily be decided by the provincial English. This working-class group is emphatically not locked down for the Conservatives.

The Conservatives’ last campaign – with its threat to penalise careful, thrifty pensioners with massive social care costs, and implicit threats of general tax rises – prevented the Conservatives carrying working-class voters in what should have been a landslide.

Lessons have been learned and the announcements made by the Prime Minister and crafted by Vote Leave alumni to date have been crafted tailored to this group. The coming manifesto will be better targeted too.

Much of the manifesto writes itself, with obvious demands for action on Brexit, public services, and crime. But there’s an area slowly creeping onto the agenda in the same way crime did a year ago: tax. Long dismissed as an issue of limited electoral potency, things are slowly but definitely changing. In crafting an economic policy for working-class and lower-middle-class swing voters, the Conservatives need a set of attractive policies on tax.

What should these policies look like? Over the summer, I ran a detailed opinion research exercise for the TaxPayers’ Alliance to probe working class attitudes to prospective tax policies. Combining a 4,000 nat-rep poll with half-a-dozen focus groups of swing voters in seats with heavy working-class representation – Walsall, Stoke North, and Bristol North West – we tested a long list of options the political parties might realistically announce for the next election.

(While all polls date fast in the current environment, by polling at the high point of the Brexit Party’s prominence and the low-point of the Conservatives’ recent polling performance, we can at least gauge the softness of Conservative pledged support and therefore the number of their voters who are essentially swing voters in this block).

You can read the full tables and judge for yourself here. However, two main things stand out. Firstly, most importantly: working-class voters want a system that looks to them much fairer than the current system. Secondly, and more surprisingly: they want government to help businesses – mainly start-ups and local businesses, but businesses generally – because they’re worried about the state of the economy.

This second lesson contradicts popular wisdom in Westminster. Both require more explanation. Given a list of prospective tax cuts, working class voters have a clear view of who should be the primary recipients of help via tax cuts, and who should take on more of the financial burden through tax rises.

For example, we found support for: a reduction in the basic rate of tax; higher tax thresholds so people are not dragged into higher bands by rising inflation; an increase in the threshold at which stamp duty kicks in; and National Insurance rebates for those that don’t claim Jobseekers Allowance for five years.

On the other hand, we also found support for: a higher rate of tax on top earners; and higher taxes on second homes. Working class voters don’t just want a system that benefits “people like them” (although they do want that), they want a system that supports those that need it – and in their eyes deserves it.

This research showed not only that working-class voters are supportive of business tax cuts, but they’re also much more supportive of business tax cuts than middle-class professional voters. They have a bias towards supporting tax cuts for new businesses (for start-ups), for small businesses, and for local businesses. For example, they strongly favour start-ups paying no corporation tax (often a heavy burden) for their first three years of operation, and tax cuts for small businesses and the self-employed. But they favour generally pro-business tax cuts too: they favour a reduction in employers’ PAYE contribution, and a general cut in corporation tax too.

The focus groups help us to understand why this might be. Fundamentally, it’s because working-class voters are much more concerned about their jobs – generally, but specifically in the context of Brexit – and they see more clearly what their communities would look like with fewer jobs.

In places like Stoke, for example, where the potteries went a while ago, all that’s really left, in local people’s eyes, are distribution centres, warehouses, and call centres. Politicians and left-wing activists sneer at these sorts of jobs, but local people don’t and local people fear that higher taxes will drive businesses away and leave them with nothing.

Working class support for business has been a real phenomenon for a while now – certainly since the referendum – and I have been arguing here for a while these arguments about voters thinking “capitalism is broken” are miles off. I fear that – like the ideas the public want everything in optimistic Obama-esque language, or that every policy should be designed to help the very poorest – this has captured Conservative politicians’ minds.

Conservatives need to un-learn this “lesson”. Working-class voters want to hear policies that will help their employers, not that those that might drive them away.

Tax isn’t a tier-one issue yet, but it’s going up in the public’s mind – and particularly amongst working class voters. They are, after all, people that have not had a pay rise in a long time and who struggle with rising costs. They are also people that live side-by-side with those they think don’t work hard, and who live comfortable lives on welfare. And they are people that fear what a weaker economy might mean for their long-term financial health.

For all these reasons, tax will become an issue that politicians have to start talking about soon.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

New York vs. Grubhub

Seamless, the food delivery service launched two decades ago in Midtown Manhattan, calls itself “the most New York app in New York.” In advertisements, the company cracks jokes about the L Train and takes unsubtle jabs at New Jersey. “Eat Like a True New Yorker,” one subway ad declares.

But while the delivery giant Grubhub, which owns Seamless, seems to have plenty of affection for New York, that feeling may no longer be mutual.

In June, during a four-hour hearing of the New York City Council’s small business committee, restaurant owners complained about the high commissions charged by Grubhub and other third-party delivery apps. Weeks later, Senator Chuck Schumer of New York called for a federal investigation into widespread complaints that Grubhub charges restaurants fees for phone calls that do not actually result in orders. And the service has also faced criticism for its recently-discontinued practice of creating web domains for the restaurants on its platform.

In response, Grubhub has started a website to help restaurants reclaim their web domains and has promised to let owners listen to the recordings of some phone calls that generated disputed fees. On Oct. 1, the company plans to hold the first in a series of “restaurant roundtables” in New York to let business owners air their concerns.

Those steps have not mollified the company’s critics.

ImageWestlake Legal Group merlin_160880268_07d44c43-e5e0-4504-a13d-c6543e145dca-articleLarge New York vs. Grubhub Small Business Seamless North America LLC restaurants New York City Delivery Services

Mark Gjonaj, the chairman of the New York City Council’s small business committee, said legislation is being considered that would regulate the commissions delivery apps could charge restaurants.CreditJeenah Moon for The New York Times

“I would love for Grubhub to do the right thing and do more,” said Mark Gjonaj, who chairs the City Council’s small business committee. “If they don’t, we’re going to be looking at serious legislation as we move forward that will make this a much more fair playing field.”

New York is one of Grubhub’s top-performing American markets and a crucial battleground in the escalating competition for dominance among the major food delivery apps. But the transformative impact of delivery apps is being felt far beyond the city. As third-party services — including DoorDash, Uber Eats and Postmates, as well as Grubhub and its Seamless brand — become faster and more convenient, they are growing increasingly popular across the world, fundamentally changing what it means to operate a restaurant.

And from San Francisco to Mumbai, the owners of small, independent restaurants complain that the per-order commissions the third-party services charge have cut into already-thin profit margins.

The major delivery companies have long argued that apps expose restaurants to new customers, allowing small businesses to tap into a network of tens of millions of online users and to benefit from the advertising muscle of multi-billion-dollar companies. Katie Norris, a Grubhub spokeswoman, said the service drives “incremental sales” — bringing in customers who would otherwise stay home and cook.

“The incremental sales and traffic with higher average checks more than offset commission rates,” she said.

But that has not been the experience of Anil Bathwal, who runs the Kati Roll Company, a New York-based chain specializing in Indian street food.

Mr. Bathwal did not have a large-scale delivery operation when his restaurant chain signed up with Seamless, and he said the service initially brought him new business. But over the years, third-party delivery has grown to account for as much as 30 percent of his sales, as existing customers — those who used to eat at the restaurant — have started using Seamless instead. “As time goes by, more of my existing customers are being cannibalized,” said Mr. Bathwal, who estimates the delivery service has reduced his overall profits by between 2 and 5 percent.

The third-party delivery apps vary in their approaches to calculating commissions, which usually range from 15 to 30 percent. While Uber Eats levies a flat rate, Grubhub charges restaurants higher commissions in exchange for better visibility on the platform.

That system could change in New York. Mr. Gjonaj said the small business committee is considering legislation to regulate commission rates. Last month, the New York State Liquor Authority proposed a policy that could effectively put a cap on commissions charged to restaurants with liquor licenses.

Signs advertising Seamless and Grubhub delivery services at a deli in the Bronx.CreditJeenah Moon for The New York Times

But with Grubhub and other delivery apps gaining popularity with customers, few restaurants can afford to opt out. “Grubhub has such huge market share that to say no, a lot of them feel like they’d be missing out on a lot of business,” said Melissa Autilio Fleischut, president of the New York State Restaurant Association. “There are lots of concerns, but I don’t know of any restaurant who says, ‘I’m not going to do it through these apps.’”

From its founding as an independent company in 1999, Seamless prided itself on maintaining healthy relationships with the restaurants on its platform, working with business owners to develop sales strategies and improve menus, according to three former Seamless employees who spoke on condition of anonymity to discuss internal company dynamics.

But the company’s culture shifted after it merged with Grubhub in 2013, the employees said, and a less sympathetic approach took hold. Sales officials at Grubhub’s headquarters in Chicago sometimes yelled at owners who called with complaints, said two of the employees.

Ms. Norris, the Grubhub spokeswoman, said any employee who yelled at a restaurant owner would be immediately disciplined.

“We depend on the success of our restaurants and work very hard to be the best partner we can be,” she said.

Another practice also concerned some Seamless employees after the merger and has recently come under scrutiny: Grubhub’s system for determining whether a phone call made through the app has generated an order. Although most customers place delivery orders by tapping their smartphone screens, Grubhub allows users to make phone calls through the app, and Yelp listings often include a Grubhub phone number alongside a restaurant’s direct number.

In December, Tiffin, a chain of Indian restaurants in the Philadelphia area, sued Grubhub, claiming that for at least seven years the company had charged restaurants on its platform for phone calls that never resulted in orders.

Marco Chirico says his restaurant, Enoteca, was charged by Grubhub for calls that did not result in orders.CreditJeenah Moon for The New York Times

Marco Chirico, who runs Enoteca on Court, an Italian eatery in Brooklyn, said he recently discovered that in two months Grubhub had charged him hundreds of dollars for phone calls during which customers simply inquired about a menu item or requested a reservation. He received a refund from Grubhub, he said, but only for the phone calls whose recordings he had reviewed.

“Now I have to take my time or pay someone extra to go through all the transactions and phone calls to see whether they were orders or reservations,” Mr. Chirico said. “It can hurt you at the end of the month.

Over the years, Grubhub has publicly acknowledged that it uses an algorithm to determine whether a phone call resulted in an order rather than reviewing the transcript of every call. The company decides whether to charge restaurants based on a range of factors, including the length of the call and whether the customer who made it also placed an online order that day, according to Ms. Norris, the spokeswoman.

“We are constantly refining these systems and processes to ensure we are optimizing for accuracy,” she said.

In August, Grubhub announced that it would double the time it gives restaurants to review phone calls, from 60 to 120 days, and would refund inaccurate charges. But the 120-day window won’t ensure that restaurants recover their losses, Mr. Enrico said. “It doesn’t help with the thousands of dollars you lost in prior months,” he said. “You should fix the past to move forward.”

The fees are expected to be one of the main topics of discussion at the first restaurant roundtable, which will be hosted by a Grubhub executive, Kevin Kearns, at the company’s office in Manhattan on Tuesday afternoon.

Over the summer, restaurant owners also began questioning another Grubhub practice: purchasing internet domain names for thousands of restaurants so that customers searching for them online would be directed to place orders through the delivery service. Ms. Norris, the Grubhub spokeswoman, said the company discontinued that policy in 2018 and, in any case, always got restaurants’ permission to establish such “microsites.”

But in June, a story in the industry publication New Food Economy detailing the practice led to an outcry from restaurant owners who said they had not realized that joining Grubhub essentially meant signing away the rights to their online identities. To reclaim control over their digital profiles, some owners are working with ChowNow, a California-based company that helps restaurant owners develop their own apps, charging a monthly subscription fee rather than a per-order commission.

“Restaurants are waking up and saying, ‘I need to own my website, I need to own my customers, I need to own my identity online,’” said Chris Webb, who runs ChowNow.

Haruki Kai, the co-owner of Sushi Ryusei in Manhattan, said Seamless has benefited his fledgling business, generating around $1,500 a month in profits. But given the popularity of online delivery, Mr. Kai said he believes that number should be even higher. He now offers a 10 percent discount to customers who bypass Grubhub and order through his ChowNow app instead.

“For now, we are O.K.,” Mr. Kai said, “but still 30 percent is too high a fee.”

Patricco Zhumi prepares to make a delivery for Enoteca in Brooklyn.CreditJeenah Moon for The New York Times

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Frustrated California Woman Has Scathing Message For Gavin Newsom After Homeless Chaos Destroys Her Small Business

Westlake Legal Group Ca-woman Frustrated California Woman Has Scathing Message For Gavin Newsom After Homeless Chaos Destroys Her Small Business Small Business homeless Gavin Newsom frustration Front Page Stories Featured Story crime California

A frustrated California woman took to Twitter on Friday to blast governor Gavin Newsom’s disastrous policies that have created a desperate homeless problem. The woman – who goes by @Jesus_porvida on Twitter – was clearly upset as she posted a video detailing why she may be forced to close the doors of her business.

I have had a business in downtown Sacramento for 15 yrs, a successful business. I now have to leave my place of business. I have to close my shop.

Later tweets show pictures of the woman’s shop after the most recent in a series of  break-ins, a break-in that apparently was the last straw for the Sacramento are hair stylist.

I have to clean up the poop and pee off my doorstep. I have to clean up the syringes. I have to politely ask ppl who I care for – I care about the homeless – to move their tents out of the way of the door to my business. I have to fight off people who push their way into my shop that are homeless and on drugs because you won[t arrest them for drug offenses.  I have to apologize to my clients as to why they can’t get into my door because there’s somebody asleep there bc they’re not getting the help they need.

I talk to police offers. They told me to contact you. They want to do something and they can’t because you changed the laws. So I wanna know what you’re gonna do for us, the ones that are unhappy. You wanna make us a sanctuary state. You wanna make it comfortable for everybody except for the ppl that work hard and have tried their hardest to get along in life and now we have to change that because of your laws.

She shredded Newsom’s “liberal ideology” as the cause for the current chaos that forced her to close the doors of her business.

While you sit in your million dollar home you don’t have to look at what we have to look at; there’s hard working people who have to deal with this on a daily basis. What are you going to do for us?

The rant sparked a flood of responses from people sharing similar experiences.

Crime and pestilence have been skyrocketing in the state of California as a spate of policies decriminalizing petty theft, open drug use and vagrancy violations have tied the hands of police and left citizens and business owners vulnerable and frightened. California politicians have been deliberately vague about the problems caused by homelessness.


The post Frustrated California Woman Has Scathing Message For Gavin Newsom After Homeless Chaos Destroys Her Small Business appeared first on RedState.

Westlake Legal Group Ca-woman-211x300 Frustrated California Woman Has Scathing Message For Gavin Newsom After Homeless Chaos Destroys Her Small Business Small Business homeless Gavin Newsom frustration Front Page Stories Featured Story crime California   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Kamala Harris fails spectacularly in Pell Grant reform roll-out

Westlake Legal Group Kamala-Harris Kamala Harris fails spectacularly in Pell Grant reform roll-out The Blog student debt Small Business Pell Grants kamala harris Entrepreneurship Elizabeth Warren

Senator Kamala Harris released her plan for a student loan debt forgiveness program for Pell grant recipients. She posted a tweet announcing her oddly specific plan and its requirements. The reaction to her plan didn’t go well. The responses came fast and furious.

While potential voters are hungry for specifics from candidates in their plans, as a general rule, Kamala’s specifications for those qualifying for loan forgiveness are so specific that not many people will qualify at all. The major stumbling block for people interested in the program rests with one requirement – recipients must successfully open businesses in underserved communities and operate those businesses for three years. Her plan is meant to close the opportunity gap for black Americans. Wait. Isn’t that racist? Isn’t she running to be president of all Americans? As it is now, the majority of Pell grants go to black students.

Her supporters say the Pell grant plan is but a part of a much bigger plan.

Harris’ plan may have the potential to help more people than the dozen or so her critics contend it will. Pell grants (a type of federal student aid for undergraduates that are given out solely on financial need and do not need to be paid back) are the largest source of federally funded grants: Seven million Pell grants were distributed during the 2017 to 2018 school year. The maximum Pell grant award for the 2018 to 2019 school year was $6,095; recipients of Pell grants can also receive federal student loans that need to be repaid. According to data from the 2015 to 2016 school year, 72 percent of black students received Pell grants, compared to only 34 percent of white students.

In addition, according to data from the Small Business Administration, about half of small businesses survive five years or longer. Even if just a small fraction of Pell grant recipients go on to pursue entrepreneurship, these statistics indicate that Harris’ plan could have the potential to help thousands of economically vulnerable entrepreneurs get student loan debt forgiveness.

The bigger plan aims to focus on entrepreneurialism. Her intention is to allow participants in the debt forgiveness program to defer their student loan payments interest-free for up to three years. This gives them time to build their business. The program also allows up to $20,000 in federal student loans forgiveness, as Pell grant receipients can also take out other student loans. Pell grants, by the way, do not have to be paid back. The survival rate of new small businesses is about 50%.

Pell grants are the largest source of federally-funded grants. What I am taking away from her plan is that this is an incentive for those burdened with student debt to strike out and make their own opportunities. I’m not quite sure why she drags Pell grants into the equation, as they don’t have to be paid back and I assume most aren’t. Pell grants are given solely on financial need. Only those who fail to complete the academic period for which the Pell Grant was awarded have to pay the grant back. Kamala’s plan allows those new business owners who survive the first years to get student loan forgiveness.

The catch for most new entrepreneurs is the difficulty of securing funding if the person has outstanding debts. A greater percentage of black students have student loan debt than white or Hispanic students – 40 percent of black Americans between 25 and 55 years old have student debt, as opposed to 30 percent of whites and Latinos. Frankly, I’m surprised those numbers are not higher – to hear the Democrat candidates talk, you would think that every graduating student is drowning in student debt. The grand total reported is 45 million Americans owe a total of $1.56 trillion in student loans.

There are other provisions in the senator’s plan – she wants to bring back the State Small Business Credit Initiative, reform Opportunity Zones programs, and expand the entrepreneurship centers at HBCUs. She wants to allow students to re-finance financial debt at lower rates. She supports “free” community college and helping students receive a four year college education while graduating debt-free. She veers from some of the other Democrat candidates in that she doesn’t support forgiving any existing student debt. So, this plan doesn’t address the overall problem of the $1.56 trillon outstanding debt that already exists.

In contrast, for example, Elizabeth Warren wants to cancel 95% of student loan debt and increase the Pell grant program with $100 billion. She wants to make all public colleges tuition-free. And, she is in favor of forming a $50 billion fund for HBCUs. Thanks, new wealth tax proposal for the ultra-rich.

All said, these new entitlement programs proposed by Democrat candidates to pander to various segments of the voting population do nothing for those students who took out loans to go to school and then followed the rules and paid them back. Why is the next generation entitled to breaks that the rest of us didn’t have when it comes to establishing personal responsibility and future debt obligations? Socialism is great as long as we don’t run out of other people’s money, to paraphrase the late Margaret Thatcher. The money always runs out.

Maybe someone will ask Harris to drill down a bit on her plan during this week’s round of debates. This lame roll-out produced more questions than answers.

The post Kamala Harris fails spectacularly in Pell Grant reform roll-out appeared first on Hot Air.

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John Penrose: The conventional wisdom about this leadership election is wrong. Hunt’s spending plans are neither unaffordable nor irresponsible.

John Penrose is MP for Weston-super-Mare and a Northern Ireland Office Minister.

If you listen to the sober-sided, serious economists at the Institute for Fiscal Studies, or to the Chancellor Philip Hammond himself, you’d think the Conservative leadership election is a horrible bidding war of doolally spending promises from Jeremy Hunt and Boris Johnson. Has the party of sound money lost its soul? Betrayed its heritage? Are Margaret Thatcher and Milton Friedman spinning in their graves as leadership contenders try to out-Corbyn each other with unaffordable spending promises?

Well no, not really. I can’t speak for Boris Johnson but, as someone who’s been involved in a lot of Jeremy Hunt’s policy development work, that’s not what we’re doing at all.

Let’s start with the charge that, if it was right to introduce austerity in 2010, we should do the same for Brexit in 2019. Otherwise we aren’t being consistent.

But the problem in 2019 isn’t the same as 2010. Brexit isn’t the banking crisis, thank goodness. And if the problem is different, the answers should be too.

By 2010, Gordon Brown was trying to keep the economy going with huge increases in public spending, paid for with ballooning debt. Something like one pound in every four the Government spent had to be borrowed, to be repaid by taxpayers later. If we’d carried on like that, pretty soon the country’s credit card would have been snipped up and the bailiffs would have been knocking at the door. So we simply had to throttle back, to stop spending money we hadn’t got.

But today is different. Public spending isn’t ballooning and borrowing is under control. We’re living within our means, and there’s even headroom for a bit more spending if we’re careful. We’ve come a long way, and it hasn’t been easy. You can understand why Hammond doesn’t want the next Prime Minister to blow it.

What are today’s problems, if they’re different from 2010? The biggest is that some – although certainly not all – firms are putting off growth-creating investments until after the Brexit fog has cleared. And that no-one knows whether our trade with the EU will be easy or awful once we’ve left.

So it makes sense to spend a bit of money to promote economic growth. Post-Brexit Britain needs a stronger, more dynamic, more energetic, turbocharged economy, so we’re prepared for the challenges of life outside the EU. And Jeremy Hunt’s plans to cut corporation tax to 12 and a half per cent, increase investment allowances and exempt small high street firms from business rates would do exactly that. They would spark economic renewal and investment in UKplc, making us more resilient in economic shocks and recessions, and more productive and efficient so we can grow faster too.

In other words, it’s OK to use different answers in 2019 than in 2010. But what about the charge that we’re making the same mistake as Brown, by spending and borrowing unaffordably?

Hunt is on pretty firm ground here, because he agrees we’ve got to keep the national debt falling relative to the size of our economy. That means borrowing can’t balloon, and we’ll always be able to repay our debts. And his business career helps here too, because his plans to turbocharge post-Brexit Britain’s economy would mean we’d be investing to grow. They’re sensible investments in our economic future, not pale copies of unworkable, hard-left Corbynomic plans.

Nor is he expecting to do everything at once. We’d need to raise defence spending progressively over five years, for example, to allow time to plan. Otherwise you’d simply waste money on the wrong things.

The same goes for fixing illiteracy. That will take ten years, building on the huge progress over the last decade that has seen more pupils being taught in good or outstanding schools than ever before.

And some of the plans would only be temporary, too. The pledge to help farmers adjust to a post-Brexit world has to be a hard-headed, short term plan to help re-equip machinery, buildings and breeding for new global markets, for example. Not a woolly, open-ended subsidy.

The plans have got to be about changing things, so we’re ready for a new world. Not expensively preserving the way they were before we voted to leave. Transformation and preparation, not status quo. But, for Hunt’s proposals at least, they are sound, practical, affordable ideas. And, most important of all, they’re thoroughly Conservative too.

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Iain Mansfield: Brexit by October 31. Stop using the Left’s language. And stand for skilled workers. Essentials for our next Prime Minister

Iain Mansfield is a former senior civil servant, winner of the Institute of Economic Affairs Brexit prize and a Conservative councillor candidate. He writes in a personal capacity.

Our next Prime Minister will take office at the most challenging time since the 1970s. Not only is there Brexit – an issue of fundamental national importance, that has destroyed the last two Prime Ministers and poses an existential challenge to the future of the Conservative Party – but the old political assumptions are changing. Across the West, traditional voter coalitions are shifting, as citizens reject centrist compromises. Flatlining productivity, unaffordable houses and millions of voters feeling abandoned, either culturally or economically, are just some of the challenges they will face.

Many of those who voted for David Cameron in 2010 are lost to the party, alienated by Brexit. In Britain today, age and education level are better predictors of a person’s vote than class. To win a general election, our next Prime Minister must forge a new coalition of voters that unites the traditional Tory shires with the left-behind Leave voters in the Midlands and North. Even more importantly, they must deliver authentic right-wing policies that address the causes of ordinary working people’s dissatisfaction. People want change and, if the Conservative Party does not deliver it, they are likely to seek answers in the flawed blandishments of Jeremy Corbyn’s socialism.

In that context, there are three essentials that our next Prime Minister must prioritise for the good of the people, the nation and the party:

  • Leave the EU by 31 October, on WTO terms if needed.
  • Openly champion conservative values rather than speaking the language of the left.
  • Reposition the party as the natural home of the skilled working and lower middle classes.

Leave the EU by 31 October, on WTO terms if needed

Not only is delivering on the outcome of the referendum a democratic imperative, it is vital for the continued existence of the party. Recent polling shows that, if we have not left the EU, the Conservatives are likely to suffer devastating losses in a general election; these figures could be even worse if large numbers of members, councillors or even entire associations defect to the Brexit Party. Many members have held on over the last few months purely out of hope that the next Prime Minister would deliver where May failed: another betrayal in October would see these members permanently lost.

Leaving with a deal is preferable, if some changes to the backstop can be agreed and Parliament will pass it. If not, as I have argued previously on this site, we have nothing to fear from No Deal. Preparations for such should be put into top gear on the first day in office. The Prime Minister must make clear that they will under no circumstances ask for an extension; and that they are, if needed, prepared to systematically veto any measure put forward by the EU on regular business if the UK is for some reason kept in. While every effort should be made to secure a deal, if it cannot be reached, Parliament must be faced with the simple choice of permitting a WTO exit or voting no confidence in the Prime Minister – a gamble, admittedly, but one that is preferable to another disastrous extension.

Openly champion conservative values rather than speaking the language of the left

In recent years too many Conservative politicians have allowed our opponents to define the playing field. We cannot beat the socialists by adopting the language and assumptions of socialism. Our next Prime Minister must stop feeding the narrative of identity, grievance and division, with its assumption that an individual’s potential is defined by their characteristics, that so-called ‘burning injustices’ are solely the responsibility of the state to address, and that the government always no best.

Changing the narrative will be a long endeavour. The systematic appointment of those with conservative values into key ministerially appointed positions; an authentically right-wing approach to policy making in Whitehall; and the withdrawal of state funding from the network of organisations that maintain the left’s grip on the policy narrative are essential. But over and above this, the Prime Minister must be willing to personally stand up and champion individual liberties and freedoms; to condemn progressive authoritarianism and to be visibly proud of Britain, our culture and the rich global heritage of our citizens.

Reposition the party as the natural home of the skilled working and lower middle classes

Young, metropolitan graduates may once have been natural Conservatives, but no longer. There is little hope of reversing this in the immediate aftermath of Brexit. Instead of squandering our effort here, our new Prime Minister should instead make the party the natural home of the skilled working and lower middle classes, particularly in the midlands and north.

Such voters have a natural affinity to the traditional conservative values of low tax and individual liberty, but also greatly value and rely day-to-day onn strong public services. This places the Conservatives in a difficult position after a decade of austerity: Labour made hay campaigning on cuts to police numbers and falls in per pupil spending in 2017. But how to fund significant increases in core services without raising taxes or alienating core Conservative voters, such as via the disastrous proposals on social care in the 2017 manifesto?

To find the funding the next Prime Minister must be bold enough to slay the progressive sacred cows that soak up billions annually in public funding. Three immediately spring to mind:

With the additional £15 billion plus a year, the Prime Minister could at a stroke increase police funding by 25 per cent (£3 billion), boost school funding per pupil by 20 per cent (£8 billion) and increase spending on social care by 20 per cent (£4 billion). And then split the proceeds of further growth between public services and tax cuts.

As well as this, we should champion the interests of the high street, enterprise and small businesses and oppose crony corporatism. Multinational companies that make use of aggressive tax avoidance, abuse their market position or actively work against UK sovereignty should not enjoy government grants, procurement or time in No. 10. Fundamentally, our next Prime Minister should spend more time listening to the Federation of Small Businesses and less time listening to the CBI.


As members, we have two candidates set before us. Both are able politicians and tested leaders who represent the best the Parliamentary party has to offer. As we assess who should be not just our next leader, but our Prime Minister, we should do so against their ability to deliver these vital elements.

Both have committed to delivering Brexit by October 31 – but which one has the ability, the genuine will and the courage to do so by any means necessary? Both are true-blue Conservatives – but which one will truly champion our values, taking the battle to our adversaries with the eloquence and conviction of a Thatcher or a Churchill? Both recognise the importance of reaching out to new voters – but which one can devise and push through the policies needed to unite the Tory shires with the Leave voters of the north? Consider carefully and cast your vote.

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Sweet summer story: KraftHeinz covering permits/Fines for kids’ lemonade stands

Westlake Legal Group LemonadeStand715 Sweet summer story: KraftHeinz covering permits/Fines for kids’ lemonade stands The Blog Small Business kids

For generations, American parents have taught their children the entrepreneurial spirit by helping them open front-yard lemonade stands. Sometimes even stocked with homemade cookies.

Don’t know about you, but my car has to stop at every one of them. Inevitably, they can’t change a $5, so we just have to leave it.

But there’s a problem, a big problem. In 36 of the 50 states, these innocent little kids’ projects are illegal by municipal code. No license to sell. No permit. Whatever. Some grumpy neighbors, who can’t remember being young, have even complained to authorities.

Texas Gov. Greg Abbott just signed a law overriding such rules in his state and letting local police pay attention to real law-breaking. But Texas was only the 14th state to okay kids’ lemonade stands.

Cue familiar ‘Ride to the Rescue’ music: This summer, however, America’s really small business people all over the country have a savior. Country Time Lemonade, owned by KraftHeinz, will pay kids’ permit fees or fines.

Yeh, sure, it’s a great PR move. But it also helps a lot of parents who these days too often feel besieged by governments and society making their kids’ upbringing more difficult than it need be or already is. @CountryTime issued a statement:

Lemonade stands help kids build strong work habits, have fun, and become young entrepreneurs. The reality is, they are being shut down because of old, arcane and very real permit laws.

But not only is the drink maker helping youngsters get legal, it’s launched a website to show which states recognize lemonade stands as legal and developed helpful advice on how citizens can go about changing the laws and codes in their town and state through a website called Legal-ade. Get it?

Americans never feel hesitant to criticize big business. Are you watching the Democratic primary debates? Perhaps rewarding a company can accomplish a little more.

Who knows, maybe some grateful Moms and Dads and grandparents and just plain nice people will purchase a bottle or two of Country Time Lemonade as a kind of thank you.

The post Sweet summer story: KraftHeinz covering permits/Fines for kids’ lemonade stands appeared first on Hot Air.

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Risky Borrowing Is Making a Comeback, but Banks Are on the Sideline

Westlake Legal Group 07shadowbanks1-facebookJumbo Risky Borrowing Is Making a Comeback, but Banks Are on the Sideline United States Economy Stocks and Bonds Small Business Regulation and Deregulation of Industry Quicken Loans Inc Mortgages Credit and Debt Banking and Financial Institutions

A decade after reckless home lending nearly destroyed the financial system, the business of making risky loans is back.

This time the money is bypassing the traditional, and heavily regulated, banking system and flowing through a growing network of businesses that stepped in to provide loans to parts of the economy that banks abandoned after 2008.

It’s called shadow banking, and it is a key source of the credit that drives the American economy. With almost $15 trillion in assets, the shadow-banking sector in the United States is roughly the same size as the entire banking system of Britain, the world’s fifth-largest economy.

In certain areas — including mortgages, auto lending and some business loans — shadow banks have eclipsed traditional banks, which have spent much of the last decade pulling back on lending in the face of stricter regulatory standards aimed at keeping them out of trouble.

But new problems arise when the industry depends on lenders that compete aggressively, operate with less of a cushion against losses and have fewer regulations to keep them from taking on too much risk. Recently, a chorus of industry officials and policymakers — including the Federal Reserve chair, Jerome H. Powell, last month — have started to signal that they’re watching the growth of riskier lending by these non-banks.

“We decided to regulate the banks, hoping for a more stable financial system, which doesn’t take as many risks,” said Amit Seru, a professor of finance at the Stanford Graduate School of Business. “Where the banks retreated, shadow banks stepped in.”

With roughly 50 million residential properties, and $10 trillion in amassed debt, the American mortgage market is the largest source of consumer lending on earth.

Lately, that lending is coming from companies like Quicken Loans, loanDepot and Caliber Home Loans. Between 2009 and 2018, the share of mortgage loans made by these businesses and others like them soared from 9 percent to more than 52 percent, according to Inside Mortgage Finance, a trade publication.

Is this a good thing? If you’re trying to buy a home, probably. These lenders are competitive and willing to lend to borrowers with slightly lower credit scores or higher levels of debt compared to their income.

They also have invested in some sophisticated technology. Just ask Andrew Downey, a 24-year-old marketing manager in New Jersey who is buying a two-bedroom condo. To finance the purchase, he plugged his information into LendingTree.com, and Quicken Loans, the largest non-bank mortgage lender by loans originated, called him almost immediately.

“I’m not even exaggerating,” he said. “I think they called me like 10 or 15 seconds after my information was in there.”

Quicken eventually offered him a rate of 3.875 percent with 15 percent down on a conventional 30-year fixed-rate mortgage of roughly $185,000. Eventually he found an even better offer, 3.625 percent, from the California-based lender PennyMac, also not a bank.

“I really didn’t reach out to any banks,” said Mr. Downey, who expects to close on his condo in Union, N.J., this month.

The downside of all this? Because these entities aren’t regulated like banks, it’s unclear how much capital — the cushion of non-borrowed money the companies operate with — they have.

If they don’t have enough, it makes them less able to survive a significant slide in the economy and the housing market.

While they don’t have a nationwide regulator that ensures safety and soundness like banks do, the non-banks say that they are monitored by a range of government entities, from the Consumer Financial Protection Bureau to state regulators.

They also follow guidelines from the government-sponsored entities that are intended to support homeownership, like Fannie Mae and Freddie Mac, which buy their loans.

“Our mission, I think, is to lend to people properly and responsibly, following the guidelines established by the particular agency that we’re selling mortgages to,” said Jay Farner, chief executive of Quicken Loans.

It’s not just mortgages. Wall Street has revived and revamped the pre-crisis financial assembly line that packaged together risky loans and turned those bundles into seemingly safe investments.

This time, the assembly line is pumping out something called collateralized loan obligations, or C.L.O.s. These are essentially a kind of bond cobbled together from packages of loans — known as leveraged loans — made to companies that are already pretty heavily in debt. These jumbles of loans are then chopped up and structured, so that investors can choose the risks they’re willing to take and the returns they’re aiming for.

If that sounds somewhat familiar, it might be because a similar system of securitization of subprime mortgages went haywire during the housing bust, saddling some investors with heavy losses from instruments they didn’t understand.

If investors have any concerns about a replay in the C.L.O. market, they’re hiding it fairly well. Money has poured in over the last few years as the Federal Reserve lifted interest rates. (C.L.O.s buy mostly loans with floating interest rates, which fare better than most fixed-rate bonds when interest rates rise.)

Still, there are plenty of people who think that C.L.O.s and the leveraged loans that they buy are a potential trouble spot that bears watching.

For one thing, those loans are increasingly made without the kinds of protections that restrict activities like paying out dividends to owners, or taking out additional borrowing, without a lender’s approval.

Roughly 80 percent of the leveraged loan market lacks such protections, up from less than 10 percent more than a decade ago. That means lenders will be less protected if defaults pick up steam.

For now, such defaults remain quite low. But there are early indications that when the economy eventually does slow, and defaults increase, investors who expect to be protected by the collateral on their loan could be in for a nasty surprise.

In recent weeks, warnings about the market for C.L.O.s and leveraged loans have been multiplying. Last month, Mr. Powell said the Fed was closely monitoring the buildup of risky business debt, and the ratings agency Moody’s noted this month that a record number of companies borrowing in the loan markets had received highly speculative ratings that reflected “fragile business models and a high degree of financial risk.”

Leveraged loans are risky, but some companies are seen as even too rickety, or too small, to borrow in that market.

Not to worry. There’s a place for them to turn as well, and they’re called Business Development Companies, or B.D.C.s.

They’ve been around since the 1980s, after Congress changed the laws to encourage lending to small and midsize companies that couldn’t get funding from banks.

But B.D.C.s aren’t charities. They’re essentially a kind of investment fund.

And they appeal to investors because of the high interest rates they charge.

Their borrowers are companies like Pelican Products, a maker of cellphone and protective cases in California, which paid an interest rate of 10.23 percent to its B.D.C. lender, a rate that reflects its high risk and low credit ratings.

For investors, an added appeal is that the B.D.C.s don’t have to pay corporate taxes as long as they pay 90 percent of their income to shareholders. Shareholders eventually pay tax on that income, but in a tax-deferred retirement account like an individual retirement account, the structure can amplify gains over time.

So, naturally, B.D.C. assets have grown fast, jumping from roughly $10 billion in 2005 to more than $100 billion last year, according to data from Wells Fargo Securities and Refinitiv, a financial data provider.

Some analysts argue that risks embedded in B.D.C.s also can be hard to understand. Because B.D.C.s own loans in small companies that aren’t always widely held or traded, there are often no public market prices available to use to benchmark the fund’s investments.

B.D.C.s have also been increasing leverage to bolster returns. It means they’re using more borrowed money, to make these loans to high-risk borrowers. That strategy can supercharge returns during good times, but it can also make losses that much deeper when things take a turn for the worse.

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