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July 1, 2020 - The Delingpod - James Delingpole
01:04:31
Luke Johnson
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Welcome to the Denny Paul with me, James Denny Paul.
And I'm really excited about this special guest.
And I know I always say this, but actually I have had him in mind for quite some time to get on the podcast because he's one of the very few people who's really been calling out the lockdown.
Certainly one of the very few people in business.
His name is Luke Johnson.
He is an entrepreneur.
You are chairman of Risk Capital Partners.
Anything else you want to tell us about yourself, Luke, before we plunge in?
I also chair Brighton Peer Group and I chair Gale's Bakeries.
Right.
OK. Is that because you live near Brighton or you just care about Brighton Peer?
No, I got involved by happenstance and I live in London, but I do love the pier and it's a great business.
I see.
Now, I'm famous for not doing my research before my interviews, because I like that kind of free spirit it gives it.
But I did look at your appearance on Question Time, which for American and other foreign listeners, It's kind of our painfully woke political discussion programme on the BBC. And there you were, the lone lockdown sceptic, surrounded by a panel of what I would call COVID bedwetters.
And it was quite clear that the chairman, Fiona Bruce, was not on your side.
I mean, how did you find that experience, being the lone voice of sanity in a sea of COVID bedwetting lunacy?
It was quite bizarre because unlike normally with Question Time, there was no audience.
So at least I wasn't barracked by a lot of lefty Covid fanatics in the audience.
They would all have been sheltering at home in a state of...
Cowering.
Cowering at home.
But I was also the only one of five who was from the private sector.
That was a point I made forcefully and I think there is a bit of a dividing line between those who tend to be very supportive of lockdown and those who are very concerned by it and Those who are supportive are people like the public sector workers none of whom not a single one of whom will face the prospect of redundancy whereas if the worst fears are to be believed and We could be hitting unemployment of 5 million in this country,
which would be a quadrupling of the levels of unemployment from prior to the lockdown.
And not all of that will come because of lockdown.
Some of it may have been happening anyhow.
Some of it may have happened even if we'd have followed Sweden because of the general damage of the pandemic.
But I would argue that a great many of those jobs will be lost because of the collateral damage of lockdown and the misery of millions of unemployed is not something to take lightly.
And you could see across the other guests that it barely registered for them in terms of importance.
They think in that way that jobs for life, defined benefit pensions for life, And, you know, whether it be NHS, teaching, civil service, the police, the transport unions, they're all right, Jack.
You taxpayers in the private sector who represent 85% of the workforce, by the way.
The public sector is only 15% of the workforce, but they are our lords and masters who make all the rules, always keep their jobs, And, as I say, in a perverse way, I think quite a few of them have rather enjoyed this lockdown.
That is really frightening.
Now, I didn't know that.
I assumed it was roughly 50-50, because I think probably in terms of the share of the economy, the public sector is about 50%, isn't it?
Not 15%.
Yes, 40-odd percent, yes.
Yeah.
Now, that's frightening in itself.
Yes, do you get the impression, as I do, that Well, your fellow panellists would be a classic.
I don't know who was on the panel with you.
Can you remember?
Yeah, there were two MPs, an academic and a union person.
Right.
That's a balanced panelist.
And in fact, of course, there's Fiona Bruce, and arguably she's part of the BBC, which is also part of the public sector.
Although I think she's probably freelance.
But nevertheless, you know, it's generally BBC groupthink.
To see the public sector as all there is.
And if you look at their coverage almost invariably of business and the private sector in general, it's treated with a mixture of disdain and suspicion and contempt.
And this helps, you know, it's all part of the culture wars whereby free markets, capitalism, those who are interested in the profit motive, dynamism, growth, all that is seen as bad.
And public sector, more government, is seen as good.
Yeah, because even before this COVID-19 scare kicked off, people of our persuasion were worrying greatly about the growth of the public sector and the expansion of this state.
I mean, I think it's right to say that even under Margaret Thatcher and even under Ronald Reagan, Government spending actually increased as a percentage of the economy, didn't it?
So there's an inexorable process whereby government is getting bigger and bigger, the public sector is getting more and more well-funded.
That was before this happened.
Now?
I mean, what's the world going to look like when all this is over?
I mean, we've almost got fully automated luxury communism as predicted by various loony lefties.
I don't think we're quite there and it is probably fair to say that public spending as a proportion of the economy as a whole does fluctuate and there are periods when it falls and even 40% or 41 or 2% I think it might be at the moment in the UK we are materially below say France where it's over 50% and that's to me you know catastrophic levels of big government it crowns out private sector less innovative It's
obviously a zero-sum game in that sense because there's no surplus creating the tax to pay for it all.
So it's an ever greater burden based on the diminishing private sector.
I think the challenge we do face, be it post-COVID or in general, is that although, you know, I think there is a very good argument to say that the Free markets and the dynamism of the private sector has won the economic argument over the decades.
Unfortunately, I think the right has been losing the cultural argument in the sense that following Gramsci's march through the institutions, be it universities,
be it the arts, Be it much of the media industry, many other walks of life, politics to a fair degree, even people who are right of center, who go into the world of academia or politics, they get captured.
The system captures them and eventually they concede.
And if you look at this government, they could almost be a Labour government in much of their behavior, in their cowering against any of the woke Beliefs and philosophies and I think the behavior of many leaders in the business community is pathetic.
Again, they're cowards.
They won't stand up and be counted and resist organizations that actually want to bring about the end of capitalism and want to fire all those business bosses.
And, you know, you have to win hearts and minds and this is what a lot of people in business don't realize.
That if you lose whole generations because they all get higher education and come out of university campuses full of mumbo-jumbo about how the economy is funded and how they're actually going to live, then of course they come out with nonsense hating business and the private sector and so forth and denying the catastrophic history of communism through the many decades.
And we're having to manage that now With particularly I would say people under the age of 40 who've been brainwashed to a fair degree by the dominant left of centre thinking that goes on in universities and it's very damaging.
Yeah well I've got friends in business in the city and so on and somebody was telling me that They have these friends who are sort of at a fairly senior level in the city, and when they want to recruit people who aren't brainwashed by this left-wing nonsense,
they have to go to these elaborate ploys to get round the human resources departments, which are all relentlessly woke, desperately keen to get BAME recruits, you know, sort of transgender recruits, Anyone of a conservative disposition is automatically off the menu.
So they have to do things like saying, if you don't mind, I'll just take this chap or a chapess out for a coffee.
I no need for you to come along, human resources woman.
And then they have to ask them kind of subtle questions like, so what websites do you look at?
So it's very hard You must have seen this, to escape the tyranny of woke in business, which ought to be, I mean, the business of business ought to be about doing business, right?
It ought to be about the bottom line.
It ought to be about generating value for shareholders.
But instead, it's become something else entirely.
And I get very depressed about this.
Can you give me any consolation that there was going to be a fight back?
Because I'm not seeing it apart from you.
Well, I'm not disagreeing with you, but I think that the principle of diversity and inclusion is fundamentally a good one but I think it must apply to all aspects of life including intellectual diversity and I think the most profound hypocrisy of our universities for example is that they're obsessed about diversity except when it comes to intellectual diversity so if someone is
right of centre or supports the Conservative Party or god forbid voted for Brexit then they are in danger of being ostracised and held in severe contempt and they dare not speak their mind on so many issues because if they were ever,
for example, and I'm not particularly a supporter, but if, say, an academic were to retweet something that President Trump had said, then they would be fired on the spot.
It's a slightly extreme example but, you know, originally our universities were about freedom of speech and diversity of views and, you know, substantial debate to try and come to the truth about things as far as it can be or for each side to agree to disagree.
But I'm afraid to say there is a totalitarianism of the left now and this intolerance of diversity, intellectual diversity, It does extend into all sorts of other places, like for example charities, where I would say that there is a strong tendency towards left of centre dominance.
In so many of the quangos now, I would say that certainly I've served on a number, you know, I would be the only right-wing person in the room, and you can almost tell that sometimes they realise they've made a mistake by appointing me in the first place.
I think increasingly people like me will not get any of these sort of posts or appointments.
We will be seen as persona non grata for all sorts of reasons and I think this creating divisions and this intolerance of diversity and labelling anyone who doesn't agree with the script that people like the BBC promulgate is an extremist.
And I think it's a sort of grotesque distortion of society, the crushing of freedom and of independent thought.
It's as if groupthink has become the only way that the whole of civilization can behave.
And I find it very suffocating, to be honest.
Yeah.
Your dad, Paul Johnson, famously started out as a man of the left and then shifted rightwards as he kind of As his frontal lobes formed or something.
Did you go through a similar phase?
No.
I took an early interest in politics when my mum stood for the Labour Party in 1974.
But I was only 12 at the time.
And apart from that, I didn't really pay any attention.
And then as I discovered business at university, it was the year of Mrs Thatcher.
So I was at university from 80 to 83.
And I saw that her embrace of free enterprise and the power of, you know, business to improve people's lives was...
I supported that completely and have done ever since through what I do for a living.
And we're going to see the reverse of that very, very sadly over the coming months and years, which is that since lockdown started in March, You know, business has not been allowed to trade.
People have not been allowed to work.
The economy has produced a far lower output than it should be.
And as a consequence, this induced coma for the commercial world is going to have devastating consequences for our standard living as a country and for millions of people who won't be able to earn a living.
And we will see that when capital...
Capitalism is prevented from delivering the goods and creating wealth The harm is very widespread indeed and I dread to think of the consequences for this country of having four or even five million people out of work that hasn't been the case for many decades and If we think we're getting a bit of so to speak civil to civil unrest now God forbid when the I don't know how many millions of those 9 million
on furlough get a P45 instead of a call to come back to work which I'm afraid is happening as we speak because hundreds and hundreds of companies are letting their people go while they're still on furlough before the terms change on the 1st of August.
So I think at the end of June the unemployment numbers will leap and they will leap even further at the end of July and it will continue that way for some considerable months And I'm very fearful that this idea of a v-shaped recovery where there's a rapid upturn and suddenly all these businesses re-recruit those people.
It's not going to happen because a lot of these companies, I'm sad to say, are going to shut for good and not reopen.
Yeah, I think we're in what I've been calling a perfect storm of stupid.
In that, for example, the running down of our police force or police, I don't know what they call them now, but they don't like you to use the word force because that sounds far too like keeping law and order.
Yeah.
So the police have been completely emasculated.
I mean, quite literally emasculated with the recruitment, painting their fingernails and stuff in solidarity with God knows what.
And then you've got academe, which is now I hate to use the phrase not fit for purpose, but I mean, I genuinely do feel ashamed to have been to Oxford.
Or rather, I don't because it was different back then.
But I look at Oxford and Cambridge now and I think you are just totally over.
So you've got that.
You've got a Conservative party, Conservative government, which isn't Conservative anymore.
And looming on the horizon, as you say, it hasn't arrived yet.
Is this like a kind of Zulu Impi just over the hill?
Waiting to get us with their ass of guise is this massed unemployment.
And we haven't even experienced it yet.
And already there are riots in the streets of London, which the police already are proving themselves unable to contain.
So I'm really pessimistic about what's coming.
And I just well, I mean, can you give me any sops of comfort?
Well, ultimately, as an entrepreneur, I've always believed in the energy and the enthusiasm and the optimism of entrepreneurs.
And, you know, they are resourceful people and every generation brings forth a new lot of inventors and creators and get up and go people who take risks and start new things and develop businesses even during the toughest times.
And they're a resilient bunch as a whole.
So I place my faith in them.
They do require rule of law and they require property rights and I hope that our government can get a grip.
It does feel to me in recent months as if those things have been slightly falling apart and the government has sort of veered between almost totalitarianism and Losing control of the entire thing And I do worry that people perhaps a lot of people don't have the respect they did for the authorities even at the beginning of the year because they're beginning to see that this entire Removal
of their freedoms unprecedented ever in peacetime has been a mistake and has been badly executed and You know they only govern with our consent and When we decide that actually we're no longer willing to be compliant about this, then the whole facade collapses.
So I hope we haven't reached that point because clearly for those who have businesses to run, rule of law is very important.
Generally speaking, this country has been in the top half dozen, I would argue, anywhere in terms of the justice system, in terms of You know, the lack of corruption of our public servants and so forth.
You compare it to so many dozens and dozens of countries in many, many parts of the world which are not safe places by our standards to do business.
And I think it's one of the big reasons, one of the hidden reasons why we've always tended to attract lots of overseas investment is because, you know, foreigners feel they can trust us and they can do business here and they, you know, there won't be a kleptocratic state or whatever and that The court system works and they can enforce contracts and all the rest of it.
We must maintain that otherwise we will no longer be seen as a safe haven and if we no longer attract foreign investment then it will mean reviving our economy will be even harder.
So ultimately I've always been an optimist.
I believe in our country.
I believe in Free enterprise and I hope we will recover but I do fear certainly for 2020 it's a complete write-off things will get worse before they get better certainly on the economic front certainly on the unemployment front and possibly on the political and cultural front we need to come to our senses it may be that as a nation eventually there will be a serious wake-up call And we will realize that we are not
as rich as we thought we were.
We've been living beyond our means.
We need to work rather harder.
We need to get back to school.
We need to get public transport working properly again.
We need to redirect the authorities towards the true priorities in society rather than identity politics and nonsense and focus on the basics Because I think an increasing number of people are realizing gradually that those are the things that matter rather than a lot of rubbish led by, well, organizations like the BBC amongst others.
Yeah.
Well, sure, I agree that everything you say, these are all desiderata, but actually I look at what the government is saying.
And I'm not really getting many signals, apart from their paying lip service to the notion that lower taxes are better than higher taxes for boosting economic growth.
I'm hearing a sort of neo-Keynesian policy coming down the line.
For example, they still seem to be wedded to their version of the Green New Deal.
They still seem to imagine that by making energy more expensive, And bigging up the renewable sector, which we know is a huge waste of money.
They're still talking about, they haven't scrapped HS2. So where are you getting the idea that there might be a kind of entrepreneurial revival, when even a Conservative government is talking about bigger government, more spending?
And also, while we're on that subject, you talk about 5 million unemployed people.
I would imagine the government's solution to that is going to be not, let's get out of the way and let's let the private sector generate more growth.
What they're going to say is, yes, we must give these people jobs.
We must pay them through the already hard pressed money of the private sector.
We must pay these people to work.
I don't see any cause for optimism there.
Well, you may be right.
I fear that this is a government that has already got the taste for massive intervention, just as the power of some of the things they've done has clearly gone to their head, where on a daily basis they make threats about, if you're not careful, we'll shut the beaches or whatever it may be today.
So, you know, they are behaving like politicians, I'm afraid, always do, which is that they get carried away with their own megalomania.
You may be right.
I rely on the private sector to do the heavy lifting, not government.
And I think one of the great flaws of modern society is that when things go wrong, we always look to government for solutions and answers and money and so forth.
And, you know, we've borrowed now a total national debt of over two trillion.
It's well over 100% of GDP now and rising never again before in peacetime as it reached that level.
And, you know, Things on that front could get worse because I think, you know, a lot of taxes have been deferred for a lot of companies and individuals and they're going to find it difficult to repay those taxes when they come due.
It is a perfect storm.
As I say, I think it's going to be an extremely difficult six months and it's astonishing to think this is a Tory government.
They're not behaving very like a Tory government.
Admittedly, they faced the crisis of Covid, but if they had perhaps behaved rather more like the Swedish government in their independence of spirit and in their faith in their people, then we might be in a rather better place.
Unfortunately, they didn't.
You must spend a lot of time talking to people in business.
What's the impression you get of their attitude towards the government's lockdown policy, etc?
I mean, because, okay, just give me one example.
My parents are in their 80s and my mother tells me that all her friends, she's the only one of her friends who is not absolutely paranoid about this virus.
They all think they're going to die.
And when I go to the supermarket, when you go to the supermarket, I imagine it's the same.
You look around and you see lots of jumpy people wearing these ridiculous masks, like if you get too close, they're gonna die.
And I'm just wondering, is that kind of bed-wetting attitude prevalent in the business community, or is it just the general populace which feel this?
I think it varies a lot.
I mean, I think older people Not surprisingly because those over the age of say 65 and those who've already got another condition are much more vulnerable so in a way you can't blame them for being more frightened.
I think what's really bizarre is the one truly effective policy that the government have had you know they've had lots of policies like track and trace failure, testing failure, quarantining visitors in February and early March failure.
Lots of things they've got wrong.
The one thing they've done really well is Project FEAR2. Their propaganda has helped scare the country rigid.
And there was an Ipso Mori poll today that showed that of 27 countries, we are the one by a material amount where people think COVID is the worst thing that we face as a nation out of 27 countries.
We are more frightened than any other country and I think even though the economic projections suggest that our economy will shrink slightly less this year than the French or Spanish, I think those could be optimistic because I think our fear is so embedded now that it's going to be harder to get people back to work,
to school, it's going to be harder to get the unions to run the transport so people can commute, It's going to be harder to get the teachers back to schools.
And as a consequence, I think that we will be slower to recover as an economy.
So I do think it's quite possible that we will perform worse than any other comparable nation in terms of the damage this has done to us.
And it will be very largely self-inflicted, not just the impact of the lockdown itself, but the government induced fear, the protect the NHS and all the other mantra, which You know, as you know, that was another catastrophic mistake I think the government made.
They became so obsessed about protecting the NHS, they didn't protect the most vulnerable people.
They decanted vulnerable people, some of whom were infected without testing, into care homes where they infected other people.
And that is where an alarming proportion of people have died.
And this is a serious scandal that will come back to bite these Tories.
And the left, you know, amongst many of the lockdown bedwetters, they're playing a political game, of course.
It's not just that they're enjoying sitting in the sunshine on furlough or whatever, or they work in the public sector.
They're loving the fact that it's a Tory government in power and they're writhing.
And so anything this government does will be criticised.
And I am certainly criticising our government.
But for them, it's a political game.
And they are very destructive people because they don't really care You know, they're arsonists in a way.
They don't care if they burn the economy and destroy millions of jobs.
Because as far as they're concerned, you know, the great march towards a left-wing paradise, it's the price worth paying.
Yeah, totally.
I mean, they want to generate the environment that foments revolution.
So who do you blame?
Well, it's easy to blame all sorts of obvious big Figures, you know, clearly the cabinet take responsibility.
I think we were very unlucky in that Boris got ill and I think his apparent near-death experience changed him a lot in terms of his attitude and his absence in a critical period meant there was complete paralysis in government.
So I think that was very bad on many levels.
I think as I say that the long march through the institutions like the police for example and indeed obviously the civil service and all the quangos and the medical and scientific worlds because of the NHS and therefore essentially every doctor works for the government all these organizations are biased to the left and so a they're suspicious of the Tory government b they know nothing about economics See,
they are suspicious fundamentally of the private sector and business.
Even though, as I say, the private sector is 85% of all jobs in the economy.
They take the taxes for granted that pay their salaries and pensions and forever feel that they're not rewarded well enough and then they should be getting more.
The cult every Thursday evening for 10 weeks of clapping the NHS all very well.
My wife works for the NHS, it happens.
But the truth of the matter is It allows us to over-obsess about, you know, a giant public sector body, one and a half million people, where no one really knows the proper cost of healthcare and, you know, too much command and control in that organisation itself.
And I think, you know, we're not necessarily, as a society, going to enjoy the enquiries of COVID because some of them will start to point the finger at parts of the NHS, in particular Public Health England, but possibly even its Hospital trusts and others as well that were as I say decanting very elderly vulnerable people, some of whom were infected with Covid, into care homes and then neglecting those care homes.
It's not a good story, not a good look for the NHS I think.
Yes, but do you not think that because of the very nature of the NHS, all the propaganda we've been fed, that people are so Brainwashed.
We've already seen this.
You remember that scandalous hospital where people were lying in mattresses in their own orgy and blood and the nurses were not giving them water.
Terrible, terrible thing.
Was it Staffordshire Hospitals, I think it was?
And yet people carried on hearting the NHS. It remained our cherished national religion.
There is a national cognitive dissonance about the National Health Service which has been enhanced or worsened by the clapping propaganda campaign to the point where my fear is that we're going to end up being a giant NHS with a tiny private sector economy attached, just sort of giving its blood every day to this parasite.
Well, you could extrapolate that and I fear that it's a conceivable future, yes.
Yes, I agree.
You know, if the NHS were as world class as so many believe, then we would have done a lot better in terms of our performance, so to speak, during this pandemic in terms of testing, in terms of track and trace, in terms of Covid deaths per million and so forth and so on, in terms of our preparation of equipment and, you know, various other aspects.
And you look at the German system, for example, where I don't believe it's because of the government, but they arguably on many measures have performed much better than we have and it's actually a mixed model with not-for-profit, government-controlled and private sector all working together,
diverse and efficient because it isn't one giant bureaucracy where it's too political and unwieldy and not flexible enough.
And so, you know, if we weren't so religiously wedded to the NHS, then I think probably we would be humble enough to say we could learn from why the Germans did so well.
Let's replicate some of what they do.
You know, some have a mixed model with some insurance, etc., etc., estate, underwriting and so forth and so on.
And it's the same in other countries that seem to have a better system, like, for example, Australia.
But no, we have to stick with our trial and tested political vehicle Which is a juggernaut, which as you say, threatens to crush virtually every other part of our society because it is so hungry.
Yeah.
So when the lockdown began, I think we can probably agree there was a reasonable case to be made for caution.
It was that the disease was an unknown quantity.
We didn't know whether it was bioengineered.
We didn't know how virulent it was.
We could probably have guessed, the Swedes did, but anyway, on the precautionary principle, maybe, just maybe, it was worth locking down for three weeks.
But here we are, three months on, and I think...
13 weeks, is it?
This is the 13th week.
I think any halfway informed person, which surely must include the cabinet, I mean, they must have access to the same information that we've got access to, will have done some...
They'd have done their background reading, they'd have listened to, well, I mean, people like Dr John Lee and The Spectator and Michael Levitt and, what's he, Professor Israel, I think, the professor in Israel, anyway, who says that Whether you have a lockdown or not a lockdown, the disease follows the same trajectory and it's all over pretty much as it is now in this country.
Given all this, why do you think it is that the government is persisting with the charade?
For example, when the pubs open, they're not going to open properly, are they?
They're going to open next week and they're going to be hedged around with these rules like you've got to give your name so that they can trace you, your name and address and you've got to keep a sort of one...
Are there any theories on why this?
Well, clearly one is that I think they listen too much to their surveys, which they're doing constantly, and because they have petrified the public, the public are telling them be careful, and so they're being too careful.
Actually, they should be bold and leading the public and saying it will be safe.
That's It's an awful word, safe, that has no scientific meaning at all, in fact.
Yeah, life isn't safe, is it?
It's fatal, in fact.
The trouble is that for the scientist advisers and indeed the politicians, there is no penalty for being too cautious, not in the shorter term, anyhow, because the economic and other consequences, you know, the depression and the destroyed schooling and the missed cancer and heart appointments that the collateral damage of lockdown those consequences flow over a longer period and they're much harder to attach directly to lockdown so
the criticism will be much more diminished whereas because of the obsession with the daily death toll and the idea of second waves and all this you know hyped up nonsense the politicians are paranoid and Unschooled in the science, you know, I have more medical qualifications than the entire cabinet put together.
And I left medicine when I was 21.
It's utterly pathetic.
I mean it truly is scary how ignorant they all are about medical science.
So of course the gurus on SAGE have bamboozled them.
And I would say that for SAGE itself, partly in order to avoid criticism, Of the fact that the lockdown and various of the other strategies and policies have not been well executed.
It's in their interest to keep the fear going in a way.
You know, they don't want normal life to return because A, then they're out of the spotlight and B, then there will be the inevitable difficult questions to answer.
And as we already know, the core underlying model that Imperial produced with the Half a million deaths that our Prime Minister has repeated on crucial occasions like that great Sunday evening when he came back and he repeated that figure of up to half a million deaths.
We know that's a fantasy figure.
It's a ludicrously overblown number that was never likely to happen.
But it seems to me that that was the basis for British policy and why we've had to endure virtually the longest lockdown in the world.
I mean, in Spain, I think the lockdown was only six or seven weeks.
And here we are in week 13 and I think they caught themselves in this sort of circle of fear and nervousness about criticism.
So the way they see it, they've built up not just the anxiety amongst the public, but even amongst themselves.
And I think that the anxiety itself can be contagious in a way.
How do you explain what can only be described as the media's piss-poor performance in all this?
I mean, to a newspaper, and of course the broadcast media has been the same, everyone has been running the government's Project Fear propaganda, almost unquestioned save in the comments section From a few licensed right-wing gestures.
But the newspapers have unanimously pushed the narrative that we can't get back to normal until we've found the vaccine, that this virus is unprecedented.
How do you explain that?
Because newspaper proprietors are entrepreneurs like you.
They understand the bottom line.
Why are they essentially committing the nation To economic suicide?
It's a very good question.
I'm not sure.
I think for places like the BBC, it's obvious that I think, you know, Ofcom, the regulated broadcasters were told by Ofcom that essentially they had to toe the government's line and scepticism was not really allowed by law, which again, I think is grotesque suppression of free speech.
But anyhow, I think for newspapers, You know, if it bleeds, it leads.
And I think scare stories can help sell copies, I'm afraid, and get clicks.
So I think in the great many cases, editors believe, possibly correctly, that they would sell more copies if they had more terrifying articles.
To give them credit, I think The Telegraph has had quite regular, and particularly in recent weeks, Skeptical pieces from a number of journalists.
I think The Spectator's done a pretty good job throughout.
I think this new magazine The Critic has done a very good job.
And obviously, you know, the internet.
And interestingly, actually, if you looked at Twitter in January and February, that's where people were taking the pandemic seriously when the mainstream media weren't.
I don't just mean seriously in terms of the infectiousness and so forth.
And the risk to the West, but also the consequences of if we followed China in the lockdown and so forth.
What of course is horribly ironic and very dangerous for the West, is if you look at the latest projections, virtually all the major Western economies, us, Germany, America, France, etc, etc, we will all suffer much bigger economic downturns than China will.
China, the OECD, now think will grow 1% this year.
Whereas countries like us will probably shrink 10%.
And yet we copied the lockdown from them.
They supplied us with the virus.
We copied the lockdown.
And they're now laughing because we have significantly weakened our competitiveness at a crucial time when China is becoming ever more assertive.
And, you know, all those who would do us down I.e.
the unions and the woke and the left who hate the Tories and business, you know, they will all come to regret their foolishness if what this means is the West is ill-equipped to deal with the challenge of China in all its ways.
And, you know, China is taking their prisoners these days.
They're not fighting a physical war.
But I would say they probably are by any other means.
Who is conducting the cyber attack against Australia, I wonder?
I think we all know.
And also, of course, China is going to have, I mean, relatively, if its economic growth is 1% up and we're 10% or more down, China is going to be able to Hoover up distressed assets, isn't it?
Yeah.
And they have had to pump prime their economy far less than we have, you know, because for every week that we're in lockdown and the government having to fork out billions of furlough money and all the rest of it, propping up more and more parts of the economy, that's more and more debt that's one day got to be repaid.
And over indebted countries are not Fit and growing ones.
You know, if you look at us after the Second World War, we were essentially bankrupted.
And it's one of the main reasons why Britain didn't enjoy anything like the growth in terms of its economy right up and through the era of Thatcher, through the 50s, 60s, 70s, etc.
You know, we were the weak man of Europe.
And it's because, amongst other things, we inherited a great deal of debt fighting the Second World War.
And, you know, we're going to be in a poor position coming out of this.
And that's a big worry in terms of, you know, Brexit, because we will have an independent pound.
We're obviously not part of the Euro.
And I am, as it happens, in favour of leaving the EU. But nevertheless, we will be more vulnerable in certain respects if our economy is in a poor shape.
And I fear it will be.
I haven't given you much room for optimism, I'm afraid, dear James.
I'm sorry about this.
I didn't mean to be a sort of house pessimist.
That isn't my style.
I am feeling quite gloomy about our prospects right now.
Hopefully, things will pick up and it will be better than one's worst fears.
Well, I did rather lead you in that direction, Luke.
I did rather encourage you.
Now, I cannot waste time with you without asking you As an investor, do you find times like this really exciting because of the massive fluctuations in markets and the buying opportunities, or do you just get depressed by it all?
Well, I tend not to be a speculator in stock markets because I tend to buy large percentage holdings in private businesses and own them for some years and get involved actively in helping to grow them.
And I only have a small portfolio of businesses that I, you know, own and actively involved with.
So, you know, I pay less attention to the, you know, fluctuations in the London Stock Exchange or Wall Street.
I think in terms of opportunities now for people like me buying companies in distress, say, there are some.
And I have been spending time over recent months looking at possibilities, trying to Find businesses to save and rebuild.
And, you know, there are some.
So despite my pessimistic talk, I haven't given up on this economy by any means at all.
I want to continue to buy and grow businesses here.
It's not easy because obviously all the uncertainties we've discussed and a lot of the fear and the lack of confidence.
No, I would say it's one of the least Predictable climates I can never remember in terms of investing and I think you know probably stock markets in general are overheated It's clearly partly because there's been so much money printed in the UK, US etc.
So much government fund priming that interest rates have gone to more or less zero and as ever whenever governments flood the system with cash it ends up in Inflating asset prices, and that's what it's doing, I'm afraid.
You know, share prices almost always benefit directly or indirectly from government liquidity, which is what they've done in unprecedented fashion in the last four months.
Do you think that if you look at, if you divide the world historically into post-COVID and pre-COVID, The world where you made your money was to do with what companies like Pizza Express, Patisserie Valerie, which in those days would have made total sense because we were a service economy.
You very cleverly caught the growth in cafe culture.
People were dining out a hell of a lot, weren't they, in the days before Covid.
But in order to do that you need Disposable income which I think people aren't going to have so much.
Is there any hope for the hospitality industry in this new world or is this the perfect buying opportunity?
Are there going to be so many distressed assets that you can move in there like a hungry shark?
Well this is the decision I'm having to make when looking at businesses because mostly the sort of businesses I've been pursuing have been In this type of sector because it's a very large industry and obviously there are a number of businesses that are struggling in need of capital and refinancing.
It's a tough call because up until the 4th of July, in theory, no pub or restaurant or cafe can actually open and seat guests.
But from the 4th of July, they will be allowed to resume business and we will then find out, you know, Will they recover quickly to previous levels of revenue or not?
And as you point out, if people are nervous about their jobs, if people haven't paid their mortgage, if people are worried about debt, then they're not going to discretionary spend on eating out so much.
And four months of not eating out and drinking out, people may have changed their habits.
They may be used to eating and drinking at home, And obviously it's cheaper to do that.
One hopes not because I've been in this industry for over 25 years and I don't want it to suffer.
But clearly it's going to shrink and I would say probably five to ten to fifteen percent of the business of the industry will shut one way or another.
It may take a few months but they will go out of business.
And so that reduced capacity you hope will mean that the survivors can prosper.
But I don't think it's guaranteed.
I think it will be A hard climb back and I don't think there will be easy cheap pickings because I think although prices of stuff clearly distressed businesses are lower than they were six months ago or whatever, that reflects the reality of a much tougher climate and more difficult conditions.
Yeah, yeah.
No, I was thinking about trying to use my own experiences and extrapolating from that.
On the one hand, I'm looking at my bank balance and seeing, this is great.
I've saved a few bobs.
I haven't been spending on my Pilates class.
I feel sorry for my Pilates teacher.
I would have carried on if I had the chance, but I didn't.
I'm thinking of my hairdresser.
I've shaved my own hair.
Again, I'd much rather be paying a hairdresser to do this.
But at the same time, another part of me is thinking, God, I want to get out and spend there.
I want to go to a pub.
I'm not a great pub goer.
I want to go to a pub.
And have a pint of beer.
I want to go to my favourite London restaurant, Pierre de Terre, to have their delicious lunchtime time menu.
And I suppose it must be hard for you as an entrepreneur trying to work out what to predict the future, basically, because it could go either way.
People could just stop spending money because they're all unemployed and they don't want to spend any more.
Or there could be this massive rebound, the V-shape rebound.
Well, I don't believe in the V-shape.
And I do think there'll be permanent damage and I think that the sector will shrink.
You know the best operators, the best financed, the most popular will recover.
Others will have to restructure and shrink their portfolios and it will be tough going as I say and you know it's not the only sector you know many others like travel and theatre and live performance these are all suffering enormously and that's not going to change anytime soon and there are many related and other industries like oil and gas and automotive and so forth that are also in pain so
I don't think the idea that you know there are nine million people furloughed that is out of 33 million working population that's an enormous number and that shows the number of businesses That are, you know, in an induced coma.
And like with a human being, when you put them in an induced coma and you bring them back out, it doesn't always work.
And for a lot of businesses that are coming out of the induced coma, they may not actually still have a heartbeat and or the owners may have just lost courage and gone.
There may not be the cash to revive the business.
So it's going to be tough.
And we won't really be able to judge just how much permanent harm's been done until, I suspect, turn of the year.
And then we will see, you know, how many are out of work, how many insolvencies there are, which sectors are back to previous levels of income and so forth, and which are the walking wounded.
We may end up with a lot of zombie companies where they haven't actually been shut down, but by the same token they, you know, Can't really generate profits and are not able to grow.
And they're a drag on the economy as well.
So I think it's going to be, you know, as I say, a very difficult 12 months.
I don't want to pry into your personal affairs, but does one need to be sitting on a pile of cash in these times?
Or is it going to be possible for entrepreneurs like you to borrow at a decent rate?
And if you do borrow at a decent rate, is there not a risk that Interest rates might go up massively and screw you up that way.
Well I think the entire economy James is depending government, homeowners, businesses on the idea that interest rates won't go up.
If interest rates go up materially then we're all sunk because we've got two trillion plus of national debt.
Homeowners have got an awful lot of debt obviously with mortgages.
Britain as a whole household Corporate government, generally speaking, has a lot of debt.
So if interest rates go up, we suffer disproportionately as a nation.
And we better hope that interest rates remain low for a very long time because that's all that's enabled the government and others to borrow as much as they have to pay all the furlough and all the soft loans to industry.
I would say that if you want to be able to move quick to take advantage of Distressed businesses then you need to have cash rather than need to be able to borrow it because mostly banks won't lend you money to do these sort of deals which are high risk high reward and they're too dangerous for lenders.
Yes, that was my question really.
So you basically need to be sitting on cash which means I can't be the next Luke Johnson.
How did you, let me ask briefly, how did you, so you read medicine.
Yeah.
How did you Because you presumably didn't inherit the money from your dad.
How did you get rich?
Well I started in business at university as a sideline and I carried on after graduating and I worked in the city for a period and then when I was in my mid late twenties I went out on my own and I struggled for a few years trying to find the right opportunity and then with a partner came across Pizza Express and together we bought it We took it public and it was very successful.
Through the 90s we grew it and that was really the turning point in my whole career and it's partly because of that I suppose that I've spent so long in this sector of dining out and pubs and so forth.
Although I've diversified and I've done things in healthcare and transport and other sectors, I've generally come back to hospitality and leisure.
Where I've had most success.
I've obviously had flops as well as winners but generally I've made progress.
I do believe passionately in the importance of entrepreneurs and in backing new businesses and how entrepreneurs rather than big businesses are the ones that tend to innovate and generate the jobs actually and that's why in the coming years the government are going to have to Stimulate entrepreneurship as much as they possibly can because it's the thing that we need more than anything to get the economy and the jobs
coming back.
Yeah.
Actually, this is interesting.
This is going to be my last question to you, but I think it's quite germane to our discussion.
So, you take an active role in the businesses that you buy.
You help I mean presumably when you were at Pizza Express you were sort of making decisions to do with policy and stuff.
Yes.
Yeah.
How do you deal as an entrepreneur with woke culture?
How for example do you deal with human resources Departments which want to force you to fly rainbow flags in the office and recruit people, not because they're the best person available for the job, but for...
Because you can't micromanage.
I mean, as a CEO or whatever, a chairman, you can't look after every detail of recruitment, for example.
So do you just lie back and just say, oh, I'm just going to get...
I'm just going to take it from the woke culture.
I can't fight it.
Or can you resist in any way?
Well, my experience has generally been that in the private sector, you know, meritocracy and quality will out.
And so, you know, generally speaking, you know, organisations choose the best people for the job.
And I think there are plenty of candidates across all groups of society.
And that you know often a degree of diversity in every sense can make it a stronger organization I think what can happen and I think it's more often in the public sector and in the nonprofit world is that You end up in the world of quotas be it unspoken or not and I think that is not healthy because I think that undermines equality and it
verges towards discrimination and you know I think you know it's questionable even whether it's legal and I think that you know you have to cultivate candidates across the piece to try and find those who you know have hidden skills and bring something different to bear And I can honestly say that if,
you know, groupthink is very dangerous and groupthink is more common when everyone on a board or in a meeting is from the same background.
So actually you want diversity in organisations because I think then you get different perspectives and I think organisations with a degree of diversity are actually more resilient and I do believe that actually.
That's been my experience.
This is the first moment in the discussion where I feel...
Not for the sake of it.
Yeah.
Because I actually think it produces...
You know, you're less likely to fall into the trap of everyone thinking the same way.
Yeah, I sort of...
This is what one of my other podcast guests was saying the other day.
I sort of get it.
Look, suppose I... Suppose I bought Pizza Express and I wanted to set up, you know, to decide who was going to run my franchise restaurants.
I really wouldn't care if every single restaurant manager was black, transgender.
It wouldn't bother me at all.
If I felt that their primary aim was making the customer experience the best possible, ensuring that the pizza crust was just right, just Looking after the books, all that stuff.
That's what I'd care about.
I just worry that you're...
Even by saying that it's important to have diversity, you're already...
You're already halfway down that slippery slope.
Because actually, diversity...
Why?
I mean, you know, you just want to get the best person for the job, regardless of whether they're all black or all white or all yellow.
Well, I agree with that.
You want the best person for the job, and you must judge every individual as that individual and try to be...
Look at them on their own merits.
It's very difficult picking talent because I've often made mistakes and sometimes the best people are from the most unexpected backgrounds.
I think, for example, an awful lot of the most successful entrepreneurs I've worked with are not people who went to posh universities like you or I, that's for sure.
That's bloody right, yeah.
One needs to be open-minded when looking at the business world.
I think that academic qualifications, for example, are not necessarily the answer.
I think it's a lot more complicated than that.
Listen, if I were recruiting now, I would strike out any applications from Oxford and Cambridge, anyone who's got a first, Probably most university graduates.
I mean, I totally agree with you.
I'd probably get working class people from, you know, people who hadn't had the common sense educated out of them by woke universities.
Well, I do think that that phrase common sense is a wonderful attribute and I think we need as a society to get back to that a bit more.
I think actually that's the biggest single ingredient in most walks of life success.
Good common sense.
Yeah, yeah.
Well, Luke, I wish you all the best.
I hope you find your...
What are they called, sort of companies that you can buy up and transform into?
Is there a name for them in the business?
Well, they generally call them distressed businesses, yes.
Oh, I see, right.
Distressed businesses.
I hope you find your wounded fish thrashing about in the water that you can come and gobble it up with your sharky teeth and turn into a whale.
Exactly.
Very good.
And listen, thank you for fighting the fight, because you have been about the only bloody businessman fighting against this nonsense.
Not quite, but there aren't many of this, it's true, yes.
I salute you, good.
Oh, one more thing.
Anyone who's enjoyed this podcast, as I'm sure you have, please don't forget to support me on Patreon and Subscribestar, because actually next time I might be able to afford a makeup team to stop me looking sweaty You know, when I get successful, I apologize for looking so rough now, but it is about the hottest day of the year.
So that's all.
Patreon or Subscribestar.
Thank you.
Bye-bye.
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