CITY AND SUBURBAN
CHRISTOPHER FILDES
I get a bung from the unjust steward — he must be due for an audit
Gordon Brown is a son of the manse, so he will have been brought up on the Parable of the Unjust Steward. As stewards have been known to do, this one, we are told, had been fiddling the figures, and realised that his accounts would soon be audited. When that day came, he knew, he would need friends — so now was the time to ingratiate himself with his customers. He hurried about to offer them rebates and discounts. Can it be that the Chancellor has borrowed this idea from holy scripture? First of all he sends me an entirely welcome tax rebate. Then he follows it up with a straightforward £400 bung. Half of it, he explains, is a winter fuel payment to help me pay my heating bill. The other half, rather bleakly described as an age-related payment, is to help with my council tax bill. The whole bung is tax-free, so that when grossed up it will be quite worth having, and I don’t have to spend it on council tax or fuel. If I would rather, I can put it on a horse. How different from the Chancellor’s other age-related payment, which he calls a pension credit. To qualify, I would have to prove need by filling in a form so long and complex that half of those entitled to the money never claim it. In defence of this principle, he sabotaged Adair Turner’s proposals for pension reform by refusing to write a cheque for them. This time, though, he is happy to ingratiate himself with me, and need does not come into it. I am left to wonder about this steward’s figures. The audit will, of course, show that he is bunging us with our own money.
Looking for the exit
The bluster that carried him through previous accounts of his stewardship seemed, in this week’s trailer for next year’s Budget, to have moderated. He had to get past or get round two embarrassing numbers. His financial forecasts had proved, as usual, to be too optimistic, and his forecast of growth was, unusually, miles out. He chose to blame that one on the price of oil, which was well on its way up when he announced his forecast. As for the public finances, a new starting date for the economic cycle helped to keep them within his rules, just as a new index of consumer prices helped to keep inflation down, and creative accounting kept Network Rail’s debt off his balance sheet. Film finance and biofuels made their regular appearance and were joined (about two centuries late) by clean coal, but we have learnt to endure these diversions and to note what he leaves out. The auditors will note it too. No wonder that this steward has been looking for the exit.
Flaps down
Fewer safety belts and more ejector seats: such is the message to British Airways from its new chief executive, Willie Walsh. This normally (or abnormally) taciturn Irishman has made it known that his airline must shed one third of its managers. At their Waterside habitat (writes my aviation correspondent, Jumbo Speedbird) all is consternation. An earlier regime commissioned this splendid head office and moved them all into it, in the days before low-cost competition and pension fund deficits and unpaid dividends. Who now will patronise its three coffee shops or muse beside its purling stream? Who will make up the task forces and working parties which have kept its 174 meeting rooms busy? Why, there may soon be enough spaces for the survivors to park their cars. Mr Walsh must be tempted to move them into somewhere humbler at Hatton Cross and to turn Waterside into Terminal Six. The customers would like it.
Lawyers’ benefit
Suing the nearest deep pocket is not the sure thing that it used to be. It did not work for BCCI’s creditors when they sued the Bank of England, and it has not worked for Equitable Life, which sued its former auditors and coupled them up with its former directors. The auditors, so Equitable claimed, should have told the directors to sell the business while they could, but the directors all testified that they had no intention of selling. Why not? This was a famous name with a wonderful franchise, which needed new capital, but they spurned the opportunity. Instead they bet the farm on a test case, and lost it. I am told their successors were advised that they had to bring this latest round of lawsuits or risk being sued themselves. Now the policyholders are £45 million worse off. Guess who the winners are.
Imperial sunset
A good row in the City is always instructive, and the great P&O row was one of the best. No less was at stake than the independence of the Peninsular and Oriental Steam Navigation Company, incorporated by Royal Charter in 1840. ‘SAVE P&O — TELL BOVIS NO!’ screamed the stickers on Oliver Jessel’s vast purple Rolls-Royce, while his chauffeur glumly wondered who was going to peel them off again. Protesters insisted that P&O was part of the empire. The plan to merge it with Bovis the builders was cooked up by Lazards, who acted for both sides, and it always looked like a merchant banker’s feeearning fantasy. Lord Inchcape, son and grandson of P&O chairmen, resigned from the board and led the shareholders’ revolt; they voted the merger down, the chairman resigned in tears and Inchcape took the wheel. More storms were to follow, until the resourceful Lord Sterling moved in and, alongside Sir Bruce McPhail, steered P&O through two decades, but now they have retired and their successors have agreed to sell out to the Port of Dubai for £3 billion. Not a glimmer of protest, this time, for P&O and the City have changed, and the great imperial steam-powered link has gone the way of the empire.
Going west
I have been arguing for years that the City is out to lunch and going west. Now comes the clincher, for next week the Dealmakers’ Arms will renew itself in Mayfair. The Savoy Grill had earned its nickname in the two decades when Angelo Maresca was its impresario, until the hotel’s new owners thought that they knew better than his customers. He retired gracefully and temporarily to help Sir Rocco Forte give the kiss of life to Brown’s Hotel, and there he will now preside over the Grill. Some of his dealmaking clientele are on the scene already, with Lazards and the Fleming family established just around the corner. So, too, are the upstart hordes of hedge fund managers and private client bankers who have made Mayfair their habitat. I count on him to keep them in order. There is something to be said for going west.
Previous page
