3 MAY 1997, Page 28


Election? What election? Just a ritual going on at the other end of town from the City


The frontier between finance and poli- tics runs north and south across the Savoy Grill, which counts as neutral territory. Patrols cross the lines, there are skirmishes, but the two rival powers tend not to probe one another too deeply. Each secretly thinks that the other is unpredictable, and crazy with it. So this time round the City and its markets have treated the election as ritual — just something going on at the other end of town. The best pointer to their expectations comes from the City bookies, IG Index. When the campaign began, their odds implied a Labour majority of 70. As polling day neared they had pushed that out to 103. The stock market, though, was ending the campaign very much where it started, with its index of leading shares up a few points. Unless they have been living in a hollow tree, buyers of shares at these lev- els must expect the next government to put interest rates up and to look for extra rev- enue from companies and from investors. All that must be, as the City would say, in the price. Short of a Labour landslide — on that, the polls say one thing and IG Index's odds say another — the markets look more exposed on another flank. Their steepest fall in the campaign's six weeks was set off by Alan Greenspan at the US Federal Reserve. Mr Greenspan suspected that inflation had got into the price of assets in America — most obviously, in share prices. Here at home it is bubbling up again in London house prices. Some government is going to have to tackle it, and I do not expect that markets will enjoy that.

Out, out, brief spark

NERVE and an enthusiastic spokesman turned out not to be enough for Andrew Regan. Armed with these and some boxes of documents that fell off the back of a Jaguar, he hoped to buy the Co-op. Not since the Saatchi brothers hoped to buy the Midland Bank has ambition run so far ahead of capacity. The Co-op 'caught him with his hands full of confidential informa- tion and threatened him with everything from the Serious Fraud Office to the Bar Council, Mr Justice Lightman joined in with a fizzing injunction, and between them they left this young City spark looking less than sparky: snuffed out, in fact. His advis- ers and backers have tiptoed away in a hurry, leaving nothing behind them but a priceless collection of grovelling letters and a faint mephitic smell. I need not pass judg- ment on Mr Regan himself — others may get the chance to do that — but I make the general point that confidential information sometimes does get out, and sometimes ought to. What is more, once it gets out, it stays out. Toothpaste is like that with tubes. The notion distresses those draughtsmen and law-givers who have written the rules about insider trading in the perverse hope of making everybody start from a common level of ignorance. Information is what a market needs to be efficient.

Dusty corners

THAT in turn helps to keep businesses up to the mark, however much it may infuriate their managers. They find that information is peculiarly hard to manage. It gets away from them. The Co-op's managers have not been used to this. They talk as if they were chieftains of an independent principality, and no doubt will count on their sponsored MPs to defend them. They are in fact stew- ards of a business which is not a very good one. For years it has performed poorly for its customers and owners — who in this case are supposed to be the same people. No wonder their business stopped paying them dividends. Light in the Co-op's dusty corners would be good for the Co-opera- tors and for all of us. As for Mr Regan, I dare say he got up to mischief, but confi- dentiality can be a screen for mischief, too. I think of Lord Brayley, who was chairman of Canning Town Glass and, briefly, a min- ister in Harold Wilson's government that was where the peerage came from. A friend of mine obtained and published evi- dence that Brayley had helped himself to £225,000 out of Canning Town. Brayley's lawyers hit back: publication, they said, was a breach of copyright. That got them nowhere, and Brayley had the tact to die, but how true the definition of news is: something that someone — a Wilson crony, a Co-op manager, even a bright City spark — does not want to see published.

A developer writes

A PROPERTY developer writes to me ask- ing for money. It is looking for £100 mil- lion, so my contribution will be gratefully received. Well, now. Developers who need money (as they always do) start off by ask- ing their banks and go on to ask their shareholders. Demanding money by mail- ing-shot is something else. This, though, turns out to be an amateur developer with big ideas: the Royal Opera House, Covent Garden. You thought that its great and good friends were appealing for money to do up their opera house? That £100 million seemed to be quite a lot of money for this purpose, even at today's prices, or tomor- row's? Read on. On the opera house's island site there is commercial property now valued at £70 million. It would like to develop this property, and its friends' appeal for money covers this: 'We aim to retain 50 per cent of the commercial prop- erty and we have therefore set ourselves the challenge of raising £100 million.' This is not quite my idea of a good cause. There are times when property development looks such an easy way of making money that everybody wants to try his hand at it. Carey Street is full of people like that. When the market turns down and the costs overrun, what will Covent Garden do? Come back to me for more money? If it really has £70 million worth of property to spare, it should sell the property and bank the proceeds. On its appeal committee I notice Alastair Ross Goobey, who wrote Bricks and Mor- tals and has seen it all before. He should promise his colleagues that he will not sing can belto if they do not develop property.

Thought for the day

MY text for May Day is taken from Paul Claudel, poet, playwright, diplomat, and French ambassador in Washington when Herbert Hoover was still whistling to keep everybody's spirits up. Claudel had a better idea: 'Gentlemen, in the brief moment that remains to us between the crisis and the catastrophe, we may as well take a glass of champagne.'