Hark who's talking, grumbles Sir Topham it's time the directors hit back
CHRISTOPHER FILZ:i;
Sir Topham Hatt has got steam up. 'Look at this tomfool letter about our directors,' he says. 'They know too much about the business, so it's time they went. That's what the code says. Bigfours Bank was told not to pick a new chairman who knew about banking. Same thing at Squareyes TV — though I notice that if your name's Murdoch, the rules don't apply. Nit-picking box-checkers, secondguessing our every decision, making a good thing of it — the pension funds want this, the insurers want that, some manager insists on the other thing by Tuesday. . . I mean to say, hark who's talking! If these people could run their own businesses, they might try telling us how to run ours, but look at them. Half of the pension funds are under water. Anyone who'd bet on life assurance to buy him a cosy old age has had a horrible shock, and not just from the Equitable. Put your trust in investment trusts and discover that zero coupons are worth zero. Like Woody Allen's idea of a stockbroker, these boys look after your money until it's all gone — but while it's there, they live well. I'm told that sevenfigure bonuses are back in the City and the next fund manager is better paid than I am, quite apart from his tickets for Glyndebourne and Wimbledon. Mark you, that's just gossip. We directors must publish our pay, but most of these people don't have to — unless they're the top brass of the Pru, who got too greedy for their own good. Anyway. I've had enough of this. Action stations! I'm giving the right-away for the Association of Fat Controllers.'
Stewards' inquiry
This, says Sir Topham, is an idea whose time has come. There are associations of insurers and pension funds and investment funds and unit trusts, all there to persecute him, so why not one for directors and chairmen — fat controllers, in fact? The AFC will press for equivalence of disclosure. Its members will instruct their pension funds' managers to mind their own businesses and do it better. They will report all the other associations to the Office of Fair Trading as code-bound cartels. 'The Institute of Directors ought to have made this its cause,' so Sir Topham observes, `if it had any sense, but it hasn't, now it's fallen out with Ruth Lea, who was head of policy
and the only bright spark in the whole mausoleum — so now it's my turn. Simple, really. All these chaps like to throw their weight around as if they were owners. They aren't, of course. They're stewards, just as we are. We need to remind them of that.'
Modesty blouse
A modest increase in interest rates — that, says Mervyn King, the Governor of the Bank of England, is what was needed to keep inflation down. What other demeanours were on offer: a chaste increase, a well-behaved increase, a forward increase, perhaps? As for house prices, mortgage debt, personal borrowing of every kind, what kind of increases are they showing? Brazen? Well, they are not so imprudent, the Governor thinks, as they were at the end of the 1980s, when so many borrowers discarded modesty and ended up in trouble. All the same, house prices have been rising faster than earnings for years, and as a proportion of new disposable incomes are now (on one measure) as high as they have ever been. Observe that, thanks to the Chancellor's clandestine income tax, disguised as National Insurance, real incomes have been falling. House prices still defy gravity. The Bank now expects, not for the first time, that they will level off in the next couple of years — hut levelling off is not what happens in markets for long. They do not move in straight lines. Lenders and borrowers now need to don their modesty blouses.
Right she was
They were all out of step but our Rachel. She had just joined the Bank as Deputy Governor, she was attending her first meeting of the Monetary Policy Committee. the Governor put a cut in interest rates to the vote, and Rachel Lomax, voting against,
found herself in a minority of one. That was four months ago, and next month we could see that consumers were still borrowing their heads off and that house-price inflation was running at 20 per cent. Knowing that, would the MPC have cut rates when it did? Rachel was right. I said. By September, her colleague Paul Tucker seemed to think so too. He went off to Yorkshire to deliver an admonitory cough to borrowers: interest rates, they should remember, were now below average and might therefore, over time, go up. This was never likely to stem the rush. and I suggested that actions spoke louder than coughs. Now they have, We do not yet know how the committee voted, but I doubt that Rachel Lomax needed to raise her voice.
Get out of here
Lord Saatchi must have been reading Up the aganisation, Robert Townsend's great handbook to what business doesn't need — such as overblown head offices where Satan makes mischief for idle hands to do. The Conservatives' newly appointed co-chairman is making a start by selling Central Office. Townsend prescribes this. Move, he says, and the good guys will see a future and come with you, and the bad guys may leave of their own accord without having to be paid to go. He also suggests consulting an imaginary man from Mars on what would be a sensible location for a business like yours. This would save the Tories from Canary Wharf (itself now the subject of an unconvincing Dutch auction) and the principle is sound.
Big bird grounded
I am sad to see Lord Marshall of Knightsbridge coming in to land at British Airways. He has been the Concorde of the boardroom: not always, strictly speaking, economic, but we'll miss him when he's gone. His genial willingness to take on one more job — Britain in Europe, the CBI, the New York Stock Exchange, Invensys and British Telecom, quite apart from the occasional turbulence at his home base — left him exposed to the hazards of pluralism. As Lord Wakeham (ex Enron) could tell him, or Sir Roger Hum n (ex Marconi), it is a great life until something goes wrong. Now, leaving behind him half-yearly profits down 80 per cent, the big bird heads for the hangar. May his nose never droop, and may no one paint graffiti on his tailplane.
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