Euan doesn't need to change a light bulb, so a bell rings at Barclays
.4RISTOP4EP FILDES
uestion: how many Bristol University undergraduates does it take to change a light bulb?
Answer: none — they just move into MiThmy and Daddy's other flat. Next question: what happens if this is Cherie and Tony's son Euan? Answer: a bell rings at Barclays. Nature imitates art, and almost a year ago this light-bulb joke was acted out in what passes for real life. The Prime Minister's son was on the way to Bristol, so his parents put up half a million pounds to buy two flats there, sight unseen, on the advice of Mrs Blair's confidante's admirer, Peter Foster. He acted as their agent, found the flats, agreed the deal, and assured the happy buyers that this would prove to be a wonderful investment. Since his only qualifications were a practised smile and some form as a confidence trickster, they were left to hope that this transaction was all that it should be — no commissions, no backhanders — and that the market in flats bought to let would hold up. At this point, Matt Barrett, Barclays' chief executive, seems to have decided that it wouldn't. Experience teaches bankers to steer clear of sure-fire ways of making money and the people who promote them. Somebody else. Mr Barrett thought, could have the customers for fancy mortgages and buy-to-let schemes. He has been content to let Barclays' share of these markets come tumbling down: 'We have avoided rushing into buy-to-let mortgages.' If he has got this right, some other lenders will prove to have got it expensively wrong. Their borrowers, too, of course.
No pain, no gain
Buying to let was in vogue well before Downing Street caught up with the fashion. You re-mortgaged your house and you borrowed more money, you bought a flat and let it to a tenant; the rent would cover the interest payments, and you could always sell the flat and take a profit — couldn't you? These propositions are now looking shaky. Flats in the wrong places are hard to shift, and some agents are throwing in longdistance holidays. Rents have been falling. Tenants are not always easy to find or to keep. As for interest payments, the pattern is changing. Loans for all but the shortest periods are becoming more expensive, as the markets fight shy of greedy governments and their insatiable need to borrow. Oh, well, there goes another painless and inge nious scheme for making money. I just hope that Downing Street's next investment adviser does not promote Hearts, or Women Empowering Women.
Just a precaution
Here's something you might not have known about the Old Lady of Threadneedle Street: she takes precautions. This is, I dare say, a habit she formed after her run-in with William Pitt the Younger. When she cut the Bank rate last month to its lowest level for half a century, that was precautionary. She did not say so at the time, but the word can be found in the Monetary Policy Committee's minutes, out this week, and was retrieved from them by Menyn King, her new Governor. We were still borrowing heavily, but the Committee had taken the view that another little cut wouldn't do us any harm. Rachel Lomax. Deputy Governor in charge of monetary policy, voted in a minority of one, and everything that has happened since makes her look right. The next move will be upwards. In Washington, Alan Greenspan has been trying to assure the faithful that he is in no hurry to raise rates. Perhaps he should add that his last cut was just a precaution.
Ten by five
Tom Fisher joined the Midland when it was the biggest bank in the world, and always resented its decline. If toughness and energy could have reversed that, he might have achieved it, but they did not always endear him. One of the board's more expensive decisions was to buy Thomas Cook, privatised by the Heath government after decades of bureaucratic mismanagement, and after a while he was asked to report on it. One sentence sufficed: 'It would take ten Tom Fishers five years to put this thing right.' 'Good.' said the chief general manager, 'you start on Monday.' News of his death sets me wondering whether bankers like this have been superseded by information technology specialists, human resources supremos and strategists with MBAs. The loss is ours.
Nigel's bright idea
Now here's a new way to measure inflation — or, rather, an old one. Who would have thought the Tax and Prices Index was still going? Nigel Lawson thought it up, needing, as chancellors so often do, an index that showed how well he was doing. The Retail Prices Index (then, as now the familiar yardstick) did not meet his needs, so along came the TN, a new index to show how affordable goods in the shops were when we paid for them out of our taxed income. The only trouble with this bright idea was that nobody except the Chancellor could be induced to pay attention to it. After a few months of beating the drum and obtaining no resonance, he turned his restless mind to other things, and the TPI disappeared from our radar screens, but not from the calculations of the Office of National Statistics. All those years ago, the number-crunchers had been told to work it out, and no-one had told them to stop — so they haven't. Inflation on this index stands at 3.9 per cent, which is I per cent above the RPI's reading and too high for comfort. What it shows is that Gordon Brown's higher taxes have made goods in the shops less affordable. He plans to hit back with a new index. nicknamed Hiccup. Getting us to pay attention to it may be harder.
Yorker for Ascot
One up for my racing correspondent, Captain Threadneedle. The next test for the Queen's advisers, he reported from Ascot, was to decide where to take the Royal meeting when the builders were in, and his money was on York — now confirmed as the winner. The trouble at Ascot, he says, is the tunnel. Never the course's best feature and no better for its tiles and traffic-lights, it was built by the sixteenth Duke of Norfolk so that ordinary racegoers could reach the paddock from the grandstand without having to pollute the Royal Enclosure. It is now time-expired and will have to be excavated, before some hapless punter finds that first the roof and then the Queen falls in on top of him. No risk of that at York.
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