Can London be turned around like a troubled company?
Judi Bevan meets Tim Parker, the controversial private-equity player who slashed jobs and boosted value at Kwik-Fit and the AA, and is about to apply his skills at City Hall Tim Parker, the bubble-haired venture capitalist hired to cut costs at City Hall and make Mayor Boris’s vision a reality, strolls down the curved walkway to greet me smiling widely, just like his photographs. Tall and rangy, this socialist-turned-capitalist, who is to be paid just £1 a year, is all charm and apologies for failing to turn up for our appointment the day before. He takes responsibility like a good leader should, although I suspect the serried ranks of apparatchiks from the not-so-ancien régime of attempted sabotage. They should watch out: while turning round the AA, Parker earned the sobriquet ‘Prince of Darkness’ for his skill at excising surplus staff.
Parker, Boris Johnson’s newly appointed First Deputy and chief executive of the Greater London Authority, built his career and fortune using private equity to sharpen the performance of uncompetitive companies such as the shoemaker C&J Clark, or those that had lost focus, like Kwik-Fit and the AA. In all of them he wielded the axe, selling property, cutting costs and jobs, provoking union anger. He has not always been sensitive — once, notoriously, arriving at a plant in his Porsche to announce job losses — but he has certainly been effective. That is good news for weary Londoners who struggle daily through clogged roads or wait on crowded platforms for unreliable Tube trains. ‘I don’t hear many people in London complaining about paying too much tax,’ he says. ‘But they hate the mismanagement — and that’s why I’m here.’ He suggests a coffee in City Hall’s café rather than ‘some bleak office’ and when he pays for my latte and his cappuccino he claims the 10 per cent staff discount — slightly surprising for a man reported to be worth £75 million, but a good sign in someone whose mission is to spend Londoner’s taxes more effectively. By all accounts Parker is good at getting things done; he speaks his mind and has no fear of friction. He detests the topdown, centralist approach of the Livingstone era. ‘I’m a great decentraliser. We have to give more power to local people. In business, success is created when you devolve responsibility, set the rules and push the responsibility out to the people.’ I point out that businessmen who go into politics often sink without trace. He agrees, but hopes he will be the exception. ‘Often the problem is that they don’t have enough personal money to stick with it,’ he says. That clearly does not apply to him.
Parker’s assessment of Ken Livingstone is of someone in a parallel universe. ‘Ken may have improved some things but it was largely eight years of missed opportunity,’ he says scathingly. ‘Central government handed him huge amounts of money yet there was never a sufficiently serious debate about how to get value out of it for the hard-pressed taxpayers of London.’ He grudgingly acknowledges that Livingstone’s contracts with the bus companies improved the bus service, albeit with many running almost empty much of the time.
‘But the subsidy to the buses is about £860 million a year.’ He peers pointedly over his rimless glasses. ‘So it is not a costless exercise. And four or five billion was spent on the Tube with little perceptible improvement.’ Parker believes there is a less ruinous way to have a good bus service and he has other plans to get the traffic moving, such as changing the alignments of traffic lights. He regards the Congestion Charge as ‘a blunt instrument’.
Parker’s budget is £11.3 billion, including £6.8 billion for Transport for London and £3.5 billion for the Metropolitan Police, so City Hall is far from broke. But the aim is ‘to cut down the bureaucracy and use the money we save to do things at the front end’. With the current hot topic of knife crime in mind, ‘youth opportunity is high on Boris’s agenda. A lot of young people feel alienated, feel they have no stake in the system. We have to get money to the communities that can deliver services that will help.’ As a left-wing undergraduate reading PPE at Pembroke College, Oxford, Parker chaired the University Labour Club and enjoyed rubbing shoulders with guest speakers such as Tariq Ali and Michael Foot. ‘At one point I really thought you could plan the economy,’ he laughs incredulously.
His was a typical rebellion against an army childhood and public-school education. Born in Aldershot in 1955, Parker is the elder son of a distinguished officer who fought with Montgomery at El Alamein, winning a DCM for bravery. While growing up, Tim and his younger brother Andrew (who works for the World Bank) travelled with their parents to Malaysia and Germany. He has fond memories of the rubber plantation at the bottom of their garden in Malaysia. ‘Giving a child a couple of years away from the UK with a different language and culture is a wonderful thing to do,’ he says. ‘It makes them aware that this world is not the only world.’ At 11 he went to board at Abingdon School, where he was a bright all-rounder, rowed in the first eight, played the flute and made a group of friends who still meet several times a year.
Working at the Treasury after Oxford — and trying to live on £3,700 a year — swung him towards the merits of free-market capitalism. He got a grant to study business at the London School of Economics. ‘I wanted to lead something. I’ve always been good at organising things. Business school gave me the tools to run a company.’ In 1981, Britain was still in the depths of recession and no one was about to hand a 25-year-old a company to run. The next best thing was a job as personal assistant to Sir William Barlow at Thorn EMI, then a ragbag of electrical and electronics companies. He spotted a vacancy at one of them, an engineer ing business called Blakeslee in Chicago, and went to sort it out, which he did by selling the component parts to their managements. Back in the UK, he was sent to turn around Crypto Peerless, a small catering equipment company in Birmingham; he took it from break even to £800,000 profits in two and a half years.
‘It was old-fashioned metal-bashing; I love that stuff,’ he says with surprising passion. Metal-bashing played Cupid when he met his Belgian wife, Thérèse, at a catering equipment exhibition in Dallas; they have two sons and two daughters.
Parker’s first private-equity deal was Kenwood, a kitchen appliance maker in the Thorn EMI group which he ran for three years and then led into a buy-out backed by Candover, with the management taking 20 per cent. They paid £52 million for it in 1989 and floated it for £104 million in 1992. When the then chairman of C&J Clark read about this achievement, he sent for Parker and asked him to rescue the shoe company, then struggling against low-cost competition from the Far East. Did he ever lose sleep about putting people out of work? He sighs and talks about the importance of treating people decently and explaining why job losses are happening. ‘The other thing is that in an efficient economy, redundancy is not always the end of the road. This is not the 1970s.’ He left the AA when it merged with Saga last year — having made £1.5 billion in three years for his investors, CVC and Permira, and upwards of £40 million to add to the pile he made for himself at Kwik-Fit, where those who invested with him made five times their money in less than three years. By that stage he might have been content with advising Central Office, playing his flute and shooting with friends. But he found life unsatisfying without the counterpoint of full-time work.
So when senior Conservatives approached him about working for Boris, whom he refers to as ‘a brave politician’, he jumped at it. ‘This was an unusual and heaven-sent opportunity,’ he says. It remains to be seen whether the two men can work together.
Under Livingstone, the numbers employed at City Hall swelled from 400 to nearer 700; many of those jobs will now go. Time is pressing and he glances at his watch. ‘We must have a better Tube system; we must get Crossrail up and running; we must make sure the Olympic legacy is not wasted; and we must build houses for the less well-off. Without those physical things, the wealth creation simply will not happen.’ All I can say to that is: bring it on.
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