CITY AND SUBURBAN
Gordon wants to make us more competitive but finds odd ways of going about it
CHRISTOPHER FILDES
Here's another surprise in the taxman's brown envelope: the government wants even more of its dirty work done for it. From April 2000, says the Inland Revenue, employers will be responsible for collecting student loans. They can add this to the chore wished on them last week, which was to distribute the Chancellor's latest handouts through the Pay As You Earn scheme. Then they can learn to administer stakeholder pensions and to give holidays to part-time fathers who are part-time workers, while the Treasury sets out to regulate mortgages. These will come within the scope of the encyclopaedic Finan- cial Services and Markets Bill, and the regu- lators, now recruiting busily, will be bursting out of their 2,000-seater dockside office. This is good news for uncompetitive lenders who are struggling to keep up, for we have never had such a competitive market in mortgages. Indeed, it is only lately that we have had a competitive market at all. Before then it was Hobson's choice from the building societies, fixing their cartelised rate once a month. Now the scramble for business has set the house market alight. In London a year ago you could have borrowed from the Nation- wide at 71/4 per cent to buy a house whose value would rise by a fifth or a quarter. Per- haps the Chancellor hopes to calm it down by throwing grit into the machinery in the sacred name of investor protection. His adviser on banking, Don Cruickshank, has told him that competition is the customer's friend and regulation is its enemy. For a Chancellor who wants to make Britain more competitive, Gordon Brown has an odd way of going about it.
Time to go
I AM told that when Warburgs sold out, Sir Georg Wilhelm von Mallinckrodt, chairman of Schroders, rang up his opposite number at Robert Fleming. 'Well,' he said, 'it seems that we are the only two English merchant banks left.' By that count there is now only one, or none, if the Flemings are counted as Scots. The Schroders (Sir Georg is a Schroder-in-law) are taking cash for their bank, which becomes the latest trophy in the financial miscellany being collected by Citi- group of New York. This does, on the face of it, seem an odd time to be selling a mer- chant bank. Huge deals are wandering round, huge fees are spilling off them, a merger has to be priced at £100 billion to be
worth mentioning, even if, like Willie Stern's record-setting bankruptcy, it is just an ordi- nary one with some extra noughts on the end. Investors queue up to buy companies with no more assets than a gleam in their promoters' eye and a .com in their title. Perhaps Sir Georg and his astute successor, Sir Win Bischoff, have made up their minds that this cannot go on and that the time to sell is at the top of the market, and perhaps they are right.
Age of chivalry
GERRARD, the last of the independent money-market houses, is taking the money, too. The role of these houses in the modern City was that of the cavalry officer in mod- ern warfare: to lend a touch of class to what might otherwise be a vulgar brawl. Now Gerrard is surrendering to the Old Mutual, its fall cushioned by a cheque for £525 mil- lion. Put that out in the money market and it will bring you half a million pounds a week, which is better than working. Under three successive chairmen — Kenneth Whitaker, Roger Gibbs, Brian Williamson — Gerrard brought a cavalier style to all it did, wore its top hats at a jaunty angle and was at its best at lunchtime. I was there on the Friday when chairman Whitaker, after his usual Louis Roederer and Hugel Gewurztraminer, offered a discovery of his own, a colourless liquid called Grappa da Bassano. We both enjoyed it. I returned to my office and then home and to bed, getting up on the following Monday. He had a hol- low leg and carried on as if nothing had happened. Chivalrous days.
For Ken, a replay
THE City's next riot is booked for 1 May and I shall scan the mob for a familiar impish face. It will be Ken Livingstone, reliving his past before he is elected Mayor of London three days later. At heart, he says, he is still the same anarchist who enjoyed roughing up public inquiries. He would have liked to have roughed up the World Trade Organisation in Seattle and would only want it here if he could rough it up again. The City depends on worldwide free trade in its services, and this is what the WTO, in its bumbling way, stands for, but the new mayor will nominate almost half the members of London's new police authority, so Ken might get his wish. Any- body who still wonders why the City needs its own Lord Mayor and its own police force can stop wondering. It may have to man its own defences. I am sure that this year's Lord Mayor, Clive Martin, will be wholly diplo- matic, but I am encouraged to think that he rose through the ranks to command the Honourable Artillery Company. This is the City's own regiment, whose battle honours include the Gordon Riots of 1780, when it took no prisoners. Ken and his mob might like to ask for a replay. I hope so.
Making no cents
LORD HALSBURY lived to a cheerful old age, and if he gave us our lacklustre decimal currency, at least he saved the pound. His committee was urged to scrap it and go for a ten-shilling unit, which would divide neatly into cents. (The Economist loved the idea, and wanted to call the new unit the Royal.) The man who got it right was John de Loynes, the Bank of England official who commissioned a four-shilling coin for the Gambia and com- plained that inflation was decimalising the world's currencies quite fast enough with- out central bankers joining in. Inflation decimalised the pound, too. No coin worth less than a florin or shilling (all right, then, 10p or Sp) is worth picking up, so Lord Halsbury need not have bothered.
In bond
I LIKE the look of the new issue from Marne et Champagne. This worthy compa- ny, whose labels include Lanson — a much-improved marque these days — is raising £250, million by offering bonds secured on the 60 million bottles in its cel- lar. It's a two-way bet. If all goes well I shall pocket my dividends, and if not I shall buzz the security.
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