However bad things may be, says Sir Peter, governments can always make it worse
CHRISTOPHER FILDES
et another portrait of Sir Peter Middleton: this time for the directors floor at Barclays. Having the chairman's portrait painted is always a signal, and sometimes a hint, of retirement, but this one has been here before. In the long career that has taken him to the top of the Treasury and then to the chair of one of the world's ten biggest banks, he has practised the art of retirer pour mieux sauter. His next sideways jump will see him as chairman of Camelot, which runs the National Lottery: 'A business.' he says, 'with a very specific objective — to raise a lot of money, efficiently, and to get its licence renewed.' It is one of our few public projects to have worked without a hitch from day one, but that cuts both ways: 'It's very difficult to do something that's as much in the public eye as the Lottery. People always assume that you get the efficiencies for nothing.' Still, the mathematical side of the business appeals to him: 'I've always been interested in numbers.' So he has. Our paths first crossed when he went to the Treasury, where he was press secretary to Anthony Barber and then Denis Healey — a longpriced double, if ever there was one. In those days the press secretary was in the loop and kept lines open to his natural constituency. (How times change.) On one rainy day we took refuge in the bar of the Ritz, which, I said, made me feel that the capitalist system might survive. 'Nonsense. Christopher,' he retorted: 'Where else do you think the commissars will stay?'
All change
It never quite came to that, but the travails of the British economy, and the collapse of the old Treasury consensus about how it should be managed, opened the way to new thinking — perhaps money and markets mattered, after all — and sent him racing up the ladder, to become permanent secretary as Nigel Lawson's long reign was beginning. Here was a Chancellor who thought that taxes should be low and simple and compulsory. (Once again, how times change.) Theirs was sometimes a sticky relationship, as the Lawson memoirs confirm, This unusual mandarin tended to think and act independently and to keep close to the City. In the end they both found perches at BZW, which was Barclays' investment bank, and Sir Peter became its chairman. 'A great experiment, really,' he calls it: 'I'd say it succeeded as to twothirds.' The parent bank, though, had been in all sorts of trouble and Martin Taylor, its hard-pressed chief executive. had BZW dismembered. I hacked down to Canary Wharf for Sir Peter's retirement party, and admired his portrait.
Man on the spot
Then, back at head office in Lombard Street, boardroom combustion set off an explosion, and Barclays had to find a chief executive, a finance director and a chairman. Personalities, so Sir Peter now says, lit the fuse: 'Unless you work at it extremely hard, all organisations tend to fall apart.' This one urgently needed somebody to take command, and by what may have been a coincidence, he was the man on the spot. 'I've had to deal with Margaret Thatcher and Nigel Lawson,' so he told me at the time: 'I can deal with these people,' He did. He calmed Barclays down, brought its costs under control, resurrected BZW as Barclays Capital, bought the Woolwich, avoided (unlike Lloyds and Abbey) the pitfalls of the pension business, and found, at the second attempt, a chief executive — the flamboyant Matt Barrett, who now takes over as chairman. This time the succession has been planned and managed, with no more audible disturbance than the grumbles of boxticking shareholders, brandishing the combined codes of corporate governance. 'They've every right to be consulted,' says Sir Peter. 'What I'm against is thinking that if you stick to the codes, you've got a wellmanaged company. Bloody ridiculous. The board's prime responsibility is to run a successful business, not to be a bunch of cops chasing executive robbers.' Not that ministers and regulators now do much to make this easier: 'It's quite an interesting time, in banking. You've got this big mass of things hitting the sector — four major European directives, the gains very doubtful and the costs all too apparent. There've been 18 inquiries under this government into the banks. It seems to have become part of the British way of life. It does mean that running the bank gets moderately far down the chairman's list of priorities. You have to do all these things before you start. You certainly don't want the chief executive doing them — then you really are in trouble.'
Illusions of safety
What worries him most in this is our own perceptions of risk and uncertainty: It seems to be getting worse. People think that if they get regulation, everything they do will turn out to be right, or that they will and should be compensated. Trying to make life certain, you end up dead.' Governments, he says, encourage this: 'Because they make promises, they are always drifting into areas which should be left to the markets. The really dangerous moment is when they get into fine-tuning. This usually means that they get their timing wrong, or that under the excuse that they're helping markets work they stop them working.So have they learnt anything? 'We're a bit lucky at the moment. The global economy exerts a discipline. Some of the worst mistakes of the 1960s and 1970s would be hard to make now — 16 phases of incomes policy, followed by the arrival of the IMF! A hit of oil came at a fortunate time, and we've had a very successful financial services industry, which is why you shouldn't try and spoil it.' One thing he can tell the inquisitors: 'Anyone who thinks banking is simple needs their head looked at.'
Middleton's Law
When he left the Treasury, he gave a valedictory lecture, noting that in his early years there, everything seemed to get worse, and drawing the moral: 'Even if you have a badly functioning economy — which in many ways we still do — it is always possible to make it worse by government initiatives.' These words should be written up in Westminster and in Whitehall, in letters of fire. When Sir Peter has sorted Camelot out and inspected his portrait, he might make this his next non-retirement job.
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