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Ministers clear the state
slate
Tuscany is beckoning and our elected leaders have started clearing
their desks ahead of a few weeks by the pool with nothing but the BBC World
Service and day-old English newspapers for company. Like most people, as
Cabinet ministers check the list of things they have to do, they come across
little Post-it notes that they set aside months ago with things they meant to
do such as "ban foxhunting", "push on with welfare reform" or "bash the
mortgage lenders" written in fading Biro.
So there is a sudden emitting of policy, most of which appears to have
been dreamt up on the hoof. Alas, much of this has quite a large effect on
business.
First to the lectern is Stephen Byers. To say that the Trade and
Industry Secretary's messages on executive pay are confused is like saying the
English cricket team is inconsistent. Only a week ago the Tyneside firebrand
was threatening hell and damnation on utility bosses if they dare raise their
pay (though the Byers idea of hell - a price freeze - would actually have been
a walk in the park for utilities forced by both competition and regulation into
ever more dramatic price cuts).
Yesterday Byers was making Tim Melville-Ross sound like Nye Bevan as he
argued that the best managers deserve the best rewards. The sting in the tail,
if it could be called that, is to demand that executive pay packages are put to
the vote each year. Unfortunately, as the corporate governance expert,
Manifest, will point out when it publishes annual survey of voting
trends next month, there is a large body of apathy among shareholders and
voting levels are still below 50 per cent. Byers says companies should
encourage their shareholders to vote on these matters. Perhaps. But there is
still a large amount of City inertia to overcome.
As Byers was sitting down, Gordon Brown was standing up. He was
attacking mortgage lenders for not passing on the full effect of cuts in
interest rates. Like his attack earlier this year on high prices on the high
street, this is a populist and maybe worthy target, though one should point out
that mortgage rates are the lowest they have been for a generation. However, it
is not an area where regulation will help much, unless it promotes greater
transparency. Also one wonders whether this is the sort of thing that the
Chancellor of the Exchequer should be bothering himself about too much.
Finally expect a little turn from Brown's deputy, Alan Milburn, later
this week. He will decree that the idea of a Private Finance Initiative
investment bank is dead. Instead he will reveal a "project manager", which will
lend money to local authorities to fund the advice needed to bring PFI schemes
to a financial close, and it will also have the power to take equity stakes and
provide higher-risk debt.
Call us old-fashioned, but that sounds remarkably like a bank, Alan.
And no amount of pre-holiday spin can hide that.
The Times
20 July, 1999
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