should be retained as a public corporation, running a public service monopoly. I am reinforced in this view by the words of the most extreme Liberal I have ever known. "Extreme Liberal?" I hear you cry? Yes indeed. He was a old friend of my father's, Carmarthen MP David Hopkin Morris, a Liberal who rose to become Deputy Speaker, Chairman of Ways & Means, in
the 1950s. Hopkin Morris was a real Old-Testament figure, with shoulder-length white hairand a pretentious full-length black velvet cloak. "Roger - " he once boomed to me - "the only things the State should run are - " (he had the infuriating habit of pausing deliberately, to attract attention and savour the moment ) " - are the Police and the Post Office". Faced with the Welfare State of post-WW2, he rejected it all - state education, the NHS, social benefits, no good would come of them. Only the Police and the Post Office escaped his old-liberal anarchism. Communications, and law and order - they represented the proper role of the State.
I moved on to become a professional manager, a socialist managing director, convinced of man's capacity to improve his lot by imaginative and astute organisation, legis lation and public intervention. I rejected Hopkin Morris' old Liberalism, which still infects
the LibDems. But on the Post
Office, I agree with him.
Small Business?
No thank you
Many a true word is spoken light-heartedly. And the Halifax has been rightly pilloried for the action of its Manchester Manager David Stringer, who left a training flip-chart in full view of the public. It explained to eager young Halifax management trainees, that when going for new accounts - - "We do not want taxi-drivers,window-cleaners, stall-holders, business start-ups, businesses dealing in coins"
He was duly reprimanded, and the Halifax rightly ridiculed. But he spoke the truth. Having spent six years of my life promoting new-business formation in my home city of Swansea (1979-1985) I know his words to be true. The big banks (of which platoon the Halifax is now, sadly, a member) simply cannot afford to service small businesses. They make a song-and-dance of doing so, in all the TV ads, purely as a loss-leader and to earn Brownie points. But
tinkers,
tailors and candlestick-makers cannot possibly maintain the major corporate
bankers at the income-levels to which they have become accustomed. Nor can they
afford solicitors, or chartered accountants. Some Banks now actually charge small
businesspeople for the dubious advantage of meeting with a bank-manager in person...
We are in the presence of yet another paradox. It is only the public sector which can provide the support services (advice, small-grants, suitable premises) which the start-up business so desparately needs. In Wales, local authorities and the Welsh Development Agency are the only ones to whom the business starter can turn. The Banks are broken reeds - they are now, and they always have been. They have other, bigger, corporate fish to fry. I wish David Stringer, the Manchester Halifax Manager, the very best in his future career. He should be promoted, not reprimanded.
But
next
time, he should remember to pull down the blinds.
Jungle News IV
This special edition of News from
the Corporate Jungle comes from Italy - you will know by now that I regard EU
matters as "Home Affairs", and I want to see a separate Secretary of State for Europe
appointed, leaving the rest of the "foreign" world to Jack Straw. There's nothing
foreign to me, about Italy. It's just a province of our common European home.
And the trusty FT carries an ordinary report of an Italian Administrative
Court ruling (just as if it were Highgate Magistrates Court..) which casts
light upon the bewildering entanglement of the corporate
thicket. Have you got a moment?
Let me explain.The question was "Should Pirelli, in filing its 2001 Accounts with
the Italian Companies House, be required to show on its Balance Sheet the
debts of Olivetti?"
A simple
question, on the face of it. But it lifted the corner of the corporate blanket
for a moment, to reveal the turmoil beneath. This is how it worked.
Pirelli planned to report a respectable 2001 profit of £170m. But it turned out that
they had a 60% subsidiary, Olimpia, which normally would have to be accounted-for along
with the parent company, in a single consolidated Balance Sheet. However, Olimpia
in turn owned 27% of Olivetti - and therein lay the problem. Because Olivetti in
turn owned 55% of Telecom Italia, and that company had huge losses. Again, applying
"normal" accounting rules, those losses would have to be shown in Olivetti's 2001
Accounts (with 55% of Telecom, Olivetti clearly controlled that company).
But that would have been a consolidation too far. Pirelli argued that although
they did own 60% of
Olimpia,
that company had a special constitution which allowed minority
shareholders a veto (clever stuff, huh?), therefore Pirelli
did not really control Olimpia, and the losses should therefore not
be shown in the Pirelli balance-sheet.
The Italian Court was being asked to rule on whether or not Pirelli had
successfully evaded all normal, honest, accounting principles. The Court decided
that they had, and that the ruse was legal. Companies House plans to
appeal. But here's the scary bit. If Pirelli have to include in their
Accounts "their share" of the Telecom losses, it would - "at a stroke" - transform
their £170m profit into a £210m loss. That's the scary world of Enron. Which is
the reality? Have you got any Pirelli shares?
Earlier >> -
Jungle News III
Jungle News II
Jungle News I
Not reached today, but to follow - housing, social housing, planning for more houses - continuing disarray on Regional
Devolution - the resurgence of trade union militancy - blacklisting tax havens - watch this space
What do you think? Drop me a line.
Back to today's
Home Page
Consider the evidence. The awful fragility of the corporate sector has been demonstrated by the Enron collapse, which will run for months. World insurance systems are having to held together by socialist guarantees, from Governments. World opinion is hardening against the abuse of corporate power, and the private manipulation of public institutions - in America, Europe, the World Trade Organisation, the International Monetary Fund. As the long investment boom slows down, millions are coming to realise that their private pensions are at risk, and that a decent basic state pension would be the better solution after all. Most Londoners would prefer the Underground to remain a public corporation. They also doubt the wisdom of allowing the profit motive to govern the safety of their crowded skies.