BAD NEWS

BUSINESS COUNCIL FOR BRITAIN - POTENTIALLY VERY BAD NEWS
What on earth is in Gordon Brown's mind, - or has he been misled by his advisers?

Mr Brown is setting up a Business Council for Britain to advise on competitiveness and other matters of weighty import. Good-oh, we might say - about time he stopped making aspirational speeches about a high tech, world-leading Britain, so far detached from the realities of life as to make him a figure of fun.
Who is he inviting to advise him on these crucial topics?

Sir Alan Sugar, who is the star of The Apprentice, a TV show featuring the ritualistic beating up of potential employees. Sir Alan is also founder of Amstrad, a company that never quite made it (and has now been sold) for the usual British reasons of underinvestment and idiosyncratic management - maybe of the sort demonstrated in 'The Apprentice'. Such behaviour seldom builds well-founded companies.
Damon Buffini, boss of Private Equity company Permira and staunch defender of not paying tax.
Sir Terry Leahy, CEO of retailer Tesco, one of Britain's few truly world-class companies.
Stuart Rose, CEO of Marks and Spencer, who has led a so far highly successful turn-round of that company.
Sir John Rose of Rolls-Royce, CEO of one of Britain's best and last large quoted technology companies.
John-Pierre Garnier, CEO of GlaxoSmithKline, the UK's largest pharma company, a business with a slightly dubious R&D record. Mr Garnier, who is based in the US, attracted a great deal of publicity when the GSK remuneration committee attempted to insert a Golden Parachute clause that would pay him more than $20 million in the event of his employment being terminated.
Tony Hayward, CEO of BP, replacement for the ill-fated lord Browne.
Mervyn Davies, Chair of Standard Chartered bank
Sir Rod Eddington, director, Rupert Murdoch's News Corporation. New Labour has been in thrall to Murdoch since the early days of Tony Blair.
Sir John Parker, Chair, National Grid.
Arun Sarin, CEO, Vodafone
Marjorie Scardino, CEO, Pearson.
Sir Richard Branson, founder and chair of the Virgin Group.
Sir William Castell, Chair, Wellcome Trust.

What can we read into this?

Mr. Brown seems to believe that British business mainly comprises big quoted companies, banks, that part of the investment industry that has little to do with real entrepreneurship and specialises in value extraction, not value creation, and Sir Alan Sugar, whose greatest (and genuine) success is in entertainment.
The two exceptions to this rule are Sir Richard Branson, a genuine entrepreneur, who once took his company private because of the restrictions of the investment markets and Sir William Castell, of the Wellcome Trust, which invests in human and animal health research.
The make-up of the council surely tells us a lot about Mr Brown (or maybe his advisers'; we could be kind and say that Mr Brown was probably too busy at the time to pay proper attention) assumptions about business in Britain. It completely ignores the fact that the bulk of the UK economy is made up of non-quoted and smaller companies, with family companies comprising a considerable portion of this. It also seems to ignore the fact that some of the best and healthiest enterprises in Britain are not large quoted companies, but partnerships, co-operatives and privately owned businesses. Mr.Brown has chosen his wise people (mainly men) almost exclusively from that part of the industrial economy that is manifestly dominated by the City and which has been a killing ground for innovation and enterprise.
He has completely ignored representatives of customers and employees, the only sources of genuine value creation.

What about:

Smaller businesses, now the bedrock of the UK economy?
Genuine value investors, like Warren Buffett, who might explain to him the differences between real investment and speculative asset stripping?
Unfortunately, there are few of these in the Ciry, so he would have to look across the Atlantic.
Genuine venture capitalists like Crispin Tweddle of Piper Trust, who invest to help smaller companies grow, and an investor in technology start-ups? As this is a very rare bird in Britain, Mr. Brown might also have to look to the US, where there are plenty.
Family companies, many of which represent real long-term business building?
Partnerships and co-operatives, like John Lewis, Scott Baader and the Co-Op Group?
Social purpose enterprises, now representing a very successful growth sector? Tim Schmidt of the Eden Project, Liam Black of the 15 Foundation or Steve Sears of the ECT Group could provide enlightening perspectives on dynamic enterprises with a social purpose.
The business education sector, maybe Warwick Business School and the School for Social Entrepreneurs?
Public sector enterprises, so sadly abused by this and previous governments, but brilliantly successful providing high quality services and customer choice in some other countries?
Representatives of employees, the real value creators - including the Trades Unions, which are beginning to look like the last bastion of resistance to the total dominance of UK industry by the financial markets?
Last, but not least, representatives of customers, especially the long-suffering customers of the financial services and banking industries, who have been exploited disgracefully for decades.

The Business Council for Britain membership generally represents exploitation and failure.

Despite the undoubtedly excellent track records of individuals such as Marjorie Scardino, Stuart Rose, Terry Leahy and John Rose, their companies are members of the FTSE 100. A quick glance at the average performances of FTSE 100 companies over the last 20 years (See FTSE 100 in this site) indicates the underperformance, underinvestment and unjustified executive reward that has characterised large British companies. To top it all, FTSE companies have been sold off to foreign competitors on a scale that makes any threat to sovereignty from Brussels look like a gnat-bite.
Damon Buffini represents a form of investment that is essentially characterised by buying companies, stripping out assets, trimming staff, loading them with debt and siphoning off the bunce into the hands of a small number of people. Private Equity as we know it does not take risks with venture start-ups, high technology or nurturing smaller companies.
Last, Amstrad is an example of a national malaise - the inability of UK ventures to negotiate the difficult transition from entrepreneurial trader to company with stamina and substance.

Why not back enterprise, hope and vision?

If British business, swathes of which has already been sold, is to have any future in the modern world, there is a need to rise above the tired old models represented by the City and big companies. They have become sterile and exploitative. Gordon Brown's Business Council represents the rather inglorious past of UK investment and industry, not hope for the future.
The future has to lie with:

a vast increase in genuine venture investment, especially in technology,
socially responsible capital,
different forms of enterprise, like partnerships, social purpose companies and
support for the vast range of smaller businesses owned and run by their employees, families and individuals.

What Mr. Brown needs is good advice and challenge on how to grow a new generation of successful British enterprises, free of the ignorance and greed of the current investment markets.
Maybe Mr. Brown plans another body to advise on the future.
Because if this Council represents Gordon Brown's only ideas on the future of British business; God help us all!!

THAT'S RICH, MR HAGUE!

Conservative Foreign Affairs spokesman, William Hague, has been belabouring the government about holding a referendum on the EU Treaty amendments, on the grounds that we are handing matters that affect national interests to an undemocratic institution.
He should be in a very good position to speak of another matter that is outside the control of UK democratic institutions. We refer of course of the London-based financial markets, substantially owned by huge global banks - most of them foreign owned and certainly regulated by no-one.
As for really bad news, going on right under our noses, what about the sale of large swathes of UK industry to foreign buyers? Most of our energy producers and distributors and nearly all our larger science and technology companies have been disposed of in this way - to companies that owe the UK and its democratic institutions nothing. Further negative trends are the arrival of a large number of companies to the FTSE from countries whose governments owe little to democracy and whose business practices are often alien to the UK.
Nevertheless, this seems not to deter some members of the House of Lords from accepting 'fig leaf' directorships in order to bestow a veneer of respectability to companies whose actions they cannot influence outside the UK.
It would be good to hear Mr. Hague's views on this creeping subversion of British sovereignty.
For further insights, see Webs of influence, politicians and the finance industry and A lord on every board in this website.