It’s tough being a proper lefty nowadays. Things have got so post-modern. Are you meant to stand up to the Queen, for example, doing a Jeremy Corbyn vanishing act? Or pitch up at Buck House for a two-night stay plus banquet, the preferred routine of the head of China’s Communist Party, one Xi Jinping?
Confusing, isn’t it? So, no surprise that John McDonnell is having so much trouble working out what he thinks about anything. The shadow chancellor took a bit of flak last week for his handbrake turn on George Osborne’s so-called “fiscal charter” — an admittedly daft bit of legislation forcing the government to run a surplus in “normal times”, whatever they’re supposed to be. And, now, he’s changed his mind over how to treat an old lady almost as well-known as Her Maj: the Bank of England.
Not so long ago Mr McDonnell was an advocate of stripping the Bank of its independence. Now he’s writing in the Financial Times that “the operational independence of the monetary policy committee is sacrosanct”, which looks a change of tack. Indeed, his new thinking’s not exactly firebrand: just reviewing the MPC’s remit, including such things as the 2 per cent inflation target that it keeps missing.
True, if the Bank changed its targets as often as Mr McDonnell changed his mind, there’d be chaos. But at least he’s having a go at improving one unproductive corner of the British economy — an MPC that hasn’t made a single change to interest rates for 79 months. Maybe it would have to think a bit harder if there was a tweak to the target, even allowing for George Osborne’s clarification in 2013 that the MPC isn’t obliged to speed inflation back to 2 per cent if a slower route’s better for growth. And, perhaps someone could invent a target that also accounted for the asset inflation that’s come with QE.
Nominal GDP targeting is something even Mark Carney toyed with before dropping it. So Mr McDonnell’s raciest idea is simply to have more regional or Scottish representation on the committee to add a bit of northern grit; all very well, but the MPC’s meant to be setting rates for the whole country, anyway. In short, Mr McDonnell’s thoughts on the Bank don’t seem very radical at all. Maybe he’s really only as left wing as President Xi.
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Sour milk
At last, a rival to Monty Python’s cheese shop sketch — and funnier, too, unless you’re a Dairy Crest shareholder.
Mark Allen, chief executive of the company behind Cathedral City cheddar and Utterly Butterly has made his life easier by flogging two thirds of the business: Dairy Crest’s loss-making milk operation, sold to Müller for a net £65 million. Sure, thanks to the Competition and Markets Authority, that’s £15 million less than the full-fat £80 million Mr Allen was promising last November. But who cares about that? He’s now in line for a “one-off transformational incentive award” with a face value of £1.2 million — a share bonus already causing an agricultural whiff among investors even before the cut-price deal.
What’s the bonus for? For him being so “transformational”, apparently, plus having the grace to stick around at the smaller company, what with Mr Allen’s leadership being “critical to the business”. Was he threatening to leave, then? Hardly. He’s been there since 1991, the last eight as chief executive. And, just to be clear, his award is on top of existing bonus and long-term incentive schemes.
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Mr Allen, who earned £941,000 last year, maintains he deserves his extra three-year share award for selling a business that’s lost £100 million since 2011. Indeed, he says he’s added £300 million to Dairy Crest’s value just by doing the deal, while the size of his award depends on share price performance. But getting a fat bonus just for doing his job? Talk about milking it.
Exchange and mart
Not everyone’s glued to the stock exchange screen at 5.43pm on a Friday evening. So no wonder some people missed the latest news on Geoff Unwin and his decision to once again become the chairman of Xchanging. Despite his £160,000-a-year fees, he’d had a go at passing on some of his duties to senior independent director Ian Cormack, notably the bit of the job that involves evaluating bids for the outsourcing company. He’d ruled himself out because it might have interfered with a potential matching share award for him worth at least £433,450. That was a bit awkward, what with Xchanging being on the receiving end of a 160p-a-share cash bid from Capita and a possible 170p one from buyout firm Apollo.
Mr Unwin finally worked out that he wouldn’t get his matching shares because neither deal had a hope of closing before the December 2 deadline for the award, as pointed out here last week. Glad he got there in the end.
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Goodbye-ee
Did HSBC’s directors spend too much time watching Auf Wiedersehen, Pet? They’re floating the idea of relocating to Dusseldorf, home to some impressive building sites and not much else. It’s the latest idea from Andreas Schmitz, chairman of the supervisory board of HSBC in Germany. He reckons that would be the ideal place should Britain leave the EU, the sort of nonsense you’ve come to expect from HSBC lately. Since it first started banging on about upping sticks to Hong Kong, Britain has cut the bank levy, partly dismantled the ringfence and done a U-turn on the “guilty until proved innocent” rule for senior managers. If the bank still wants to leave after that, let it go. Auf wiedersehen and all that.