In the middle of the political storm over Brexit, last week’s row between Labour and the Confederation of British Industry came as a distraction. While the big issue of the country’s future trading relations with its biggest economic partner should have taken priority, the two sides were instead at loggerheads over nationalisation.
The CBI was caught red-handed with a cheap political stunt when it claimed that Labour’s nationalisation plans would cost an “eye-watering” £196bn. In a piece of analysis unbecoming of the nation’s leading lobby group, it trumped up the figure by including spending plans that are not official Labour policy.
The CBI included purchasing existing railway rolling stock, to the tune of £14bn, even though it later admitted it knew this was wrong, in an email exchange with Labour that was later seen by the Guardian.
So far Carolyn Fairbairn, the CBI’s director general, has refused to apologise to the party and says she stands by the £196bn figure. To regain trust, she should concede a mistake has been made. Future interventions could be undermined by a lingering suspicion of the lobby group’s methods.
While the storm that raged between Britain’s leading business lobby group and Her Majesty’s official opposition was reminiscent of an unedifying he-said, she-said playground tiff, important questions were nonetheless raised.
That the CBI felt the need to trump up its analysis in the first place shows just how scared major companies are of Jeremy Corbyn’s party. It also reveals that the lobby group is out of touch with public opinion, as support has grown for renationalising the railway network and utilities companies.
A decade on from the financial crisis, with average wages no higher than they were before the crash, people have had enough of big companies charging a king’s ransom for their products and services, while doling out huge sums of money to their senior executives and shareholders.
Despite this, Labour’s reputation in the City and in boardrooms up and down the country is not ideal for a government in waiting. Many company bosses worry that Labour would damage the British economy as much, if not more so, than Brexit. Corbyn is regularly asked at business conferences if he dislikes people getting wealthy from running a company. It is a concern the party must address to win over swing voters who will be vital in the forthcoming election.
Labour also still suffers from a degree of mistrust about its ability to safely manage the public finances. The accusation that Labour was reckless in the run-up to the financial crisis might well be misguided – paying nurses well and building schools was not the reason for the banking crash – but the Tory propaganda since 2008 still sticks in the minds of many.
The tide is turning against austerity. The Conservatives have become profligate and are recklessly throwing money about to win votes in an upcoming election. But in a straight fight about who can be trusted to raise spending the most, Labour still needs to make greater efforts to convince the public.
Talking more openly about its plans for renationalisation would help to allay public concern. If the policy is as popular as the party believes, then it should have little to fear. If the CBI got its numbers so badly wrong, what is the accurate cost and benefit as Labour sees it? The party should spell this out in detail as a matter of priority.
There are legitimate questions about Labour’s spending plans. About the impact nationalising large swaths of the economy might have on business investment, or about the costs and benefits. But the row last week was not a constructive one. The quality of debate badly needs improving on both sides.
Charting Thomas Cook’s course on to the rocks
The inquiry into the demise of Thomas Cook continues this week, after an opening evidence session in which MPs on the business select committee didn’t learn a great deal.
Former boss Peter Fankhauser, who gave evidence last week, insisted he hadn’t just taken the job for the hefty salary and bonuses but, after 20 years with the company, truly believed he could turn around the business he loved around.
Ultimately, he explained, it was loaded with too much debt to survive one-off shocks, such as a European heatwave that led to a plunge in bookings. The picture painted by Fankhauser and his fellow board members was of a cruise liner that was far too close to the iceberg by the time he got his hands on the tiller.
On Wednesday, MPs will have the chance to quiz the executives who supposedly plotted that course.
Manny Fontenla-Novoa was in charge from 2007, when German-owned Thomas Cook merged with London-listed MyTravel. The tie-up looks catastrophic in hindsight, particularly after the value of MyTravel was written down by £1.1bn earlier this year.
What followed doesn’t look too clever either. Fontenla-Novoa oversaw an acquisition spree that included multimillion-pound takeovers, as well as a merger with the Co-op’s high street travel agency business, even as the internet hoovered up booking volumes.
MPs will want to know why Fontenla-Novoa pursued such a strategy and whether he feels responsible for the demise of a 178-year-old business. They will no doubt focus on his handsome rewards too. He racked up some £17m in pay and bonuses during his time at the tour operator. Will any of that be offered up by way of penance?
His successor Harriet Green, a somewhat quirky character, will also give evidence. Green was paid close to £10m to slash the business to the bone after a financial rescue in 2011, yet somehow it didn’t work. But her views, as the bridge between the penultimate chapter and the last, could be key in shaping the inquiry’s findings.
Superdry boss will have no one to blame but himself
So Mr Superdry is staying on for more than one season. After pulling off one of the most audacious boardroom coups of recent times it always seemed unlikely that Julian Dunkerton, the fashion brand’s co-founder, would then hand the reins to someone else.
So it should have come as no surprise to anyone that the company has made Dunkerton’s temporary appointment permanent, giving him a two-year contract to turn the business around. Chairman Peter Williams trumpeted his “clear vision” and said his “creativity, ambition and leadership” would be crucial to reboot the company. Also, let’s face it, the queue of candidates that wanted to work alongside Dunkerton in the boardroom can’t have been that long, given the systematic dismantling of former boss Euan Sutherland at his hands.
During the bust up with the previous board, Dunkerton set out a clear alternative vision for the retailer, which had suffered a profits collapse amid a sea change in shopping habits and waning demand for its brightly coloured hoodies and T-shirts, emblazoned with Japanese script. At the start of 2018 the share price was £20 but today it is languishing at £4.54. No one has felt that pain more than Dunkerton, who has seen more than £200m wiped off his near 20% stake.
Dunkerton, who started out selling clothes on a Cheltenham market stall, launched Superdry with the designer James Holder in 2003 and he has got the band back together in a bid to rediscover the company’s “fashion edge”. Dunkerton recently told investors he was making an impact and thought he had done enough to “save” the key Christmas period, which was a disaster last year. We will soon find out if he has done enough and come 2021, if he hasn’t rekindled the Superdry magic, he will have no-one to blame but himself.
