BUSINESSES SOME SLACK

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02 NEWS MONDAY 6 FEBRUARY 2017 CITYAM.COM TOP PUNNING While millions watched the Super Bowl last night, Brits on Twitter were asked to select their favourite #superbowl THE CITY VIEW Corbyn is wrong: The system isn’t rigged JEREMY Corbyn began the new year embarking on something of a rebrand, with aides describing how the Labour leader would move to emulate Donald Trump. This wasn’t about any policy shifts, rather the strategy was to borrow from the US President’s playbook of straight-talking, honest-Tweeting, anti-establishment positioning. It’s an approach that sees Corbyn and his top team attacking what they describe as a rigged economy and a rigged political system. In Corbyn-speak, the sinister forces behind this apparent manipulation are described as “the people who run Britain” and “the powerful”. These new rhetorical flourishes can be heard whenever a member of Corbyn’s (dwindling) team of loyal shadow ministers appears on Question Time or makes a speech. It’s supposed to present Labour as some kind of insurgent force, committed to bringing down the pillars that uphold a cosy, corrupt elite. The problem is this tactic represents a blunt and misleading approach to a complex range of issues. It isn’t the first time a political party has favoured simplicity over nuance, but for Corbyn’s Labour it feels more like a retreat to easy rabble-rousing rather than a coherent new proposition based on sensible policy analysis. Yes, certain sectors of our economy are mired in the bog of corporatism, stagnating in a lack of competition and a web of complexity (one thinks of the energy market and rail travel as examples that Labour rightly highlight) but the solution is not to try and convince the electorate that a handful of individuals (“the people who run Britain”) are colluding to keep them downtrodden, screw the poor and – in Corbyn’s words – “line the pockets of their friends” while they’re at it. This caricature of ‘us versus them’ – the people versus a rotten establishment – doesn’t work in a country that saw hundreds of thousands of new businesses launch last year, and in which the incumbent government enjoys a record poll lead. Sectors of the UK economy may have their problems (some of which require government attention, many more of which are exacerbated by it) but the biggest attempt to rig the system that anyone’s proposing is Corbyn’s own idea of borrowing £500bn to build a state-run bank and direct economic activity from Whitehall. Follow us on Twitter @cityam Labour has simply retreated to easy, rabble-rousing rhetoric 250k public sector staff can be replaced by robots JULIAN HARRIS @hariboconomics ONE QUARTER of a million public sector workers should be replaced by robots, according to a provocative report published this morning. The public sector has the chance to become “the next Uber, using the gig economy to employ locum doctors and supply teachers,” the think tank Reform says. The number of public sector workers accelerated under Labour, to more than 6m, but has steadily declined since 2010 – partly due to austerity measures as the government tries to reduce its huge annual deficit. However, Reform – a Westminster group that encourages market-based thinking in the state sector – says the numbers can continue to fall. It THE BRITISH Museum used the hype surrounding America’s biggest sports event to plug its superb owl collection last night, asking followers to pick their top feathered friend. Hundreds retweeted the post and a forlorn-looking owl sitting on a branch lit by moonlight won the vote. argues public services will improve if technology is used to shake up the civil service and other parts of the state sector. “Websites and artificially intelligent chat bots will remove the need for over 90 per cent of Whitehall’s 137,000 administrators by 2030, saving £2.6bn a year,” Reform says. “Similar approaches will replace 90,000 NHS administrators and 24,000 GP receptionists.” In areas such as the police and the NHS, technological change could reduce the burden of bureaucracy for frontline staff, improving morale and lifting the quality of service, it says. Alexander Hitchcock, who co-authored the report, said: “Such a rapid advance in the use of technology may seem controversial, and any job losses must be handled sensitively. But the result would be The public sector must become more flexible, a top think tank says public services that are better, safer, smarter and more affordable.” The think tank also argues that such changes would make the public sector workforce more diverse. On top of technological reforms, it says less emphasis should be placed on degrees when recruiting. FINANCIAL TIMES THE TIMES THE DAILY TELEGRAPH THE WALL STREET JOURNAL NEW BANK OF ENGLAND DEPUTY TO BE ANNOUNCED The Bank of England’s new deputy governor for markets and banking, to replace Minouche Shafik who leaves this month, will be announced this week by the Treasury. The new deputy governor will lead the BoE’s work on banking, payment systems and financial markets at a crucial time for the City, as financial services companies work out the implications of Brexit. BUSINESS LEADERS SLAM INDUSTRIAL STRATEGY Britain’s new industrial strategy has been attacked by some of the City of London’s most senior figures, with one urging the government to “get out of the WHAT THE OTHER PAPERS SAY THIS MORNING way” and others insisting the state cannot hope to “pick winners” more effectively than commercial investors, in an online debate among FT City Network members. £200M BREXIT BOOST FOR PHARMA AND AEROSPACE A hard Brexit could boost the pharmaceuticals and aerospace sectors by more than £200m, according to a study that reveals a surprise silver lining to leaving the Single Market. Analysis by Bain & Co suggests that a hard Brexit could improve their profit margins because they would be protected from the introduction of tariffs. FOREIGN PATIENTS TO PAY UP FRONT FOR NHS CARE Hospitals will be legally obliged to charge migrants and other foreign patients before they are treated in an attempt to curb health tourism in the NHS. BOOKER WOOS SHOPS OVER TESCO MERGER Booker bosses will launch a charm offensive this week in an attempt to convince Britain’s shopkeepers of the merits of its shock £3.7bn Tesco merger, amid rising concerns that the deal will strangle competition. They will address thousands of Premier convenience franchise owners at Newbury Racecourse on Wednesday. VAUXHALL CHIEFS FACE GRILLING OVER ZAFIRA FIRES Vauxhall executives will be put on the spot by MPs today and told to explain the company’s response to a fault in their cars which causes them to burst into flames. TRUMP SPACE POLICY HEAVY ON PRIVATE SECTOR The Trump administration’s evolving space policy is expected to foster private investment, while likely favouring relatively short-term goals such as sending astronauts back to orbit the moon by 2020, according to industry and transition officials. BANK REGULATION CHANGES COULD RETURN $100BN The six biggest US banks, including Citigroup and JP Morgan, could potentially return more than $100bn (£80bn) in capital to investors over time through dividends and share buybacks if the Trump administration succeeds in a push to loosen bank regulation.
CITYAM.COM MONDAY 6 FEBRUARY 2017 NEWS 03 Brexit boost as Bank of America Merrill Lynch eyes up new offices HELEN CAHILL @HelCahill BANK of America Merrill Lynch (BAML) has started a search for new office space, brushing off uncertainty over the City of London’s future following the Brexit vote. The US banking giant is currently located near St Paul’s Cathedral, but as its lease expires in 2022, the bank has started looking at other buildings that could house its 1,200 bankers. It is thought property agents at CBRE are involved in the survey for sites of around 500,000 square feet in size. BAML is currently gathering information on potential new properties because it needs to make a decision on whether or not it stays in its current location by 2020. It started its property search before the EU referendum in June last year. Even if the bank chooses to roll over on its lease, it will need to have up-todate information on the commercial property market to help it in negotiations with its landlord. The news comes after it emerged that Lloyd’s of London is making plans to ensure it maintains its access to the EU’s single market. Lloyd’s has said that it has been considering a subsidiary model and that possible locations for the move include Dublin, Paris and Frankfurt. The firm’s boss John Nelson said in 2016 that the company would leave the City if it didn’t get passporting rights and that the firm has been making contingency plans because “it won’t be Lloyd’s losing out, it will be the UK”. FLOPSHOP The Arcadia Group brand suffers sales drop over Christmas period SIR PHILIP Green’s fashion brand Topshop suffered a like-for-like sales drop of nearly 11 per cent over Christmas, the most important shopping period of the year. The Sunday Times has reported that sales across the Arcadia Group as a whole, which includes Dorothy Perkins, Wallis and Evans, fell by about 6.5 per cent. RBS bonus pot overtaken by Lloyds this year HELEN CAHILL @HelCahill LLOYDS Banking Group’s bonus package will be more generous than RBS’s this year for the first time since the 2008 financial crash. RBS has set aside £340m for bonuses this year, according to Bloomberg, but Britain’s other bailed-out bank, Lloyds, is planning to share out £390m. The bonus plans reflect the differing fortunes of the two banks. Lloyds has returned to profitability, allowing the government to cut its stake to less than five per cent, but RBS is still battling misconduct issues. Last month, RBS was hit with a multi-billion pound charge for misselling mortgage-backed securities in the lead up to the financial crash. RBS chief executive Ross McEwan has said bonuses will remain on a “downwards trajectory”. Lloyds and RBS declined to comment. Fund managers to crack down on executive pay WILLIAM TURVILL @wturvill A GROUP of fund manager giants has agreed to club together to combat excessive executive pay. Aberdeen Asset Management, M&G Investments and Standard Life Investments were among 13 firms involved in the recent pact. The agreement came after an 18 January meeting of the Investment Association, which came around the time BlackRock, the world’s biggest fund manager, indicated it would not stand for excessive pay at FTSE 350 firms. The fund managers agreed to the plans in the context of Theresa May’s pledge to crackdown on fat cat pay, with the investors fearful this intervention could prevent UK companies from attracting global talent. May set out proposals to overhaul executive pay at the end of November. The corporate governance reform consultation closes on 17 February. The Sunday Times reported that 150 FTSE executives are currently negotiating pay deals that will be subject to shareholder votes in the next few months and that a “considerable number” are flagged to be rejected. The Investment Association said: “We engage with our members on a range of corporate governance issues and we will be responding to the green paper in due course.” Old Mutual Asset Management, BMO Global Asset Management, Columbia Threadneedle Investments, HSBC Global Asset Management, Investec Asset Management, Royal London Asset Management, State Street Global Advisors and Vanguard Asset Management were also named as firms present at the meeting. Last month, BlackRock chief executive Larry Fink warned companies his firm will use its weight to vote down unreasonable pay levels. The Pensions and Lifetime Savings Association also published new guidelines last month, indicating a tougher stance on the committees that sign off remuneration policy. FTSE 100 boards lack experts with cyber security know-how Tiffany loses some sparkle as chief exec abruptly steps down LYNSEY BARBER @lynseybarber JUST a handful of FTSE 100 companies say they have a special technology or cyber security expert on their board, despite the growing risk to business, new analysis has revealed. Only five per cent of board level individuals with such direct expertise are disclosed, Deloitte’s Cyber Risk Reporting study found. “In light of high profile breaches, companies understand more than ever that the event of a cyber attack is not a question of if, but when, by whom and by what degree,” said Deloitte UK’s head of cyber risk services Phil Everson. Only 64 per cent of firms disclosed that the board received at least one report a year on cyber security, while just 18 per cent did so on a “regular” basis, although this varied from monthly to biannually. Meanwhile, only 27 per cent of of Britain’s top businesses clearly identified a person or team with responsibility for cyber security. Some 87 per cent of firms said cyber risks were one of their principal risks. SCOTT DISAVINO US JEWELLER Tiffany & Co yesterday said Frederic Cumenal has stepped down as chief executive officer, effective immediately. The retailer said its chairman and previous CEO, Michael Kowalski, would serve as interim CEO while the board of directors seeks a new CEO. Kowalski will continue as chairman. Last month, Tiffany said its sales during the November-December holiday period were “somewhat lower” than it had expected, hurt by lower consumer spending and a sales drop at its flagship store in New York. Reuters
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BUSINESSES SOME SLACK

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