Horton was forced to resign, but his parting was the sweetest of sorrows. BP's redundancy package was worth £1.5 million. Almost immediately, the Government, recognising a like spirit, hired him and made him chairman of Railtrack, even though he cheerilyadmitted he knew little about railways. Once in office he helped turn a resolvable dispute about the pay of signalworkers into a national strike by offering his staff a 5.7 per cent pay rise, which the unions showed every sign of being interested in, and then withdrawing it.
Despite it all, Horton is still in his post; still drawing £150,000 for a three-day week; and still helping to implement a rail privatisation programme which virtually everyone outside the Cabinet believes will cripple "public" transport just at the moment when there is general recognition that Britain's car culture is unsustainable.
Mr Horton makes a brief appearance in Will Hutton's powerful, clearly written and angry analysis of Britain's decline, as an example of how commercial mistakes by executives (whose real pay has risen by 50 per cent in a decade) are not punished but rewarded for being loyal supporters of what Hutton calls the "Conservative supremacy".
It is a familiar theme these days when even right-wing newspapers feel obliged to be outraged by the behaviour of the managers of privatised utilities. What lifts Hutton's analysis of the stock market, banks and Treasury above the mundane and turns it into compelling synthesis is his central argument that Britain's lack of accountable political institutions and its economic failure are linked. Charter 88 meets the new Keynsian economics and the result is, to this reader at least, a depressingly accuratepicture of how we have ended up with one in four people unemployed, few companies able to compete in the international market for new technologies and a public sector where access to what were once regarded as basic services depends increasingly on wealth.
The centralised, pre-modern British state, Hutton argues, unconstrained by devolved assemblies, a bill of rights or a written constitution, was captured in 1979 by a Conservative Party interested in the needs of the "gentlemanly capitalists" of the City to get the highest return, rather than the needs of industry to secure low-cost, long-term investment. Finance was released from credit and exchange controls while the principles of the then fashionable belief in the free market were brought in to privatise every aspect of public life from health to the provision of pensions. Mrs Thatcher's determination to implement her programme could be turned into practice because there was no constitution or intermediate bodies to stop her, and because it fitted wi th the prejudices and predilections of a section of the English ruling class. Their attitude to investing in British industry was summed up by Lord Revelstoke of Barings, who, when asked to finance a coal company in 1911, said: "I confess that personally I have a horror of all industrial companies and that I should not thinking of placing my hard-earned gains in such a venture."
In Germany, Japan and even the United States, banks, often based in the regions rather than the capital, develop long-term relationships with companies so they can invest in new technologies and expand market share. In Britain, industry lives under the continual threat that shareholders and bankers will withdraw support or back a take-over. The pressure is always to maximise short-term profits to fickle shareholders rather than concentrate on building up industrial strength. One fact from the mass of information Hutton has collected serves to illustrate his point. Sixty per cent of the lending given by the National Westminster (excluding personal mortgages) is for less than one year; half of the lending of the Deutsche Bank is for four years or more. Big British companies have to compete daily with the best short-term investment opportunities in the world if they are to get finance; they know that if they divert profits into investment, their backers may leave them.
This book's arguments are complex and important. Its description of how the policy of making the poor poorer and rich richer has not only made us an uglier society, but also worsened the boom/bust cycle in the economy, is convincing. Hutton's lucid presentation of the attack of modern American Keynsians on the free market orthodoxy, which has so dominated our lives, is exceptionally good and would make even the most sceptical reader burst out laughing at the sound of Michael Portillo. The attack on theTreasury and Bank of England could usefully be read by any future Labour chancellor who meant business.
If the now widely diffused ideas for constitutional and economic reform he puts forward do not have some influence, then Britain will be seen merely as a lesson to economic students. As Hutton writes: "the British experience offers a salutary warning. While individual countries may have at least one horror story of radical marketisation similar to Britain's, only Britain can tell them all . [In the 1980s] The British credit boom generated the biggest rise in personal debt of any industrialised country... the growth in inequality has been the fastest of any advanced state. The drop in the relative importance of manufacturing has been the most marked."
A freak show may be diverting to watch, but it is no place to live.Reuse content