Change of attitude that gets my vote

City & Business
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The Independent Online
I switched on the television the other night and who did I see but Gerry Robinson, the Granada supremo. Had the great man cracked, I wondered, and taken a cameo role in Coronation Street? It appeared not. Instead he had been offered a walk-on part in another soap opera - the general election. The central casting department at the Labour Party had been looking around for a young, affable, intelligent, sensible, good- looking, reasoned voice of business. I, unfortunately, was on holiday. As it turns out, Gerry not only fits the bill better but also he is a convert to New Labour.

To reinforce his commitment to Tony Blair's party, Mr Robinson was out and about again on Friday at the launch of Labour's business manifesto. This identified some key issues for industry but left me in more doubt than Mr Robinson about Labour's ability to deliver the promises it made. I would love to think that the single market can be completed by June 1998 since this is critical to British industry's commercial relationship with Europe. However, I doubt whether some of our European colleagues will cease their inherent and frustrating double talk merely to allow Mr Blair to fulfil an election promise. Similarly while a pledge to address the faults in the Private Finance Initiative is to be applauded, such are the complexities that I suspect it will take more than a change in government for the PFI to yield its as yet unfulfilled potential.

I did not find Mr. Robinson's endorsement for New Labour any more reassuring than the support which true Coronation Street hero Ken Barlow (in the shape of actor William Roache) showed earlier in the week for Neil Hamilton, the Tory MP at the heart of sleaze allegations.

Perhaps my scepticism originates from a profound belief that when it comes to politics it is actions that speak louder than words.

Those industrialists who choose to wear their political hearts on their sleeves are entitled to do so in a personal capacity but I prefer a more understated approach. I would much rather see them trading in reality, not rhetoric, which is I why I am so taken with the principles of the Stakeholder Corporation espoused on the page opposite by David Wheeler and Maria Sillanpaa. The book they have penned is not a political tract but a practical guide to how companies can serve the interests of staff, shareholders and customers equally and better.

The historical culture in this country of putting the shareholder first has tended to hamper progress on a move to a more broadly-based portfolio of management priorities. In recent years that has been changing among our more thoughtful companies. They have recognised the clear inter-relationships between staff, shareholders and customers. Put bluntly: if you look after staff, they look after customers who in turn look after shareholders.

This more egalitarian approach to management is already yielding dividends for those who practise rather than preach. The principles of the Stakeholder Corporation are not borne out of politics but by harsh commercial reality. It does not take a genius or a radical political thinker to work out that a well-educated, well-remunerated, well-informed healthy workforce which operates in a pleasant environment well supported by an efficient infrastructure is a desirable objective. The key question, then, is where does the responsibility lie for creating the necessary conditions? The easy but tired and outdated answer is government. Those who subscribe to the concept of the Stakeholder Corporation would accept that the real answer lies closer to home.

The simple fact is that greater recognition of the importance of stakeholders other than shareholders can not only enrich society but also enrich investors. That does not seem like a bad deal.

Nip inflation in the bud

IT WAS perhaps not the greatest surprise that the Ken and Eddie roadshow (on tour last week in Nottingham) did not yield an immediate increase in interest rates. While the Governor of the Bank of England may be justified in suggesting some pre-emptive tightening, I suspect the Chancellor has other things on his mind.

The enforced delay in raising interest rates means that a post-election hike is now inevitable, whichever party wins. More interesting is whether that can be restricted to a half point or whether a full point rise will be required.

The money markets are indicating a full point rise and the nervousness in the equity markets suggests a more hostile interest rate regime is anticipated.

One market which appears to be paying no interest at all to interest rates is the housing market. Although the boomlet is beginning to fade in some parts of the country, house price inflation is rising in the Midlands and the South. Prices in London are up a breathtaking 17.4 per cent on the year according to the Halifax. This smacks of a market which is out of control - dominated by panic, speculation and acute shortages in supply. It needs to cool off. One way of helping the process is to increase the cost of mortgages.

That may be unpalatable to those parts of the country which have witnessed a more controlled property market, but sometimes you have to be cruel to be kind. Those who geared up using cheap money to pay inflated prices have repented at leisure.

It can be argued that the engineered boom in the South has helped narrow the equity gap for some homeowners. I just wonder whether it is creating the potential for further gaps for the new people of property. The sooner exorbitant inflation is nipped in the bud the sooner the potential for further equity gap misery is restricted.

If a one point rise in interest rates can restore order to a chaotic market then the sooner it is levied the better. The market has sufficient underlying strength to suggest that a one point hike would not trigger a slump. It might, however, yield a period of much-needed consolidation.

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