City & Business: Lose Eddie and we lose the world

My "Eddie Must Stay" campaign designed to ensure that Eddie George is reappointed as Governor of the Bank of England when his term expires next year received a tremendous boost this week courtesy of fashion victim and Chancellor of the Exchequer, Gordon Brown. His eminently sensible decision to strip the Bank of its supervisory role and bring it under the umbrella of a unified and revamped Securities and Investments Board has served to make it crystal clear that Mr George is a national asset who must be preserved.

There are two reasons for this. The first is political; the second, and more important, is practical. On the political front the rather clumsy handling of the regulatory announcement has prompted genuine fears in the City that there is a devious campaign afoot to dislodge the Governor from Threadneedle Street. There has been a chorus of support from bankers, publicly and privately, for Mr George whose stature both at home, and more importantly abroad, is immense. To strip the country of a man who is now so closely associated with monetary stability and economic prudence would be an act of vandalism.

The City's concern was prompted less by Mr George's own thought about resigning and more by the crass comments attributed to a senior member of the Government, suggesting that by saying he had considered resigning over the regulatory revamp Mr George had "played into our hands". Such petty arrogance from some anonymous floozie has brought the George supporters out in their droves. The message is clear: Lose Eddie and you lose the confidence of the international financial community.

What was most tragic is that this pathetic sniping threatened to undermine and devalue the Chancellor's richly and rightly applauded move to overhaul the regulatory regime. I have not found a single opponent of the principles which Mr Brown has espoused. Even Mr George would admit it was not the principle which upset him but the manner in which it was announced.

The view from bankers, insurers and regulators this week has been remarkably consistent. Yes, we needed change; yes, it makes sense to bring it under one roof; now it is for us to deliver a regime which will set London apart as having the most efficient and effective regulatory set-up in the world.

It is an awesome challenge which has been set. There is no easy template to copy, no computer model to solve the problem. What is required is a quite radical overhaul and yet this must be achieved whilst maintaining an effective and robust regulatory regime. You cannot stop regulating for a year while the blueprint is drafted.

But it is not mission impossible. Two things help. In Howard Davies the new super SIB will be blessed with a leader of immense talent, energy and respect. He has been universally acclaimed by regulators and regulated alike as the only man who can pull this off. Secondly, there is an enormous amount of goodwill among practitioners to make the new regime work.

There is a third asset, and this is the second and practical element of the Eddie Must Stay campaign, which is the Governor himself. One of the key relationships to be managed is that between the old SIB and the old banking supervisory division. Crucial to that relationship are confidence and consistency, both of which are epitomised by Eddie George.

He is the man who can ensure that Bank staff, present and former, will continue to discharge their responsibilities with professionalism and enthusiasm. He is the man who can ensure that financial stability and financial supervision are actually enhanced and certainly not weakened by their separation. He is the man who has an excellent relationship with Howard Davies. He is the man who can prove that you can take supervision out of the Bank and take the Bank out of supervision.

What we have at the moment is a proposal for change which oozes with potential. However, that potential will only be realised if the energy and enthusiasm of all those involved in the regulatory process can be harnessed. That requires extensive consultation and open debate. It will take longer to implement than it did to announce. Let us hope the Chancellor appreciates that more haste can result in less speed. Let us also hope he appreciates the value vested in his current Governor.

Costly leaks

THE water company reporting season begins this week, providing executives with their first real opportunity to deflect the attention which has been poured upon them by the new Labour government. They have been in the windfall tax firing line for some time but last week they were threatened with mandatory targets for reducing leakage by Deputy Prime Minister John Prescott.

Mr Prescott is right to identify leakage as being extremely undesirable. But there is a danger that in focussing so aggressively on mandatory targets he will throw the baby out with the bath water, so to speak.

The key issue here is establishing the economic benefit of reducing leaks. Thames Water, for instance, could make greater inroads into its leakage if it brought London to a standstill while it found and mended its leaks. It could halt dividend payments, slash wages and put up prices. But would it be worth it?

Anglian Water estimates it would cost it pounds 200m, the equivalent of 80 per cent of 1996 profits, if it were forced to fix all its customers' leaks. But who would pay for this?

A point will be reached where it is uneconomical to fix leaks. However, this is not an excuse for inertia. The water companies have not always impressed. It is encumbent upon them to provide both constructive and compelling arguments for how they intend to improve the leakage problem but not eradicate it completely.

The incentive to do this will come from a government which is prepared to deal in the art of the possible. Progress will only come if the stick is used in equal proportion to the carrot, rather than in isolation.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor