COMMENT: 48-hour rule won't change the way we do business
`It is difficult to see the directive changing anything at all in well-run, efficient companies that do not compel their employees to work longer hours than they want'
Thursday 14 November 1996
A veritable forest of misinformation has appeared in the 48 hours since the European Court of Justice announced its ruling against Britain, truth being one of the first casualties of any war with Brussels. One of the more impressive is the Institute of Directors' unsubstantiated estimate that it will cost British industry pounds 12bn. But there have also been some telling facts and one of them is that 6 million employees - a quarter of the working population - are exempt along with media types, ranging from bus drivers, trawlermen and trainee doctors to managing directors and domestic servants.
As many as 4 million people may now be working more than 48 hours. However, the more important statistic, according to the British Chambers of Commerce, is that 91 per cent of these do so voluntarily. Nothing in the directive will change that.
Indeed, it is difficult to see the directive changing anything at all in well-run, efficient companies that do not compel their employees to work longer hours than they want - something accepted by the Confederation of British Industry despite its belligerent noises.
The idea that the directive is in some way back-door social engineering forced on Britain in breach of its opt-out from Maastricht, is likewise hard to sustain. Britain approved and endorsed the European legislation under which the directive has been introduced long before the opt-out from Maastricht became an issue. As Peter Sutherland, the chairman of Goldman Sachs and former director general of Gatt, observed earlier this week, those who oppose the Working Time Directive, and the Social Chapter and indeed a single currency on grounds of sovereignty are questioning Britain's membership of the European Union. Sovereignty was ceded when Mrs Thatcher signed the Single European Act.
Appearing to be told how to run their companies by a court based in Luxembourg understandably sticks in the craw of most businessmen. But they should bear in mind that the more the EU is treated like an a la carte menu, the more they risk playing into the hands of those who would pull Britain out or leave it hopelessly marginalised. That would be a true cause for calamity.
Selective leak cost `Independent' a scoop
Now why did Lord Stevens of Ludgate choose to reveal his reduced role at United News & Media (he'll be stepping down as executive chairman at the annual meeting next year to become part-time chairman) via the medium of an exclusive interview with the Financial Times, published yesterday? It's called news management, something which, as a long-serving newspaper proprietor, Lord Stevens ought to know a thing or two about.
Knowing this newspaper and others to be pursuing the rumour that Lord Hollick was trying to force him to accept a reduced role, salary and expenses, Lord Stevens plainly thought it would be better to get his side of the story out first through the time-honoured method of a selective leak. He was right.
What we got was the usual guff about not wanting to go on for ever, having other things to do, etc, etc. The FT gave him as warm a send-off as he could have hoped for and in the process he defused the rest of the pack. Unfortunately his action was also perilously close to being illegal. The Financial Services Act specifically forbids through the Stock Exchange listing rules the partial release of price-sensitive information, even when those doing the leaking are not making any money out of it.
It seems that when it comes to company affairs, the black arts of spin have become a mighty dangerous thing. But for the fact that the rules are ambiguous on a decision of this sort, and that United shares, although firmly up on the news, did not move excessively, United would have been in trouble. As it is, the Stock Exchange is rushing through a change in the rules to close the loophole. From now on the selective leaking even of information as apparently innocuous as a director's decision to stand down will be barred. It might be tempting to think of this as further evidence of the way regulation and bureaucracy is swamping the City and commerce.
But it would be wrong to do so. It is all very well and jolly nice to be the recipient of a selective leak, whether you are a newspaper or a dealer, but it doesn't make for fair and efficient markets. As for manipulating the press, good luck to him. Lord Stevens certainly succeeded in outmanoeuvring us. We had a scoop and he deprived us of it.
Crest risks a rebellion over software problems
It is hard to exaggerate the anxious concern in the City over the software teething problems of Crest, the City's new share settlement system. Crest was set up by the Bank of England to replace the Stock Exchange's ill- fated Taurus clearing system. Now an independent company, Crest announced last week that it was delaying the entry of a number of FTSE 100 companies to early next year to give a breathing space while the problems are being sorted out.
Crest's board is to meet at the end of the month to have another look at progress. One of the options is to reduce further the rate at which companies transfer to the system. That would delay full operation beyond the target date of next April. Some firms believe there is now a real danger of the system failing, for example if there is heavy trading after the Halifax is floated next year, unless there is a radical and complete overhaul of the software. If there were the remotest prospect of that, the Securities and Investments Board would have to intervene, because of the threat to the health of securities firms of any serious settlement delay.
Some firms go further, and say that delaying a few more companies' entry into Crest is not enough. Instead they believe the commissioning programme should be suspended altogether while Crest is sorted out. That means the winding down of the old Talisman settlement system would have to be put on hold, to avoid total chaos. The loss of face for the City, and especially for the Bank, would be hard to bear so soon after the Taurus fiasco.
Whether all this is exaggeration or not, it is nonetheless symptomatic of extreme, widespread and very real concern. Crest is not yet operating at more than 25 per cent of capacity. If it is having severe software problems now, what's it going to be like when it runs at full steam? Claims that it knows how to put the problems right are greeted with justified scepticism.
One of the problems is that Crest has simply not given customers enough information to convince them that the software can be put right. Unless Crest can reassure customers soon, it will face open rebellion from the brokers, companies, registrars and investors who the system is set up to serve.
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