Comment: P&O's promises will not hold off snipers for long

It is a measure of the success of the charm offensive launched yesterday by Lord Sterling that investors studiously ignored the apparent lack of substance in his proposals to restore P&O's fortunes. They focused instead on the fact that the company's saving grace, one of the FT-SE 100's highest dividend yields at 7.3 per cent, looks assured for the foreseeable future and the shares nudged duly higher.

It is hard to escape the view, however, that it will take more than yesterday's promises-promises to persuade the City to rerate the shares. As a long term strategy, selling a sizeable chunk of the group's pounds 2bn property portfolio to pay the dividend is hardly credible even if, in the short term, it avoids the ignominy of cutting the payout.

Floating off Bovis Homes, while it gets rid of one of the most cash-hungry parts of the empire and conveniently sidelines a division with one of the lowest returns in the group, is also hardly a great strategic leap forward. Arguably in the run up to a widely expected housing recovery, P&O should be holding on to Bovis.

The group's problem is not that its spread of transport, shipping and property businesses are unusually badly run but that they operate in a range of lousy markets. During the 1980s Lord Sterling was bailed out by inflation, as he had been during the 1970s, with relentlessly rising property values providing the cash to invest heavily in the capital intensive cruise liner and ferries businesses. It is possible to argue that continuing to invest throughout the recession was the right long term strategy, misunderstood by the short-sighted City, but with the real estate cash tap firmly shut it was never going to be a sustainable policy.

One of Lord Sterling's favourite charts at the moment shows how since he took the helm in 1983 the total return on P&O's shares broadly matched that of the market until little more than a year ago. That says something about the importance of dividend income to total investment performance, and rather more about the ability of statistics to tell any story you want them to.

As the chart on the opposite page shows, another way of looking at the same data is that P&O's shares, having outperformed the market by a huge amount in Lord Sterling's first two honeymoon years in charge, have steadily undershot ever since. Yesterday's proposals will hold the snipers off for a while but, with a plausible break-up value in excess of pounds 7 a share, it will take something more substantive than this to see off P&O's critics for good.

Labour will not stop Railtrack flotation

Most stock market pundits are a spineless lot. Even those prepared to forecast the index tend to avoid putting a date on it. The Labour Party may be about to try the political equivalent, by leaving the date out of its promise to bring the railways back into public ownership. Within the next few days the party is planning to release a policy statement to be incorporated in the Railtrack prospectus next month.

The indications are that the wording will be tough, satisfying John Prescott, the hawkish deputy leader, but leaving the timing so vague that Gordon Brown, the shadow chancellor, will be be able to dismiss the financial costs, thus reassuring the City about Labour's fiscal orthodoxy.

Labour will repeat its previous statement that Britain needs a publicly owned, publicly accountable railway, implying it will bring Railtrack back under public control, at some undefined date. It is also likely to propose abolition of the pounds 2bn a year government subsidy to the 25 passenger train operating companies, and a re-routing of the money directly to Railtrack.

This is obviously going to be difficult, given the tight contracts under which train operating franchises have been sold. However, it might be possible. If track access charges are reduced by the amount the operating companies receive in subsidy, the financial effect would be neutral. But why bother? While subsidising Railtrack rather than the operating companies might give the Government more control over the network, it is hard to see what other benefits there would be.Labour policy will probably be dressed up with lots of cautious words about consultation and deciding at the appropriate time. It may knock a little off the sale price, but it will not stop the flotation.

These unemployment figures are a sham

To describe the unemployment statistics as a "fiddle on an orchestral scale", as Greville Janner, chairman of the House of Commons Select Committee did yesterday, is certainly a good line. His report on the same was, however, a rather more limp affair than the one produced by civil servants.

The committee held back from calling decisively for a monthly unemployment number based on the Labour Force Survey. The Central Statistical Office made its own view rather clearer with a working paper recommending collecting the figures on this internationally accepted definition at an extra cost of pounds 7-8m a year.

The Chancellor has now been told by three separate bodies that the headline figure, which measures the number of benefit claimants, is widely regarded as a sham, since it understates - probably quite substantially - those actually unemployed and seeking work. It is an easy figure for the Government to collect but it has been undermined by the many changes in definition.

The new Job Seekers' Allowance in April will be the latest in a long line of changes affecting the headline total. Independent experts, official statisticians and MPs are in agreement that it will no longer do.

The lavish rewards of failure

When it comes to lavishly rewarding failure, the Dutch masters of Barings have managed to suppress their deep Calvinist austerity. By any measure, the financial package agreed with Andrew "Teflon" Tuckey is an affront.

It may be paltry compared with the rich rewards that he once believed were rightfully his. But this is the man who presided, as deputy chairman, over one of the most spectacular collapses the City has known. The Securities and Futures Authority, holding to strict legal procedures, cleared Tuckey ofdirect involvement in the management debacle that allowed the Barings disaster to happen. But there was no hiding their feeling that natural justice had not been seen to be done.

Now this. "Retirement" at 52 with a pension of pounds 120,000 a year; a pounds 110,000 annual fee as a consultant, and the usual share of profits as bonus. Such are the rewards of failure. Ministers don't resign these days, so why should investment banking captains go down with their ship? But rest assured. ING Barings says his role has been substantially scaled down. Oh well, that's all right then.

Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
tv
Sport
footballShirt then goes on sale on Gumtree
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
art
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine