James Ashton: G4S and Serco became slick bidding machines, not service providers

Outlook

Whatever happened to the FTSE 100’s conglomerates? The blue-chip index used to be littered with them, be it Bowater, which encompassed diesel engines, stamps and telephone cards; Lord Weinstock’s GEC, straddling electronics, defence and shipbuilding; or Lord Hanson’s Embassy cigarettes, building aggregates and Buxted chickens.

The argument to investors of owning assets that had so little in common with one another was that when one part wasn’t doing well, another would pick up the slack. Over time, and with the passing of these companies’ forceful leaders, the City tired of the lack of focus and break-ups became the norm.

But to say that the FTSE 100 doesn’t feature conglomerates today would be to misunderstand how some of our largest firms operate. They’re still there – they’re just labelled differently.

In rejecting a £1.6bn offer for its cash-handling arm, G4S not only reminds us of its conglomerate characteristics, but points out that under Ashley Almanza, the new boss, it is no mood to get rid of them.

It wasn’t so long ago that Nick Buckles, Mr Almanza’s predecessor, told me simply that the way it would manage increasing its workforce to some 1.1 million people – more than many small countries – from acquiring Danish rival ISS would be to get his country managers to take the strain. Investors made sure that deal never happened and what with the London Olympics security fiasco, Mr Buckles exited too.

These outsourcing companies have been a modern economic miracle, taking on virtually any task for the public sector and completing it for a discounted price. As the departure last week of Chris Hyman from the helm of Serco after grave errors in the electronic tagging of prisoners demonstrated, it couldn’t go on forever.

When one enterprise manages such disparate activities as RAF aviation support, out-of-hours medical care and London bike rental, you have to wonder if even a Lord Hanson would be able to keep tabs on it all.

What G4S and Serco have in common is the client, not the contract. In order to feed the growth that investors have come to expect, they have become slick bidding machines first, deliverers of great work second.

As he prepares next week’s strategy update, has Mr Almanza been listening closely? Of course, with so much public sector work, the Government has a role to play in the shape of these companies. After all, the Cabinet Office minister, Francis Maude, is always saying how he wants to outsource more work to the small business sector.

M&S may still be too middle of the road

D-Day is fast approaching for Marks & Spencer. How should Marc Bolland and his team play it? With results due on Bonfire Night, I predict someone is going to get burned.

It is apparent that the make-or-break autumn/winter range has been fine at best, without exactly setting the world alight. My unscientific straw poll suggests that shoppers love the price but aren’t so sure about the quality. The company has done its best to gloss over stock problems.

M&S clothing still falls between stools. Mid-market, mid-priced – the original squeezed middle which has seen many of its core shoppers head down the price curve for bargains at Primark and H&M, or upmarket for the odd luxury garment.

Mr Bolland, who has had three-and-a-half years to get to grips with M&S, should push it upmarket, as the chain is trying to do in overseas franchises. Burberry and Topshop have shown how much British fashion is prized in foreign climes.

Two questions emerge as 5 November nears. At what point do the company’s shareholders decide it is time for a change at the top? And when they do, will the M&S chairman, Robert Swannell, have the gumption to pull the trigger?

Remember, his many years reading the City at Schroders and Citigroup include helping to fend off Sir Philip Green’s takeover attempt of the retailer nine years ago. But his hands-on experience of the sector is relatively thin, comprising the chairing of HMV for two years. During that time, the shares headed south after an ill-fated expansion into concert venues, which ignored the real problem of working out what to do with the music seller’s high street footprint.

True, Mr Bolland has marketing excellence earned in his Heineken days and he can hold a room in the palm of his hand. But can the Dutchman spot a weak fashion buyer on his team at 30 paces, like veteran garmentos such as Sir Philip or Paul Marchant of Primark?

Supporters say he doesn’t have to. Non-food boss John Dixon or style chief Belinda Earl are there to do that. But if Mr Dixon can fix clothing in the same way as he fixed M&S’s sumptuous food offering beforehand, then surely the board’s problem of who to try out next at the helm has already been solved?

Curry houses have a beef with prices

Lunch with a food industry veteran last week revealed some startling facts about the economic downturn. Apparently Britain’s curry houses were hit exceptionally hard by all those eat-in-for-a-tenner offers that supermarkets promoted heavily.

And just as consumers began spending more on nights out, those Indian eateries whose speciality is beef dishes are having to contend with higher prices. Apparently British cattle farmers are having a bumper year. It is something to do with those food companies who were previously content to let their supply chain extend to somewhere just outside Bucharest taking more care about what ends up in their burgers. 

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
ebooksAn unforgettable anthology of contemporary reportage
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
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

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering