Margareta Pagano: Is Bullingdon Man the perfect City reformer?

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The Independent Online

The other day I had lunch (okay, a sandwich) with someone who was close to Gordon Brown and Tony Blair at the beginning of their reign, and she remembers that even then they would discuss their future after politics.

She says, without hesitation, that they had both decided on a second career in business or even the City. Since then, Blair has set his sights on the world stage and Brown apparently wants to go back to school – jokes about whether he would qualify for the new Balls licence to teach were whizzing around the Square Mile last week.

Now, nobody is suggesting that Labour's economic policy was entirely based on the future ambitions of this dynamic duo, but there is no doubt that where people come from and where they want to get to play a part in the decisions they make. The decisions might be as seemingly inconsequential as who to lunch with, whose call to take or whose party to go to, but of course it is these encounters on which the foundations of great powerbases are built.

This brings me to George Osborne, the Shadow Chancellor, who is finally giving us a better glimpse of how the Tories plan to tackle our crippled economy as well as curbing some of the City's worst excesses. Now we know where he comes from – wealthy Anglo-Irish aristocracy, St Paul's and Oxford. But what is interesting to ask is what his measures tell us about where he is going. His latest thoughts on financial regulation came to me via Amsterdam last week where he went to find out more about the Dutch "twin peak" model of financial supervision – the central bank looks after banking while another regulator looks after the consumer. Osborne was there to meet the regulators, as well as the Dutch finance minister, and to discover how the model has been so successful. As a fierce critic of Brown's discredited tripartite system, it's heartening to know that Osborne is actively looking for inspiration outside the UK rather than just repeating the mantra that ours has failed so miserably.

In fact, Osborne is showing a new robustness which the City should find stimulating. He's been one of the most vocal critics of bonuses – and the first to hit out at the huge sums being paid to Stephen Hester, RBS chief executive, and Tory supporter. He's also investigating ways of breaking up the bigger banks as well as finding ways to encourage new ones.

Most pertinently, his team is also looking at ways to remove the distortions in our tax system which treat debt finance far more generously than equity finance, one of the main factors leading to our boom and now our bust, although he is not – contrary to reports last week – considering the abolition of tax relief on debt interest.

Rebalancing this distortion between equity and debt is Osborne's biggest test and one I'm told he is working hard to redress. The UK is the most expensive place in the world to buy shares; investors must pay stamp duty, dividend tax, corporation tax and then capital gains tax. Abolishing stamp duty on shares while introducing other tax relief to bring about more equitable share ownership, in private and listed companies, should be his priority.

In some ways, Osborne's background inoculates him from being easily impressed by big money in a way that Brown, Blair and Lord Mandelson have so obviously been. Who knows, if Bullingdon Man is smart (and sorts out his expenses mess) he could turn his life of privilege to greater advantage.

Sex and the Kitchen: Lingerie brings a smile to the high street

Even Gordon Brown can't have guessed that steamy nights and high unemployment would end up helping the economy. But Debenhams claims sales of sexy underwear have reached a peak only ever seen at Christmas: sales of fishnet stockings are up 83 per cent; suspenders, 50 per cent; basques, 45 per cent; and garters, 71 per cent. The usual culprits, black lace and animal prints, are the most popular materials. Tongue-in-cheek, I am sure, but Debenhams head of lingerie buying, Annette Warburton, says: "Losing a job is never good news but our lingerie sales suggest that many people are using the opportunity to become fully employed at home." And, just to show the Brits aren't completely obsessed, sales of cookware are also up.

Rolls-Royce's Norway deal may be small, but it's a stroke of maritime genius

It was a small deal but one with a big tailwind. Rolls-Royce paid £60m last week for a third of a little-known Norwegian company, Odim, a leading provider of specialist marine handling systems to the offshore oil and gas industry. Although Rolls-Royce is the world's second-biggest supplier of large commercial aero engines behind E, it's one of the biggest in the marine industry as well. It supplies marine solutions – products and services – to more than 30,000 commercial and naval vessels in the offshore, merchant and submarine markets. Among other things, it makes diesel engines, gas turbines, propellers, thrusters and water jets, and employs more than 8,000 people in 34 countries. That's why adding Odim's automated handling systems for seismic and sub-sea vessels makes such sense for Rolls-Royce – and it knows the country well, as it already employs nearly 3,000 people in Norway.

Rolls-Royce needs to keep pushing the marine business, as the civil aerospace sector – which makes up half of all revenues and more than half of profit – faces severe headwinds from falling passenger traffic and weak cargo. Jo Russell, analyst at Oriel Securities, likes the Odim deal and has added Rolls to her buy list at the current 363p price, with a target price of over 400p. In the short term, though, it's likely to be hit by the downturn and next year could be tough, with earnings falling and then returning to double-digit growth the year after. But, as Russell points out, the upside is good since most airlines are going to have to replace their legacy fleets with more fuel-efficient aircraft, and there'll be new demand from Asia and the Middle East as economies recover. With more than £1.5bn of cash – and no debt and low pension liabilities – Rolls is still one of the UK's strongest companies, and last week's deal shows once again that it's one of the smartest too.