Outlook: Barclays settles for safety first in its plans for the succession

ONS scrutiny; GE/Amersham
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So hello again Matt Barrett, chief executive of Barclays. Having virtually written his obituary earlier this week, I'm now forced to eat my words as the Irish born Canadian comes bouncing back to accept the position of chairman after all. That wasn't the way it was last weekend, when the spin was very much that he had family back in Canada, was fed up with his lonely existence in London, and didn't in any case relish the ceremonial and corporate governance role he would have to take on if he stepped up to the chairmanship. Now it appears that everyone got their wires crossed, and that far from wanting to go, Mr Barrett would need "to be beaten out of London with a stick" to get him to leave Barclays.

Mmm. I don't mind being used, I really don't, but it is impossible not to suspect politicking here. It's hard ever to get to the bottom of these things and in any case silly to speculate on precisely what jostling for position there must have been in the Barclays hierarchy this past few months as the succession battle came to a head. Even so, this was plainly not the smoothly executed succession it was made out to be yesterday.

Sir Peter Middleton has proved himself a popular and engaging chairman and would dearly have liked to stay on. Nice pay, nice perks, great access and the choice of London's social circuit - who wouldn't? Lady Middleton would have liked it even more by some accounts. When asked yesterday what he will do when he retires, he replied gloomily "buy a wheel-chair", but the fact of the matter is that there are few 69 year olds as sprightly, and he could have kept going for years.

As for who would succeed Mr Barrett as chief executive, there must have been a battle royal for that job, with John Varley, the finance director and a Barclays lifer, pitched full square against Bob Diamond, the preppy American who heads the group's investment bank. Several other internal candidates had thrown their hats into the ring as well. How the various internal allegiances stacked up is anyone's guess, but it wasn't just Mr Barrett who threatened to be on his bike if he didn't get what he wanted. Mr Diamond played the same card, and although he was being frightfully grown up about it all yesterday, stressing how much he likes what he is already doing, the disappointment was palpable.

By going for the Matt Barrett/ John Varley combination the board has chosen stability and continuity over change and upheaval. Mr Varley is a Barclays man through and through, having originally secured his place at the bank by marrying into one of the old Barclays' family dynasties, in this case the Pease family. He's exactly right for the job while Mr Barrett adds colour and a wealth of international banking experience.

Whether safety first and more of the same is entirely the right approach for Barclays from here on in, as Sir Peter suggested it was yesterday, is more questionable. Barclays is now fully rehabilitated after the instability of prior regimes. There has been some cautious letting out of the throttle on acquisitions over the last two years, but nothing that puts Barclays on a level with Royal Bank of Scotland Group or HSBC. That must rankle for a bank that once thought pride of place among the clearers to be an ancestral right.

ONS scrutiny

The office for National Statistics is facing an investigation by the Statistics Commission following a series of cock-ups with the data, culminating last week with the revelation that GDP growth in the second quarter was twice as strong as the ONS originally said. Its head, the national statistician, Len Cook, is also being summoned before the Commons Treasury Select Committee to answer his critics. Mr Cook is contrite in admitting to mistakes and he acknowledges that the impact of getting it wrong on public and private decision making is massive "compared with where I come from". Mr Cook was formerly the head of national statistics in New Zealand. Yet he still thinks the ONS has much to be proud of and claims it produces the fastest and most reliable statistics in Europe.

Fortunately, the underestimate of GDP growth hasn't had quite as much impact on public policy as Mr Cook seems to assume. It came too late to influence the July decision to cut interest rates, nor have rates been raised since, despite the fact that the Monetary Policy Committee now knows growth was much stronger in the first half than previously thought. Even so, decision makers must be able to rely on the integrity of the numbers. If they can't, then they operate in a fog of unknowing. Recent failures have gone way beyond the bounds of acceptability for a large, developed economy.

What can be done to correct the problem? Mr Cook blames it mostly on 25 years of underinvestment, a problem the Chancellor went some way towards addressing in the last spending review by granting the ONS an extra £75m. Yet according to Mr Cook, this is not the whole story. He also cites the fact that the UK economy is becoming increasingly complex. Globalisation, deregulation and changes in technology have made the economy much harder to track than it was.

This is no doubt true, but it still doesn't excuse the unreliability of the figures. The MPC spotted immediately that the original second-quarter GDP estimate couldn't have been correct, as growth in consumption of 1.3 per cent was impossible to reconcile with output growth of only 0.3 per cent. Why couldn't the ONS have been similarly sceptical? On top of everything else, the ONS is widely suspected of being too beholden to the Treasury, of which it is a part, and therefore prone to political judgements, most famously when it decided that Network Rail debt should not count as part of the public finances.

There are two reforms that would improve the position. One would be to bring all data collection and collation within the ONS's orbit, rather than have it rely as it does at present on raw data collected and to some extent processed by other government departments. That's where the GDP figures went wrong. The other thing would be to make the ONS a fully independent organisation, immune to ministerial interference, like the Office of Fair Trading or the Bank of England. The idea that ministers regularly tamper with the numbers is fanciful, but perception is all with statistics and it is important that they are seen to be independent as well as accurate.


Yesterday I gave Sir William Castell, chief executive of Amersham, a harder time than I perhaps should have done in characterising his company as a disjointed conglomerate of unrelated medical interests. While this is undoubtedly true, the formula plainly works, for few can match Sir William in the amount of shareholder value he's created. Amersham is a bit like that miracle of nature, the bumble bee. It shouldn't fly, but somehow it does.

As we now know, the mystery suitor is General Electric of the US, which is the great big grand daddy of conglomerates, having been through more corporate transformations across the years than any other surviving company on the planet. Right now it's in the middle of another. Jeffrey Immelt, successor as chairman to the great Jack "Neutron" Welch, is busy selling off large parts of his predecessor's legacy - particularly financial services - and ploughing the money back into higher growth businesses such as media and healthcare.

Parts of Amersham, particularly its diagnostic imaging agents business, would fit hand in glove with GE's already commanding position in medical scanners. To help finance a likely £5.8bn cash bid, GE would dispose of some of Amersham's non-core businesses, such as protein separation, for which it already has a buyer lined up. It would be the end of Sir William's vision of creating the all singing, all dancing "personalised medicines" company, but then he was the only person who could really see it anyway. The irony is that the rump of Amersham ends up as part of an even bigger conglomerate.