Outlook: Why not do something lastminute, like change your career?

Rover's reverse; Rail funding
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The Independent Online

Martha Lane Fox's departure from the business she launched looks distinctly lastminute although she herself insists it had been coming for a long time and was all her own decision. No blood on the boardroom walls, no fearful bust-up with her old friend and co-founder Brent Hoberman, no institutional shareholders beginning to ask pointed questions. Just the right time to move on after five fantastic years in the cockpit of what began as an online bucket shop and went on to offer everything from car hire to a lastminute Night at the Opera. And what better time to step down than with the announcement of the first annual profit? What a girl.

Martha Lane Fox's departure from the business she launched looks distinctly lastminute although she herself insists it had been coming for a long time and was all her own decision. No blood on the boardroom walls, no fearful bust-up with her old friend and co-founder Brent Hoberman, no institutional shareholders beginning to ask pointed questions. Just the right time to move on after five fantastic years in the cockpit of what began as an online bucket shop and went on to offer everything from car hire to a lastminute Night at the Opera. And what better time to step down than with the announcement of the first annual profit? What a girl.

The share price took it badly. But whether this was because of Martha's departure (her explanation) or because the profit figure was disappointingly small (the market's explanation) or because of the bombings in Istanbul was less clear.

What is not in doubt is that she leaves behind a fabulous brand and a strong business. One of the few survivors of the dot.com boom, lastminute now has nearly 8 million registered subscribers and is more than half way towards its goal of generating £1bn worth of business a year. If there is to be consolidation in the online travel booking market, then lastminute is perfectly placed - either to spearhead it at home or provide a bridgehead into Europe for one of the big US players such as Travelocity.

Martha is the internet pin-up who has been synonymous with lastminute since it floated in 2000. She professed to dislike the image but she traded shamelessly on it. Although Martha, self-deprecating to the end, described herself yesterday as more general manager than entrepreneur, her altogether more sober co-founder will find it hard to fill the effervescent space she leaves behind.

What marks her departure out is that she is going long before the City tired of her. Many entrepreneurs who create their own businesses and then float them, outstay their welcome as did Stelios at easyJet and the Roddicks at Bodyshop. But Martha is moving on long before she was pushed.

The brand is powerful enough to survive and, in truth, the driving force has always been Brent, whose brainchild it was. In the space of five short years, it has also grown into a different kind of business with a strong-minded chairman in Allan Leighton, an ambitious vice-chairman in Clive Jacobs who arrived along with holiday autos, and an experienced management team, not all of whom grew up with the business.

What will Martha do next? Take a break, lastminute, natch. And after that look for a new challenge, though not with a start-up and not with a dot.com and not with her old friend by her side. Watch this space.

Rover's reverse

The owners of MG Rover managed to avoid a nasty pile up during their meeting with trade union officials on Wednesday night to explain why they have not been asset stripping the business. Whether they will be able to steer themselves clear of trouble so easily when the unions' financial experts get their hands on Rover's books remains to be seen.

There are plenty of questions left unanswered at MG Rover starting with why the Phoenix consortium, having bought the business for a token £10, deemed it necessary to reward themselves with a £10m loan note in return for handing some of the free equity to the employees and dealers.

Then there is the question of the £13m trust fund set up for the benefit of the five Phoenix directors and their families at a time when the rest of the workforce was told their pension scheme had drifted £73m into deficit.

Oddest of all, was the decision to annexe the profitable bit of Rover - its loan book - from the loss-making car manufacturing arm. By the time it got to the early hours of Thursday morning, most of the explanations were flying clear over the heads of the two national officials present at the meeting with the Phoenix chairman John Towers.

It may be that there are reasonable answers to all these questions but the Phoenix Five have hardly covered themselves in glory. They have been made to look greedy and irresponsible for enriching themselves at a time when MG Rover is losing more than £100m and its long-term future is far from assured. Worse, by failing to make a clean breast of all these financial dealings when Phoenix's report to shareholders was released a month ago, they have been made to look furtive.

There are two things keeping MG Rover going. One is the £500m dowry the company received by way of an interest-free loan when BMW finally let Rover off the leash in May, 2000. The other is the fund of goodwill it has been able to draw on from the 6,500-strong workforce and the wider West Midlands community. The payments from BMW came to an end earlier this year which means that, short of a miracle, MG Rover's cash position will start to deteriorate. As for the fund of goodwill, that has been seriously depleted by recent events.

To survive long term, the company needs a partner to help it finance a new range of medium-sized cars. It also needs to make and sell more cars that customers want to buy. Last year, its sales fell by 13 per cent while the search for an industrial partner looks as forlorn as ever.

The report to shareholders, or at least that part of it which Phoenix saw fit to publicise, could not have been blunter. MG Rover's losses can only continue to be sustained in the short term. Its survival against the odds three years ago averted a disaster for manufacturing in the Midlands. The challenge now is to avoid an industrial scandal.

Rail funding

Gordon Brown knows a thing or two about debt and, as the Rail Regulator helpfully pointed out to him yesterday, debt is an obligation. Tom Winsor retires next June so he has nothing to lose by lecturing the Chancellor on railway financing. As things stand, the Treasury may have to find an extra £7bn to fund Network Rail from next April, assuming the Mr Winsor allows it to increase the access charges which train operators must pay to £23bn over the next five years. The extra money, by law, cannot come from the passenger so it must come from either the taxpayer or the financial markets. In Network Rail's case, this amounts to much the same thing since its existing debt is already guaranteed by the Government. Not that the debt will go on the public finances, of course.

With copious use of smoke and mirrors and the acquiescence of the Office for National Statistics, Mr Brown has managed to keep Network Rail's £10.3bn of existing debt off the Government's balance sheet and he will do likewise with whatever is needed in addition.

The Treasury, no doubt, wishes it did not have to pump so much money into Network Rail. But, as Mr Winsor reminded it with relish yesterday, it has no choice. Whatever level of track access charges he decides is what Network Rail gets.

There is just a chance that the desperate search for some "innovative and creative" way of raising the money on Network Rail's balance sheet will be discovered in the next few months. But you would not bet on it.

In the first half of the year it managed to increase its losses by some £230m and has nothing yet to show from the extra billions it is throwing at the railways. One in five trains continues to run late and Network Rail's share of the blame for that, measured in delay minutes, has barely shifted. The chairman Ian McAllister's depressing assessment is that it could take five years before passengers see any noticeable change.

The cost explosion which accompanied the removal of Railtrack and the effective renationalisation of the network is being tackled by a £1.3bn cost saving plan and 2,000 job losses. But for now Network Rail is getting fatter not thinner as it takes all maintenance work back in house. The taxpayer is about to pick up the bill.

michael.harrison@independent.co.uk

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