Sir John Egan: Monopoly man gets ready to pass go for second time

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The Independent Online

It is the secret dream of all businessmen to run a monopoly. But for Sir John Egan, the dream became a reality and, what's more, he is about to experience it all over again. Next January, he takes over as chairman of Severn Trent, the monopoly water supplier to the Midlands, having spent most of the 1990s running BAA, the monopoly airports operator for south-east England.

"This is only my second attempt at a monopoly," he chuckles. "What I like about them is the intellectual debate you have with the regulator." But isn't that a poor substitute for the cut and thrust of competition and learning to live on your wits? "At BAA, we tried to do everything the airlines and the regulators wanted us to do but we tried to do it for a lot less money," he says. "BAA can probably build most things for less money than anyone else so does it matter which way round the impetus comes into the business as long as the final result is a low-cost, high-quality, internationally competitive solution?"

Michael O'Leary, the Ryanair boss who is locked in a bitter dispute with BAA over charges at Stansted and the costs of the airport's new runway, might disagree. "Yes. But Michael doesn't want to pay anything does he?" Sir John says. "He wants to be paid to go into airports. Well, he can't do that. But don't forget one thing. He built up his company at Stansted and I think he would be the first to admit he had a high quality relationships with BAA. Without that he would not have been able to do it."

It would be unfair to think of Sir John solely as a monopolist. During a long and varied career, he ran Jaguar before selling the luxury car company to Ford for a ridiculous amount of money and for the past four years, he has been chairman of the car dealership Inchcape.

Now aged 64, the "grim routine" of being a full-time chief executive is well and truly in his rear-view mirror. "I would find it very difficult indeed just stopping work altogether," he says. "But I have slowed down. I only work for four days a week now and, generally speaking, I only work eight months of the year. January, February and March we go skiing and I come back for whatever board meetings I have to attend. As a non-exec chairman, you just have to do the jobs which have to be done. There is always plenty of time for any crisis work to be done."

Something else which marks Sir John out is that he survived the famous "curse of the CBI", where he was president for two years. When he joined Inchcape, the share price was £3. Now it is £16. If only some of his predecessors at the CBI, such as Rentokil's Sir Clive Thompson, could say the same. "The CBI presidency should be done by someone who is a non-executive," he says. "I don't think there is enough time for a chief executive to do it. It takes a day and a half a week but there are also some hard points in the diary. If you have got a meeting with the Prime Minister or Chancellor you do not want to give that up simply because you have got some crisis in your company. As a chief executive, you should be able to put practically everything to one side on behalf of your company."

In some ways, Sir John's professional life has gone full circle. He began his career as a petroleum engineer with Shell in 1962 and today he bases himself at Harrison and Lovegrove, a company specialising in trading oil and gas assets on behalf of the majors, where is he also non-executive chairman. Oddly enough, his office is in the old Shell Mex building on the Strand, just a stone's throw from the Savoy, where Sir John was once a regular in the Grill Room. He doesn't go there so often now. For one thing, he says he is too busy. For another, Gordon Ramsay has changed the menu. "I think for the old school of businessmen who went there the old menu was probably better because you knew what it was and you could predict it. Simple stuff all very well done."

Taking up the Severn Trent job will mean spending more time in the Midlands, where he lives. "That was a very attractive feature of the job," he says. "It is probably one of the few companies I could work at which isn't in London." He is also a deputy lieutenant of Warwickshire ("major duty to have a jolly good dinner once a year").

So what else is occupying his mind? Well, there's always Europe. Sir John made little attempt to hide his Eurosceptic tendencies while he was at the CBI, despite the organisation's backing for the single currency. Now he is completely free to vent his feelings. He says there is no case for withdrawal from Europe "at this stage". But he clearly believes there are some things fundamentally wrong with it.

"I don't think most people have any idea of the awful outpouring of regulation coming from Brussels. About half our regulations now emanate from Europe. There seems to be virtually no assessment of the economic impact of all this stuff and business people are very annoyed and sickened by the waste it produces. There are a lot of left wing ideas being flung about in Europe without any idea of how to create the wealth to support them. The Lisbon agenda which was designed to make Europe the most competitive economy in the world by 2010 has been largely forgotten.

"The next major issue is the constitution. There is no doubt that it is designed to create a bigger government in Europe. It is much more to do with a centralised European movement than a collection of states working their destiny out together. The euro was intended to kick-start the economies of Europe into closer integration and I think the constitution is trying to do that too. I think it is a threat to sovereignty in the longer term. The Prime Minister did a good job in getting his red lines in place. Whether he has done enough to make it the right thing for Europe to move forward with, I doubt."

Is he, then, a supporter of Michael Howard? "I have to say that under his predecessor, it was very difficult for the CBI or anybody to deal with the Tories, but certainly they are now proper grown-up politicians. The progress made under Michael Howard is excellent and Oliver Letwin is looking more impressive as he goes along. The Tory leadership is beginning to look like a serious group of people. So I would have said they are looking like a credible opposition."

Nevertheless, politicians of whatever hue have still got a lot to learn from businessmen. He highlights the way the two main parties are competing to see who can cut more costs out of public services. "I don't think I have ever bought anything from the Government and not been able to improve productivity by at least 50 per cent so I think they are right to be looking for savings. But to look for savings in the Civil Service, you have to make politicians more specific in what they are seeking to do. In business, we are very clear about what our objectives are. But if you are being very woolly about what you are trying to do and cover every corner, then it is very difficult to be become efficient."

CBI survivor whose career has gone full circle

Age: 65

Pay: £215,000pa

Career: Chairman of Severn Trent (from January 2005); chief executive and chairman of Jaguar (1984-90), chief executive of BAA (1990-99), chairman of Inchcape (2000 to present), president of the Confederation of British Industry (2002-04)

Education: Bablake School, London University, London Business School

Interests: Skiing, opera and walking, keen interest in the environmental debate

Personal: Married with two daughters. Knighted in 1986

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