Tony's friends lose their way
Many of the business gurus advising New Labour have been struck by the Curse of Blair, write Chris Horrie and Danny Rosenbaum
Sunday 25 July 1999
Coming out in favour of the Third Way has coincided with a reversal of fortunes for the likes of BA chief Robert Ayling, former Barclays wunderkind Martin Taylor, and Planet Holly- wood tycoon Robert Earl. Call it the Curse of Blair.
Even the performance of one of New Labour's brightest business stars, BP chief executive David Simon, does not bear too much comparison with that of his successor, John Browne. On the back of its purchase of Amoco, BP's share price has rocketed. But this happened after Simon, now Lord Simon, left the scene to take up a position at the DTI as Minister for Competitiveness in Europe.
Lord Simon is assisted at the DTI by a taskforce of 90 other business people - part of what has been described in recent research by the Cranfield School of Management as "a staggering rise" in the number of semi-official policy forums and business groups advising Whitehall since the 1997 election.
At the last count more than 350 business people had been recruited to advise New Labour on a total of 75 new taskforces ranging from defence procurement through business and education to the five-member government advisory committee on the purchase of wine. Some advisers have even fallen by the Third Wayside - notably Alan McGhee, owner of the Creation record label, who went cold on "Cool Britannia".
Cranfield will report later in the year on the usefulness of this tidal wave of business wisdom washing up on the shores of Whitehall. But its provisional conclusion is that "little is known about these groups: how they were appointed; who they report to; and the extent of their influence". In the meantime the researchers have coined a new acronym, the NDPB (Non- Departmental Public Body) - roughly meaning a quango without the power.
So if you receive a buff envelope from Lord Simon inviting you to tell a Whitehall department how to pull its socks up, think twice: becoming part of the Third Way project could seriously damage your wealth. Just consider the fates of these men: Robert Ayling, BA
Labour links: on close personal terms with the Labour leadership. Shared 50th birthday party with Jack Straw. Last year Sir Colin Marshall, BA's chairman, accompanied Tony Blair to Tokyo in an effort to explain the Third Way to the Japanese and raise funds. BA's chief economist, Dr DeAnne Julius, was one of the first experts brought in to join the new Monetary Policy Committee of the Bank of England.
Performance: share price down from 706p on Labour victory day to around 400p this week and a 52-week low of 303p - in round numbers down by 45 per cent over a period when the London stock market has risen by about 50 per cent. Declining profits have led to major lay-offs. One of the few big British companies to be subject to strike action in recent years. Has slipped from claimed position of being "the world's favourite airline" to mid-way point on international league table of business travellers' preferences. Earlier this month analysts blamed poor leadership for BA's "dire situation".
Martin Taylor, ex-Barclays
Labour links: egg-head ex-financial journalist who became chief executive of Barclays at the age of 41, reaching a final salary of pounds 1.5m a year. An energetic member of Labour's taskforce on welfare reform before the 1997 election, as one of the party's most prominent supporters in the City. Offered the position of minister for the welfare state in Blair's first cabinet and then touted as a possible successor to Eddie George as Governor of the Bank of England. Turned down positions, saying he was too busy at Barclays.
Performance: 1998 was a series of disasters for Taylor, including the reported rebuff of merger plans with NatWest, the botched sale of BZW and a pounds 300m bail-out of an American hedge fund. 1998 year-on-year pre- tax profits fell by half a billion. The share price fell from a 1998 high of more than 1,800p to 1,374p on the day of Taylor's resignation. Barclays sans Taylor has recovered strongly. This week the share price was back up over the 1,800p mark.
Lord Sainsbury, ex-Sainsbury's
Labour links: financial godfather of now-defunct Social Democratic Party and associated think-tanks on employment and science policy, David Sainsbury switched his allegiance to the Labour Party when Blair "came out" as a fellow Social Democrat. Sainsbury became a leading light in Labour's "Comm- ission for Business" - a City policy forum and booster group - and donated pounds 1m to Labour's 1997 election campaign. Now in the House of Lords as Science Minister.
Performance: the company suffered a dramatic dip in pre-tax profits and loss of market position to rivals during David Sainsbury's last few years in charge. The share price has improved slightly since victory day - boosted by a jump of about 5 per cent on the day Sainsbury announced he was leaving the company - but has lagged well behind the FT-SE. Pre-tax profits have been stagnant and Sainsbury left the company in poor shape, with falling year-on-year sales and earnings little better than in 1991. New chief Dino Adriano says it will take several years to repair the company.
Robert Earl, Planet Hollywood
Labour links: bailed out the party with an emergency pounds 1m when in November 1997 Labour repaid the same amount to Formula One's Bernie Ecclestone. Close associate of Mark McCormack of IMG, the man entrusted by Peter Mandelson with the role of finding sponsors for the Millennium Dome.
Performance: in the week of Earl's donation in November 1997 Planet Hollywood's shares were worth $147/8. They are now down by 95 per cent to $3/4. Profits before tax of $13.2m have been turned into losses of almost $250m. If Labour had taken the donation in the form of Planet Hollywood shares, the million would be worth just pounds 50,000 now.
Labour links: organiser of the New York branch of New Labour and, as president of US book publishing giant Random House, cemented links between Blair and Democratic Party fund-raisers, election strategists and intellectuals.
Performance: after a poor run of form under Evans' leadership, Random House has ceased to exist as an entirely distinct business entity. Disasters included the $5m (pounds 3.1m) paid for Marlon Brando's autobiography. When Evans left Random House, in November 1997, the publisher had only three titles in the US top 30 best-seller list - all of them bought by his successor as president, editor-in-chief Ann Godoff. Random House survives as an imprint, but the business was bought by Bertelsmann in 1998.
Lord Hollick, United News & Media
Labour links: long-term Labour financial backer, active fund-raiser and member of Labour's advisory commission for business. Swung the Express, once the greatest gun in the Tory media arsenal, behind Blair. Likewise demanded assurances that the Mirror, where he was briefly an influential director, would continue to support Labour when it was refinanced in the wake of the Maxwell affair.
Performance: share price was 722.99p on victory day, rising by only 5 per cent to 759.50p on the second anniversary of the New Dawn. But this week shares were down to well below 650p. The shares have massively under- performed against the FT-SE average and the booming media sector since Blair came to power. Questions continue to be asked about the Express titles, where lack of direction and poor strategic management have been identified as problems by analysts. Group pre-tax profits for 1998 were down by 50 per cent on the 1997 figure.
Gerry Robinson, Granada
Labour links: describing himself as "a life-long Tory voter" Robinson came out in favour of Blair at the last election, saying: "The party has made a sea-change in its attitude. From a business viewpoint I think it is a very healthy change." This endorsement, from the chairman of an pounds 8bn company employing 67,000 people, had a big impact on the campaign. Replaced Tory peer Lord Gowrie as chairman of the Arts Council.
Performance: shares were 890p on victory day, rising to 1,328p on the second anniversary this year. This is by far the best performance of major Blair business buddies, since it has tracked the average performance of the FT-SE over the same period. But despite the more high-profile media interests, about two-thirds of group turnover (stagnant at around pounds 4bn) comes not from new hi-tech knowledge industries but from the low-skilled, low value-added burger-flipping economy, identified by New Labour as the symbol of Britain's decline.
Lord Simon, ex-BP Amoco
Labour links: the BP chairman became close to New Labour in 1996 when he joined a group of 12 senior European businessmen set up by then European Commission President Jacques Santer. He revealed himself as pro-European, advocating a reformed version of "the European social model" for Britain. At one point he was thought of as a candidate for the head of the No 10 policy unit after a Blair victory. In the event he was elevated to the Lords, joining the Government as Minister for Competition in Europe. He refuses to draw his pounds 51,000 ministerial salary.
Performance: after years of unspectacular performance under Simon, BP has soared ahead since he took the ermine and went off to advise New Labour full time - showing that the Curse of Blair also works in reverse. A share price of 708p on victory day, when he left, has soared to 1,179p on the second anniversary.
n 'Advising Government - a Report on Government Sponsored Advisory Bodies' by Cranfield School of Manage-ment. Sponsored by The Industry Forum. 0171-437 3809.
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