Banking on the Barclays

The Barclay brothers' reputation as hands-off proprietors is unduly flattering. But perhaps the real worry for the Telegraph is their love of cost-cutting, says Tim Luckhurst
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Opposite the unfinished and vastly over-budget Scottish Parliament building in Edinburgh stands Barclay House, modern home of The Scotsman. Barclay House was completed on time and on budget. Sir David and Sir Frederick Barclay know how to run construction projects. Absent so far is any proof that they have parallel expertise in newspapers.

The paper is on its sixth editor in eight years. It experimented with tabloid and broadsheet second sections, before reverting to a single-section broadsheet format. Neither personnel nor format changes have turned the tide. Scotland's self-proclaimed national newspaper has declined to a daily sale of fewer than 70,000 copies. Its pro-market, Eurosceptic, pro-American line does not sit comfortably with the social-democratic consensus that is political Scotland. The Scotsman's scepticism about devolved government, though justified by the evidence, looks to many like a betrayal of the its historic line.

In 2002, when the Barclays expressed interest in acquiring Scotland's other broadsheet, The Herald, political opposition was widespread. The Scottish National Party condemned "the Barclay brothers and their destructive Svengali Andrew Neil". At Westminster, politicians including Helen Liddell, then Scottish Secretary, and Robin Cook argued against Barclay control.

In Scotland, then, where the Barclays already own what was once the main Establishment broadsheet, their reputation as newspaper proprietors is not good. They are accused of running newspapers simply to promote their personal opinions. Critics say they do not care about the traditions of titles such as The Scotsman and are happy to squander goodwill to use them as bully pulpits. So, should staff and readers of the Telegraph titles be quaking in their boots? Having edited The Scotsman under Barclay ownership, I believe that the future is less predictable than their Scottish record implies.

In my three years as assistant editor, deputy editor and editor of The Scotsman, I saw them only once: when they attended the royal opening of their state-of-the-art new headquarters. That was a bizarre occasion. Against the instincts of the editorial team, the proprietors insisted on wrapping the Edinburgh edition of the paper in a commemorative cover. We did as we were told.

Apart from that, Sir David and Sir Frederick Barclay rarely interfered directly. Their campaign to change the inheritance laws of the Channel Island Sark resulted in the appearance of some eccentric pieces on our op-ed pages. On the 10th anniversary of Margaret Thatcher's departure from Downing Street, they were angered by a special section that portrayed their friend Thatcher in a purely Scottish and therefore unflattering light. Editors were instructed always to maintain a pro-union and pro-market stance, and those instructions were issued with unambiguous proprietorial backing. But on a day-to-day basis they were hands-off owners.

During the ferocious takeover battle for the Bank of Scotland, Sir David Barclay was approached by one of the interested parties, who objected to the editorial line adopted by my predecessor, Alan Ruddock. His response was to call Ruddock and tell him to follow his own instincts.

The running of the business was entrusted to Sir David's son, Aidan. I met him on several occasions when he made visits to Edinburgh. During one of them, I was invited to dinner in a private suite at the Balmoral Hotel. Aidan Barclay listened attentively and asked perceptive questions. He showed little interest in Scottish politics but an impressive grasp of the commercial property market in Edinburgh. He once phoned to congratulate me on an exclusive that had won coverage on both sides of the Atlantic, and phoned me to offer sympathy when I was unwell. But with those exceptions, he appeared content to leave the running of the titles in the hands of executives and his publisher, Andrew Neil.

Neil's instincts are not those of the Scottish Establishment. He has encouraged successive editors of The Scotsman to question the value of devolved government and has used the newspaper as a platform for his own eloquent condemnations of Scottish Labour's stranglehold on power. If his tone has alienated The Scotsman's traditional readership, and there is little doubt that it has, it has also introduced to Scotland a dissident note previously lacking from the regional media.

In financial terms, the Barclays were initially generous owners of the Scotsman group. In their first five years, they authorised editorial budgets that allowed the recruitment of foreign correspondents, feature writers and big-name columnists including Michael Portillo. For a while, The Scotsman had more money to spend than ever before. Journalists were recruited from London titles, and salaries were increased to match their expectations. Pagination was extended, and the newspaper, particularly under Ruddock's editorship, began to look like the serious, upmarket British national broadsheet it had always claimed to be.

The shame was that the investment was never matched by a long-term vision for the title. When the serious, intelligent approach that Ruddock pioneered with great style failed to convert new readers, I was appointed with a brief to cut spending, reduce pagination and adopt an agenda tailored to compete with the stupendously successful Scottish edition of the Daily Mail. My successor, Rebecca Hardy, who was recruited from the Mail's London edition, gave that her best shot and was sacked when additional sales achieved through ruthless price-cutting failed to stick as soon as The Scotsman reverted to a realistic cover price.

That is the biggest failure of the Barclays' Scottish operation. Their mistake has been not to interfere aggressively with content, but rather to believe that a newspaper can change its identity overnight without alienating loyalists. My impression was that Aidan Barclay thought tactics that delivered results in retailing or property businesses could be applied without adaptation to a newspaper. As a result, despite the investment of many millions of pounds, The Scotsman has run on a series of very short-term plans, none of which has consolidated its position in the market. Its helm has become the least-coveted editorial post in Britain.

There is a view that Sir David and Sir Frederick have not been unduly concerned by problems at The Scotsman and the bad publicity they have generated. In that version, the business represents a barely noticeable fraction of their empire. They spent a great deal on trying to resuscitate The European and simply closed it when it failed to find a market. They are not sentimental owners.

But that is not entirely fair. The real evidence from the Barclays' involvement in newspapers so far is that they appoint a management team and trust it to get on with the job. In Scotland, that team started at odds with public opinion and has remained in that uncomfortable position.

The brothers' publisher, Andrew Neil, would not be as instinctively hostile to the interests and concerns of Telegraph and Spectator readers as he has been to Scotsman loyalists. But it is perhaps revealing that Neil has not been involved in the brothers' negotiations to acquire a controlling stake in Hollinger International.

As the Barclays come close to winning titles that will give them the influence they seem to crave, the big question is who they will recruit to run them. They can afford the investment that the Telegraph requires. Their track record suggests that they will not hesitate to spend immediately after acquisition of the paper. The dilemma will be whether to entrust the new acquisitions to a publisher whose career suggests that he may understand Middle England rather better than he grasps the public mood in his native land.

Tim Luckhurst is a former editor of 'The Scotsman'