No FT, no job ... no confidence?

The first compulsory redundancies in 100 years and a collapse of staff faith in the editor have plunged Britain's financial daily into turmoil. By Paul Vallely

They still believe in tradition at the Financial Times. Which is presumably why the redundancy notices came round in Manilla envelopes. The technique has been legendary in journalism since The Night of the Plain Brown Envelopes, when large numbers were sacked when the Daily Mail merged with the Daily Sketch. And where the Mail goes, the rest of Fleet Street follows.

Not that there is much of Fleet Street left, either as a locale for national newspaper production or as a corpus of shared journalistic heritage. The announcement of compulsory redundancies at the FT - the first in more than 100 years - marks one of the final nails in the coffin of the old ways. Some 30 journalists are to be made redundant, including all six staff photographers on the paper. Most night staff are to lose their four- day week. Reporting teams are to be "reorganised". A Web desk is to be established for increased electronic output. And the editorial budget is to be cut by 5 per cent.

The result has been a unanimous vote of no confidence in the editor, Richard Lambert, and his deputy, Andrew Gowers, whom staff have come to see as Lambert's Mephistopheles in the matter. There is a Beelzebub, too, in the shape of Stephen Hill, the FT's recently appointed chief executive, who arrived from the company's regional newspaper arm, Westminster Press, with the reputation of a cost-cutter.

Hill sees newspapers as mature products - which is business jargon for over-the-hill. He has already closed the vast print plant the FT built in the heady late 1980s, when the City was booming. He has shut the advertising offices in Bristol and Birmingham, with the loss of nine jobs; five more jobs have gone in the computer services department, five in the post- room and two with the closure of the "strategic intelligence unit".

So what? Isn't this just another tale of the downsizing of modern industry? The plan involves the loss of some 20 of the 121 sub-editing and production posts and the departure of a mere four of the 144 writing staff. It seems pretty modest by contemporary standards - the sort of thing which the FT management page is full of and which its leaders advocate that British industry should be embracing with enthusiasm. Physician heal thyself?

Well, we know what happened to the first chap to voice that response. (It was Christ as he told the people of Nazareth that he wouldn't be doing any miracles there; the reaction of the locals was to try to throw him off a cliff.) Something rather similar may be about to happen to Andrew Gowers this week, as he embarks on a penitential round of the FT's departments, where he says he plans to spend six hours a day for the next 10 days trying to allay the fears of the paper's staff.

The Financial Times has always stood for the highest standards in British journalism. Accuracy and authority are its hallmarks. Traditionally, those have been purchased with high staffing levels and a great investment of time in all areas. Many of its writers are not journalists who would survive in white broadsheets so much as policy analysts who spend far longer gathering material and analysing it than is possible on most papers. It has always been well staffed on the subbing side; it has a team of about seven or eight subs each night just for the front and back pages. But the jewel in its crown is its network of foreign correspondents, which it has continued to expand just as other newspapers are cutting back.

The result is a good track record on reliability, good exclusives and in-depth coverage of affairs like the collapse of Barings; and, as the rest of the British press becomes more little Englander, it is ever more international. But its specialism can also be an excuse for laziness, for telling the newsdesk: "It's an old story". Part of its culture is unjournalistic and slow-moving. Often, its coverage and interests are arcane; it makes little concession to readers and much of the paper is - its own readership surveys show - dull.

The result is a paper which never seems able to make up its mind whether it wants to appeal to the general business reader or just to the City, whether it sees its main growth market in the UK or abroad and now, whether it sees its future in newsprint or in an electronic medium.

All this has been compounded by increased competition. The Wall Street Journal now has more than a million international readers. The Economist (which FT staff regard as flash and glib) has internationalised and marketed itself far more successfully. Wire services, like Reuters and Bloomberg, disseminate financial information the day before the FT comes out.

It was in an attempt to tackle these core conundrums that, three months ago, the FT management brought in expensive German consultants to conduct a lateral review of the editorial structure and production process. "There were no management presuppositions," insists Gowers. "The idea was to harness the ideas of staff, rather than imposing some of our own."

The journalists agreed to co-operate, with some misgivings. The consultants were bright, young, excited. Journalists put in a lot of work on the consultation groups, which were intensive and took three or four hours at a time.

It was at one of these groups that Gowers let slip that the aim was to reduce the head count by 10 per cent. Between 20 and 40 jobs would go. Draft floor plans showed lots of large spaces where there used to be people. The staff decided that the consultation exercise was "being twisted toward making a case for job cuts". They withdrew their co-operation.

Discontent focused on Gowers, who was accused of being a mediocre manager and of misleading people at crucial times. His apologia for the cuts was seen as an attempt to position himself for eventual succession to the editorship. Then, Stephen Hill was appointed chief executive and fears of cuts escalated. The editor issued a memo saying he would not countenance cuts that would damage the paper's quality. "He should have just come clean," said one FT insider, "Lambert is far too decent and gentle a man to be doing all this: he feels the hurt it has all caused very deeply."

Such a response echoes the past rather than what many staff fear will be the future. Until now, the paper's owner, the Pearson group, has been a model proprietor, not interfering even when Lambert supported Labour at the last general election. But Pearson - which has been described as a fairly sleepy organisation, full of upper-class ex-army types - is now under pressure. Rumours of bids to take over the group and break it up have increased the pressure to deliver more profits and adopt a more aggressive management style. "But tough management," says Gowers, "which would not only maintain standards but enhance them by taking advantage of new technologies and improving training and appraisal."

One of the characteristics of life on the FT until recently has been that leaving parties were most often held for people who had been on the paper for 25 or 30 years. "Everyone at the FT now assumes that is all gone," says one staffer. "Morale at the paper is at rock-bottom." Andrew Gowers is not in for an easy week.