Funny how little phrases go viral. Suddenly everyone’s talking about ‘fasting diets’, ‘zombie companies’ and ‘leadership plots’. As to the first, the idea of the ‘5:2 intermittent fasting diet’, I gather, is to eat as little as you can for two days a week. It’s all over the media, and any moment now someone will call George Osborne’s fiscal strategy ‘the 0:7 fasting diet that’s starving us of protein for growth’, or some such. There you are, Mr Balls: yours on a plate, as it were.
But ‘zombie companies’ are not so easy to explain. Financially speaking, these are businesses that are surviving but unable to invest in new capacity, kept alive only by low interest rates and banks’ unwillingness to convert them into bad debts by pulling the plug. More loosely, the phrase applies to retailers — the likes of the Blockbuster video chain, which went under last month — that go on trading long after their high-street business models are overwhelmed by online alternatives. Zombies are offered as a reason why the low levels of insolvency and high numbers of private-sector jobs in this extended downturn are not the positive counter-indicators they appear to be: capital and labour are being ‘hoarded’ in moribund businesses, depressing productivity and inhibiting the Darwinian process by which, as the hard-nut turnaround investor Jon Moulton told the BBC, ‘things are tossed on the bonfire and something better emerges… We need failure as part of the solution.’
All very Austrian School, you might think, and unkind to business owners who have chosen to batten down the hatches, preserving the jobs of loyal staff on a part-time basis if need be until the upswing arrives. The pattern of struggle is as evident by observation in any small town, including mine, as it is from statistics reported by the business rescue specialist Begbies Traynor under the headline ‘Green shoots of recovery despite GDP gloom’. The number of ‘distressed’ companies fell by 12 per cent overall between the third and fourth quarters of 2012, with zombies in property and construction beginning to awake while the trance-like state continues to afflict ‘consumer-facing’ businesses in retail and hospitality. I’m probably the first pundit to find a metaphor in the distinctly non-Darwinian film comedy Shaun of the Dead (2004), but it did remind us that some zombies eventually become useful citizens again.
And a plague of the hideously undead is no explanation at all for the fact that employment numbers have not just held steady but actually keep going up. I’ll return to that conundrum at length shortly.
The plot certainly isn’t getting thinner at Barclays, as the departure of the old guard continues; this week saw the early retirements of finance director Chris Lucas and in-house legal chief Mark Harding. Meanwhile, another billion was set aside for mis-sold insurance and swaps, and investigations continue into the 2008 capital injection from Qatar that saved the bank from a bailout but left a whiff of dangerous sophistication behind. One former director I’m glad to see at least partially vindicated, however, is Alison Carnwath, who as chair of Barclays’ remuneration committee was obliged to defend Bob Diamond’s £2.7 million 2011 bonus at last April’s AGM, and found almost a quarter of shareholders’ votes cast against her re-election. She resigned in July, claiming to be too busy as chairman of Land Securities, but last week told the Parliamentary Commission on Banking Standards that she had in fact argued for a zero Diamond bonus only to find herself in a minority of one, stitched up both by the complacent fat cats (my words) at her committee table and by the corporate imperative of a unanimous recommendation.
Neil Collins in the FT argues that she should have resigned as soon as she lost the argument, but that’s a bit harsh if she felt she could bring reason to bear by staying. Before her exit I wrote that she ‘might even turn out to be the right person to succeed Marcus Agius’ as Barclays chairman. That chalice passed to 73-year-old Sir David Walker, who surely can’t hold it for long; Mrs Carnwath stays on my shortlist.
A vote for Jesse
I’m less of a political animal than I used to be, but I do love a Tory ‘leadership plot’. Let me declare immediately my enthusiasm for Bruce Anderson’s candidate, Hereford MP Jesse Norman, who worked with me in the City in the early 1990s on privatisation schemes for Poland and Hungary. Jesse combines high energy, good manners, an original mind and a deep interest in Conservative philosophy with perpetual cheerfulness — an attribute especially prized by this column. I also remember a Labour grandee once describing Jesse to me as ‘that idiot’, and rejoice to see that opinion confounded.
As for Boris, I have a mental picture of him after dinner in Brooks’s a decade ago, cigar ash scattered all down his front, muttering ‘I wannabe prime minister, yup, that’s what I wannabe, prime minister’ — and I probably have enough unpublished anecdotes to parlay for a quango chairmanship and a CBE if he fulfils the ambition he has lately chosen not to express.
Then there’s Adam Afriyie, who seems to have declared his hand (or had it declared for him) a mite too early. Naturally I admire the entrepreneurial skills that brought him a fortune from DeHavilland, the information services company he sold to Emap for £18 million, and Adfero, his ‘search engine optimisation’ venture. But a personal glimpse left a less positive impression; it was at the 2002 party conference in Bournemouth, just before he was selected for Windsor, and I was waiting to check out of the Norfolk Royale Hotel while he pursued, in tones of one who had no doubt of his own future importance, a furious complaint about his room bill. Suffice to say, the sympathies of the lengthening checkout queue were very much with the polite but unyielding hotel manager — who by a trick of memory I recall looking strangely like Jesse Norman.
This article first appeared in the print edition of The Spectator magazine, dated 9 February 2013