‘Like a scene out of Village of the Damned,’ one UBS banker describes the moment of collecting his redundancy envelope. He’s over-dramatising, I’m sure, but let’s not be unsympathetic: in my banking days I found myself on both sides of that life-changing moment, doing the sacking and being sacked, and it’s never painless, even when you’ve got a mass of fellow sackees for company. The Swiss group is culling one sixth of its worldwide workforce. Managers warmed to their task last week by cancelling the passes of 150 London staff, who join around 100,000 other City job-losers since the onset of the financial crisis; according to the Centre for Economics and Business Research, numbers in work in the Square Mile and Canary Wharf have fallen back to mid-1990s levels.
A surplus of people and a shortage of deals to occupy them, combined with multiple provisions and fines for misbehaviour, mean the bank bonus pot has been shrinking even faster: CEBR predicted it at £2.3 -billion for 2012-13, compared with £11.6 billion in 2007-8. All this is bad short-term news for tax revenues, but good long-term news for the shape of the economy. Overlay City numbers on the wider employment statistics I highlighted a fortnight ago, and you’ll find a much-desired rebalancing happening before your very eyes: from public sector to private; from financial services to more productive activities; from big, dangerous banks to smaller, focused ones. The City may well be a village of the damned these days — but it is one in which the zombies, having collected fortunes for their troubles, have the opportunity to be reborn as useful citizens.
The engineer’s eye
To York University, to conduct a sub-Paxman-style interview with Sir George Buckley, a Sheffield-born industrialist whose story is a shining encouragement to anyone in mid-career crisis. At 45, Buckley was a senior executive of British Rail; it was, he says, ‘a wonderful place to work’, full of ‘hugely intelligent and dedicated people’. But when the Major government unveiled a privatisation scheme that proposed to fragment the railway system into 70 separate companies, his engineer’s eye told him it would not work (‘Structures always fail at the joints, and this one had too many joints’). So he made a fresh start in America and by 2005 he was the only British chief executive of a Fortune 500 company — 3M, formerly -Minnesota Mining & Manufacturing, a conglomerate with more than 130 factories around the world making 55,000 products, from Post-it Notes to electronic components.
How on earth do you control such a vast business? One answer is to keep your management messages and structures as simple as possible. One of Buckley’s favourite -aphorisms is Dr Johnson’s: ‘Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.’ That thought must resonate strongly with another British contributor to -American manufacturing success, Apple chief designer Sir Jonathan Ive, but think how widely it could be applied in other spheres: in financial products, in the tax code, in all forms of regulation. Bring on the engineers.
Late run on the inside
The Chancellor is expected to name the next Governor of the Bank of England just ahead of his autumn statement on 5 December, but pundits have already run out of anything fresh to say about the favourites, deputy governor Paul Tucker and FSA chairman Lord Turner, and neither will be greeted with much of a cheer at the winning post. Perhaps that’s why there’s a late flurry of betting on an outsider who is also a Bank insider: Andrew Haldane, the executive director responsible for financial stability. He’s the Bank’s licensed lateral thinker — I quoted him not long ago on the subject of hedgehogs and foxes — and he caused quite a stir last week by saluting the Occupy movement which spent last winter camping outside St Paul’s. Their protest ‘has been successful in its efforts to popularise the problems of the global financial system for one very simple reason’, he declared provocatively. ‘They are right.’
‘Andy’ Haldane is clearly positioning himself as the man to watch — and perhaps inviting us to observe that a generation-skipping internal appointment would address the criticism, in a clutch of recent reports, of ‘excessive deference and hierarchy’ which damaged the Bank’s effectiveness in its handling of the financial crisis. It would be silly to argue that he’s too young, since at 45 he’s four years older than George Osborne and three years older than Lord Cromer was when he became governor in 1961. He’s unknown to the wider world and therefore has the advantage over Tucker and Turner of not needing a lengthy defence of his past record appended to any press release. Short of resolving the appointments of the Governor and the Archbishop of Canterbury by giving both jobs to the ex-financier Bishop of Durham, Haldane may be the solution to the Chancellor’s problem.
This is the season when I visit America — New Orleans next week — and here’s what I wrote from Los Angeles four years ago: ‘The emotion of the crowd and the near-universal admiration for [the new president’s] coolness, his eloquence, his black-but-not-quite-blackness, his sheer Obama-ness, cannot conceal the blank space where the coherent response to economic crisis ought to be.’ I certainly got that right. ‘If I had a vote here I’d have given it to Barack the beacon of hope,’ I went on, ‘but by the time Obama-mania subsides, I hope the new emperor has found some convincing clothes.’ He never did: the past four years will surely go down as modern history’s greatest disappointment, the blank space where American global leadership ought to have been.