‘A John Lewis economy’ was a strong soundbite from Nick Clegg, even if it failed to resonate with Netto shoppers lower down the social scale than the Cleggs. The Deputy Prime Minister is ‘pushing for real, early, radical action’ to make this ‘the decade of employee share ownership’, and no one can deny he’s picked a potent theme at a time when conventional capitalism seems hellbent on self-destruction. But having bagged a headline, he should pause to ask himself this: if John Spedan Lewis invented such a brilliant business model — which he did — then how come it hasn’t been copied again and again?
There are only a handful of enduring large-scale employee-owned businesses in Britain. After the Lewis-Waitrose combo the most celebrated is Unipart, the car component supplier that is 70 per cent owned by its workforce and pension fund, with sympathetic institutions holding the rest. Formerly the spare parts arm of British Leyland, it has been led since its 1987 buyout by one man, John Neill; what makes it tick, besides the commitment that comes with ownership, is a philosophy that Neill calls ‘the Unipart Way’, all about empowerment and self-improvement. It sounds cult-like but it works — and the Unipart model has often been held up as an alternative to full-blooded privatisation for troublesome parts of the public sector such as Royal Mail.
Less well known is the Scott Bader Commonwealth, a multinational chemical firm headquartered in Northamptonshire and employing 560 people. Its founder, Ernest Bader, placed the company in the ‘common trusteeship’ of its workforce in 1951, and they continue to uphold his Quaker-influenced principles. Inspiration and Reality, the late Robert Oakeshott’s history of Scott Bader’s first 50 years, identified the compromises that come with such high-mindedness: how the inability to bring in outside capital limits investment in new projects, while unusually generous employment terms squeeze profit margins. The nature of such companies makes them cautious rather than bold, but that’s no bad thing in the long run. All three of these examples are, in their way, hugely admirable. Yet they have not been replicated because each is the creation of a driven individual with a vision — and a willingness to give away or share wealth that he might otherwise have kept to himself. There aren’t many of those around, and Clegg’s ‘radical action’, with tax gimmicks attached, won’t make more of them. What we might get instead is a surge in the City’s form of employee share-ownership: bankers laden with share options, gambling with other people’s money as if it were their own.
Tesco trouble
By contrast with John Lewis — where sales were 6.2 per cent up over Christmas — Tesco is in trouble, having issued its first profit warning in 20 years and seen £5 billion wiped off its market value. After decades of expansion, the empire suddenly looks bloated and tired. So I remind you of what Ross Clark wrote in May 2008, in an article titled ‘Tesco I hate you — and you need to know why’: ‘When the last few Tesco superstores are sold off to a chain of cheap and cheerful bowling alleys around the year 2030, just remember that you read about the decline of Tesco here first.’
The Truffle Index
Have Anglo-Saxon habits infected the truffles of Périgord — or is a rogue trader at work? Sunday found me at the annual fête de la truffe in the medieval town of Sarlat, hoping to bring home some voxpops about Standard & Poor’s downgrading of French debt from triple-A to double-A-plus. But the crowd was too absorbed in the serious business of gastronomy: sampling amuse-bouches offered by local chefs, all based on the pungent Tuber melanosporum and ranging from truffled cappuccino of ceps (delicious) to truffled macaroons (yuk).
But what really caught my attention was the behaviour of wholesale truffle prices. In the big freeze of 2009–10, these passed €1,000 a kilo, but after the recent mild autumn they opened in late November at €400, doubling to €800 by mid-December when the volume traded also doubled. After Christmas they dropped to €500, but have perked up to €600 again. That’s what I call volatility. There’s something inherently sinister about these ‘diamants noirs’, and someone’s making a killing in them.
I tried to spot the villain amid the gourmet throng. Maybe it’s not a human being, I fantasised, but a laptop lurking behind one of Sarlat’s shuttered facades — a bit like the super-computer in Robert Harris’s The Fear Index, which I happened to have been reading all weekend. ‘One could no more pass moral judgement on it than one could on a shark,’ writes Harris at a climactic point in his gripping narrative. ‘It was behaving like a hedge fund.’
A flotation to celebrate
Nick Clegg grabbed another headline by dismissing Michael Gove’s leaked suggestion of a new Royal Yacht — but both seem to have overlooked my own value-for-money proposal (4 June 2011) that Britannia should be recommissioned as a 90th birthday present for the Duke of Edinburgh. My idea was that she should resume both royal duties and her part-time role as a prestigious venue for overseas missions selling British financial services — and that the entire cost should be met by ‘a whip-round in the City, as a gesture of atonement for distress caused and gratitude for past business generated’. The 58-year-old yacht, now a sad tourist trap in Leith dock, has been leaking and listing lately, so perhaps not even the seadog Duke would be keen to put to sea in her again. But the £60 million price of a modern replacement would be just 1.5 per cent of the £4 billion-plus bonus pot that will be paid out in the City in the next couple of months. As I said last year — only more so, for the Jubilee and the Duke’s 91st — ‘how the nation would cheer’.
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