Labour won't win economic credibility by attacking easy targets | Nils Pratley

It’s the knockabout stage of the general election campaign so there’s no real harm in the leader of the Labour party summoning a few business villains for the crowd to boo. But let’s hope the manifesto will offer a more nuanced analysis of business in the UK. If business, in all its variety, ends up in the wrong half of Jeremy Corbyn’s “who side are you on?” divide, the bogeyman approach will become tedious.

The Duke of Westminster, Mike Ashley, Jim Ratcliffe, Rupert Murdoch and Crispin Odey may deserve a few verbal jabs but it was impossible to tell from Corbyn’s speech if he was proposing policies that would tame their alleged sins or was simply naming a few rich individuals he dislikes.

Ashley was accused of not paying his workers properly, which was definitely true at one point because Sports Direct had to pay a fine and back pay after this paper’s revelations about working conditions at the Shirebrook warehouse in 2015. But, if Corbyn is alleging that Sports Direct still isn’t paying the minimum wage, he should ring HMRC and ask it to investigate. In the meantime, Amazon, which pays a lot less corporation tax in the UK than Sports Direct, might make a more interesting target.

Ratcliffe at chemicals firm Ineos was said to “make his money by polluting the environment”, in which case Labour presumably has policies to curtail such activities. So which bits of Ineos, a company with a wide span of products and a large UK workforce, would be closed?

Hedge fund manager Odey was on the list because “he makes millions betting against our country”, a reference to his shorting of the pound. But, unless Labour intends to abolish currency trading or hedge funds, it’s hard to guess what the policy response would be.

Some elements of Labour’s business proposals are already known, of course. The most eye-catching are the nationalisation programme and the “inclusive ownership funds” that would distribute 10% stakes to the workers over a decade while also being a nice dividend earner for the Treasury. It’s unlikely that either policy will be applauded widely in the business world.

But there is a wider point. There is a lively – and overdue – debate raging in boardrooms about the nature of the corporation and how the duties of directors should extend well beyond the maximisation of shareholder value, the dominant philosophy for far too long. When former Unilever boss Paul Polman said this week that “we need to build a new model of inclusive and sustainable capitalism”, he was making an argument that is gaining ground.

Is Labour going to tap into that spirit? One hopes so because it might chime with other messages about addressing executive pay abuses and promoting worker representation. But the tone needs to be sophisticated. Calling out a few baddies plays splendidly with core supporters but floating voters will be assessing Labour’s economic credentials. It would be better to say occasionally that the taxes that business pays on its profits are crucial.

Whose in the driving seat of the Fiat Chrysler/Peugeot merger?

The industrial logic behind the merger of Fiat Chrysler Automobiles and the Peugeot owner, Groupe PSA, is hard to dispute. The duo think €3.7bn (£3.15bn) can be saved annually, in time, before the sensitive question of plant closures is even addressed. One can also understand how. In combination, the firms can avoid duplication in research, combine platforms and get better prices from suppliers. When you’re selling 8.7m vehicles a year that stuff can add up to a large number.

But is it right to call it a merger? Each set of shareholders will get 50% of the new Dutch holding company, but that’s not the whole story. Fiat Chrysler is extracting a lot more value, in the form of cash and businesses, before the transaction takes place. The share price reaction told the tale – Fiat Chrysler up 8%; PSA down 13%.

PSA gets the better end of the boardroom split, with its chief executive Carlos Tavares behind the wheel, but it’s paying for the privilege. A Jefferies analyst reckons PSA is paying an effective 32% takeover premium for control. The Italian Agnelli family, which control Fiat Chrysler, look to be the winners.

Lloyds looks in decent shape despite £22bn PPI hit

By way of reminder, Lloyds Banking Group’s first estimate of its bill for mis-selling payment protection insurance, or PPI, was £3.2bn. That was back in 2011. Final total: £21.8bn, probably.

The last gasp of PPI ruined the quarterly figures but, beyond the minimal headline profits, life doesn’t look too bad. “Credit quality remains strong,” said the bank. If that assessment is correct, it’s a decent boast at this late stage of the business cycle.


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