Any other business

George Osborne’s cynical grab for northern votes (and why I’m for it)

Plus: The UK drug company that’s not scared of a takeover bid, and remembering Felix Dennis

28 June 2014

9:00 AM

28 June 2014

9:00 AM

When John Prescott used to wax garrulous about a ‘superhighway’ from Hull to Liverpool, everyone assumed it was a wheeze to spray southern taxpayers’ money across the region he saw as his power base. When George Osborne decided to ‘start a conversation’ this week about a super-city along the same route, an English equivalent of Germany’s Ruhr valley connected by yet another decades-away high-speed rail project, everyone assumed it was about recapturing votes in northern conurbations where Tory MPs and councillors are an endangered species.

But on past form you’d still expect me — ardent northerner and rail buff that
I am — to embrace this back-of-a-Downing-Street-envelope concept, however cynical its origin; and yes, I’m ready to do so. It makes at least as much sense to upgrade the trans-Pennine rail route to ‘HS3’ for Osborne’s vague estimate of £7 billion as it does to go the whole hog for £42 billion and counting with HS2 from London to the north.

As for the ‘super-city’, doubters say it’s
a recipe for strife between rival local authorities, and that any entity that has Saddleworth Moor in the middle of it will never make a conurbation. But the jockeying for position would bring out the best in each of the component cities, like some urban X Factor contest. Liverpool, currently hosting the International Festival of Business that is Britain’s biggest trade fair for more than half a century, might grab the sales and marketing portfolio. At the other end of the line, Hull might extend its role as 2017’s ‘UK City of Culture’. York, advertising itself as ‘the northern tiger’, will clamour for a curve in the route that will allow it to get in on the act. Leeds, still reeling from the boom and bust of the past decade, might find a way to raise its game at last.

As for Manchester — conference destination, hub airport and birthplace of free trade, computer science and the miracle material that is graphene — it has the most progressive administration of any English city, and the most coherent networks of civic, business and university bigwigs. It should clearly lead the whole project, however much that puts its neighbours’ noses out of joint. I’ll be happy to chair some blue-sky sessions to get them all started.

An open market

How curious that another admired UK drug company is under attack from an American predator — but this time there’s hardly any fuss at all. Shire plc was founded by a British team in 1986 as a maker of calcium supplements for osteoporosis sufferers, and has its main operation in Basingstoke though its head office is now in low-tax Dublin. It has rejected a £27 billion bid approach from AbbVie of the US, but Shire’s Danish-born chief executive, Flemming Ornskov, shuns the nationalistic tone of AstraZeneca’s ‘save our science’ defence against Pfizer. ‘Everybody can show up and bid for Shire,’ he says cheerfully. ‘It’s an open capitalist market. I’m an acquirer myself.’ That’s the authentic voice of globalised ‘big pharma’.

Fair wind for TSB

The TSB flotation turned out as well as could be expected in a lukewarm market for new issues — to the relief of all concerned, including the Treasury and the bankers responsible for pricing and ‘bookrunning’. After last year’s Royal Mail sell-off, Goldman Sachs and UBS were summoned before the Treasury select committee to explain why their pricing at £3.30 was justified even though the shares shot up to £6.50 and have rarely dipped below £5 since. In TSB’s case, Citigroup and JPMorgan Cazenove, with UBS in support, can look relatively smug. The parent Lloyds Banking Group was able to sell 35 per cent of TSB, rather than the 25 per cent originally planned, and at a higher price than first anticipated; the issue was ten times oversubscribed, and the shares moved to a respectable 13 per cent premium — just enough to reassure investors by offering a modest profit if they wanted to take it. TSB’s sound balance sheet and promise of no more than 15 per cent bonuses for managers (even though chief executive Paul Pester will earn £1.7 million this year) contributed to positive sentiment. So all is set a little fairer for Lloyds’ sale of the remaining 65 per cent of TSB next year and, more importantly, the Treasury’s sale of its remaining 25 per cent stake in Lloyds, via a retail offer of which news is awaited in the autumn.

Poetic genius

I once had a memorable dinner with the publisher Felix Dennis in the upstairs room of an Irish-themed Fitzrovia pub. He was affable — elaborately so in my direction — but those who knew him better were wary of his strange and volatile temperament. I was also a regular visitor to his offices in nearby Cleveland Street, though I never ran into him there; like Sir Richard Branson he preferred to run his empire remotely, unfettered by tedious routines of business life, through loyal, sharp-pencilled subordinates. But what a money-maker he was, even if the half-billion fortune he has now left behind did not buy him much contentment.

His instinct for magazines that would find growing markets was remarkable: if Computer Buyer and MacUser look obvious winners in hindsight, the exuberant vulgarity of Maxim (‘It’s what guys want!’) was a stroke of genius, while his decision to buy into The Week in its struggling early days, but never to interfere with the restrained format devised by its editorial founders, was even shrewder — and eventually paid off in spades.

As for his poetry — at which the literati sneered, but which sounded fine when he read it in his tired, smoky voice — he made money out of that too, selling an astonishing 10,000 copies of A Glass Half Full. And he embedded in it his best advice for would-be entrepreneurs: ‘The money? Just pester/ A likely investor/ To get what you need/ You toady to greed… Ideas? We’ve ’ad ’em/ since Eve mated Adam/ But take it from me/ execution’s the key.’

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