It begins.
Hat-tip: CL&G.
Wednesday, 6 October 2010
Car crash TV
Last night's Newsnight with Theresa May trying to explain the current position on Child Benefit. I actually found it painful to watch as you could almost see the ground disappearing from under her feet as she spoke.
Tuesday, 5 October 2010
My lazer sharp political ears smell an unpleasant message for Cameron
If the jungle drums from the Tory conference are to be believed then the writing is on the wall. In a word: Osborne has guffed. And as Iain Dale eloquently puts it:
David Cameron has an acute pair of political nostrils. And if he is sniffing the wind this morning I think I know what he will smell.Indeed, that distinctive and unpleasantly eggy aroma in the conference hall is the unmistakable whiff of poorly thought through policy. And Osborne has definitely let one go in this instance. But Cameron can't complain, he was involved in this decision too. To quote Disraeli: he who smelt it, dealt it.
Monday, 4 October 2010
Interesting...
What's going on here then? Look at all the groups listed (LSE, CBI, IoD, NAPF) as opposing moving the UKLA to the FRC. Perhaps it is, as it says on the tin, a grumble about pointless deckchair shuffling (but then that's the HMT White Paper in a nutshell!). But you get the feeling there's more to it. Check out the CBI quote:
"It is not clear what the proposal to merge the UKLA with the FRC is seeking to achieve. UKLA is a real-time markets regulator whereas FRC is a standard-setting regulator."But in that case I refer the honorable gentleman to the HMT consultation document (which I can't believe he hasn't read!) which states:
"The Government believes that, within the proposed new regulatory architecture, there is a strong case for a powerful companies regulator established with responsibilities for regulating corporate governance, corporate information and its disclosure, and the stewardship of companies by institutional shareholders."It's explicit that this is intended to be a step towards creating a companies regulator. And my suspicious side leads me to think that is what is being (indirectly) opposed.
Beware a 'nudge' fudge on pensions
According to one report, the Government's response to the review of auto-enrolment may now appear later in the year. As Nigel has posted previously, here are some unpleasant rumours circulating about how the Coalition may undermine the consensus that has been built up around the policy. Of course it would all be pitched in terms of the difficult economic environment - especially exempting smaller businesses.
But this would - of course - be a major retreat from arguably the most high-profile Nudge-inspired policies*. Auto-enrolment as a way to 'nudge' people into saving is given a good bit of coverage in... err.. Nudge. And go back and read through the DWP docs first setting out auto-enrolment and you will see referenced one R Thaler, now an adviser to one D Cameron's Behavioral Insight Team. Therefore if the Coalition does back away, even partially, from auto-enrolment then someone ought to seek out Thaler's views.
* This is also why I find it irritating when Labour supporters take the mick out of the Tories over 'nudging'. a) we got there first and b) we should not surrender this ground to the Right.
But this would - of course - be a major retreat from arguably the most high-profile Nudge-inspired policies*. Auto-enrolment as a way to 'nudge' people into saving is given a good bit of coverage in... err.. Nudge. And go back and read through the DWP docs first setting out auto-enrolment and you will see referenced one R Thaler, now an adviser to one D Cameron's Behavioral Insight Team. Therefore if the Coalition does back away, even partially, from auto-enrolment then someone ought to seek out Thaler's views.
* This is also why I find it irritating when Labour supporters take the mick out of the Tories over 'nudging'. a) we got there first and b) we should not surrender this ground to the Right.
Sunday, 3 October 2010
Labour back in front - part 2
A couple of polls today have Labour in the lead, by 2 and 3 points respectively, with one having us behind. So, based on other polling results in the week, there was a bit of a post-conference bounce it seems. But this is clearly fairly meaningless and whilst we have probably hoovered up left-leaning Lib Dems I would be surprised to see a result like this if there were an election today.
Encouraging stuff, provided you don't take it too seriously.
Encouraging stuff, provided you don't take it too seriously.
maybe not today, maybe not tomorrow, but soon...
I've posted a couple of times previously about my belief that we are going to see a shift away from a market-focused approach to governance to one in which others (primarily regulators) play a bigger role. Despite the publication of the Stewardship Code, and the apparent desire amongst the key interested parties in the UK to keep a shareholder-centred model, I am increasingly convinced that a regulatory turn is on the cards.
Why?
1. I am not convinced that the asset management industry in general is concerned enough to lobby hard in defence of the UK model. IMA research seems to bear out the intuition that most managers think governance matters a bit, but not enough to put real resource behind it. And most clients are not bothered - so where is the commercial incentive? The Stewardship Code may result in some upskilling across the industry as a whole, but I think this will be overwhelmed by other trends.
2. Regulators and/or states have real power to intervene in companies in a very forceful way. They have been reluctant to do so pre-crisis, but the situation is surely reversed now. It is more risky (reputationally) to not intervene. The govt booted out Fred Goodwin, not the shareholders, the FSA barred Johnny Cameron. I don't think that asset managers who are not as a whole even convinced of the intellectual/economic case for activism are going to achieve anything similar. And what matters is what works, I seem to remember someone saying.
3. Pay. Governance isn't well paid, except for a handful, but regulators are belatedly open to the idea that you have to shell out if you want to attract poachers turned gamekeepers. A lot of good people wouldn't think twice about a job in corp gov at an asset manager because it offers neither financial or reputational rewards comparable with those elsewhere. That matters - companies see how much money asset managers put into corp gov too.
4. Europe. The tone of the EC Green Paper looks to me like the direction of travel. It's worth noting that beyond a couple of nods to employee representation and a wider conception of directors' duties, it doesn't herald a turn back to the Rhineland model. It's a regulatory turn, not shift to stakeholder capitalism.
5. Politics. I don't think the restart of the upwards march in exec pay, return of big bonuses etc, can survive another attempt by politicos to kick it into the long grass by saying 'it's a matter for companies, rem comms and their shareholders'. There will be pressure to intervene more directly.
In all of this I am by no means expecting an overnight change. It may take several years to work through and the direction of travel won't always be obvious. But I think the signs are there already, and I struggle to see how an investment industry that is structured around an entirely different conception of what share ownership is about can make stewardship work quickly enough to fend off the inevitable.
It's also worth noting that this is no way a triumph for the Left or other critics of the existing model. As is no doubt obvious given my background, my personal sympathy would be with a model that had a greater employee involvement in governance. The fact that such an alternative is not a realistic option suggests on the one hand that we don't have the capacity to deliver it, but perhaps on the other that we don't have the collective belief to argue for it.
Why?
1. I am not convinced that the asset management industry in general is concerned enough to lobby hard in defence of the UK model. IMA research seems to bear out the intuition that most managers think governance matters a bit, but not enough to put real resource behind it. And most clients are not bothered - so where is the commercial incentive? The Stewardship Code may result in some upskilling across the industry as a whole, but I think this will be overwhelmed by other trends.
2. Regulators and/or states have real power to intervene in companies in a very forceful way. They have been reluctant to do so pre-crisis, but the situation is surely reversed now. It is more risky (reputationally) to not intervene. The govt booted out Fred Goodwin, not the shareholders, the FSA barred Johnny Cameron. I don't think that asset managers who are not as a whole even convinced of the intellectual/economic case for activism are going to achieve anything similar. And what matters is what works, I seem to remember someone saying.
3. Pay. Governance isn't well paid, except for a handful, but regulators are belatedly open to the idea that you have to shell out if you want to attract poachers turned gamekeepers. A lot of good people wouldn't think twice about a job in corp gov at an asset manager because it offers neither financial or reputational rewards comparable with those elsewhere. That matters - companies see how much money asset managers put into corp gov too.
4. Europe. The tone of the EC Green Paper looks to me like the direction of travel. It's worth noting that beyond a couple of nods to employee representation and a wider conception of directors' duties, it doesn't herald a turn back to the Rhineland model. It's a regulatory turn, not shift to stakeholder capitalism.
5. Politics. I don't think the restart of the upwards march in exec pay, return of big bonuses etc, can survive another attempt by politicos to kick it into the long grass by saying 'it's a matter for companies, rem comms and their shareholders'. There will be pressure to intervene more directly.
In all of this I am by no means expecting an overnight change. It may take several years to work through and the direction of travel won't always be obvious. But I think the signs are there already, and I struggle to see how an investment industry that is structured around an entirely different conception of what share ownership is about can make stewardship work quickly enough to fend off the inevitable.
It's also worth noting that this is no way a triumph for the Left or other critics of the existing model. As is no doubt obvious given my background, my personal sympathy would be with a model that had a greater employee involvement in governance. The fact that such an alternative is not a realistic option suggests on the one hand that we don't have the capacity to deliver it, but perhaps on the other that we don't have the collective belief to argue for it.
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