The Great Debate UK
– Neil Collins is a Reuters Breakingviews columnist. The opinions expressed are his own –
Since Labour came to power in 1997, it has pursued a policy of expanding the numbers employed by the government or its agencies. The result is that today 6.1 million people are on the state payroll, an increase of about 900,000 in 13 years.
They are also paid, if not well, then at least comfortably. The Office of National Statistics calculates that pay in the public sector is now higher than in the private sector (462 pounds and 451 pounds a week respectively). It’s also rising faster (3.7 percent, against 1.8 percent).
Add in greater job security and the final salary pension schemes which are almost extinct everywhere else, and it’s easy to see why those in a recession-wracked private sector are resentful. Yet in over 60 constituencies, more than a third of the workforce is on the state payroll. Apprehensive politicians see public sector employees, along with their families and their client base of welfare claimants, as a block vote.
At the very least, it’s frightfully convenient for the British government to call in the Serious Fraud Office to look into MG Rover, a former carmaker. Whether there’s a shocking crime or not, it suits Peter Mandelson, the Business Secretary, to organise a further delay before this gory case is finally closed.
Stephen Green, the chairman of HSBC, published his latest book on Thursday. Green is a passionate Christian who devotes considerable energy to disproving that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven.
It is a quarter of a century since the ground-breaking privatisation of BT. Unfortunately, it may not be many more years before a reluctant government is forced to take the company back into state ownership.
Ineos Group, popularly described as Britain’s largest private company, has escaped the hangman’s noose again. For the second time, a sufficient majority of the 230 banks to which it owes 7.5 billion euros have granted it a stay of execution.
Standard & Poor’s could have chosen a better day to kick the British economy, by placing the UK onto “negative outlook”, the usual precursor to a downgrade of S&P’s rating of an issuer’s debt.
If a company’s health can be judged by the clarity of the statements it makes, Marks & Spencer is sick indeed. Its long, comprehensive and in parts incomprehensible statement with Tuesday’s figures is stuffed with jargon, phrases designed to cheer up the troops, while some key news is glossed over.
Jan Du Plessis, the man parachuted into the chair at Rio Tinto from British American Tobacco (they’ve so much in common), has spent a day on a charm offensive with the big shareholders in the mining group.
This Chinese deal is marvelous, he’s telling them. Not only do we get a fine price for selling what are merely minority, passive stakes in our mines, but just think of what we’ll be able to dig up in China with a powerful local to open the doors for us.
Tuesday, May 12 was just another day in the twilight zone that is the market for bank debt and preference shares. As usual, that day’s dividends were paid on time, including the one due on Lloyds Banking Group 6.0884 percent preference shares.
– Neil Collins is a Reuters columnist. The views expressed are his own –
Shareholders in Rio Tinto would very much like to buy a bond yielding 9 percent, convertible into ordinary shares at $45, a tiny premium to today’s price of 29.30 pounds.
Unfortunately, if their board gets its way, they won’t get the chance, since the bonds are all being bought by the state-owned Aluminium Corporation of China (Chinalco).