I have spent a lot of the day talking to the media about Sir Philip Green.
I did not want to. They called me. In 2006 I helped make a Money Programme in which I discussed the exceptional dividend his UK retail group paid through offshore trusts for the benefit if his wife, who was then resident in Monaco. I suggested at the time that this saved the Green family £285 million if that payment was compared to the alterative of having had the dividend paid to the UK resident (then) Mr Green. I stand by that calculation. I also note that Sir Philip Green said then, and presumably still does, that “no tax was avoided because none was due”. That this was because of the arrangements he and his family had put in place is a matter we can leave aside for now: although I’d describe those arrangements as the tax avoidance process he clearly does not, and I’m happy to let the matter and difference of opinion rest.
So why the calls? Well, as has been widely reported:
The government has asked Sir Philip Green, the billionaire owner of high street retail chains including Topshop and Dorothy Perkins, to carry out an external review of its drive to cut public spending, it was announced yesterday.
The entrepreneur’s audit of government spending will run alongside the coalition’s ongoing major review of ways to start cutting the £155bn deficit.
Green, regularly photographed in the company of celebrity friends such as Kate Moss, is behind the UK’s largest private family-owned clothing retailer, Arcadia, which employs more than 40,000 staff.
He will head a team of officials in the Cabinet Office and Treasury looking at the last three years of spending to identify inefficiencies and savings. In particular, he will look at whether leases and contracts entered into in 2007 were good value.
Green will report to the Cabinet Office minister, Francis Maude, and the chief secretary to the Treasury, Danny Alexander, before the end of the spending review.
The review concludes on 20 October and will set out cuts of 25% to 40% in Whitehall departments whose funding is not ringfenced.
I don’t take offence at this appointment because Sir Philip has avoided tax, even if others wish to highlight that issue. That’s his business. I’ll also leave aside the fact that the appointment does lead me to question the political judgement of those who appointed him – but that’s something I’ll be doing day in and day out of ConDem ministers for the next 4 years or so (unless we get a lucky break and they go early). Again, that’s still not the issue that really concerns me here. What really annoys me about this appointment is, I think, the subliminal but absolutely fundamental messages that those making it are wishing to send out.
The first is that they don’t trust civil servants to undertake a review of this sort. I am shocked and appalled by that. I think they are competent to do it.
Second is that they don’t trust their own judgement or competence to undertake such a review. What sort of minnows do we have in this government? (Yes, I know – Francis Maude and Danny Alexander answer that question).
Third, there is the implicit assumption that the private sector knows best.
Fourth, there is confirmation that the sycophancy of Blair and Brown is to continue under the ConDems.
Let’s be clear: I’m not disputing for a moment that Sir Philip green is a first rate retailer of cheap fashion. He is. But, with the very greatest of respect to those who appointed him, what do they think this has to do with the appraisal of government spending?
Fashion retailing is about selling inconsequential ephemeral apparel in large volumes to make a profit. None of it is needed: all of it is wanted. The criteria for success is profit. The management technique for motivation is the setting of targets. The basis for all financial decision making is cash flow. The entire management approach focuses solely on microeconomic issues.
This is about as far removed from government activity as it is possible to get. The vast majority of government activity is about the meeting of needs, not wants. The criteria for success are wholly unrelated to profit: they relate to the creation of viable communities. The required management technique should not be targets (odd to bring in a man who must use them when the ConDems say they’re the last thing they want to use now) but the fulfilment of a complex algorithm of goals all of which will require complex ability to manage often conflicting aims. Cash flow is not one of those aims. Integration in the vastly more complex world of macroeconomics when compared to the absolute simplicity of the microeconomics of retail management is one of those aims.
I could analyse the differences in much greater depth but do not think I need do so. The point is that whilst Sir Philip must have considerable skills they’re really not the ones I think are needed to undertake a review of the financial decisions made by government over the last three years.
An expert on macro-economics; an objective observer on PFI; a senior civil servant from another country (say, Germany) could have undertaken such a review. But a retailer? That’s just incomprehensible. An ability to sell lots of knickers is not what is needed for this job. And I think the implicit vote of no confidence in the civil service that this appointment represents is in itself one of the most profoundly disturbing messages that this government has sent out to the dedicated, loyal, and (in my experience) highly competent (in the main) civil servants who work for them. How long it will be before we see the First Division Association in dispute with the government is anyone’s guess – but at this rate I’m very sure they are very annoyed indeed tonight. And rightly so.
PS Note Kate Moss’s top in this picture of her with Sir Philip appears to be transparent. Oh for a little more such transparency in finances, public and private, say I.