By Simon Basketter
Downloading PDF. Please wait... Issue 2058

Council of bosses at the heart of power

This article is over 17 years, 0 months old
When Gordon Brown became prime minister he pledged to be an inclusive leader.
Issue 2058

When Gordon Brown became prime minister he pledged to be an inclusive leader.

Brown said, “I will reach out beyond narrow party interest. I will build a government that uses all the talents. I will invite men and women of good will to contribute their energies in a new spirit of public service to make our nation what it can be.”

The reality behind these words is that the bosses of multinational companies will play a huge role in deciding government policy.

John Hutton, the new business, enterprise and regulatory reform secretary, made this clear last week when he said that Brown’s government will be “aggressively pro-business”.

This is part of the drive to replace the Tories as “the natural party of business”.

To do this Brown has brought together a council of bosses, called the Business Council for Britain.

It is a committee stuffed with the representatives of big business.

They will advise him on issues that affect “enterprise, business and the long term productivity and competitiveness of the economy”.

The Business Council for Britain counts Sir Alan Sugar, the “star” of TV’s The Apprentice, Tesco boss Sir Terry Leahy and Marks & Spencer boss Stuart Rose among its members.

JP Garnier, the head of GlaxoSmithKline, the world’s second largest drug company, Vodafone boss Arun Sarin and Tony Hayward, the chief executive of oil giant BP, are also on the committee.

Sir Alan Sugar, once a firm Thatcherite, made donations to New Labour in the late 1990s. His Viglen business, meanwhile, has large public sector contracts.

JP Garnier of GlaxoSmithKline lives in the US and doesn’t pay tax in Britain. He described his own company as a “financial monster”. He moaned, “I’m pretty much at the bottom of the pile” when it comes to pay. He rakes in about £6 million a year.

The committee is to be chaired by Mervyn Davies, chairman of Standard Chartered bank and a board member at Tesco.

Davies presides over a bank that makes 90 percent of its profits in the Third World. Standard Chartered was formed in 1852 to help finance the expansion of the British Empire.

The biggest insult, however, is Brown’s decision to pick one of the leading figures in the private equity industry to sit on the council.

Damon Buffini is the founder of Permira, which alongside fellow private equity firm CVC bought the AA three years ago. That deal and the subsequent cost-cutting exercise which followed saw 2,800 workers lose their jobs.

The unions have been campaigning against the impact of private equity firms and demanding that the government regulate them.

Permira, which operates funds totalling £15 billion, has brought its “talents” to a string of British firms including New Look, Birds Eye and Travelodge. Buffini is thought to have amassed a personal fortune of £100 million.

It is the second time in a week Brown has called in Buffini. He was also appointed to the new National Council for Educational Excellence, to encourage business involvement in schools.

It is a sharp stick in the eye for the unions and a clear message from Brown that the private equity bosses have his full support, despite their reluctance to pay tax.

Private equity bosses earn huge bonuses while taking advantage of special tax breaks introduced by Brown while he was at the Treasury.

The change from Tony Blair to Brown looks to mean that there will be more influence for the bosses.

Money men behind Labour

Bosses are pouring money into the Labour Party’s coffers. Gordon Brown raised £113,000 to fight his election campaign for party leader, even though he had no challenger.

Brown’s leading supporters include Lord Paul, a Labour peer and owner of Caparo Industries. This is an international engineering group registered in the Virgin islands.

Lord Paul recently defended his decision not to be domiciled in Britain for tax purposes. He is more prepared to donate to Brown than he is to pay tax. Along with Labour peer Lord Bhattacharyya he donated £50,000.

Paul Myners, the chair of Guardian Media Group, and Lord Gavron, the former chair, put up £14,700 between them. Myners is also chair of the Low Pay Commission which sets the minimum wage.

Other donors to Brown were Labour peers Lord Leitch, who heads the New Deal Taskforce (£5,000), Lord Gregson, a former president of the Defence Manufacturers Association (£10,000), and John Miskelly, recently appointed as a member of a government panel on public service reform (£2,000).

The private equity bosses have also rushed to donate money to Labour. Four businessmen gave more than £500,000 to the Labour Party in the run-up to Brown becoming prime minister.

They are Sir Ronald Cohen, the founder of Apax Partners, Nigel Doughty, chair of Doughty Hanson private equity company, the internet betting tycoon Peter Coates, and Jon Aisbitt, a former Goldman Sachs partner.

The massive profits of private equity bosses are already the subject of a review to see whether they should pay more tax. Labour insist the donations had nothing to do with that review.

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