HOWZAT

The hedge funds are, with few exceptions, not remotely interested in taking a long-term holding in the company, or any other listed company. Rather they are fishing for trading ideas, particularly about suppliers and competitors. The nearer they can get to inside information from companies or brokers, without going beyond the limit of the law, the more grateful they are likely to be in the way they allocate their business.

The contrast is glaring between the intrusive exactitude of the corporate governance codes imposed on public companies big and small and the sleazy looseness of the practices and disclosures made by those who are the nominal owners of the companies.

John Sunderland, president of the CBI as well as chairman of Cadbury Schweppes, has vented the corporate sector’s frustration in a sharp speech to the Investor Relations Society lambasting the lack of openness and accountability that has transformed the once- simple ownership of UK industry into a miasma of mystery.

The developing hedge fund bubble indicates how impossible it is to impose long-term thinking on one set of investors. Success in persuading or hobbling pension funds only transfers trading volume into the hands of a queue of others, taking a shorter view.

Openness is another matter. Companies are entitled to know at all times who their shareholders are, where their shares are and who has rights to capital gains, dividends and votes. Company pension funds, such as that of Cadbury Schweppes, should be demanding full information on any banks or funds to which they entrust their money and should think twice before they lend stock for purposes they would deplore if it were close to home.

The City has long held supremacy in relations with industry, but needs to take care of the golden goose. Otherwise, even more decent companies will be driven into the hands of opaque private equity funds or foreign-controlled companies.

Taxing timing

THESE were not the numbers that the Government would have wanted to be aired just ahead of an election. While Messrs Blair and Brown stride the country proclaiming the strength of their economic miracle, the news that the UK’s gross domestic product rose by only 0.6 per cent in the first quarter of the year tells a rather different story.

Industrial production actually fell in the quarter and service sector growth slowed. That leaves year-on-year growth at 2.8 per cent. Mr Brown is forecasting the outcome for the year will be between 3 and 3.5 per cent, while the consensus among economists is only 2.5 per cent. Mr Brown has a strong record for meeting his forecasts; some would say more by luck than judgment, but his luck looks to be running out.

These numbers back up the Institute for Fiscal Studies’s conviction this week that taxes will have to rise early in the next Parliament. Mr Blair has pointedly refused to promise that there will not be another increase in national insurance contributions from a new Labour Government. He may not count it as tax, but those who pay it do.

• THE board of GlaxoSmithKline has just enjoyed an outing with a difference. The chief executive, Jean-Pierre Garnier, arranged for the directors to be given a special briefing in Washington by Mark McClellan, the man who is driving the Medicare Modernisation Act (MMA). Dr McClellan won fans in the pharmaceutical industry as a Commissioner in the US Food and Drug Administration. He contended that the MMA would benefit big pharma, a message that the GSK directors will pass on. Which makes the trip rather more use than the usual boardroom bash.

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