Constituents of the Power 100 are not the first to express dismay at the way our children are educated. But their emphatic declaration that the British education system fails to prepare kids for working life is no less worrying for that.
The knee-jerk reaction to the news may be to assert that vocational training should play a larger part in the educational process. It would be unwise, however, to press for such a simple solution. In an era when the service sector dominates and job swapping is commonplace, it is not enough to wish for more metal-bashing apprenticeships — valuable though it may be to have some of these.
Richard Lambert, the Director-General of the CBI, points to some basic weaknesses. “To be globally competitive, we must improve our functional skills,” he says. “Far too many school-leavers struggle to read and write fluently, interpret simple data, or carry out basic mental arithmetic.”
As Mr Lambert asserts, it is not only to improve standards of living that action is required. “These skills are for life, not just for business.” But beyond the inculcation of literacy and numeracy, the educative process needs to encourage free, lateral and logical thinking. Training people to do specific vocational tasks has some use; giving them the wherewithal to adapt and innovate for themselves will achieve more. Academic studies may well be far more valuable than vocational training.
You might call it the “computer says no” syndrome, after the Little Britain comedy sketches. It is nothing but bad news if the chief resource of our services-led economy — human capital — is unable to think independently. Other findings, undertaken as part of The Times’s Power 100 research, suggest that business would rather see David Cameron than Gordon Brown as the next Prime Minister. But Mr Brown’s sceptical stance on the benefits of the joining the euro does win plaudits. About 80 per cent of the business leaders said the Government should continue to avoid membership of the single currency. Since Mr Brown has presided over a sustained period of economic growth, it is unfair to tar the Chancellor from head to foot.
Perhaps surprisingly since private equity investors often target the quoted companies led by Power 100 business leaders, three quarters believe that private equity ownership helps to create better businesses.
The business leaders are also sanguine about the influence of hedge funds — only one fifth reckon they threaten the financial or commercial stability of UK plc. Higher numbers report that it has become more difficult to do business in the US, but not a majority.
As for the Power 100 itself, several intriguing trends emerge. It is disappointing to see that there are only seven women in this year’s list, where there were nine last time. The anecdotal evidence is that gender diversity is being actively sought by those hiring executives and non-executives. Men, however, are in more of the bigger jobs at the bigger firms.
Women are employees, customers and owners of companies — they must be more fully represented on boards. If this is to happen, appointment committees and investment managers may need to rethink views on eligibility. It is not just those who follow career paths similar to successful men who should be included.
Success has plentiful rewards. Although the average was distorted by multimillion earners such as J. P. Garnier of GlaxoSmithKline and BP’s Lord Browne of Madingley, the Power 100 have a combined income of £103.9 million. It may be only 3.3 per cent more than last year, but it is still an awful lot of money. It also emerges that executive directors of FTSE 350 companies earn an average of £700,000 a year.
The key finding is that the network linking high-achieving directors is alive and well. There is not necessarily anything suspicious about this. John Buchanan, this year’s top dog, knocked the notion on the head by saying: “I arrived here from New Zealand with a network of one — my wife.” Mr Buchanan may have been helped to his four non-executive FTSE 100 directorships by personal contacts made along the way. But he, and the others lauded in the Power 100, have earned the privilege they enjoy.
Poor reports
THE bean-counters have cottoned on to what the rest of us thought we knew. Company accounts are as much use as a chocolate kettle. Or as Mike Rake, the top man at KMPG speaking on behalf of the six largest accounting firms, puts it, “We all believe the current model is broken.”
Company reporting has got too complex, too opaque, and too voluminous to have any meaning. Accounts are too much about covering backsides and ticking boxes, and not enough about giving investors and other stakeholders comprehensible as well as a “true and fair” financial impression.
But it’s not at all clear that it will help if the companies are obliged to deliver information more quickly. Investors are already swamped and there is a serious danger of overload. The move also seems to be responding to speculators, who would love to trade on the volatility caused by a daily or weekly drip of information, rather than traditional long-term shareholders.
There is a case for more immediate dissemination of some information, if only to prevent market abuse. It is ironic that capitalist Britain relies on a worker co-operative — the John Lewis Partnership, which publishes weekly sales figures — for the first clues on high street activity. And new technology should make it possible to keep shareholders better informed at minimum extra cost.
But none of this requires edicts from on high. The market can be relied on to encourage companies to provide if provision is required. The effort should be applied to simplifying interim and annual accounts to make them more useful to more people.
BRITAIN is losing small-car factories to cheap labour areas in the Far East. But at the top of the market, cars made in Britain are being shipped in rising numbers to China. Our newest factory, sited unexpectedly in Sussex downland, is adding a shift to meet rising demand for Rolls-Royce Phantoms at £200,000 a time in new markets such as China. VW is doing well with Bentleys and there are plenty of would-be bidders for Ford’s Aston Martin. Eco-taxation may kill the UK market for supercars. Everywhere else that people get rich, especially where they used to be poor, they will be wanted.
robert.cole@thetimes.co.uk
