Splayed across the top of a metal filing cabinet in Sir Peter Viggers’
Westminster office is Helkin, a squashed, well-cuddled, brown bear. Helkin
has been with the MP for Gosport for longer than Sir Peter’s 35 years as an
MP, a trophy from when, as a banker, he bought Helkin District Mines for
£750,000 and sold it on a few weeks later for £1.5 million.
It is not merely the premium on that deal sealed decades ago that Helkin has
come to represent. Sitting in the heart of the honeycomb of MPs’ offices in
the Palace of Westminster, the bear also signifies the value placed on
politicians who understand the City, the economy and business as Britain
spirals into one of its deepest recessions for decades.
Sir Peter, by his own admission, is something of an evergreen. While at the
age of 71 it has been 20 years since he has held a ministerial job, the
Conservative’s second wind came in 2005, when he joined the Treasury Select
Committee, which has become the most pivotal and high profile of all
parliamentary bodies since the credit crisis erupted two years ago.
The Treasury Select, which is coming to the end of an inquiry into the causes
of the banking crisis, is made up of 14 MPs from across the three political
parties, with the power to haul whomever they want in front of them – from
the Chancellor of the Exchequer to the Governor of the Bank of England to
regulators and bank chief executives.
In more benign times, hearings from such a committee are dry affairs, but
since Britain’s banking system came within hours of total collapse, since
three banks were part-nationalised and taxpayers found themselves funding
Sir Fred Goodwin’s £16.9 million pension pot at Royal Bank of Scotland,
members of the Treasury Select have become mini-celebrities. Watching
pudgy-fingered chief executives squirm, dodge, wriggle and obfuscate their
way round questions, resplendent in monogrammed shirts and hand-stitched
brogues now part-funded by the taxpayer, has become the new reality TV.
Sir Peter is self-deprecating about the committee – “We are all either
wannabes, has-beens or utterly useless. I am a has-been” – but, critically,
Sir Peter forms part of a handful of financially astute MPs on the committee
whose scathing questions force most bankers to start preparing three weeks
before they appear. Such is the public interest in greedy bankers, Viscount
Thurso – another member of the Treasury Select – is nobbled as he leaves
church on a Sunday by constituents telling the Scottish Liberal Democrat to
“sock it” to financiers, while another Tory member confesses that the
pressure to nail and expose arrogant, flagrant executives is huge in the few
hours of a hearing.
Sir Peter, who sits in his office amid stacks of briefing notes for each of
the committee hearings, cannot emphasise enough the enormity of the
financial crisis engulfing Britain. “You know how the saying goes – if you
owe the bank £10,000, you have a problem. If you owe the bank £1 million,
the bank has a problem. But if the banks owe a £1 trillion, the country has
a problem. This Government is obsessed with the idea that the most important
thing is getting rid of the banks’ toxic assets. It isn’t. The most
important thing is to free up banks so that they get back to their
traditional role of lending money – it is the critical lubricant of the
economy.
“They [the Government] are using good taxpayer money to deal with toxic
assets, but what they should do is to split good from bad. Of course, when
you put this to bankers they say it is all very complicated, they say
everything is now so interrelated. Mervyn King has said as much.
“But I don’t think that’s true. What they should be doing is making sure that
£1 of taxpayer money is used to back £1 of good assets. The assets on banks’
books should be split into toxic and purged – for sure, it will be
complicated to divide them up, but it must be done.”
The process is not as unprecedented as the Government would have voters
believe, he argues. Sir Peter, who was elected to the council of Lloyd’s of
London, the insurance market, in 1990, has seen it all before. In the late
Eighties and early Nineties, Lloyd’s went through the most traumatic period
in its history, overwhelmed by claims and lawsuits and suffocated by the
so-called “spiral”, which Sir Peter compares to the sub-prime crisis that
erupted two years ago.
“The problem we experienced then was the spiral of insurance, where one
insurer would underwrite risk, then pass it on to a reinsurer and the risk
would go round and round. Someone would take part of the risk of a North Sea
oil project, then they would pass it on to someone who also had underwritten
part of the risk in the Gulf of Louisiana, then someone else would slice the
risk again and, before you knew where you were, you only knew that you were
exposed to 0.7 per cent of syndicate 962’s risk. But you weren’t exactly
sure what that was. So you had no idea what your exposure was.
“The problem now is very similar. Then we separated the good assets from the
bad and ring-fenced them into a separate vehicle – in Lloyd’s case, it was
Equitas. I know how difficult it is to separate them out. Then, we had an
entire floor at Lloyd’s, sealed off, and the likes of Ron Sandler spent
months identifying what these assets were worth. Many of us spent nights
worrying whether the Equitas model would work, but it did.”
So – among all the executives, ministers, Treasury mandarins and experts – in
front of the Treasury Select, how often does he think he has been lied to?
Sir Peter pauses: “There are three things you cannot do in the House of
Commons. You can’t die, that’s the first thing. If you died in the House,
you’d have to get the Royal Coroner out, so what you’d find is that you
actually died in the ambulance. Secondly, you can’t be drunk. We’re all
supposed to be gentlemen, so, you can have dined well, or showed signs of
having enjoyed company, but you can’t be drunk.
“The third thing you can’t do is tell lies. So when Alistair Darling told the
committee that the country is in a stronger position than any other to
withstand the credit crisis, he wasn’t lying. I just had to tell him that I
found it impossible to reconcile his comments with what I understood to be
true.” Despite Sir Peter’s gentle humour, he is – as one would expect of a
stalwart Tory – scathing of Gordon Brown: “Brown is a true socialist. He
really thinks that there is no problem which can’t be solved with the
application of his great brain and our money. When you had to watch him
present successive Budgets crowing about his achievements – it really was
quite nauseating.”
So where now? Will the next generation of bankers be mired in regulation and
forced, like many of us, to make do on more modest salaries?
“Regulation is going to have to change. When I compare the City now to when I
was there, we had bows and arrows. Now, with derivatives, the City has
atomic weapons and any new regulation is going to have to take account of
that.
“In terms of pay, it’s unlikely there will be any real change in executive
remuneration – probably a shift in the way that incentives are structured.
But after this period of purging ourselves, greed will reassert itself.
“The real issue is that, in my view, we aren’t even halfway through this
crisis yet. There probably won’t be another pillar to topple but the effect
of this banking crisis is going to spread for a long time through the entire
economy.”
How appropriate then, that Sir Peter’s discussion of the market should be
watched over by a large bear.
C.V.
Born March 13, 1938
Education Portsmouth Grammar School Trinity Hall, Cambridge College of
Law
Career 1956-58 RAF fast-jet pilot during National Service
1963-68 Captain in Territorial Army
1967 Solicitor
1970 Joined Edward Bates, bankers
1972 Director Chairman and director of companies in oil, plastics,
pharmaceuticals, hotels, textiles, venture capital
1974 Member of Parliament for Gosport
1984-86 Parliamentary Private Secretary in Treasury
1986-89 Industry Minister, Northern Ireland
1990 Elected to Council of Lloyd’s of London
1989-2005 Defence Committee Nato Parliamentary Assembly
2005 Member of Treasury Select Committee
Q&A
Who, or what, is your mentor?
People with a “can-do” attitude. As in America and the British Army. An
example: Tom King was my Secretary of State in Northern Ireland and told me
how to run a meeting. “Go in: ask in a loud voice ‘Who is in charge?’ If no
one answers, take charge.”
Does money motivate you?
It certainly used to, but I no longer work in that field.
What was the most important event in your working life?
Becoming a director of a merchant bank in my early 30s.
Which person do you most admire?
Margaret Thatcher. She changed the world.
What gadget must you have?
My screw-pull bottle opener is pretty neat.
What does leadership mean to you?
Dependability. Being trusted by people to get it right.
How do you relax?
Walking by the sea.
