Rathbones Review Summer 2015
Tunnel vision Will Britain’s biggest infrastructure projects deliver on their promise?
Nice guys finish first Michael Palin reflects on a life of comedy, drama and travel
Food for thought Retail empires and the impact of our changing shopping habits
The day the world changed Why the Battle of Waterloo still shapes our lives today Contents — Summer 2015
47 The full Monty
BAFTA/REX Shutterstock 30 Vive la différence 4 On the right track?
Roger Bamber / Alamy
Hulton Archive/Getty Images Contents
4 Tunnel vision 30 The day the world changed Has the UK finally mastered the art of The enduring repercussions of the infrastructure? Battle of Waterloo 10 Bulldog spirit 34 Chain reaction Protecting a Great British legacy In pursuit of a pedal-powered record 14 Food for thought 38 FX effects How changing consumer habits shaped Why managing risk is a top priority in the rise and fall of a retail empire volatile markets 20 Helping fight modern slavery 40 The benefits of diaspora The importance of ensuring ethically How migrant communities contribute sound supply chains to adopted and mother country alike 22 Watching the watchmen 44 Peer review Freedom of Information: triumph of It may be growing fast, but is peer-to- transparency or driver of deception? peer lending sustainable? 26 Live long and prosper? 47 Nice guys finish first Deciphering the implications of greater Michael Palin visits BAFTA to reflect on life expectancy his on-screen career
Cover image: Sean Dempsey/PA Archive/Press Association Images
2 Rathbones Review www.rathbones.com A word from Paul Chavasse
34 Welcome Saddling up to the summer edition of Rathbones Review Rick Robson
n this edition, we look at how the present and the future are shaped by the past. Historian Andrew Roberts considers how Ithe Battle of Waterloo continues to shape the UK and Europe; Randolph Churchill talks about how the Winston Churchill Memorial Trust is keeping arguably our greatest Prime Minister’s memory alive for future generations; and two more articles examine radical changes in Britain in recent years.
First, we consider how the British infrastructure industry has learned from years of poor performance. Where projects used to be hugely over-budget and often years late, they are now often on time and within budget — we look at what changed and how the UK is benefiting, but conclude that there is still room for improvement.
Second, we look at the impact of the internet on the food retail sector, particularly on how we shop for non-food items, and how the 14 continental discounters overcame British reserve through irresistible Aisle be damned value. Both articles have important investment implications as they show how quickly things can change and, in the case of food retail, how vulnerable ‘dominant’ companies can be.
We also describe how in September a team of students will attempt to break the world land speed record for the fastest human-powered vehicle. With support from Rathbones, the University of Liverpool’s ARION1 brings together cutting-edge technology and the ambition of youth to demonstrate how British universities and industry are Editor joining forces to develop the engineers of the future. James Maltin You will notice that this is the first edition in our new brand. As well Investment Director as our new logo, we have developed a new tagline, ‘Look forward’, to describe how we consider the future in managing your wealth If you have any comments on this and how, in turn, you can look forward to the future, confident that publication or suggestions for topics that your investment objectives and requirements are in safe hands. you would like to see discussed in the future, please do let me know. I hope that you enjoy this edition of Rathbones Review. We would, [email protected] as always, welcome your feedback.
Connect with Rathbones
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in Rathbone Brothers Plc Paul Chavasse Head of Investment Management Rathbone Brothers Plc [email protected]
www.rathbones.com Rathbones Review 3 OnTunnel the right vision track?
4 Rathbones Review www.rathbones.com On theTunnel right visiontrack? Tunnel vision
Since 2010 the UK has spent an average of £47 billion a year on infrastructure. Policymakers believe a further hike is necessary if we are to compete on the international stage in the long term. Are we spending wisely?
James Pettit, Investment Director, Rathbones
Image: Anthony Devlin/PA Wire/Press Association Images www.rathbones.com Rathbones Review 5 Tunnel vision
“ You and I come by road or rail, but economists travel on infrastructure” — Margaret Thatcher
hen the Iron Lady delivered the eighth wonder of the world by Ken Dodd, Sweden and Norway, at fifth and sixth above soundbite at the 1985 “because you get on and wonder how to get respectively, were the only European WConservative Women’s Conference, off” — our road network is hardly an object countries to rank higher. Germany, Europe’s an event held at the Barbican in the heart of of affection. Our railways are still recovering undisputed economic powerhouse, came central London, she described infrastructure from the monumental inflexibility of the 14th. France limped home in 19th, just as “the new ‘in’ word”. In truth, infrastructure Beeching cuts, and we could debate the pros ahead of Thailand. has long been “in”. It was “in” in Victorian and cons of privatisation until the cows — times. It was “in” after the Second World War. or, indeed, the 18.25 to Godalming — come We might deduce, with typically British It was “in” 30 years ago. And it is “in” now. home. pessimism, that the UK can be deemed attractive only because so much remains to As Mrs Thatcher implied, it is viewed as be done; but the picture, fortunately, is essential to economic growth. It is also “ Infrastructure is viewed as neither quite so simple nor quite so gloomy. regarded as a cornerstone of social progress. For a start, we are in reasonably illustrious The Oxford English Dictionary defines it as essential to economic company: none of the top 10’s other “the basic physical and organisational growth. It is also regarded constituents — among them Singapore, structures and facilities needed for the Qatar and the USA — could realistically be operation of a society or enterprise”. As such, as a cornerstone of social disdained as some sort of crumbling tabula it is crucial to the long-term success of rasa. The index takes into account criteria developed and developing nations alike. progress.” including the ease of doing business, government policy, tax rates, quality of Whether the UK has ever been especially Even Mrs Thatcher, for all her pro- existing infrastructure and GDP per capita good at it, however, is a moot point. Even infrastructure rhetoric at the Barbican, might — all areas, according to Arcadis, in which some of the engineering wonders of be said to have ushered in a period of chronic the UK has markedly improved. Victorian times suffered from failings that a underinvestment. Meanwhile, her French modern audience might think all too counterpart, François Mitterrand, was So have we genuinely turned a corner? Is familiar. Marc Brunel’s tunnel under the overseeing a policy of so-called “grands infrastructure at last something we do well? Thames, a groundbreaking undertaking in projets” in a lavish bid to revitalise Paris. And, if so, what are we doing differently? every respect, proved a financial disaster Perhaps a defining illustration of the state of and had to be bailed out by the taxpayer. UK infrastructure in the late 20th century …………………………………………………………………………………… Joseph Bazalgette’s London sewer system, was the pre-HS1 journey via Eurostar to though undeniably a technical tour de force, France: what patriotic Briton could suppress Crossrail is the largest building project in is now seen by some experts as a classic a squirm of shame as the train chugged Europe. The £14.8 billion scheme to link example of massive over-specification and, through Kent, hamstrung by a line built Berkshire, Buckinghamshire, Essex and by extension, massive overspending. decades earlier, before surging to full speed South East London began in May 2009, within moments of emerging from the since when 10,000 workers at 40 sites have And what of the 20th century? Not least as Channel Tunnel? devoted more than 60 million hours to far as transport is concerned, the judgment realising a vision intended to transform rail is liable to be bleak. From the rain-delayed And yet in September last year the UK was transport in the capital and beyond. With construction of the Preston Bypass, Britain’s placed 10th in the Global Infrastructure over 60 miles of track, 26 miles of tunnels founding stretch of motorway, to the daily Investment Index, as compiled by and 10 new stations under construction in grind of the M25 and the dizzying brutalism international design, construction and and around one of the busiest cities on of Spaghetti Junction — once dubbed the management consultancy firm Arcadis. Earth, it is arguably the showpiece of the
6 Rathbones Review www.rathbones.com Tunnel vision Images: Crossrail/REX Shutterstock, REX/Shutterstock, Andrew Findlay / Alamy, / Alamy, Andrew Findlay REX/Shutterstock, Shutterstock, Images: Crossrail/REX Images Herschan/Getty W.Brown/Otto
Above: The £14.8 transport across the billion Crossrail Pennines. UK’s current drive to cement its place as a scheme is the biggest Below: Joseph world leader in infrastructure. infrastructure project Bazalgette’s London in Europe. sewer system is now The forecasts are impressive. It is estimated Left: The proposed seen as a classic that Crossrail will bring an extra 1.5 million construction of a £15 example of over- people within 45 minutes of central billion high-speed rail specification and London and that by 2021 it could help add link could transform overspending. around £5.5 billion in value to residential and commercial real estate along its route. Passenger numbers are expected to reach 200 million a year once services start in late Kahneman met a group of teachers and 2018, while London’s overall rail capacity fellow academics to discuss how long the is predicted to grow by 10% — the biggest “ Crossrail is arguably the project might take to complete. When each climb since the Second World War. member of the team was invited to write an showpiece of the UK’s estimate on a slip of paper the predictions Thankfully, as we shall see shortly, these current drive to cement its ranged from 18 to 30 months. figures were not plucked out of thin air. Yet in the past something like from guesswork place as a world leader in One of those present, a distinguished was the order of the day, and it is the move specialist in curriculum development, was away from less reliable means of infrastructure.” then asked whether these forecasts agreed prognostication that may well constitute with any similar initiatives of his acquaintance. one of the most significant changes in our Eventually, he rather sheepishly confessed approach to infrastructure. that around 40% of the schemes he had been involved in had failed totally and not To understand why this is so we have to one had reached fruition in less than seven start with Professor Daniel Kahneman, the years. celebrated Israeli-American psychologist whose research in the fields of decision- Utterly undeterred by this revelation, the making and behavioural economics earned team ploughed on. The project concluded a Nobel Prize in 2002. The relevance of his eight years later, and the curriculum was work on forecasting is neatly encapsulated never used. in the story of his own experience in trying to develop a curriculum for a new subject Kahneman showed how precisely for Israeli high schools. this kind of false optimism characterises
www.rathbones.com Rathbones Review 7 Tunnel vision
decision-making in the realm of business distributional information from other and even displacement is never likely to be and how those tasked with planning — ventures similar to that being forecast is the quietly accepted. “plansters”, as the arch-preservationist Sir cure for ‘the planning fallacy’,” wrote John Betjeman famously labelled them Professor Flyvbjerg. “Human bias is bypassed.” Yet there is evidence that public — consistently underestimate costs, engagement has been enhanced in recent completion times and risks while at the “ For the public, a project’s years and that voices from outside the same time overestimating the benefits of policymaking community now have a their actions. He also found such errors to long-term benefits are chance of being heard when once they be systematic rather than random: in other would have been patronised, overlooked or words, miscalculations are rooted not in often far less important not even sought in the first place. confusion but in bias — the result of prizing than its short-term effects.” human judgment over available data. Dr Amanda Crompton, of Nottingham University Business School, has studied the Professor Bent Flyvbjerg, a Danish economic The new method was known as “reference consultation process surrounding another geographer, later laid bare the extent of the class forecasting”, and the UK led the way in of the UK’s present “grands projets”, the malaise — dubbed “the planning fallacy” — adopting it. In 2003, two years before the proposed HS2 line between London, the in the sphere of infrastructure. Examining American Planning Association endorsed West Midlands, Leeds and Manchester. “It’s 70 years’ worth of data, he demonstrated the practice, HM Treasury amended its right to say the system is still far from how forecasts of costs, demand and other Green Book — the official guidance for public perfect,” she says, “but it’s a long way impacts of major projects had “remained sector bodies on how to appraise proposals removed from what used to be the norm.” constantly and remarkably inaccurate for before committing funds to a project, decades”. The average inaccuracy in cost programme or policy — to recommend the By way of context, consider the futility of estimates for transportation schemes was use of historic data to protect against a the 1973 public inquiry into the projected found to be 44.7% for rail, 33.8% for bridges “tendency to be overly optimistic”. Crossrail routing of the M25 through Epping Forest, and tunnels and 20.4% for roads, while the was one of the first large-scale initiatives to the outcome of which was actually never in average overestimate for rail passenger reflect this shift. doubt for a second, or events three years predictions was a staggering 106%. later at Twyford Down, Winchester, where …………………………………………………………………………………… all-out disruption became the weapon of The problem, it was reasoned, was that choice among protesters. plans were customarily based on an “inside For the public, of course, a project’s view”, which treats any given venture as long-term benefits are often far less “Compared to these episodes and many unique and is oblivious to the outcomes important than its short-term effects. more since, the likes of HS2 and Crossrail of comparable schemes. What was needed Although the 2014 British Social Attitudes have seen a much more productive was an “outside view”, which draws on survey suggested a decline in “nimbyism” interaction between policymakers and the information from analogous projects to — most notably in relation to the building of public,” says Dr Crompton. “Certainly with statistically predict likely impacts. “Using new homes — the prospect of disruption HS2 there has still been frustration and
Building for the future According to government data, the UK has achieved the following Offshore wind-farm infrastructure successes since 2010. capacity now greater Source: HM Treasury National Infrastructure Plan 2014 than that of rest of Europe combined Over 1.5m more homes King’s Cross and businesses given super-fast redevelopment broadband access 55 completed, plus major roads and improvements to local transport more than 400 projects completed other stations
Opening of new Heathrow Terminal 2 and Birmingham runway extension
8 Rathbones Review www.rathbones.com Tunnel vision
disenchantment with the consultation There is even nascent backing for a Some experts believe no form of cost-benefit process, but the backlash hasn’t been the “Crossrail of the North”. Supporters contend analysis, whether stripped of human bias or archetypal ‘Not in my back yard’ response. that Manchester, Leeds, Sheffield and perhaps not, can portend every contingency, Liverpool should be classed as a single consequence and possible catastrophe and “A key difference nowadays is that there’s far economic entity and linked as such: transpose that a Victorian-like leap of the imagination more scope for any reaction to have positive the London Underground to the Pennines, is therefore still desirable. Others insist the implications. The power of the internet and they say, and the Central Line would stretch long-term dividends of infrastructure social networking encourages coordinated from Manchester to Leeds. Such notions are spending are frequently muddled and that and constructive action and guards against no longer routinely dismissed or, worse still, countries too often get locked into the usual accusations of nimbyism. Voices resolutely ignored. unsustainable cycles. “When you flip the of protest become organised and informed. infrastructure switch,” says Andrew Warner, an Banner-waving gives way to business cases. …………………………………………………………………………………… economist at the International Monetary Fund, Reason replaces rage. In these circumstances “the light doesn’t automatically turn on.” there’s much more hope for meaningful But who foots the bill? This is both the dialogue and no excuse for ignorance on multi-billion-pound question and an There are, too, those who maintain that in either side’s part.” enduring quandary. Britain we are even now underinvesting in infrastructure. In 2013 the UK was only 27th In tandem with this trend, it may be that Each year the government publishes the in the World Economic Forum’s ranking of both the public and the policymaking Infrastructure Pipeline, a report outlining all nations’ overall infrastructure quality, while community are finally coming to terms with planned or in-progress projects costing in 2012 it came 15th in the World Bank’s a vital point: infrastructure investment more than £50 million. The 2014 edition rundown. cannot be concentrated in one or two regions includes 532 schemes, between them or, even more damagingly, one or two cities. worth £554 billion, and shows that private So have we really turned a corner? It may finance, accounting for 64%, “dominates” be more pragmatic to say we are still in the In October last year, in a report entitled infrastructure investment in the UK; just process of turning it and that when we Rebalancing Britain, the chairman of HS2, 23% of financing comes from the public might state with confidence that it has been Sir David Higgins, described the £43 billion sector, with the remainder from mixed well and truly rounded is another matter project as a “strategic intervention”. “The public/private funding. For its part, Crossrail altogether. It is unlikely that Crossrail’s effect should be transformational,” he wrote. says over 60% of its funding comes “from tunnels will end up like Brunel’s, which by “The result should not be a zero-sum game Londoners and London businesses”. 1852 were being used not as a pioneering in which London loses out to the Midlands transport artery but as home to the world’s and the North but a situation in which Whatever the source, the real trouble with first subterranean fairground; but only time London grows sustainably and the gauging whether money is being well spent and the far-off bottom line will tell if, finally Midlands and the North achieve their full is that nobody can sincerely predict the and at long last, we are on the right track. potential. The country’s productivity will future. Foresight is one thing; clairvoyance rise as a whole.” is quite another.
Creation of almost 20 gigawatts of new electricity 4.6m tonnes More than 500 generation — enough to of additional annual waste- flood and coastal erosion Improvements power 23m homes processing capacity defence projects completed carried out at almost 500 sewage works
www.rathbones.com Rathbones Review 9 Bulldog spirit
Rathbones Investment Director Randolph Churchill aboard the Havengore in January this year. The vessel carried the coffin of his great-grandfather, Sir Winston Churchill, along the Thames en route to his state funeral 50 years ago.
10 Rathbones Review www.rathbones.com Bulldog spirit
Bulldog spirit
As the great-grandson of Sir Winston Churchill, Rathbones Investment Director Randolph Churchill works tirelessly to safeguard the legacy of one of the most towering figures in Britain’s history. Here, as the country marks 50 years since the former Prime Minister’s death, he discusses the enduring significance of the wartime leader who simply refused to give in.
Julian Chillingworth, Chief Investment Officer, Rathbones
andolph Churchill knows full well that 2015 will “ A crucial part of be a year to remember, replete with episodes to Rtreasure and occasions to cherish. Already, though, Winston Churchill’s one memory seems forever guaranteed to bring a proud smile to his face. legacy is the
The moment came during a January visit to the Royal stirring message Mint in Llantrisant, Mid Glamorgan, to attend the launch that you should of a special-edition £20 Winston Churchill coin. For Randolph, a trustee of the Winston Churchill Memorial never give in.” Trust, the engagement was part of a series of events marking 50 years since the death of the man universally regarded as among the most important figures in Britain’s history. For John Churchill, Randolph’s seven-year-old son, it was principally a fun day out — until, that is, a reporter from ITN asked him what had made his great-great- grandfather so remarkable.
The reply proved entirely in keeping with the Churchillian penchant for powerful one-liners. Amid the thousands of words written by speechmakers, journalists and authors, it fell to an unrehearsed schoolboy to deliver the most succinct encapsulation of the Churchill legacy. Immaculately attired in suit and tie, John looked straight into the camera and confidently declared: “He won the war.”
LEON NEAL/AFP/Getty Images …………………………………………………………………………………………………………..
www.rathbones.com Rathbones Review 11 Bulldog spirit
Randolph was himself seven when he “One of the reasons he was so respected began to appreciate the extraordinary was that he had fought alongside the men impact of the Churchill name. As he joined and knew exactly what they were up members of his family at statue unveilings against,” says Randolph. “The fact that he and other official functions — “I vividly had been on the front line counted for a lot recall being brought on parade and standing when he was leading the country. As he to attention,” he says — he gradually realised once said: ‘It was the nation that had the he was bearing witness to acts of respect, lion’s heart. I had the luck to be called upon even reverence, and that those present, to deliver its roar.’” irrespective of whether they had a personal connection, cared deeply about the man It is often overlooked that he was also an whose achievements they were celebrating. exceptional forward-thinker. This much is The Winston Churchill evidenced by Churchill’s Scientists, the Memorial Trust These public shows of admiration furnished Science Museum’s contribution to the him with his earliest insights into his commemorative effort, which tells the The Winston Churchill Memorial great-grandfather’s significance to Britain little-known story of how his fascination Trust was established in 1965, and its people. Now, more than four decades with technological advances, coupled with the year of Churchill’s death, with later, he works to ensure this significance is his first-hand experience of combat, helped donations from thousands of understood and preserved for generations defeat Hitler and the Nazis. people who wanted to see his to come. legacy benefit future generations. “He was especially interested in how science It funds British citizens from all For many, of course, Churchill is might change warfare,” says Randolph, who backgrounds to travel overseas in characterised by his stirring oratory and his had the privilege of opening the exhibition pursuit of new and better ways of dogged determination during the Second on his own 50th birthday. “Within a few tackling a wide range of the World War. Randolph believes that to truly years of the Wright brothers’ inaugural flight challenges currently facing the UK. appreciate his feats and his legacy — he not only established the Royal Naval Air particularly how he won the war — it is Service, the precursor to the Royal Air To qualify, applicants need only a essential to consider his endeavours prior Force, but also took to the skies himself, suitable project and a desire to to the conflict that came to define him. taking flying lessons at a time when to do so improve their community, was both pioneering and dangerous. While profession or field. Thereafter He was, for a start, something of a failure at at the Admiralty during World War One he they are known for life as Churchill school. This led directly to his love of the encouraged the interception and decoding Fellows. More than 5,000 Fellowships have been awarded military. Within weeks of arriving at Harrow of enemy messages, which led to Bletchley during the past half-century. he joined the Harrow Rifle Corps; afterwards Park in World War Two. He played a key role he went to Sandhurst — passing the in the development of tanks when he Visit www.wcmt.org.uk for more entrance exam at the third time of asking commissioned the ‘Land Ships’ committee. information, including details of — where his training as an officer laid the He pushed for radar. He was even the first Churchill 2015, a series of foundations for an illustrious career that politician to appoint a dedicated scientific international events coordinated both took him around the world and adviser. As he said in a speech at Harvard at by Churchill-related organisations underpinned the incomparable political life the end of the Second World War: ‘The empires around the world. that followed. of the future are the empires of the mind.’”
12 Rathbones Review www.rathbones.com Bulldog spirit
Left to right: Churchill’s Below: Randolph Churchill rise from cavalry officer and his son, John, examine to Prime Minister left the new Churchill coin at him acutely aware of the Royal Mint. the horrors of war and the value of science and technology in battle.
Images: Classic Image/Alamy, Pictorial Press Ltd/Alamy, AP/Press Association Images, Bettmann/CORBIS Adam Gray / SWNS …………………………………………………………………………………… “He hated the idea of Randolph was born on 22 January 1965, soldiers being chewed just two days before his great-grandfather passed away. His birth was announced in up on barbed wire and the same newspapers that reported Churchill’s death. To this day, even though in the trenches, which is they never actually met, he derives “a huge why he was constantly Randolph Churchill thrill” from knowing their lives intersected for a few hours. looking at how wars could Randolph Churchill joined the Royal Navy at the age of 18, serving He also acknowledges certain parallels. be foreshortened and how on minesweepers and with the Both men found genuine purpose and you could make sure you Fishery Protection and Hong Kong discipline only when they entered the Squadrons. His last appointment military, in Randolph’s case when he joined won them.” was as a Navigating and Operations the Royal Navy at the age of 18. Both Officer on HMS Swallow. discovered a love of learning later in life, in Randolph’s case when he went to university, include providing opportunities for youth, After leaving the military he aged 23, to study financial management prison reform and, in keeping with Churchill’s studied financial management and and accountancy. own passion, science. accountancy. He joined Rathbones 12 years ago, having previously “We’re energetic,” jokes Randolph when Randolph sees the Trust’s work as an act of worked for Deloitte & Touche, asked about his family’s chequered school remembrance for those who died in both Lazard Asset Management and record. He admits to a sense of being World Wars and a model of inspiration for Schroders Private Bank. “redeemed” on the high seas and in their grandchildren and great-grandchildren. academia; and there is no doubt that “When you look at everything Winston did He is a Director of the Armed Churchill’s story, too, was one of redemption, — not just the triumphs and the things he Services Investment Company, with ultimate victory coming only after the got right but the scrapes, the accidents and which helps more than 100 frustration of his early years, the tragedy of the things he got wrong — you can’t help but military charities. his fall from office over Gallipoli, and his be inspired,” he says. Randolph Churchill is a trustee of decade in the political wilderness in the the Churchill Centre, a charitable 1930’s, when his warnings about Hitler fell “That’s why he’s still a great role-model. nonprofit organisation that on deaf ears. When you read his writings and listen to his supports educational programmes, words you’re aware that what he said was including public speaking and Perhaps it is only fitting, then, that learning always uplifting, optimistic and focused on design competitions. A new online from mistakes is central to the work of the ‘the broad, sunlit uplands’. A crucial part of hub, providing a vehicle for Winston Churchill Memorial Trust, which his legacy is that even today he offers us the Churchill organisations around the each year funds hundreds of British citizens same stirring message that you should never world to share content that sheds from a variety of backgrounds to travel give in. He expressed it himself: ‘Success is light on his life and legacy. abroad in pursuit of new and better ways of not final; failure is not fatal. It is the courage tackling society’s problems. Areas of interest to continue that counts.’” Visit www.churchillcentral.com.
www.rathbones.com Rathbones Review 13 Food for thought Image: Fotomaton /Alamy Fotomaton Image:
14 Rathbones Review www.rathbones.com Food for thought
Food for thought
The UK’s shoppers have become increasingly savvy and selective in recent years, condemning the one-stop, one-shop approach to retail history. How did this transformation come about? And how did the High Street’s biggest name become the most high-profile casualty? John McDougall, Equity Analyst, Rathbones
ow the mighty have fallen. The woes Yet there is a much wider context to the of Tesco, a retail phenomenon that saga. Tesco’s struggles have not unfolded Honce threatened to dominate the in a vacuum. Familiarity may have bred UK’s consumer landscape so completely contempt, but other forces have been at that the neologism “Tescopoly” entered work. The fact is that there has been a common parlance, have become a mainstay profound shift in how we shop for food, of the business and news pages alike. If the and in no small part it is a persistent failure measure of a good story is that everyone can to acknowledge, respond to and reflect this relate to it then this must rank as a classic, seismic change in attitudes that has because there was a time, sure enough, brought Tesco low in such dramatic and when it seemed everyone shopped at Tesco. unexpected fashion.
In November last year Warren Buffett …………………………………………………………………………………… reported losing $678 million on his investment in the firm — which, he In the early 1990s, amid the gloom of described as “a huge mistake”. With recession, British consumers were revenues plunging, shares plummeting and introduced to a different kind of shopping a Serious Fraud Office investigation into experience. Alongside the High Street claims of inflated profits looming, the stalwarts that had for so long shaped the contention that all great empires must nation’s retail habits — Sainsbury’s, eventually crumble inevitably comes to Safeway, Asda, Tesco — strange new names mind. The overwhelming likelihood is that began to surface. Tesco will survive in some form; but few would doubt it will emerge from its present The first was Aldi. Calculating that travails a different beast to the all-consuming unemployment and a prolonged economic leviathan many of us once relied on but slump had created a niche market that somehow came to resent. British chains were failing to tap, the German company arrived in the UK in 1990. The The causes of this spectacular decline have preferred terminology for its offering was The notion of already been pored over by commentators quickly determined and commendably a weekly shop and customers alike. Some blame unequivocal: Aldi specialised in “discount carried out in a single arrogance, some cite overambition and stores”. store has become much some make the case for sheer greed. less entrenched since the Regardless, it appears reasonable to suggest Lidl, another German firm, followed four global financial crisis. the company has been the victim of a series years later. It stuck to the same cut-price, of managerial misjudgments. unapologetic take-us-as-you-find-us
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approach. Netto, from Denmark, took the the food chain. “The Office of Fair Trading By 2007 Tesco’s sprawling out-of-town bargain-basement concept even further, and the Competition Commission kept a branches stocked everything from fruit and seeking to replicate the success Ikea, in very close watch on the sector throughout vegetables to televisions and toasters. Its finding a no-frills route to British shoppers’ the ’90s, but there was a feeling that the convenience stores, replete with ready hearts. consumer was basically gaining from the meals and other day-to-day staples, were system as it stood and that the big players omnipresent in town centres across the Concessions to the popular notion of a should be left to police themselves.” land. Market share reached an all-time high late-20th-century supermarket were scant. of 31.2%. Share prices peaked. Terry Leahy Stock was arrayed apparently at random. “What would one day work was knighted. It was the company’s annus The Teutonic equivalent of Jaffa Cakes mirabilis. might be found next to a hodgepodge of so well for Scandinavian plastic toys; cereals might sit alongside And then came the global financial crisis. beers. There was no guarantee that a crime dramas — moody Suddenly the conditions on which Aldi had product available one week would still be lighting, barren vistas, a first sought to capitalise 17 years earlier present the next. The décor was at best were there to be seized on again, and this spartan and at worst dispiriting. nagging sense of time they were more acute and likely to be longer-lasting. The discounters were about On the whole, despite the appeal of lower uncertainty — proved less to start doing things well; Tesco, by prices, the public was either unmoved or beguiling in Scandinavian contrast, was about to embark on its slide. repelled. The attributes the average Briton so despises in German football — consistency, discount stores.” “Austerity removed the stigma that had quality, machine-like efficiency — were previously been associated with the likes deemed to be absent from German This laissez-faire philosophy was most of Aldi and Lidl,” says Professor Morgan, supermarkets. What would one day work starkly illustrated in October 2000, when of the Nottingham School of Economics. so well for Scandinavian crime dramas — the Competition Commission published the “With household budgets getting tighter moody lighting, barren vistas, a nagging findings of an inquiry into the UK grocery and tighter, it simply became acceptable to sense of uncertainty — proved somewhat market. Dozens of instances of anti- shop there. The proposition resonated with less beguiling in Scandinavian discount competitive behaviour were highlighted, more and more customers, who saw these stores. but the vast majority affected suppliers chains as viable alternatives to the usual rather than customers. Tellingly, the candidates. There was nothing to be “Many consumers found it a grim resulting Code of Practice, ostensibly embarrassed about, and Aldi and Lidl, experience,” says Professor Wyn Morgan, a intended to regulate the relationship to their credit, built on that.” leading expert in the field of food economics. between the largest chains and their “They weren’t accustomed to what they suppliers, was a strictly voluntary affair. Tesco’s reaction to the emerging threat was found, and they couldn’t get to grips with it. to reduce investment in its home market As a consequence — even though a lot of Without effective legislation, the big guns and divert more energy to conquering new people didn’t have jobs, a lot of people didn’t got bigger and increasingly benefitted from frontiers, Asia and the US chief among them. have much money and there seemed to be economies of scale. They exerted their The message was plain: the company was plenty of reasons to believe the market was purchasing power over thousands of relying on British customers to resume there — the impact was minimal. And in the suppliers, playing them off against each spending once the economy recovered. end it was all about brand. Rightly or wrongly, other. Lower prices were a powerful Shoppers were unimpressed. The backlash- there was a stigma attached to taking your narcotic: we may have cared in principle cum-exodus gathered momentum. custom to these places. Perceptions were about farmers and other small suppliers, generally negative. In essence, the view was but we also liked low food bills. Similar The low-cost forces of online retailing asked that if you had to go there you must be pretty forces were at work for non-food items, further questions of the firm as super- desperate.” such as books, CDs and electrical goods. affordable internet sales of electrical items, clothes and general merchandise spiralled. The attempted incursion did not go Outstripping its rivals, Tesco expanded at a Formerly a trailblazer, Tesco was rendered unnoticed by the established titans. In 1993 furious pace. In 1995 it unveiled the Clubcard a comparative dinosaur as the likes of Tesco launched its Value range with the loyalty scheme and usurped Sainsbury’s as Amazon rewrote the rulebook. Warehouse- strapline “Every little helps”. Why would the UK’s number-one food retailer. In 1997, sized hypermarkets assumed the air of even the most cash-strapped shopper trudge with new chief executive Terry Leahy at the monuments to hubris. Strategies that had around a dreary branch of Netto when helm, it opened the first Tesco Extra defined Tesco’s expansionist outlook were savings could be found in more recognisable hypermarket; dozens more would follow. coming back to haunt the company. and congenial surroundings? Tesco.com went live in 2000. In 2003 a takeover added almost 900 local outlets to More stringent legislation also added to the The legislative environment, too, was less the empire. With the recession fading from pressure. A second Competition Commission than ideal for the unloved newcomers. “The memory, the nation’s newly emboldened inquiry, completed in 2008, led to a revised household names worked on the basis of shoppers fuelled the march towards Code of Practice and recommended the driving down costs through their buying ubiquity. It was relentless. The Tescopoly appointment of an independent ombudsman power and how they dealt with suppliers,” era was in full swing. — a prospect that at last became a reality says Professor Morgan, the co-author of under the coalition government, despite various major studies into competition in …………………………………………………………………………………… what House of Commons documents
16 Rathbones Review www.rathbones.com Food for thought
1 2
3
4
1. Tesco founder Jack Cohen originally ran 7 7 East End market stalls. This store opened in Yiewsley, Middlesex, in 1972. 2. Scandinavian chain Netto was determinedly downmarket when it arrived in the UK in the early 1990s. 3. Aldi also championed cheapness in its efforts to woo British shoppers. 4. Untroubled by the newcomers, Tesco boosted its product range and cemented its supremacy during the early noughties. 5. Ever-bigger stores, featuring electrical and other home goods alongside more established lines, became monuments to the giants’ market power. 6. Finally, in the wake of the financial crisis, “cheaper” was no longer equated with “worse”. 7. In 2014 Aldi was named Britain’s favourite brand in a YouGov survey.
5
6 Images: Hulton Archive/Getty Images, Andrew Drysdale/REX Shutterstock, CBsigns/Alamy, Dan Kitwood/Getty Images, Kitwood/Getty Dan CBsigns/Alamy, Images, Andrew Drysdale/REX Shutterstock, Images: Hulton Archive/Getty Images via Getty Simon Dawson/Bloomberg Cole/Alamy, David uk retail Alan King/Alamy,
www.rathbones.com Rathbones Review 17 Food for thought
The German stores that changed how we shop
1914 1948 1960 1971 Anna Albrecht opens Anna’s two sons, Karl and The two brothers fall Theo is kidnapped and Albrecht Discount — Theo, take over and expand out and separate the held for 17 days. He later a small food store under the shortened business into Aldi Nord demands tax relief on in Essen business name Aldi and Aldi Sud the €3.5m ransom
1930 1973 1977 1980s Josef dies. Dieter buys Josef Schwartz Josef and son Dieter By the end of the decade rights to Lidl from father’s founds grocery open firm’s first discount Lidl a household name former business partner wholesale business store in Germany in Germany and rebrands stores
subsequently recorded as “Tesco’s strong included fees for displaying SKUs prominently problem: customers cared only about opposition”. The days of the “big four” and would eventually contribute to a £263 limited quality, and the Germans were not having their own way were over, and the million overstatement in profits. to be found wanting in that regard. issue of suppliers and product ranges would become increasingly relevant to the Shoppers once saw nothing particularly As Tesco’s troubles in the UK worsened, metamorphosis unfolding in aisles across ridiculous, less still sinister, about having so its grand plans for global domination the country. to select from an assortment of 228 floundered. Its Asian adventure was air-fresheners or nearly 30 iterations of excruciatingly exemplified by the saga of its While an average Aldi outlet might boast tomato sauce: if anything, they revelled in showpiece store in Qingdao, China, famously barely 1,500 different lines — known as it. But after the financial crisis savvy built with a car-park on the ground floor and stock-keeping units or SKUs — some Tesco consumers exercised their right to the grocery section on the second floor: it branches could stock up to 90,000. A key contemplate alternatives, varying their transpired that most shoppers arrived by bus driver of this unrivalled fervour for variety routines, abandoning age-old loyalties, no or on foot, and the mere thought of having was the policy of demanding payments longer content to confine themselves to a to climb two flights of stairs was sufficient to from suppliers, a controversial system that single chain. Now limited choice was not a turn them away in droves. The purchase of the Fresh & Easy chain in the US, first announced amid the euphoria of 2007, would climax in the biggest-ever British retail failure in the States, with losses of £1.8bn UK grocery share over six years. Despite the negative coverage on Tesco it remains by far Britain’s biggest supermarket “For a long time it was thought food retailers chain, dwarfing Aldi and Lidl. were recession-proof,” says Professor Morgan, “but 2008 was a real tipping point. What we’ve seen since is a fundamental change in our shopping behaviour. We were a nation of die-hard weekly shoppers — one stop at one shop — but we’ve got out of that habit. Tesco is the most obvious high-profile casualty, M and Aldi and Lidl are the beneficiaries.
“It’s an amazing turnaround, but at the same Tesco Sainsbury’s Asda Morrisons Waitrose Aldi Lidl time it’s worth remembering that certain 29 1% 16 9% 16 8% 11 3% 5 1% 4 8% 3 5% cycles are always at work. Before Tesco there was Sainsbury’s; before Sainsbury’s there Source: Kantar Worldpanel Grocery share data Figures 12 weeks to 04 Jan 2015
18 Rathbones Review www.rathbones.com Food for thought
2010 2014 2015 Theo, head of Aldi Karl dies aged 94. Aldi plans to open 70 Nord, dies at the age His Aldi Sud business new UK stores this year. of 88 operates over 500 Still privately owned stores in the UK
1994 2014 2015 Lidl opens first store Lidl ends year with Lidl plans to double its in the UK over 600 stores in UK presence, opening UK and over 10,000 at least 30 stores a year. across Europe Still privately owned
“Warehouse-sized hypermarkets became monuments to hubris. Strategies that had defined Tesco’s expansionist outlook returned to haunt the company.” Aldi began humbly in its native Germany. It is now firmly established in the UK and building a presence in the US. was the Co-op. Aldi would become the Tesco of 2007 if it could — in Germany, after all, it is Tesco — and if it did then the next Aldi or constituents had managed to maintain that it targeted while its UK powerbase was Lidl would come along and set about “ever-present” status; the remainder had starting to disintegrate. picking up the slack at the discount end of gone bust, succumbed to takeovers or been the market. The bottom line is that markets supplanted by new entries. Empires do, Long before his own investment in Tesco change, society changes, people change.” indeed, rise and fall. As Munger noted: cost him $678 million, Buffett himself “Tesco owned the world, and then one day posited that it takes 20 years to build a …………………………………………………………………………………… it stopped working so well.” reputation. He could be right: Aldi has been in the UK for 25 years, Lidl for 21. Yet a Charles Munger, one of Warren Buffett’s Aldi was last year voted Britain’s favourite more pertinent consideration now, at least longest-serving business partners, was brand in a YouGov survey. In January this in some quarters, is how long it takes to recently asked to sum up Tesco’s plight. year Aldi and Lidl’s combined share of the rebuild a reputation. As we peruse the “The natural course of competition is that it UK grocery market hit a new high, winners and losers on our High Streets, as gets tough,” he said. “It’s the people who prompting Mike Watkins, UK Head of we move from discount to middle-of-the- expect everything to keep going wonderfully Retailer and Business Insight at information road to specialist and back again, as we who are nuts.” company Nielsen, to remark that show ourselves to be as shrewd as we are discounters “have changed shopping habits fickle, maybe even as we feast on German The history of the FTSE 100 underlines this forever”. Tesco is not only struggling on Jaffa Cakes and the very best of British, it is truism. In 2014, when the index marked its home soil but saddled with a severely all very much food for thought.
Image: ALDI Einkauf GmbH & Co. oHG via Getty Images oHG via Getty GmbH & Co. ALDI Einkauf Image: 30th birthday, only 19 of its founding battered reputation in the overseas markets
www.rathbones.com Rathbones Review 19 Helping fight modern slavery
Helping fight modern slavery
The first draft of the Modern Slavery Bill began its progress through Parliament in December 2013. By December the following year the government had included an amendment requiring all commercial organisations over a certain size to address the risk of slavery in their supply chains. Rathbone Greenbank played a key role in encouraging this shift.
Matt Crossman, Ethical Research and Corporate Engagement
odern slavery — an umbrella term financial incentives and increasing the Images covering forced labour, human chances of arrest can bring real progress. Mtrafficking, forced marriages and Engaging companies in the debate and debt bondage — is estimated to affect 35.8 pressuring them to investigate the risk of million people globally. Although many of modern slavery in their own supply chains these are concentrated in a small number of are significant steps. countries, the issue has worldwide relevance. One way to achieve this in law would be Jeff Holt/Bloomberg via Getty Aside from the strong moral dimension, to require companies above a certain size there are significant economic to report on their efforts in this regard. from the final draft of the bill, which was consequences for the countries most affected. Transparency in supply chains (TISC) presented to Parliament in June 2014. The International Labour Organisation has legislation along such lines was first calculated that modern slavery generates proposed in the UK in 2012, thanks to MP Yet intensive efforts behind the scenes led around $150 billion in illegal profits each Michael Connarty’s private member’s bill. to growing cross-departmental consensus year. in government over the merits of such Although Connarty was unsuccessful, legislation. Soon it became clear that MPs Although the problem may not be eradicated momentum soon began to build. In the would defy party lines and vote to accept a by widening the scope of the criminal summer of 2013 Home Secretary Theresa Labour amendment — and at this point the activity covered by legislation, reducing the May announced her intention to include government changed course and expressed TISC in the proposed Modern Slavery Bill. its support for including TISC in the bill.
In February 2014 I was invited to give Rathbone Greenbank coordinated a letter “The International Labour evidence to the Parliamentary Joint Select on behalf of institutional investors with Organisation estimates Committee scrutinising the draft bill. The some £940 billion in assets under Committee supported TISC. In tandem, management, calling for effective supply that modern slavery Rathbone Greenbank coordinated an chains reporting in the bill. In keeping with investor coalition — with a total of £195 the strong abolitionist history of our generates around $150 billion in assets under management — to company’s founding family, this letter, billion in illegal profits write to the Prime Minister to register its published in the Daily Telegraph in support. Unfortunately, despite the November 2014, was co-signed by each year.” Committee’s backing, TISC was omitted Rathbones’ chief executive, Philip Howell.
20 Rathbones Review www.rathbones.com Helping fight modern slavery
Responsible investment in action Ivo Clifton, Head of Specialist and Charity Business
Companies and charities have always had to be mindful of the way they conduct business. Whether through whistle-blowers, investigative journalists or activists, uncomfortable stories have always surfaced to bring scandal, embarrassment and promises to ‘learn lessons’.
The internet and social media have, however, had a radical impact on the availability of information in general and the way it can be harnessed for particular causes. Companies and charities now have to be ultra-sensitive in how they conduct their affairs — whether it is the impact extractive industries have on the environment, the source of ‘beef’ for microwave lasagne, the cheap labour used to produce ‘throwaway’ fashion or charities investing in the arms industry or payday loan companies.
It is increasingly important, both for moral reasons and pure self-interest, to know all The Modern Slavery Bill received Royal A key aim of the about your suppliers’ and partners’ business Assent in March this year. It encompasses Modern Slavery Bill is to practices and to work only with companies new powers for the police, the establishment encourage companies that behave responsibly towards their of an independent anti-slavery to ensure their supply customers, employees, shareholders and commissioner and a strengthened role for chains in developing society. The price of not doing so is too high. the Gangmasters Licensing Authority, a economies are ethically sound. public body set up to oversee the protection As shown by our role impressing for the of casual labourers in the agriculture and inclusion of TISC in the Modern Slavery Bill, food industries. Rathbones continues the tradition of its William founding family in campaigning to improve Rathbone IV In addition, thanks to the efforts of the lives of others. We used our specialist Rathbone Greenbank and many committed Rathbones’ knowledge and industry contacts to effect NGOs and other experts, companies will involvement in changes that will affect millions of people and have to start reporting on the risk of modern the campaign set a standard for other countries to follow. slavery in their supply chains in the near to end modern future. slavery continues a Our charity clients can be sure that Rathbones long, honourable tradition. is committed to raising standards and Investors and consumers alike will benefit William Rathbone IV was a merchant in awareness in the investment industry and from this greater transparency. Most Liverpool and a committed opponent to to using our expertise for the benefit of importantly of all, though, the legislation the slave trade in the 18th century. society. These are not just words in a CSR will help save millions of people from the Rathbone Greenbank takes its name from statement: we devote people and resources terrible conditions of modern slavery. his family house and estate in Liverpool. to make a difference to the world around us.
www.rathbones.com Rathbones Review 21 Watching the watchmen
Watching the watchmen
The Freedom of Information Act was hailed as a means of delivering “a new relationship between government and people” when it was introduced 10 years ago. Has it proved a “triumph of transparency”, as officials claim, or has it served only to drive an even larger wedge between policymakers and the public?
James Garbutt, Investment Director, Rathbones
“Quis custodiet ipsos custodes?” — Juvenal, Satires n 1 January 2005, under the aegis of The Act began life as a New Labour “ It is easy to forget a man who later described his actions manifesto commitment in the run-up to the Oas those of “a naive, foolish, 1997 general election. It was preceded by a that before 2005 irresponsible nincompoop”, the Freedom of White Paper, Your Right to Know, prepared Information Act came into force. It granted by Dr David Clark, who before becoming an the public had no everyone the right to obtain information MP was a Lecturer in Government and held by the UK’s public authorities. Ten Administration at the University of Salford. right of access to years on, with hundreds of thousands of government.” applications having generated a mix of In 1998 academics at the Constitution Unit, startling revelations and mind-numbing part of University College London’s School ephemera, it remains as divisive as ever. of Public Policy, published a commentary that described Your Right to Know as Some have championed it as a landmark “unrealistic”. It had the air, they said, of a triumph for open government and document produced without the full democracy — a sort of Big Brother in reverse; understanding of departments and their others have derided it as a godsend for ministers and in the absence of due journalists and busybodies or, worse still, a consideration for the staffing and resource mechanism that encourages more strategic implications of such legislation. Maybe the deception on the part of the public sector. most telling phrase in the critique was “too Once closely guarded, Either way, it is hard not to think of it in good to be true”. the inner workings vaguely Orwellian terms: we may not have of government are a Ministry of Truth, but we do have an The assessment proved prescient. What now open to public Information Commissioner. eventually emerged was some way removed scrutiny.
22 Rathbones Review www.rathbones.com Watching the watchmen
Scott Barbour/Getty Images
www.rathbones.com Rathbones Review 23 Watching the watchmen
FOI in action from Clark’s vision. Clark himself in [the LGA’s] summaries are the requests vehemently opposed the watering down of that cost nothing, because no intelligent his original proposals and lost his Cabinet FOI officer is going to spend time searching inspection report seat shortly thereafter. Most notably, when for files for an action plan on zombies.” changed the way such the Act at last became law it contained than information is treated. 24 exemptions from disclosure: the White In addition — and perhaps more compellingly The Information Paper had proposed only seven. — various studies have shown the legislation Commissioner overruled Bridgend is used primarily by the people for whom it Borough Council’s Even so, it is easy to forget that before was purportedly introduced: the public. 2005 the public had no right of access to Researchers have estimated that up to 80% Brought to account refusal, and now all food hygiene ratings government. Instead there was only a of the 400,000-plus applications made A lengthy legal battle are freely available. limited framework for sharing information during the past decade have been aimed at was played out before — one in which the word “voluntary” was writ local government and rooted in strictly the Commons forbiddingly large. At a stroke — albeit one parochial or personal issues. The ostensibly authorities finally that took eight years — the floodgates were trifling facts and figures revealed by such prepared for disclosure opened. enquiries might not make the headlines, but millions of receipts, they can still have great value to individuals invoices and other …………………………………………………………………………………… and communities. In the words of Dr Ben documents related Worthy, a Lecturer in Politics at Birkbeck to MPs’ expenses. Everyone is familiar with the major College, University of London: “Real FOI is The scandal proved Cutting to the truth successes of what is now widely known local, focused and probably bringing benefits a reputational simply as FOI. Arguably the most celebrated we don’t see.” catastrophe for A request relating to of all is the Act’s role in revealing the scandal Parliament. a 2006 knife amnesty surrounding MPs’ expenses — a saga of organised by the repayments, resignations, retirements, court “ Various studies have Metropolitan Police appearances and one especially notorious showed the initiative claim for a duck-house. shown the legislation had no apparent long-term effect on Such high-profile, attention-grabbing is used primarily by the reducing violence. This exposés have prompted complaints that FOI people for whom it was was a classic example is used principally by journalists, and it is of FOI revealing the true that editors and reporters throughout purportedly introduced: 101 frustrations real impact of a public the land have occasionally seized on it as a policy. the public.” Data for nine months space-filler nonpareil. “There’s too much of 2012 revealed how fishing and not enough trawling,” concedes almost half a million John Mair, co-author of FOI 10 Years On: Naturally, the financial repercussions of calls to the police’s Freedom Fighting or Lazy Journalism?. “The delivering these benefits are another matter. 101 non-emergency lad on work experience at a local paper has Any FOI application can be refused if the line went become a trawlerman.” Yet the temptation processing it exceeds £600, but it has still unanswered. Some to picture bored scribes making merry at the been estimated that local authorities run up callers persevered for Act’s expense should be tempered by two an annual bill of more than £30 million in half an hour before Reassessing history considerations. dealing with requests. Could any government, finally giving up hope The cost of the ill-fated whatever the extent of its Orwellian of getting a reply. bid to keep the value Firstly, the media’s collective belief is that leanings, willingly tolerate a combination of of the pound tied to FOI is under constant attack from massive expenditure and the laying bare of European currency officialdom and that the Local Government its once-hidden workings? exchange rates in Association routinely highlights the most 1992 was widely bizarre requests in an effort to drive further …………………………………………………………………………………… estimated at tens of restrictions. “The point is to suggest FOI is billions of pounds. An used for trivial and pointless and vexatious Jeremy Bentham, the 19th-century FOI request led to the purposes, when that’s not the case,” Maurice utilitarian philosopher and social reformer, Treasury calculating Frankel, the long-serving director of the believed greater scrutiny was the key to A recipe for the actual cost was Campaign for Freedom of Information, told civil liberty. People would behave more transparency £3 billion. a press reception to mark the Act’s 10th responsibly, he said, if they knew they were A request for a hotel’s anniversary. “The requests that are featured being watched. He demonstrated this food hygiene
24 Rathbones Review www.rathbones.com Watching the watchmen
the time of his memoirs he saw it as “one of The silly side of FOI “ Might we one day the biggest mistakes of my career”. “For grow tired of FOI, as political leaders,” he complained, “it’s like saying to someone who is hitting you on To highlight how FOI can be abused, the we appear to have the head with a stick ‘Hey, try this instead’ Local Government Association has published and handing them a mallet.” some of the most bizarre requests received grown tired of so by councils. They include: many other aspects of Neatly enough, this brings us back to Orwell, who in 1946, in his essay Politics and the government?” English Language, observed: “In real life it is What preparations has the council always the anvil that breaks the hammer.” It made for a zombie attack? conviction in conceiving the Panopticon, a is worth noting that the number of FOI (Leicester City Council) circular jail in which a guard could survey all applications received by central the inmates from a central location: the government has been conspicuously What plans are in place to deal with design meant each prisoner could only inconsistent over the past 10 years and is an alien invasion? assume he was being monitored constantly, currently in decline; moreover, electoral (Merseyside Fire and Rescue Service) even though this was impossible. turn-out alone suggests the Act has done nothing to foster wider engagement with the How much money has been paid to At its best, say some commentators, FOI political system. Might we one day grow tired exorcists over the past 12 months? operates on the same principle. Like of FOI, as we appear to have grown tired of (Cornwall Council) Bentham’s Panopticon inmates, central and so many other aspects of government? local government have to presuppose they What preparations has the council are being scrutinised: a request might or On balance, one would hope not. Given the made for an emergency landing of might not come, but they have to imagine it fundamental sea-change it has represented Santa’s sleigh this Christmas? will — and they have to conduct themselves and some of the far-reaching revelations (Cheltenham Borough Council) accordingly. that have resulted, we would probably miss it if it were gone. Whether bureaucrats and How does the council manage to Others are less convinced. They cite the irony administrators everywhere secretly dream of cope with the vagaries of of granting the public its very own “snoopers’ its demise, on the other hand, we may never Heisenberg’s Uncertainty Principle? charter” when civil liberties are perceived to know — unless, of course, we ask. (Wealden District Council) be under increasing threat. They insist FOI — not least in light of its provision for a ministerial veto — is little more than a sop, a mere squint through the keyhole of a governmental machine that in return enjoys near-omniscience about its subjects.
By far the most damning criticism of all, however, has come from the aforementioned self-proclaimed nincompoop. “Freedom of Information Act,” Tony Blair wrote in 2010. “I look at those words as I write them and feel like shaking my head till it drops off. You idiot. There is really no description of stupidity, no matter how vivid, that is adequate. I quake at the imbecility of it.”
The future Prime Minister had claimed FOI remains open while in opposition that FOI would “signal to abuse — as a new relationship between government illustrated by a and people — a relationship which sees the request about public as legitimate stakeholders in the a fire service’s running of the country”. Once in Downing plans to deal with Street, he came to regard it as a law “utterly an attack from undermining of sensible government”. By outer space. Image: John Springer Collection/CORBIS
www.rathbones.com Rathbones Review 25 Live long and prosper?
Live long and prosper?
It has been claimed that the first person to live to 150 has already been born.
Whether that is true or not, what is beyond doubt is that we are living longer.
Increasing life expectancy has implications for all of us. For example, how do we fund retirement? A man reaching 65 years old today can expect on average to live another 21 years, and a woman 24 more years. Only as far back as 1982 it was just 13 and 17 years respectively.
With recent pension reforms encouraging more people to opt for income drawdown rather than annuities, the challenge of making money last is going to become more serious. So is the challenge of the state generating sufficient revenue from a shrinking proportion of working age people to care for the ageing populace.
The health and social challenges created by our longevity are clearly also highly problematic, as our illustration demonstrates overleaf.
The solutions to the problems will be complex; recognising the scale of the challenges is merely the start, but an important one.
26 Rathbones Review www.rathbones.com Live long and prosper?
www.rathbones.com Rathbones Review 27 Live long and prosper?
The health challenge in the UK
Forecast increase in long-term illnesses among people aged 65 and over, 2010 to 2030
45% 50% 50% 50% 80%
Diabetes Arthritis Coronary Stroke Dementia heart disease
Source: Ready for Ageing? — Select Committee Report (figures for England and Wales)
Increasing longevity Life expectancy Born in 1900
49.8 56.4
30 40 50 60 70 80 90 100
The funding challenge
£ £ £ £ £ £ Only 58% More people are working beyond traditional retirement age: of adults have any pension assets. These have a median Only 1 in 3 value of adults is currently saving for retirement £46,900 33% 25% Assets this size might provide 10.7 million Women Men33% people can expect inadequate retirement £2,800 aged25% 60-64 aged 65-69 incomes still working still working annual income in retirement
Source: Ready for Ageing? — Select Committee Report Source: ONS Source: ONS
28 Rathbones Review www.rathbones.com Live long and prosper?
Cost of dementia care today Percentage of currently aged Demand for unpaid care 65 men and women who will provided by families and Total cost: £26 billion need social care in the future friends will increase:
£4.3bn £4.5bn £5.8bn £11.6bn 6,400,000 NHS Social (public) Social (private) Unpaid people provide unpaid care
This is twice the number of paid staff in the health and 88% 66% social care systems combined. 84% 67%
Source: Dementia UK: Update, Alzheimer’s Society Source: Ready for Ageing? — Select Committee Source: Ready for Ageing? — Select Committee Social Report Report NHS Social Social £11 6bn Life expectancy Life expectancy £4 3bn Frenchwoman £4 5bn £5 8bnBorn in 1950 Born in 2015 Men who reach 65 in 2015 Jeanne Calment can expect to live another lived to 122 — the 21.8 years and women oldest age on record another 24.4 years 78.2 83.1 91.2 94.5
30 40 50 60 70 80 90 100
There are 5.4 million people aged 75 or over. In 2035 there will be 8.8 million Male Female
Source: ONS, Cohort life expectancies
Contributions made to society Old age support ratio by older people made possible The number of people of working age is falling relative to the by increasing lifespans: number of pensioners. 30% : of over 60s volunteer 1971 19711 to 3.57
1 in 3 working mothers rely : 2015 on grandparents for childcare 2015 1 to 3.22
Source: Ready for Ageing? — Select Committee Report : 2035 2035 1 to 2.87 Source: ONS
www.rathbones.com Rathbones Review 29 The day the world changed
unday, 18 June 1815 was one of those rare days of which one can say with Scertainty that one chapter in history ended and another began. It was the day The day the of the Battle of Waterloo.
For the victor, the Duke of Wellington, it was a “damned near-run thing”. For the loser, Napoleon Bonaparte, it signalled the world changed denouement of a truly extraordinary military and political career. For Europe and beyond it brought repercussions that remain with us even now. Two hundred years ago, on land just a few miles from Brussels, the Battle of Waterloo changed the course This year we mark its bicentenary. There will be hundreds of speeches, books, of history. The repercussions of Napoleon Bonaparte’s dinners, commemorative coins, festivals, decisive defeat at the hands of the Duke of Wellington museum exhibitions, TV programmes and newspaper and magazine articles — this one are still with us today. included. There will even be a full-scale, on-site reconstruction featuring a cast of 50,000. Amid the commemorations, the Andrew Roberts, author of Napoleon: A Life celebrations, the pomp and the
30 Rathbones Review www.rathbones.com The day the world changed Map courtesy FCIT Map courtesy pontificating, we would do well to pause Defeat at Waterloo marked the end and reflect on precisely why Waterloo still of Napoleon Bonaparte’s remarkable matters so much today. military and political career.
…………………………………………………………………………………… His promotion of Enlightenment ideas provoked fear in the old European Napoleon was born on the island of Corsica monarchies. The likes of Austria, in 1769 and was educated in France from Russia and Prussia believed notions the age of nine. He was only 20 by the time such as equality before the law, of the outbreak of the French Revolution religious toleration, the abolition but had already recognised that France held of feudalism and the championing the key to achieving his grand ambitions. of meritocracy — ideals for which the French had deposed and By the age of 27 he was commander-in-chief decapitated the Bourbon king of France’s Army of Italy, winning a series of Louis XVI — represented a threat battles against the Austrians. He went on to to their supremacy. Given that invade Egypt before returning to France in such conceits were fundamentally 1799, still aged just 30, to overthrow Paris’s opposed to the whole basis of the Directory government in a military coup, rule exercised by the Habsburg, install himself as First Consul and embark Romanov and Hohenzollern on what amounted to a dictatorship that dynasties, their anxiety was would cast a shadow over Europe. well founded.
Lebrecht Music and Arts Photo Library/Alamy www.rathbones.com The day the world changed
In Britain, which had adopted “Britain recognised that the ideological wars that Enlightenment principles long before the French Revolution, the governing elite were beckoned offered an opportunity to triumph at last just as shocked by Louis XVI’s guillotining. But they also recognised that the ideological in the Anglo-French struggle that had kept the two wars that beckoned offered an opportunity to triumph at last in the Anglo-French countries at war for 63 of the previous 125 years.” struggle that had kept the two countries at war for 63 of the previous 125 years.
France had already been at war with Austria table succeeded only in destroying his international transgressions. The Congress and Prussia for seven years and with Britain ultimate power base, his Grande Armée. of Berlin in 1878, the Treaty of Versailles in for six when Napoleon seized power. The Consequently, he lost both wars. Suitably 1919, the Potsdam Conference in 1945, the country was almost a failed state: near- bolstered, the Austrians (then at peace modern G8, G9 and G20 conclaves, the UN bankrupt, demoralised, hyper-inflationary, with France after Napoleon’s marriage to Security Council — all of these means of controlled by deeply corrupt Directors and the Emperor of Austria’s daughter, the settling international disputes can trace their utterly tired of conflict. Within six years, under Archduchess Marie Louise) and the Prussians origins to the discussions that led to the Napoleon’s aegis, the nation was restored to (who had been crushed at the Battle of Jena signing of the Treaty of Vienna after Waterloo. the most powerful in Europe, as it had been in 1806) rose up against the French once during the reign of Louis XIV a century earlier. more in 1813. Perhaps inevitably, the rise and fall of other empires also ensued. Napoleon’s defeat There was even a period of peace. Napoleon’s They were joined by Russia, Britain, Portugal, dangerously diminished France’s power just victory over the Austrians at the Battle of Sweden, Spain and various German states as Prussia — which enjoyed a national Marengo in 1800 ushered in five years of to form the Sixth Coalition, whose victory resurgence while fighting against him in 1813 much-needed respite, during which he over Napoleon at the Battle of Leipzig, — became more self-confident. By the 1850s radically overhauled almost every aspect of where he was outnumbered two-to-one, led and 1860s the Prussian premier, Otto von French politics, economics, education, law, to his abdication in 1814. He was exiled on Bismarck, was able to unify — by persuasion public administration, society, religion and Elba, within sight of his birthplace, but that and realpolitik but also by naked aggression the military. was far from the end of the story. — the German states that Napoleon had deliberately kept fragmented. The German Yet the Austrians could not forget they had In a campaign known as the Hundred Days, Empire was proclaimed in the Hall of Mirrors ruled northern Italy for two centuries before Napoleon attempted to reverse the easy at Versailles after Prussia’s victory over Napoleon’s advent. In 1805, 1809 and 1813 rise-and-fall trajectory that was the fate of Napoleon’s nephew, Napoleon III, in the they endeavoured to recapture the region. so many other empires. He escaped from Franco-Prussian War. After Bismarck’s death In 1806 Prussia, too, attacked, while Britain Elba in February 1815, regained power from it took very little for a German Empire kept up a long campaign at sea to cut France the Bourbons without a shot being fired and dominant in Europe to settle on a collision off from her overseas markets and set about the campaign that would culminate course with Britain and France — a possessions. An acknowledged military in his ultimate downfall — a defeat so final, confrontation that would ultimately lead to genius, Napoleon ensured his country won so complete, that the phrase “to meet one’s the First World War. almost every battle at which he was present Waterloo” has since entered the language to from 1796 to 1812; but he committed two describe total nemesis. For its part, the British Empire emerged cardinal errors. from Waterloo having disposed of its key …………………………………………………………………………………… overseas competitor for the crucial period The first came in 1807-1808, when he of imperial development in Asia, Africa, invaded the Iberian Peninsula. The result was What followed Waterloo was, first of all, a Australasia and elsewhere. Britain had no the Peninsular War, which not only left genuine revolution in the art of diplomacy. desire for European land territory, but the France with a quarter of a million casualties The world’s first multinational summit strategic naval bases inherited following but failed in its original objective of forcing meeting, the Congress of Vienna, which in Napoleon’s demise — among them Cape Portugal to stop trading with Britain. Much some circles was known as “the United Town, Tobago, Sri Lanka and Heligoland — more seriously, in 1812 he invaded Russia, Nations”, had met while Napoleon was on secured the Royal Navy a number of also in a bid to thwart trading with Britain: Elba and duly oversaw a coordinated strategic stations that helped Britain fulfil more than half a million of his followers were response upon learning of his escape. It its imperial ambitions. killed or wounded. was nothing less than the forerunner of multinational peace-keeping, in which In France, meanwhile, post-Waterloo Thus Napoleon’s desperation to use economic several nations confer about how to punish political instability inaugurated a second factors to force Britain to the negotiating aggressors and work together to deal with Bourbon restoration, a revolution, an
32 Rathbones Review www.rathbones.com The day the world changed
Chalke Valley History Festival for Schools
Napoleon famously said: “History is the version of past events that people have decided to agree upon.” The Chalke Valley History Festival, held this June, provides an opportunity to learn about, discuss and debate history and its implications. We are thrilled that Andrew Roberts will be speaking at the festival on ‘Napoleon the Great’ Jean Godefroy’s engraving of 1814’s Congress of Vienna, the world’s first multinational summit at a Rathbones-sponsored evening on meeting. 24 June.
It is important for young people to have “Not even Napoleon himself foresaw the extent to a good understanding of what has which the impacts and corollaries of that single come before, which is why Rathbones is also delighted to continue its day 200 years ago would endure.” sponsorship of the schools festival.
Set in Wiltshire‘s historic Chalke Valley, the two-day event (part of the wider Orleanist monarchy, another revolution, the more on the sub-continent — speak English; week-long festival) features a wide Second Republic, a Bonapartist restoration by contrast, French is a shrinking language. range of curriculum-based lectures (under Napoleon III) and the Third Republic delivered by leading and best-selling — all in the space of just 56 years. French It seems not even Napoleon himself foresaw historians, including Michael Wood, leaders didn’t know whether to try to the impacts and corollaries of that single Dominic Sandbrook and Tracy Borman. emulate Napoleon or repudiate him; and in day 200 years ago. During his exile on the From 1066 through to the First World a sense they still don’t, with the Gaullist right mid-Atlantic island of St Helena, where he War and the Cold War, the programme still admiring him and the left criticising him. would spend the remainder of his life, he offers a series of lectures, seminars, living history and interactive The cult of the strong leader still bedevils reflected on his legacy, suggesting it would demonstrations to bring history alive French politics, and the constitution be his educational, legal and administrative and inspire students. Charles de Gaulle wrote for the Fifth reforms and his architectural triumphs that Republic reflected that. Today Napoleon’s would survive and that his feats on the Thousands of pupils from primary Conseil d’État still meets every Wednesday fields of combat would have no long-lasting school-age to sixth formers will visit to vet the laws of France, his Banque de influence. the festival on special days dedicated France is the state bank, his lycées and to different year groups. grandes écoles still provide excellent He was right about his first 59 battles, but education, his Legion d’Honneur award is he was very wrong about his 60th and last. For details, please visit: hugely coveted, his Cour des Comptes The cannon-fire of Waterloo still reverberates. http://cvhf.org.uk/schools-festival/ oversees the public accounts and his Code Napoleon forms the basis of European law. Be in the draw to win six signed books from Andrew Roberts: Further repercussions continue to be felt Napoleon the Great, The Storm on the grandest scale. For example, English of War, A History of the English- might not have become the lingua franca it Speaking Peoples Since 1900, is today — dominant not only in terms of Masters and Commanders, the spoken and written word but in the Letters from the Front, Hitler and spheres of computing, international business Churchill: Secrets of Leadership and the internet — if Napoleon had won at Waterloo. A resurgent French Empire might Andrew Roberts is a To enter, please visit have challenged British rule over India in critically acclaimed www.rathbones.com/CVHF. the 19th century, but instead the Indian historian, author The draw will be made on 17 July,
Images: Kohl-Illustration/Alamy, Nancy Ellison Images: Kohl-Illustration/Alamy, elite and middle class — and many millions and TV presenter. with the winner notified by email.
www.rathbones.com Rathbones Review 33 Chain reaction
Chain reaction
Britain has led the cycling world for years, but one honour that remains unclaimed is the record for outright speed. Enter a team of students from Rathbones’ home city...
Nicholas Roe-Ely, Investment Director, Rathbones
34 Rathbones Review www.rathbones.com Chain reaction
ULV Team
www.rathbones.com Rathbones Review 35 Chain reaction
his September, a team of “ It just seemed wrong that cycling, on flat roads most of the drag that undergraduates from University of has to be overcome is from wind resistance. TLiverpool will attempt to break the the record had never been This increases sharply with speed: try world land speed record for the fastest putting your hand out of the window of a human-powered vehicle. Three cyclists will held by a British team.” car travelling at over 80mph. alternately pedal the team’s hand-built bicycle along a five-mile stretch of road in human-powered vehicle at 83.13 miles per The breakthrough from student project to Nevada to try to bring this prestigious record hour. The challenge was on. world record attempt came when the team to the UK for the first time. met Nigel Keen at the Advanced Engineering As Ben Hogan, the team’s leader, says: “British Show. Also an engineer, he is a business Were they to succeed against a field of universities are world-leading, as is British development manager for the National international competitors, many of whom cycling. It just seemed wrong that the record Composites Centre (NCC) in Bristol, which are PhD-level engineers with experience in had never been held by a British team.” The is a government-backed project to bridge aerospace or similar industries, their story team sees the record attempt as the ultimate the “valley of death” between universities could become one of those stories about test of human power, with the physical and the R&D capabilities of companies, such plucky British underdogs that our film effort only successful if the mental challenges as Rolls-Royce, GKN and Airbus. industry is so good at portraying. are conquered. He invited the team to the NCC to meet a But while some aspects of the story conform In reality the initial eight-man team had no panel of experts from industries such as to this narrative, the reality is very different. expectations of ever reaching Nevada. The aviation and Formula 1, who challenged the What started as a degree project has drawn project was theoretical and only computer team’s design ideas, such as why they in some of the most hi-tech resources and models would test the aerodynamics of the weren’t using an F1-style monocoque shell. industries in the UK, suggesting that Britain design. But enthusiasm took them a lot The design was changed and ARION1 was is at last finding ways to nurture its young further than they expected and the team now born. As well as ‘intellectual sponsorship’, engineers. The project celebrates the very comprises 16 engineering students, three the relationship with the NCC also brought best of British academic study, industry and sports science students (from Liverpool’s contacts with industry, such as Cytec, who sport, with just a dash of madcap optimism. John Moores and Hope Universities) and were able to donate hugely expensive three cyclists. carbon fibre. The University of Liverpool Velocipede (ULV) Team was formed in September 2013. After analysing previous attempts, the Suddenly, the idea of actually building the As the third-year Mechanical Engineering team reverse-engineered an initial design. bicycle and participating in the 2015 World students were deciding what to do for For aerodynamic reasons, they opted for a Human Power Speed Challenge in Nevada their two-year degree project, a team of recumbent rather than upright position for was no longer a fantasy. This gave them an Dutch university students from Delft and the cyclist, although that would bring other unexpected challenge — a real bicycle Amsterdam set a new world record for a challenges later. Even in standard road would need a real cyclist. As Deputy Team
Setting a world record
The record is governed by the International Human-Powered Vehicle Association (IHPVA), which holds the World Human Power Speed Challenge each September in Battle Mountain, Nevada. This is the location of the world’s flattest and smoothest road, Route 305, which even though it is a public highway is treated before the event to make it even smoother.
For seven days, the road is closed morning and evening for just 20 minutes while the teams use the five-mile run-up to build up speed for the flagship event, the 200-metre flying start speed trial. Unusually for a land-speed record, it isn’t necessary to compete in both directions to cancel out wind speed (although it must be below 3.7mph for any record to count). For this reason, all the teams compete in the direction of the slope, although it’s only 1° for the whole five miles.
36 Rathbones Review www.rathbones.com Chain reaction
Some of the biggest names in British industry have helped in ARION1’s design and construction.
Making it happen — Rathbones’ sponsorship
We are delighted to be the principal sponsor of the University of Liverpool Velocipede Team. Liverpool is Rathbones’ home city and the Rathbone family was closely involved with the foundation of the university, eventually donating the family’s house, Greenbank, to serve as student accommodation.
The ARION1 project embodies several elements that are important to us. It extends the support for young people that we give through our financial awareness programme, English Lacrosse and Lacrosse Scotland, and the Chalke Valley History Festival for Schools.
Participants in the World Human Power Speed Challenge are also at the cutting edge of engineering and materials technology, looking forward to a zero-emissions, environmentally friendly future.
ARION1 is a triumph of British education, industry and sport. As investment managers, we seek to invest in future technology and it is therefore a privilege for us to make possible the team’s world record attempt.
Leader Patrick Harper puts it: “You can build the best bike in the world, but you need a IHPVA records 200-metre good engine to power it.” flying start speed trial Inspired by Saturday evening television, the Men (single rider) team launched a national search for cycling talent using social media. From 50 initial 83.13mph candidates, 35 were tested and, after much Delft and Amsterdam Universities agonising, three cyclists were chosen. Many (September 2013) factors influenced the choices, such as each cyclist’s power/weight ratio, peak power, Women (single rider) commitment and focus and lack of fear, but the crucial factor was their relative size and 75.69mph build — they will use the same machine, so Team Varna (September 2010) it needs to fit them all.
Ken Buckley, Natasha Morrison and David Collins are now training to develop the different muscle groups and breathing techniques required in recumbent cycling. This specialist training made the team realise its limitations: having planned to supervise this themselves, they decided to bring in sports science support from Liverpool’s other universities. All the cyclists will have equal status.
So, roll on September. Until then, apart from the small matter of sitting finals, the engineers will finish building and testing ARION1, and the cyclists will push themselves
to be up to the challenge of bringing the Photo Rick Robson record to Britain for the first time. We wish them all the best. The ULV Team’s record attempt will feature in the Winter 2015 issue of Rathbones Review.
www.rathbones.com Rathbones Review 37 Currency movements
FX effects — volatile times in global currency markets
John Nugée, Laburnum Consulting
standard question to young portfolio a portfolio is completely lost, then no do well and the portfolio as a whole will not managers when they first start amount of investment skill can revive it, suffer irreparable damage. Amanaging other people’s money is: because there is nothing left to reinvest. “What is the most important thing you And just as a diversified portfolio invested manage?” It is not a trick question, but the in several asset classes can have less risk answer is one that most people outside the “Whether or not currency than one focused on just one asset class, so investment management industry — and is a separate asset class diversification and the all-important even some within it — are surprised by. For reduction of risk can be achieved by investing despite what one might expect, the answer — and opinion in the in several different countries. However, here is not “investments”. there is a small twist, because investment in investment management foreign markets, as well as reducing risk Managing investments is of course the industry is divided on this through diversification, can add risk though overall task an investment manager has, but the introduction of foreign currencies into it is not the most important element. Nor is — it is quite definitely a the portfolio. All the benefit of investing in a the answer “our clients”: managing clients, well-performing market overseas can be their expectations, their hopes and fears, and separate risk.” undone for a UK and sterling-based investor sometimes even their irrationalities, is an if the local currency of the market concerned important and indeed highly skilled part of Fortunately, there are some proven methods falls against the pound. investment management, but it too is not of minimising risk, and the best known of the most important function. these is to diversify a portfolio into different So whether or not currency is a separate assets and asset classes. This approach is so asset class — and opinion in the investment No, the most important management task well tried and trusted that it has even management industry is divided on this — an investment manager has is to manage passed into common parlance: “Don’t put it is quite definitely a separate risk. And as risk. Risk, or the possibility that assets will all your eggs into one basket”, we say, and such, it needs careful management, which lose value, is inherent in investing and the investment manager knows not to put makes the movements in the currency present in almost all markets, and the first all his or her investments into one narrow markets in recent months of great duty of any investment manager is to protect asset class. A balanced portfolio may well importance to your investment managers. their clients’ funds against significant loss. contain equities and bonds, and perhaps Currency markets have been unusually And the reason for this is clear: once value some commercial property, and these days volatile, with relative values moving more has been lost, the portfolio may become maybe some alternatives and infrastructure sharply in the last 12 months or so than has permanently impaired, and recovering those investments as well. The theory is that if been the recent norm. Quite apart from losses would be very difficult. In extremis, if one asset class does badly, then others will UK-specific issues directly affecting sterling,
38 Rathbones Review www.rathbones.com Currency movements
Taking these together, this central bank activity — one might call it central Dealing with bank activism — in a less clear world currency volatility carries with it the heightened risk of central bank errors. This is not a James Maltin, Investment Director, criticism of central banks, just an observation that when the authorities are operating so Rathbones’ London office far outside their normal sphere of activity, and with impaired market signals to guide While companies for whom currency them, it is not entirely surprising if some of fluctuations mean the difference between their footwork is less than completely perfect. earning a profit and suffering a loss often A good example was the Swiss National use currency hedges, at Rathbones we do Bank’s decision to end its currency peg to not hedge client portfolios. The majority the euro in January — this led to the wildest of our clients’ capital is invested in their one-day gyrations in the value of the Swiss domestic currency, predominantly franc in history (up 40% and back down sterling, meaning that sterling fluctuations 20% in a matter of hours) and one suspects in the portfolio are essentially risk-free. that, in retrospect, they might have hoped If one owns pounds, earns pounds and to manage the process a little more deftly. spends pounds, then the value of the pound relative to other currencies is largely Thirdly, with such difficult markets the irrelevant. psychology of market participants has both in the run-up to the recent election changed. In many markets, most particularly We invest in international assets to and in its immediate aftermath, there are perhaps fixed income, positions are held not diversify risk and to improve the return a number of more general reasons for this so much because of conviction that they that can be achieved relative to investing that we can identify. are inherently good, but because of concern entirely in the UK. Sometimes, if we have that everything else is worse. And positions a strong conviction that an overseas Firstly, central banks have been unusually held despite one’s beliefs rather than because currency is likely to appreciate against active in recent months. The European of them are usually held more tenuously sterling, we seek to capture this to enhance Central Bank has launched a quantitative and more likely to be sold aggressively if the portfolio’s value. A recent example of easing (QE) programme, while Japan has events turn against one — which in turn adds this has been the US dollar, which in the continued its aggressive economic and to market volatility. second half of 2014 alone increased in monetary policy known as “Abenomics”. value from $1.70 to the pound to $1.50, We have seen a determination by some So, activist central banks, the experiment a relative increase of nearly 12% before central banks to force their currencies weaker, of QE and negative interest rates, imperfect any rises in US equities. while other central banks have been driven signals, nervous markets and the ever-present to extreme measures, including negative possibility of official sector errors — your In certain markets, Japan being a recent interest rates, to avoid their currencies investment managers have had a lot to example, we may invest in funds that becoming too strong. And all the while consider in recent months as they attempt to use hedging strategies to protect their markets have been waiting for the central fulfil their mission of controlling risk, and portfolios in the event that the yen banks in the UK and US to start raising their protecting your portfolios from significant depreciates relative to sterling. There has policy rates. Nobody quite knows how loss. recently been a strong correlation markets will react to this, but the initial path between weakness in the yen and is unlikely to be entirely smooth. increases in the Japanese stock market. In such situations, equity profits can be Secondly, as central banks exert more undermined by currency weakness and and more influence over markets, so the hedging makes sense. information that they derive from those markets is reduced. Central banks John Nugée is an independent Generally, however, we find that traditionally use markets as a window on commentator on financial, economic and currencies, are difficult to predict with the real economy; but increasingly markets political issues (www.laburnum-consulting. any great accuracy. Hedging is a form are not a window but a mirror, merely co.uk). The major part of his career was of insurance and can be expensive, not reflecting back to the central banks the spent at the Bank of England, where his last least given that the cost increases with results of their own actions. post was as Chief Manager of the Reserves. market volatility.
www.rathbones.com Rathbones Review 39 The benefits of diaspora
40 Rathbones Review www.rathbones.com The benefits of diaspora
The benefits of diaspora
Rathbones Investment Director Robert Hughes-Penney recently hosted a Christian Embassy event at our head office. It was attended by 45 Ambassadors and High Commissioners to the UK. Ram Gidoomal CBE, a successful businessman and the chairman of the South Asian Development Partnership, explained how countries can use their diaspora communities to boost trade with Britain. Here Ram describes how migrants survive, thrive and contribute both to their adopted country and to their homeland.
Ram Gidoomal, Chairman, South Asian Development Partnership
Stephen Chung/Alamy www.rathbones.com Rathbones Review 41 The benefits of diaspora
he word “immigration” has increasingly come to be a politically charged. I Tprefer to use the word “diaspora” when considering migrant populations, as it more accurately captures the movement of peoples and their sense of community and heritage.
Derived from Greek, it means “dispersion” or “scattering”. My dictionary mentions “the dispersion of the Jews”, though there are many other peoples in diaspora. Some have no homeland and are scattered across the world; some have a homeland where they are no longer welcome; and some have simply left to make their home in another country.
I am part of the South Asian Diaspora. My family was forced to flee during the partition of India in 1947 and made its way by ship to Kenya. We had businesses “People in diaspora supplying silk from Japan to migrant Indian workers in East and South Africa. I am are often open- amazed to think that my grandfather and his brothers managed to run a global business minded, and it without the internet or telephone, yet they is frequently our 20 were hugely successful. attitude to business In 1967 we were again forced to leave all our possessions behind as we left Mombasa that sets us apart.” and arrived in London as twice migrants — ex-British India and now ex-East Africa. We bought a corner shop in Shepherds Bush, Those settling in the UK from which provided a roof over our heads — four around the world have enriched bedrooms for 15 of us. Running our own and added vibrancy to the business was appealing — it was in our DNA culture, clothing, language, cuisine and even the architecture — and my parents’ humility and hard work of the nation. enabled me to study at Imperial College London.
After I had spent several successful years in business, some colleagues suggested I get involved with developing South Asian business. I was surprised. “What do I have to do with South Asia now?” I said. “I was born in Africa. Now I’m in Britain.” They reminded me of my heritage and perspective as a non-resident Indian. I have since written books, set up the South Asia Development Partnership and mobilised other South Asians. We have a common heritage — not something of which to be ashamed but a unique way to build business networks.
People in diaspora are often open-minded,
and it is frequently our attitude to business Amelia Ayaoge/Alamy Wiedel Photolibrary/Alamy, Janine Amedzro/Alamy, Images: P.D
42 Rathbones Review www.rathbones.com The benefits of diaspora
“Cultural distinctions are As well as companies, countries are increasingly recognising the value of their Doing business important. We need to diaspora people. For example, Ghana has with the British recently taken steps to build relations with remind the new generation its emigrants, many of whom left during a period of civil unrest. The Diaspora Ethnic businesses represent around 12% of their heritage. They Research Unit at the Ministry of Foreign of all start-ups, yet many UK companies need to know it is an asset, Affairs aims to support emigrant Ghanaians have been unable to harness this valuable who want to return home or improve ties sector of the economy. Effective not a liability.” with their mother country. communication often evades even the largest corporate body. This kind of support is of enormous value. that sets us apart. For us change is In my view, a diaspora community thrives In The British and How to Deal With Them: unavoidable. We have to be flexible, innovative on news from its country of origin and on Doing Business With Britain’s Ethnic and culturally adaptive. We are risk-takers practical reminders — food, music, literature Communities, Ram Gidoomal and his — we are forced to be so by virtue of the fact — of the land from which it originates. I co-authors, Deepak Mahtani and David that we have to survive. South Asian doubt very much whether the British Porter, argue that UK businesses often entrepreneurism is a good example of this. South Asian community would have retained look overseas for goods, skills and services its very strong identity had there not been that can be found here in abundance. They With average income per head of $25,000, existing links with the subcontinent. show how indigenous businesses the estimated 70 million people of the South sometimes fail to do business with ethnic Asian Diaspora comprise a very strong Of course, there are those who would like enterprises because they don’t understand economic unit with a value of $1.75 trillion. to shed much of the cultural “baggage” they the importance of key cultural factors Compare that with India’s nominal GDP for brought with them and integrate with their that affect business transactions. 2014 of $2 trillion and the community is adopted country. In many ways this is a hugely significant. These people are seen as good thing; but if it means losing your Illustrating the characteristics of ethnic potential investors and customers for both heritage and your cultural identity it is also communities, they suggest how to build South Asia and the countries where they sad. We can all laugh at the Indians in the cross-cultural relationships. They also have settled. television comedy Goodness Gracious Me! identify a number of “fault-lines” which who want so much to be English that they affect the integration of ethnic businesses The huge economic value of diaspora insist on their family name, Kapoor, being into the UK economy. For example, lack communities is demonstrated by the pronounced “Cooper” — but there is an of awareness inhibits take up of remittances that migrant workers send to uncomfortable truth behind it. government initiatives and can lead to support families or invest in their mother the development of “ethnic economies”, countries. According to theguardian.com, The fact is that cultural distinctions are detached from the mainstream economy. these remittances are at record levels. In important. We must preserve them so that 2011 they were officially more than $500 the next generation will be able to recognise Ram has kindly donated some copies billion globally; according to the World Bank, them and take pleasure in them. We need of this book. If you would like a copy, they may be much higher. Remittances to remind the new generation of their please contact your investment manager from the US were calculated at $110.8 heritage. They need to know it is an asset, or telephone Amanda Crook on 020 billion; the UK is believed to generate the not a liability. 7399 0262. third-highest amount, at around $23 billion, of which $3.9 billion is sent to India. Similarly, it is important for everyone to acknowledge that diasporas bring benefits Remittances alone are justifying the rather than burdens. As the recent election establishment of banks overseas. The showed, most politicians struggle with the managing director of ICICI Bank recently complex issues of immigration, calling told me: “We’ve opened this branch purely either for bans or quotas or arguing that the on the basis of the diaspora remittances. UK needs to fill low-paid jobs: this analysis And our aim is to become the bank of overlooks the value of migration to mother The Christian Embassy choice for diaspora and non-resident and destination country alike. (www.ce-london.org.uk) is a non-political, Indians. With internet banking, we’re going interdenominational NGO. Established in to give them access to the very village they 1975, it serves the diplomatic came from in terms of remitting funds — all communities in capital cities on five at the push of a button.” continents as well as the United Nations.
www.rathbones.com Rathbones Review 43 Peer review
Peer review
The peer-to-peer lending industry has doubled in the past two years and continues to grow strongly. Is this the answer to low interest rates on cash savings or are the risks greater than the returns merit? Francois Kotze, Fixed Income Analyst, Rathbones
ebsites that cut out Most platforms offer banks by matching loans to both businesses and individuals Winvestors with borrowers are although some focus on one or the other. becoming increasingly popular. These The largest in the UK are Funding Circle, low-cost peer-to-peer (P2P) lending Ratesetter and Zopa, which together control platforms are one of the fastest-growing more than 50% of the market. Yet there are areas of finance. There are three main many smaller players, some of which have factors behind the rise. First, they are come and gone. Quakle is probably the filling the gap left by banks reluctant best-known failure, which collapsed in 2011 to lend money following the 2008 financial crisis.£ Second, years of record low interest rates have “Low-cost peer-to-peer encouraged investors to seek out alternatives. Third, technology lending platforms are one enables the platforms to assess credit of the fastest-growing risk quickly, and the online application process is straightforward. areas of finance.”
44 Rathbones Review www.rathbones.com Peer review
“Investors have been achieving healthy returns over the past few years. Yet it is difficult to assess investment risk and return across the platforms.” 114,697 lenders
after savers shunned the site for accepting too many poor-quality borrowers.
Matching borrowers with lenders
Borrowers have been drawn to the interest rates offered by P2P lending websites, which 139,749 borrowers are lower than credit cards or overdraft facilities. With no large fixed costs the platforms are able to offer competitive rates on loans up to £1 million. Due to the huge demand for credit, they have so far been able to cherry pick borrowers with the best credit profiles. Because they cannot compete with their rates of interest, some high-street banks have been pointing smaller customers towards P2P websites.
The platforms charge borrowers a fee for arranging loans. They then pass most of the against the returns available from equities risk and return profile of P2P returns (minus an annual administration and bonds, which offer liquid secondary loans is similar to five-year UK charge) to lenders as well as all of the risk. markets, regulatory protection and long-term corporate bonds with a BB credit rating, There are some differences between how track records. which is at the better-quality end of the the platforms operate. For example, Zopa non-investment grade spectrum. There is bundles loans together, automatically P2P lending platforms requested and received little data on recovery values for defaulted creating a diversified portfolio. Meanwhile, regulatory oversight from the Financial P2P loans but our research indicates BB investors select loans individually on Conduct Authority (FCA) in 2014. So far the bond default rates are lower. Funding Circle. You receive repayments each industry has stayed out of trouble except month, made up of interest and capital, which for using the word ‘savings’ too liberally in Tax is another important issue to consider. you can re-invest. advertisements. As the sector matures, P2P The returns from P2P loans are classed as lending is likely to become a common income, and you cannot invest through a Relative returns and regulatory feature of the financial landscape and any SIPP or ISA although the government is £ concerns increase in regulation could push up costs. looking into it. Unlike equities and bonds they do not benefit from capital gains tax P2P loans are not covered by the Financial Investors have been achieving healthy breaks or deferrals. The next time somebody Services Compensation Scheme (FSCS) returns over the past few years. Yet it is tells you they have made stellar returns because they are neither ‘savings’ nor difficult to assess investment risk and from P2P loans, remind them that HMRC is ‘deposits’. They are investment products return across the platforms across the full due a cut of the profits. Given the risks, and therefore you should evaluate them economic cycle. Our research reveals the taxpayers cannot justify investing through
www.rathbones.com Rathbones Review 45 Peer review
P2P platforms if they have not already used Returns of P2P lenders their annual allowances.
If you need to withdraw a lump sum or all Zopa of your money before the end of the term, you can sell your loans on the platforms’ 5.1% secondary markets, for a fee. Experience projected returns over suggests it is relatively straightforward to five years find buyers for loans worth a few thousand pounds. However, attempts to sell large Peer-to-peer amounts have caused problems in the past, Ratesetter and any sudden rush could lead to a lending split liquidity crunch. Up to 6.1% Five-year average return Another option is to gain exposure to the sector through a specialist investment trust. Consumer They invest in diversified portfolios of loans 52% that have been arranged on P2P platforms Funding Circle and may also invest in equity stakes in the 6.8% Business platforms themselves. These trusts have 48% the technology to conduct due diligence estimated annual returns and also negotiate lower fees from platforms. Returns as quoted by P2P lenders, 4 March 2015 As a result, risk-return profiles can be more attractive.
The death of traditional banking? Notes of caution
The next recession could be brutal for P2P investors with defaults increasing as £ Returns are taxed as income companies go bankrupt and people lose their jobs. But borrowers may begin to have £ problems before then when interest rates Not covered by FSCS begin to rise. Additionally, high-street banks Cumulative lending by are already offering more attractive savings £ peer-to-peer lenders rates, which make P2P loan returns appear No long-term track record less appealing. £2,184m
We believe the sector is likely to come when any problems could attract renewed under pressure when the economy turns, regulatory interest. Over the longer term the advantages of the platforms and the returns they offer are likely to be competed “Over the longer term the away as the sector becomes more mainstream. Some established banks are £843m advantages of the already showing interest by launching their platforms and the returns own P2P platforms. £381m they offer are likely to In the meantime, there may be opportunities be competed away as the for investors to generate decent returns. You can even feel you are contributing to 2012 2013 2014 sector becomes more the country’s economic recovery by backing British businesses. Speak to a professional mainstream.” adviser before you decide to invest.
46 Rathbones Review www.rathbones.com Nice guys finish first
Nice guys finish first
Since the late 1960s Michael Palin has become one of the most familiar faces on our screens. He has also earned the unofficial title of “Britain’s nicest man”. He spoke about his career at the latest event in the British Academy of Film and Television Arts’ BAFTA: A Life in Television series, sponsored by Rathbones.
Tim West, Investment Director, Rathbones Harry Borden/Contour by Getty Images Getty by Harry Borden/Contour
www.rathbones.com Rathbones Review 47 Nice guys finish first
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t cannot have escaped Michael Palin’s for the first time and met future fellow notice that a significant proportion of the Python and longtime scriptwriting partner IBritish public has come to associate him Terry Jones. The duo’s onstage debut came with three things. The first isMonty Python. in the unlikely setting of the Oxford The second is travelogues. The third is being University Psychology Society’s Christmas supremely, unfailingly, almost mind- party. “Our act was greeted with silence,” says bogglingly nice. Palin. “But afterwards they said it was very good: ‘There was so much to think about...’” He must be grateful for number three. His apparently inexhaustible reserves of His first TV work was as a presenter onNow! , patience and tolerance surely come in handy a children’s pop programme, but it was when even his Wikipedia page distils a writing that would sustain him for the next 50-year career as a writer, actor, comedian few years. Together with Jones, he produced and presenter into the following strangely material for Ken Dodd, Roy Hudd, Billy Cotton pejorative summary: and the Two Ronnies — plus “one joke for Russ Conway” — before the pair gravitated, Known for: as so many of their most promising — Monty Python contemporaries did, to The Frost Report. — Travel documentaries Later came the likes of Twice a Fortnight, 2 Broaden Your Mind, Do Not Adjust Your Set Naturally, Palin is well aware that his and The Complete and Utter History of Britain. gravestone is likely to read “Ex-Python” and that for many people nothing else in his canon The audience is treated to a black-and-white of work will ever surpass his unflappable clip of the latter. A parody of ’60s-style defence of a suspiciously lifeless Norwegian post-football-match analysis, it shows Palin Blue. He knows, too, that some will forever as William the Conqueror, celebrating with see him as a chinos-wearing, shoulder-bag- his men in the showers, still sporting his lugging, endlessly inquisitive yet vaguely crown, while being interviewed about his bemused explorer — the natural, reassuringly triumph at the Battle of Hastings. “It was cosy link between the journalistic rigour of a brilliant series,” says Palin. “But nobody Alan Whicker and the faux naif escapades watched it.” of Louis Theroux. “ I’ve never had a Yet there are many more strings to his bow, as the British Academy of Film and Television masterplan. It was always Arts underlined two years ago when it awarded him its highest honour, a BAFTA whatever took my fancy Fellowship, in recognition of what it at the time. I wanted the described as his “eclectic mix of achievements in the public eye”. In March this year, at an element of surprise.” event sponsored by Rathbones, he reflected on those achievements in front of an Fortunately, John Cleese did watch it. It was audience at the Princess Anne Theatre one of the reasons why he asked Palin — along at BAFTA’s London home, 195 Piccadilly. with Jones and fellow Frost Report alumni Palin received BAFTA’s highest honour, a Graham Chapman and Eric Idle — to join him Fellowship, in 2013 (1). His most celebrated for what would become Python. “The BBC …………………………………………………………………………………… TV work includes travelogues such as Pole to didn’t know what to make of us,” admits Palin. Pole (2); Ripping Yarns, co-created with Michael Edward Palin was born in Broomhill, “I’m quite surprised we got on air. We had longtime writing partner Terry Jones (3); The Sheffield, in 1943. He had his first experience what must have been the worst job Complete and Utter History of Everything (4); of acting five years later, playing Martha interview of all time with Michael Mills, the and, perhaps most famously of all, Monty Cratchit in A Christmas Carol at his local Head of Comedy, and we were amazed when Python’s Flying Circus, in which he frequently prep school. he told us: ‘I’ll give you 13 shows — that’s all!’” felt the wrath of characters played by John Cleese (5, 6). He reflected on his career at a It was while studying modern history at Thirteen eventually became 45, running Rathbones-sponsored event at BAFTA’s Princess Anne Theatre (7). Oxford that he wrote and performed comedy from 1969 to 1974 and spawning four films, Shutterstock, ITV/REX Prior/Redferns, Mike Shutterstock, Pete Brooker/REX Shutterstock, Images: BAFTA/REX Simonds BAFTA/Jamie Shutterstock, Photography/REX Images, Collection/Getty Bielecki Movie Stanley
48 Rathbones Review www.rathbones.com Nice guys finish first
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numerous live spin-offs — including 2014’s sold-out extravaganzas at the O2 Arena — and several generations of obsessive fans capable of reciting the ‘Dead Parrot’ sketch from memory. “Python was a great acting school,” insists Palin. “You had to play so many characters. People forget it was acting, 4 but it was.”
He certainly found himself cast in parts that would shape many of his later roles. Spivs were a speciality — crooked insurance salesman Mr Devious, Blackmail host Herbert Anchovy — but his true forte was the resilient little man, the timid but perversely durable underdog: the pet shop owner who maintains Cleese’s nailed-to-the-perch bird is merely “pining for the fjords”, the cuckolded husband who dreams of being a 6 lion-tamer, the ever-defiant proprietor of the decidedly cheese-less Ye National Cheese “ The BBC didn’t know Emporium.
what to make of us. Many of his characters in Ripping Yarns, the We had what must BAFTA-winning Boys’ Own parody that ran from 1976 to 1979, owed much to this have been the worst tradition. So, too, did Ken Pile, the stuttering animal-lover in 1989’s A Fish Called Wanda, job interview of all for which he earned another BAFTA, this time.” time for best supporting role. Yet Palin’s mastery of the downtrodden-but- 5 hardy genre arguably reached its zenith two years later in GBH, Alan Bleasdale’s acclaimed drama about the conflict between Michael Murray, a megalomaniac council leader, and Jim Nelson, the principled but neurotic headmaster of a strike-breaking school. Palin was originally set to star as Murray but ended up portraying Nelson, an ostensibly timorous man who responds heroically in the face of crisis. He has since frequently identified the performance as his finest.
“I’ve never had a masterplan,” he says. “It was always whatever took my fancy at the time. I wanted the element of surprise. Throughout my career I’ve been fortunate to be standing around and thinking what to do next when someone more forceful has said: ‘Do this!’ Playing Jim Nelson was quite difficult, because there was a lot of Alan in there and I’m a poncey, Oxford-educated southerner — but I think I got it right.”
www.rathbones.com Rathbones Review 49 Nice guys finish first
Palin was interviewed by fellow comedian David Walliams at the Rathbones-sponsored BAFTA: A Life in Television event.
There are even residual traits of the indefatigable trouper in Tom Parfitt, the haunted pensioner at the centre of Remember Me, a three-part ghost-story screened on BBC1 late last year. Trapped in a nursing home, Parfitt is uncommunicative and spiky, fighting a monumental battle whose otherworldly secret he cannot share. “I thought it was a terrific character — very odd and unnatural, full of contradictions,” says Palin. “The moment I read it I thought: ‘I could do this — and I’d like to do it.’”
Parfitt was Palin’s first major dramatic role since GBH — an extraordinarily lengthy absence in light of the praise lavished on his turn as Jim Nelson. The main problem, of course, was that throughout the ’90s and the noughties he spent rather a lot of time
travelling. Images J Hogan/Getty Dave
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Palin is sincerely proud of his documentary horribly choreographed, if not downright anonymous London street for 50 years. When work. He has remarked that Around the World incredible, in the age of “reality” TV. Hollywood came calling in the ’80s, hot on in 80 Days, the 1989 series that paved the the heels of his success in films such asTime way for a raft of successors — Pole to Pole, “I was worried people might see me as an Bandits and The Missionary, the superficiality Full Circle, Sahara, Himalaya, New Europe, eccentric choice,” he confesses. “I didn’t of LA was not to his taste. Brazil — has to rank as “the single most really discover how to do it until we went successful thing I’ve ever done in my life”. on the show. It was the moment when I By way of illustration, he nominates Python’s realised I didn’t need to be an actor — I could ‘Fish-Slapping Dance’ sketch as the high spot “It was one of those limbo periods,” he says, just relate to these people. Everything of his career. It was shot amid the decidedly “and someone from the BBC phoned up and about me as a presenter, as an actor, went out unglamorous surroundings of Teddington said: ‘You’re going to be the new Phileas Fogg.’ of the window. It was the key to everything Lock. The skit climaxes with Palin We were about halfway around the world I’ve done since. I think it was good to plummeting into a canal after Cleese wallops when the director, who’d had a few beers, acknowledge that things went wrong. We had him with a giant halibut. He recalls that the admitted I was about the fifth person they the safety net of being honest.” lock was full during rehearsals but the water had asked.” was barely 15 feet deep come filming. “ It was the moment I A vital component of these programmes’ He says he wants to be remembered for appeal was — and remains today — their realised I could just comedy. It makes sense: even here at BAFTA, sheer believability. As Palin has repeatedly where his “eclectic mix of achievements” stressed ever since, there was no sleight of relate to these people. has been rightly celebrated, The Liberty Bell hand. If he looked befuddled, enthused, Everything about me as — now commonly recognised as Python’s dispirited, intimidated, lost, it was because unofficial theme tune rather than as a he was. a presenter, as an actor, constituent of an unfinished Sousa operetta — has preceded his arrival on stage. Case in point: Around the World in 80 Days’ went out of the window.” pivotal episode was devoted exclusively to But is this nicest of men in any way Palin’s seven-day voyage by dhow from Palin feels his days of circumnavigating are unsatisfied with his lot? After all he has done, Dubai to Bombay, during which he forged at last behind him. In all seriousness, he everything he has seen, is there an unfulfilled a genuine bond with the vessel’s Gujarati expresses a fondness for holidaying in ambition festering beneath the ever-pleasant crew members. The final scene, featuring Antwerp. And it is well worth noting that, for surface? Is there anything left for him to his emotional farewell and his heartfelt all his globetrotting exploits, he remains achieve? “I just want to keep going,” he says, lament that “it’s almost impossible to accept something of a home bird. He and his wife as cheerfully modest as ever. “And if that I shall never see them again”, would appear have lived in the same house in an doesn’t work out I’ll try something else.”
50 Rathbones Review www.rathbones.com Important information
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