Rathbones Review Winter 2016 Building trade barriers The perils of protectionism

Bring me sunshine The rise of solar power A tale of two Cities The changing face of our financial capital This sporting life Life as an elite athlete Contents — Winter 2016

20 A problem shared...

Zipcar

26 Reflected 4 glory Protectionism: is it gaining traction?

iStockphoto MasPix/Alamy Contents

4 Building trade barriers 26 Bring me sunshine Assessing the growing threat of Shining a light on the future of energy use protectionism 31 This sporting life 10 A tale of two Cities The life of a top lacrosse player The transformation of the Square Mile 34 When is a lot too much? 14 Keeping it in the family Executive pay: success versus excess When blood ties and business mix 36 Together but apart 18 Cathy Come Home: 50 years on The financial implications of cohabitation What has changed since the BBC’s landmark drama? 38 An unsung heroine The extraordinary life of Eleanor Rathbone 20 The A to Z of sharing Consumerism: we’re all in it together 42 Core strength The story of the Bramley apple 24 What next for central bankers? Dissecting the “new normal” of 44 Taking on Cho Oyu monetary policy What it means to push to the limit Cover image: iStockphoto image: Cover

2 Rathbones Review rathbones.com A word from Paul Chavasse

Welcome to the winter edition 31 of Rathbones Review Net gains

hat a year it has been for political surprises. It is now just Lacrosse Pix over four months since the EU referendum result shook Wthe country and financial markets alike. The stock market recovered quickly, helped by the fact that many UK companies actually do more business abroad in dollars than in sterling. Sterling itself continues to be weak, reflecting concerns about the outlook for the UK after Brexit.

As I write, the result of the US presidential election is unknown, although the die will be cast by the time you read this. Wall Street tends to prefer Republican candidates, yet it often performs better under Democrats. However, the presidency has historically had 38 little impact on investors. This may not be true from 2017 to 2021. Portrait of Donald Trump has explicitly committed to protectionist trade a pioneer policies, including a 45% tariff on Chinese imports. In our view, this University of Liverpool would be a disaster for world trade and therefore economic growth. Our lead article discusses protectionism in more detail. We believe politicians should be making the case for free trade, rather than letting populist rhetoric set the agenda. Hillary Clinton has also made protectionist noises: let us hope that these are only for campaigning expediency.

Elsewhere in this edition, we look at an eclectic range of subjects, from Eleanor Rathbone, Cathy Come Home and the changing face of the City of London to how technology is transforming how we Editor live (‘The A to Z of sharing’) and generate and store energy (‘Bring me sunshine’). Samantha Boyd Investment Director I hope you enjoy this edition of Rathbones Review and, as ever, we would appreciate any feedback you might have. If you have any comments on this publication or suggestions for topics that you would like to see discussed in the future, please let me know. [email protected]

Connect with Rathbones

@Rathbones1742

in Rathbone Brothers Plc Paul Chavasse Head of Investment Rathbone Brothers Plc [email protected]

rathbones.com Rathbones Review 3 Building trade barriers

Building trade barriers

Populist pledges to protect domestic jobs by restricting free trade proved a key feature of both the Brexit campaign in the UK and the presidential election race in the US. Although such rhetoric can seem very appealing, history suggests protectionist policies ultimately do far more harm than good.

Edward Smith, Asset Allocation Strategist, Rathbones

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China’s dumping of steel on world markets earlier this year provoked fears of a tariff war, but governments managed to avoid a protectionist response.

Image: epa/Alamy

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udgetary dynamics aside, the influence these other products. The clothes manufacturers of politics on markets has rarely been now have a larger market in which to sell their Bprofound during the past quarter- wares, and their people can have access to century or more. Look at a long-term chart of cheaper electronics. The electronics producer the S&P 500 or the FTSE 100 and you would can concentrate on producing products to struggle to pick out even major geopolitical which it adds considerable value without events such as 9/11 or 7/7. needing to divert manpower and investment capital to producing its own clothes at a much Lately, however, there has been little mistaking lower value-add. In this way the living the political and ideological roots of a marked standards of both countries will rise as each spike in economic uncertainty — one that has country can earn a higher income. been reflected in everything from business confidence and media headlines to expected Unfortunately, politicians frequently use exchange-rate volatility and predicted earnings protectionism as a political expedient, from domestic equities. It is not war or proclaiming that it “saves jobs” as certain terrorism that has propelled doubt and industries lose out to comparative insecurity to levels last experienced in the advantage. But the idea that protectionism global financial crisis of 2008 and 2009. The saves jobs is misleading. Study after study 3 cause is a gathering backlash against capitalism shows that trade plays a negligible role in and, maybe more pertinently, globalisation. the number of employees in a country. Protectionism saves the wrong kind of jobs, Much of the rhetoric behind the Brexit debate preventing comparative advantage from and in the US election was about raising maximising national income. barriers to trade and “protecting jobs”. Many economists thought this was an argument Moreover, free trade is invariably in the that was decided many years ago. consumer’s interest, protectionism in the producer’s (and even then only in the short The benefit of trade is perhaps most easily term). When an import is restricted, the understood at an individual level. Despite product becomes scarcer in the domestic some of our River Cottage escapist fantasies, market, driving up the price. most of us do not produce a fraction of what we consume. We specialise in a certain activity, In this way protectionist barriers act as a direct earn some income and use it to buy the things transfer of wealth away from the consumer. others can produce more efficiently. Add to Where protectionism takes the form of that the slightly more complex notion of tariffs or duties, consumers must shoulder ‘comparative advantage’ and the benefits of three burdens: first, the tariff revenue itself; international trade are really quite that second, an implicit tax or transfer of funds simple still. from consumers to producers, reflecting the 1. Protectionist rhetoric, as employed by increased prices of protected domestic the likes of Republican candidate Donald “ Politicians frequently use products; third, what we call “dead-weight Trump and UKIP’s Nigel Farage, frequently losses”, caused by the misallocation of featured in the US presidential election. protectionism as a political resources that trade barriers encourage. 2. A promise to “save jobs” through protectionist measures often serves as a expedient. But the idea is The duplicity of protectionism has been noted compelling political expedient, not least for centuries. Adam Smith reviled the misleading.” in appealing to the disenfranchised. mercantilist cronyism of his era, in which the Comparative advantage is the concept that consumer’s interests were “duped” into 3. Even Barack Obama played the protectionism trade is driven by the comparative rather than subservience to the producer’s. In 1776 he card, imposing sizeable tariffs on Chinese absolute costs of production, first spelled out wrote: “In every country it always is and must tyres. Yet research suggests the move by 18th-century economist David Ricardo. be the interest of the great body of the people effectively cost the US jobs. Although a country may be twice as productive to buy whatever they want of those who sell 4. In the UK the future of many long-established as its trading partners in making clothing, say, it cheapest. The proposition is so very manifest trade agreements is uncertain in light of the if it is three times as productive in making that it seems ridiculous to take any pains to vote to leave the European Union. electronics, it will benefit from making and prove it; nor could it ever have been called in exporting electronics and importing clothes. question had not the interested sophistry of 5. Similarly isolationist sentiments are merchants and manufacturers confounded increasingly shaping politics in other Its trading partners will gain by exporting the common sense of mankind. Their interest European countries, including France, clothes — in which they have a comparative is, in this respect, directly opposite to that of where Marine Le Pen’s National Front but not absolute advantage — in exchange for the great body of the people.” party champions le protectionnisme.

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“ In the UK this counterattack spectacularly revealed itself in the outcome of the referendum on membership of the European Union.” And yet, arguably, it is the great body of people that is driving the protectionist debate. This is a populist movement in every sense. Free markets may have lifted billions worldwide out of poverty, but there is no denying that many people have been left behind; and it is these who are now finding an ever-louder voice amid a groundswell of 4 conspicuously attention-grabbing, grievance-appeasing, vote-winning alternatives to the neoliberal political consensus that has ruled developed market democracies for the past four decades.

In the UK, of course, this counterattack spectacularly revealed itself in the outcome of the referendum on membership of the European Union. In the words of Professor Angus Laing, dean of Lancaster University Management School, the vote for Brexit represented “the revenge of the disenfranchised” — a seismic reprisal drawn from “a wellspring of discontent, of anger... the lived experience of those for whom globalisation, the tech revolution and financial capitalism haven’t worked”.

5 Moreover, it is now all too possible that other countries might follow the UK’s lead. The Organisation for Economic Co-operation and Development warned ahead of the vote that success for the “leave” lobby could constitute a significant step towards the EU’s disintegration and that only a landslide “remain” victory would calm tensions in other nations under mounting internal pressure to hold referenda of their own. Radical, nationalistic parties are already riding high in the polls in the likes of Austria, Hungary, the Netherlands, Sweden, Denmark, the Czech Republic and Poland.

And then there is the US, where protectionism was a defining theme of arguably the most unedifying race for the White House ever witnessed. Republican and Democrat candidates alike advocated forcing US companies to “bring manufacturing home” and vowed to tear up America’s existing trade Images: Reuters/Alamy,Jim West/Alamy, iStockphoto, Newzulu/Alamy, Bloomberg/Getty images agreements. Donald Trump, who greeted the

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news of Brexit by remarking that Britons had if a falsehood isn’t promptly and effectively policies made it more difficult to agree on shown their desire to “have a country again”, countered by senior public figures it tends other measures to halt the slump.” called for tariffs of up to 45% on Chinese to become accepted by the public at large, goods. Bernie Sanders described free trade regardless of the damage it may cause.” Pascal Lamy clearly had such a catastrophic as “a race to the bottom”. Hillary Clinton scenario in mind when, as director-general of expressed her opposition to a trade deal she Those who fear the prospective scale of this the World Trade Organisation, he cautioned had previously hailed as a gold standard. damage customarily cite the events that against the perils of protectionism by quoting followed the Wall Street Crash as the ultimate Mahatma Gandhi: “An eye for an eye makes Tellingly, the would-be “leaders of the free warning from the past. The Great Depression the whole world blind.” By way of recognising world” were able to use such isolationist of the 1930s was characterised by a severe protectionism’s enduring and far-reaching rhetoric almost entirely unchallenged. Small outbreak of protectionism, the domino effect appeal as a political weapon, it is well worth wonder: jingoistic tub-thumping of this ilk of which eventually all but destroyed trade. noting that Lamy was speaking in 2009 and has seldom found a more unquestioningly that his words were in part a reaction to a sympathetic ear. In many cases it is exactly Although it is commonly thought the trigger controversial “Buy American” clause what the disenfranchised want to hear. With was the introduction of the Smoot-Hawley inserted in an economic package overseen its ever-attendant commitment to “save tariff, conceived by the US in 1929 to protect by a politician not normally associated with jobs”, protectionism is, as previously stated, farmers and factory workers, the tariff war blinkered insularity: Barack Obama. a reliable and powerful political expedient. did not start in earnest until the autumn of 1931, after the UK came off the Gold Standard. Like the chaos of the 1930s, Obama’s nod to Yet it is also a dangerous one. Taken at face As the pound devalued, France, Canada and the populist bent for autarky would prove value, it provides a sizeable, easy-to-quantify Germany imposed heavy duties on UK counterproductive. The raising of tariffs on gain that is enjoyed by a small but often vocal imports in order to protect the market share Chinese tyres — a move the president later minority; but it simultaneously delivers a of their own producers. As more countries claimed had saved more than a thousand modest, hard-to-quantify loss that is diffused left the Gold Standard, more tariff barriers to jobs — offers a classic case study of throughout a large but frequently silent trade were erected by countries that stayed protectionism’s unintended consequences. majority. A substantial body of academic in the currency regime. literature demonstrates as much; so, too, do the The tariff was raised from 4% to 39% lessons of history — both distant and recent. The worrying lesson for today is that when between 2009 and 2011 in a bid to monetary stimulus is not an option — whether safeguard America’s own tyre manufacturers. “Nearly all economists say protectionism is due to a currency union or the constraints Yet these had long since exited the low-cost a beast that will gore us if set loose,” says of low interest rates — voters and politicians market favoured by the Chinese, meaning David Brodwin, co-founder of the American may turn in desperation to protectionism. gains were duly enjoyed not by US Sustainable Business Council. “But the Reflecting on the example of the 1930s, companies but by producers from Mexico, downside is that protectionism is complicated Barry Eichengreen, a professor of economics Indonesia and Thailand — all of whose prices and not well understood by the public, and political science at the University of were around 50% higher than China’s. whereas the call for tariffs is simple and California, Berkeley, notes: “The benefits of Consumers ended up worse off, and research emotionally resonant. Hence the problem: in competitive advantage were lost, and by the respected Peterson Institute for political communications it’s well known that recrimination over beggar-thy-neighbour International Economics subsequently calculated that each “saved” job had effectively cost $1 million a year and that in reality, on balance, the US economy suffered a net loss of at least 2,500 jobs.

“Misinformed policy leads to large numbers of losers,” says Richard Kneller, a professor of economics at the University of Nottingham’s prestigious Globalisation and Economic Policy Centre. “It’s widely accepted that the people who lose out from free trade are usually lower-skilled workers in more labour- intensive industries and that these naturally

The Wall Street Crash of 1929 preceded the most crippling outbreak of protectionism ever experienced by Western economies.

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The bizarre world of tariff s Import duty tariff 12.8% 4.5% 151% 17.6% 3.2%

Peanut butter Tyres Edam cheese Pickled gherkins Satellites 155% 30% 15% 9.6% 0%

Images: Design iStockphoto Pics/REX/Shutterstock, Sources: hts.usitc.gov, www.gov.uk/trade-tariff

agglomerate regionally, so the disadvantages With the spectre of a return to protectionism Americans an unfair advantage in terms of tend to be concentrated among certain looming ever larger, our greatest comfort, selling their goods here? And why would groups in certain locations. Protectionism however perverse, might just lie in the fact anyone allow the UK an unfair advantage if helps these groups, but the rest of us have that politicians habitually fail to keep their it did the same? The reality is that no-one to pay with higher costs, higher taxes and promises. It is easy enough to win votes with could expect to impose such forms of less innovation.” bellicose tirades that strike a chord with those protectionism without creating a world with who are tired of prevailing political more trade ‘friction’ and more tariff barriers, In 2008 Professor Kneller co-authored an philosophies and ache to regain some control a world without genuine competition, a infl uential report on the economic corollaries over the forces that shape their lives; but it world in which companies have no incentive of off shoring, the practice of sending jobs is much more diffi cult to translate pledges to innovate or reduce costs — in eff ect, a world abroad. One imagines the fi ndings would not into action, especially when those pledges full of losers.” have sat comfortably with the US presidential invite disaster. candidates or, for that matter, many It is true that the preservation of jobs is a proponents of Brexit. The research, which “ Eradicating foreign deeply emotive issue. Polls suggest most focused on the UK, concluded that off shoring American voters support free trade — but results in more exports, more employment, competition is not the only if the question is not framed in terms of increased turnover and improved answer. It never has been.” protecting US workers, whereupon their views productivity — hardly an empirical basis for change dramatically. It is true, too, that the a drive to “bring manufacturing home”, shred Professor Kneller sees parallels in the gains that have fl owed from globalisation and longstanding trade agreements and impose “mutually assured destruction” ethos that the creative destruction that has accompanied tariff s left, right and centre. has long been central to what students of the process have been distributed very nuclear war strategy call “the balance of unevenly and that successive governments “What’s consistently overlooked is that in the terror” — the supreme, overriding dread that have shown themselves sadly incapable of longer term the number of people in undue aggression will inevitably culminate nurturing an environment in which some employment is determined by the deeper in a confl ict from which no winners can people, many of them hard-grafting workers, characteristics of a country’s labour market possibly emerge. are not outstripped by rapidly shifting patterns rather than by trade, although that may have of supply and demand. some short-run eff ects,” says Professor Kneller. “Look at what happened when China was “Relatedly, it’s vital to acknowledge just how accused of dumping steel on world markets Yet eradicating foreign competition is not signifi cant ‘normal’ turnover in the labour earlier this year,” he says. “In that instance the the answer. It never has been. Protectionism market is. Our research indicates that in the UK, for one, wasn’t particularly keen to seek might well bring short-term relief — and UK around 50,000 jobs are lost and around anti-dumping measures. The government with it a few million handy votes — but in 50,000 created every single week, with was obviously concerned about the bigger the fullness of time it serves only to sending jobs abroad accounting for only a picture, aware that China would almost disincentivise productivity, arrest economic tiny percentage of that fi gure. Accordingly, certainly respond by imposing restrictions growth and raise the cost of living; and although there are always winners and losers of its own. nobody, irrespective of their personal from free trade, the notion that protectionism circumstances or their political leanings, saves jobs is at best misleading and at worst “Similarly, suppose the US went down the stands to benefi t in such potentially ruinous bogus.” protectionist road. Why would we allow the circumstances.

rathbones.com Rathbones Review 9 A tale of two Cities

A tale of two Cities

In early 2017, our head office will move to the City of London. To mark this move, we look at the changing face of the City over the centuries and, in particular, the last 25 years.

Christopher James, Investment Director, Rathbones

10 Rathbones Review rathbones.com A tale of two Cities

hat is the City of As of 2011, the City had a insurance, investment banking, London? Until recently, population of 7,375, making it investment management, Wthis described the the UK’s smallest city. However, commodities trading, ‘Square Mile’ that lies north of hundreds of thousands of commercial property and so on. the River Thames between Fleet people flood in to work there Although the City is often Street in the west and the Tower every day and its financial portrayed as a little club, you of London in the east. It largely services businesses account for can work there for many years retains its medieval boundaries: around 3% of the UK economy and only know people in your it isn’t a square mile, however, by value and more still in terms line of work. but a rectangle covering 1.12 of tax revenues. London is the square miles. world’s biggest foreign It’s just as important to say exchange market — in 2009, it what the City is not. It may This was the site of the original accounted for nearly half of the once have been a place for city, which dates back to Roman $4 trillion global daily turnover. upper-middle-class men to times (Londinium). Nowadays, work, but these days it is it is administered by the City of Today ‘the City of London’ also perhaps the most meritocratic London Corporation under a Lord describes much of the UK’s working environment in the Mayor — not Sadiq Khan, but the financial services sector — not UK. It doesn’t matter what sex, successor to Dick Whittington just in the Square Mile, but also colour or creed you are — if — who is elected for a one-year in Canary Wharf and hedge you’re bright and good at what term by the members of the City’s funds in the West End. It covers you do, you’ll be welcome in livery companies. many activities: banking, the City. Image: Bloomberg/GettyImage: images

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A rich history original stockbrokers were considered so lacking in manners that they were banned Its origins were in the trade of livestock, goods from the Royal Exchange and had to operate and services — this history can be seen in from various local coffee houses. These some of the street names, such as Poultry, coffee shop traders ultimately joined up to Milk Street and Bread Street. But by the late form the Stock Exchange, which first opened 1500s, London was increasingly a major in December 1801 and still exists today, albeit centre for banking, commerce and in electronic form. international trade — reflecting Britain’s maritime adventures and the start of Empire. On the old stock exchange floor, the booths were operated by stockjobbers and the The original Royal Exchange was opened in stockbrokers would ask them for a share price 1571 by Queen Elizabeth I as a centre for on behalf of their client. These were the days commerce and subsequently hosted the of ‘My word is my bond’ (the Stock Exchange Lloyd’s insurance market for 150 years. It was motto) and many older people in the City Britain’s first specialist commercial building, look back at these days with affection, like a but has an unfortunate habit of burning golden era of finance. This isn’t quite true as down — the current Royal Exchange was the Guinness scandal showed. built in the 1840s and rather unhappily is now a cafe and a home to luxury boutiques. Their cosy face-to-face world came to an end on 27 October 1986 with the Big Bang, which It changed the landscape of the City almost A key development was the shift from a deregulated London’s financial markets. This overnight. The small partnerships were mercantile to a capitalist economy, in which was driven by the Office of Fair Trading and snapped up by big banks like Barclays and the owners of capital were separate from Mrs Thatcher, who disliked the power and firms emerged with unlikely names like the owners of ideas or trading rights. The vested interests of the City. Big Bang involved Barclays de Zoete Wedd (BZW), formed from wealthy could invest in various inventions a move to screen-based electronic trading; Barclays’ merchant bank, the stockbroker or schemes, such as the railways, but a key the abolition of the rule that separated banks de Zoete & Bevan and jobbing firm Wedd requirement was a secondary market, so from stockbrokers and stockjobbers; and Durlacher. This was when merchant banks they could sell their shares if needed. The abolished minimum commissions. became investment banks.

“ A key development was the shift from a mercantile to a capitalist economy, in which the owners of capital were separate from the owners of ideas or trading rights.”

On the old stock exchange floor, the booths were operated by stockjobbers and the stockbrokers would ask them for a share price on behalf of their client.

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“ In 1984, two years before Big Bang, another change took place that would have a long-term impact on investing — the FTSE 100 was launched.”

The stereotypical image of the City as an exclusive preserve of upper- middle-class men is long gone. Meritocracy and diversity have flourished

Images: Daily Mail/REX/Shutterstock, PA archive, Luke MacGregor/Reuters Luke archive, PA Mail/REX/Shutterstock, Images: Daily hand-in-hand.

With it came the need for large balance sheets the former docklands and the large banks, The pubs no longer shut at 9pm or stay shut for trading and to facilitate client business. frustrated by the City’s sky-high rents and at weekends — in fact, where weekends were Slowly the British firms slipped off the map: restrictions on space, started to look at once dead in the City, it now bustles with S.G. Warburg was taken over by Swiss Bank Canary Wharf. tourists and shoppers. Corporation, Morgan Grenfell by Deutsche Bank, Kleinwort Benson by Dresdner Bank The City was initially slow to react and the Summary and Smith New Court by Merrill Lynch. Jubilee Line extension encouraged a lot of Within a decade, there were no British firms to relocate. However, recent years We’ve covered over 400 years of history. In investment banks of any scale left — even the have seen it respond — the Shard is south of many ways the City is exactly the same as aforementioned BZW was mostly sold off to the river, but the Gherkin, Cheesegrater and it’s always been — buying and selling, with Credit Suisse First Boston. In the meantime, Walkie-Talkie show that the City’s planning relationships still very important, although Goldman Sachs, Citigroup and J.P. Morgan department is more imaginative than there is little time for lunch. Yet in other ways, moved in from the US. previously. The Heron Tower is the City’s it is totally different — dominated by American, tallest building (755 feet with mast), one of European and Chinese banks, conducting In 1984, two years before Big Bang, another many where the NatWest Tower used to screen-based trading from skyscrapers in change took place that would have a long-term stand more or less alone. Canary Wharf and the Square Mile. We look impact on investing — the FTSE 100 was forward to seeing you there soon. launched. Prior to that, investors used the This redevelopment looked rather FT30 of industrial and commercial unnecessary when the global financial crisis companies, but the new index took Britain’s blew up in 2008, taking Lehman Brothers, 100 biggest companies across all sectors and Bear Stearns and AIG with it. Trading weighted them by market capitalisation. It volumes and profitability collapsed and started at 1000 and is recalculated every 15 thousands lost their jobs, banks needed seconds — at the time of writing, it is close bailouts and interest rates were cut to their to its all-time intraday high of 7128. lowest-ever level.

The City today Yet the City recovered and is thriving today, although Brexit and the covetousness of the By the early 1990s, everything was more or German and French governments are a less in place for where we are today: the major threat. Whereas 25 years ago it was a FTSE 100; increasing globalisation, where social desert, limited to dated wine bars and London’s position between the US and Asia restaurants that sold old school food to chaps This article is based on a talk given by gave it a key geographical advantage; and the wearing old school ties, today high-end Christopher James and Samantha Boyd, shift eastwards towards Canary Wharf. The department stores rub shoulders with trendy both Investment Directors at Rathbones, Thatcher government wanted to revitalise hotels and Michelin-starred restaurants. to the London Ladies Club.

rathbones.com Rathbones Review 13 Keeping it in the family

Keeping it in the family

The UK’s family businesses are a crucial part of the nation’s economic backbone. They employ nearly 12 million people, contribute £125 billion in taxes and generate a quarter of the country’s gross domestic product. Yet for many, long-term survival boils down to a problem that has little to do with business acumen: how to ensure close relatives get on with each other.

Justine Peck, Investment Director, Rathbones

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ome of the world’s most successful Now, as the founder and CEO of Families in brands are family businesses. Even Business, she hosts events around the UK, SWalmart, the biggest company on Earth encouraging people facing similar challenges by revenue, has been passed from generation to share their stories and learn from each to generation through the decades. It is by other. One such event, held at a country no means inevitable that organisations with house restaurant, produces a typical array supranational profi les and multi-billion-pound of stories. market values should forget their roots. At fi rst the conversation is light-hearted, In the UK the number of family businesses peppered with reminiscences of being roped is thought to be around 4.6 million. Although into helping parents out at weekends or most are a long way removed from the likes doing summer jobs. “I was doing the payroll of LEGO, another global empire still at 11!” says one business owner. Soon, overseen by the dynasty that founded it, though, the tone becomes more sombre. together they constitute some of the economy’s most important building blocks. “My dad and uncle launched the business,” recalls one guest. “When I joined they were Yet success is no guaranteed antidote to the determined to show the rest of the tensions that tend to characterise so much employees there was no favouritism, so I was of family life. Nor, for that matter, is wealth. always underpaid and had to work harder In many instances the emotional complexity than anyone to climb the ranks. of blood ties is more likely to provide an additional layer of stress and confl ict in a “ In many instances the business setting — one that can sometimes make or break a company at a stroke. emotional complexity of Trouble brewing Several themes are writ large in the unhappy blood ties is more likely to history of the fi rms and relationships that The Yorkshire town of Tadcaster is have fallen prey. They include confusion provide an additional home to two breweries — the fi rst, over the diff erence between ownership and layer of stress and confl ict built in 1758, was owned by John management, disagreement over succession Smith who left equal shares to his planning and good old-fashioned fall-outs. in a business setting.” brothers William, who had worked These are hurdles many family businesses alongside him, and Samuel, who had will almost inevitably have to overcome if “They said I would benefi t in the end when a tannery business in Leeds. On their they are to continue to form a part of their I inherited the business, but when it came death, the will stipulated the business country’s economic backbone. for them to retire they decided to sell up. I should pass to their heirs. But William had to buy them out at the market rate. I had no heirs, neither Samuel Smith ………………………………………………………………………………….. nearly killed myself trying to pay down this nor his heirs had ever been involved huge debt. I made myself ill. But I managed in the running of the brewery and no Dani Saveker is painfully familiar with the it, and we’re growing and much stronger mention was made of two nephews problems that can ultimately destroy family than we were.” Frank and Henry Riley, who had also businesses. Her personal experience of them worked in the brewery and felt they culminated in the closure of a century-old Such a tale off ers a classic illustration of were owed a stake. fi rm bearing her family name and led her to what can happen when family members fail William Smith and his nephews establish a support group in the hope of to address the ownership/management bought a plot of land within a quarter sparing others the same agonies. conundrum. In this case, although the of a mile of the old brewery and built business endured, relationships suff ered. a new one, transferring everything over. So when Samuel Smith and his “A few months ago I was having dinner with Transition of power: Kjeld Kirk Kristiansen son eventually arrived to take control my mum,” continues the guest. “She said they (68) and his son Thomas Kirk Kristiansen (37) of their legacy all they found was an had just helped my sister to buy her house announced this year that they are to swap empty building. roles in the family LEGO Group business, with with a big contribution towards the deposit. Thomas becoming deputy chairman and his Mum said: ‘Well, it’s only fair — we helped Samuel Smith rebuilt the business you by selling you the business cheap.’ I trading from the old brewery and his

Images: The Lego Group, Tegestology/Alamy Group, Lego Images: The father an ordinary board member. The company was founded in 1932 by Thomas’s nearly exploded with fury. I can still barely company became Samuel Smith’s. great-grandfather Ole Kirk talk to my family.” The Rileys had the advantage of the Kristiansen and the family new large brewery and traded as still owns a 75% stake in Such a scenario is especially common in John Smith’s. What followed can the LEGO Group. larger family businesses that span generations, only be described as a bitter rivalry.

rathbones.com Rathbones Review 15 Keeping it in the family

Successful family businesses (left to right): Doug Perkins founded Specsavers with his wife Mary in 1984 — it now has nearly 1,400 stores and employs 26,000 staff . Their son, John, is Joint MD. An employee packing Clarks shoes — the fi rm’s origins go back to the 1820s. One family business to another — Jonathan Warburton shows the Queen around his family's bakery in Bolton. Five generations of Warburtons have been involved in the business survived, but I’m not sure my relationship since its launch in 1870. “ Most family business with my family has.” owners try to do the right “In normal business life you get rid of the thing, but emotions and rotten apples and try to move on,” says another guest. “But if it’s a brother you’ve ties mean they can struggle fi red, your parents still expect you to come to have a frank dialogue.” for Christmas dinner and give each other presents.”

says Dani. She cites the example of fi rms ………………………………………………………………………………….. where one sibling works while others are merely stakeholders or where one runs the The Department for Business, Innovation business while others just potter around. and Skills classifi es all single-owner fi rms as Clichéd characters like the ‘playboy brother’ family businesses. Although around 3.1 and ‘sponging sister’ emerge. “It can be million of these are sole traders, the Institute seriously divisive,” she says. for Family Business (IFB) points out that more than one in 10 large companies in the Family sport Often these circumstances arise out of a UK belong to families, as do around half of parent trying to be fair by distributing shares all medium-sized companies. Adidas and Puma grew out of a equally upon retirement or death. Another German shoe company launched guest tells how she worked alongside her Warburtons, Clarks, Specsavers, Dyson and by two brothers, Adolf and Rudolf father for years, only to learn after he passed Wilko (formerly Wilkinson) are among the Dassler, in the 1920s. Their away that he had left the company not just to most recognisable names. The list also reputation was established when her but to her sister and mother — neither of includes Associated British Foods (which they persuaded US sprinter whom had ever contributed to it in any way. owns brands such as Twinings, Patak’s and Jesse Owens to wear their spiked Ryvita, as well as retailer Primark), the Swire running shoes in the 1936 “My sister said: ‘I’m going to sell my shares.’ Group (owner of Cathay Pacifi c) and, in Olympics. But a series of family Mum said: ‘Oh, that’s a good idea!’ I said: construction and engineering, Laing O’Rourke, arguments during the stressful ‘What?! I’ve lost my dad and now you’re JCB and Sir Robert McAlpine. years of the Second World War going to make me lose my job as well?’” An led them to go their separate ways. independent valuer established a fair price According to the IFB, a not-for-profi t Adolf launched Adidas (from Adi for a buy-out, but external economic membership organisation that supports the — a nickname for Adolf — and the pressures soon sent the business’s value sector, one in 10 family-run small or fi rst three letters of his surname). plummeting. “Not once did they medium-sized enterprises is likely to be Rudolf launched Puma. Both off er to help. The business sold or gifted to new owners in the next fi ve operated in the same town of years. Many of them are likely to have Herzogenaurach. The two inadequate plans in place. brothers were never reconciled, and their companies remain “Diff erent generations can have fi erce rivals. diff erent ideas around the growth

plan and management strategy,” Davies/Alamy, James urbanbuzz/Alamy, Images: Helen Sessions/Alamy, Reuters/Alamy C & J Clark archive,

16 Rathbones Review rathbones.com Keeping it in the family

The heavy weight of family heritage Dani Saveker's story

Savekers was a manufacturing “ I reached the business that produced architectural metalwork and diffi cult decision shop fi ttings. It was founded by says the IFB’s Fiona Graham. “The timing my great-grandfather Thomas to make my uncle of the succession can create upset, and Saveker in 1903. I joined in there can be issues over how current owners 1994. Mike and his son and potential transferees perceive the role redundant.” of non-family members. In 2001 my older cousin Martin Saveker and his parents the redundancies necessary to “Some may question the skills and interests announced plans to sell their survive. of those primed to take over, and then there shares. We all realised things can be straightforward personality clashes. needed to change and I knew I In February 2009, I realised it The problems aren’t insurmountable, but wanted to take over and lead was over. I had to fi ght back the they do need to be prepared for.” that change. Many of the family tears as I broke the news to staff members had an infl ated and introduced the insolvency perception of the company’s practitioner who went through “ In normal business life you value, which meant we couldn’t the list of who was to go and who get rid of the rotten apples sell externally and meet their was staying to fulfi l existing expectations. It was down to me. orders. People were mouthing and try to move on — but “Are you OK?” to me. It was all too I had to restructure the board much. I could feel it all welling if it’s a brother you’ve fi red, — Martin resigned as managing up inside. your parents still expect director and I reached the diffi cult decision to make my The heritage was the downfall you to come for Christmas uncle Mike and his son in so many ways. Everything redundant. It was truly upsetting has a life and companies are no dinner and give each other from a personal stance but exception. Savekers had been absolutely necessary. We bought ill for years. I made mistakes presents.” Mike’s shares — the cost was but I think the diffi cult decisions excessive but we had no choice. I made were the right ones. “Most family business owners try to do the right thing, but emotions and ties mean We powered on, making a couple The ghosts of your predecessors they can struggle to have a frank dialogue,” of acquisitions, rebranding the can haunt you in family adds Dani. “That means they can company and investing in new businesses! My cousin Derek — sometimes miss what should be glaringly laser equipment. The who’d been in senior obvious opportunities and solutions.” restructured Savekers was all management there — said later set to achieve its potential when he was amazed I’d kept it going The lessons are easy enough to explain but the 2008 downturn hit — it was for as long as I did. He said he’d frequently diffi cult to learn. Maybe Walmart like someone had unplugged expected it to die 10 years earlier. founder Sam Walton, who launched what the phones, it was so dead. Some of the responsibility and would become the world’s largest retailer guilt drifted away at that point. from a single discount store in one of The average age of the workforce It felt like having permission to America’s most rugged regions, summed it was 55 and the average length move on. up best: “We’re all working together,” he said. of service was 12 years — we “That’s the secret.” simply couldn’t aff ord to make

rathbones.com Rathbones Review 17 Cathy Come Home: 50 years on

Cathy Come Home: 50 years on

On a cold night in 1966, a BBC television play about homelessness created a sense of outrage that led to questions in Parliament and the foundation of the charity Crisis. What is the legacy of the programme that should have changed Britain?

Gary Smith, Investment Director, Rathbones

s years go, 1966 was rather a good one desperate Cathy knows her marriage is Equally, such films still draw complaints for television. In July, 32.3 million breaking down under the strain, but focuses today from commentators who feel that A people watched England win the World on protecting her children. They repeatedly there should be a clear divide between Cup accompanied by Kenneth Wolstenholme’s seek help from the council, but are told they documentary and drama. iconic commentary. The match remains the should have stayed within its boundaries to most watched television event in UK history. remain on the housing list. The involvement Legacy of social services inevitably leads to heartbreak. Ken Loach dismissed the play’s impact, Yet on 16 November, the BBC broadcast a saying the public outcry changed little apart play that arguably rivalled the World Cup Five decades on, even in black and white, from the hostel rules that broke up families. victory in cultural significance. Watched by the play remains harrowing. Unlike most This seems unduly harsh, given it led to the 12 million people, a quarter of the British BBC dramas at the time, which were filmed foundation of Crisis and helped Shelter’s population at the time, Cathy Come Home in a studio, director Ken Loach deliberately profile. hijacked the national consciousness. In made it feel like a documentary, choosing 2000, in a British Film Institute poll, it was to film on location using 16mm film and However, it is true to say that homelessness voted by industry professionals as one of improvised scenes. A commentary of and child poverty were not ended by Cathy the best television programmes ever made. fictional vox pops saying the welfare state Come Home: that Shelter and Crisis still have so stops people from becoming homeless is much demand for their help speaks volumes. Landmark television set against Cathy’s desperate decline. Cathy Come Home was shown in BBC One’s Homelessness issues are still regularly raised Impact in 1966 The Wednesday Play strand. It tells the story in Parliament. In 2013-14, government of a young woman, Cathy, who moves to The reaction was mixed. Many viewers were statistics showed there were more than the city to find work. She meets Reg, who is outraged that families were being subjected 81,000 homeless households in England. earning good money as a lorry driver: they to such appalling living conditions and Of those, 33,960 had dependent children fall in love, move in together and marry. He is contempt from those purporting to help accepted as homeless and in priority need a dreamer and, although Cathy is more down them. The BBC was swamped by phone calls by local authorities. to earth, she is a little naïve. Nonetheless, and the play led to questions in Parliament, their happiness augurs well. prompting changes in the hostel rules that Shelter says 1.24 million households were separated men from their families. on housing waiting lists in England alone She soon falls pregnant, however, and they last year and nearly 54,000 families are living have to move out of their flat as children By chance, Shelter was launched a few days in temporary accommodation — 3,000 of aren’t allowed there. Reg is then injured in after the play was broadcast: in 2009, the them in bed & breakfast accommodation. a lorry crash, but doesn’t get sick pay or charity acknowledged its debt to the film in compensation and the family’s seemingly alerting the public, media and government to Fifty years on, politicians from both sides of inexorable slide from working-class comfort the scale of the housing crisis. More directly, the house cite Cathy Come Home to evoke to homelessness begins. Even as the play following a campaign by William Shearman victims of the UK’s affordable housing crisis. progresses, such an ending seems unlikely. and Iain Macleod, then shadow chancellor, It is a touchstone for the plight of destitute, The family move in with Reg’s mother, but the charity Crisis was set up in 1967. unfortunate and desperate families. his brothers have just left the army and the flat is overcrowded. Other viewers felt that ‘docudramas’ were That night in 1966 was a There but for the intentionally misleading — purporting to grace of God go I moment for the entire They slip from one grotty place to another, be factual, yet rooted in fiction. ThatCathy nation. It elicited compassion, raised until Cathy is forced into a shelter for Come Home was so brilliantly made seemed awareness and stirred politicians to action. homeless mothers and children — fathers are more vexing still. The genre survived the not allowed to stay and Reg is forced to move criticism, however, and remains one of the Wednesday evening television drama has

away to look for work. The increasingly most powerful ways to tell difficult stories. rarely, if ever, achieved more. images Reed/Getty David Image:

18 Rathbones Review rathbones.com Cathy Come Home: 50 years on

A mother and her two children pictured at a hostel for the homeless in London in the early 1970s. Many of the issues that Cathy Come Home had highlighted just a few years previously are still with us today.

rathbones.com Rathbones Review 19 The A to Z of sharing

Car-sharing company Zipcar began life in the US in 2000 and now operates across North America and

Europe. Eric Carr/Alamy Image:

20 Rathbones Review rathbones.com The A to Z of sharing

The A to Z of sharing

The internet is turning more and more of us into fanatical sharers. First we shared information — comments, photos, tweets — and now, thanks to an ever-growing raft of apps, we seem ready to share almost anything, including homes and cars. From Airbnb to Zipcar, the way we consume — and in particular the way millennials consume — is set to have a profound infl uence on the global economy and some of its corporate leviathans.

Louise Hudson, Investment Director, Rathbones

or decades, reducing in. Add insurance — particularly inventory — the stock of expensive for younger drivers Sharing economy Fthings just sitting around — and taxation and the costs of — was the province of car ownership can be painful, estimated size manufacturers and retailers. especially if you rarely use the Now it is becoming personal. vehicle. Estimates suggest that Global switching to car club membership Increasingly consumers are typically saves users up to £3,500 seeing ownership of under-used a year. $15bn possessions as an ineffi cient cost 2014 — or an opportunity by which to Architect Andrew Phillips was an generate income. early adopter, joining a car club in 2011. “I sold my car because $350bn Car-sharing company Zipcar is I didn’t actually use it enough,” expected by 2025 arguably the poster child for this he says. “The car club omits the emerging economy. Members liabilities and bureaucracy of pay £6 a month, entitling them owning a car in London — parking, to access 1,500 cars in dedicated congestion charges, maintenance, parking spots across seven UK even fuel costs.” cities, paying by the hour to do so. Transport for London sees car Zipcar arrived in London in 2006 clubs like Zipcar, Carplus and and now has a presence in seven eCar as vital components in European countries. For city managing congestion and “ The sharing dwellers used to commuting by pressures on road space. It wants public transport and needing a to see one million drivers using economy will car only at weekends, its rationale them by 2025 (which would fundamentally of sharing is perfectly clear. mean 10,000 car club vehicles on London’s streets). Crucially, change the world; The AA estimates that the average it estimates that each club car new car loses 60% of its value in results in the removal of 5.8 industries will the fi rst three years. Depreciation other vehicles from the capital’s have to adapt… is less precipitous on older cars, roads; other estimates put that but then maintenance costs kick fi gure at nearer 10. or go bust.”

rathbones.com Rathbones Review 21 The A to Z of sharing

Opposite: Airbnb The imminent arrival of self- allows owners to driving vehicles — Uber recently rent out their homes launched the fi rst self-driving or rooms in them. taxi fl eet in the US — adds a new layer to the story. It does not take much imagination to picture being able to tap your mobile phone and wait for a driverless vehicle to pull up at your door.

FT contributor Paul Hodges, a Car-sharing culture consultant to the petro-chemical and investment industries, warns that the sharing economy could drive down global consumption at a diffi cult time. “Across the world, the great population bulge that came with the post-war baby boomer generation is working its way through to retirement,” he says. “As we get older we buy 97% fewer possessions — we have Amount of time an most of what we really need and average city dweller's we make what we have last longer. car is parked. “The sharing millennial BMW has launched its own The money has helped fund generation are going to be the car-sharing scheme, DriveNow, projects including a local night key drivers of global demand in London, Europe and the US. shelter and the building of a soon, and if that doesn’t already Daimler, which owns Mercedes- playground. It has also allowed terrify traditional manufacturers Benz, has its car2go service. the church to employ a youth and service providers then General Motors recently took a counsellor and helped make it perhaps it should. The rise of stake in Uber’s US rival, Lyft, at a thriving hub of the local the sharing economy will a cost of $500 million, and community. fundamentally change the Volkswagen is reported to have world, and many industries will spent €300 million on taxi app In London more than 20,000 186,000 have to adapt their business Gett on the same day. property owners are now renting Number of car club models to respond or go bust.” out their driveways through members in London, up …………………………………………………………… JustPark, earning an average of from 155,000 a year ago. Car manufacturers are acutely £810 a year. Across the UK aware of the threat. Deutsche The impressive Georgian others are renting empty loft Bank analysts challenge the church of St John’s in the heart space and even unused fi elds. idea that sharing will reduce of Hoxton, London was falling demand for new cars — they into disrepair and its congregation The best known example of argue that shared cars will need shrinking when Reverend property sharing is probably replacing more often — but if Graham Hunter arrived in 2011. Airbnb, which allows you to individuals no longer buy He knew he would have to rent out your home — or rooms 10.5 cars vehicles then ownership will be innovate to survive, so he made in your home — to strangers. A transferred to just a handful of eight of its parking spaces typical Airbnb host in London Taken off the road for organisations with enormous available for drivers to book earns around £3,000 by renting each of the 2,800 car purchasing power, which may through the JustPark website out for 33 nights a year, club vehicles in London explain the recent rush by and app. according to the company. according to some manufacturers to take stakes in estimates. car club businesses. The church’s location — within The sharing concept is spreading, easy walking distance of the City's with people now sharing and Square Mile and just outside the renting clothes. Research by the “ More than 18.5 million people in the UK congestion zone — has made Waste and Resources Action the spaces hugely popular with Programme found the average have turned to online platforms and local residents and commuters UK household owns around apps to source taxi drivers, builders, alike. St John’s now earns on £4,000 of clothes but around average £500 a month from what 30% of these have not been worn graphic designers and even accountants.” was previously an untapped asset. in at least a year.

22 Rathbones Review rathbones.com The A to Z of sharing

“A new kind of working life is Airbnb: Just live there emerging,” she says. “For many it is a life in which they do not Founded in 2008 in California, Airbnb now off ers accommodation know from one week, day or in more than 34,000 cities and 191 countries and has been used even hour to the next when or whether they will have work, so by over 60 million guests. they keep their smartphone always to hand, ready to hit Main reasons given for using Airbnb ‘accept’ at a moment’s notice. They are, in short, permanently logged on. I have real concerns that the proliferation of online labour platforms will lead to an irreversible erosion of labour Cheaper price Location Authentic experience standards and employment rights.” 3-5 nights …………………………………………………………… 51% of guests are staying 3-5 nights at Airbnb A 2014 Department for properties on average compared to 33% at Business, Innovation and Skills traditional hotels. report estimated that the sharing economy was worth £9

Images: TravelibUK/Alamy, Uber Images: TravelibUK/Alamy, Source: Raconteur billion to the UK in 2014 and could be worth £230 billion by At the luxury end of the scale, has transformed the private car 2025. Many policymakers view this is seen to represent an hire industry. Now operating in the latter as a target, with opportunity. US dress-sharing 507 cities and 66 countries government ministers keen to site Rent the Runway off ers around the world, it enables embrace the concept, which subscribers $30,000 worth of almost anyone to turn their car they see as boosting competition Shared values designer clothes to rent — three into a taxi. and opening up new products garments at a time — for less and experiences to consumers. Recent valuations of than $1,700 a year. The idea Debbie Wosskow, founder of emerging shared has clearly gained appeal. This government-backed sharing Many consumers are undoubtedly economy companies and year the fi rm’s revenues are economy trade body SEUK, says benefi ting from the earning and their longer-established cost-reduction potential that expected to surpass $100 million, this is opening opportunities competitors and copycatwalk fi rms off ering for workers. “For women within sharing platforms create. So are similar schemes are appearing the UK the sharing economy many companies, either from Zipcar around the world. represents a real opportunity to engaging entrepreneurially work fl exibly and to be within the sharing economy or $500 million …………………………………………………………… ‘microentrepreneurs’, particularly simply by sourcing workers when they have a family,” she through the emerging platforms. Uber Sharing is not limited to says. “Some 44% of economic $62.5 billion possessions; it now extends to inactivity in women of working Yet benefi ciaries may also fi nd people. More than 18.5 million of age in London is due to caring themselves suff ering, with versus us in the UK have turned to online responsibilities such as being companies forced out of business General Motors platforms and apps to source a mother. For these women the by more competitive digital taxi drivers, builders, graphic sharing economy can off er a enterprises and workers driven $48.7 billion designers and even accountants. lifeline back into work.” into a zero-hours existence to fi nd employment or seeing their Ford TaskRabbit breaks down jobs Others are less positive. Ursula jobs outsourced and wage claims $50 billion even further, allowing users to Huws, a professor of labour and undermined. fi nd people willing to do tasks globalisation at the University ranging from rushing a forgotten of Hertfordshire, says fi ve million This is one instance of “creative passport to the airport to moving people in the UK are now being destruction” where there are Airbnb furniture and doing DIY jobs. paid through online platforms, defi nitely winners and losers, and over $10 billion with one in four of them relying many of us may be both. The monster of this 'gig economy' on such payments for at least versus — so called because workers are half of their income, but the work contracted for only short-term is uncertain and often poorly Marriott engagements — is Uber, which remunerated. $17.8 billion

rathbones.com Rathbones Review 23 What next for central bankers?

What next for central bankers?

The machinations of central banks were once conducted in near-anonymity and of interest only to a small band of finance specialists. Now they are both political and highly public. With ultra-low interest rates representative of the “new normal”, what are the chances of a return to the low-key status quo that endured for so long?

John Nugée, Laburnum Consulting

24 Rathbones Review rathbones.com What next for central bankers?

arold Wilson is once said to have But at some point, the reality sinks in: the markets and financial assets. This in turn remarked “A week is a long time in world really has changed, there will be no means current market levels may be more Hpolitics”, putting his finger on the fact return to the status quo ante, that where we sustainable than the doomsayers predict, that things can change suddenly, no matter are now is indeed the new orthodoxy. In short, and that anyone waiting for a fall in prices how certain they may seem. The life of a central banking has moved to a “new normal”. to provide a buying opportunity may be political commentator is full of late night And then everyone — investors, commentators, disappointed. The old maxim that market revisions to articles as events develop and central bankers themselves — has to accept timing is a losing game and that it is better careers rise and fall at breathtaking speed. this and work out what it means. to be fully invested is likely to prove true once more. Not so the life of a writer on central banking. “ It is probably time to accept For central bankers and those who analyse For central bankers themselves, it is likely to their activities, events usually unfold at a that central banking is in a postpone even further their return to relative slower, more measured pace. Crises come and anonymity. Gone are the days when the actions go, but the essence of central banking is slow new paradigm and that of the central bank were reported briefly on to change. There is a sense that even quite ultra-low interest rates are the business pages and followed only by a substantial policy regime shifts are merely small band of specialists. The modern central deviations from some pre-ordained norm and no longer an aberration.” bank governor is a prominent figure, and his that, in due course, life will “return to normal”. or her actions are as much political as financial. As we approach the eighth anniversary (in Financial markets and investors like this. March 2017) of the Bank of England’s historic In part this is inevitable, given that their There is comfort in the belief that however decision to lower interest rates to 0.5%, it is decisions on interest rates and markets difficult markets are right now, they will in probably time to accept central banking is in affect so many people — redistributing due course return to more orthodox and a new paradigm and that the ultra-low interest wealth from savers to borrowers. But it also understandable patterns. Investment rates we have experienced since then — 0.25% reflects two other factors: firstly, there is no managers assess how and when this will at the time of writing — are no longer an obvious exit strategy for central banks, as take place, and position assets accordingly. aberration that will be rectified in due course the discussions at Sintra and Jackson Hole but the shape of things to come for the seem to have concluded. And secondly, foreseeable future. even if there was, it suits their political masters very nicely to have central bankers Central bankers seem to have finally so active. Finance ministers with limited accepted this. At two major room to use fiscal policy are more than conferences last summer — the content to let their central banks undertake European Central Bank meeting the heavy lifting to keep economies alive. at Sintra in June and the meeting of the US Federal And at least one central bank governor seems Reserve (Fed) at Jackson to have realised this and even welcomed it. Hole in August — there was Mark Carney, the Governor of the Bank of much discussion about the England, has always been a political governor changing role of central — for him, the post is clearly a stepping stone banks and how permanent in a career that will no doubt at some stage the “crisis response” to the return to Canadian politics. Initially he asked Great Recession of 2007-09 for, and was granted, a let-out from his would be. This is not the first eight-year contract which would enable him time this point has been to step down after five years. Now, he seems debated, of course, but for the to be enjoying the limelight (even the criticism first time the general consensus over his “political” role in the EU referendum) appears to have been that where we so much that he is talking openly of serving are now is indeed likely to be the pattern a full term. for many years yet. Investors have fair warning. The era of What does this mean for investors? On the ultra-low interest rates, of active central banks, one hand, it probably means that the era of and of prominent and political central very low interest rates, and correspondingly bankers, will be with us for some time yet. low annuity rates for those seeking to create And in the UK, central banking will probably a pension, will continue. Of all the world’s continue to speak with a Canadian accent. major central banks, only the Fed is considering raising interest rates — and it is John Nugée is an independent commentator being extremely cautious and deliberate about actually doing so. on financial, economic and political issues (www.laburnum-consulting.co.uk). The It is also probable that central banks will major part of his career was spent at the maintain their very large balance Bank of England, where his last post was as

Image: POOL/Reuters Image: sheets and active involvement in Chief Manager of the Reserves.

rathbones.com Rathbones Review 25 Bring me sunshine

Bring me sunshine

Earlier this year, for the first time ever in the UK, solar power generated more electricity than coal over the course of a month. In tandem, major advances in battery technology are delivering unprecedented energy-storage capabilities. Are we on the verge of a truly “disruptive” breakthrough? And, if so, who are the winners and losers likely to be?

James Kyle, Investment Director, Rathbones

26 Rathbones Review rathbones.com Bring me sunshine

Solar panels are becoming a more common sight across the UK. If current trends continue, their prevalence could soon increase dramatically.

Image: Ezra Bailey/Getty images

rathbones.com Rathbones Review 27 Bring me sunshine

solar panel and a wind turbine are economical battery storage might just solve discussing the future of electricity solar energy’s most fundamental and pressing Ageneration. “So,” says the panel, “what problem: what to do when the sun goes down. do you think about this whole renewable energy thing?” “I must admit,” says the turbine, …………………………………………………………………………………… “I’m a big fan.” Nowhere on Earth enjoys permanent sunlight. Whatever its merits in strictly comedic terms, This is an inescapable fact that has forever the above joke should nowadays resonate with dogged humanity’s attempts to harness the the vast majority of the global population. This might of our galaxy’s most important star. alone illustrates how substantially the cause of Even the ancient Greeks appreciated that alternative, non-fossil-fuel sources of energy Helios had to take a rest from driving his has advanced in recent decades. Solar panels, chariot across the sky. wind turbines and other potentially “off-grid” devices are no longer seldom-seen curiosities: “ In May this year the they are ever more commonplace and, crucially, ever more efficient. amount of electricity

Renewables have entered the mainstream; but generated by solar in the could they be on the brink of dramatically reshaping it? A growing body of evidence UK surpassed that indicates that solar energy in particular may produced by coal for the be nearing the point at which it might qualify as a truly “disruptive” technology. first time.”

In May this year, for example, the amount of The consequences for energy generation are — quite literally — to precisely what that vision electricity generated by solar power in the UK straightforward enough. In May this year, in might be is to be found at the Tahoe Reno surpassed that produced by coal for the first another noteworthy milestone, Portugal’s Industrial Center in Storey County, Nevada. time. In August, citing its commitment to “the electricity consumption was fully covered by Here Tesla’s giant Gigafactory 1 is well on its national decarbonisation agenda”, the solar, wind and hydro for four consecutive way to producing more lithium-ion batteries University of the West of England revealed days; but then Portugal tends to be a good annually than were made worldwide in 2013. plans to spend £650,000 on photovoltaic place to get a tan. Put very simply: no sunshine (PV) panels capable of providing up to half of equals no solar power. Tesla already relies on the availability, all the energy used by its University Enterprise dependability and affordability of such Zone and Bristol Robotics Laboratory. Analogous criticisms are habitually levelled at technology for its cars, and it is looking to other renewables, wind chief among them. In improve all three. Battery production costs are Maybe most significantly of all, Tesla, 2015 Denmark set a world record by drawing expected to fall by over 30% in the next six manufacturer of the world’s best-selling 42% of its electricity from wind turbines; and years. General Motors reported in 2015 that electric car, announced on 1 August its yet, as one report of the feat memorably its battery packs cost $145 per kilowatt-hour, intention to buy SolarCity, a leading installer conceded, it was “a particularly windy year”. around 70% cheaper than they were in 2012. of PV panels in the US, for $2.6 billion. Some As Professor Bob Cywinski, a prominent Tesla believes it will bring the figure down to commentators quickly dismissed the tie-up as researcher in the field of thorium-fuelled approximately $100 per kilowatt-hour soon unduly risky — the Wall Street Journal accused nuclear reactors, remarked in the Winter 2014 after the turn of the decade; in the meantime, Tesla CEO Elon Musk of having a penchant for edition of Rathbones Review: “Would any if recent history is any guide, battery storage “incessant cash-burn” — yet others feel it could parent want their child to have life-saving could increase by 5% to 10% a year. signal the advent of the game-changer that the surgery in a wind-powered hospital?” renewables industry has long been waiting for. Similarly, solar panels are becoming ever more Such concerns may no longer apply to solar effective and cheaper to buy. The average solar Why? Because anyone who successfully energy if the sort of vision suggested by Tesla’s panel is approximately 15% efficient, leaving

combines PV panels with effective and move is realised; and perhaps the biggest clue plenty of room for improvement. Scientists in flaticon.com Images: iStockphoto,

What's guzzling the energy in your home?

850 Average annual output of a typical 1kW 166 317 567 607 638 domestic solar Washing machine Oven Electronics Lighting Fridge/freezer panel system

Source: OVO Energy (kilowatt-hours per year)

28 Rathbones Review rathbones.com Bring me sunshine

big-name players; instead it has been the “exponential technologies” such as digital near-exclusive preserve of unfamiliar start-ups photography, smartphones and the internet. hawking competing technologies and “The Stone Age didn’t end because we ran proprietary financing schemes. Online out of rocks,” says Seba. “Stone tools were advertising, mailshots, cold-calling and even disrupted by a superior technology: bronze.” door-to-door salesmen have been used to drum The falling up business, seldom to especially great effect. The scenario in which the price of unsubsidised Now, with its cutting-edge reputation and solar generation undercuts the price of power cost of fashionable showrooms, Tesla could make from the grid is known as “grid parity”. “My solar panel solar chic by doing things not only better but numbers indicate that by 2020 households in differently. sunny areas around the world will be able to modules generate solar energy for less than the cost of The emerging parallels with the rise of another transmission,” says Seba. “This means utilities resolutely hip Silicon Valley titan have not won’t be able to compete with rooftop solar £1.61 gone unnoticed. According to one Bloomberg even if they generate electricity at centralised Jan 2010 analysis, the outcome could be “the world’s stations at a cost of zero. This is what I call first clean-energy juggernaut — a company ‘god parity’, which means conventional that does for solar power, batteries and electric utilities don’t have a prayer.” £0.42 cars what Apple did for computers, phones Jan 2015 and software apps”. Seba is undoubtedly a vocal champion of renewables, yet his rhetoric is rooted in a …………………………………………………………………………………… prospective reality of which the “conventional ... approximating utilities” whose demise he envisages are all to a fall of 75% Tony Seba coined the phrase “clean disruption” too aware. In 2012 — long before Tesla’s in his 2014 book, Clean Disruption of Energy acquisition of SolarCity suddenly upped the Canada and the UK are developing new and Transportation. He claims the only people stakes — executives of the US’s foremost materials that could ultimately triple the hostile to “a cleaner, healthier and wealthier energy companies met in Colorado to assess efficiency of panels, while technical advances future” are “the dirty energy companies, their the threat posed by solar and to formulate a and investment in manufacturing have also lobbies and their protectors in governments”. coordinated riposte to everything from brought down production costs significantly He posits that solar will become the world’s declining sales to the risk of obsolescence. — by around 75% between 2010 and 2015, main source of power by 2030. according to the International Renewable Despite such behind-the-scenes machinations, Energy Agency. “ Battery production costs many utilities continue to stress their own commitment to PV. Critics are unimpressed. Many analysts believe Musk could soon bring are expected to fall by over Professors Christopher Wright and Daniel the cost of a battery/PV bundle lower than the Nyberg, authors of Climate Change, Capitalism cost of electricity from a utility company — a 30% in the next six years. and Corporations, argue that such tipping point that would leave the Tesla- General Motors says that its pronouncements are characteristic of major SolarCity double act well placed to respond organisations that, while keen to parade their to a classic case of supply and demand on a battery packs now cost 70% “green” credentials in public, very rarely place monumental scale. With cars and homes environmental considerations above profits. equipped with sophisticated and less than they did in 2012.” competitively priced batteries capable of “The corporate world has repeatedly chosen to storing energy and smoothing delivery, the A lecturer in entrepreneurship, disruption and spearhead the march towards environmental economics of solar would become much clean energy at Stanford University, Seba first collapse,” says Professor Wright, leader of the more appealing to the average consumer. presaged a decisive convergence between PV University of Sydney’s Balanced Enterprise and battery storage several years ago. Now, Research Network, who has interviewed Solar’s overall image might also receive a with his prediction about to be fulfilled, he numerous senior figures in energy companies. defining boost. Until now the sector has been compares solar’s apparently inexorable ascent “It has managed to convince us that our practically devoid of universally recognisable, with the stellar trajectories of established long-term future is safe in its hands, but the

Average household electricity use

China UK Australia USA 1,500 3,940 7,000 12,300

Source: OVO Energy (kilowatt-hours per year) rathbones.com Rathbones Review 29 Bring me sunshine

dominant view is really that only the short term matters.” Solar so far: more than 20% of UK energy now comes from Even if mainstream energy producers are renewable sources, with an increasing amount from solar. sincere, a long-term dedication to solar could be all but futile. “Large-scale solar power plants 12000 will still get built,” says Seth Blumsack, an Onshore associate professor at Penn State University’s Wind 10000 College of Earth and Mineral Sciences, “but it’s O shore in the many millions of rooftops where the real Wind potential for solar energy as a disruptive 8000 technology is taking shape. By installing solar panels, a consumer pays the utility less and — 6000 for the first time — becomes an energy producer Solar rather than an energy consumer only.” 4000 Seba makes much the same point, explaining Hydro that solar “flips the architecture of energy in the same way the web flipped the architecture 2000 of publishing”. “In the old days,” he says, “publishing was done by a few companies that 0 owned large centralised printers. They decided 2012 2013 2014 2015 2016 what would be published and pushed it down Source: International Renewable Energy Agency to the users. Now everyone with a Facebook, Twitter or LinkedIn account is a publisher — per se before the advent of the smartphone. This underscores the likelihood of far-reaching and the same dynamics work for PV. Everyone Sometimes it is just a matter of opportunity. disruption — a transformation Seba calls “a can generate energy as well as information.” dream come true for anyone who believes in Tellingly, both contexts apply to the rise of human quality of life”. …………………………………………………………………………………… renewables generally and solar more specifically. There is the crisis presented by It is by no means guaranteed that Tesla and The notion that momentous change is dwindling reserves of fossil fuels and, more SolarCity will be the principal architects, just invariably born out of crisis has endured pressingly, global warming; and there is the as it is by no means guaranteed that Seba’s since Marx, but the nature of recent change opportunity to mould what management forecasts will prove unerringly accurate. But has occasionally suggested otherwise. There consultancy McKinsey & Company has solar’s supremacy increasingly appears was, for instance, no communications crisis labelled “the coming resource revolution”. imminent.

Leading the charge

Lithium-ion battery technology is advancing Modern cars already use up to 150 motors so quickly that today’s electric or hybrid cars to power windows, wipers, ABS systems and could look obsolete remarkably soon. other features. Increased voltage means engineers can use electricity even more — to The latest Nissan Leaf has a range of 150 miles, supplement engine power during acceleration, but it is rumoured that the next generation, to produce more responsive suspension or to due in just a couple of years, will have double improve the efficiency of stop-start technology. the battery capacity and a range of 200 miles. This approach allows smaller engines to be The company’s researchers are exploring the used. A turbo-charged 1.5-litre engine today use of a sodium compound within the battery can already match the power of an older rather than a carbon one. This could increase two-litre vehicle, and with 48-volt technology the energy density within the battery by a one-litre engine should be just as powerful 150%, extending the range to 375 miles. yet need fewer gears — all of which reduces weight, fuel consumption and emissions. Even greater technological leaps are just around the corner. Car manufacturers are Cars being developed with this technology working on upping the voltage of cars from 12 are known as “mild hybrids”. Some experts to 48 volts, the battery equivalent of cranking believe these vehicles will offer 70% of the

up the pressure in your water system. benefits of a full hybrid at 30% of the cost. iStockphoto Image:

30 Rathbones Review rathbones.com This sporting life

This sporting life

Playing sport at the highest level requires huge dedication but also sacrifices, with employers often less supportive than might be expected. As sponsors of the FIL Rathbones Women’s Lacrosse World Cup, we look at the challenges facing high-performing sportswomen.

Martha Back, Investment Director, Rathbones

Kirsten Lafferty, England lacrosse player and trainee medic, typifies the challenges that face elite athletes who have to strike a balance between their sporting and working lives.

Image: English Lacrosse

rathbones.com Rathbones Review 31 This sporting life Images: Lacrosse Pix

f playing lacrosse for England has taught Thereafter began the challenge of juggling the picking shifts that fi t around the tough Kirsten Laff erty anything it is how to cope demands of elite sport and studying for a lacrosse coaching schedule. She is on the Iwith pressure. “If you can handle playing medical career. For much of the time recently fringes, fi ghting for a place in the England against the US in the World Cup you can it is medicine that has been the winner. team for the Rathbones Lacrosse World Cup handle stitching someone up for a surgeon to take place in Guildford next summer. after an operation,” says the young doctor. “ With 25,000 women Her story is not unusual, says the CEO of Laff erty took up the sport at boarding school choosing to play lacrosse English Lacrosse, Mark Coups — himself a — “It looked really satisfying chucking a ball former international. “We don’t draw down around with a stick!”. By the time she came on a week-by-week basis elite funding and players often take on board to sit her A-levels she was also faced with it is the fastest-growing considerable fi nancial sacrifi ces and stresses preparing to play for England at the 2007 if they don’t have supportive bosses.” Under-19 World Cup. sport in the UK.” Many of England’s women players are teachers. Despite the pressure, she stormed through “In my fi rst year of clinical study I didn’t In some schools having an England player with four As, earning a place at Birmingham play — I was on the pancreatic surgery teaching lacrosse is seen as hugely University to study medicine. The results wards with 40 to 60 patients; I was meant advantageous and players are given paid time came through just as she was helping England to work 8am to 5.30pm, but in reality it was off for tournaments; others force the players win the bronze medal. 7.30am to 7.30pm — I was too shattered to to work overtime to compensate. do anything afterwards. Then I was on Soon afterwards she was promoted to the emergency admissions, doing 13-hour days “I’m a massive believer in sport and elite sport senior England team for the 2009 World Cup and working every other weekend.” in particular,” says Coups. “It has enormous in Prague. “I did more lacrosse than studying benefi ts for employers. You have a diff erent in my fi rst year at university,” she says. “It Laff erty has now put the career on pause. set of standards to others. Your expectations was a miracle I passed my exams — I think Rather than go into another demanding of yourself and your ability are at a diff erent they’d mixed my papers with someone else’s!” training position, she is working as a locum, level. You are more diligent about working

32 Rathbones Review rathbones.com This sporting life

England’s women’s lacrosse team — seen here in action against Australia earlier this year — features players who work in a variety of professions. Supportive bosses are crucial to their continued success.

“ It builds confi dence, team With 25,000 women choosing to play lacrosse on a week-by-week basis — he does working and good not include the 15,000 playing at school communication. That’s — it is the fastest-growing sport in the UK. It is particularly popular in universities and what you need to succeed women who have developed a passion for the sport there are now taking it into the wider on the playing fi eld and community on graduation, setting up clubs often in the workplace too.” across the country. “It’s been a fantastic few years,” says Coups. quarters of them said it could help accelerate “Hosting the Rathbones Women’s Lacrosse a woman’s career and 61% said it had World Cup next year, and only a year after contributed to their own career success. the men’s tournament which will be held in Manchester, is a huge vote of confi dence in But other research by the EY Women. Fast the state of the game in the UK. forward gender parity campaign showed that smarter and harder and also very focused on though organisations perform better with “We’re really looking forward to the tournament setting out goals and how you attain them.” more women promoted to senior positions, and I hope the hard work and training and all women remain seriously under-represented the sacrifi ces the Team England players are Laff erty agrees: “I’m Miss Effi cient,” she says. on boards of directors and in C-suite positions. making pay off .” “At university I hadn’t time to procrastinate. I had to squeeze into one hour what my friends Coups says: “We still don’t have a system might do in two. It was the same when I started sorted that works for women in the workplace working on the wards — I was a complete list and that’s something we have to address. fi end. As you race from bed to bed, picking up We’ve seen top-class athletes having babies tasks at each stop, you need to be really and coming back to win world records; in the effi cient, getting them done quickly and well.” same way a talented accountant, who’s worked at a very senior level and taken time Coups says a team sport like lacrosse off ers out to have a family, is perfectly capable of other benefi ts too. “It builds confi dence, team doing a senior role again — in fact, she may working and good communication. That’s what be better equipped because parenting skills you need to succeed on the playing fi eld and translate to the workplace too. Employers are often in the workplace too. These are skills you missing out if they don’t recognise that.” usually only fi nd in people in their 40s who’ve racked up many hours on expensive courses.” On the positive side, Coups says campaigns like Women. Fast forward are encouraging a The FIL Rathbones Women’s Research by EY, based on interviews with change of attitude and coming generations Lacrosse World Cup 2017 will be women in senior positions across four will not tolerate the disparity. held at Surrey Sports Park from continents, supports his arguments. Around 12 to 22 July. For information about 94% of them played sport, arguing it helped Turning back to his own sport, he sees plenty tickets and the schedule email them see projects through to completion, to of athletes who can go on to shine in their [email protected] or motivate others and to build teams. Three careers, and a sport that itself is thriving. visit www.2017worldlacrosse.com.

rathbones.com Rathbones Review 33 When is a lot too much?

salaries for a FTSE 100 chief executive (CEO) When is a lot too much? came in at £700,000 per annum.

While high levels of basic pay are controversial The challenge of assessing executive pay to some, the real issues come with ‘variable pay’. This is the catch-all term for the suite of bonuses, pension payments, share plans Matt Crossman, Group Corporate Governance Manager, Rathbones and the like that crystallise at various levels, dependent on the attainment of targets. Research from the High Pay Centre suggests the total remuneration of the average CEO is around £5.5 million per year. From our point of view, variable pay is the most controversial element as it has the potential to diverge from the expectations of shareholders.

An additional issue for investors is that of incentives. With regard to the targets set for senior staff, what kind of behaviour is being encouraged? If large bonuses can be attained by pushing short- over long-term performance, this is clearly working against the interests of committed, long-term shareholders. If there are to be variable rewards for performance, the criteria for determining those awards should be made clear and disclosed publicly, so all stakeholders can assess their validity. Even bearing this in mind, the evidence does not suggest that optimal variable pay arrangements are the only factor in driving outperformance.

This year, BP has provided a fascinating example of the challenges surrounding variable pay. The company’s CEO Bob Dudley stood to receive a total remuneration in excess of £13 million — in a year in which the company suffered huge losses and made job cuts. BP’s board argued that its senior team had done well in managing the company in a low oil price environment — to which concerned investors responded that this was t Rathbones, we seek to be a “ A major factor in our its job, to be expected of the CEO and responsible shareholder of the management team. Exceptional variable pay Acompanies we invest in on behalf of responsible voting policy is deserved if there was exceptional our clients, most notably in our voting at performance. In this case, it really wasn’t clear AGMs. The most contentious votes involve is the alignment of pay that it was, so we voted against management the issue of executive pay. The 2016 AGM on that resolution. season was no different, with high-profile packages with the best defeats for some of the UK’s biggest companies. interests of shareholders.” There are several red flags that we take account of in looking at pay packages. The At such times, everyone — politicians, the pay deal: a major factor in our responsible first is benchmarking: reviewing pay against newspapers, City ‘experts’ — has an opinion, voting policy is the alignment of pay packages peers only tends to lead to inflation of pay with many calling high pay ‘unfair’. But with the best interests of shareholders. levels. We prefer remuneration committees which factors drive executive pay and who to review the strategic direction of the defines what’s ‘fair’? We have developed an A key issue is basic versus variable pay. A company and decide on the remuneration approach that takes account of these concerns salary remunerates an employee for services levels required to attract and retain the and questions. rendered — the day-to-day business of running talent that will deliver on these targets. a company and making strategic decisions. First, we need to set the context. We’re not For most people, salary is what defines their Secondly, we do not like remuneration policies

necessarily concerned with the overall size of value to the organisation. In 2014, basic which offer the opportunity for unearned images, Reuters/Alamy, Images: Nick Shepherd/Getty News/REX/Shutterstock East Clickpicks/Alamy,

34 Rathbones Review rathbones.com When is a lot too much?

bonuses, in the form of ‘golden hellos’ or “ We do not like management on the achievement of various ‘goodbyes’. We also compare shareholder three-year fi nancial targets — but these do returns against the growth in variable pay and remuneration policies not always suit the business model of the take a dim view where there is signifi cant particular company. divergence. Finally, there must be some way which off er the of reclaiming bonuses from staff should their At Rathbones, our guiding principle is clear: performance later be discovered to have been opportunity for ‘golden variable pay arrangements must incentivise fraudulent. hellos’ or ‘goodbyes’.” management to act in the best long-term interests of all shareholders. Where those The issues with executive pay have resisted interests diverge, we will vote against. attempts at reform. Under the coalition government, the business secretary Vince Cable introduced both a forward- and backward-looking vote on executive pay at all AGMs, giving investors the chance to vote on both future remuneration and the actual awards made in the previous year. The votes are only advisory in nature, however: Left to right: Sir Martin the BP pay deal saw a 58% vote against, but Sorrell — the UK’s the company was under no legal obligation highest-paid CEO to change the arrangement. — and Lloyds Bank CEO Antonio Horta-Osorio, In her speech announcing her candidacy for whose pay fell last year. the leadership of the Conservative Party, Theresa May indicated a willingness to take things further, making such votes on pay Top 10 highest-paid CEOs binding. But beware the law of unintended consequences — aware of their increased power, some investors may shy away from 2015 2014 being overly critical, resulting in more, not fewer, egregious deals. 1 £70 416m 1 £42 978m Industry working groups see further reforms Sir Martin Sorrell WPP Sir Martin Sorrell WPP coming in the area of complexity to encourage a greater simplicity in the award of variable 2 £23 296m 2 £19 510m pay structures. There also needs to be a Tony Pidgley Berkeley Group Ben van Beurden Royal Dutch Shell greater fl exibility. Many companies rely on the industry standard of a ‘long-term incentive 3 £23 190m 3 £16 176m plan’ (LTIP) under which shares vest to Rakesh Kapoor Reckitt Benckiser Erik Engstrom Relx (Reed Elsevier)

4 £16 889m 4 £13 333m Jeremy Darroch Sky Peter Long Tui Travel

5 £14 638m 5 £11 834m Flemming Ornskov Shire Tidjane Thiam Prudential

6 £13 296m 6 £11 544m Bob Dudley BP Antonio Horta-Osorio Lloyds Banking Group

7 £10 869m 7 £11 237m Erik Engstrom Relx (Reed Elsevier) Rakesh Kapoor Reckitt Benckiser

8 £10 031m 8 £10 608m Right: BP CEO Bob Mike Wells Prudential Ian Gorham Hargreaves Lansdown Dudley faced fl ak for his £13 million reward 9 £8 905m 9 £9 868m in a year in which the fi rm struggled. Above: Michael Dobson Schroders Don Robert Experian Reckitt Benckiser’s Rakesh Kapoor saw his 10 £8 773m 10 £9 289m pay double in 2015. Antonio Horta-Osorio Lloyds Banking Group Bob Dudley BP

Source: highpaycentre.org

rathbones.com Rathbones Review 35 Together but apart

eyoncé sang “put a ring on it” and it is sound advice but make sure it is a Bwedding and not an engagement ring. The problem is that English law distinguishes starkly between the rights and remedies of those who are married and those who live together and are not (cohabitees).

There is no such thing as “common law marriage”. The law will not step in to award a share in a property or an income in the form of maintenance to either cohabitee when the relationship breaks down and they separate. How long they have lived with one another and their individual financial circumstances are irrelevant.

If cohabitees have children then the parent with their care (usually the mother) may be able to seek financial help in the form of a property in which to live and use as a home for herself and the children, plus a small capital (lump sum) payment and child maintenance. In the case of a property this applies only if the father has sufficient financial resources over and above his own accommodation needs. Even then the claims can only ever be brought on behalf of the children and not the mother in her own right and for her own benefit.

The law is to be found in Schedule 1 to the Children Act, 1989 and, in such cases, the Together but apart home will either be acquired on trust, or by means of a long lease, for the mother and children to occupy for a pre-determined period. The legal title remains with the Many cohabiting couples rely on the notion of “common father. As and when the children no longer law marriage” to tidy up their legal and financial affairs need it, i.e. when they finish in full-time education (usually after a first degree in the event of a relationship breakdown. In fact, at least course), the property reverts to the father at present, there is no such thing. What are the potential potentially rendering the mother homeless, or even bringing her into conflict with her implications of this misconception? And how might own children if he decides to make over the property to them, perhaps as part of his cohabitees best formalise and protect their respective tax planning arrangements. The better interests? course might be to allow the mother to occupy it for so long as she wishes to do so

Jane Keir, Senior Partner, Kingsley Napley LLP under some form of life tenancy but there is Neil Webb/iSpot Illustration:

36 Rathbones Review rathbones.com Together but apart

“ The problem is that English So what’s to be done? First, cohabitees must but since 2009 in Australia, former partners instruct their solicitor/conveyancer as to (who may be same sex partners), who had a law distinguishes starkly the shares in which they want to own their relationship as a couple living together on home, be it 50/50 or in unequal shares by a genuine domestic basis for at least two between the rights and reason of one of them having paid the years, or who had a child together and who deposit, and/or making a higher contribution also comply with other “gateway” criteria, remedies of those who are to the monthly mortgage payments, so that can apply to a court to “have financial matters married and those who live the position is properly recorded at the Land determined in the same way as married Registry. As time goes by and circumstances couples ”. together.” change perhaps with the arrival of children, that original agreement can be varied and On 12 December 2014, a Private Members’ no compunction on the father to allow any the position updated at the Land Registry. Bill sponsored by Lord Marks — the such arrangement. Cohabitation Rights Bill — had its second Cohabitation contracts which set out and reading in the House of Lords. The proposal If a couple buy a property in joint names, define the financial and other arrangements is that it does not equate cohabitation with then in the absence of any discussions by which an unmarried couple lives and marriage but its aim is to “address economic between them or indication as to how they what will happen if the relationship breaks unfairness at the end of a relationship that wish to hold their shares, the law will fix down — rather like a Prenuptial Agreement has enriched one party and impoverished them with a 50/50 interest. Each can specify — are becoming increasingly popular. Such the other in a way that demands redress”. a different percentage split where for a contract may also include other provisions example, one has contributed more, perhaps referable to the decisions a couple makes Post the Brexit vote, it has next to no chance by way of a deposit when the property is as to possible financial priorities, goals and of becoming law but as and when our purchased, but too few people are advised objectives, etc. They will be binding Parliamentary draftsmen work their way to spell out their respective interests in (absent any public policy considerations) through the mountain of statutes and which they will hold the property, at the and can be varied subsequently, by regulations that will require amendment time of purchase, so the likelihood is that it agreement following, for example, a change as we exit the European Union, perhaps will be held in equal shares in joint names. of circumstances such as one party giving reform could find its way into the up work to look after the children, redrafting of our Children and Family Law Worse is the position of a cohabitee where unemployment or illness, etc. Acts along the lines of the Australian model. the property is owned in the sole name of the other. He or she may pay half of the Otherwise, only a substantive change in family outgoings but that may not be the law will give financial protection to enough to acquire a proprietary interest, so cohabitees at the end of the relationship. if the relationship breaks down, he or she England and Wales is by no means alone may come away with nothing. A judge can in maintaining such a significant distinction attribute or vary the shares in a property between the married and unmarried family, but clear evidence of intention and/or financial contribution will be needed and the Appeal Courts have been quick to correct “ Cohabitation contracts are any over generous assessment especially in becoming increasingly Jane Keir specialises in complex favour of the non-owning party. financial cases, pre- and postnuptial popular. Otherwise, only a agreements and arrangements Contrast the position with the married regarding children. In January 2016, family where the spouses acquire rights substantive change in the the minute they marry under the provisions she was named as one of the Top of the Matrimonial Causes Act, 1973, in law will give financial Ten family law solicitors for private relation to the joint ownership and division protection to cohabitees at children cases by Citywealth. She of the matrimonial home and other assets appears in the Spear’s Top 50 Family and income. the end of the relationship.” Lawyers and Citywealth Leaders List.

rathbones.com Rathbones Review 37 An unsung heroine

An unsung heroine

Eleanor Rathbone was one of the unsung heroines of the 20th century. As a feminist, suffragist, MP and humanitarian activist, she influenced social and welfare reform both at home and abroad. Seventy years after her death, we celebrate her remarkable life and reflect on the enduring relevance of the qualities that made her who she was.

Dr Susan Cohen, Honorary Fellow, Parkes Institute at the University of Southampton

lients of Rathbone Investment scheme for nursing the sick poor in their own “ Eleanor never Management may have a vague idea homes, in Liverpool, in 1863. Royal patronage Cof the family heritage behind the was conferred in 1887, and the newly sought recognition Rathbone name, and know that the roots of founded Queen Victoria’s Jubilee Institute the company can be traced back to Liverpool for Nurses continues today as the Queen’s for her work, for in the 18th century. Early generations were Nursing Institute, numbering William in shipping and overseas trade — but never Rathbone VI’s great-great-grandson, another she considered it the slave trade — before they became William Rathbone, amongst its trustees. her duty as a engaged in managing money in the 20th century, but regardless of their business But there is another very important Rathbone responsible citizen activities, philanthropy and responsible to consider, and that is William VI’s daughter, citizenship were a fundamental part of their Eleanor Florence Rathbone, who died 70 years to champion the lives. Abiding by the family motto ‘what ought ago, on 2 January 1946. cause of the to be done, can be done’, Rathbone men and women followed their consciences, making Born in May 1872, she had a privileged disadvantaged and it their business to help improve the lives of upbringing, but was regularly reminded of the poor and needy in society, and using their the duty she and her siblings had to those underrepresented.” wealth to bring about positive and lasting less fortunate than themselves. Her father’s change. principles of responsible citizenship and practical philanthropy were reinforced by The early generations of Rathbones were her studies of philosophy during her three inspired by their strong Quaker beliefs of years as a pioneering undergraduate at honesty, integrity and public service, but this Somerville College, Oxford, and informed Right: This painting ideology continued long after the religious her decision, after completing her degree in of Eleanor is among link was broken. This was the case with 1896, to follow in his footsteps. The more a select number of William Rathbone VI (1819-1902), a Unitarian, social investigations she undertook, the portraits of notably a respected businessman and Liberal MP, a more determined she became to find practical influential women philanthropist, and a social and welfare ways of improving the lives of the poor in MPs to feature in the reformer, who was responsible for pioneering Liverpool. From challenging the deeply Parliamentary Art

district nursing by establishing the first ever entrenched casual dock labour system which Collection. Gallery Gunn/National Portrait Sir James Image:

38 Rathbones Review rathbones.com An unsung heroine

rathbones.com Rathbones Review 39 An unsung heroine

impoverished families, she investigated the as parliamentary secretary of the Liverpool from abusive husbands. The battle for family household budgets of widows, worked as a Women’s Suffrage Society in 1897, but took endowment eventually succeeded with the ‘friendly visitor’ for the Liverpool Central a new turn after she was elected, in 1909, passing of the Family Allowance Act in June Relief Society, and for years undertook social as Independent Councillor for Granby Ward, 1945. This payment survives today as child investigation for the Liverpool Victoria the first woman ever appointed to Liverpool benefit. Women’s Settlement, where untrained City Council. volunteers provided amenities and support Eleanor achieved her long-held ambition of for women and children. The warden, “ The more social becoming an MP in 1929 when she was Elizabeth Macadam, became her lifelong returned as Independent Member for the friend and companion, and between them investigations she Combined English Universities. She used the two women were responsible for her new platform to campaign on behalf of establishing the Liverpool School of Social undertook, the more underrepresented women and girls in Britain’s Science and Training for Social Work, which determined she became colonies, including challenging the practice of opened in 1905, putting social work on the child marriage in India and clitoridectomy professional map. to find ways of improving (FGM) in Kenya. FGM was not banned in the country until 2011, and not only has it not Eleanor never stood still in her pursuit of the lives of the poor.” been eradicated, but continues to be illegally worthy causes to champion. During the First performed in many other countries, World War she pioneered a nationwide For 26 years she campaigned across a range including Britain. scheme for the prompt payment of separation of social issues, from abolishing unsanitary allowances to the impoverished wives of slums, to reducing the hours of labour, The mounting international crisis and foreign serving soldiers and sailors, and then post-war, raising wage rates and improving education. affairs soon took precedence over all these she and Elizabeth revitalised their lapsed campaigns, and on 13 April 1933 Eleanor organisation, the Council of Voluntary Aid. As a feminist and suffragist, Eleanor was drawn delivered a prescient warning in the House of It was soon renamed the Personal Services to campaigning for equality for women, and Commons of the dangers that Hitler and his Society (PSS), and gained a reputation for her concern over their economic dependence party posed to world peace. Henceforth she responding quickly to the crises of the day, upon men led to her formulating her plan devoted herself to defending states and people exemplified by the clothing and boot clubs for a regular payment to be paid to mothers. vulnerable to fascist and Nazi aggression, and loan funds it set up in times of extreme By spring 1918, she had launched her while fiercely opposing appeasement. poverty. Today’s PSS, which now stands for long-running family endowment campaign. Person Shaped Support, continues to work Her humanitarian activism was exemplified with the community and to innovate, having In 1919, she was elected second president of by her part in the rescue, in 1937, of some been involved in developing Age Concern, the National Union for Suffrage and Equal 4,000 children from the Basque combat Citizen’s Advice Bureau and Legal Aid, Citizenship, and during her 10-year tenure zone during the Spanish Civil War, but the organisations that everyone recognises. And steered the organisation towards legislative refugee crisis that resulted from the Munich following in the Rathbone tradition, a member campaigns which were the catalyst for reform, Settlement, signed on 30 September 1938, of the family is chair of trustees. leading to improvements in women’s proved decisive for Eleanor. She felt a deep domestic rights, helping to improve their personal responsibility for Britain’s part in Eleanor’s political career, which ran alongside access to pensions, divorce, the guardianship the German occupation of the Sudetenland her other work, began with her appointment of children, and separation and maintenance and launched herself into a campaign to save

40 Rathbones Review rathbones.com An unsung heroine

as many endangered Czechs as possible. From alone. Her subsequent visits to camps up Above, left to right: Eleanor began November 1938 she used her newly-formed, and down the country boosted the morale her political career as parliamentary purely voluntary, all-party Parliamentary of the internees, who claimed her as the ‘MP secretary of the Liverpool Women’s Committee on Refugees to exert pressure on for refugees’, and her intervention led to the Suffrage Society. Having warned the government, demanding that they relax early closure of some of the worst ones and against the danger posed by Hitler entry restrictions and pay the promised loan to changes and improvements being gradually and the Nazis, she later campaigned to Czechoslovakia. implemented at home and abroad. to help refugees, many of whom were interned in so-called With the outbreak of war in September In response to confirmed news of the ‘protective custody’ in the UK after fleeing their own countries. One of 1939, and the doors to Britain firmly closed, Holocaust reaching her by late 1942, her proudest and most enduring Eleanor shifted the focus of her activism to Eleanor set up a new campaigning group, achievements was her pivotal role the refugees already in the country, now the National Committee for Rescue From in the passing of the Family classified as enemy aliens. Her immediate Nazi Terror, which besides proposing some Allowance Act, 1945. concern was for the 6,500 or so who were small-scale rescue plans, published classified by the tribunals as friendly but who propaganda material intended to keep the nevertheless were subject to supervision Nazi atrocities in the public eye. and restriction orders, and their treatment struck at the very heart of Eleanor’s sense of “ She never had a plan, but of the disadvantaged and underrepresented justice, and her belief that Britain’s tradition in society. She never had a plan, but instead of liberty, generosity and asylum were of instead responded to responded to ‘unsuspected obligations’ as profound importance, even in wartime. and when they came to her attention. ‘unsuspected obligations’.” Throughout her lifetime she refused to be a Hers became a familiar voice in the House of bystander, adhering to her principles and Commons as she challenged the workings Her speeches and letters displayed her utter belief in right and wrong. She serves as a of the tribunals, and the lack of procedural despair at having ultimately failed to do more model the world would do well to emulate. uniformity which wrongly restricted many to save lives, but despite being utterly refugees and prevented them working. But exhausted, she vociferously opposed the situation worsened following the post-war plans for the compulsory repatriation introduction of mass internment on 12 May of the surviving remnant of Europe’s Jews 1940, as 26,700 enemy aliens, many of to countries from which they had escaped Dr Susan Cohen is Honorary Fellow of the them Jewish refugees, were arrested and near-certain death, and in which many had Parkes Institute at the University of taken into so-called ‘protective custody’. lost whole families. She remained actively Southampton, and is the author of Rescue involved in Victor Gollancz’s Save Europe the Perishing. Eleanor Rathbone and the The unsatisfactory condition of some of the Now campaign, and was reasserting her Refugees (London: Vallentine Mitchell, 2010). camps, the food shortages, the suicides and support for a Jewish homeland in Palestine the deportation of internees to Australia and when she died suddenly on 2 January 1946. She is the co-founder of the Remembering Canada were among the raft of injustices Eleanor Rathbone group. which Eleanor now challenged relentlessly Eleanor never sought recognition for her from the backbench. She put down more than work, for she considered it her duty as a www.rememberingeleanorrathbone.wordpress.com

Images: University of Liverpool, University of Warwick, J.A Hampton/ Stringer/Getty images, Nick Yapp/ Hampton/ Stringer/Getty J.A of Warwick, University of Liverpool, Images: University images Press Agency /Stringer/Getty Topical of National Insurance, images, Ministry Stringer/Getty 80 parliamentary questions on internment responsible citizen to champion the cause [email protected]

rathbones.com Rathbones Review 41 Core strength

Core strength

The story of the Bramley apple is one of basic botany, Victorian entrepreneurship and modern science. It stretches from a single tree grown more than 200 years ago to an industry now worth £55 million a year.

Gareth Pearl, Assistant Investment Director, Rathbones

o apple pip will grow to replicate That is where the story might have “ I at once went to see Mr Bramley and his in true form the apple from ended — as a local legend — but for an apple tree, which was full of beautiful Nwhich it is plucked. This simple enterprising young gardener with an fruit. I was a young man at the time but law of nature explains why we have so unusual knowledge of fruit and an eye knew most of the apples of any many varieties of apple today and for opportunity. consequence and on seeing this tree I makes possible the remarkable story was at once struck with the marvellous that follows. Henry Merryweather had begun working appearance of this wonderful variety life at the age of 10, toiling alongside his and asked for its name. He said: ‘It is my Back in around 1809 a young woman father in the orchards and glasshouses apple raised in my garden and it is called in the pretty town of Southwell, of a local stately home, Norwood Park. In Bramley’s Seedling.’ I asked for some Nottinghamshire, planted some apple 1856, when he was just 17 and helping grafts and was told to take what I wanted. pips in her family’s cottage garden. his father establish his own nursery From that time I worked all the plants I Mary Ann Brailsford was 18 at the time business, he was already a fruit expert. had room for and by degrees I had a fi ne and a couple of years later left home to stock of young plants. I then began to marry a local joiner, leaving her widowed That autumn he encountered the have fruiting trees in the Nursery, which mother to nurture the tree and enjoy its gardener to the Vicar Choral of Southwell more than ever confi rmed my opinion fi rst fruits. Minster, carrying a basket of fi ne apples. of its great value and I considered it the Impressed by their size, he asked where fi nest apple I had seen.” And what fruits. The tree yielded they had come from and was told they beautiful large apples with a sharp- were the fruit of nearby trees that had fl avoured fl esh that melted to a perfect, been grafted several years earlier from a The Merryweathers recorded the fi rst sweet pulp when cooked. No other fi ne tree in Church Street. Clearly others sale of the fruit in October 1862 in the apple in the 19th century could match had recognised the fruit’s merits and had business ledger: “Three Bramleys apples it as a “cooker” — and arguably none has the expertise to graft a cutting from the for 2/- to Mr Geo Cooper of Upton Hall.” since. tree to ensure a truer replication. This was an era when gardening was By then the cottage becoming a middle-class passion. It was was owned by a no longer just the domain of the humble local butcher, cottage gardener eking out a subsistence Matthew Bramley. from home-grown crops or the landed In 1924, then a gentry with their professional sprightly nurserymen competing to outdo each 86-year-old, other by growing exotic and outsized Merryweather fruits. recalled what happened next in There was an incredible thirst for a hand-written knowledge and an explosive appetite note for his family: for new and better varieties of plants from around the world. It was the era of the adventuring plant hunters and of Henry Merryweather the great nurseries that marketed their in later life (in straw discoveries and used them to develop

hat). even better varieties. FLPA/Alamy Images: Merryweather family,

42 Rathbones Review rathbones.com Core strength

95% of apples sold in the UK The Merryweathers for cooking at home saw the Bramley as a are Bramley apples home-grown success story and were canny in their marketing of it. “The apple of the Present and the Seedling trees were in commercial under attack from Future”, proclaimed their adverts. plantations in England and Wales. Today honey fungus and, “When once tried the market buyers all 95% of the apples sold in the UK for concerned about its enquire for more Bramleys. Travels cooking at home are Bramleys — around state, used groundbreaking without bruising and keeps readily until 80,000 tonnes are grown here every year. biotechnology methods to clone the late in May, and with care until July.” tree to replicate even more closely the Remarkably, the original Bramley apple genetic make-up of the original. Fruit They showed the fruit widely at tree is still alive. Though in a fragile from these cloned trees has been found competitions. It won a fi rst-class condition, it can still be seen by visitors to contain more vitamin C than certifi cate from the Royal Horticultural to Bramley Cottage. It was recently modern Bramleys, which over decades Society at the Apple Congress of 1883 shortlisted by the Woodland Trust in its of graft upon graft have lost some of their and garnered many other awards in the “Tree of the Year” competition, marking original zest. years that followed. it out as one of the 10 most important in Britain and celebrating its tenacity. Sadly, the untreatable honey fungus The Bramley apple’s popularity soon has now spread throughout the original spread among commercial growers. By The tree was hit by lightning and fell tree, leaving it in a terminal state. 1924, 80% of Kent’s 2,469 acres of over in the early 1900s, but re-rooted Fortunately, thanks to the enterprise of orchards were devoted to Bramley’s itself, sent up a new trunk and continued a Victorian nurseryman and the Seedlings. The 1944 fruit census shows to bear fruit. In 1991 biologists from expertise of a team of 20th-century that more than two million Bramley’s the University of Nottingham found it scientists, its legacy at least will live on.

rathbones.com Rathbones Review 43 Taking on Cho Oyu

Taking on Cho Oyu

In April and May, after 16 years at Rathbones, Rupert took a short sabbatical from his job as an Investment Director and head of our London offi ce. While some might do some gardening or lie on a beach to recharge their batteries, that is not what makes Rupert tick…

Rupert Baron, Investment Director, Rathbones

44 Rathbones Review rathbones.com Taking on Cho Oyu

Clockwise from above: Mister Yak and his 92 friends provided four-hooved transport to our ABC. Looking down the third ice fall (c.6,700 metres) between camps 1 and 2. ABC: the prayer fl ags are part of the “altar”

decorations for our Puja. Baron Images: Rupert

ying next to a drowning man is an by vehicle from 1,400 metres to the road-head To reach Cho Oyu one must approach her unnerving experience, but in a cramped, at about 4,800 metres. We would break the from the north through Chinese Tibet, via L freezing tent at 6,400 metres at journey with a series of acclimatisation walks, Lhasa, and submit oneself to the delightful midnight, it’s far from ideal. working to the maxim ‘work high, sleep low’. services of the Chinese Tibet Mountaineering From the road-head we would proceed on Association. In years gone by, climbers and Jonathan was suff ering from high-altitude foot for four days to reach Advanced Base travellers could cross from Nepal via the pulmonary edema (HAPE), a condition Camp (ABC) at 5,700 metres, from where we nearby Nangpa La pass, but this is now closed. brought on by a lack of atmospheric pressure, would ‘assault the mountain’. We assembled in Kathmandu, from where which causes one’s body fl uids to fl ow back The plan from ABC was to build three camps we obtained visas and climbing permits, and into the lungs. If untreated the suff erer would and ‘rotate’ up and down to acclimatise to then fl ew on to Lhasa. Due to poor weather die within a few hours. Thanks to the fact we ever higher elevations. Camp 1 was at 6,400 conditions, we were routed via Chengdu had three doctors on the trip, one by some metres, Camp 2 at 7,000 metres and Camp 3 1,300 miles away. miracle researching high-altitude medicine, at 7,400 metres. we were able to successfully treat Jonathan with Dexamethasone, a type of steroid.

Cho Oyu — The Turquoise Travel and culture Goddess Lhasa is one of the world’s highest cities Welcome to Camp 1! Cho Oyu lies 12 miles west of Everest and, standing at 3,600 metres above sea level. The at 8,201 metres, is the sixth-highest peak in altitude, and therefore the need to acclimatise, My team consisted of eight paying western the world. Like Everest it straddles Nepal and gave us an excuse to spend two days in the climbers, a British ‘Leader’, six Nepalese Tibet. By way of comparison Kilimanjaro city aff ording time to see and explore the Sherpas and three Tibetans. The stands at 5,900 metres, Mont Blanc 4,800 stunning Potala Palace. The Chinese objective was to climb Cho Oyu, metres and Ben Nevis 1,345 metres. authorities have removed all reference to the one of 14 8,000-metre peaks. 14th and current Dalai Lama and all of the The plan was The mountain is considered the most information boards and literature to travel straightforward of the 8,000-metre refer to Chinese Tibet. slowly mountains, but any attempt involves considerable objective danger not From Lhasa we drove least from cold and altitude. 320 miles to Tingri, where we swapped

rathbones.com Rathbones Review 45 Taking on Cho Oyu

“ By yak, it took four days to One had to place great confidence in the — High-altitude pulmonary edema (HAPE), system of fixed ropes. One works up the as mentioned earlier, where one’s body reach our advanced base route using a Jumar, a form of ascender fluids leach into one’s lungs, is the greatest which grips the fixed rope as it is pushed killer and often strikes without warning camp at 5,700 metres.” higher. On our last day, it took me eight and completely randomly. However, if hours to ascend 600 metres. After no more treated quickly with drugs and if the four wheels for four hooves. The road than half a dozen steps one had to stop for sufferer is able to descend quickly, there journey through Tibet was slow, not because a minute or two to regain one’s breath. is every chance of a full recovery. At ABC the roads are poor, far from it, but because the air pressure was roughly 50% that of the authorities impose a 60kph speed limit. sea level, making even the most basic of Every 100 kilometres or so we were required tasks a real struggle. At Camp 1, where to pass through police check-points. These Dangers one of our number fell victim to HAPE, were unsmiling and unfriendly affairs. the air density was less than 45%. On the Apart from the obvious dangers of avalanche, summit the pressure was close to 35%. crevasses and falling, the greatest danger is suffering from altitude-related ill health: — High-altitude cerebral edema (HACE), Advanced base camp (ABC) where one’s body fluids leach into one’s — Acute mountain sickness (AMS) is brain, is a deadly condition. The victim By yak, it took four days to reach our ABC commonplace and other than excruciating often loses consciousness so quickly that from the road head at Tingri — it was at headaches is easily ‘cured’ by descending descent is not an option. 5,700 metres on the moraine of the say 500 metres and resting. Gyabrag Glacier. Each ‘paying’ climber had their own tent. We erected a cook tent, two mess tents, a communications tent, a shower and two loos. All very luxurious compared Not this time, but home safe and sound with our last Tibetan hotel. Sadly, it was not to be. A combination of Despite this, we all suffered from acute Our Nepalese Sherpas arranged a Puja with poor weather and some very poor tactical weight loss. I lost 6.2kg (14 lbs) in five the local Tibetan monk. The monk blessed planning ruined our chances. Really we weeks. our equipment and in so doing gave luck to only have ourselves to blame. We devised the expedition. I suspect that payment of $80 a poor acclimatisation plan and left Once acclimatised at ABC my resting pulse had much to do with the process, but either ourselves with too much to do in too short stabilised at roughly 80 beats per minute, way it was a colourful and jolly affair. a time. while my blood oxygen saturation stood at roughly 82%. Just ‘being’ required effort However, I climbed to 7,000 metres before and energy consumption was astronomic. Weather being turned back by one of our Sherpas. I was only 200 metres from the point But we are all back home and Cho Oyu isn’t where we agreed we would switch to going anywhere. That by most measures Dreadful. After an unseasonably dry winter, bottled oxygen. This was a new high for is a happy ending. our arrival at ABC heralded snow, snow and me and I was delighted that I could make more snow. Wet spring snow on icy surfaces it to this altitude without any ill effects spells danger and this caused us to falter whatsoever. and delay our acclimatisation programme. However, it did give us time to practise on As a historical footnote, Sir Edmund the lower slopes. Despite the snow, the Hillary failed to climb Cho Oyu in 1952. temperature was increasing day by day as winter gave way to spring. Our other worry Fortunately, all eight of us returned home was that the monsoon season, which typically and this is the first rule of mountaineering. arrives in June, would be early, bringing any The second is that we return in one piece. hopes of summiting to an instant close. Out of our team of eight Jonathan suffered from HAPE, while Martin suffered from retinal hemorrhaging in both eyes. Both Thank you are well on their way to making full Climbing recoveries. Our ‘sister’ team climbing on Thank you to my colleagues and friends Lhakpa Ri were not so fortunate. who helped me raise money for Stoll, a Walking on the flat at this altitude is hard leading charity and housing association enough. Climbing 70° ice, with a 20kg My time in Tibet was a remarkable but for military veterans (stoll.org.uk). With rucksack, is all but impossible and required taxing experience and one for which I had the help of one large benefactor, I have vast effort. prepared both mentally and physically. raised over £20,000. Illustrations: flaticon.com Illustrations:

46 Rathbones Review rathbones.com Important information

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