Justine Greening is unlucky to have been passed the transport chalice so early in her cabinet career, and her tenure will surely be even shorter than the already short average for the post. On the issue of a third Heathrow runway, opposition to which was a theme of her campaign for her Putney seat in 2010, she seems at a loss to respond to a surge of Tory opinion led by former minister Tim Yeo in favour of the runway project as a symbol of newly assertive, globally connected, growth-seeking post-Olympic -Britain. I feel obliged, in a chivalrous way, to help her marshal her arguments before she’s forced to depart. Here goes.
What Heathrow needs is not the bulldozing of the last semi-rural communities between the Bath Road and the M4 to make way for what could only be a short-haul landing strip, but a complete redesign of the nightmarish central complex that encompasses Terminals One, Two and Three. In modern air travel, size matters less than the sophistication of the offering and the speed of connection to the city centre: the quality of the Wi-Fi, the air conditioning, the seafood counter and the Crossrail link are at least as important as the availability of direct flights to Chinese industrial cities.
Contrary to the pro-runway rhetoric, history does not tell us that foreign investors base their choice of location on proximity to giant hub airports. It was Thatcherism and tax breaks that brought Asian factories to the north-east in the 1980s, not the limited amenities of the former RAF base that was Teesside Airport. The denizens of Canary Wharf would rather slip through City Airport to Geneva and beyond than trek westwards to Heathrow; London’s tribe of foreign bankers stays here because of the quality of housing and office space, not the transport. Likewise, 300,000 Frenchmen came to London because it is a city of fun as well as opportunity; they couldn’t care less about Heathrow so long as they can be home in a couple of hours by Eurostar.
I admit I’m intrigued by the concept of the Boris Island airport in the Thames estuary as a very long-term solution to the inevitable need for more capacity and less noise pollution. But in the medium term, the investment thrust should be towards making all of London’s airports more pleasant, efficient and accessible, and enhancing the distinctive quality of life of the capital and its environs in all its aspects. That way, foreign investors will keep coming and staying, rather than using an expanded Heathrow hellhole as a hub to take them elsewhere. Over to you, Justine.
One-way traffic
Louis Gustave Mouchel must be spinning in his grave, if its reinforced construction allows him to do so. Mouchel was a French mining engineer who migrated to Wales to make his fortune promoting ferroconcrete at the turn of the last century. The company he left behind went on to design the cooling towers of Battersea power station and the stands for Liverpool’s Anfield stadium — and in modern times, to specialise in outsourced infrastructure services for local government, especially planning and maintaining roads. Many a small town in recent years has been surprised to find some over-specified traffic scheme foisted on it not by the freemasons of the county highways department but by the sharp-suited consultants of Mouchel. It was good business — until spending cuts began to fall heaviest on anything that was contracted out and thus not a direct threat to local government jobs. Mouchel’s debts mounted, a £4 million hole was uncovered in its accounts, and its share price plunged out of sight.
At which point a new management team led by turnaround specialist David Shearer tabled a proposal in which Mouchel’s lending banks would write off £60 million and take 80 per cent of the equity in exchange for £87 million still owed; the managers would take the other 20 per cent as an incentive to steer the business back to health, while existing shareholders would receive a token penny a share. Quixotically, shareholders voted down this one-way traffic scheme last Friday. Mouchel promptly went into receivership and was sold to a new entity owned by the banks and the managers on the terms previously proposed, except without the penny payout. Mr Shearer, collecting a handsome fee for his work, will argue that shareholder value had already been wiped out by his predecessors, that this scheme saves a historic name and thousands of jobs, and that any upside in it rightly belongs to the banks and the managers. But private shareholders, including lifelong employees who invested through a ‘share-save’ scheme, think they smell a rat, or at least a ruthless connivance against their interests. Perhaps we should hear from Sir Michael Lyons, the former BBC chairman and local government panjandrum who is Mouchel’s senior independent director, as to whether he thinks the outcome is fair to all parties.
Patent wars
The impact of a Californian jury’s decision to award $1 billion of damages to Apple in respect of alleged patent infringements by the Korean group Samsung had dramatic stockmarket consequences: Samsung’s value plunged more than $12 billion while Apple’s rose by a similar amount as investors chased its shares to a new all-time high.
Alex Brummer explained presciently here in May why investors in high-tech stocks should keep a close watch on patent wars. Protection of intellectual property, rather than price competition, has become the new gladiatorial arena for global electronic and digital giants — the industry is now waiting to see whether the next bout pits Apple against Google, whose Android smartphone operating system, as adapted by licensed manufacturers, is attracting the scrutiny of patent lawyers. Apple, meanwhile, is seeking a ban on sales of eight best-selling Samsung phone models in the US. The Koreans must be wishing they had stuck to assembling microwave ovens on a subsidised site near Teesside Airport.
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