Howard Davies: "I am proud to have got this far without mentioning the 'B' word"

DIARY: The chair of RBS reflects on Brexit negotiations, data breaches and the art of diplomacy.

by Howard Davies
Last Updated: 12 Dec 2018

For the first time," reports the Daily Telegraph, "senior business leaders are expected to be approached and encouraged to apply" for ambassadorial posts overseas. That was in July 2010, in the first months of the Cameron-Facebook, sorry Cameron-Clegg regime. In fact it was a reprise of an idea tried in the 1990s, with little success.

So Jeremy Hunt’s recent announcement of exactly the same brand-new idea was further proof that you can’t keep a bad plan down if it will generate a headline from cub reporters with no memory of any events before last Tuesday.

I took a particular interest in this exciting announcement because I may be the only serving company chairman who was, once upon a time, almost an ambassador. Well, strictly speaking I was private secretary to one, our man in Paris in the 1970s, and sat outside his office for a couple of years twiddling my thumbs and nursing hangovers after embassy receptions. It was a tough life, but someone had to do it.

I did, however, learn enough to discover that diplomacy is a profession, and that the skill-set required for it is substantial. Not only do you need a high tolerance for champagne, you have to be able to tolerate fools gladly, and understand the mysterious thought processes of others. You also need an understanding of the difference between the European and Soviet Unions, which is apparently not well appreciated in today’s Foreign Office. I discovered that I did not have the requisite silky diplomatic skills (though, armed with an Oxford history degree, I was fairly sound on the Soviet/European question).

Hunt’s clever wheeze, I suspect, will be about as long-lived as that of his erstwhile boss. Whatever happened to him, by the way?

The Budget came and went. The lavatory jokes were so bad as to be almost good. Most attention focused on the giveaways, but there were tax changes too. Chancellor Hammond’s latest money-spinning wheeze, the Digital Services Tax, was popular with bricks-and-mortar retailers. There is a lot of detail to work out, and ideally it should be implemented globally, but it taps into a sentiment that in many areas there is one law for the FAANGs (Facebook, Apple, Amazon, Netflix and Google et al) and one for the rest of us. Only the Luxembourg Exchequer seems to get a significant cheque from Amazon.

I came across a vivid example of how this new competition feels to conventional businesses in the Netherlands the other day. A Dutch bank set up a coffee van outside a station offering free lattes and flat whites to anyone who cared to ask. The only catch was that they had to be prepared to hand over their mobile phone to the barista to have all their contacts and personal data extracted. Not surprisingly, when people were asked directly for their iPhones, there were few takers, yet many of us effectively do that every day, in less overt ways, when we sign up for nifty new apps.

The Cambridge Analytica case drew attention to the dangers of handing over data, but the cautionary effect seems to have been quite short-lived. I suspect it will require some aggressive policing of the GDPR rules before people take serious notice. For the moment, the most noticeable impact is that you keep having to click ‘Accept Cookies’ before you can buy a theatre ticket. But that tells you nothing about where the data is going, once your preferences have been harvested. I suspect some boards on top of these new ventures will find they do not know the answer to that question themselves. They had better find out quite soon before the Information Commissioner comes calling.

I am proud to have got this far without mentioning the ‘B’ word. On all my overseas trips I am asked about it, solicitously, in the way one does about an ailing elderly relative. In the States people commiserate, but quickly say that Trump trumps Brexit and that their politics are even worse than ours. In most of Europe people shake their heads sadly. The Germans and Dutch seem genuinely to regret our passing. The French see some advantage for themselves, but fear that the perfidious British may have set a trap. Surely London cannot have scored such an obvious own goal? Will Paris now become the de facto financial capital of Europe? Can that plum really be about to fall into their lap?

I mutter darkly that in courting the investment banks and hedge funds they should be careful what they wish for. Hosting a global financial centre has its advantages, of course, but there are downsides too. Property prices will rise, and the natives will be priced out of their apartments. Maseratis will clog up the boulevards and simple cheap boulangeries will be replaced by branches of Patisserie Valerie.

And if you do roll out the red, white and blue carpet for the bankers you can’t quickly roll it back up again. Hollande, who famously declared that high finance was his enemy, is thinking of running again in 2022. Macron is very unpopular, and stranger things have happened. He would send the Masters of the Universe scurrying back on the next Eurostar (SNCF strikes permitting, of course).

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