OK, I admit I was one of those who tittered when the announcement of his name prompted a chorus of boos in the Olympic Stadium in 2012. But, unlike many, I don’t cringe at the thought of George Osborne. Nor am I, on the whole, particularly anti-Conservative. But, I am frankly, appalled by recent disclosures about the behaviour of our former Chancellor.
I don’t often say this, but I’d like to refer you to the Daily Mail, which, to its credit, has done an excellent job over the last fortnight of explaining quite how shameless Mr Osborne has been in pursuit of a fast buck.
First, Mail reporter Guy Adams revealed the intimate nature of Osborne’s relationship with BlackRock, the fund management company, during his time as Chancellor of the Exchequer. Osborne, you may have heard has recently taken a part-time job with said fund house for a reported salary of around £200,000.
A former Cabinet minister was quoted as saying: ‘It’s clear that Osborne has been milking his contacts for all they were worth.”
This was the reporter’s conclusion:
“Supporters of Osborne may argue that he’s got as much right to earn a living as anyone else. However, the extent of these links to BlackRock — which were all, remember, forged when he was in high office, on the public payroll — will only anger critics who believe the bucket-loads of cash thrown at former ministers by the banking industry has created a disincentive for politicians to challenge ‘big finance’ while in government.”
Yesterday the Mail was on the case again, reporting how, since leaving the Treasury, Osborne has made £620,000 from speeches to City institutions. One speech alone, for HSBC, earned him £52,000. The financial advice firm St James’s Place paid him £40,000 for another one. All this, of course, is on top of the £75,000 a year Osborne is paid to fulfil his duties as an MP.
I’ll be honest, you have to admire the sheer gall of a man who, even when he first entered Parliament, was already one of the wealthiest politicians of the modern era.
But there are far more important issues at stake here. The asset management industry has very close connections to the political establishment. Many MPs sit on the boards of fund houses, and some no doubt aspire to a lucrative job in the City after they leave the Palace of Westminster. Also, of course, the Conservative Party is largely bankrolled by hedge fund managers and executives. We must be very careful, then, to ensure that this cosy relationship does not impact on issues such as financial regulation.
Through its control of the tax system, the Treasury in particular has huge influence over the profits that fund management companies make. Remember, the tax relief on pension contributions means the Treasury (or, more accurately, the UK taxpayer) is by far the biggest client the fund industry has. Against that backdrop, I hope that politicians and regulators are paying very close attention to George Osborne’s commercial activities.
And another thing. What benefit, if any, will customers of BlackRock and St James’s Place receive from the vast sums being paid to the MP for Tatton? I’m afraid I can only see benefits to BlackRock and SJP, who in turn will want to recoup the money they’re spending. There are no prizes for guessing who will end up picking up the tab.
But is Osborne going to provide vital nuggets of insight into the future of the UK and global economies which will give BlackRock fund managers an edge over their rivals? I very much doubt it. After all, the financial markets and the economy are two completely different things. Even if there were a direct connection, economic forecasting is notoriously difficult and, let’s face it, Mr Osborne hasn’t exactly covered himself in glory in that regard given his drastic predictions in the event of a vote for Brexit.
Sorry, George, you’re not adding value to the investment process; you’re extracting from it. And anyway, shouldn’t you be spending just a little more time representing your constituents?
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
