Now we know why the government was so keen to keep Greg Clark’s letter to Nissan in 2016 under wraps. The document was embarrassing. The business secretary was making promises he couldn’t underwrite and was offering cash he would struggle to reclaim if the Japanese car company didn’t stick to its half of the supposed bargain at Sunderland.
On both scores, the foolishness has been exposed. Clark’s vow that Nissan’s UK plants would not be “adversely affected” by Brexit was merely an expression of hope. Two months before the UK is supposed to leave the European Union, the minister is in no position to guarantee that a no-deal exit can be avoided or, if a deal is secured, say what trading terms with the EU will apply.
As for the £61m of grants, these were supposed to be “contingent” on Nissan building its Qashqai and X-Trail models in its Sunderland plant but the threat looks empty. The X-Trail SUV will now be built in Japan but Nissan is free to reapply for the cash and can be confident of getting a thumbs-up. The government will not want to risk damage to supply chains around Sunderland.
It would be wrong to read too many Brexit parables into this tale, of course. As has been widely noted, the X-Trail decision was probably driven as much by the downturn in the European diesel market. But one can say this about the government’s dealings with Nissan in 2016: ministers were desperate to say anything to secure a single day’s headlines about “a vote of confidence” in Britain. It was hot air.
Ryanair boardroom departures stuck on the tarmac
Any change in Ryanair’s boardroom could be considered dramatic when you remember that Michael O’Leary has been chief executive since 1994, chairman David Bonderman arrived in 1996 and senior director Kyran McLaughlin is in his 18th year as a director. When it finally arrived, however, after some prodding from shareholders, the shake-up merely served as a reminder that Ryanair is a company that does things on its own terms and at its own pace.
O’Leary is staying for another five years, albeit in a rejigged corporate structure. Four divisional bosses, including a yet-to-be-appointed head of the main Ryanair airline, will report to O’Leary, allowing him, in theory, to concentrate on big-picture tasks such as buying aircraft and pondering more takeovers to follow the acquisition of Laudamotion in Austria. What this means in practice, however, is anybody’s guess. O’Leary may be free to fiddle as much, or as little, as he wishes.
Meanwhile, the rejig of the non-executives is happening at a leisurely pace. Last September’s instruction from rebellious shareholders, 30% of whom voted against the re-election of Bonderman, seemed clear. It was time for the chairman to proceed to the departure gate immediately.
Bonderman and McLaughlin are leaving – but not for another 18 months. That may be enough to get Ryanair through another tricky annual shareholder meeting but the problem, in the view of outsiders, was lack of boardroom accountability and a belligerent approach to dealing with newly recognised unions. A minor tinker doesn’t really improve matters.
Ofgem could yet serve cold revenge
Cheung Kong Infrastructure, a Hong Kong-based fund with a large collection of infrastructure assets in the UK, last appeared in this column a year ago. CKI, controlled by the billionaire Li Ka-shing, was the only hold-out against Ofgem chief executive Dermot Nolan’s efforts to secure “voluntary contributions” from energy network companies, the firms that manage the nation’s electricity wires and gas supply pipes.
Nolan argued that the network operators had enjoyed financial luck from the global trend towards lower interest rates, so handing a small portion of the winnings to customers via their bills would help to sustain “public trust” in regulation. In a column in the FT, he explained that £650m-worth of commitments had been secured from the industry but Northern Gas Networks and Wales & West Utilities – both owned by CKI – had “yet to step up”.
Well, they never did, Ofgem admits now. Nolan’s exercise in naming and shaming yielded nothing. But what’s this? CKI, reports the Sunday Times, now fancies buying Electricity North West, a business valued at £2bn that operates the electricity networks around Manchester and up to Cumbria.
Ofgem has no formal powers to stop takeovers but it does have lobbying clout. This is a chance to serve some revenge coldly, and it should be taken. If CKI is prepared to ignore the regulator’s pleas over assets it already owns in the UK, it does not deserve a crack at buying another large piece of kit.
