In this month’s column, IoD director general, Simon Walker, says former prime minister Sir John Major is the unsung architect of our Olympic glory, takes issue with airline fuel surcharges and looks at the problems with company pensions
What a great sporting summer 2016 provided. At the 2012 Olympics in London, Britain was third in the medals table – probably the limit for a country lacking the scale and resource of the US and China. Except that it wasn’t. Rio 2016 saw this country moving ahead of China into second place, with as many gold medals as France and Germany combined. And in September, GB was second in the Paralympics too.
What a contrast with much of the 1980s and 1990s with a place well below the top 10 – and from our nadir in Atlanta in 1996, when Britain narrowly pipped Belarus to 36th in the medal table. Just one gold medal, won through the grit and determination of Steve Redgrave and Matthew Pinsent – despite our sports support network, not because of it.
So what changed – and who deserves credit? Unquestionably, inspirational athletes such as Dame Kelly Holmes and brilliant strategists such as Sir Dave Brailsford, whose philosophy of “marginal gains” revolutionised British cycling.
But my vote for the hidden architect of Olympic success goes to someone from a profession not normally linked to athletic prowess. Sir John Major was prime minister when the UK was crushed in Atlanta. An enthusiast for all sport at all levels, he was genuinely hurt by our fall from athletic grace: I know that, as the Downing Street policy adviser whose responsibilities included sport, as well as rather more prosaic remits such as financial regulation.
Major knew that paradigm shifts – reversing years of decline and driving performance – would take time and long-term investment. He instituted the National Lottery with a big chunk of its proceeds going to identifying and building sporting aptitude. Skilled coaches and strong analytics systems backed brilliant athletes who could afford to train full time, because they were supported by relatively modest funding. Britain began to forge ahead, and the end result was on display in Rio de Janeiro.
The lessons are equally applicable to business and to public policy. Put in the spadework, build for the long term, work from the grass roots up, spread your net wide and don’t expect instant returns.
Stop ripping off airline passengers
Nearly 20 years ago I worked for British Airways. Competition was tough, and when the oil price rocketed from $16 (£12.27) a barrel in 1998 to $45 a barrel at the beginning of 2000, I understood why a fuel surcharge was introduced – the airlines just couldn’t control a major cost. And it got worse. By 2008 oil was $150 a barrel. Surcharges soared, but that seemed fair. But what’s happened since? Oil has traded at a 12-year low – $28 in January and below $45 all year. Have fuel charges fallen?
Not a bit of it. They’ve simply been renamed “carrier imposed charges”. BA says they now reflect “changing industry practices”. An ostensibly free flight from London to Sydney using air miles in February will cost you £266 in BA surcharges – and another £190 to government rip-offs including UK airline passenger duty and an array of Australian charges.
What rot! Why not re-inject some honesty? The industry should call a spade a fuel surcharge, and be open about ripping off travellers.
The main problem with company pensions is how we define liabilities. In an era of nil, or negative interest rates, it is ludicrous to require a fund to calculate its deficit as if all its investments were in government stock. No one, however cautious, would place their entire nest egg in gilts. Nor, now, is any promissory note irrevocably secure just because a government issues it. Let’s redefine expectations on a practical basis: a balanced portfolio or a sensible margin above base rates. Otherwise, if Britain does face Japan-style, long-term low interest rates, share ownership will become entirely sclerotic.
The pensions issue we need to worry about is the unfunded and unaccounted future obligation to public sector workers, most still on salary-based payouts. The Treasury should at least note, somewhere in its balance sheet, this bipartisan sleight-of-hand that makes Sir Philip Green seem a rank amateur.