You could almost hear the sigh of relief across the City at the end of last year when Boris Johnson swept to victory in the General Election. The threat of a Jeremy Corbyn-led Labour government nationalising vast swathes of British industry had been rejected - and bosses felt they could once again get on with the important business of wealth creation.
But just five months on, with the economy in tatters after ten weeks of coronavirus lockdown, we have come full circle.
It now seems almost inevitable that a Conservative Chancellor, Rishi Sunak, will have to stage dramatic state interventions to prop up business life in Britain.
Upbeat: But Jim O'Neill says fresh thinking is vital for economic recovery
And, unlike in December, this time he will have some of the most influential names in the City behind him. Foremost among those is Jim O'Neill, former chief economist at Goldman Sachs.
Lord O'Neill, as The Mail on Sunday revealed last weekend, is the man behind one of the key plans under consideration at the Treasury. He has proposed creating a £25billion sovereign wealth fund, which would represent a groundbreaking moment for state intervention into private markets.
The fund could buy shares in key businesses outside London to aid the Government's agenda to 'level up' the country.
'This will produce better long-term returns for the Government,' O'Neill explains in a Zoom call. 'It's also an alternative to taxation as it produces higher returns for the British Government and reduces the burden on the taxpayer.
'You could reinvest any income, you could redistribute to the national accounts or it could be used for public expenditure.'
Treasury policymakers are now frantically working on ways to prevent a jobs crisis - with the Bank of England warning the economy could shrink by 14 per cent in 2020.
The Treasury is working on so-called Project Birch to bail out key sectors. Jaguar Land Rover, Virgin Atlantic and Tata Steel have all turned to the Government for aid.
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Meanwhile, top figures in the City are working on a plan to help companies convert debt incurred during the crisis into shares. Sources have said more than 100 advisers are working on options to be presented to the Government by the end of June. O'Neill, 63, says: 'Project Birch seems to be some kind of a 'bad bank' and I see why that makes sense, as a rescue operation. But that shouldn't be confused with what I've been talking about, which could be called the 'good bank'.
'And I don't think this should be thought of at all as a sort of nationalisation. The people who jump to describe this as nationalisation I think are in a very rigid mindset.'
As an example of what he's advocating, he gives FTSE100 giant 3i, set up with £15million in 1945 by the Bank of England and big banks.
It started off as the Industrial and Commercial Finance Corporation, providing funding to small and medium sized firms that needed cash for the long-term. Now it is a public company - and a major player in management buyouts.
O'Neill says: '3i originated from the kind of entity I've described, and it ended up creating some very successful businesses.'
The 3i group regularly sells it stakes in firms, or floats businesses, to generate significant returns. It made £228million from the sale of IT specialist Civica in 2013, and £89million when it floated off Dutch fitness brand Basic Fit in 2016. However, it has not always made money on its investments.
O'Neill says taxpayers, like 3i investors, tử cấm thành bắc kinh need to accept that some investments made by the new sovereign wealth fund would probably fail. He says the key is that the successes outweigh the losses. 'That is the reality of investing. I've invested quite a lot in start-ups myself and you lose money on some of them.'
But he's made plenty too, working for a string of top-flight banks before becoming chief economist at Goldman Sachs in 1997. During his time there, he teamed up with wealthy Manchester United fans to put together the 'Red Knights' consortium that tried, unsuccessfully, to buy the football club in 2010.
He became Treasury Minister under George Osborne in 2015 and took charge of the Northern Powerhouse project. He continues to work on this as vice-chair of Osborne's Northern Powerhouse Partnership.
O'Neill sees the pandemic as a wake-up call for firms that are focused on profits above all else.
'I think we will shift to an economy less dominated by shareholders [who demand ever-increasing profits], and more towards stakeholders,' he says, suggesting that workers, customers and wider society could stand to benefit more.
'So much of business - and therefore life involving people - has been hugely dominated by the end pursuit of profit maximisation, and that's partly why you end up with just-in-time business models that have suffered in this crisis.' The just-in-time model means holding little stock and relying on deliveries of components and raw materials precisely when they are needed - to save on storage and avoid waste. O'Neill says the just-in-time model was created precisely to boost profits but its flaws have been exposed in the Covid crisis.
He adds: 'The just-in-time type of management has been proven to have significant holes in it - we need to have a huge rethink.' The same lesson could be applied to the NHS, he says. There has been huge criticism of the delays in delivering PPE and test kits.
O'Neill says: 'Countries that treat health infection seriously, and don't have this just-in-time health system, are in better shape that ever. I think the data shows Britain's technology, both in our health service and around it, and in the nation at large, is just not Premier League.
'We are talking about track and tracing starting, and somebody who was responsible for it said it wouldn't be first-class straight away. That's just not good enough, we should think a lot more about our technology in this country.'
But just five months on, with the economy in tatters after ten weeks of coronavirus lockdown, we have come full circle.
It now seems almost inevitable that a Conservative Chancellor, Rishi Sunak, will have to stage dramatic state interventions to prop up business life in Britain.
Upbeat: But Jim O'Neill says fresh thinking is vital for economic recovery
And, unlike in December, this time he will have some of the most influential names in the City behind him. Foremost among those is Jim O'Neill, former chief economist at Goldman Sachs.
Lord O'Neill, as The Mail on Sunday revealed last weekend, is the man behind one of the key plans under consideration at the Treasury. He has proposed creating a £25billion sovereign wealth fund, which would represent a groundbreaking moment for state intervention into private markets.
The fund could buy shares in key businesses outside London to aid the Government's agenda to 'level up' the country.
'This will produce better long-term returns for the Government,' O'Neill explains in a Zoom call. 'It's also an alternative to taxation as it produces higher returns for the British Government and reduces the burden on the taxpayer.
'You could reinvest any income, you could redistribute to the national accounts or it could be used for public expenditure.'
Treasury policymakers are now frantically working on ways to prevent a jobs crisis - with the Bank of England warning the economy could shrink by 14 per cent in 2020.
The Treasury is working on so-called Project Birch to bail out key sectors. Jaguar Land Rover, Virgin Atlantic and Tata Steel have all turned to the Government for aid.
RELATED ARTICLES
Previous
1
Next
Ministers weigh up £25bn sovereign wealth fund to reboot... Britain's plan for £25bn sovereign wealth fund: Whitehall... Big companies slammed over furlough abuse: Firms tapping... Helicopter money, people's QE or universal basic income? The...
Share this article
Share
Meanwhile, top figures in the City are working on a plan to help companies convert debt incurred during the crisis into shares. Sources have said more than 100 advisers are working on options to be presented to the Government by the end of June. O'Neill, 63, says: 'Project Birch seems to be some kind of a 'bad bank' and I see why that makes sense, as a rescue operation. But that shouldn't be confused with what I've been talking about, which could be called the 'good bank'.
'And I don't think this should be thought of at all as a sort of nationalisation. The people who jump to describe this as nationalisation I think are in a very rigid mindset.'
As an example of what he's advocating, he gives FTSE100 giant 3i, set up with £15million in 1945 by the Bank of England and big banks.
It started off as the Industrial and Commercial Finance Corporation, providing funding to small and medium sized firms that needed cash for the long-term. Now it is a public company - and a major player in management buyouts.
O'Neill says: '3i originated from the kind of entity I've described, and it ended up creating some very successful businesses.'
The 3i group regularly sells it stakes in firms, or floats businesses, to generate significant returns. It made £228million from the sale of IT specialist Civica in 2013, and £89million when it floated off Dutch fitness brand Basic Fit in 2016. However, it has not always made money on its investments.
O'Neill says taxpayers, like 3i investors, tử cấm thành bắc kinh need to accept that some investments made by the new sovereign wealth fund would probably fail. He says the key is that the successes outweigh the losses. 'That is the reality of investing. I've invested quite a lot in start-ups myself and you lose money on some of them.'
But he's made plenty too, working for a string of top-flight banks before becoming chief economist at Goldman Sachs in 1997. During his time there, he teamed up with wealthy Manchester United fans to put together the 'Red Knights' consortium that tried, unsuccessfully, to buy the football club in 2010.
He became Treasury Minister under George Osborne in 2015 and took charge of the Northern Powerhouse project. He continues to work on this as vice-chair of Osborne's Northern Powerhouse Partnership.
O'Neill sees the pandemic as a wake-up call for firms that are focused on profits above all else.
'I think we will shift to an economy less dominated by shareholders [who demand ever-increasing profits], and more towards stakeholders,' he says, suggesting that workers, customers and wider society could stand to benefit more.
'So much of business - and therefore life involving people - has been hugely dominated by the end pursuit of profit maximisation, and that's partly why you end up with just-in-time business models that have suffered in this crisis.' The just-in-time model means holding little stock and relying on deliveries of components and raw materials precisely when they are needed - to save on storage and avoid waste. O'Neill says the just-in-time model was created precisely to boost profits but its flaws have been exposed in the Covid crisis.
He adds: 'The just-in-time type of management has been proven to have significant holes in it - we need to have a huge rethink.' The same lesson could be applied to the NHS, he says. There has been huge criticism of the delays in delivering PPE and test kits.
O'Neill says: 'Countries that treat health infection seriously, and don't have this just-in-time health system, are in better shape that ever. I think the data shows Britain's technology, both in our health service and around it, and in the nation at large, is just not Premier League.
'We are talking about track and tracing starting, and somebody who was responsible for it said it wouldn't be first-class straight away. That's just not good enough, we should think a lot more about our technology in this country.'
