'Red Adair' is really just talking common sense

City & Business

YOU surely had to blink! So is it "Red Adair" after all? Certainly the Confederation of British Industry's new Director General was doing a fair impression of the veteran Texan oil-fire fighter in warding off right-wing flak for daring to say that higher wages for UK employees might not be a bad thing.

"Splish, Splash - CBI's Wet Adair lays down the law" screamed the Telegraph, using a variant label, in a vitriolic attack that suggested he was betraying CBI members who would have to foot the bill.

But was he? Since his appointment from management consultancy McKinsey last year, Mr Adair has taken a series of initiatives seen as cuddling up to Labour, but which are in reality just plain common sense.

At the CBI conference in November, for example, he urged the Government not to use privatisation to fund pre-election tax cuts. Anti-Tory, betraying the party most CBI members vote for? Hardly. A warning instead not to repeat the accounting sleight of hand that led the UK to blow pounds 200bn of North Sea oil and privatisation receipts on unsustainable lower taxes.

No firm, nor family for that matter, would think that windfall one-offs could fund higher income in perpetuity unless invested wisely, rather than spent in a feel-good binge.

In his latest speech to the Institute of Personnel & Development, Mr Adair said that with steady growth, falling unemployment and low inflation, the UK appeared now to have broken the upward price/wage spiral of the 1970s.

Worryingly, though, wages were taking a lower share of national income, with many people's real earnings after tax declining. Performance-related pay had contributed much to flexibility which had ditched the old "going rate" approach to wage settlements. But one-way bloodying of employees meant insecurity and a feel-bad factor, Mr Adair warned. And that hitconsumer confidence and work relations, to the long-term detriment of UK firms. "Our goal as wealth creators must be to develop a framework which gives individuals opportunities, prospects and participation in the economy's success - dare I say a 'stakeholding'?" Mr Adair said.

Hardly controversial, you might think, and a line backed by many industrialists as well as unions and Tony Blair.

Mr Adair might have gone further and really put the cat among the pigeons. Last week, my colleague David Bowen wrote of one very simple way of delivering a sense of "stakeholding" by employees: good management, which includes leadership by example.

How often have we seen staff, buffeted by redundancies and insecurity, exhorted to moderation, when boards have awarded themselves huge pay rises and paid out large dividend increases.

Unsurprisingly, this "one rule for us, one rule for them" mentality hits morale and motivation, and even in the most successful of firms. Take, for example, one of the UK's stars of the past two decades, Reuters. Staff there are balloting on strike action over a below-inflation wage offer. The international news group says it cannot afford more, yet analysts estimate its profits grew 16 per cent to pounds 590m last year, with a further 12 per cent rise on the way for 1996. It has a cash pile of over pounds 600m, bought back pounds 350m of its shares in 1993, is thought to be considering another payout and its share price quadrupled in the past five years.

Reuters is now based in London's ITN building, the former Times newspaper building, where ITN staff have also just voted to strike. Ten years to the week after Rupert Murdoch sparked a bitter dispute by the Times's moonlight flit to Wapping, how ironic it would be to see picket lines there again: not this time not because of new technology or "Mickey Mouse" practices, but the very one-way traffic on pay and conditions that Mr Adair warned against last week, when profits and productivity are on the up.

Pity the SFO

SHOW a little pity for the poor Serious Fraud Office. Friday's decision to prosecute Kevin Maxwell on further charges will see it hung, drawn and quartered again.

The same voices that crucified it last week for failing to secure convictions in the most expensive trial in British history will want it both ways. They will pillory SFO chief George Staple as vindictive, bowing to political pressure etc in having a go again. Yet juries convict or acquit, not the SFO. The SFO's job is to prosecute where it believes a crime has been committed, not drop charges after loss of face. The reason the Maxwell charges were split into two was fear that one trial would drag on further than the eight months the first did, itself far too long.

In all this lies the nub. The SFO did not frame the legislation under which it was set up in 1988 and the Government had full opportunity to change the system in its review last year.

Last week, even Labour urged the Attorney-General to scrap jury trials for complex fraud cases and look at the French system, which uses a judge and two assessors. The US has far more success in tackling fraudsters and insider dealers, because it has a far wider armoury of fines and civil remedies, with different standards of proof.

All of this is hardly new. So why hang the prosecutors, and let the politicians out of jail free?

Forte fall-out

HOW fortunes change in a week. Sir Rocco is now on bended knee before Gerry Robinson for a crack at the hotels the Forte family ran until last Tuesday; pals until then, Forte and Whitbread are now fighting like rats in a sack over who's to blame for Granada's win.

Those are just two quirks from the bid.

Tax breaks for pension funds, far from encouraging a long-term view, made it easier to offer a higher, sell-out price.

Last week, Dixons chief Sir Stanley Kalms, no stranger to hostilities himself, ran hotfoot to tell Mercury Asset Management not to assent Dixon's pension fund's shares to the bid - a care that all pension trustees might in future take.

MAM in turn, which helped deliver Forte's head, might yet take up the FTSE-100 place Sir Rocco has just vacated.

And now a break-up of a break-up? With KKR in the running for the up- market hotels, what next? Individual rooms up for sale, or timeshares perhaps at the Savoy?

o Patrick Hosking is away