Pounds and sense – looking back at the 25 years that shaped business

Margaret Thatcher

“The rise of the financial decision-maker has been spectacular. But the elevated status of senior financial executives has not narrowed the communications gap between them and other members of management. Often they are regarded quizzically, sometimes with suspicion, by their colleagues.”

These were the first words spoken on behalf of the finance director community in the pilot issue of Financial Director magazine, dated July 1984 (we launched that October).
The FD’s lot has improved since then, but sadly, those words don’t sound as out of date as the pilot issue now looks, with its advertisements for Peterborough as the Silicon Valley of the UK and computerised spellchecker program ‘Wordplex’ (Microsoft had unleashed Word the previous year). Back when British business was still dominated by British brands, from British Airways to Lloyds Bank, The Equitable Life and Jaguar, the FD’s current role as the hybrid of a beancounter and a strategic, business-aware thinker was merely a twinkle in the eye.

Timely launch
We chose the right time to launch Financial Director because the politics of the day put in motion a socio-economic sea change whose rewards ­ and consequences ­ we only now have the hindsight to properly appraise. Finance directors have been front and centre at the growing pains of the UK economy ever since.

But what has happened to the sort of aforementioned emblems of British economic pride in the past quarter century?

The birth of Richard Branson’s Virgin Atlantic in our launch year ­ a decade after British Airways was formed as the national carrier ­ laid the way for BA to be privatised by Margaret Thatcher’s government and floated on the London Stock Exchange in 1987, as was the policy of the day. Where is the world’s favourite airline today? Up to its teeth in debt, fighting off the unions, its CEO Willie Walsh pilloried.

The black horse that accompanied the Lloyds name (first as Lloyds Bank, established 1765 and later, post merger, as Lloyds TSB from 1995) went from being famous to infamous in the course of our 25 years. Proudly sporting the strapline “Strong companies choose strong partners” in its advertisement in our pilot issue, in a credit crunched 2008 Lloyds TSB bought a stricken HBoS in a deal personally brokered by Gordon Brown ­ before nationalising both in the £37bn cash infusion that also included Royal Bank of Scotland.

Lloyds TSB was then criticised for making several tranches of heavy layoffs. As for that other bastion of British financial strength back in 1984 (and another Financial Director advertiser using the strapline “no one can know what the future will bring”) Equitable Life ­ the wheels of that particular car crash were put in motion by Thatcher’s 1988 decision to launch personal private pensions; Equitable merged theirs with its with-profits fund from its existing retirement annuity, but was caught out by falling interest rates ­ and the rest is, sadly, far from history.

Foreign influence
The privatisation era did give management the chance to manage independently of the government. But the subsequent failure of so many jewels in the British business crown unintentionally and some years on created an opportunity for overseas suitors and opened up our economy to foreign businesses, while Thatcher’s battering of the trade unions took down one fundamental barrier to unfettered advancement.

The coal miners’ strike in 1984-85 strengthened the Conservative government’s plan to import cheaper energy from other countries: as UK companies reached outward, we ran a piece in our launch issue about the risks of foreign trade ­ and in our September 2009 issue we ran a piece on the danger of it reversing due to trade protectionism fuelled by recession.

Take Jaguar, its flotation in 1984 one of the more prominent privatisations (and our pilot issue cover story.) Five years later, Ford Motor bought it and when it wanted to sell the business on in 2007, the inklings of the credit crunch put off all but one of various suitors ­ Indian conglomerate Tata Motors sealed the deal last June, a snip at £1.15bn.

But what of the achievements of that year? Most of those are from the tech and communications sectors. 1984 was the year Racal Telecom won one of two licenses to create cellular networks in the UK and formed its subsidiary, Vodafone, to set this up, leading to the latter’s independence in 1991. Chasing the launch of the Apple Macintosh that January, an advertising spread from Bill Gates’ Microsoft was first to greet the eyes of Financial Director readers in our launch issue.

Our cover story was the flotation of British Telecom and an interview with its finance chief, Doug Perryman, who told us: “I don’t think there was another public corporation whose accounting standards were as low as British Telecom’s” and that it took him “three years of very pointed and aggressive work” to repair that.

Twenty-five years on, things have really changed ­ and we’ve had a front row seat.