What the next few weeks have in store for Charles Allen

by Atul Hatwal

Charles Allen, welcome to the spotlight. You might have thought you were already high profile, after all running ITV and EMI made you a fixture in the business pages. And your turn on Channel 4’s the Secret Millionaire was genuinely touching.

But all of that is as nothing compared to what you will experience as  chair of the Labour party’s executive board.

As you start your new role, you should be aware of the two pitfalls that perennially await ingénue businessmen keen to apply their acumen to the political world.

First, what works in business does not apply in politics. Second, the media are coming.

Politicians frequently muse about how good it would be to apply business practice to politics and improve efficiency. They do this because they have never worked in business, beyond perhaps a temporary sinecure in public affairs en route to a parliamentary seat.

Most politicians can barely run a bath, let alone any form of enterprise. Executive management as you understand it is almost non-existent. Just look at the how Labour party restructure has been managed so far.

But politicians are not an untalented breed and there’s a reason they have evolved in a particular way.

In business, all relationships are underpinned by money. Whether its shareholders and their dividends, employees and their wages or suppliers and their fees, power is held by the he or she who holds the purse strings.

In politics, most things that matter are based on goodwill.

All those good people knocking doors and delivering leaflets? Free. The trade unions and businesses that donate funds to the Labour party? As good as free.

Len McClusky might be about to change that, but for all the millions of pounds that Unite have given the party in the past year, what have they actually got in return?

Even your truculent staff at Labour HQ. Pay rates in all political parties are extraordinarily low given the hours and effort expected as a minimum.

Despite politicians’ manifold failings, when it comes to nurturing relationships where sane adults work ridiculous hours in pursuit of lost causes for little personal return, their skills are unparalleled.

So when switching codes from business to politics, beware: your version of command and control will wreck relationships.

What is called leadership in the private sector, driving change at the point of a corporate gun will make your people feel deeply unloved. They will find better things to do with their spare time. You will come to exemplify all they came into politics to change.

And the organisation will surely grind to a halt.

This isn’t just an affliction of the sensitive souls within the Labour party. If you want a case study, take a look at what happened when Michael Howard became Tory leader and parachuted a range of bright corporate things into the Conservative operation.

One example: In 2003, Will Harris former marketing director of O2, arrived to revolutionise the Conservative brand and marketing set-up. Nine months later, after his department virtually went on strike, he was gone, complaining of a “flawed, amateur and imperfect system”.

Unfortunately Charles, things haven’t got off to a good start. You were responsible for the report that restructured the Labour party. It would have seemed obvious to you that the leader needed to have full control of the party.


Have a read of Peter Watt’s piece for Uncut yesterday to see what happens when a leader’s office becomes too powerful and the checks and balances at the top of the party are removed.

Time is needed to learn how politics and business differ, if the distinction can actually be learned at all. Many businessmen cannot change their mindset. But time is not something you have because of the second problem faced by businessmen in politics: media vetting.

In the corporate world, there is a very simple metric for success – profit.

Politics isn’t like that.

Outside of elections, hard results are non-existent. This empty space is filled with a concatenation of polls, media speculation and the twittering white noise of the crowd.

Process assumes a new importance. What you achieve matters less than how you do it.

Your role as a senior adviser at Goldman Sachs is already well known, but here’s a hint at what some journalists are already looking at: executive pay.

Back in 2003 as chair of the Tesco remuneration committee you helped sign-off a package that led to an unprecedented shareholder revolt.

Then there was the shareholder anger at your pay deal when Granada took over Carlton to create ITV plc.

And as departing chief executive of ITV in 2007, having presided over a disastrous slump in revenue and share price, you were in the fortunate position of being paid £5.5m as a golden goodbye. Again, some very cross shareholders.

So this is how it will go down in the next few weeks.

First Ed Miliband will be asked his opinion about whether he thinks being paid £5.5m for taking a company off a commercial cliff is an example of good corporate governance.

He will obfuscate and maybe muddle through after some uncomfortable press conferences where this topic dominates. Maybe.

Then will come the tax questions.

As with all executives you will have quite rationally and legally minimised rather than maximised the tax liable on your remuneration.

Some bright spark will calculate what you should have paid, had it all been PAYE. And so Ed Miliband will be asked whether you did or didn’t. He will be asked whether he thinks you should have paid the full amount.

Initially the defence will be that this is a private matter. But that will soon be untenable when the words of countless Labour press releases on cracking down on tax avoidance are hurled back at Ed and Labour’s trade and industry team.

Then the panic will set in. You will be under pressure to disclose your tax arrangements. The media will obsess about it. Ultimately you will and when it emerges you have been tax efficient, Ed will be asked to condemn you.

His competence will be questioned in appointing you and in the end you will wonder if it was all worth it.

No, it’s not right. And yes, it does reflect badly on our politics. But this is the reality of life in the Westminster village. It’s why businessmen rarely thrive in politics. It’s  life in the spotlight . Welcome.

Atul Hatwal is associate editor at Uncut

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6 Responses to “What the next few weeks have in store for Charles Allen”

  1. Nick says:

    What missing from your analysis?

    At the heart of almost all problems in the UK is one player. The government and that means politicians.

    e.g If I has you for a million and you give it to me, who is the idiot? Me for asking, or you for handing over the cash.

    From Green subsidies to bank bailouts to changing the law retrospectively, to changing the law to get individuals, government is the problem.

    Add the 7 trillion of debt, 225,000 per house hold that governments have run up, and its clear your the problem.

    So Atul, how are you going to pay your 225,000 plus interest off?

  2. swatantra says:

    Some interesting points.
    But Labour already started the modernisation process under Blair Brown and Mandelson bringing the ailing Party machine into the 20th Century. This is just a continuation.
    Your main point is that Labour doesn’t really understand business. And thats true. Value for Money must be important for any organisation. Political Parties are no different from any other organisation; they cannot afford to be
    altruistic; to be altruistic is to fail; you have to have your feet firmly on the ground. Of course youhave to stick to your values and principles.
    Change is always painful, whether its mergers or downsizing or growing.There will always be people who like the status quo because its in their interests and resist change. They are not prepared to sacrifice themselves for the sake of the Party. Who is.
    Most politicians couldn’t run a whelk stall let alone a bath, because they haven’t ever had a real job apart from reciting the Party Manifesto over and over again.They lack business experience. So I would be in favour of more business people becoming attracted to the Party nd seeing that the Party has something to offer the small business community. We can learn from them as well.
    But one thing is certain: in business if you don’t deliver pretty quick, then you’re out on your ear. And thats a message that Labour need to take on board. Its a crueler world than the cushy world of Westminster politics.

  3. Don Gately says:

    “What is called leadership in the private sector, driving change at the point of a corporate gun will make your people feel deeply unloved.”

    you need to get out more – many of the more successful private sector companies I’ve come across understand the need to ensure the workforce feel valued. At the extreme end of this you have private sector companies like John Lewis.

    If Allen is engaging in bad practice (and it looks like he is) that’s as much down to personal faults as the sector he’s from (and don’t diminish the lead he’s been given by his boss). You would have thought Ed would be able to distinguish between private sector producers and predators though.

    and as for:

    “In the corporate world, there is a very simple metric for success – profit.”


    the metric is actually “shareholder value” – many shareholders do invest for the long term (individuals investing for retirement and pension funds for example) and trashing your reputation is distinctly bad for shareholder value. Ratners were quite profitable until their reputation was trashed by the CEO – the shareholders were the first to flee and then the company collapsed.

    Giving shareholders a stronger role in governance might curb some of the excesses of the private sector. The same applies to Labour – governance in the party is weak at present and many structures have been eroded over the last decade. This restructuring makes things worse and something has to change to place a stronger NEC back at the heart of party governance

  4. There’s a neat symmetry to the fact that the current chairman of ITV plc is … *drumroll* … Archie Norman.

  5. BenM says:

    Nick is right in one sense – the government is a problem. But not for the reason he supposes.

    That 225k of debt (per household? What about all the other taxpayers?) could be wiped out in an instant by the press of a button. Which is why most people don’t really need to worry about government debt at all (others do and try to spread that fear for political reasons).

    No the problem with our government is that it is not doing enough to encourage growth. It is sitting on its haunches waiting for a private sector revival that isn’t going to happen without government input.

    Why even BA chief exec Willie Walsh said so just the other day.

  6. Gary says:

    The problem is not Charles Allen or the press, its the left’s attempts to turn tax efficiency into some sort of moral crime. The press will only reveal the failure of that idea by exposing Ken, then Charles and ultimately Ed’s trick with his father’s house to escape Inheritence Tax.

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