Belfast Telegraph

Friday 18 April 2014

Her Majesty's plot to escape economic mire

One had a busy day yesterday. Between banking reform, enterprise reform and grocery reform, the Queen was delving into all sorts of issues and tackling some of the problems facing business in her House of Lords speech.

Now you may say these are the words of David Cameron but even so at least he's managed to touch on a few of the things holding back some of our most important sectors.

Take banking for instance.

Nearly all of us have been hit by higher interest rates and stingy lending as a result of the high-risk trading strategies of the investment arms of our banks. We didn't enjoy the benefits of the extraordinary profits they made during the boom times prior to 2007 and it's only right we should feel a little aggrieved that we're having to pay the price for their recklessness now so news of the banking reform bill should raise a smile.

The retail and investment arms of banks were always said to have Chinese walls in place to prevent any overspill, but the implementation of the recommendations in the Vickers report should mean we have stone walls in place.

We could probably do with a moat and some razor wire as well but the Vickers recommendation should go some way to keeping the risk on the side of the risk takers and prudence on the side of the prudent.

Tackling executive pay is also a welcome sign and although it's more related to the likes of FTSE 100-listed companies it's still relevant to us here in Northern Ireland.

That's not just because pay levels for our executives tend to be benchmarked against their listed colleagues but also for shareholders here who probably feel rightly outraged that the average chief executive in the UK's leading 100 companies enjoys a 120:1 pay ratio with that of their average worker.

And then there's the nattily-titled Groceries Code Adjudicator Bill, one which will hopefully allow our pummelled farmers, who should be fighting in the featherweight rounds, to lift themselves off the ropes and go another few rounds with the heavyweight supermarkets.

If ever an industry needed a referee in a bow tie it's the agri-food sector as the recent Deloitte report showed.

It said "brutal" price-led competition among retailers was making life extremely difficult for processors who on many occasions have seen margins squeezed to oblivion, very much like direct farmer suppliers.

The problem the suppliers, both of the processor and farmer variety, have is that the supermarkets make up such a large part of their business that they are bound to abide by the demands of their biggest customers or risk losing their business. In fact, most were scared to speak up about the problems which they were able to air in the Deloitte report.

So all-in-all a few plus points in the Queen's speech. There could have been more on reducing red tape for small businesses but for now we'll take what we can. She can rest easy tonight after a hard day's work.