Lord Livingston of Parkhead!

Published on Tuesday 16th July, 2013 by Celtic Trust

Here we reprint a Celtic Trust blog from 2010 on the noble Lord....

Stephen Boyd of the STUC (writing here in a personal capacity) gives us his take on the recent activities of one member of the Celtic PLC Board…..you know that group of people who want Celtic fans to leave their politics at the door…..

Although the individual stories will vary enormously, I guess there are three fundamental reasons why supporters give up their season tickets: financial pressures, family/childcare issues or general dissatisfaction with the way the team is playing/team is being managed/direction club is heading. Undoubtedly there has been growing frustration with events on and off the field over the past few years. Even when titles were being won under Gordon Strachan, the quality and style of football came in for legitimate criticism. Losing the League in the last two seasons to an average if consistent Rangers side has exacerbated these concerns.

But in my own experience, it is financial pressures that usually tip the balance; and with unemployment increasing by over 100% in Scotland since the start of the recession in spring 2008, there is no shortage of skint Celtic fans. The situation in Ireland is even worse with unemployment currently running at a rate of 14%.

Season tickets are expensive. Many working people can’t afford one. To many committed supporters who have lost their job, or at risk of losing their job, they can quickly become a luxury. Those with savings (and let’s face it, saving has not been possible for most workers in a time of stagnating real wages) might struggle to convince their families that it is appropriate to invest a substantial proportion of the family nest egg in a new season ticket.

It is against this background of high and rising unemployment, growing economic insecurity and falling season ticket sales that we find Ian Livingstone, Celtic Director and Chief Executive of BT adding his name to a letter sent to the daily Telegraph by 35 ‘business leaders’ in support of George Osborne’s budget plans. The letter, published on 18 October, three days before the spending review, urged the Chancellor not to dilute the spending cuts announced in his June 2010 emergency Budget. 

The letter was organised by Tory peer Lord Wolfson. Therefore it will hardly surprise anyone that it is as is unflinching as it is shameless in its support for government policy. The economics of the letter are absurd and the implications of the policy it espouses for the economy are hugely negative for working people. The impact on society’s most vulnerable citizens will be severe.

I think this letter throws up three key questions for Mr Livingstone which I’ll address in turn:

  • Why was he prepared to put his name to a letter which was blatantly party political in nature and expressed resolute support for a dangerously ideological economic strategy based on, to put it politely, discredited economic theory?

 

The letter is an obnoxious assemblage of every myth used to justify Osborne’s spending cuts. It assumes, as does Osborne and his ConDem colleagues, that cutting public spending will necessarily improve the public finances. It suggests, quite outrageously, that Britain is in danger/was in danger of a full-scale fiscal crisis akin to that facing Greece and Ireland unless deep and immediate cuts are pursued. It confirms Osborne’s ‘analysis’ that employment growth in the private sector will more than offset job losses in the public sector. It repeats the oft-stated prejudice that private sector jobs are by definition ‘more productive’ than those in the public sector. I’ve already spent much time interrogating the substance of these arguments and have no wish to do so again. But anyone interested can read the STUC analysis here and here.

The adherence of the letter’s signatories to discredited populist economics is encapsulated in the statement that, “everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better.” Everyone does not know this. Indeed, many people, Nobel Prize winning economists amongst them, think this is undiluted nonsense. Pre-Keynesian Treasury view nonsense to be precise.

The economy is running around 10% below pre-crisis output levels, unemployment is close to 9% and rising (in Scotland at least), the medium-term risk is deflation not inflation and interest rates are already close to zero. In these circumstances, both macroeconomic theory and more importantly the lessons of history suggest that the government should be engaging in fiscal expansion i.e. increasing spending (preferably in areas such as infrastructure and education which will boost long-term growth prospects) to create employment. Savaging public spending at this time is highly likely to condemn the UK to a prolonged period of economic stagnation and high unemployment.

Mr Livingstone is obviously content to be associated with this highly ideological and self-serving (for those who’ve been itching for years to ‘shrink the state’) agenda. Of course, Mr Livingstone doesn’t have to rely on public services. Like the other signatories, I imagine he uses his vast wealth to pay for private education and health services and those with access to chauffeur driven cars don’t have to worry about public transport. His vast and growing wealth cocoons him from the economic insecurity afflicting workers across the economy.

What we have to remember is that people who have been successful at running a company, are very, very rarely well placed to advise on the economy of a nation. The proof is in the letter to the Telegraph. On the question of business people expounding on economic issues, Nobel Prize winning economist Paul Krugman concludes thus: ‘Economics and business are not the same subject, and mastery of one does not ensure comprehension, let alone mastery of the other. A successful business person is no more likely to be an expert on economics than on military strategy’.  The pamphlet he wrote on the subject is to be recommended; particularly for those politicians unable or unwilling to accept his premise.

By signing up to the puerile economics of this letter, Mr Livingstone may have suffered some damage to his reputation. But, I’m sure he only worries about the views of his FTSE 100 CEO peers. He probably assumes that most will endorse the letter’s position. Which brings us onto question 2…

  • Is the signing of this letter compatible with his role as CEO of BT?

 

I have been told by BT contacts that Mr Livingstone signed the letter in a personal capacity. And yet the letter clearly shows that it was signed by Ian Livingstone, CEO, BT Group. Does he sign all his personal correspondence in this way?

The bulk of the letter’s signatories can reasonably be described as ‘usual suspects’:

  • Tory supporters/donors e,g. Wolfson, Paul Walsh of Diageo and Ian Chesire of Kingfisher;  
  • minimum wage retailers who have long subscribed to a very British low-pay, low-skills, low regulation business model; and,
  • outsourcing firms who spy an opportunity in spending cuts.

 

BT does not fit neatly into any of these categories. This is a private sector company which has promoted a distinct corporate ethos; an ethos which builds on the public service values ingrained in the organisation and its people since the days when it was a publicly owned and accountable utility. This is a company which (hitherto?) valued its relationship with its workforce in whose skills it has invested. This is a company which does an awful lot of business with the public sector.

On what grounds does Mr Livingstone justify tarnishing his company’s name through association with the feral vanguard of British shareholder capitalism? He has certainly ingratiated himself with some powerful people. Surely he wouldn’t be trying to set himself up for even higher rewards at another firm where stakeholders are able to exert even less restraint on the ability of executives to extract profit as ‘reward’?

It is notable that only 35 ‘leaders’ agreed to sign up. Mr Livingstone should have exercised the judgement and discretion shown by the majority of his peers.

  • Is the signing of this letter compatible with his role as a director of Celtic?

 

I’m guessing that any potential conflict with his role as Celtic Director didn’t weigh heavily in Mr Livingstone’s decision to sign the letter. This I can’t know for sure. I’m only guessing.

The strategy proposed in the letter will, by the Government’s own figures, lead to around 500,000 job losses in the public sector. PWC estimate that another 500,000 will be lost in the private sector. Only this week, the CIPD forecast that combined job losses in both sectors would reach 1.6 million. The Government’s forecast that the private sector will create 2.5 million jobs over the period of fiscal consolidation appears literally incredible.

The problem is that there is no offsetting mechanism available in our current circumstances. The Bank of England cannot slash interest rates when they are already at 0.5%. Over the course of the crisis the pound has already devalued by around 25-30% (which is a good thing) but any competitive advantage will be slight as the world prepares for a period of managed devaluations. There is no global boom to piggy back on.

Many Celtic supporters are on the verge of losing their jobs because of the ConDem Government’s irresponsible and ideological economic strategy. Season ticket and merchandise sales are likely to fall again. Did this even impinge on Mr Livingstone’s thinking? By the way, he receives £25k a year from Celtic for doing…well, what exactly? It’s worth reminding Mr Livingstone that the UK median wage is around £25k. Yep, half of all Celtic supporters (potentially much more) are likely to earn less in from a full year’s work than Mr Livingstone earns for showing his face at a few meetings.

The direct impact on club revenues is likely to be dire but there are bigger issues. I think it’s unacceptable that a Director of our club is publicly associating himself with an economic strategy that will have a huge negative impact on the Celtic community; a strategy that has deliberately targeted cuts on the poorest and most vulnerable people in our society in order to facilitate the scoring of cheap political points. I’m sure it’s not a concern to Mr Livingstone but I do wonder how he would reconcile UK Government strategy with Celtic’s ‘social mission statement’s’ commitment to promote ‘health, well being and social integration’?

I’ve no idea why Mr Livingstone was appointed to the Celtic Board but suspect that others imagined having the CEO of such a massive UK company would in some way add to Celtic’s prestige. What guff. Experience in other countries suggests that long-term performance is improved when the board of an organisation better reflects its wider community of stakeholders. Following the banking crisis, improving the quality and range of directors should be a policy priority as should the ending of the cosy culture of remuneration committees which enables executives to extract massive and undeserved pay and bonuses.

I find it appalling that Celtic should seek to replicate a failed corporate culture. It is worse that directors should act in such a brazen way against the interests of the vast majority of fans. And yes, this is a political statement and one that will not find favour with all Celtic fans – what political statement would? But I cannot leave my politics at the door of Celtic Park or any other door; particularly at a time when the well-being of my fellow supporters (of this and all other clubs) is being targeted by the Government and its corporate cheerleaders for purely ideological reasons.

Mr Livingstone’s decision to sign this letter does not reflect well on him as an individual or the organisation’s with which he’s involved. Is it too much to expect an explanation on why he thought it was appropriate?

 
 
 

Share this article:

Share with email
0 comments

Login to post a comment

 
 
Site by MALO MEDIA