Should Jeremy Corbyn want an example of the spoils going to the few not the many, he might look at the document which rams together Standard Life and Aberdeen Asset Management. As a result of this lovey-dovey £11bn merger, 800 people will lose their jobs.

Whether or not the departing hordes added much value, the jobs were not the zero-hours, unstable or badly-paid ones that Mr Corbyn so dislikes. The departees include only a modest cull of the directors, since eight from the dozen on each side will step up to the board of the new Standard Life Aberdeen. Presumably the first resolution will be for a new boardroom table.

The beneficiaries are rather fewer in number. The managers share a £35m bung to stay, and once the inevitable infighting has cut the board down to a manageable size, the directors will get more, because it’s customary to pay mega-rewards at the top of mega-corporations. The big winners are the usual suspects among the advisers, who have cranked up the fees to a magnificent £74m. This handy sum is split between Goldman Sachs, JP Morgan and Credit Suisse, plus assorted lawyers and PR advisers.

Well, it was jolly hard work. The bankers had to agree with both company boards who had decided that putting two of Scotland’s finest together was a good idea, and that the shares were already priced at almost exactly the right terms. Then followed the trickier business of persuading the shareholders not to make a fuss at the lack of any premium. Pointing out the £200m saved by firing all those superfluous employees doubtless helped.

The shareholders seem strangely resigned to their fate. They certainly can’t see some glad, confident morning; after an initial twitch, Standard Life shares are lower now than they were on March 6 when the deal was announced. With Aberdeen shares trailing along, the proposed merger has, so far, destroyed shareholder value as well as those jobs, and in a continuing bull market. There is still time for the whole thing to fall apart, although apathy is the way to bet. Mr Corbyn might pay attention.

Forecasting is hard, especially for the future

It’s a paradox of economics that the worse economists’ predictions turn out to be, the greater is the demand for more of them. The forecasts from the UK Treasury are treated with almost holy reverence on Budget day, even though the previous predictions are often shown to be comically inaccurate (worse, on the whole, than those from Capital Economics, for example, who are currently forecasting an early interest rate rise). The projections for later years are little more than wishful thinking, but still carry weight because they are “official.”

ING bank asked YouGov to find out what we think of the dismal science. Over half with a view said they didn’t trust economists’ opinions, although an encouraging 40 per cent said they understood media discussions of the subject. Three-quarters of respondents believed economics should be taught in school. They were not asked which subjects should be dropped to make room in a crowded curriculum.

We claim to have a good understanding of the consequence of a fall in sterling or government spending cuts, while understanding the consequences of Brexit produces the now-familiar 50-50 split, this one between those who think they know and those who know they don’t. Economists will argue that there is more to their trade than forecasting. With George Osborne’s Treasury-backed predictions of disaster to follow a vote to leave now looking like a bad joke, perhaps that’s just as well.

No whining, please

I am member number 59363 of the Wine Society, and should I die today, my estate could cash in £74.79 of accumulated profits. Unfortunately, the 2016/17 accounts reveal that there were no profits last year, thanks to a blunder in 2010 when the pension scheme benefits were capped. Despite the legal advice at the time, it now seems that the cap didn’t fit after all, and the result is a nasty hangover in the p&l. Sadly, there is no suggestion in the accounts that the (unnamed)  advisers should stand their round.

Advertisements