Silence in the Storm – Business and No Deal Brexit

28 Feb 2019 james
Daily Telegraph image to accompany publication of the leaked conference call – 15th January 2019


The storm in Westminster rages so ferociously that at times it’s hard to hear ourselves think. There is second by second coverage of the House of Commons and Downing Street from every conceivable angle. Backbenchers so obscure that we’ve never heard of them before are dragged through the TV studios and closely cross-questioned. Others gain their ‘moment of fame’ though ‘acts of principle’ such as resignation. The journalists watch like hawks the comings and goings of advisors to Number 10 for any chance indication of a change in direction by the Prime Minister.

Questions swirl around the corridors of Whitehall.

What happens if we have a No Deal Brexit? What will be the impact on the country, on the economy? Will the lorries back up around Dover jamming the ports, filing the motorways and spilling onto the reserved runways of nearby airports? Will the lack of basic foodstuffs cause social unrest?

The strange thing about this storm is who remains silent at the heart of it. The UK’s three largest companies on the London Stock Exchange, by market capitalisation, are HSBC, Shell and BP. As they have been for a long while. We have heard from the likes of the CEO of Airbus and the UK Manufacturing Director of Honda (neither company are listed on the London Stock Exchange), but where are John Flint, Ben van Beurden and Bob Dudley, the heads of each of these companies, in all of this?

John Flint – head of HSBC

The media talks of the question of the UK economy  and it’s imminent crisis (Will No Deal mean gridlock and panic buying?) and the question of its long term prospects (Will Brexit lead to companies winding down investment and shifting production out of the UK?) as though it is the ministers or shadow ministers, the backbenchers or advisors, who can or will direct these things. But we know in our bellies that this is not the case, that decisions about whether capital is directed away from the UK, or trucks are directed away from Dover, will take place not in the offices of public servants in Westminster, but in the offices of executives in private corporations.

Ben van Beurden – CEO of Shell

Of course we also know that ‘business’, or rather large corporate concerns, are not sitting there idly or as bemused as we are. Their task is simple, to generate return on private capital, to generate ‘shareholder return’, and every circumstance has to be assessed for its potential to do so. If the UK crashes out of the EU – then how can this event increase profits? If the UK does Brexit – then how can that be used to improve shareholder return?

Bob Dudley – CEO of BP

Platform’s knowledge is particularly built around the energy sector – especially oil & gas and wind – so how do these questions apply in this sector:

If the UK crashes out of the EU – how will Shell and BP use this to increase profits?

If the UK does Brexit – then how can that be used by Orsted and EON to improve shareholder return?

Only very occasionally does the media afford us any glimpse that this corporate debate is taking place. On the night of Tuesday 15th January Prime Minister May suffered the worst defeat of any key government bill in at least a century. It was widely taken as a given that the governments’ Brexit Plan would be defeated, but few had predicted that the opposition to it would be so strong. The shock waves in the commentariat were immediate and Minister’s hurried to calm public nerves.

It seems that the first to take action were three of the most important UK ministers, after May, the Chancellor, Phillip Hammond, together with Greg Clark, Minister for Business, Energy & Industrial Strategy, and Stephen Barclay, Secretary of State for Brexit. Less than 60 minutes after the vote had been declared they held a conference call with ‘business leaders’ from 330 ‘leading firms’.

Who were these ‘leading firms’? The reporting was scanty. The Evening Standard said they were “top brass from Amazon, BP, Balfour Beatty, the Post Office, Tesco, Siemens, Carolyn Fairbairn (CBI) and Richard Pennycook (of CoOp Retail and Head of the British Retail Consortium.)”. The Guardian added another name to the list, Scottish Power.

Who are these ‘top brass’? What do we know about them? We of course have names of those who attended from the side of the public – Hammond, Clark and Barclay – and we can find their biographies on-line, but only two of the ‘top brass’ were named in most of the reports in the papers.

Fortunately for us, such is the nature of these turbulent times that a tape of the conversation was leaked to the Daily Telegraph. Through that rare leak, we learn that from BP there was Peter Mather. Amazon UK was represented by Doug Gurr, and Tesco by chairman John Allan, who is also President of CBI. Jurgen Maier was there from Siemens UK, the largest manufacturer of wind turbines in Britain. And there was Kevin Anderson, CEO of Scottish Power, Simon Blagden, Co-chair of Fujitsu UK, Leo Quinn, CEO of Balfour Beatty, Paula Vennels, head of the Post Office and Vivian Hunt, managing partner at McKinsey & Co. From this we can glean the names of ‘leaders’ from 11 firms, but that apparently leaves 319 unaccounted for.

Greg Clark MP – Secretary of State for Business, Energy & Industrial Strategy

We shall have to await the release of any information via Freedom of Information requests, and as is the usual way, the names of those attending will have been blacked out, redacted for ‘commercial reasons’.

The Telegraph leak reveals much of the substance of the discussion (although the paper seems not to have released the full hour of the transcript). The focal point, which was at the heart of the Telegraph’s outrage, is the pressure that several of the executives put on ministers in order to get the government to pull a No Deal Brexit off the table. Hammond effectively gave his commitment that this is likely to happen – a suggestion that runs directly counter to the public announcements of Teresa May.

The anger of the Pro-Brexit Right at this intervention by ‘big business’ in the democratic workings of the British state was neatly expressed by the columnist Janet Daley. Writing in the Telegraph three days later she described how:

A British Chancellor, a Cabinet minister in charge of Brexit and a Business Secretary fall over each other to soothe and placate the leaders of over 300 multinationals, sounding like aspiring lobbyists competing for contracts as they assured the companies that they would do everything possible to prevent the no-deal outcome which their boards feared’.

She went on to explain ‘the multinationals are now as determined to snuff out the true spirit of free enterprise as they are to control the actions of governments. They are as protectionist in their instincts as an isolationist country and as fierce in defence of their power as a totalitarian regime.’

Stephen Barclay MP – Secretary of State for Exiting the European Union

There is much talk of how ‘business does not like uncertainty’. But only a short reflection gives the lie to this truism, some business dislikes uncertainty, but much of business thrives on uncertainty. The entire realm of trading, in equities or commodities, in traded goods or currencies, depends on uncertainty, or turbulence as it’s better described. A static, unmoving market in oil, for example, is a dead market. Money is made by judging, or guessing, the future value of a commodity. If nothing moves, and no values change, there can be little profit to be made on trading. A turbulent market, a market with plenty of turbulence, is a profitable market. And this does not just apply to those companies who are described as ‘traders’ based in the likes of Canary Wharf, but also to the ‘big businesses’ such as Amazon, BP, Siemens and others. In 2015, BP had the worst financial results in its century long history, it’s value was effectively rescued by the soaring profitability of its trading arm, BP Integrated Supply & Trading. The head of that division of the corporation, Dr Brian Gilvray, is now Chief Financial Officer of the whole of BP.

From the leaked transcript it is clear the ‘top brass’ used the call to get a better understanding of how the Chancellor saw the coming weeks and months. For such intelligence will assist BP, Amazon et al to utilise and navigate the unfolding turbulence. Invariably this is reported as being in order to avoid losses, but is also invaluable in order to generate profits.

What then does the government want in return from assisting private corporations, from this rush to a conference call within minutes of the vote? Most likely it’s after reassurances on how the likes of Amazon, Tescos, BP and the British Retail Consortium will help maintain the free flow of goods within the UK amidst the growing anxiety over a No Deal export/ import mayhem

Not without reason the government’s greatest fear is of a breakdown of the distribution systems, of panic buying in the supermarkets, queues at the petrol stations and social unrest. There are good grounds for their fear. The memory of Whitehall is scarred by such events in the past.

The Winter of Discontent – 1978/79

The famed ‘Winter of Discontent’ that contributed so strongly to the rise of Mrs Thatcher in 1979, is remembered for the tales of bodies lying unburied in the morgues and piles of rubbish in the streets. But the disruption of two months began in December 1978 with an overtime ban by BP tanker drivers who were determined to defend the value of their wages in the midst of rising inflation. They struck, petrol did not reach the forecourts, queues jammed the streets, and Callaghan’s Labour government teetered on the brink of declaring a National Emergency and calling in the Army.

Just over twenty years later a similar crisis hit Blair’s Labour government in September 2000. Lorry drivers, protesting the rising cost of fuel that was destroying their livelihoods, blockaded the UK refineries such as Coryton and Stanlow and distribution hubs at Buncefield and Trafford Park. Within hours the supermarkets were feeling the pinch, there was panic buying and rumours of the cash tills running empty. Blair reacted with unprecedented urgency, demanding that the oil companies meet in Downing Street and help get the fuel flowing again. Executives from BP and Shell duly attended, but their slow response to the government’s demands illustrated their power and gave them a key tool in their battle to extract an improvement in the UK North Sea tax regime. The chief negotiator on the oil companies’ side was John Manzoni – then a senior executive at BP Refining & Marketing, now Chief Executive of the Civil Service, perhaps the most senior man in Whitehall. How the poachers turn gamekeepers.

John Manzoni – currently Permanent Secretary to the Cabinet Office – former executive in BP

So the government knows well what a distribution breakdown looks like, and the ‘top brass’ know Westminster’s anxiety. They can smell their fear. Wittingly or unwittingly, the likes of Amazon, Tesco and BP can exploit that fear – after all the main function of these companies is to generate return on capital, and only secondarily to provide a public service to UK citizens that ensures there are avocados on the shelves and copies of cookbooks and DVDs delivered to homes.

At the centre of the political storm are conversations between the government and private corporations over the prospects of the coming months. They are hugely influential in determining the course of Britain at this time. Yet they are hidden from public view and we the citizens are unable to hear the dialogue that takes place in those rare meetings we are granted a glimpse of. This is the silence at the heart of the storm.


Thanks to Jo Ram


This blog builds on the back of the research being undertaken for the forthcoming ‘Crude Britannia – How Big Oil shaped a nation’s past and future’ by James Marriott and Terry Macalister. Due out in 2020.



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