Leaders: Cable must take a long view on short-termism

SHORT-TERMISM is widely believed to be a serious problem inhibiting the performance of British companies and the development of the economy.

SHORT-TERMISM is widely believed to be a serious problem inhibiting the performance of British companies and the development of the economy.

Executives constantly complain that stock market analysts employed by banks and investment companies have a time horizon which regards the three months until the next quarterly report on output and earnings as long. The demand by the stock market to keep short-term earnings rising is believed to be a disincentive to long-term investment which may yield good returns in a year’s time, but will create 
performance-depressing costs in the short-term.

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Professor John Kay, the eminent economist commissioned by Business Secretary Vince Cable to examine trading in company shares, has now concluded that wider opinion is right. Innovative and sustainable long-term business performance is being undermined, and bad long-term decisions encouraged.

Some of what he argues has been obvious for a long time. For a decade or more, the City of London has been much less interested in companies’ organic growth from within and much keener on the apparently quick gain to be made by mergers and acquisitions. Getting back to the kind of environment where investors and the City become more interested in the long-term is, however, a lot easier to say than to do. Action involves trade-offs which may be unacceptable. Banks, for example, introduced quarterly reporting of results to show that they were much more transparent and to rebuild trust after the financial crisis.

Even the nakedly short-term effects caused by computerised trading of shares, taking advantage of slight movements up and down in different markets to earn a quick return, might be held as valuable. Pension funds, for example, are major traders in company equity, and if they were not seen to be earning the best return they could, their eventual pension-holders might get angry.

There is thus a debate to be had, but much of what Prof Kay has recommended needs to be implemented quickly. There is widespread agreement that executive bonus culture has got out of hand. Bonuses need to be reduced and aligned more clearly with long-term growth goals, including claw-backs when things go wrong.

The big picture which Prof Kay draws is that the City has become so far removed from the workings of the real economy that it has become a parasitic leech, engorging itself at the expense of everyone from shopfloor workers to executives in the boardrooms and shareholders. Mr Cable has a huge job to do in 
restoring a proper balance.

Siren sounds for ambulance service

Hospitals are supposed to make people well, not ill. But dangerous diseases which can make patients sicker than when they entered hospital for other treatments have become the curse of the modern health service. In trying to eradicate these infections, ambulances have somehow escaped attention.

Unfortunately, the Healthcare Environment Inspectorate has found an extremely troubling picture when it looked at the standards being applied across Scotland in our ambulance


Doctors and nurses have long been forbidden from wearing such things as jewellery, watches, and nail varnish as all these can be agents carrying infection into hospitals. But the inspectors found ambulance crews still wearing these things, creating an obvious risk of transmitting any infection they may be carrying on to patients.

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Some of this can be put down to poor communication within the infection control teams of the Scottish Ambulance Service and its crews, who, in one area, did not know that they were required to clean their vehicle properly rather than just wiping surfaces between patients. Rather more worryingly, the inspectors found staff using filthy mops to clean out their vehicles. This, surely, is a matter of common sense which should not require rulebook enforcement. It just should not


According to the crews, some of these breaches of hygiene occur because they are under pressure to transport as many patients as possible. Because this is an obvious main priority task, a tendency to skimp on cleaning might be the outcome, but it does not make it excusable. There is little point, and an obvious false economy, in getting lots of people to hospital quickly if many end up being infected with something worse in the ambulance.

Ambulance crews do a good and valuable job. The results of these unannounced inspections, which ought to be applied more widely within public services, should not be resented but welcomed for uncovering problems and leading to improvements.