The Old Lady at sea
The Bank of England once owned a succession of yachts, which each went by the name of Ingotism, an insider’s reference to its old telex address and to the bullion stored deep in the sub-basements of the Threadneedle Street offices. This is the story of how Ingotism was sunk – in a manner of speaking – and of how I got a good share of the blame from the Bank’s sailing club.
From today’s perspective, many are likely to wonder what on earth the central bank of the United Kingdom was doing owning a yacht in the first place: a government organisation in the public eye, funded by taxpayers, charged with overseeing the economy. The idea of buying a yacht for the staff would be laughed out of Court in these austere and financially puritanical times (and by that I mean the Court of the Bank of England, which is the antique name still used by the governing body).
It wasn’t always so. One of the commonest defences of spending other peoples’ money on sailing is that it is character and team building. For quite a few decades, company yachts and sailing clubs had been regarded as a good thing, so it was not just the Bank of England. The biggest commercial banks, the armed services, even the civil service, used this justification to maintain yachts at shareholder or public expense for the benefit of their staff.
From the 1950s onwards much charitable money was also raised to take young men to sea, which led to the foundation of the Ocean Youth Club and the London Sailing Project: get them out out on the ocean, and they would learn the value of working together as teams; take youngsters off the streets and put them on a boat, and they would stay on the straight and narrow; encourage your future managers to go sailing and they would come back reinvigorated by a life on the ocean wave and pull together as a crew (or any other mix of overworked naval and rowing metaphors).
By the late 1990s this justification was no longer plausible for commercial and taxpayer-funded organisations. All the major banks had closed their sailing clubs or spun them off into independent organisations financed by the staff from their own pockets. The banks were now conscious that shareholders would not see a great deal of value in owning a staff yacht. Company yachts were on the way out.
This did not mean that the notion of sailing as good for character and team building disappeared; rather, it reinvented itself, with sailing schools and charter companies selling team building weekends to corporate clients. The yachts themselves were off the company books, and the smart wheeze was that the cost of sailing could be lost somewhere in the training budget.
By the turn of the century, the Bank of England stood out like a sore thumb by continuing to finance a substantial racing yacht. Britannia was on the banknotes and ruled the waves. Why shouldn’t the bank’s staff be sailing on them as well, in a company yacht?
This was a perplexing matter for me when I arrived as Secretary of the Bank in early 1997. Inside the Bank, the yacht did not seem to be regarded as in any way unusual. It was just one of the many benefits the Bank, an excellent employer, organised for its staff. For an outsider, it was a very curious thing to find listed as a central bank asset. It was even odder to find that, as far as the boat went, the main public relations preoccupation was with how to handle the news if Ingotism sank or otherwise got into trouble during its summer ocean racing season.
As a sailor, my loyalties were torn: part of my job at the Bank was to protect the organisation’s reputation, so I was from the beginning uneasy about ownership of a yacht, because of the rather simpler issue of public servants having fun at the taxpayer’s expense. If the arrangement ever came to be scrutinised seriously by the press or parliament, the public and political mood was not going to be sympathetic to the idea of a yacht for the use of the central bank’s staff and governors.
The Governor, the late Eddie (Lord) George, rarely went on the water, cruising gently with a few staff and friends a couple of weekends a year. But he was a great enthusiast for sailing. He encouraged the Bank club, served as its president, attended and spoke at its functions and gave it all the support it asked for.
In 1999, the ask was a big one: the club wanted a new boat, because the old one was in need of a major refit. The request for £250,000 of capital spending on a yacht (the eventual total was £300,000) came not long after the Labour government gave the Bank independence in setting interest rates. We were regarded at the time with deep suspicion by the press and by politicians, who were still trying to get their minds round the idea that unelected officials had taken charge of steering the economy. A debate about whether those unelected officials should also be steering a boat would be an unwelcome diversion.
With the finance director, I lobbied hard against the proposal. My main argument was that, while we might get away with it during good times, once the Bank came under sustained attack for any reason, especially for its management of the economy, ownership of a yacht at taxpayers’ expense would be used as a weapon against it. For most people, £300,000 is an awful lot of money. But Eddie George backed the club. How could I endanger his staff by expecting them to do the next Fastnet race in an old and tired boat? I lost the argument, of course.
The new investment was not publicised, so it was not picked up by the press or by the parliamentary select committee that oversaw the Bank; the most plausible reason we got away with it for so long was that we were increasingly liked by the public. The tough times, when the yacht would have been a liability – in the sense that it could be used to attack us us – were postponed.
Five years went by, and a new Governor, Mervyn (now Lord) King, was in place. We had all but forgotten about the boat when, out of the blue, a request came from the Bank sailing club for yet another replacement yacht, on the grounds that the previous one had been heavily used and needed a very expensive refit to get it back to scratch.
The club had badly misjudged the situation. Oliver asking for more had nothing on the reaction at the top. My advice was strongly against buying a new one, for the same reasons as before. The Governor did not have to be persuaded. The only question the club had raised by asking again for a new boat was how to get rid of the old one discreetly, because we had been reminded that it existed. The Governor ordered the yacht to be put on the market.
Some months later, the Bank had a call from the Mail on Sunday. How did we justify owning this expensive luxury yacht funded by the taxpayer, and how often did the bosses sail on it? The call had been prompted by a written question in the Commons by Mark Hoban, a conservative Hampshire MP with a constituency near where the boat was kept. His political agenda quickly became clear from the wording of the question, because as well as probing the cost of running the yacht he also asked asked whether it had been used by the Treasury in the previous two years.
We had an hour or two of ‘In The Thick of It’ panic from the Treasury as we were ordered to search the archives and interrogate the sailing club on whether any Treasury person had set foot on the boat in that period. Gordon Brown relished his reputation as the no-nonsense Chancellor who refused to wear black tie at City dinners, so his spinners found it all too easy to imagine the fun some newspapers would have had mocking him, if Treasury officials had been caught using the Bank’s “luxury” yacht. I asked a press officer to ring back to say said that the Governor had decided six months before to sell the yacht, and we would get back to them with the details.
However, we were then surprised to find (we should have checked earlier) that the club had “misinterpreted” the Governor’s March decision, taking his message to mean the yacht should be put on the market when they had finished their season’s sailing. Ingotism was still very visible on the Hamble. Between mid-morning, when the call from the Mail on Sunday came in, and mid-afternoon, when one of the press officers rang back, we got the boat priced and publicly on the website of a major broker, so we were able to confirm that it was indeed on the market. This took the wind out of the Mail on Sunday’s sails, as it were. The paper wrote matter of factly in an inside page story that “The Bank of England is selling its ultimate taxpayer-funded staff perk – a corporate yacht.” (See this link to Mail on Sunday story).
Nobody could find any record to show Treasury people had been on the boat in the previous two years, so Ed Balls, then one of the Treasury ministers (and in practice also Gordon Brown’s spinner in chief), answered with a parliamentary statement saying so. If the MP had thought to ask about the previous 10 years, the answer would have been different.
The Bank was lucky that we sank the yacht in time. If it had still owned the yacht when the economic crisis and later the MPs’ expenses scandal broke, no fine distinctions would have been made between a Bank of England yacht paid for by the taxpayer and moat cleaning, duck houses and second home fiddles on MPs’ expenses.
Postscript: Meanwhile, I hear the sailing club carries on successfully as an independent group paying for its own charters. I’m told it is very popular with a new generation of Bank sailing enthusiasts, who are freed from the constraints of the Hamble and of racing, and can choose to charter wherever they want, including the Greek islands. Only the old guard, who were used to doing Fastnet races on the taxpayer, still grumble.