Robert Peston is the BBC business editor who first uncovered the troubles at the newly nationalised Northern Rock. Now he has the UK's new breed of billionaires in his sights. He talks to Simon Round
Robert Peston is fascinated by people with money. He is an acknowledged expert on those who make huge amounts of it, what they do with it, how much tax they pay on it, and the social and economic effects that the new billionaire class has on the rest of us.
Indeed, such is the interest of the BBC's business editor in his subject that he has just published a book about it - Who Runs Britain: How the Super-Rich are Changing Our Lives.
"After graduating from Balliol [College], I did some postgraduate work in Brussels and then had no idea what I wanted to do. In those days [the 1980s], it was pretty easy to get a job in the City: you just had to sign your name at the bottom of the contract. I couldn't see what harm it would do me to learn something about a world I knew nothing about. So I became a stockbroker. I was selling shares to European banks and financial institutions. When I discovered I could do it - that I understood the system and how to sell shares - I had a bit of an ‘is that it?' moment."
So to avoid becoming bored, he left the City and turned to journalism. The decision probably cost him a fortune, but he feels his life as a journalist, formerly for the Financial Times and the Sunday Telegraph, and latterly at the BBC, has been far more rewarding.
"I genuinely regard journalism as a vocation," says Peston, whose his child-like enthusiasm and boyish looks make him appear much younger than his 47 years. "I think it's in my DNA. I don't have to grow up and get a real job now. I love journalism. It's fantastically exciting to be able to explain these incredibly important trends which have a bearing on millions and millions of people. I think that is phenomenal."
Another part of his make-up that drives him is his Jewishness: not in a religious sense, but certainly in a cultural one. "I'm incredibly proud of the intellectual traditions of Judaism. I loved the books of Philip Roth and Isaac Bashevis Singer when I was growing up."
Peston is one of the BBC's more idiosyncratic performers. He displays all the intense gestures, verbal tics and halting delivery which made his first few months as a broadcaster a challenge. Indeed, his habit of starting the same sentence several times and interspersing his speech with errs and umms initially gave rise to much criticism.
However, two years later, Peston is still in place, his reputation much enhanced by the story he broke last summer about the troubles at Northern Rock bank. Indeed, even his perceived lack of expertise as a broadcaster has added to his fame - he is now in the repertoire of impressionist Rory Bremner. Peston is flattered: "If you are a fan of Rory's, as I am, there is no higher accolade than being done by him. Let's say I recognise certain verbal mannerisms.
"Look, I absolutely take the view that I wasn't the world's most brilliant broadcaster to begin with. It took me a while to acquire those skills. I've still got lots to learn. When I look back at performances I gave two years ago and compare them to more recent ones, there's no doubt in my mind that I am miles better than I was. But then if I compare myself to some of the BBC's great broadcasters, it is equally clear that there's more to learn. Does it bother me? No - I get bored if I haven't got stuff to learn."
Peston, talking at the home in Muswell Hill, North London, he shares with his wife, writer and filmmaker Sian Busby, and 10-year old son Max, says he was slightly taken aback by the size of the challenge of his new post. "I discovered it was actually rather a big job."
This meant that the publication of Who Runs Britain? had to be delayed - something of a frustration for Peston. In his original draft, he predicted that the debt bubble would burst and that all of us would pay a high price. His prophecy was proved right, which meant a re-write. The revised version incorporated the problems at Northern Rock. "The book as it appears now is more of an analysis of the mess we got ourselves into. I got this scoop on Northern Rock - how it had gone cap-in-hand to the Bank of England. I do think the mess of Northern Rock is related to the worrying trends I describe in the book. In particular, how this debt bubble was created."
Peston is ambivalent about the contribution made by the new elite class of billionaires. On the one hand, he declares himself an enthusiast for the market economy. "It is important that people have incentives, that there is a market-based economy and that people are rewarded for creating wealth," he says.
However, in the past few years, the market has changed. "Something extraordinary is happening in the sheer sums of money that have been accumulated by a small group of individuals, particularly people who were involved in City-related financial businesses like hedge funds and private-equity firms. I wanted to look at this and examine the economic and social consequences of it."
The genesis of the rise of the super-rich came, Peston says, in the cheap money flooding the financial markets from 2000. "If you were the right kind of financier, you could borrow astonishing sums for very little in the way of interest or conditions imposed on you by lenders. As long as you had your timing right, you used this finance to buy assets, and, as the stockmarket rose, made a colossal fortune with no more fundamental skill or benefit to the economy than when you or I buy a house with a lot of debt and the price rises."
However, the availability of these deals meant that "clever financiers were getting dodgy loans, which they turned into supposedly high-quality bonds and sold to banks and pension funds. On August 9 last year, there was suddenly this great awakening in the market when they realised these things weren't quite the high-quality investment they thought."
On one level, Peston is sanguine about the existence of the new superrich class. But he also has concerns. One of his biggest is over tax.
"In the book I mention some research done by Grant Thornton accountants. They analysed the tax paid in the UK by some 50 billionaires who were based here. They worked out that they paid only a few million pounds between them. I calculated that this meant they were paying tax at a rate of 0.2 per cent, compared to middle-ranking policemen and school deputy heads who would pay 40 per cent. A few weeks later, the chap at the Grant Thornton got back to me to tell me he thought I had actually overstated what the billionaires pay."
Some of these non-doms (non-domiciled billionaires) have created businesses and do employ people in this country. Peston acknowledges there are gains to be made from them, but maintains they should be made to pay the same tax as everyone else.
He says: "The Treasury is genuinely frightened that if you tell these people they should pay tax in this country the valuable ones will go somewhere else. But these people reap the benefits of the money we spend on our roads, from the rule of law, from being in a strong stable democracy - all these things cost money, so there is no reason why they should not contribute like the rest of us." He adds that if the global economic slowdown continues and people start to lose their jobs and homes, then the resentment about those at the top might increase to the point where you could see "quite unpleasant social unrest".
Peston notes that the huge increase in wealth of those at the top (he estimates the top 0.1 per cent of the population now receives 4 per cent of all income generated) means that Britain now is a very different place from the country he grew up in. There was, he says, an expectation in the 1970s that the gap between rich and poor would continue to narrow.
The son of leading economist Maurice (now Lord) Peston, Robert grew up in a Labour household, and was sent to Highgate Wood Comprehensive in North London rather than a private school as his father was a keen supporter of this type of education. Says Peston: "My father was very committed to the principle that people should have the maximum opportunity to make the most of themselves."
Peston, who is no socialist, feels he benefited from the diversity of his school. "It was a proper comprehensive, a happy school. It was a period in my life when I wasn't in a middle-class ghetto. If there was a disadvantage, it was that I became a bit arrogant. I became so used to being the cleverest person in my year that I think I had a slightly exaggerated view of how brilliant I was."
At university he coasted, admitting that he "lost the work ethic for two or three years". There was also a minor rebellion. "I was a late-'70s mod revivalist and then in the '80s I grew my hair and became the only City correspondent with a ponytail. In retrospect, it would be fair to describe me as a loud-mouthed, vain, neo-Restoration twit - but if you are not going to misbehave when you are young, when will you misbehave?"
Perhaps the Rory Bremner impersonation came 20 years too late.
Who Runs Britain? (Hodder & Stoughton, £20)
From his book: Peston on the super-rich
"The forces at work are powerful and global. It is not just happening in the UK but all over the world, especially in the US, Russia, India and China. In a way it's wrong to look at this trend in terms of nationality in any sense. These inordinately wealthy people are British, or American or Russian in name but they are essentially stateless, living where the taxes are lowest and where the opportunities to increase their net worth are greatest. For a variety of reasons -technological, regulatory, economic - increasing amounts of wealth are sticking to individuals with special talents rather than being dispersed to the owners of public companies or being siphoned by the state in tax.
"That's true whether you are a footballer born in Madeira, like Cristiano Ronaldo, or an Indian steel magnate, like Lakshmi Mittal, or a British hedge-fund superstar whose father was a car mechanic, like Chris Huhn.
"Why is that? Well, capital was - until the meltdown in the money markets in the summer of 2007 - plentiful and cheap for those who could demonstrate they could make big profits in the way they deploy that capital. In the UK, for example, Philip Green was able to borrow £10bn from the world's biggest banks for his failed attempt to buy Marks &Spencer, with minimal negotiation and with few strings attached. What counted for the lenders was his track record of making fortunes from buying and selling other businesses."
From Who Runs Britain?
Snapshot: Robert Peston
Born: April 25, 1960
Family: Grew up in North London. Parents are economist Lord Maurice Peston and mother Helen. He is married to writer and filmmaker Sian Busby. He has a 22-year-old stepson, Simon, and a 10-year-old son, Max
Education: Attended Highgate Wood Comprehensive in North London and Balliol College, Oxford
Career: First job in journalism was with Investors Chronicle. In 1991 he moved to the Financial Times, where he was political editor, banking editor and head of its investigations unit. After a short spell at the Sunday Times, he became City editor and assistant editor on the Sunday Telegraph, before in 2006 joining the BBC as business editor
On his Jewish identity: "I have a very strong sense of being Jewish. All of my family are Jewish; some of them are religious, quite a lot aren't. My parents are atheists. I'm incredibly proud of the intellectual traditions of Judaism. It's a bit like supporting Arsenal - you take great pride in the achievement of Jews without feeling any great need to take part in a religious sense. I would say I am culturally Jewish."
