Financial journalists must learn what ordinary people think are big deals
Mega-sensations are not as important as reporting what’s happening to pensions
The credit crunch raises some profound questions about the nature of financial journalism; the types of story we write and how we write them. Over the past 30 years, there has been an expansion of financial coverage mirroring the liberalisation of markets. The credit crunch has itself created some unlikely new media stars: the BBC’s business editor, Robert Peston, has gained a cult following for his dark-haired good looks and drawling delivery as much as for his scoops on Northern Rock.
Too much of the reporting, though, has been caught up with the drama of the mega-bid, the mega-bonus, or the mega-bust. Too little attention has been paid to the broader picture.
Business journalism in its current form was born in the 1980s when Margaret Thatcher embarked on her projects to open up the City through the Big Bang. She conducted parallel missions to expand home ownership by breaking up the old building society cartel, to widen pension provision and to democratise share ownership by selling off nationalised industries. Her over-arching belief in freeing individuals from the “dead hand” of the state spawned countless personal finance and property supplements.
Plenty of financial journalism tapped either into aspiration – how the readers, too, could become wealthy – or resentment, as the first fat cat pay packages, such as Cedric Brown’s at British Gas, emerged in the 1990s. In tandem with the burgeoning business media, the City PR industry grew massively in the 1980s and 1990s, while older reporting beats such as industrial correspondent declined in importance along with the trades unions.
The dotcom boom of the early Noughties was a fresh seam of excitement for financial hacks. Some lost their critical faculties as they watched young entrepreneurs – including some of their own former colleagues – make millions. Reporters and editors were fixated by the big deals, preferably involving big personalities, such as Sir Philip Green’s unsuccessful attempt to take over Marks & Spencer. Deals were and are typically reported in terms of high drama; issues such as likely job losses, the effect on regional economies and the long-term strategic interests of the UK generally took a back seat.
Large swathes of the financial universe were under-reported. Blue-chip companies quoted on the stock market received a big share of attention, partly because they are obliged to reveal information about their profits and trading on a regular basis. As private equity took over household names such as Alliance Boots and the AA, it became apparent that disclosure in that area urgently needed to improve. The state of company pension funds, on which millions of people rely for a retirement income, was and is insufficiently scrutinised – again, partly because of a lack of timely information. Although companies do report information in their annual accounts, actuarial valuations are only carried out once every three years. This gap is worrying, especially in the case of companies such as British Airways, which has essentially become a big pension fund with a little airline on the side.
There are huge questions for financial writers to address in these chastened times, including how an average person, with limited assets and financial knowledge, can be expected to navigate through the hazards of a liberalised financial system. Beyond the credit crunch there is the threat of the pensions crisis and how – or even whether – tomorrow’s old people will ever be able to retire.
There are also important questions about companies’ responsibility towards communities and the planet, as opposed to just serving the narrow interests of their shareholders. Issues such as dealing with the deficits have become highly politicised and will be a huge factor in the general election; more than ever, well-informed and lucid financial journalism is necessary for democracy to function properly.
This comes as the old media model is under threat from the internet. Money is tight at conventional media groups, with little cash to spare for investigations and reporters under pressure to produce instant news coverage to feed websites, and even less time to stand back and analyse.
But the picture is not all gloom; the internet has opened up access to customers and employees and could democratise financial journalism, lessening the influence of the PR machine. But whatever form it takes, the need for top-quality, independent financial journalism has never been greater.
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