A New Start

FT: Figure of speech

But he always recognises JFK's primacy in both domains: "I never confused which of us was the elected leader and which was the assistant."

The president who appears in Sorensen's stories is rigorous, curious and aware of his own frailties - dissimilar in most respects, then, from the current incumbent. The world's opinion of America's leader was also strikingly different at that time. When a US emissary briefed French President Charles de Gaulle on the Soviet missile sites in Cuba in October 1962, de Gaulle brushed aside an offer to review the CIA's aerial photography. "No," he said, "the word of the President of the United States is good enough for me."

Counselor is a wise and handsomely written memoir which reveals the uncommon attributes of its author. Somehow Sorensen has dodged the pomposity which attaches to so many important men in their advanced years. He recognises his failures and limitations; he cites the charges levelled by his critics, to whom he is generous; he enumerates regrets which he might easily have concealed. He has even forgotten his Secret Service code name, which others display as a badge of honour.

According to this book, John Kennedy was "a good and decent man". My first thought was that this is too sentimental a judgment. But he must have been, to have attracted so fine an associate as Ted Sorensen.

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Figure of speech

By Michael Fullilove

Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

I once attended a talk given by President John F Kennedy's speechwriter, adviser and "intellectual blood bank", Ted Sorensen. He was asked who had written the most famous line in Kennedy's inaugural address, "Ask not what your country can do for you; ask what you can do for your country." Was it JFK's work, or his speechwriter's? Sorensen's answer was magnificent: "Ask not!"

The speechwriter's code of silence requires that a discreet veil be drawn over the drafting process. Adherence to this code is rare these days, however. Speechwriters routinely brief friends and journalists about their authorship of some golden phrase or other. Occasionally they even scrap publicly for credit.

Sorensen is different. For more than four decades, he minimised his role in the drafting of the speeches delivered on the New Frontier. Only now, in this new memoir, with the other parties dead and the archives open, does Sorensen pull back the veil - a little.

Counselor: A Life at the Edge of History throws new light on Sorensen's central role in both the speechwriting and policy processes in the Kennedy White House ("I was too busy ever [?] to smell the flowers in the White House Rose Garden," he notes). But he always recognises JFK's primacy in both domains: "I never confused which of us was the elected leader and which was the assistant."

The president who appears in Sorensen's stories is rigorous, curious and aware of his own frailties - dissimilar in most respects, then, from the current incumbent. The world's opinion of America's leader was also strikingly different at that time. When a US emissary briefed French President Charles de Gaulle on the Soviet missile sites in Cuba in October 1962, de Gaulle brushed aside an offer to review the CIA's aerial photography. "No," he said, "the word of the President of the United States is good enough for me."

Sorensen admits JFK's flaws: his faint-heartedness in ducking a 1954 vote to censure Senator Joe McCarthy, his "blind spot on Cuba" and his "deaf ear on China". And he acknowledges the president's philandering: "He should have known that ultimately the inevitable disclosure of his misconduct could diminish the moral force and credibility of all the good he was doing," Sorensen writes. On the other hand, Sorensen refuses to provide succour to Kennedy's enemies, stating, "I know of no occasion where his private life interfered with the fulfillment of his public duties."

In other words, Sorensen keeps faith with Kennedy. Though a conscientious obj-ector in his youth, Sorensen is a good soldier. Here, too, there is a stark contemporary comparison in the former White House Press Secretary Scott McClellan. McClellan would not, I suspect, have even become an intern in Sorensen's day. But the real difference between the two men lies in the measure of their loyalty. Within two years of leaving the Bush administration, McClellan has a book in the stores dumping on the man who made him. Nearly half a century after JFK's assassination, on the other hand, Sorensen still feels what he calls "the obligations of loyalty, which for me outweigh all pressures to cast prudence, privacy, discretion, and the secrets of others aside".

Counselor is a wise and handsomely written memoir which reveals the uncommon attributes of its author. Somehow Sorensen has dodged the pomposity which attaches to so many important men in their advanced years. He recognises his failures and limitations; he cites the charges levelled by his critics, to whom he is generous; he enumerates regrets which he might easily have concealed. He has even forgotten his Secret Service code name, which others display as a badge of honour.

According to this book, John Kennedy was "a good and decent man". My first thought was that this is too sentimental a judgment. But he must have been, to have attracted so fine an associate as Ted Sorensen.

Michael Fullilove is director of the global issues program at the Lowy Institute in Sydney, Australia and a visiting fellow at the Brookings Institution in Washington, DC.

Copyright The Financial Times Limited 2008

FT: Dressing-room consultations keep Dutch team happy

Dressing-room consultations keep Dutch team happy

By Simon Kuper

Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

Edward, my best friend from primary school, came to Bern to see Holland play Romania. I'm not Dutch but I grew up in a small Dutch town, and 30 years ago Edward and I used to phone each other at half-time during Holland's games for breathless analysis. On Tuesday we sat on the pavement in the Swiss sun, had a beer and swapped news about our mothers. Then Edward said: "Simon, all this is unprecedented."

It's true. These 30 years the Netherlands has generally been the best small football country on earth, but we've never had a fortnight like this. So far at Euro 2008 we have beaten the world champions Italy 3-0 and the runners-up France 4-1, while our reserves have tossed aside Romania 2-0. Whatever happens in tonight's quarter-final against Russia, this feels miraculous.

To try to understand, I've been reading what foreign journalists say about Holland. There is one recurring story: the Dutch always destroy themselves through infighting, but this time they haven't yet. This shoddy half-truth misses the point about Dutch football. Holland are good precisely because our players quarrel about football. And that is particularly true now, because the genesis of the current side was an argument in a hotel room.

The Dutch have quarrelled about the game since about 1970, when Johan Cruyff emerged as the father of Dutch football. He said: "Football is a game you play with your head." Every Dutchman who ever placed a pass - and the country usually has the world's highest density of registered footballers - grew up in this tradition. When I was 12 and playing in a kids' team, half of us would go to the snack bar after matches and debate what had gone wrong over frites .

The English don't have that tradition. Mark Burke had played for various English clubs when in 1995 he joined the Dutch side Fortuna Sittard. "In England if the manager said it, you just did it," Burke told me. "When I went to Fortuna I noticed how much the players talked." During games, team-mates would call to him: "One metre, one metre left!" Training sessions would be interrupted by 15-minute seminars on the relative positioning of the centre-backs. Burke says: "I really started to understand the shape of the field, horizontally and vertically. In England the only time I had training sessions like that was when I went on coaching courses."

Of course the Dutch debates have downsides. Cruyff, who favoured what he called the " conflictmodel " of working relations, quarrelled with the great goalkeeper Jan van Beveren before the 1974 World Cup. Van Beveren didn't go to that World Cup, or the one in 1978. Holland lost both in the final, partly due to goalkeeping errors. The conflictmodel also destroyed Holland at the 1990 World Cup and at Euro 96. This summer, the midfielders Mark van Bommel and Clarence Seedorf have stayed home rather than work with Holland's manager Marco van Basten.

And yet the quarrels over football are now helping Holland. In recent years it had become clear that the traditional Dutch formation with two wingers no longer worked. Last autumn Van Basten asked his captain, Edwin van der Sar, to consult the other players about what to do. Van der Sar called a "group of seven" senior players to his hotel room. They proposed playing with just one forward and five midfielders. Van Basten acquiesced.

It was exactly the sort of consultation that management books would recommend. It was done without conflict, because Dutch football, after passing from an amateur era through the pop-star 1970s, is now as corporate as football everywhere else. And the employees liked being consulted. Before Euro 2008, two friends of mine organised a football quiz for the Dutch squad. Wesley Sneijder won, with cheating. But what struck my friends was how happy a camp it was. When Van der Sar raised his hand to protest that a question was wrong, the entire squad in unison began chanting, "Losers!" (in English) at the quizmasters.

Here in Switzerland the Dutch are even happier. The new formation has worked beautifully. With two defensive midfielders behind them, the creative midfielders are free to create. Nobody is glued to the touchline anymore like a parody of a 1970s winger. Instead of stringing together endless passes, the Dutch now wait until the opposition lose the ball and then break instantly à la Arsenal.

The Dutch could absorb a new system only because they think. Each player is a playmaker, making autonomous decisions on the field. When leading 2-0 against the world champions, left-back Giovanni van Bronckhorst decided to gallop 80 metres forward and score with a header. Meanwhile, another player instantly took over his position, because everyone is thinking, and consulting on the field. When it goes quiet during games here, you hear the Dutch players calling out instructions.

Dutch football is a fragile plant, and we could easily go home tonight. But if Edward and I are lucky enough to have another beer on some foreign pavement at the World Cup 30 years from now, we might conclude that this week was the peak.

Simonkuper-ft@hotmail.com

Copyright The Financial Times Limited 2008

FT: A Class Apart

A Class Apart

By Rob Blackhurs

Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

Cover Story

Children in Britain are not legally obliged to go to school. And as parents' discontent with the state system grows and fees for private places rocket, more and more families are seeking a third way - home education

Photographs by Charlie Bibby

By Rob Blackhurst

It's 11 o'clock on tuesday morning. Throughout britain, school bells are ringing and corridors are pressed with shrieking teenagers on their way from geography to double science. Excuses are being formulated for late homework; gossip is being shared. But elsewhere, an alternative vision of contemporary British education can be seen. Across kitchen tables and on suburban sofas, in museums and parks, a growing tribe of home-schooled children is learning without whiteboards, timetables or uniforms.

At a rugby club in Bromley, London commuter-belt country, nine home-educating parents are giving their charges a day's "socialisation". Amid a wall of high-pitched noise, some kindergarten-age children are mixing paints and playing with glitter. Two 11-year-olds are idly flicking a table-football machine, and two boys - friends 30 seconds ago - are fighting over whose turn it is to play with a toy castle.

Alex, a pale, undersized seven-year-old with dyspraxia and autism, has upset Sam, 10, who has Asperger's syndrome - which means he too can find it hard to read social signals. "It's not fair. Go away, go away," shouts Sam. Sam's father runs over to rule, Solomon-like, on their contested claims. Just as the dispute is resolved, one girl breathlessly reports that she has seen another child climbing on the roof.

Elsewhere I speak to a self-possessed 10-year-old girl whose mother has taken her out of school because she felt she was too advanced for the work. She reels off reading lists of children's classics: "I'm reading the Just Williams. I'll read them all in two days. I finished The Hobbit. I'm now on book five of The Chronicles of Narnia." Though she's precocious, she speaks unselfconsciously. As we're approaching Easter, I ask her if she takes school holidays. "We don't really need to. We learn wherever we go. Say we went to the south of France - we'd learn stuff about France on holiday."

Home schooling has been on an upward trend in Britain over the past 10 years. Since there is no legal duty on parents to inform local education authorities that they are home schooling their children, the government has no idea how many children are in this position. Only if a child starts school and is then withdrawn is there an official record. But this misses out the thousands of children who never start school in the first place.

Mike Fortune-Wood, a pro-home-education researcher, estimates that about 50,000 children are presently being schooled at home - but says that number is growing fast: "The rise I got was 17 per cent annually. If you kept on at this rate, the figures start to get quite scary for schools by around 2020." Still, Britain is decades behind the US, where an estimated 1.2 million children are home educated, largely for religious reasons.

Unlike in Germany, where home schooling is banned (see opposite), there has never been a legal obligation for British parents to send their children to school. The only demand is that every child receives an "efficient full-time education suitable to his age, ability and aptitude... either by regular attendance at school or otherwise".

But within this definition parents have generous latitude. They don't have to follow the national curriculum, enter their children for exams, observe school hours, give formal lessons, or mark work. Local authority inspectors can ask annually for written information on how a child is being educated, but they have no right to meet the child or visit the home. Should a local authority decide a child is not receiving a "suitable" education it does have powers to send him or her back to school. In practice, though, courts rarely rule in the authority's favour.

Sam's mother, Ann Newstead, is a spokesperson for the Education Otherwise support group for the Kent area. She withdrew her son from school in July 2005 because he was being badly bullied: "The differences between him and his classmates got more obvious. At school he couldn't have a meltdown like that. You can't start shouting and screaming in class." Ann and her husband Roarke gave Sam's elder brother Josh, 12, a choice about whether to stay in school or leave. Initially he opted to stay: "He said, 'I've got friends at school, we're doing a really interesting project at the moment'. He carried on for one day. That night I went into his room. He was really tearful and said: 'I don't want to go back tomorrow'." Sam's younger brother, Will, six, is also educated at home.

Do the children have any regrets? "We live opposite school and they hear the kids playing. I think they miss that. But they don't remember that it's the every-single-day aspect of it that did their head in." Children on the verge of adolescence, however, can be stifled by a home education. "Because they're closer to us, letting them out of your sight can be a bit harder," says Newstead. "If [my son] was going on a school bus every day, he would be totally independent. Now he's not."

In the us, 75 per cent of home-schooling families are practising christians - and a third of that number cite religion as their main reason for choosing home education. In secular Britain, only 8 per cent home-educate for reasons of faith. But it's a contributory factor for many others who feel state schools have become too permissive.

Modupe has come to Britain from west Africa after completing a masters degree at an Ivy League university. She's teaching her son, Theo, at home, with a curriculum partly based on the teachings of the 19th-century home-education pioneer Charlotte Mason. Mason warned of the dangers of insulting children's intelligence by giving them "twaddle" to read, and Theo's reading list is furnished with such doughty classics as The Pilgrim's Progress and H.E. Marshall's Our Island Story (a volume of high Edwardian patriotism that has long since disappeared from British classrooms but is still taught in traditional African schools). "The modern stuff doesn't make you think," says Modupe. "It almost seems to be for entertainment. It's important for Theo to be aware of the history of this country."

Theo was attending a private school in the south of England. His teacher - who seemed to be unmarried - fell pregnant. As a Christian, Modupe felt awkward having to answer a child's questions about why an unmarried woman would be having a baby. There were worrying hints of racism at the school, too: Modupe's son was the only boy in class not invited to a classmate's birthday party for three years in a row.

She also felt she was fighting low expectations from some staff. One teacher said: "It's really good that you are keeping [your son] busy so he doesn't get into trouble." "He hadn't even spoken to my son," says Modupe, "but he was really negative towards him." A sociable boy, Theo was initially upset at being removed from school: "At first he complained that I had ruined his life. But the socialisation they get from school is not the kind of socialisation we want."

Ronald Meighan, a former professor of education at Nottingham University, has been part of the home-education movement from the days when it was a besieged minority. In 1977 he knew of only 20 home-schooling families in Britain. "Home education started as an alternative lifestyle for people living in smallholdings," he says. "People who believed in a better and more self-sufficient society also believed in a more self-sufficient form of education. At the first meetings of Education Otherwise, I was the only one wearing a suit. But the message got round to doctors and solicitors and teachers that this could work for us. The Sound of Music - which shows a home-education family in operation - gave it a shot in the arm."

Still, it was a risky lifestyle choice. Before the early 1980s, parents who home-educated their children stood a good chance of seeing them taken into care. In the 1960s and 1970s, a generation of home-education martyrs fought the government in the courts - greatly restricting the powers of local education authorities. Now, official attitudes vary. Some local authorities provide teaching materials online for home-educators and allow them to take extra books out of the library. Others, though, have inspectors who are still deeply sceptical about the value of home education.

Meighan is a proselytiser for "purposive conversation" - the belief that in-depth discussion is the most effective way to teach children. He believes formal schooling is actively harmful: it removes children from the comfortable home environment in which their natural curiosity thrives and they learn best.

According to a survey of 297 home-schooling families by Mike Fortune-Wood, 62 per cent never use a timetable, the same percentage never consult the national curriculum, and 50 per cent disagree with the statement that a child should be able to read by the age of eight. Fortune-Wood, who home-educated four children, says: "I know of children who've started to pick up books at nine or 10, and there are no indications that they do any worse than others. One of our children didn't read until he was nine or 10 - and he's just completed an MA in creative writing."

A week later i join a home schooling trip to an educational farm amid the lush countryside of the south downs. On a windswept hill, to the bleating of Pygmy goats, I meet Janice, a former policewoman turned homeopath who educates her 11-year-old son Jesse at home. Jesse is a gifted footballer - and for most of the trip he is a hurtling streak on the horizon. "I've never been to school but it doesn't sound very good," he tells me during a two-minute hiatus before tackling the adventure playground. "This boy at a school that I know had his head flushed down the toilet."

Janice home-educates because, "Like most boys, Jesse has an enormous amount of testosterone. And the school system does not really allow for that. Jesse does not absorb information if you go over 20 minutes. He needs to run around the garden and be manic for a minute and then come back." Jesse is following the "Unschooling" philosophy: "We're not following the national curriculum. His writing is coming along really well, but it is at his pace. He wouldn't be at the age level that the schools are at. He might be in a specialist reading class because we did not start reading with him until he was seven-and-a-half."

Jesse is a "practical learner" so he learns "experientially" - going on outings, visiting museums, taking photos and creating scrapbooks. He has daily morning sessions of maths and English and a weekly session with a private tutor. But it's Jesse's gentle self-assuredness that his mother sees as the main achievement of home schooling: "He's so confident. He gave a talk about football training to a group of parents. He spoke with such authority. When he's training he always involves the younger kids."

So why have the numbers of the home-educated grown so quickly over the past five years? In the UK, home-educating religious and ethnic minorities - Muslims, Romany travellers, Presbyterians, pagans - have grown in number, but they have not been the recruiting sergeant for home education they are in the US. Bigger factors have been the increasing number of children diagnosed with special needs, parents fleeing the British state sector's testing and targets, the ready availability of teaching materials on the internet and the doubling of private school fees in a decade.

But a survey of 34 local authorities showed that by far the most significant factor was bullying: 44 per cent of parents cite it as the reason they withdrew their children from school. In this less deferential age, parents are less willing to trust teachers - and when faced with a problem such as bullying, they sort it out themselves.

In spite of its somewhat anarchic origins, home-schooling is more than anything a product of consumer power. Take the Norton family. They live on a suburban close near Rochester, where Rob works from home for British Telecom and is a squadron quartermaster sergeant in the Territorial Army, while Karen works evening shifts at the local retail park. The couple deregistered their 11-year-old son, Andrew, from the school roll last Easter after an unhappy move from junior school to a comprehensive with 2,000 students. It was, says Rob, "educational factory farming". There was "lots of disruption, lots of behavioural problems. The place is just too big. We logged everything that happened over two terms on two sheets of A4. We are looking at assault, stealing and criminal damage."

Andrew, a serious-minded boy, gives a litany of complaints - from scrawls of "boffin" across his exercise book to a lesson in which one pupil hit another over the head with a chair. "We hated taking him to school," says Karen. "He didn't want to cry but you could see him welling up. I was concerned that I was going to see a child that wanted to start self-harming." The teachers "tried their hardest" to sort out the issues. But in the end, according to Rob, "they didn't get the support they needed. They've got the crest, they've got the uniform, they've got the procedures, but they haven't got the willingness at a higher level to deal with the problems."

After ruling out private school on the grounds of cost, they signed Andrew up to InterHigh - an internet-based school that runs virtual classes each weekday morning in real time. Teachers scattered across Britain speak to pupils at home via a Skype-type headset and microphone. Inside his bedroom - all Star Wars posters, Lego space stations and Airfix models of helicopters - Andrew shows me how he files his homework by e-mail and his teachers upload their class notes to a central database. There is no disruption - any pupil who misbehaves in cyberspace is logged out by the teacher.

For a few hours in the afternoon, Andrew does his homework on his own and bounces on a trampoline in the garden in lieu of PE lessons. Rob's meticulous accounting gives a taste of the new home-educating consumer: "We worked out that the cost in petrol of taking Andrew to school - up and down the gears - is about £1,000 a year. It costs £2,000 for the internet course. So we've knocked half the cost off already."

The Nortons are home educating not because of any sweeping alternative vision of education. Theirs is a pragmatic decision, based on a belief that state education is lagging behind expectations: "We as a family are so happy," says Karen. "Andrew has opened up his world a lot more."

The most common fear is that the home-educated miss out socially. American studies have yet to prove this: observations of home-schooled children at play show they have fewer problems with social interaction than state-educated children - and are involved in a wider variety of activities outside the home. It is true that home-educated children seem well-balanced and thoughtful. But isn't there a contradiction between an educational philosophy that stresses a child's independence and the fact that they remain much more cloistered and dependent on their parents?

Home education can produce the ultimate "helicopter parents" - constantly hovering over their children, protecting them from the failures that might be thought essential rites of passage. And oughtn't we be concerned that so many parents, particularly those under pressure with children with special needs, are finding state education so poor they take the drastic step - and make the financial sacrifice - of keeping their child at home?

More fundamentally, the growth of home education is a challenge to the age-old concept of universal education. It is bizarre that while the state insists on a detailed, legally enforced national curriculum for every pupil at school - whether at Eton College or an inner-city comprehensive - those schooled at home are able to opt out of these obligations entirely. The teachers' union Voice - which represents 34,000 educational professionals - is campaigning for greater inspection rights for local authorities.

As general secretary, Philip Parkin, says: "It is absolutely unbelievable that we don't know how many home-educated children there are and we don't know who is educating them. Society has got to get a grip on this."

Some names have been changed.

The Home School Refugee

Jonathan Skeet, who fled his adopted country of Germany for the Isle of Wight when he was ordered to send his children to school or have his bank account frozen, tells Serge Debrebant why a home education is best

I don't understand why Germany is opposed to home education. I only know the authorities would have taken our children away if we hadn't moved to Britain. I'm from Hampshire, but in 1989 I moved to Germany, where I met and married a German woman. We started a family in a town in North Rhine-Westphalia.

Although Germany is the only industrialised country in which home education is illegal, we got to know some parents who were promoting it. My wife and I liked the idea. Our first child, Rahel, was so eager to learn that we decided to give her lessons. Our reluctance to send our kids to school grew when we saw how well it worked.

In 2002, our troubles started. We received a letter telling us to register Rahel at the local school. We wrote back to say we preferred to home-educate her. Although I had heard some German home-schooling families had lost custody of their children, I wanted to be open about it. I was hoping to reach a compromise.

At first, the authorities didn't react, but this changed two years later, when our son Immanuel had to be registered at school. This time we received a flurry of letters. The local school inspector called us to her office, and at the end of the conversation, she warned me: "Mr Skeet, you don't know what's coming to you."

A few weeks later, my bank account was frozen. The state had fined us more than *6,000, and half of the money was removed from my bank account. Bailiffs turned up at our apartment trying to get the other half. My wife told me later that Rahel had been terrified - and tried to defend our piano [from being taken]. But the bailiffs just wanted our car keys.

I was working at a home for the elderly at the time and was just about to give out lunch when I looked out the window and saw men walking around my car. Then they had it towed away. We had to pay the other half of the fine to get it back.

We kept up the fight, but we set a one-year time limit. After that, we were worried it would start to damage the family. Soon, we were being threatened with other fines. The school minister for North Rhine-Westphalia wrote to us to tell us that she supported the local authorities.

In summer 2006 - four years after the first letter from the authorities - we visited my parents in Hampshire and also went to the Isle of Wight, where about 80 home-schooling families live. It was a swift decision. Within three months I had quit my job and given notice on our flat.

In our last weeks in Germany, the child welfare office invited us in to talk. We knew it was their first step towards taking our children away. But it didn't bother us any more. We were off to the Isle of Wight.

17% - The estimated annual increase in children who are home-schooled in the UK (presently 50,000)

Source: Mike Fortune-Wood

10% - The proportion of home-educating families in the UK who use textbooks on a frequent basis

source: mike fortune-wood

1.1 million - The lowest estimate of the number of children being home-schooled in the US. (Seventeen US presidents were educated at home.)

source: fraser institute

42% - The proportion of home-educating families in the UK that earn less than the national average wage. Despite perceptions that learning at home is a middle class phenomenon, 17 per cent of families live on incomes of under £10,000 per year

source: mike fortune-wood

Some famous names who were schooled at home...

John Stuart Mill, Patrick Moore, William Blake, Yehudi Menuhin, Bertrand Russell, Her Majesty the Queen...

Copyright The Financial Times Limited 2008

FT: West rethinks strategic threats

West rethinks strategic threats

By Carola Hoyos and Javier Blas

Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

For decades Washington has seen oil as an issue of national security, worrying that a rogue Middle East country would withhold America's lifeblood as Arab countries did during the 1973 oil embargo.

Now US and European politicians are linking oil - and record food prices - to a new international strategic threat: instability in developing countries.

During the past few weeks senior officials have quietly begun to shift their emphasis of the fuel and food crisis from viewing it as purely a humanitarian and social problem to a concern that governments could fall as hungry and fuel-deprived people take their anger to the streets.

Haiti's prime minister was sacked by the national assembly earlier this year following food protests, Pakistan told Saudi Arabia it could not pay its oil bill this month, and this week China joined a growing number of Asian nations taking the unpopular decision to slash costly fuel subsidies.

Josette Sheeran, executive director of the World Food Programme, has warned that riots in more than 30 countries were "stark reminders that food insecurity threatens not only the hungry but peace and stability itself".

She added that only seven meals separated civilisation from potential anarchy and that some of the world's "gold-standard, new, fledgling democracies" were under the most pressure.

Lee Hsien Loong, prime minister of Singapore, said at last month's opening of a security conference attended by Robert Gates, the US defence secretary, that the stresses from hunger and famine could result in social upheaval and civil strife.

"Between countries, competition for food supplies and displacement of people across borders could deepen tensions and provoke conflict and wars," Mr Lee said.

But it is only now that this thinking has transferred into foreign policy. The most visible signal of this move is tomorrow's oil summit in Jeddah, Saudi Arabia. For the first time 40 ministers and 20 oil executives will meet to discuss what is causing high oil prices and what can be done about them.

Saudi Arabia has realised that it could be blamed for political upheaval in developing nations. The issue is especially acute when it comes to Muslim countries, such as Pakistan, Malaysia, Morocco, Indonesia or Egypt, since Saudi Arabia regards itself as a leader in the Muslim world.

Saudi Arabia fears it could be made the scapegoat for economic woes even in the developed world. In the US, the kingdom's most important customer and ally, Riyadh worries that it will beblamed for deepening the economic crisis as the candidates vying for the White House look to deflect responsibility and win voters in November's presidential election.

The kingdom yesterday confirmed that it would increase its oil output by 200,000 barrels a day to about 9.7m b/d, the highest level in more than 25 years.

Adam Sieminski, of Deutsche Bank, said that with Saudi Arabia appearing to favour lower oil prices and backing that up by pumping more oil, relief to the crisis may be in sight. "With luck, oil prices can be capped below $140 a barrel," he said.

But limiting the oil price at $140 a barrel and halting the rise in food prices will be of little consolation to those who worry about the stability of developing countries.

*Venezuela went back on its decision to skip a meeting of energy producing and consuming countries in Saudi Arabia this weekend after the host country insisted it attend, Venezuela's oil minister said yesterday, Dow Jones reports from Caracas .

On Thursday, Rafael Ramirez had said Venezuela would not attend the meeting.

"In the end, we will go. In the end, Saudi Arabia asked us to go as [one of the] founders of Opec," Mr Ramirez said.

Copyright The Financial Times Limited 2008

Security fears over food and fuel crisis

By Carola Hoyos and Javier Blas in London

Published: June 20 2008 22:02 | Last updated: June 20 2008 22:02

Western countries have upgraded the food and fuel crisis into a national security concern as they fear record high energy and agriculture commodity costs are destabilising key developing regions of the world.

The concerns come as the world suffers for the first time since 1973 from the confluence of record oil and food prices. Corn, soyabean and meat prices jumped this week to all-time highs, while oil prices hit a record of almost $140 a barrel.

EDITOR’S CHOICE

In depth: Oil - Sep-04

Lex: Chinese fuel demand - Jun-20

Editorial Comment: Cut oil subsidies - Jun-20

West rethinks strategic threats - Jun-20

In depth: food prices - Oct-08

What to watch for at Jeddah’s oil summt - Jun-20

This shift toward a national security concern will become apparent at Sunday’s oil meeting in Jeddah, Saudi Arabia, where ministers are expected to warn that developing countries are cracking under the burden of record oil and food costs.

Saudi Arabia, the world’s largest oil producer and the only country able to raise output, has recognised the danger after developing countries, including US-ally Pakistan, pleaded for a reprieve from oil payments.

Morocco was forced last month to ask for an $800m loan from Saudi Arabia and United Arab Emirates to cushion the impact of oil and cereal imports.

One Washington official said: “What we have been watching is behaviour [that indicates] China, India, Indonesia, Vietnam [and] Malaysia simply can’t bare the burden on the central budget and that the medium to long-term confluence of oil and food prices is just too much.” He added: “It is leading to a real security issue where the streets are talking to the president.”

Martin Bartenstein, Austria’s economics minister who is travelling to Jeddah, said on Friday that the risk of social tension caused by high oil prices driving inflation to double digits will be a main tenet of his argument.

“It is very high on our agenda,” said a senior diplomat from a larger European nation.

Senior active and former US, European and United Nations officials said they had met US White House staff on the issue for briefings having been prompted in part by the unrest that toppled Haiti’s government and more recently after several Asian countries risked popular anger by cutting fuel subsidies.

Additional reporting by Daniel Dombey in Washington

Copyright The Financial Times Limited 2008

FT: Historian who debunked the second world war's myths

Historian who debunked the second world war's myths

By Sue Cameron

Published: June 21 2008 03:00 | Last updated: June 21 2008 03:00

It was a damp basement in 1960s London, piled with closely written sheets of thin, crumbling wartime paper. Most people would have found it a forlorn place. Yet for the young Angus Calder, wandering round the room randomly picking out documents, it was an Aladdin's cave of history. Here was a first-hand account of the London blitz. There were descriptions of what people really felt about rationing, about evacuees, about "Uncle Joe" Stalin.

That dank room contained the hundreds of reports written during the second world war by ordinary men and women for the Mass Observation research group. They had been lying neglected for years. Calder, who has died at 66, was to use them as the basis for his groundbreaking books The People's War: Britain 1939-1945 , published in 1969, and later, in 1991, The Myth of the Blitz . His work challenged the cherished view of a plucky Britain that came smiling through the blitz with people of all classes united by humour, tolerance and the volunteer spirit.

True, Calder found fortitude and courage at all levels of society. Yet as he showed in his vividly written and meticulously researched books, wartime Britain also saw industrial unrest, anti-Semitism, rising crime - the blackout was ideal for thieving - and a growing divide between rich and poor. "The forces of wealth, bureaucracy and privilege," wrote Calder, who was a passionate socialist, "survived with little inconvenience." He details, for example, the outrage of middle-class households when asked to take in vermin-infested evacuees from the slums. One rural council even turned away evacuees on the grounds that large houses could not be used because "the servant problem is acute and it would be unfair to billet children on them".

As well as being a historian, Calder was a poet, critic, essayist and teacher who made a big contribution to literature. Yet The People's War , written when he was still in his 20s, was the first to give the views of ordinary people and the first to question established myths about the war. It influenced people from Sir David Hare, the playwright, to Gordon Brown, the prime minister, who knew Calder when both were historians and Labour party supporters in Edinburgh.

"Angus was an inspirational writer and teacher, an intellectual who engaged with and enriched public life," said Mr Brown this week. "He was a challenger of orthodoxies and a wonderful stimulator of ideas. His People's War broke new ground and influenced countless students of history. But his writing covered a huge range of other topics - from culture and nationalism to the intellectual currents within the British empire. He was a towering figure in the Scottish literary world. His passion, insight and lifelong commitment to both academia and politics inspired me and many others."

It was another Edinburgh historian, Paul Addison, who first rediscovered the Mass Observation reports and Calder always acknowledged this debt. "His books have never been surpassed and they are crammed with vivid detail about people and places," said Mr Addison, author of The Road to 1945 . "Angus put in the awkward squad. His was not the Max Bygraves version of history. He thought of himself as a writer rather than an academic and he was something of a bohemian. A man with a well-stocked mind, he was always wonderful company."

Angus Lindsay Ritchie Calder was born in London in 1942 and educated at Cambridge, where he read English literature. He was much influenced by his father, the Scots-born Ritchie Calder, journalist, diplomat, science writer, founder of the Campaign for Nuclear Disarmament and ultimately a member of the House of Lords. In Gods, Mongrels and Demons , a collection of dark humour published in 2003, Calder wrote: "My father's exuberant non-career left me unconvinced by the notion that worthwhile people must follow persistent, steady paths (though some have done so). Committed careerists may in fact be very dangerous."

His own unconventional path started with a doctorate at Sussex University, where his supervisor was Asa Briggs and where the Mass Observation reports are now properly housed. His thesis was a study - still unpublished - of the Common Wealth party, a mainly middle-class, idealistic, socialist group that emerged during the second world war.

Calder married Jenni Daiches in 1963 - they had two daughters and a son - and in 1971 they moved to Edinburgh. Despite his English background and accent, he became passionately Scottish and a believer in the particularly Scottish idea of the democratic intellect where a ploughman could become a vice-chancellor.

An engaging, gregarious man, his career took him round the world literally and intellectually. He taught English at the University of Nairobi and held posts at the universities of Malawi and Zimbabwe as well as working in New Zealand - his first published volume of poems was called Waking in Waikato . In 1981 he produced, Revolutionary Empire , a study of Britain's empire up to the American War of Independence, which considered the views of the conquered as much as the conquerors. It had rave reviews but the subsequent, planned volumes never appeared.

One reason was he was spending more time in Edinburgh's pubs. His fondness for drink destroyed his first marriage and his second to Kate Kyle, which produced a son, was brief. Yet he continued to teach, spending 14 years with the Open University, and writing essays of Orwellian standard as well as introductions to writers including Dickens, Scott and T.E. Lawrence. He completed a book on 19th-century Russian writers and wrote, with Paul Addison, A Time to Kill: The Soldier's Experience of the War in the West 1939-45 .

"He had a long, slow decline," said Mr Addison. "Yet he wrote more than most people who live to be 80." Another friend, academic and now Scottish parliament member Christopher Harvie, who went to see him only weeks before he died, said: "He told me: 'This has been a helter- skelter existence - much of it my own fault.' Yet he was remarkable man, an outstanding teacher who could make himself a specialist in anything and who wrote brilliantly."

Sue Cameron

Copyright The Financial Times Limited 2008

FT: Cautious of creating too much complexity

Cautious of creating too much complexity

By Bernard Simon in Toronto

Published: June 16 2008 03:00 | Last updated: June 16 2008 03:00

John Hull has a confession to make.

As a professor of finance at the University of Toronto's Rotman School of Management, he has won international acclaim for designing and valuing complex financial tools such as options and other derivatives.

But when it comes to managing his own money, Prof Hull has little use for such exotic instruments. His investment portfolio comprises mainly index funds. And while he keeps reminding his students about the importance of hedging risk, his own liabilities are heavily concentrated in Canadian dollars.

"In retrospect, I certainly haven't behaved optimally," the 62-year-old, UK-born professor says with a wry smile.

Seen from a different angle however, Prof Hull's financial strategy is entirely consistent with the message he hammers home as a teacher, author, consultant and expert witness in derivative-related lawsuits: that is, keep things as simple as possible.

"There's a danger, with all the people with PhDs in physics and maths who have moved into this area, that some of the models become too complicated", Prof Hull says. "There's a tendency for people with that sort of background to just want a really difficult problem to solve. And that's not necessarily what's needed."

His avoidance of this tendency helps explain the respect his work has garnered.

Izzy Nelken, president of Super Computer Consulting in Chicago, who has known Prof Hull for 16 years and co-authored several publications with him, notes that while "some folks like to couch it all in huge mystery, John doesn't do that. He always brings the latest developments in a simple, easy-to-understand manner."

Armed with a Cambridge maths degree, Prof Hull's first job was in operational research at a UK shoe manufacturer.

An interest in applying mathematics to finance led him to do a PhD at Cranfield University.

He had his first taste of Canada as a visiting lecturer at the University of British Columbia in Vancouver in 1979. He then moved to York University in Toronto two years later so he could work in a leading financial centre. He has been at Rotman since 1988.

Quantitative analysis and analysts have made deep in-roads in trading rooms and financial research departments since two University of Chicago economists, Fischer Black and Myron Scholes, devised a mathematical model for pricing options and corporate liabilities in the early 1970s.

However, the recent turmoil in financial markets has jolted faith in the so-called "quants".

Prof Hull agrees that "there's some ground for concern" that traders and analysts have relied too heavily on mathematical models in their decision-making.

"We need a much more common-sense approach to risk management and must not let quants and traders run free-rein for short-term profits," he says.

The problem, in Prof Hull's view, has been an overdependence on models that are based chiefly on recent market trends.

Over the past three years, for instance, "we were looking at a period when volatilities were very low", he says, "so values at risk were lower".

"To some extent, that model led to a false confidence on the part of the banks. Somebody should have been saying: 'Let's look at the big picture, what could go wrong? How well will we come out if it does go wrong?'

"In most institutions I don't think anybody was doing that. They were just relying on: 'We're making a lot of money, the value-at-risk model says we're okay'."

But heavy losses since the onset of the US subprime mortgage crisis have prompted a good deal of soul-searching among quants, and those who employ them. "I don't think there is a substitute for sound managerial judgment," Prof Hull says.

"In a few companies, however, rather than senior managers letting the traders run loose on this, they sat back and thought about the environment out there; about what could go wrong and how badly they would suffer if it did."

As for his own approach, he says that "my claim to fame is not being an out-and-out quant.

"It's more looking at a situation, coming up with the simplest model that captures the essence of it, and then writing it up in such a way that people will easily be able to understand it."

His seminal book Options, Futures and Other Derivatives , now in its seventh edition, is widely regarded as the bible of the subject. According to Mr Nelken, "he's had a substantial impact on a whole generation of financial mathematicians".

Prof Hull tries to bring equations to life by including actual figures in them. His books are dotted with "Business Snapshots" that show how quantitative theories and models are applied in real-life situations.

His books also demonstrate his appreciation of the shortcomings, as well as the advantages, of exotic financial instruments.

For example, the chapter on asset-backed securities in the latest edition observes that these financial products have been created from exotic assets such as royalties from the future sales of a piece of music.

"Dealers have been very creative - perhaps too creative - in their use of this type of structure," he concludes.

Copyright The Financial Times Limited 2008

FT: Success at work is a drug that becomes an addiction

Success at work is a drug that becomes an addiction

By Stefan Stern

Published: June 17 2008 03:00 | Last updated: June 17 2008 03:00

"To every thing there is a season," says Ecclesiastes, "and a time to every purpose under heaven. A time to be born, and a time to die . . . a time to kill, and a time to heal . . . a time to weep, and a time to laugh; a time to mourn, and a time to dance . . . "

What would that gloomy old soul have to say about the life of the modern manager? "A time to work, and, er, that's it."

Many would see nothing wrong in this approach. Sir Alex Ferguson, the highly successful manager of Manchester United football club, is a good example. Asked last month how he felt about his latest triumph of winning the European champions league, he admitted that, of course, he would be celebrating that evening.

But: "The thing about me is that I won't get carried away with it, and tomorrow morning I will be thinking about next season," Sir Alex went on: "It drains away very quickly - that drug, that final moment. I will be thinking about the future and looking into the players' eyes to make sure their hunger is still there."

Drive, hunger, ambition: today's workplace seems to demand more and more of such stuff.

If you are serious about getting on in your career or leading your organisation on to greater success, a strong sense of urgency is required.

Millions of TV viewers have been enjoying the latest series of the UK version of The Apprentice, which finished last week. The programme featured the now traditional array of eager, sharp-elbowed individuals who were ready to do their fellow team members down if it meant a better chance of grabbing an exciting new job which came, as the programme's narrator kept reminding us, with a "six-figure salary" attached.

To win this prized apprenticeship you have to "front up". Put on a good show. Create the right impression. Give a good account of yourself. These days, the ideal recruit won't just do a really good job, but he or she will tell a good story about him/herself as well.

"You have to work on your identity today," the distinguished sociologist Anthony Giddens told a packed seminar room at the London Business School last week. Lifestyles are now enormously diverse, he explained. We have to choose who it is we are going to be. (That other global TV phenomenon, Big Brother, proves his point. Never have so many anxious people expended so much energy at the same time in the quest to create a winning identity, or "self".)

Lord Giddens was speaking at a half-day symposium called "Humanising Work", held under the auspices of the Lehman Brothers centre for women in business.

In a wide-ranging talk, he considered the relationship between the highly committed, obsessive professional and the more troubling phenomena of addicts and those trapped in compulsive behaviour patterns.

New technology helps feed some people's addiction to work. Lord Giddens joked about the hard-working types who, getting up in the night to go to the bathroom, seize the chance to check their e-mails. This presupposes that the BlackBerry is not still buzzing away on the bedside table, or under the pillow. And that said executive has even gone to bed in the first place.

Compulsive behaviour is linked to depression, Lord Giddens warned. But, he conceded, it is also linked to high achievement. Look again at that Alex Ferguson quote. Success is a drug for him, he admits. But even as he begins to plan how to achieve the next hit, he knows that the resulting pleasure will be fleeting. Funny old game, football.

Before he became a TV celebrity, Sir Gerry Robinson, the former chairman of the leisure group Granada (which merged with Carlton in 2003 to form ITV), offered an alternative model of the successful business leader.

There really are only 10 or 12 key decisions you have to get right every year, he used to say. Concentrate on them, and aim for a success rate of at least 80 per cent. Do that and all will be well.

As for the rest of the job, well, lighten up a bit. Relax. Delegate. And, like Sir Gerry, you too could be back on the golf course by Friday afternoon. Naive? Perhaps. Out of date, in today's faster, globalised, 24/7 world? Probably. Disingenuous, given the complexity of modern business life? Almost certainly yes.

And, of course, Sir Gerry's last few years in business have not exactly been an unqualified success. It is far easier being a TV troubleshooter than a real-live manager, who has to carry on with the work in hand after the camera crews have gone home.

Working harder and harder, doing "the wrong thing righter", as Russ Ackoff puts it, will not lead to success. And yet, just like on the "reality" TV shows, people fight an unrelenting battle to get to and stay at the top.

"If something comes up that requires seven-day working . . . then I will do it," Sir Gerry Robinson once said. "But it rarely does. I think many people just use work as a way of not confronting themselves."

The best and most subversive question to be asked about the "long hours culture" is this: why don't you want to go home?

stefan.stern@ft.com Read and post comments online at www.ft.com/stern For the latest thinking on management and strategy, go to: www.ft.com/managementblog

Copyright The Financial Times Limited 2008

FT:Sector catches them young

Sector catches them young

By Richard Milne

Published: June 16 2008 19:47 | Last updated: June 16 2008 19:47

Joachim Belz is looking for engineers. The chief executive of Weidmüller, a German maker of components for the electrical and electronics industries, wants to hire 200 in the next two years but he has a problem: there are not enough of them.

“We have problems filling these posts as quickly as we would like,” he says. “But we have complained long enough about it in Germany. Now we have to find a solution.”

It is a sentiment echoed not just around Germany, the supposed land of engineering, but across large parts of Europe. Manufacturing companies from Spain to Switzerland are finding it hard to recruit high-skilled employees domestically, a trend that could affect growth in the long term.

So how are they tackling the issue? The answer is a series of increasingly far-sighted measures that range from visiting kindergartens to creating companies inside universities.

The steps taken by Weidmüller, which is based between Hanover and Dortmund, are typical. For long-term results, it sends managers into local junior schools to play science-based games with children from eight years old and upwards. “It could take us 10-15 years to reap the fruits from this but we are being deliberately long-term,” Mr Belz says. Older students and teachers are invited to the factories to see how products are made. “We need to get them excited about the wonders of science,” he adds.

Value of education: local universities that can feed a far-flung HQ

European companies based in obscure locations often have a hard time attracting highly skilled employees. Mondragon, the world’s largest cooperative with sales of €15bn ($23bn, £12bn), has opened a university near its headquarters in the Basque Country in north-east Spain. “We needed to stop the brain drain to other countries,” says Jesus Ginto, head of communications.

Companies in Franconia, in central Germany, have grouped together to open an international school in Erlangen. Adidas, the sporting goods group based in nearby Herzogenaurach, is one of the big supporters of the venture alongside Siemens. “We need to attract the best international managers and this is one of the ways to convince their families to come to this small town in Germany,” says Herbert Hainer, chief executive.

Joachim Belz, chief executive of Weidmüller, a components maker based in Detmold in a rural part of northern Germany, says companies need to do more to address “the big challenge of location marketing”.

Weidmüller supports the Institute for Industrial IT at a local technical college and tries to encourage other institutes such as the renowned Fraunhofer to set up in the region.

Weidmüller spends €5m ($7.7m, £3.9m) a year on education programmes, not an inconsiderable sum for a company with a turnover of €500m. That includes paying for students to take a university degree – costing about €60,000 per student – as well as for work placements, visits to colleges abroad and a dual programme in which study is combined with technical training in the company. “We get a good return on investment – we can win all these people for us,” says Mr Belz.

Other companies go even further. Bosch, Siemens and ThyssenKrupp – three of Germany’s largest industrial groups – all work with kindergartens to try to get children interested in science from as early an age as possible. Siemens provides kindergartens with a “discovery box” containing experiments for three- to six-year-olds ranging from electricity, the environment and water. One example sees the children constructing a basic electric circuit with batteries, lights and wires. “We want to get them to learn things in a playful not a pedagogic way and they can learn so much more at that age than they can later,” says the Maria Schumm-Tschauder, the project’s co-ordinator.

It is not just about raising interest among children. Thomas Kaeser, chief executive of Kaeser Kompressoren, a leading provider of compressed air, says it is important to invite teachers from schools and universities into companies to see how a factory operates. “They are normally totally shocked at how different it is from their preconceptions,” he says.

Some companies have even bigger ideas. ThyssenKrupp, the steelmaker, has set up a biannual event called IdeenPark, or Ideas Park. Vast halls are filled with endless hands-on experiments for children – and adults – such as understanding how a bobsleigh works and designing their own electrical circuits. Nearly 300,000 people, many of them young children, visited the last event in Stuttgart. “It was a great success,” says Ekkehard Schulz, ThyssenKrupp’s chief executive.

It is not just companies that are contributing to this long-term focus. In the Basque Country of Spain, the provincial government of Biscay helped set up a large industrial park outside Bilbao. José Luis Bilbao, the head of the government, says: “Our biggest problem here is the lack of human resources so the park helps tackle that.”

But companies are having to act in the short term too. VDI, the German association of engineers, estimates there are 95,000 vacant posts for engineers in the country – up from 18,000 just three years ago. That is due both to a surging demand for engineers and the lack of students in technical universities. Senior executives such as Dieter Zetsche from Daimler say the situation is slowly improving after a period a decade ago when companies stopped hiring engineers. But the recent rise in engineering students is still not sufficient to cover the gap.

Instead companies are seeking to co-operate more with local universities. Lenze, a German maker of mechanical drives, has set up three companies inside technical colleges in an attempt to commercialise innovations and attract engineers to it. “That has helped us keep our lead in filing patents in our sector,” says Erhard Tellbüscher, chief executive.

Ormazabal, a Spanish electrical components company that in spite of its size competes against Siemens and ABB, is taking a more down-to-earth approach and trying to help students at the engineering schools in Bilbao and Madrid with their projects. Guillermo Amann, the chief of staff for the head of the company, says: “We are trying to catch the students before they freeze and lose interest or go elsewhere.” Weidmüller invites 10 students each year to a week-long “summer academy” at its headquarters where they work and socialise together. It also offers more places for apprentices than it needs and the demand is clearly there – for the 55 places on the three-year programme it receives at least 1,200 applicants.

Of course, companies can simply try to look for engineers abroad, and some do. Mr Amann says Ormazabal recently brought four French electrical engineers to Bilbao as well as two Brits in its high-power laboratory and two Germans. Eduardo Giménez, the corporate marketing director of Ingeteam, another electrical components company in Bilbao, says it is bringing in people from its operation in eastern Europe and the Czech Republic in particular. “This is one of the secrets for us in opening up branches around the world – we can bring the people back here,” he says.

ThyssenKrupp has gone further and made acquisitions to gain highly skilled workers, such as the purchase of Uhde Shedden, a Thai company with 340 workers, most of them engineers. It has also built up a subsidiary in Siberia near a technical university to tap its qualified engineers and will soon have 400 workers.

A common refrain among these companies is that, given the skills shortage, they have had little choice but to decentralise research and development facilities that were previously located solely in the home nation. Ormazabal now has R&D centres in China and France, as well as factories outside the Basque Country in Madrid. Weidmüller has a development centre in China and a new one will soon open in the US.

Mr Belz, like other engineering executives in European industry, says the losers from the lack of skilled workers will not be companies but countries. “If you can’t get the engineers for the tasks at your base then you have to bring the tasks to where the engineers are.”

Copyright The Financial Times Limited 2008

FT: Perks of the job from operating table to grave

Perks of the job from operating table to grave

By Rhymer Rigby

Published: June 17 2008 03:00 | Last updated: June 17 2008 03:00

L isa Hanson, an assistant accountant, had been working for her organisation for six years when she decided it was time to take advantage of the staff discount scheme. "I had a breast enlargement and an uplift and I saved £3,000, or over 50 per cent," she explains. "I'm extremely pleased with the results and it's a real plus of working here. To be honest, I don't know why I waited."

Ms Hanson works for Transform, the UK's largest cosmetic surgery provider, and like many employers it gives its workforce the opportunity to enjoy its products and services at a substantial discount to the market rate. About 75 per cent of staff have had some sort of treatment and a third have had surgery.

A Transform representative says that not only is it seen as a perk that engenders loyalty, but surgically enhanced staff act as company ambassadors: "It helps people empathise. If someone comes in for a consultation and the person they speak to has had the same operation, then the member of staff really knows what they're on about."

Most product-related perks are a little more pedestrian. Almost all retailers offer schemes whereby their staff receive a discount on the products they sell. J.*Sainsbury and Tesco, the UK supermarket chains, offer 10 per cent off shopping. Employee-owned Waitrose, another UK store, offers 12 per cent (and up to 25 per cent at John Lewis stores).

Across multi-company groups it can be more complex. At Virgin, the Tribe scheme gives staff discounts across a broad range of the group's (and others') products and services. However, employees get bigger discounts from the division that employs them, such as Virgin Atlantic or Virgin Trains, the company says.

In some cases, employees can receive discounts from suppliers. For example, if a company uses Dell PCs or Apple Macs, staff can often buy computers from those vendors at a reduced rate.

Not all perks are straightforward discounts or freebies. Professional services firms typically offer free financial advice or accountancy.

However, some of these benefits are of limited monetary value, offering just a curious cachet. Staff mortgages are no longer available from the Bank of England but employees can still apply for an account with the Bank that comes with a chequebook and guarantee card. However, it may be of limited use as the Bank has a grand total of two cashpoints.

Paul Brown, a senior consultant in the Flexible Benefits Team at Watson Wyatt, says that although offering discounts can be a good way to create loyalty, and perhaps even ameliorate lousy pay, there are a number of issues to watch out for. Typically these programmes will be either relatively modest, of limited real use or have some some sort of cap on them. "The [Inland] Revenue might get rather funny about unlimited amounts of free or nearly free goods, especially if they are easily tradeable," he says.

For obvious reasons, most businesses do not give a staff discount straight away - a year is a common wait - to discourage those who are just in it for the freebies. There are other sector-specific considerations, too. For instance, Transform applies its usual rules to staff operations: "While there are no limits on what you can have done, if the surgeon feels you don't require it or your expectations are unrealistic they may refuse," the company says.

Mr Brown also points out that poorly administered schemes have been known to backfire badly. "The biggest issue we've found is where people discover they can get the goods cheaper elsewhere. We worked with a large conglomerate that offered fridges and dishwashers through a staff scheme. Sometimes [usually through one-off discounts] they were cheaper at retailers. This was seen as a real negative; it looked like they were taking their employees for a ride."

Other problems, he adds, can occur when the company sells problematic products. Giving your employees discounted cigarettes, for example, does not necessarily send out a message of unalloyed benevolence. However, at least one tobacco company also offers support for those who want to give up smoking.

But those who just cannot quit may wish to consider a job at Dignity, the UK's largest provider of funerals. "It depends on the circumstances," says Richard Portman, corporate services director and company secretary, "but if a member of staff or someone in their family dies, discounts are available."

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FT: There is a better way to prevent bank failures

There is a better way to prevent bank failures

By John Kay

Published: June 18 2008 03:00 | Last updated: June 18 2008 03:00

Stuff happens. People make mistakes, parts go wrong, unexpected things crop up. When disaster ensues, politicians, journalists and savants blame the blunderers, the component manufacturers and the perversity of fate. But good systems, whether in engineering, in management or in regulation, are robust. When those that rely on infallibility break down, the fault lies with the structure - not the individuals, the parts or the gods.

Richard Bookstaber's fine book on modern financial innovation, A Demon of Our Own Design , distinguishes loosely and tightly coupled systems. The postal service is a complex network, but individual failures are contained and have no consequences for the integrity of the whole. Aircraft are safe because every critical element has a back-up. But the indicators of reactor core temperature at Three Mile Island were designed to give readings only within the planned operating range; neither the control room nor the instrumentation, Bookstaber explains, was designed with emergency operation in mind.

It seems absurd to design a monitoring or regulatory system on the premise of normality, but that is what we routinely do. Our systems are tested on data from periods of stability and our inspections confirm that everything functions as we intended. Northern Rock did not fail because the Financial Services Authority did not maintain adequate minutes, or because the tripartite authorities did not keep each other informed. It failed because the control room had not been designed with emergency operation in mind. The problems could, of course, have been defused at any time by the public authorities writing out a sufficiently large cheque - as they eventually did for Northern Rock, and as the Federal Reserve did much more promptly for Bear Stearns. Many social and economic problems can be ameliorated by the prompt disbursement of $30bn, although it is difficult to see why protecting the counterparty exposures of large financial institutions comes near the top of the list of priorities.

In a column last September, I made three proposals that would have led to the better handling of Northern Rock. Adequate deposit protection would have given an immediate assurance that no small saver would lose money, and ended the run. A special administration scheme would have given adequate power to deal with a failing bank. The government plans to implement both these measures. It should also act on a third proposal: that the Financial Services Compensation scheme becomes a preferred creditor in any liquidation.

Banks traditionally borrowed short from the public and lent long to business. The growth of innovative intermediation severed the link between borrower and lender. The outcome has been to make retail depositors less safe, not more, as their deposits have become collateral for proprietary trading. In an ideal world, retail deposits would be backed by genuinely first-class and liquid assets. Competition in the retail market would then be on the basis of relative effectiveness in the collection and processing of deposits. It is ironic that Northern Rock's efficient administration is being wound down owing to losses in different activities.

To impose that ideal through regulation would be intrusive - and also unnecessary. The preferential status of retail deposits would ensure that if deposits were not supported by government or similar quality obligations, wholesale lenders would be at risk for any shortfall. Such a structure is probably the only realistic regulatory intervention that would have prevented the Northern Rock fiasco. If both securitised mortgages and the retail deposit base had been ring-fenced, the residual balance sheet would have been insufficient to support the bank's risky expansion.

This proposal amounts to the privatisation of banking regulation. If public agencies are to supervise seriously the strategies of high street and investment banks, we might as well nationalise them; the proposal is entertained only because everyone knows it is not really serious. Such supervision will continue to be an exercise in box-ticking, analogous to confirming that today the reactor temperature was within the normal range, and equally helpless when, one day, it is not.

www.johnkay.com

Copyright The Financial Times Limited 2008