City Interview: I'm not going just yet, says Peter Hargreaves
By Ian Lyall
Peter Hargreaves is riled. And he doesn't hold back. The Chancellor bears the brunt of his ire, but there are digs at the Financial Services Authority, 'useless' bankers, ' overpaid' bureaucrats - and he even has a sly swipe at James Caan, the entrepreneur and Dragons' Den panelist.
Hargreaves is the original grumpy old man, though the cofounder and chief executive of the investment group Hargreaves Lansdown probably won't thank me for saying that.
I've been dispatched to Bristol to track him down. Word is he is ready to quit Britain in protest at the Chancellor's tax-the-rich levy on the nation's top earners.
So this might be the last opportunity to talk to him before he seeks shelter in the tax haven of Monaco, or some far-flung Caribbean island where the authorities don't really care how much you earn.
Actually, the reports say he is headed for the Isle of Man.
But the truth is even more prosaic: the irascible 63-year-old is staying put. 'I won't be leaving. I actually love this country,' he admits rather apologetically.
He'll take his medicine. But not quietly. And not before kicking up a fuss. He thinks the new 50 per cent rate will bring in less tax, not more. And he says it will strangle the life from the City - 'our only world class industry'.
'I'm going to live the same lifestyle whatever the government does,' Hargreaves explains.
'It doesn't matter whether we think the bankers have caused the recession or not.
'People in the City get these salaries (over £150,000 and eligible for the top rate of tax) and they don't care whether they work in New York, Geneva, Paris or Zurich.'
He talks with a thick Lancashire accent, though he has lived in the West Country for 30 years. Nowt is left out of his Budget monologue. You get every single detail. That includes how much he handed over to HM Revenue & Customs (£2million on earnings of last year in excess of £12million).
So there won't be too many who sympathise with the 'plight' of a man conservatively estimated to be worth more than £300million. But when he bandies the figures around he is not bragging. He is trying to make a point: that Darling and Prime Minister Gordon Brown got the Budget horribly wrong.
'I don't think any thought was put into it,' he says. 'It was written on the back of fag packet three days beforehand.'
Warming to his theme he explains: 'I pay tax of £2million on my dividends. If they added 10 per cent on I'd pay £3m on it. But if I left the country, they wouldn't just miss out on the £1million, they wouldn't get the £2million either.'
It is a well rehearsed argument of the right that was put into practice during the Thatcher years - an era that allowed budding entrepreneurs Hargreaves and partner Stephen Lansdown to flourish.
Back in 1981, when Charles and Diana were about to be married, the pair forged their own union to form HL and ran it from Hargreaves' spare room. Both were accountants by training and worked together as financial advisers.
It was the adventurous Hargreaves who struck upon the idea of direct newspaper marketing of unit trusts - and Lansdown, happy to do the mundane chores such as the book-keeping, who brought some solidity to the partnership.
Their motto: if it looks too good to be true, then it probably is.
It is a maxim they applied daily when advising clients on which unit trusts they should buy.
And it has helped the pair navigate some choppy waters. This is the company's third recession, and the lessons learned in the previous two have served them well recently.
They were suspicious of the USoriginated debt instruments that brought down the financial sector, and Hargreaves in particular, was an outspoken critic of funds that invested solely in bricks and mortar.
This led to a spat with John Duffield when his firm New Star came knocking with a fund invested in commercial property.
Those initial misgivings appear to have been well founded. Not only did the property fund founder, but New Star eventually collapsed.
'He's still unrepentant,' Hargreaves says shaking his head. 'John Duffield backed his business on property and he put huge pressure on us.
'I had big arguments with him and New Star. I said property was ludicrously over priced. And I also pointed out that if people want to withdraw their cash you can't just (instantly) sell a property.'
HL has managed to escape the worst ravages of the downturn by providing 'simple products at the best prices'.
That philosophy has paid off. Today the group is worth a shade over £1billion. (Hargreaves owns 32 per cent and Lansdown 23 per cent).
That's not to say there haven't been some headaches recently. One was where to stash investors' cash in the wake of the Northern Rock collapse. 'We were petrified and did not know what to do,' he admits.
'We had to work out how to keep our clients' money safe. We spent hours and hours thinking about it. It cost us a huge amount of profit to do this. But we kept that cash safe.
'We had to decide which banks the government would not allow to go bust. It transpired no other bank was allowed to go bust, but we didn't know this at the time.
'What I still can't believe is the local authorities who piled all their cash into Iceland. Even the local cab drivers knew Iceland was bust.'
HL prides itself on giving solid, no-nonsense investment advice.
Like its founder, the company doesn't over-complicate things. The products it offers aren't fancy. They are mainstream and easy to understand. The investment advice too. So where should I put my money?
'An equity income fund,' Hargreaves replies as quick as you like.
'You can get 5 per cent in the stock market-Everyone believes the stock market will recover.
'So 5 per cent is extremely good compensation while you are waiting for things to turn around.'
At 63, you'd think Hargreaves, a father of two grown-up children, would be thinking of taking it easy.
But he is at his desk at 8am most mornings answering emails, or nosing around the post-room to inspect the results of the latest marketing campaign.
This harks back to the early days of HL when he placed the company's first advert in the Sunday Telegraph and had to sweat until Thursday before he received a response from prospective customers.
A bulging post bag is a good barometer for a business that makes its living from massive mailshots, he says. For the rest of the day he prowls the company's main office, an unpretentious two-story building, tucked down a side street just off Bristol's Whiteladies Road.
He hates meetings, saying they are a waste of time. He gleans enough intelligence about the company by simply talking to the employees on a daily basis.
Outside of work the former fell runner goes to the gym several times a week, and manages to fit in a five-mile jog once a week. It allows Hargreaves to enjoy the odd pint and a good meal.
The joke at HL is that the boss will be carted out in a coffin. And while the company may soon have to name his successor, Hargreaves still wants to retain a role at the firm he founded.
Away from the office, he is immensely proud of his garden - an enormous plot that yields a yearround supply of fresh vegetables.
Anything else? 'I'm reading James Caan's autobiography. A great work of fiction,' he says with a chuckle and wink. 'Sorry, I didn't mean that.'
Hargreaves's honesty and candour are refreshing. He speaks with great affection of his upbringing in Clitheroe in Lancashire, and how it helped mould him into a businessman.
Just don't mention the Budget.