Who runs Britain? By Robert Peston, published by Hodder

This book was first published in February 2008 and was recently updated in September. It is a reflection of the speed of change that a number of statements still seem out of date since the events of the last few months (for instance the description of the now sacked CEO of HBOS as a ‘wunderkind’).

Peston is now well known as the man who broke the news about Northern Rock and who has become a central figure in events as well as a respected pundit. Indeed there have been criticisms that this involvement has compromised his independence as BBC Business Editor and that he has allowed his personality to become too high profile for his role. This was confirmed by the recent Panorama programme based on the book, which contained too much of him and not enough answers to the question.

The book contains none of this ego tripping; it is exceptionally well written and, unlike many other books on the economy, full of examples and interesting personal portraits. I particularly enjoyed the chapters on Philip Green – as an example of someone who has become one of the ‘super-rich’ - and on the trials and tribulations of the roller coaster that is Marks and Spencer.

Though he clearly has a left wing background and sympathies, his description of the activities of Private Equity and Hedge Fund operators is objective and compelling, and the sums of money involved are mind boggling, both in total terms and the earnings of the individuals who mastermind the deals. He also makes a good job of destroying the myth that Private Equity operators are, in the long run, good for the businesses they buy and sell; his view is that the deals are, in the short or long term, only good for those who are made rich by them.

Peston also makes two other good points; firstly that these guys have become very rich because the banks have been willing to lend to them too cheaply, which is one of the under-rated factors that has caused the banks to be in such a sorry financial state. Secondly that the impact of these deals has been to move wealth away from the pension schemes who invest in equity markets to these few individuals, most of whom pay little or no tax here. He also makes the point that politicians have encouraged these investors by a favourable tax regime and a lack of willingness to regulate. Indeed some have been further encouraged through the honours system.

The book is a good read with simple explanations of complex concepts and deals, which are pitched at the right level for the average reader. However I was not sure after reading the book, that he has answered the question ‘Who runs Britain?’ Peston seems to be saying that it is the super-rich who control the politicians and call the shots on taxation levels and ownership of big businesses. I was not entirely convinced about this, particularly after his fascinating chapter on Royal Mail which described how the charismatic executive Alan Leighton could not overcome the resistance to change of the politicians and the unions, and was thus unable to force through the privatisation he wanted. More discussion about this kind of conflict would have been helpful.

This is however a book worth reading but I suggest you make it quick, it could be out of date in a few more months!