No one would regard Robert Peston as a natural broadcaster. Yet this has been no disadvantage to him since he took over as the BBC's business editor in 2006. His muscular reporting and network of contacts in Whitehall and the City left rivals, including former colleagues at the Financial Times, in the dust when the Bank of England bailout of Northern Rock emerged on 13 September last year. Peston has demonstrated that in the digital age, when broadcasters also report and blog on the web, the BBC can be as powerful a force in up-to-the-minute domestic financial reporting as it is internationally.
Much of Who Runs Britain? clearly was assembled before the debacle emerged of the credit crunch and Northern Rock, which are dealt with briefly in this volume. Nevertheless, it is a useful primer on the free-for-all in the City and among Britain's new classes of super-rich that allowed the crisis in the credit markets to develop. It was one of those periods in financial history when financiers had unlimited access to borrowing - the key to making easy money, as he demonstrates - and enjoyed an astonishingly favourable tax regime. New Labour, in its determination to make Britain the financial centre of Europe, cut capital gains tax to the bone and turned London into a haven for non-domiciles, the footloose capitalists looking to put down new roots.
Peston's book is a peculiar mixture of resentment and admiration for what the super-rich have done. He is the son of the Labour intellectual Lord Peston, with humble roots in the East End of London, which lends a slightly chippy air to some of his observations. Yet he cannot suppress his admiration for Philip Green of Arcadia and Stuart Rose of Marks & Spencer, rivals and friends, who have commanded more headlines and profiles on the business pages than almost anyone else since the turn of the century. The way in which Green parlayed a few million pounds into a record personal dividend of £1.2bn to his wife, Tina, is chronicled in meticulous detail. In looking at the career of Rose, he sketches in fascinating personal facts.
The larger theme of the book, however, is that under new Labour, with which Peston is broadly sympathetic, capitalism was allowed to let rip. Private equity kings such as Damon Buffini of Permira went on a joyride, defenestrating along the way long-established British enterprises such as the AA and selling on the burnished assets in record time. The secret to all this, Peston explains, is leverage. Using his own simple-to-understand calculations, he provides an insight into how the Gordon Brown tax regime allowed these new wideboys to rake off personal gains in the tens if not hundreds of millions of pounds.
It is not just the private equity bigwigs and their greed that are given the once-over by Peston. He also takes to task the hedge funds, the speculators who take huge, one-way bets on market movements, and greedy investment bankers. He rightly points out that when the bankers start to make up names for new in vestment instruments (for instance, "collateralised debt obligations") that no one outside their narrow circle can understand, you know that they are up to no good.
Indeed, one of the features of Peston's BBC blog is his willingness to venture where few financial journalists dare to tread by working out the profits on deals from first principles. The book is spoiled, however, by his attempts to show off his intellectual prowess. Early on, seeking to show the way in which the gap between rich and poor opened up under Margaret Thatcher, he introduces the Gini coefficient - a favourite of economics geeks. In an impenetrable sentence, he explains: "This is a measure of income inequality that condenses the distribution of income into a number between zero and one, where the zero corresponds to a world in which all households have identical income, and one would be a place where all the income goes to a single person." Whew! All this to prove how the rich became richer and the poor poorer.
The author examines how the new super-rich and politics came together in Labour's fundraising scandal. Sir Richard Branson, the one-time favourite to take over Northern Rock, is described as having played Tony Blair and more recently Gordon Brown "astutely". Although it was the self-made music impresario Michael Levy who was the real power "in the court of Tony Blair", Peston believes that the importance of Levy to Blair was that he "reinforced the influence of the wealthy over Labour".
Amid all this talk of wealth and money, the one chapter that seems out of place in Peston's book is his account of how Britain's occupational pensions system was all but destroyed under Labour. Maybe it was material left over from his previous book, Brown's Britain. What is certainly the case is that the pensions scandals of the past decade are almost certainly deserving of a book all of their own.
Alex Brummer is City editor of the Daily Mail. He is working on a book about the credit squeeze - "The Crunch: the Scandal of Northern Rock", to be published by Random House in May