Rachel Reeves would be wise to disown Labour’s Big Short spoof

Like most of us, I enjoy a bit of You-Tubing. For my father, it’s watching endless clips of Yes Minister; for me it’s watching the late Sean Lock on 8 out of 10 Cats does Countdown. Lock was a comedic genius and if you doubt me, just watch Claudia Winkleman dissolve completely alongside Lock as he discusses his performance on “Rectum of the Year” (as he says, “it’s ‘Rear of the year’ with the gloves off”) or the time he read out his new children’s novel, “The Tiger who Came for a Pint”, on the show. His fellow team captain on Cats does Countdown was, more often than not, Jon Richardson, who has many excellent moments alongside Lock although, as he would readily accept, he can never quite escape Lock’s shadow.

I was thinking of Lock and Richardson as, by mistake, I watched Richardson appear in a well-made Big Short spoof for the Labour party. The thesis of this very short film is that, well, Rishi Sunak was responsible for the Global Financial Crisis which is a bit of a surprise. Richardson’s script says that the hedge fund where Sunak was working in 2007 (they don’t name it but it was The Children’s Investment Fund Management (TCI) ) invested in “a struggling Dutch Bank called ABN AMRO” on the eve of the Financial Crisis which they “shouldn’t have touched with a bargepole”. Having bought a 2 per cent stake, the hedge fund apparently went around telling everyone that ABN was a terrible investment and should be sold as quickly as possible. Richardson then explains who should come along but RBS who spent billions on ABN, inherited lots of sub-prime mortgages and then went spectacularly bust. So, as the telling goes, Rishi got his money and then went off to California being “one of those bankers who made millions from a deal that helped trigger the financial crash and all at the expense of the British taxpayer.”

I have watched it a few times now and, besides lamenting the fact that a comedian I like has revealed his politics (and I could have guessed he is a Labour supporter, of course, but do we need it confirmed?), I think the Tories could release a video saying that Keir Starmer not only didn’t prosecute Jimmy Saville but also approved of and applauded his crimes and Labour wouldn’t have a leg to stand on.

This video is absurd.

First of all, TCI bought their stake in ABN AMRO because they were activist investors who wanted to break the bank up as a route to getting greater value for shareholders. This was not a struggling bank.

Secondly, they held a 2 per cent stake but the vast majority of shareholders had to agree with them to sell the business.

Nor does is seem likely that 2 per cent shareholder TCI forced RBS CEO Fred Goodwin and his board to make an overvalued bid for ABN.

I also don’t see how the same 2 per cent shareholder forced RBS shareholders to accept the deal. 

Additionally, the financial crisis and the subprime mortgage disaster came out of nowhere – that’s the point of the film that Labour is spoofing: a very small number of people had worked out what was really happening!

What’s more, we don’t even know what Sunak’s role within TCI and this investment was: he would have been a 26-year-old analyst at the time so it’s very unlikely he would have been anywhere near the decision-making on this.

Finally, by attacking Sunak and this investment, Labour is attacking TCI whose founder Sir Chris Hohn has made billions of pounds, most of which he has given away, hence why he has been described as one of the world’s generous philanthropists by Forbes magazine.

As it happens, I was on the very edge of the ABN AMRO deal as a very junior individual in a financial advisory firm. In the first half of 2007, a deal-making frenzy was at its peak and the ABN deal was no exception with Barclays being particularly fortunate that their attempt at a knock-out bid to buy ABN in April 2007 was unsuccessful and was blown out of the water by the RBS-lead consortium that secured the deal.

So we can say, for sure, that the video is rubbish, tosh, a pyramid of piffle but the video also reveals something about Labour: their distaste for financial services is visceral and unfortunate given how the tax base in the UK works. If I were Rachel Reeves, I would be disowning that video as quickly as possible. But there’s also another nagging thought: that the creative cretins within Labour that made this video don’t realise that Sunak and TCI were not running their own money when they invested in ABN. I always get the impression that Labour has so little understanding of the City that they don’t know the difference between personal investment and institutional investment. Anyone with half a brain knows that TCI were running money invested in their funds by pension funds, banks, insurers and others.

It’s perfectly possible – in fact it’s likely – that the Labour party pension scheme will have, in some shape or form, an investment in TCI themselves. Who knows? They may even have benefited from that clever investment in ABN AMRO themselves. 

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