‘Invisible Power’ of London Money Exposed as Mayor Fights Back

March 12 (Bloomberg) -- When money needs to talk in London, it’s the lord mayor who speaks.

Nick Anstee, the 682nd mayor of the U.K. capital’s financial district, is battling politicians from all parties who blame the bankers and brokers he represents for wrecking the country’s economy. Taxpayers assumed more than 800 billion pounds ($1.2 trillion) of liabilities to bail out financial firms, and an election must be held by June.

“The taxpayer doesn’t understand how critical the financial services industry is to them,” Anstee, 51, said in an interview at his 252-year-old Mansion House residence opposite the Bank of England. “This absolutely overwhelming tide of negative attitudes has been brought about in taxpayers’ minds.”

City of London chiefs have championed trade and challenged politicians for centuries. They befriended William the Conqueror, helped overthrow King Charles I and one backed U.S. founding father George Washington. Yet the top lobbyist for Britain’s financial services industry isn’t well-known in the square mile he presides over and where 6,000 companies operate.

The lord mayor is an “invisible power” who Britons don’t recognize as the representative of the banks they bailed out, said London Metropolitan University politics lecturer Maurice Glasman. He’s campaigning to merge Anstee’s government with that of Greater London Authority Mayor Boris Johnson, which was started in 2000 to represent the capital’s 7.5 million people.

‘The Invisibles’

“The bailout made the invisibles visible in a really disturbing way,” said Glasman, 49, walking in front of the City’s six century-old Guildhall a few streets away from Mansion House. “This is the invisible heart of an invisible City that protects invisible earnings.”

Financial services, once known as “invisibles” in the U.K. because loans, insurance and trading can’t be seen in the way manufactured goods like cars can, are a vital source of investment, tax and employment, Anstee said.

“That’s what I’m promoting and that’s what I’m defending,” Anstee said in his Georgian palace, which is decorated with paintings by Dutch masters and plasterwork of cornucopias spilling coins and fruit.

In 1968, the Bank of England started the Committee on Invisible Exports to promote finance. It was renamed British Invisibles, and is now International Financial Services London.

‘Unique Platform’

Lord mayors travel with the rank of cabinet minister and host annual dinners for the prime minister and chancellor. Their speeches to the U.K. premier from 2003 to 2009 called for low taxes, limits to regulation and easier visa requirements for foreigners. The first lord mayor was named in 1189.

The lord mayor has a “unique platform” to influence politics, said Bob Wigley, the former chairman of Merrill Lynch & Co.’s European unit. Wigley led a review of the City’s competitiveness as a financial center for Mayor Johnson.

Guests at the City banquet in Mansion House on Sept. 22 dined on smoked fish and filet of beef and Madeira syrup. They drank Chablis and Chateau Moulin a Vent wines and toasted Britain’s financial services industry as well as the queen.

Barclays Plc Chairman Marcus Agius, former Lloyds Banking Group Plc Chairman Victor Blank, BT Group Plc Chairman Michael Rake and Financial Services Authority Chairman Adair Turner were on the table plan.

Yet in a spot poll of 25 people passing Mansion House on March 10, 19 didn’t know the lord mayor lived there. None could name him.

‘Golden Age’

In his 2007 speech to the lord mayor at Mansion House, then Chancellor Gordon Brown pledged “a competitive tax regime” and heralded “a new golden age” for the City.

“Britain needs more of the vigor, the ingenuity, the aspiration that you demonstrate daily,” he said.

In September, Brown, now prime minister, attacked the “bankrupt ideology” of free market “fundamentalism” at his party’s conference. In October, opposition Conservative leader David Cameron said he won’t cut the 50 percent rate of income tax for top earners so “the rich will pay their share.”

The City defends free markets whenever possible. Anstee disagrees with a so-called “Robin Hood tax” on financial transactions that film director Richard Curtis and U.K. non- profits including Oxfam want to fund anti-poverty projects.

At Guildhall, Stuart Fraser, chairman of the City’s policy and resources committee, rejects labor unions’ criticism that overseas takeovers of companies like chocolate maker Cadbury Plc by Kraft Foods Inc. cause job losses.

“We believe in the Cadbury example,” Fraser said. “The whole City is based on that.”

‘Friendly’ Tax

Anstee wants politicians to provide “business-friendly” tax and regulation, defend British companies in the European Union, improve transport networks such as airports, cut the budget deficit and boost investment in research and development.

At a March 1 dinner, Anstee asked all political parties to endorse policies that promote financial services, which employ 1 million and accounted for 10.1 percent of gross domestic product and 27.5 percent of corporate taxes in 2007, according to the government and accounting firm PricewaterhouseCoopers LLP.

“It’s counter-productive to compete with each other to think of ways to punish the City,” Anstee told Business Secretary Peter Mandelson and 350 guests in Mansion House’s Great Egyptian Hall. “I am challenging each of Britain’s political parties to commit publicly to growth.”

Dragons

Supporting the City is politically difficult, Mandelson said. His Labour Party government last year imposed a one-time levy on bankers’ bonuses.

“People who are losing their own jobs find it jarring when many in the City are reported as having had a good year,” Mandelson said.

As head of the City of London Corporation, the area around St. Paul’s Cathedral whose boundary is marked by dragon motifs and statues, lord mayors lead a local police force and travel 90 days a year to promote financial services. Anstee has visited the U.S., Dubai and Saudi Arabia and will travel to South Africa, India, China, Russia and other countries.

Anstee, a City resident and marathon runner, trained as an accountant and is a director of law firm SJ Berwin LLP. He lives at Mansion House with his wife for the duration of his one-year term, and speaks to about 10,000 people a month.

“Nick is being outspoken at a time when the City desperately needs a positive voice,” said Wigley, who is now chairman of yellow pages publisher Yell Group Plc. “You can’t realistically expect any serious senior politician to be standing on a pro-City platform at the forthcoming election after the financial crisis.”

Baltic Exchange

The City’s focus on money has led to its local population dwindling to 9,000, while about 320,000 workers arrive each weekday. Uniquely in the U.K., companies as well as individuals vote for City representatives.

From the Baltic Exchange for shipping to the Lloyd’s of London insurance market and the London Metal Exchange, the legacy of centuries of global British trade and finance lives on in the City, championed by the lord mayor.

“The City of London has definitely represented the interests of money over a very long time,” said Glasman, standing in the square built over the gladiatorial amphitheater of London’s Roman founders. “I want to make the ancient City the center of all London so all citizens are represented here.”

Glasman is a member of London Citizens, a non-profit whose campaign to raise the minimum wage for London workers was adopted by Barclays and other companies. His 1996 book, “Unnecessary Suffering,” criticizes excessive market reforms in eastern Europe after the collapse of communism there.

In history, some challengers to the City did so at their peril. King Charles I failed to get the City to expand its boundaries to include new populations. He was beheaded in 1649.

More than three centuries later, the challenge to explain and justify the City’s focus on capitalism remains.

“One of the biggest risks following the banking crisis is the development of an unhealthy attitude towards business and open markets in general,” Mandelson told Anstee at Mansion House. “I realize talking about trust probably sounds rich coming from a politician. Let’s just say: I feel your pain.”

To contact the reporter on this story: Simon Clark in London at sclark4@bloomberg.net