Lord Sterling: a nautical man with a plan for Britain's choppy economic waters Sterling was typically adamant about one thing. "I wasn't having any second-class celebrities on board," he grins. "So I rang up [Sir] Steve Redgrave and said "Steve what are you going to be doing on June 3?." Steve's got Matt [Pinsent] as the lead oarsman. Joining the Olympic gold medallists in the 18-strong crew are Paralympic rowers and soldiers disabled from campaigns in Iraq and Afghanistan - a long-standing interest of Sterling, who chairs the Motability charity that provides them with cars and scooters. "When I think of these lazy buggers on the dole and you've got these people doing their damndest," he says. This is what endeavour is all about. I feel very strongly about that. Luckily, Sterling feels very strongly about a lot of things - an engaging trait undimmed by 2005"s retirement from public company life. He spent 22 years at the helm of P&O - the group that took its name from the Peninsular and Oriental Steam Navigation Company. He was a non-executive when, in 1983, he helped see off a bid from Trafalgar House. By the end of the bid, he was chairman. Two years later he merged P&O with his property firm, Sterling Guarantee Trust. It was quite an empire. In its 1990s heyday, P&O had 11 divisions across 100 countries. There were cruise and cargo ships, ferries, ports, property, the Bovis construction arm and Olympia's exhibition centre. It was too much for most fund managers. They forced a radical break-up, including one of the City's most drawn-out takeover bids - the 18-month slugfest for P&O Princess, the cruise operator snaffled by Carnival Corporation. By the time of the final disposal, the £3.9bn sale of the ports arm to Dubai's DP World, Sterling had disembarked. He remains P&O life president and today chairs Swan Hellenic, the cruise brand he bought from Carnival. Does he think the Government is doing enough to get business moving? "The problem the Government has in these most unusual times is that nobody knows what is the best way of creating growth," he says. Think of government like a company. The first thing you sort out is the balance sheet, which George Osborne is trying to do. But the whole future of the firm depends on how you go forward. You have to have a long-term vision and the workforce have to believe you know where you're going. But if you're looking at your toecaps all the time, everyone else gets nervous. That's roughly where the Coalition is right now, he says. "If people feel the Government can't work out where it's going they think "why the bloody hell should I"?" Sterling bursts out laughing. Just suppose you and I had a small engineering company. We could invest half a million pounds to expand it. In this climate, we'd probably wait. A million companies are saying the same. If everybody waits, you're not going forward. It doesn't help, he says, that Britain's main export market, the eurozone, "ain't buying." But there's also a lack of leadership. "I have a lot of sympathy for the views around [Business Secretary] Vince Cable," he says. You have got to lead from the front. From his general background and views he is not a natural leader. He finds a military analogy. What's the difference between a good regiment and a bad regiment? It's not the men it's the leadership. You'd say I'm following him. What makes you go over the top? You're not going to go on your bloody own. When it comes to Cable's department, Sterling's "been there, done that." He was an unpaid adviser to the DTI [trade department] in Margaret Thatcher's government. "I do see her from time to time but sadly her good days are not too often," he says. A couple of years ago we used to go out quite regularly and she liked to go to Wilton's [the West End restaurant]. You always know when she's having a good day because she starts the finger bit," he says, miming her jabbing away, "saying "you know Jeffrey it's all about tax, it's all about tax."" Sterling would not disagree. Someone's got to have some courage with tax. It's all very well saying corporate tax is down. But most of us, even the bosses, don't have much of a feel for that. When you get a bit more in your own pocket, you notice that. It's the old fashioned thing. On a Saturday night, 10.30 say, you want to flag down a taxi and the driver says, "No, I'm going home, Governor." If he knew from 10 o'clock onwards he didn't pay any tax at all, he'd say "where you going"? We're all the same. For Sterling, one of the main problems of Coalition politics is that the Government has been hamstrung on tax. When you have people in the Coalition saying I don't think anybody should earn more than £100,000 a year, you can't get anywhere. Then there's the Government's "mixed messages" over the City and the banks. I've said to them ages ago, leave the City alone for goodness sake. Who's them, I wonder? "I can't say who I've talked to," he smiles, later dropping in à propos of nothing: "David Cameron's father was my stockbroker for 35 years so I've known David since he was that high." The City, insists Sterling, is "a great creator of wealth. These people are taxed heavily so it all comes in. If you let the banks go out there and make money and you eventually flog off that public holding [in the Royal Bank of Scotland and Lloyds] that's £70-odd-billion back again. But every time you say I'm going to kill the banks, the share price goes down. Then someone says "do you realise the public is losing 30pc of its investment." Maybe it's because the Government's last utterance made the shares nosedive. He found the Government particularly vindictive over "that business around old Fred and his knighthood." "I was hugely upset about that," he says of the decision to strip former RBS chief executive Fred Goodwin of his gong. He hadn't committed a criminal offence, they were just hounding him. I thought it was absolutely ugly. I know him extremely well and I've always found him very straightforward in his concern in looking after people. He was a great supporter of Motability. But he did get the ABN Amro deal so badly wrong the bank needed a massive taxpayer bailout. Did he make a major mistake? But he wasn't alone. He had all his board, he had half the City involved in it. People like to rewrite history. Sterling says Goodwin's main mistake was "not stopping" when ABN sold LaSalle, the US business RBS coveted, to Bank of America. The bloke who gets away with it is old John Varley [the former Barclays Bank chief executive] because John was minded to do it as well. But he pulled back and Fred went through. And that's, I'm afraid, how reputations come and go. What of the great shareholder spring? Sterling, who had a £12m stake in P&O by the time the business was sold to Dubai, thinks directors will only be properly aligned with shareholders when they have their own money in the business that they "can actually lose." "The biggest problem with many bonus schemes is they are all upside and no downside," he says. But shareholders must also be less "short term." "If I put down the keel of a ship today, it takes me out to 2050," Sterling says. When you take an investment decision to 2050 there's no point a hedge fund manager saying at my quarterly results can you give me an idea of how you'll be doing in June, it's meaningless. These days, the CEO is expected to do a miracle, like this [Marc] Bolland at Marks & Spencer. In this economy, it's not surprising the spending power's gone back. What do they want, blood? How can he build for the future if he has to keep looking over his shoulder because he might get kicked out in a year's time? With that, Sterling is off for some final barge practice. Before he goes, I ask him if he really did complain that the layout of the new Portsmouth ferry terminal would force Swan Hellenic cruise passengers to mix with "lorry drivers who in the summer suffer from BO." "I did," he confesses, with a sheepish grin. I didn't choose my words very well. All I was saying is what happened to be the truth. In this day and age you have to be so careful with what you say.