Gordon’s council of gurus

It is hard to imagine that the advisory body of well-known business leaders appointed by the Chancellor will tell him anything he hasn’t heard

by
Last Updated: 31 Aug 2010

When the Chancellor of the Exchequer calls and says he would like to pick your brains, it is a brave business leader who refuses. So it was that a dozen top business people allowed themselves to be named last month as Gordon Brown's International Business Advisory Council.

But what is the upside for them, or for the country? Brown benefits from having something new to announce that allows his name to be linked with such illustrious characters as Bill Gates, Lord Browne, Sir Terry Leahy and Li Ka-shing without any suggestion that cash may have been involved or any ulterior motive beyond the advancement of the British cause.

The contrast with the plight of the prime minister and his wealthy friends cannot have been wasted on the Chancellor's campaign managers, as Brown maintains that he had no idea about the £14 million of loans that had been raised to help his party fight the last election. Maybe he believes in the good fairy and her ability to conjure funds at the wave of her wand.

He is certainly more of an optimist than he has previously been taken for if he believes that getting a group of 12 international business leaders to meet once a year will benefit Britain's competitiveness. That there is a problem to be addressed is undeniable, but it's not new: Brown has been banging on about the need to improve productivity and competitiveness ever since he entered Number 11. He has held conferences and summits, some of which have included contributions from his latest initiative. Yet Britain continues to sink in the productivity rankings.

Brown himself has regularly issued dire warnings about the threat posed by the emerging powerhouse economies of Asia. No doubt when his business advisory council meets for the first time – and do not underestimate the task of finding a date when they might all be on the same continent, let alone gatherable in the same room – the challenges posed by China and India will be top of the agenda. But it's hard to see that the council will be able to tell Brown anything that he has not heard repeatedly – on occasion, from the members themselves.

Red tape needs to be slashed, the tax system simplified and the tax burden lowered; education needs to be vastly improved; the country's infrastructure must be upgraded; and firms have to be persuaded to invest more in their businesses and to be more adventurous in establishing links with the east.

The basic analysis of the problem is little different now from what it was a decade ago. Brown and his colleagues have acknowledged where the obstacles to com- petitiveness lie. The Chancellor has produced mountains of paper after successive Budget speeches, spelling out his good intentions. Yet regulation has increased. True, much of it originates from Brussels, but it is specially gold-plated in Britain. The tax burden on business has grown and the attitude of HM Revenue and Customs has become so hostile that some companies are considering moving their base to a more accommodating jurisdiction.

The chances are that they'd find a better- educated workforce as well as a more hospitable tax regime. For although examination results continue to improve, employers have difficulty reconciling all those GCSEs with candidates who seem bereft of even a basic education. A recent survey of employers found widespread dis- appointment with the basic skills of graduates.

Companies now have to invest in educating new staff to an accceptable level, yet the minimum wage they must pay rises ahead of inflation. The latest lift of 5.9% from October comes on top of an increase of 12% between 2003 and last year. This may be the sort of social justice that the Chancellor supports, but it is not an obvious boost to the competitiveness of British business. The advisory council will surely tell the Chancellor that investors must be persuaded to take a more long-term view if companies are to invest in measures to enhance competitiveness, and it will un- doubtedly stress the need for a more sensible and responsive planning system. It's hard to imagine what Li Ka-shing will make of the long-winded public inquiries that dog most planning ap- plications for new industry or infrastructure. Sir Terry Leahy, however, will be able to explain in full and angry detail.

But Brown has dangled before business the promise of improvements in the planning system on many occasions, with little obvious result. More words, even from the Chancellor or his new business council, will not aid UK competitiveness. If its members do not see any of their advice translated into rapid action, they should vow not to attend a second meeting.

Congratulations to Richard Lambert, who as the new director general of the CBI will have a pivotal role in trying to persuade the Government into action rather than words on improving British competitiveness. He is just the man to do it. I wish him well but will not be commenting on his success for MT, since this is my last column here. Thank you for all the feedback you've provided over the years I've been writing for the magazine. Its readership is mercifully free of those who fire off angry missives scrawled in green ink – a positive sign for British industry.

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