Is Theresa May turning her back on business?

EDITOR'S BLOG: The exit of BRICS minister Jim O'Neill and the closing of the Business Advisory Group are a message of intent by the Prime Minister that is anything but lily-livered.

by Matthew Gwyther
Last Updated: 26 Sep 2016

Two events at the tail end of last week give one concern that the government and business in the UK are hardly seeing eye to eye currently. First, there was the abrupt departure of Jim O’Neill, the Treasury Minister and former chief economist at Goldman Sachs. This was Mrs May’s first ministerial resignation and he’s gone not to the Conservative seats in the Lords but very pointedly to be a cross bencher. Then there was the equally terse announcement that the Prime Minister was disbanding the Business Advisory group that had been set up by her predecessor David Cameron.

If you don’t live in the fierce, tribal world of politics it’s hard to see why Theresa May did this. What exactly does it signify apart from a weird scorched earth attempt to eradicate anything that remains of the Cameron/Osborne era? It almost has an element of Year Zero about it. After a summer filled with Philip Green, Mike Ashley and sky high executive salaries it looks like another rap over the knuckles for the fat cats of British business. But we should all hope that despite this she doesn’t believe business should be unseen and unheard.

Goodbye Mr Brics

First, O’Neill. Prime ministers and chancellors over the years have seen value in bringing big shots from the world of business to join their administrations. It gave them rigour and a  sense of the importance of the bottom line. Gordon Brown made Digby Jones, the former head of the CBI, a member of his government ‘of all the talents.’ Jones endured a very bumpy ride indeed. Archie Norman was the CEO of Asda when he was invited to become MP for the true blue seat of Tunbridge Wells at the 1997 election.

Few of these experiences tend to end well - Norman moaned how the simple processes of business management were impossible to bring to bear on the fractious blob of politics. The worlds of business and politics are very different and business people tend to get highly frustrated by the fact that the wheels of government are far slower to turn for them than heads around the boardroom table.

George Osborne - who talked O’Neill away from Goldman Sachs and into government in the first place - saw that the fanatical Manchester United fan was the perfect fit to help with two of his cherished projects: the Northern Powerhouse and developing closer economic ties between Britain and China. O’Neill was Mr BRICS (he coined the famous emerging markets acronym for Brazil, Russia, India, China) and was at one with Osborne in believing that our long term interest lay in building and preserving very close links with the wealthy Chinese who will be paying for our new infrastructure needs for years to come.

So it’s highly unlikely that the Hinkley Point saga where May very publicly hesitated and questioned the suitability of Beijing as a partner in such a project  amused him. He must have endured several ear-burning calls in Mandarin. As a comprehensive school educated individual he also did not have much truck with the re-introduction of grammars. May and O’Neill were clearly not a good fit.

Bye bye Business Advisory Group

There is much symbolism in closing up a talking shop for corporate big cheeses. The Business Advisory Group was there according to its website to ‘ provide high level advice,’ to the PM and ministers on ‘critical business and economic issues facing the UK.’  And there are those who appear less concerned by the removal of the these developments.

Mark Wallace of ConservativeHome - who used to be head of media for the IoD which represents individuals directors often of smaller enterprises - asks who really speaks for British business and makes a point which is worth quoting at length:

‘Part of the problem is rather like a wider issue in our democracy more generally: those who make the most noise are not always representative of the greatest share of the population. This is particularly stark when it comes to the influence of big corporations. Their size means it’s easy to get a couple of dozen in the room with a politician and make it sound like an impressively influential meeting – how many hundreds of thousands of people they employ, how many billions of turnover were sat around the table and so on.

'The problem is, while big businesses give easy access to what sound like large numbers, they still only represent a small minority of the UK’s economy – small businesses, which are much harder to engage with en masse, are far more important collectively. That disparity is even more stark when you judge them on the part they play in growth or rising employment – big businesses can create thousands of jobs at a stroke, but their power as sizeable individual companies is tiny compared to the vast collective expansion and hiring done by their smaller counterparts.’

So, the little guys and gals could and should get more of a look in. What did the Advisory group actually achieve, ask some? It certainly did not help Cameron to win the referendum. It was often seen as a close ally of the Treasury. This may be a key to its demise as it appears that the Treasury under Philip Hammond is trying hard to negotiate a softer Brexit deal, remaining within the single market, in the face of hardliners like Davies and Fox.

It’s also true that such committees can look like cosy coteries with the members pushing their own companies’ particular interest. Why wouldn’t they - they are under a duty to their shareholders to do so. There’s also a risk when some bosses don’t get the tap on the shoulder and feel highly resentful that a rival gets a competitive advantage. When Alison Brittain of Whitbread, Bob Dudley of BP and Carolyn McCall of easyJet were invited their competitors almost surely felt passed-over. (Having Michael O’Leary of Ryanair around a table at Number 10 would, however, have been priceless.)  

There are alternative lobby groups who talk to government all the time. The CBI the IoD, the British Retail Consortium, the Federation of Small Businesses. I suggest that the more talk, the more dialogue between business and government the better, especially in these unsettling times. To coin a phrase not heard for a while ‘we’re all in this together’ with or without a Business Advisory Council.

Good luck with the opposition

So if they feel unheard by the current government where might business go for a sympathetic ear. The opposition? Keep your sniggers down at the back. Labour’s relations with business were hardly warm during the Ed Miliband era and they have chilled very considerably since. At the Labour conference this week there are apparently not many takers and they can hardly give tickets away for the business gala dinner. McDonalds is banned.   

‘If you look at the stalls, the business presence is well down; instead we’ve got every social movement in the country turning up,’ said one Labour figure quoted by the FT. Quite what point there would be cosying up to a party that holds businesses in such disdain and would seek to make life even harder for it, is hard to see.

The shadow chancellor John McDonnell is making quite clear this morning what his agenda for business might be - a programme of re-nationalisation. ‘The winds of globalisation are blowing in a different direction. They are blowing against the belief in the free market, and in favour of intervention,’ he says. The future of manufacturing, he says, lies in collaboration - underpinned by high-skilled labour and high levels of investment - rather than ‘dog-eat-dog competition’. Not a fan of markets, then

And, anyway, the futility of any campaign by business to woo Labour is summed up by one point - their utter unelectability at the moment. It would be wasted effort if their chances of ever getting political power are close to zero. And Corbyn has no real interest in business apart from squeezing it until the pips squeak if he were ever to get the opportunity. He doesn’t need money from business currently as the explosion in new party members and their subs have helped swell his coffers.

Far better to hang on with the current regime by the coattails, keep those lobbyists hard at work in the shadows and try to see where we are going on this weirdest and most unnerving of journeys, and then do what can be done to influence what is looking increasingly like a Hard Brexit. And that goes right from sole traders right up to FTSE 100 giants.

Image Credit: DFID/Flickr


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