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How The Conservatives And Business Need To Work Together To Save The Job Creating Sectors

Last Updated: Friday, February 3rd, 2012

Should Fred Goodwin have lost his knighthood? Should Stephen Hester have been forced to give up his bonus?  Should the Coalition be proposing new taxes on the wealthy? Individual pro-enterprise people will answer these individual questions in different ways but the climate adds up to something that’s not attractive to investors, risk-takers and job creators. The frustration of influential commentators, notably The Telegraph’s Jeremy Warner (http://conho.me/w3CEzB) and City AM’s Allister Heath (http://conho.me/w4uJgg), has boiled over this week. Britain had become anti-business, they declared. Warner said a populist Cameron had sent a “not welcome here” message to the world’s businesses. Heath argued that the UK political environment hasn’t been more hostile to the wealth creating sector since the mid-1970s. “Goodwin’s deknighting is not what is destroying the UK’s reputation,” he wrote but… 

“What is doing that is the war on the City (rather than sensible reform); constant attacks on success; an absurd belief that fixed pay is a better system than variable pay and that politicians can determine what a “fair” wage is; the government’s failure to deregulate labour markets; high income and other taxes; an energy policy which is killing manufacturing; the tax raid on the North Sea; an inefficient and bloated public sector; inadequate airports; a gargantuan budget deficit and excessive private and public debt; an inadequate education system.”

Cameron and Osborne need to wake up to this and I think they might be beginning to. Normally when I complain about the Government’s lack of a growth agenda my ears are met with a recital of policy initiatives that have been taken by the Coalition (sadly, most of them Gordon Brownian in complexity). This week when I raised the same question with a very senior minister I didn’t get that list. I was met with a pregnant silence. At least I’m assuming and hoping that it was pregnant.

I’m not going to get into the substance of what a growth agenda might include. On the pages of ConHome and in these Letters I’ve done that many times – new airport capacity… a green light for new nuclear power stations… road privatization and toll roads… profit-making schools… retirement age linked to life expectancy… radical pruning of red tape for small and start up businesses… an end of national pay bargaining… a regional minimum wage… end of 50p… a restructuring of the tax system so that income and investment are taxed relatively less and pollution and property more… delay of climate change measures until clean technologies have advanced… Enough, you say! What I want to emphasise today is the politics of this for both the Conservatives and the business community.

First, the Conservatives. Although the Tories cannot ignore the public mood (and if you look at thinks like the rise in CGT, retention of 50p and bank levy they haven’t) they should and do know that they can’t win a political contest if the winner is the party that most bashes bankers, creative tax accountants and the wealthy in general. The Left is always better at redistribution of wealth and the Tories better at encouraging its creation. The political contest that the Tories can win is the one they are always best at – the party that takes the long-term decisions for the good of the British economy. George Osborne understands this. On debt he is portraying the Coalition as the party acting in the national economic interest while Labour plays politics. That’s as good as far as it goes (and Cameron is trouncing Ed Miliband’s ‘toughness’ rating) but it’s too narrow. Yes, Conservatives have taken the tough decisions to ensure the country lives within its means but the Government has not taken the tough decisions to prove to the world that Britain is open for business. Because supply-side reforms are slow to have an effect the Government is running out of parliamentary time to deliver growth-enhancers but they should still try. And soon. There’s mounting evidence (http://conho.me/z9mLZe) that it will be hard for the Tories to win an overall majority at the next election. The Government needs a game changer and, perversely, embracing unpopular individual measures probably won’t add up to unpopularity if voters begin to see the Conservatives as THE party with the answer to Britain’s long-term prosperity.

To succeed in all of this, however, the business community needs to be radically reorganised. Ministers complain with some justification that they don’t get much media savvy support from business when difficult issues like planning reform come up. On one side of the debate is the NGO For Protection Of Fluffy Bunnies and on the other side is the Association Of Plutocratic MegaCorps In Pinstripe Suits. Business doesn’t need any more spokesmen for individual sectors like the airline industry or the banking sector (as good as job as they do on individual pieces of legislation) but it needs to create a MOVEMENT for the kind of job-creating friendly economy that is in the whole nation’s interest and not just in the interest of the already haves. When BBC or Sky wants a business representative for an interview the person who turns up should represent an organisation called something like TwoMillionJobs.com. They will be there to argue for the kind of reforms that will create jobs (and yes, in the process, those very same reforms just happen to be business-friendly too).

By Tim Montgomerie

 

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

MARK PRISK MP ON CUTTING RED TAPE: “More than 1,200 regulations have been considered so far, and we have agreed to scrap or substantially improve over half.  Changes include replacing 12 pieces of legislation on consumer protection and information with a single Consumer Rights Bill; scrapping the paper counterpart to the driving licence, saving motorists up to £8m; and streamlining procedures for manufacturing export control. Many arcane and obsolete regulations have also been scrapped, including the 98 Trading with the Enemy regulations (restricting companies’ dealings with such threats to national security as Belgium and the USSR), regulations dictating the location and design of no smoking signs, or guidelines specifying the roads on which dogs must be held on a lead.” More via http://conho.me/y7uvFW

 

IMPLICATIONS OF HUHNE’S DEPARTURE: “Huhne’s energy policies have been hurting UK manufacturing. His replacement will still be a Liberal Democrat but Treasury sources hope he might be a little bit more pragmatic. We will see but George Osborne will certainly see the change as an opportunity to kick some green policies into the longer grass.” More via http://conho.me/zLKN4G

GOVERNMENT SIGNALS IT WANTS TO FURTHER INCREASE IMF CONTRIBUTION: “We had a further sign that George Osborne is minded to send more money into Christine Lagarde’s warchest when, [Wednesday] night, the Government’s Whips Office circulated an article from Andrew Tyrie (see Paul Goodman’s tweet). The article by the Chairman of the Commons Treasury Select Committee made a very strong case for increasing Britain’s contribution.” More via http://conho.me/w8oQXO

BRITAIN’S NEW UNIVERSITY SECTOR TAKES SHAPE: “The Government certainly has no alternative to the tuition fees policy itself if Britain’s universities are to be good quality and student numbers are to remain high (since the taxpayer simply can’t afford to fund their fees).  “Those institutions that succeed are likely to be those that are more accountable to their students”, Willetts writes today.  This is suggesting directly that market pressures are going to have their way.” More via http://conho.me/xWBs1b

DON’T UNDER ESTIMATE LABOUR’S CHANCES AT THE NEXT ELECTION: “Labour may have only won 29% of the vote at the last election but they start their time in opposition with nearly 100 more MPs than Hague. More significantly they received a windfall gain of 5% to 8% the moment the Liberal Democrats joined with the Conservatives. Many Left wing supporters of the Lib Dem party defected – probably permanently – into the red column when Nick Clegg put a Tory into Number 10. Labour therefore go into the next campaign with more like 34% to 37% of the vote already pretty committed. Where Margaret Thatcher had the great benefit of a divided opposition, Cameron has the great disadvantage of a united Left.” More via http://conho.me/z9mLZe

CHRIS KELLY MP ADVOCATES A NEW EUROSCEPTIC BUSINESS CAMPAIGN: “Paul Goodman recently wrote that “Euro-sceptics won’t win an EU referendum without a Business for Britain campaign“. He was absolutely right that the vast bulk of business opinion is firmly Euro-sceptic and that that scepticism now needs to be cultivated, harnessed and focused. I would warmly welcome the formation, in 2012, of a “Business for Britain” campaign of the sort Paul has called for.” More via http://conho.me/xXquvX

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