19 May 2017

Is May’s government biased against business?


I agree with Allister Heath that the Conservative manifesto is much better than expected, given all the worrying “Red Tory”, anti-business spin which has been coming out of the party’s election campaign.

The actual words in the manifesto are vaguer than was originally indicated. The energy price cap on variable tariffs, falsely advertised last week as saving 17 million households £100 a year, is reduced to being “a safeguard tariff cap that will extend the price protection currently in place for some vulnerable customers”.

Even the commitment to reducing immigration below 100,000 a year has no time frame and no definition of immigration.

Furthermore, the overall thrust of the manifesto, which is intended to shore up the cohesiveness and the institutions of society, is surely correct. Mrs May says she doesn’t support “untrammelled free markets” or “libertarianism”. Hardly anyone does support those Aunt Sallies. Even the most market-oriented members of the Conservative party support sound regulation and state provision of essential services. What the hoary old Thatcherite Alan Clark used to call “all this privatising the Red Arrows nonsense” is a myth, or at least it ought to be.

The ex-Labour, pro-Brexit voters being targeted by Mrs May no doubt like her Red Tory rhetoric, perhaps being of the view that the City and business are full of crooks. Indeed, the conduct of a tiny minority in business, in relation to executive remuneration, or stirring up opposition for the Government via the Remain holdout campaign, means the language of the Conservative campaign is not entirely a surprise.

However, in two important respects, both the manifesto and the rhetoric which accompany it are disappointing and store up potential trouble for the future.

The first, is investor confidence. Business investment is flatlining, when actually we need a substantial step up, especially in investment for small businesses, intellectual property in universities, and infrastructure. Neither Mrs May nor her team seems to have a view where this will come from except from a proliferation of Government-run “Future funds” and other such vehicles.

Not only are these funds trivial in size when compared to our global capital markets, it stands to reason they are likely to be bureaucratic and prone to political interference. It would be far better if the Government instead had a policy, like the Victorians or the Georgians during the Industrial Revolution, to connect capital markets, via the City with the myriad emerging investment opportunities in the United Kingdom.

Instead, the Conservative government is apparently intent not only on omitting to create such a connection, but in chasing investors away. The recent spike in inflation, the uncertainty over fiscal and monetary policy, the extended period for bringing down the deficit, the failure to invest in infrastructure, and phrases like “asset strippers” accompanying an ill-thought-out proposal to alter the Takeover Code, hardly encourage investor confidence.

Which leads me to the second point. The idea that we are going to make a success of Brexit and our future without the help of business is absurd. It is in the private sector where the majority of people work. It is the private sector which creates economic growth, pays the tax revenues, and delivers most goods and services, not the Government. And the Government works for the people, not the other way round.

There is a view that some around the Prime Minister lack experience of working in business, and consequently are prejudiced against it. Once the election is over, let us hope the Conservative party rediscovers its respect for and understanding of enterprise, for regulated markets and for the good the private sector can do. After all, that is how the world works outside Westminster.

George Trefgarne is founder of Boscobel & Partners, a communications firm