Hammond’s warning to business
Irresponsible companies face backlash, says Chancellor in push to put workers on boards and curb bosses’ pay
BIG businesses are “angering their consumers” by failing to listen to the “mood music” over issues including executive pay and workers’ rights, Philip Hammond says today.
In his first newspaper interview since becoming Chancellor, Mr Hammond backs plans to force firms to put workers on boards and clamp down on excessive rewards for bosses.
He warns that “demonstrations of popular sentiment”, including the EU referendum vote in the UK and the rise of Donald Trump in the United States, show that people will no longer accept “irresponsible” business practices.
The warning comes on the eve of the Conservative Party conference, at which Theresa May is expected to unveil a series of initiatives designed to appeal to wavering voters who have previously backed Labour.
The Prime Minister will today also announce a review of workers’ rights to be overseen by Tony Blair’s former policy chief.
Mr Hammond defends government plans to put workers on company boards and proposed action on executive pay.
“Business needs to understand – and I think business does understand – in the wider context it isn’t sustainable to have large household brand-name businesses angering their consumers,” the Chancellor says.
“Their consumers, our voters, must be important to them and their reputation. Their image with their consumers must be important to them.”
He adds: “Recognising the mood music that we see in the UK from the referendum, many European countries in all sorts of demonstrations of popular sentiment, in the US with the phenomenon of the Trump campaign – I think business needs to respond to that in a measured and sensible way.” The comments are likely to anger some business leaders concerned that a Conservative government is failing to speak up strongly enough for entrepreneurs under attack from Jeremy Corbyn’s Labour Party.
Official figures yesterday confirmed that the economy has prospered since the Brexit vote but business sentiment remains cautious.
The Chancellor says that new immigration controls when Britain leaves the EU must not lead to the economy “suffering”.
Britain will not “shut out” highly skilled workers and new rules will be enforced “responsibly”, he says. In re- cent days a number of senior Conservatives have suggested that Britain could quit the European single market in order to ensure full control of its own borders.
Mr Hammond says: “[ Voters] will expect us to negotiate a solution which delivers the key elements of leaving the European Union – regaining our sovereignty, getting control over our borders – but they will expect us to do all of that in a way that allows the UK economy to go on growing.”
PHILIP HAMMOND is keen to point out that his relationship with the Prime Minister is very different from the one George Osborne had with David Cameron.
In the three months since Theresa May made him Chancellor, there have been reports of strains. Gone are the days when Mr Cameron and Mr Osborne governed almost as one.
The new Prime Minister prefers to make decisions alone or with only her most trusted advisers, it is said.
It has even been reported that Mr Hammond is no longer a guest at her daily morning meeting, something that would have been unthinkable when Mr Cameron and Mr Osborne occupied Downing Street. But Mr Hammond suggests that the near-symbiotic relationship maintained by his predecessor and the former prime minister was not necessarily conducive to good government.
“George Osborne had a very close personal and political relationship that goes back a very long way with David Cameron and they worked together in a certain way,” Mr Hammond says.
“Theresa May and I work together in a different way – [though] we’ve also known each other a long time.”
He adds: “The most important thing is that we share clear objectives. That we understand each other’s priorities, we know how each other work and we have a channel of ready communication between us and I’m quite satisfied with the arrangements that Theresa May and I have got.”
Brexit and the Single Market
In recent days there have been reports that Mrs May is seeking a “hard Brexit”, which would mean Britain relinquishing its membership of the single market so that it can have full control of its borders. Mr Hammond is dismissive of attempts to characterise exit negotiations as “soft” or “hard”.
“We’re the world’s fifth-largest economy and creating a relationship between the European Union and the world’s fifth-largest economy is going to be a complex process for which there is no model,” he says. “So it will be a bespoke model. We should be looking for a good Brexit – not a hard Brexit or a soft Brexit.”
There have been reports that he is concerned that the desire among some in Government to control immigration could lead to economic harm, with the European Union denying access to the single market if Britain does not accept the free movement of migrants.
But Mr Hammond insists that any migration controls must not come at the expense of economic progress.
The Chancellor says: “We’ve got to be clear about one thing – there’s an implicit term of the mandate we received from the British people. It may not have been stated explicitly but it’s implicit. And that is that they do not want to see the economy suffer.
“They do not want to see jobs lost, they do not want to see standards of living decline. So they will expect us to negotiate a solution which delivers the key elements of leaving the European Union – regaining our sovereignty, getting control over our borders – but they will expect us to do all of that in a way that allows the UK economy to go on growing.”
Immigration
Mr Hammond has made clear that whatever immigration controls are enforced, “highly skilled” workers will never be “shut out” of Britain.
He has already said that key workers in the financial services industry will be exempt, but appears to suggest that other sectors will get similar freedoms. “Whatever solution we end up with, whatever control powers we have over immigration into the UK, we will use them responsibly,” he says. “We will use them in a way that supports the UK economy and we will certainly not use them to shut out highly skilled Philip Hammond said that powers over immigration would be used ‘responsibly’ people – whether they are bankers or software engineers or managers in global companies – from the UK when their presence is supporting inward investment and growth.”
Responsible capitalism
Mrs May has faced criticism from the country’s biggest firms by demanding “responsible capitalism”.
The Prime Minister wants to put workers on company boards and also rein in excessive pay.
He insists the measures, particularly plans to put workers on boards, are “something that responsible businesses will recognise can be positive for them”. He also suggests large companies will not want to risk a backlash from angry customers.
“Business needs to understand – and I think business does understand – in the wider context it isn’t sustainable to have large household brand-name businesses angering their consumers. Their consumers, our voters, must be important to them and their reputation, their image with their consumers must be important.”
Amid growing concerns about the German lender Deutsche Bank, Mr Hammond is quick to reassure voters that the British – and global – banking systems are more “resilient” than before the 2008 financial crash. He says that if a big bank is in trouble “the world’s central banks would cooperate together to resolve it in a way that didn’t contaminate the wider system”. He adds: “I have a high degree of confidence that those mechanisms that we now have in place are effective and will work if called upon.”
The tech industry
Mr Hammond will use his speech to the Conservative Party conference in Birmingham to announce a huge cash-injection for hi-tech companies.
As well as £100 million for life sciences, there will be £120 million to research artificial intelligence and nanotechnology. Mr Hammond says he wants to make Britain a “global capital” of “innovation”.