Tories are turning hostile to business, warns former No 10 policy chief
A “CREEPING sense of hostility to business” has taken hold in the Conservative party, the former head of the No 10 policy unit has warned ahead of a crackdown on executive pay.
Writing in The Daily Telegraph, George Freeman criticises the party’s “woeful” failure to champion business and warns that ministers must back “insurgent capitalism” and convince a new generation of its benefits.
The Tory MP’S comments come ahead of a government announcement which will force nearly 1,000 listed companies to disclose their chief executives’ pay compared with the average worker and to justify the difference. It is also believed a new public register will name and shame companies that have had 20 per cent of investors complain about executive pay.
The move was criticised initially by senior business figures for being draconian after a report by the Big Innovation Centre warned that there would be unintended consequences of a crackdown on pay. The plans have been watered down from initial proposals, which included a pledge to give workers representation on boards, announced by Theresa May last year.
Mr Freeman, who helped write the Conservative manifesto, says that “the creeping sense of hostility to business in British politics generally – and the Conservative Party since Brexit” is “inexplicable” and the party should focus on reassuring businesses. He writes: “Thirty years after unleashing a renaissance of enterprise which reversed this country’s economic prospects in the space of just seven years (1979-86), a Conservative government confronted by growing anti-globalisation seems to be flirting with anti-capitalism.”
George W Bush famously said “the problem with France is that they don’t have a word for entrepreneur”. In reality, the French have plenty of words for it, but as Emmanuel Macron has grasped, simply not enough actual entrepreneurs. Instead, they’re in London – now France’s fourth biggest city – escapees from self-defeating labour laws, drawn to London’s renaissance as a vibrant global city.
Charles de Gaulle’s dictum that it is hard to govern a country with 300 cheeses has been turned around: the revival of British cheese by entrepreneurs now means that the UK has more cheeses than France. (We are seemingly becoming less governable, too.) Mr Macron wants to exploit Brexit to lure back French entrepreneurs, and with them British and American scientists and businesses alienated by Brexit or Donald Trump’s isolationism. Smart move. Entrepreneurs and enterprise are the keys to Western Europe’s economic vitality. Unsubsidised, self-motivating, risk-taking, job-creating, customerempowering, tax-generating engines of opportunity: if you described this to one of the many committees in Whitehall looking at entrepreneurship, they’d say it was unrealistic to expect people to take such risks. But they do. And we need to support them.
The buccaneers of British innovation – people like Sir James Dyson, Sir Richard Branson, Dame Anita Roddick, Brent Hoberman, Baroness Lane-fox of Soho and Luke Johnson, and countless less famous but similarly successful others – have done more to transform this country than most ministers ever will. Investor entrepreneurs like German-born Hermann Hauser (the only man to start 10 companies all now worth over £1 billion), and the thousands of angel investors backing start-ups, are funding the modernisation of our economy. Companies like Vodafone, Virgin and Dyson have showed what’s possible. A new generation of high-growth firms emerging from British “incubators” and clusters like Tech City in east London have the potential to be the BP, Virgin or GSK of tomorrow, employing tens of thousands and generating billions for our public services.
Which makes the creeping sense of hostility to business in British politics generally – and the Conservative Party since the Brexit referendum – all the more peculiar. Nearly four decades after unleashing a renaissance of enterprise that reversed this country’s prospects in the space of just seven years (1979 to 1986), a Conservative government confronted by a backlash against globalisation seems to be flirting with anti-capitalism.
Of course we need to be tenacious guardians against cosy cartel capitalism, fat-cattery, rip-off merchants, money launderers and the international criminals who pose as businesses or exploit our laws (we aren’t nearly tough enough). But we must always promote real entrepreneurship: the fresh, insurgent, empowering, disruptive sort that is the oil that makes the engine of capitalism hum.
While the UK is still a crucible of entrepreneurship, the engine isn’t humming – and not just from the rising cost of goods or worries over the impact of a hard Brexit on access to markets and talent. Popular support for business is waning, too. The truth is that a whole new generation of “millennial” voters, shaped by the impossibility of getting on the housing ladder, an ever-rising cost of living (especially rent and childcare), all the while observing London and the South-east becoming a playground for the global superrich, are feeling locked out of the system. Is it any wonder that the benefits of capitalism are not apparent to them? Why would you support capitalism if you have no prospect of owning any capital?
Wider share ownership, and obvious consumer choice and power, are keys to popular capitalism. And for a new generation it needs to be clear that capitalism isn’t just about share value but about shared values. For markets to flourish they need the consent of consumers, seeing the values they hold dear cherished rather than trashed. The damage that those like Sir Philip Green do isn’t just to BHS but to all of us fighting off the real threat of renewed socialism and the poverty it will guarantee the poorest.
As Theresa May has rightly flagged, market failure should offend real Tories. The way in which so many of our core markets – banking, energy, water, transport – have been allowed to evolve towards entrenched dominance by a few established players (often with government subsidies or protected monopoly privileges) to the detriment of customers is extraordinary. In fact, given this country is home to so many of the most exciting new companies with the ability to bust open cartels and drive innovation, prosperity and opportunity, it’s inexcusable.
Too often our public sector is a barrier to innovation, when it should be a catalyst. Nowhere is this more clear than in the field of life science where the NHS is too often an obstacle to innovation instead of being a research partner to world-class start-ups such as Immunocore, based in Oxford and pioneering drug cures for cancer, which was my crusade as Minister for Life Science, pre-brexit.
By embracing a partnership between private and public sector, we could unleash a new cycle of growth with the UK as the melting pot of the innovation emerging markets are crying out for. In my 15-year career before Parliament, working in the med-tech, agri-tech and clean-tech sectors, I was lucky enough to help start some of these new companies. Vectura, now a worldleading drug delivery technology company, began on my desk as a onepage memo on an idea for a new type of firm. It’s now worth over £1 billion because of the drive of its management, staff and investors.
We in Britain cannot cut our way out of debt – we must grow our way out. And we will have to do that by innovation growth, not population growth. As the economic power of mass consumption shifts to the East, we can be, and need to be, the crucible of new technology: renewable energy, vaccines, digital health, and diseaseand drought-resistant crops that are transforming emerging markets.
As a democrat in a sovereign Parliament I’m reconciled to the idea of making a success of Brexit. But we will only do that if we make it a moment of national renewal, if we stop blaming others for our own failings and confront them honestly – with the same energy, ambition, rigour and purpose that characterises our great start-ups.
To unleash this spirit of enterprise we need to implement some real reforms to create the conditions for new businesses to flourish. But we also need to ask some hard questions about the failures of British capitalism in the last 20 years, and the failures of the Conservative Party in the last couple of years to be the champions of enterprise and all it can deliver.
Will Brexit be the moment we turn our backs on the world, or the moment we reform and renew our economic model to create a more insurgent capitalism for the 21st century? Mr Macron is waiting for us to fail. We mustn’t.
George Freeman MP is chairman of the Conservative Policy Forum follow George Freeman on twitter @Freeman_george; read more at telegraph.co.uk/opinion