The best companies embrace change
I’ve long had a problem with publicly owned companies doing politics. They can and should do policy, of course: they certainly owe it to their shareholders to try to influence the laws and taxes that affect them directly. They are also perfectly entitled to fight for capitalism in a broad sense: without that, they wouldn’t exist.
But there is a line that shouldn’t be crossed. They shouldn’t explicitly back a political party or a particular side in a referendum. That should be the preserve of private individuals and private companies. PLCS should try to make the best of democratic decisions, and they should accept and embrace big social trends. It is genuine progress, for example, that big businesses increasingly embrace modern society as it is currently is, and are desperate to hire a diverse workforce. Major elections and referendums often reflect another kind of social change; that too needs to be absorbed by the business community.
Which brings us to Brexit: the job of PLCS is to try to mould the outcome in a way that is best for them, or for the economy as a whole, not to seek to reverse it. Some banks have a real challenge on their hands, because of the EU’S protectionist attitude to the selling of financial services: but they should seek ways around it, and replacement trade arrangements, not campaign against Brexit per se.
It is fair for companies who believe that their business has been damaged by a side-effect of Brexit to say so (for example, the partly irrational slump in sterling has damaged retailers that import the kinds of products it isn’t feasible to produce in the UK). But others that haven’t really been affected shouldn’t use the referendum as an excuse for poor management or bad luck. Conversely, firms that have done well from what has already happened as a result of Brexit should be free to say so. Export volumes of manufactured goods have been booming, thanks to the weaker pound: there was a 9.9 percentage point rise in the three-month year-on-year rolling average growth rate between July 2016 and March 2017 following the EU referendum vote, according to the Office for National Statistics.
The reality is that the best companies are those that always embrace change. They realise that it is pointless and stupid to fight against the tide of history and do their best to make the most of it.
One of the best responses to Brexit to date from a major business – and one that certainly meets my criteria of what a firm should say when confronted with major political change – came from Burberry this week. Christopher Bailey, chief creative officer, said as part of the company’s latest results presentation that the potential for post-brexit Britain is “enormous”.
He pointed out, quite sensibly, that his company was “absolutely committed” to keeping its manufacturing in the UK. Even better, he argued that “Britishness resonates globally” and that his business now has a huge opportunity to grow. This is the sort of upbeat talk that real leaders understand to be necessary in times such as these.
He was absolutely right – just as he was right to warn that restrictions to immigration shouldn’t become so severe as to make it too hard to operate a dynamic business from London. His intervention was pitched exactly right, and it is worth remembering that Bailey, like many other big business leaders, backed Remain.
So this is my new litmus test: I respect businesses that embrace the upsides of Brexit and that seek to mitigate the downsides in a constructive, sensible manner that is respectful of the UK’S democratic choice. I respect those that come up with plans to make Brexit work as well as possible, in the short as well as long term. I don’t respect those that seek to bully or blackmail the UK into reversing our choice. And, guess what – I bet that upbeat, optimistic firms such as Burberry will do much better than those that still refuse to accept the new political reality.
‘I respect those that come up with plans to make Brexit work as well as possible’
Build more homes now
Kudos to Sajid Javid for trying to tackle Britain’s housing crisis, caused primarily by decades of underbuilding. It is the biggest problem we face, a key reason why productivity is so low, costs so high and labour relatively immobile. Let us hope that his ideas are adopted. The UK needs to build at least an extra 100,000 homes a year, and this expansion needs to be driven by the private sector, albeit perhaps from new entrants to the market and self-builders. Javid’s plan is a great starting place.