Top of his in-tray: Curb strikes and cut red tape
THE arrival of the cool, selfmade figure of Sajid Javid at the ramshackle Department for Business, Innovation and Skills looks as if it will be a breath of fresh air. Javid, the millionaire son of a Bristol bus driver, is known for his admiration for enterprise and hard graft – prized by Mrs Thatcher, whose picture adorns his office wall.
As the first Conservative running the business department in 18 years – and with a background in investment banking – Javid offers a sharp contrast to Vince Cable, his defeated Lib Dem predecessor.
Cable gave the impression of being rather aloof, and his failure to deal with excessive regulation of free markets earned him a reputation with his critics in the City as the anti-business minister. Most seriously, Cable failed to tame the large and ungainly remit which comes with the business department.
From running the universities, to encouraging and advising small businesses, promoting exports and enforcing better behaviour in Britain’s boardrooms, it oversees a vast bureaucracy which has too often been allowed to run out of control.
If Javid wants to show he can overhaul the department, he could adopt the approach of management consultants McKinsey – when they are asked to streamline a business, they routinely start with the proposition that it could be run more efficiently if the cost outlay was cut by 40 per cent.
If he was able to make savings along those lines in his own ministry, that would certainly please the Chancellor, George Osborne. What was missing from the department in the Cable era was a determination to sweep away the mountain of regulations that stifle enterprise. Every administration of modern times has promised a bonfire of red tape, so as to liberate entrepreneurs, but few have achieved it.
Were Javid to set about this, either by dismantling some of the quangos – such as the Industrial Development Advisory Board – which oversee business, or at least by replacing their leaders with others who have free market credentials, he would be off to a roaring start.
He could also pledge to speed up the review of business rates, which was one of the measures announced in the Chancellor’s preelection budget in March.
The unfairness of the business rating system is one of the major bugbears for growing firms, particularly in the retail sector. One of the main reasons for the closure of thou- sands of small high street shops in recent years has been the damagingly high rates they are forced to pay on their premises.
As someone who regards ‘deregulation’ – in other words, a reduction of State meddling – as a core function of government, Javid has a real opportunity to boost enterprise.
His hero worship of Mrs Thatcher – last week he told the Mail how, when he met her in his twenties, she told him to ‘protect our great island’ – also makes him the ideal minister to defuse the threat of strike action from ever-militant unions.
Industrial action in key areas of public services, from transport to education, do untold damage both to commerce and consumers. That’s why the Government wants legislation that would require the participation of at least 50 per cent of unionised staff in strike ballots for them to be legal – and even then 40 per cent of the entire union membership eligible to vote would have to support the strike action. Such a measure would win widespread applause from business, which suffers heavy losses of income whenever there are walkouts.
The new minister also needs to be a real advocate for the development of innovative businesses. It’s a huge disappointment that British firms still lag behind many other Western economies in pursuing research and development (R&D), which is always the key to future expansion. It is no surprise that the nation’s best corporations, the life sciences groups GlaxoSmithKline and AstraZeneca, and the aerospace firms BAE and RollsRoyce, are those which devote the most resources to R&D.
HOWEVER, we in the UK spend only 1 per cent of total output, or GDP, on research, against twice that figure in the United States and Germany. For us to close that gap may require Javid to persuade George Osborne to provide much more generous tax incentives for investment in science and technology projects.
So what else is in his in-tray? He needs to give more economic clout to the regions by allowing businesses, chambers of commerce and regional politicians more say in how money is spent.
And while he needs to take the economic recovery forward, he must also deal with two serious deficiencies.
The first is Britain’s appallingly low level of productivity, which can be addressed only by encouraging more investment in IT, plant and modern industrial techniques such as robotics. The second is our failure to export more successfully.
Javid, as the effective head of what used to be the old Board of Trade, must secure free trade deals with the fast-growing economies of Asia, with India a particular target. If that can be managed, then the long-term prosperity of Britain could be assured.