Tony Danker: Now is the moment for the Government to go for growth

3 Feb

Tony Danker is Director-General of the Confederation of British Industry

For business leaders, the past few weeks have felt like peak politics. But this week has marked a shift back to economics. And it is most welcome.

Yesterday saw the publication of the long-awaited Levelling Up White Paper, with its transformational aspirations. Today there are energy price announcements and an interest rate decision. Economics is coming to the fore once more.

For me, the biggest takeaway from yesterday’s PMQs is that the debate about long term growth has now reached primetime. Here at the CBI, we’ve been banging this drum for a while now. We partnered with the Campaign for Economic Growth at Conservative Party conference back in the Autumn because we wanted the government to focus more on business investment to drive the economy. And today I was joined by the brilliant Robert Colvile from the Centre for Policy Studies at a joint CBI-CPS event to answer the question: are we actually serious about growth?

The UK currently has the fastest growing economy in the G7, but it doesn’t tell the whole story. V-shaped recoveries around black swan events are no time for credit or blame. The downward nosedive is not an accurate judgement of economic performance; and nor is the climb.

The truth of the matter, as set out in black and white by the OBR, is that we’re looking at post-recovery growth of just 1.3-1.7 per cent. For a country that has demonstrated it can do growth at around 2.5 per cent, this is not ambitious enough.

And let’s be honest, without higher, sustainable growth the ambitious, levelling-up goals set out yesterday, from improvements to public services and much more besides, will be all the harder to achieve unless we can get growth going again.

Let’s look a little closer at the bind we’re in – and importantly – how we can escape being caught in a trap.

Lumping more onto the UK’s tax burden – already at the highest sustained level seen in peacetime – cannot be the answer. The evidence is clear that raising taxes stifles growth, and cutting them drives it.

We’re not talking growth at any cost and by any means. And we’ve not lost sight of the need for fiscal responsibility. We’re talking sustainable, long-term growth stemming from greater investment, innovation and productivity.

Just as companies can’t afford not to invest in growth, nor can countries. It’s not just about money – it’s about ambition and imagination too.

And there’s never been a better time to go for growth, because right now we’re at a unique moment: when once-in-a-lifetime events have coalesced to create a burning platform for change.

One of those is Brexit. I am a big believer in the opportunity of post-Brexit Britain. I think it gives us the platform we need to push the UK’s huge economic potential and the freedom to make big bets. It can awake us from the flatlining productivity that took hold after the financial crisis.

Another is the pandemic, which has driven huge acceleration in tech and digital adoption.

And finally, we have the opportunity that flows from our world-leading position on decarbonisation. There is a wall of investment to fund decarbonisation – backed by firms with over $130 trillion in assets. British businesses are begging Conservative politicians to see the enormous economic prizes available go to those who move fast.

All this means this is our moment.

So how do we seize it? By harnessing the creativity and initiative which birthed the Super Deduction, new skills bootcamps and offshore wind investment – measures which spurned orthodoxy in public policy and showcased the boldness and vision we need.

The first step should be a permanent Investment Deduction, succeeding the Super Deduction and mitigating the looming Corporation Tax rise. It would act as a long-term incentive to invest and grow enterprise, with businesses acting across many fronts in service of the nation.

Achieving the Prime Minister’s vision of the UK as a science superpower requires nurturing a workforce fit for the future. So, how about building on the Apprenticeship Levy with a new Skills Challenge Fund to invest in the high-value skills businesses really need.

We also need to get serious now about generating more of the skills we need at home – so we’re less reliant on immigration. Nadhim Zahawi is onto something with his new Unit for Future Skills, examining where skills gaps exist. Let’s supercharge that and build an independent Council for Future Skills. It could optimise training towards future economic demand and recommend visas to overcome shortages in home-grown talent, setting the Shortage Occupation List.

On energy, ending uncertainty on hydrogen and schemes like carbon capture and storage will enable the UK to lead in global green markets.

Meanwhile, let’s build on Monday’s Benefits of Brexit paper by establishing a new Office for Future Regulation to allow a post-Brexit UK to become the smartest and most future-focused regulator in the world, with a clear remit to target competitiveness, investment and innovation.

The focus of this new body should be the big bets for our economy. Set free to be agile, now we are no longer bound by EU-wide consultation and compromise. Proportionate, so that it strikes a better balance between investment and consumer protection. And more dynamic, allowing regulators to act quickly and decisively, as we saw with the vaccine, when the MHRA saw the UK lead worldwide.

This is not all on Government. Business has a key role, and the CBI will be promoting serious growth to firms across the country. We will ask them to increase business investment. In net zero. In innovation and digital transformation. In exports. In skills. In workforce health and wellbeing. And we will gather them in clusters around the country to deliver levelling up the only way it can be done – by the private sector through better skills, jobs and wages.

Business leaders – of all sizes and sectors – will respond because they are serious about growth.

So let’s get serious, together. Let’s unite, creating sustainable growth – the only real answer to our cost-of-living crisis, rising energy prices and high inflation. Growth that propels the UK beyond recovery to a new era of prosperity.

After a disappointing decade for UK investment and productivity, this is our second chance. Let history show that, this time, we seized the moment.

 

James Frayne: Why businesses act woke and what to do about it

22 Jun

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

Those that lean right find can’t understand why businesses decide to pull advertising from mainstream news outlets such as GB News or the Daily Mail – nor why they seem so prone to trash conservative attitudes online.

Right-leaning voters wonder why businesses treat ordinary right-leaning people like dangerous lunatics, when many of their own customers must be aligned to such views.

And why they are so easily pressured from outside – particularly by manifestly ideological campaigns who exist to pursue political ends? As someone who spends most of my time in the commercial world, here are a few thoughts to try to bring some sense to these fundamental questions.

1. Marketing teams control firms’ reputations, not the board (and not public affairs teams). The single most important thing for right-leaning outsiders to understand is this: boards don’t control most of a firm’s political comment, even on the most sensitive cultural issues – indeed, particularly not on the most sensitive issues.

While they might reluctantly exert control when it hits the fan, boards generally stay out of politics, preferring to let marketing teams control political comment. Boards devolve in this way because they’re persuaded that political / cultural issues fall under “corporate purpose” or “brand positioning”; they are further persuaded marketing teams know best how to engage with the public, particularly online.

Public Affairs’ teams have a decisive say on day-to-day political or Parliamentary issues – where issues are discussed within a formal framework – but less so on those sensitive cultural conversations that might not have a clear beginning or end (such as identity, the environment, and so on).

2. Most marketing teams aren’t political and don’t know their customers’ politics. Problems for boards arise because marketing teams don’t come from a political background. While recruitment between political campaigns and corporate public affairs teams (who are usually very politically sophisticated) is common, it’s unheard of between political campaigns and marketing teams.

Most marketing teams know little of Governments’ departmental agenda, and very little about how complex political / cultural issues are likely to develop. The prospect of mistakes are therefore high.

Take Net Zero as an example: many businesses have thrown themselves into an outrageously fraught and complex debate with next to no understanding of how the issue is going to play out politically (many, many businesses are going to come a cropper on this issue in the next decade). Many marketing teams know little about their customers’ approach to politics either. They usually know everything about their customers’ finances, lifestyle and shopping habits but their research rarely extends into political values or ideology. Again, this means mistakes can happen.

3. Businesses mistake social media for public opinion. In politics, it’s become a cliche to note that social media opinion isn’t public opinion; in the corporate world, this isn’t even near to becoming a cliche; people treat the two are one and the same.

This means when businesses are exposed to political comment online, they assume it’s an accurate reflection of where their customers and the wider public stand.

This ought to be corrected by reading opinion research but, because most marketing teams aren’t across political numbers, they can’t discern between a fringe campaign and a national movement.

4. Most corporate executives lean left culturally. Most businesspeople aren’t personally very political; this is true of people on boards, as well as in the marketing teams. To the extent they are, as middle class graduates who tend to live or work in and around big cities, they tend to be “liberal” in the American sense of the term.

While most executives wouldn’t seek out a row with conservatives in their business life, their liberal leaning means they’re more likely to think culturally very left-wing opinion as ordinary, mainstream opinion. This again means that their compass can be unreliable when judging external commentary on outlets like GB News, or on various sensitive political and cultural issues.

5. Boards almost always want to avoid combat. During the very early days of the EU referendum campaign, under Dominic Cummings’ encouragement, Vote Leave was eye-wateringly aggressive – to the point of near-embarrassment – towards the CBI. Why? Because Cummings judged that the CBI was ultimately frightened of combat and it was worth Vote Leave looking a bit daft if the CBI got the message they should stay quiet-ish.

Similarly, most leading businesspeople want to avoid combat; they want to sell goods, make money and take a decent salary; they don’t want rows or political attention.

Usually, therefore, if / when boards do actually sign off a political decision that might be driven by the marketing team, they will do so for a quiet life – judging that such a path is the one of least resistance. This is why pushbacks often lead to U-turns – because businesses conclude that their chosen path wasn’t the quiet one at all. It means that pressure works.

6. Businesses aren’t generally enemies of the right, they’re just dysfunctional like everyone else. The hostile commentary on supposedly woke businesses is therefore mostly overdone.

Of course, some businesses generally have gone woke and are led so from the top. Most, however, bump up against the right because of structural and cultural failings internally.

They take anti-conservative positions because they aren’t able to think politics through properly. This is encouraging; it means there is usually a pathway for the centre-right to have a more constructive relationship.

7. Harsh counter-attacks work – but primarily from the mainstream. As we saw this week, harsh counter-attacks in the media and on social media make a big difference quickly. Many businesses correct course when exposed to reputational risk from the other side.

But while assertive online campaign movements to challenge hard-left boycott campaigns can be useful, right-leaning people should not rely on such movements to secure serious long-term change. What makes businesses reverse course is not being attacked from the right, or merely the fact of negative coverage in the media and online.

Rather, it’s being exposed to allegations – by people who are manifestly mainstream and powerful – of being outside the mainstream or being hostile to it. They hate to be considered on the ideological fringes. As such, by far the most persuasive and powerful course corrections are set via criticism from Government Ministers, MPs and activists and others from the “established order”. Aggressive third party campaigns can’t match this power.

8. Conservative MPs must lead the campaign on corporate wokedom. What does all this mean? Ultimately, that Conservative MPs should come together to challenge corporate wokedom where it appears.

They should not necessarily campaign via the official party – and ideally they should do so in conjunction with other MPs and mainstream voices – but they should do so in an organised fashion.

To businesspeople, while Conservative MPs aren’t their cup of tea, they know Conservative MPs manifestly speak for the English majority; they have the stamp of respectability by being elected officials; they are treated seriously and with some respect by the media; and they have reach and influence. Conservative MPs are the only ones that can really, consistently make businesses think.