Howard Flight: What we can learn from Dyson

6 Dec

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

Scandals about Ministers benefitting from public expenditure are damaging and have clearly damaged the Government’s popularity. But what really matters over the longer term is the success of economic policies.

Here, while there was a case for increasing public expenditure while Covid-19 was closing down too much of the economy. Government spending as prescribed in the Budget looks to be far too high and risks serious permanent damage to this administration’s standing.

I am one of the traditional Conservative voters wanting to see Government expenditure reduced significantly as soon as is possible. I cannot understand a Tory Government indulging in such huge deficits. As inflation rises, the cost of financing the public deficit rises more substantially. There is the danger of the Government being forced to cut back expenditure materially and, with this, losing its credibility.

My wife recently gave a party for old friends to celebrate getting back to normal. Most had been vaccinated three times, and the majority had had Covid-19. It is clear that we have to live with the virus and as vaccinations increase, the incidents of Covid-19 (and, in particular, fatalities), should reduce to relatively modest numbers.

This is one area in which the Government has faired well, and our economy is thus better positioned than are most European economies. The main area of Government weakness is excessive spending – and the inflation risk that comes with it.

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The parliamentary magazine, The House, has conducted an interesting interview with Sir James Dyson. He has been greatly concerned about the future of British manufacturing and innovation for many years. His main worry is that we do not produce enough engineers.

In Britain. we produce 20,000 a year, China produces 600,000 and India 350,000 pa. Even the Philippines produce more engineers. In the global completive world in which technology is everything, we risk getting left behind.

We have excellent design and engineering universities in the UK, but the majority of students and researchers in them are from outside the UK. Dyson thinks the problem is our lack of interest in manufacturing which has existed since Victorian times.

The major problem is that the status of an engineer in the UK is low by comparison with Germany and France. Manufacturing is still seen as something done by the less successful. Factories are seen as places providing employment – not producing great products which we can sell all over the world. As a nation ,we admire the wrong things.

In 2017, Dyson established the Dyson Institute of Engineering and Technology – a private Higher Education institution. It is based in Malmsbury. Students are paid a salary for working three days a week: they study for the other two days, and have their tuition fees covered for the four-year course.

If they want a job, there is one guaranteed at the end of the course. Recent winners of the Dyson Award covering 29 countries have included a Spanish student who created a box which can detect cancer, and sends the results to a cloud and then informs the user what cancer they have and what to do next; and a Pilipino student who discovered a way to generate electricity by mashing up certain fruits and vegetables, spreading a thin film across a pane of glass and shining a light on it.

Not surprisingly, Dyson is a champion for entrepreneurs. He favours lower tax for investors and innovators. In 2010, he wrote a report for David Cameron on how to make the UK the leading tech exporter in Europe, including additional tax relief on research and development investment. Government should not try to pick winners, but make it attractive for entrepreneurs and engineers to come up with new ideas themselves.

Dyson now employs more than 12,000 people in 89 countries. In 2002, he shifted most of his manufacturing from the UK to Malaysia – largely because it was hard to find UK suppliers who could deliver components on scale.

In 2019 he was criticised for moving his headquarters to Singapore, although his UK based employees have since doubled.

As a country we need to learn from Dyson’s experience. Government needs to apply itself to reducing unnecessary red tape; if anything it is still increasing it.

We need to boost our manufacturing sector and to reduce planning constraints, both in relation to factory accommodation and housing. Our SME sector continues to be very successful – substantially the result of the Enterprise Investment Scheme and Venture Capital Trust tax incentives on investing and smaller businesses.

Government needs to sort out our finances. Faster economic growth is needed, but the money supply needs to be controlled. We need to be doing more business in Asia, where the Foreign Office can assist by identifying opportunities on the ground. There are also plenty of business opportunities for the UK in the EU, particularly in Poland and other Eastern EU countries.

We need to have a Government focusing on improving our economy – and to put behind us both Covid-19 and politically damaging scandals. Going forward the priority must be what is good for the economy.

Gavin Rice: Free from EU rules, Government contracts can be used as a levelling up tool

28 Sep

Gavin Rice is the Head of Work & Welfare policy at the Centre for Social Justice think tank and is leading its levelling up work. He is a former Special Adviser. 

Whenever government contracts are making headlines, controversy is usually around the corner.

The word “procurement”, usually a term sufficiently dull to make eyes glaze over, has fresh connotations in the Covid era: of backroom negotiations, of test-and-trace systems that don’t work, of the Prime Minister texting James Dyson, of the £41 billion spent on Covid-related deals.

Much of this was actually very well spent, including on the life-saving vaccine programme. Some of it was not.

It may surprise you to learn that these are all very small figures in the world of government contracting. In fact, in normal times the Government spends £290 billion every single year on procurement – one third of all spending. That’s more than twice the total annual NHS budget, more than five times the total defence budget, and more than is spent each year on the whole welfare system.

What is this money spent on? Most of it is boring, but vital. It includes building schools and hospitals, running prisons, cleaning and maintaining public buildings, constructing and maintaining roads and rail rolling stock, running social care facilities, providing catering and other services for public institutions, and supplying our emergency services with vital equipment.

Incredibly, the way in which this money was spent was, until Brexit, determined almost entirely by EU law. These rules are hugely complex, and throughout the EU lawyers are paid handsomely to find ways of dodging them.

But in essence, their purpose is to ensure contracts are awarded to the most competitive – read “cheapest” – bidder. If a tenderer thinks they have lost out, they can sue the relevant public authority under European law, or make a complaint all the way up to the European Commission.

The rules had some catastrophic consequences. In 2011 a £1.5 billion public contract for City Thameslink was awarded to Siemens rather than the Bombardier site in Derby. Professor Karel Williams told the Transport Committee that the fallout from this was entirely foreseeable, including £100 million loss to the wider economy, £20 million lost tax revenue for HMRC and around 500 job losses.

Companies offering workers more than the minimum wage often found themselves frozen out of tenders for being too expensive, and regions especially exposed to job losses could be badly affected if a major local employer lost a contract. £18 billion annually was awarded to overseas suppliers, according to market research firm Tussell. Attempts to build in a wider understanding of the social value of contracts through the 2015 Social Value Act had limited effect.

Thankfully, leaving the European legal regime means we are now free of these rules, and the UK can redesign its own system from scratch (subject, of course, to the much less restrictive WTO rules). The Cabinet Office published a Green Paper, Transforming Public Procurement, in December 2020, and the government is currently responding to its consultation.

In a new report the Centre for Social Justice calls on the Government to establish as a national priority injecting much needed investment into our most deprived and struggling communities. Authorities responsible for awarding contracts should do so on the basis of a levelling up test: public bodies should be responsible for showing they have prioritised the award of contracts to tenderers operating in regions with the most economic need unless there is a good reason not to do so.

We also have a golden opportunity to devolve and diffuse this enormous spending power. Local authorities should be able to apply to the Cabinet Office for the right to award a central government contract locally where feasible. Councils should prioritise awarding their own contracts locally to keep revenues from leaving the area.

Through all this, job creation should be prioritised. The principle of “value for money” – a lynchpin of the old EU rules – should be expanded radically to include the costs to the welfare state of increased unemployment if a particular decision results in severe job losses in a particular community.

Economists have described Britain as one of the most regionally unequal countries in the industrialised world, and by every metric this has been getting worse for at least 20 years. After delivering Brexit, the Government has rightly identified tackling these vast disparities as its number one priority.

The biggest challenge with this worthy cause is the lack of direct levers – the state cannot click its fingers and change regional economic conditions overnight. But the Government has one such (enormous) lever at its direct disposal: the hundreds of billions it spends itself.

It should use this money to further the domestic policy objective of tackling deep regional inequality, as so many other developed economies do around the world. Far from being protectionist, this approach simply entails the state acting as a responsible purchaser (like you or I). And it isn’t new money – no fresh tax hikes are required. This is money the state already spends.

Britain’s newfound legal freedoms from Brexit can be used to deliver for those regions who voted for it, and to use taxpayers’ money more effectively through the principle of public money for public good. To use the Government’s own language, we should take back control of public contracts to level up the country.

Cummings claims Johnson tried to halt the “chatty rat” inquiry – because it would cause him “serious problems” with Symonds

23 Apr

Here is a link to Dominic Cummings’ blog post of this afternoon, and below is our summary of some of his main claims.

Dyson

  • Re the Dyson leak, Cummings has messages from Dyson to the Prime Minister on his mobile phone, but that they’re about “ventilators, bureaucracy and covid policy — not tax issues”.

Chatty Rat

  • Re the lockdown “chatty rat” leak, Johnson mulled stopping the leak inquiry after being told by Simon Case, the Cabinet Secretary, that Henry Newman, a friend of Carrie Symonds, and now a senior Spad to the Prime Minister, was responsible.
  • Civil servants “would give evidence to this effect under oath to any inquiry. I also have WhatsApp messages with very senior officials about this matter which are definitive”.

Downing Street flat wallpaper

  • “I thought his plans to have donors secretly pay for the renovation were unethical, foolish, possibly illegal and almost certainly broke the rules on proper disclosure of political donations if conducted in the way he intended. I refused to help him organise these payments.”

Newcastle United

  • Cummings doesn’t refer at all to messages to and from the Prime Minister on his mobile phone about the bid by Saudi Arabia’s crown prince, Mohammed bin Salman, for Newcastle United.

Procedure

  • He is “happy to meet with the Cabinet Secretary and for him to search my phone for Dyson messages”.
  • He is “happy to tell the Cabinet Secretary or Electoral Commission what I know” about the Downing Street flat wallpaper.
  • I have made the offer to hand over some private text messages, even though I am under no legal obligation to do so…this does not mean that I will answer every allegation made by No10″.
  • An urgent Parliamentary inquiry is required “into the government’s conduct over the covid crisis which ought to take evidence from all key players under oath and have access to documents”.

ConHome snapshot take

  • That the Prime Minister sought to halt a leak inquiry isn’t necessarily serious in itself, but more details may come to light that are – since the inquiry hasn’t reported, as far as we know, yet the leak itself took place last November. What’s happened to it since?
  • Cummings clearly believes he can prove that he was not responsible for either the “chatty rat” or Dyson leaks.
  • He is silent on the Newcastle United leak, and is willing to hand over “some private text messages” [our italic].  He shouldn’t be surprised if others draw the conclusion that in this case he was responsible.
  • Cummings is seeking to cause maximum damage not only to Johnson, who he is seeking to present as under the thumb of his partner, but also to Symonds herself, and to Henry Newman, her friend and a member of the Number Ten faction associated with her.  Our guide to the various groups is here.

Labour’s Tory sleaze accusations look hypocritical, and – even more interestingly – aren’t landing any blows

22 Apr

The lobbying scandal surrounding the Government shows no signs of abating, with the latest news being that vaccines minister Nadhim Zahawi has shares in a company given more than £1 million in government contracts during the Covid pandemic. Labour has been on the attack, accusing the Tories of “sleaze” as much as possible.

Over the weekend both Rachel Reeves, Shadow Cabinet Office Minister, and Steve Reed, Labour’s Shadow Communities Secretary, were doing the media rounds, apparently in competition with each other as to who could use “sleaze” the most dramatically in a sentence. “Tory sleaze is back and it’s bigger than ever”, was Reeves’ line. “The era of Tory sleaze is well and truly back“, was Reed’s.

And so you can guess what word Keir Starmer used at PMQs yesterday. In fact, he said “sleaze” three times in a row, in a moment reminiscent of when in the 90s Tony Blair accused John Major of being “weak, weak, weak!”

Whatever one thinks of the ongoing lobbying saga (and my own view is that it needs to be thoroughly thrashed out, although voters will be more sympathetic to some events than others –  such as the PM texting James Dyson for emergency ventilators), Labour should be careful, to say the least, when it accuses the Government of cosying up to private enterprise. Its record on this is far from perfect.

In February this year, for instance, it was reported that Starmer has turned to Peter Mandelson for advice on how to better the party’s prospects at a general election. He has reportedly “offered advice on Brexit and how to woo big business” and they have “struck up a close working relationship”. This is the same Mandelson who’s Chairman of Global Counsel, a firm that has worked for clients in the gambling, banking, commodity trading and packaging industries.

Then there’s Starmer’s current team. David Evans, Labour’s General Secretary and one of the Labour leader’s closest allies, is head of The Campaign Consultancy. Over the weekend The Mail on Sunday revealed that it had won a series of taxpayer contracts advertised as being worth nearly £200,000 from Croydon Council, when his ex-lover and the mother of his child was deputy leader.

Lord Falconer, the Shadow Attorney General, is a partner at Gibson Dunn, which has offered advice on “political lobbying” in the UK; and Lord Myners, a peer and former minister in Gordon Brown’s government, is Chair of the PR giant Edelman and according to The Guardian had “secretly explored a potentially lucrative board-level role at Greensill Capital after publicly raising concerns about the now-defunct lender”. John Healey, Labour’s Shadow Defence Secretary, also lobbied the Business Secretary, asking him to give Greensill greater access to the Coronavirus Large Business Interruption Loan Scheme “without delay“.

In short, we can go on and on in regards to these examples – so Labour needs to be careful about what accusations it levels at the Government. There will also be other things lodged in voters’ minds, such as the parliamentary expenses scandal in 2009, in which Jacqui Smith claimed 88p for a bath plug on the additional costs allowance, and John Reid claimed £2,387 on a bathroom suite from Homebase with a “black glitter toilet” seat, as well as what was termed “smeargate”.

Perhaps the most sensible line for Labour to take around lobbying is that the whole system needs a clean up. But as usual the party has reverted to playground politics, believing that repeatedly using the word “sleaze” will somehow hypnotise voters into realising they want to vote Labour. Actually it just reminds a lot of people that Labour hasn’t moved on from the Corbyn/ pre-Brexit era in which MPs seemed to think insulting the opposition was the way to succeed.

The truth is that Labour isn’t landing any serious blows on the Conservatives, which is particularly interesting given the lobbying story dominating the news. I say “interesting”, but it’s a pitiful indictment on our opposition. Criticism matters, but without vision, it can look weak, weak, weak.

Andrew Gimson’s PMQs sketch: See the incredible rejuvenating effects of “Tory sleaze” on dejected Lefties

21 Apr

“Tory sleaze” should be bottled and sold as a tonic to any Leftie who is feeling glum. Its incredible rejuvenating effects continue to be demonstrated by Sir Keir Starmer.

The Labour leader had been looking down in the mouth, a bit disorientated, unable to come to terms with his disappointing poll ratings, prone perhaps to the feeling that he must be doing something wrong.

Today, for the second time in a row, he looked and sounded full of beans and bounce. “Sleaze, sleaze, sleaze,” Sir Keir intoned with relish, “and it’s all on his watch!”

Lefties love to believe in their moral superiority. However badly Jeremy Corbyn was doing, one could see that his belief in himself as a more virtuous person than any of those accursed Tories, or indeed than any of those accursed Labour moderates, remained intact.

Tony Blair carried this self-righteousness to an insufferable extreme. Whatever he did was noble. Gladstone possessed the same convenient ability to portray himself as God’s right-hand man.

And now Sir Keir is doing it. Quite how it will go down with the voters, we shall have to wait and see, but for those of us who watch PMQs each week, this boost to the morale of the Leader of the Opposition is most welcome, for it renders the contest less unequal.

Boris Johnson remained unabashed. He made no apology “for shifting heaven and earth” to get Sir James Dyson, and others, to supply life-saving ventilators during the pandemic.

“Favours, privileged access, tax breaks for mates,” Sir Keir declared, looking more perky by the moment.

After Johnson urged him to “take back what he said about the ventilator challenge,” Sir Keir retorted in a light-hearted tone: “If I had to correct the Prime Minister for everything he gets wrong I’d be here all day.”

“Captain Hindsight snipes continually from the sidelines,” Johnson replied, perhaps faintly riled by such a display of piety.

Ian Blackford, for the SNP, appeared by video link and chose the same subject: “This is how the Tories do government.”

Blackford’s dog, who had probably had to listen to his master rehearsing these lines earlier in the day, began to bark.

“I thought his dog just made a more sensible contribution just now than he did,” Johnson remarked to laughter.

What levity: Blackford the moralist was not amused.

Andrew Rosindell (Con, Romford) lamented that the statue of Ronald Reagan, “a true friend” who “supported Britain during the liberation of the Falkland Islands”, has been removed from Grosvenor Square, and said it should be erected in Parliament Square.

Johnson: “Did you notice, Mr Speaker, how the benches opposite recoiled at the idea of the recapture of the Falkland Islands?”

I was not in the Chamber, so could not see how fair this observation was.

But here is a fine piece of Tory morality: rejoicing in patriotic deeds, not prating about sleaze.