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David Frost

David Frost is a former Ambassador and now CEO of the Scotch Whisky Association. He writes in a personal capacity.

In 2009, as the then head of the Foreign Office’s Planning Staff, its in-house think tank, I wrote an internal memo about what I saw as the growth of “bad ideas” globally in the aftermath of the financial crisis. I meant “anti-growth-ism”, lifestyle economics, wishful thinking on energy and climate, trade protectionism, and so on. I remember the thesis was vigorously disputed. But now, as the head of a big trade association, and with hindsight, I feel it was a prescient thesis, with these ideas driving anti-business opinion in much of the Western world.

We are lucky. We don’t have it at its worst in Britain. We have been helped by the inoculation against anti-business attitudes delivered by both the Thatcher and the Blair governments and by our general pro-free trade orientation. We still have high levels of entrepreneurialism. All this is still a big competitive advantage for us. But all the same there is a growing suspicion of business motives, an apparent sense that big firms are out to exploit the little guy, and a growing belief that the point of business is to generate tax receipts for government not to generate wealth and profit for owners, workers, and customers.

As Paul Goodman points out, there’s a strong case for pushing back against this. So why does business seem to be reluctant to do so? Some say it’s just because business likes to keep its head down. I don’t think it’s that simple.

After all, on those issues where it matters most, most businesses are in fact ready to press their case on government and to try to mobilise public opinion. To take a case close to home, in my day job at the Scotch Whisky Association, I am pressing the Government hard before the Budget on the iniquitous situation whereby 80 per cent of the price of a bottle of Scotch Whisky is taxation (and indeed I hope readers might do likewise). Indeed, because such problems are often industry-specific it can often be narrow industry organisations that make the most impact in addressing them.

Equally, most businesses also see how desirable it is for everyone to understand business, approve of it, and support it. We tend to think that making that case is more naturally the role of politicians. But politicians don’t take on that task, there are reasons why it is not straightforward for business itself to fill the gap.

First, and most importantly, it’s hard for business to press on the government reasonable but narrow points of self-interest and at the same time make the general case for wealth generation to public opinion. The former inevitably compromises the latter and makes it seem purely self-interested. The big membership organisations like the CBI and IoD, who try most to do both things, get most criticised for this.

Second, business has to be conscious of its bottom line. It wants immediate problems solved. So, if criticising politicians on their broader attitudes to business, or attempting to mobilise public opinion in a particular direction, seems likely to compromise the outcomes of short-run campaigning, then business will certainly tend to keep quiet or pull punches.

Third, business focuses on new problems rather than sunk costs. If a new regulatory burden appears, business will lobby to try to get it reduced or eliminated. Once it’s in force, it becomes part of the landscape and we move on, doing our best to absorb the costs. That’s why business often gets criticised for predicting dire consequences which don’t then materialise. But it’s not that they haven’t materialised: it’s just our mindset to get on with things and deal with problems, rather than endlessly wring hands.

So is this a counsel of despair? How can we get the business case across? I believe we can. And to do so I would take Paul’s idea one step further.

My personal view is that we need an organisation which is supported by, but not directed by, business, which makes the broad case for business’s work without lobbying for specific policies. We need a body that can, for example, speak up for wealth generation, explain how a free market economy works and why free trade makes you rich, or set out why careers in business are just as satisfying and just as morally worthwhile as those in the public sector.

It would stick at the level of these principles and would not get into the business of lobbying for particular policy changes. It would argue the general merits of low taxation but not press a particular top rate number on the Chancellor. It would make the case for free labour markets in principle but not have a view about the right cost for access to employment tribunals.

In other words it would be a mixture of think tank, university, advocate, and commenter on public policy. And it would provide a supportive policy context for business to do what it does best – explaining and pressing its own concerns directly.

It would of course have to avoid suspicion that it was simply saying what its funders wanted to hear. So it would need guarantees of independence, within its defined philosophical framework, and of at least short-run funding streams.

It’s true that this would be a new kind of organisation, different from current trade associations or political parties. But that’s what the current political environment requires: a new kind of transparency in business advocacy, and a new engagement in the ideas battle. Bring on the business case!

17 comments for: David Frost: We need a new organisation to make the case for business

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