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Who truly speaks for British business is a vexed question. As a former Head of Media for the Institute of Directors, I should know. There is a panoply of business groups – the CBI (dominated by a few large businesses), the IoD (representing individual directors, often of smaller enterprises, though not businesses themselves), the FSB (a voice of smaller companies, but somewhat limited in its reach among sole traders, younger startups and so on), the BCC (by definition very much based on activist businesspeople in each area). Each has its upsides and downsides, but the majority of businesses in the UK are not a member of any of them, opting instead to focus on their work and assume that their interests will be represented either incidentally or by others.

Part of the problem is rather like a wider issue in our democracy more generally: those who make the most noise are not always representative of the greatest share of the population. This is particularly stark when it comes to the influence of big corporations. Their size means it easy to get a couple of dozen in the room with a politician and make it sound like an impressively influential meeting – how many hundreds of thousands of people they employ, how many billions of turnover were sat around the table and so on. The problem is, while big business give easy access to what sound like large numbers, they still only represent a small minority of the UK’s economy – small businesses, which are much harder to engage with en masse, are far more important collectively. That disparity is even more stark when you judge them on the part they play in growth or rising employment – big businesses can create thousands of jobs at a stroke, but their power as sizeable individual companies is tiny compared to the vast collective expansion and hiring done by their smaller counterparts.

This might not be a problem if all businesses had the same priorities, but they don’t. The regulatory systems which might serve big, established supermarkets, manufacturers or banks well often pose real problems for their smaller, nimbler but more vulnerable competitors. Indeed, sometimes those corporations will merrily support such costly rules precisely because they prevent new entrants from disrupting their comfortable lives. In practice, we saw during the EU referendum that groups such as the CBI sought to pretend that business was universally supportive of Remain, even though that simply wasn’t the case.

The Prime Minister’s Business Advisory Group, so beloved of the Cameron administration, suffered precisely these flaws. It looked good in press releases and photo opportunities to have the Prime Minister talking with the bosses of airlines and so on, but the policies they urged on him were – understandably – those which served their particular type of large business, not businesses more generally or the most productive type of enterprise.

They also served as allies for a very particular part of the Government – the Treasury. May herself experienced the frustration of having her proposals to deliver on the manifesto immigration pledge stymied by a combination of Treasury opposition and the voices of the BAG.

So it’s interesting to see her moving swiftly to close the Group down. The predictable criticism is levelled that she is refusing to talk to business – that isn’t true, she’s just refusing to talk primarily to this arbitrarily selected group of businesses. She has hired an able head of business relations in Jimmy McLoughlin. His work at the IoD, interestingly, focused particularly on digital start-ups and younger entrepreneurs, in stark contrast to his predecessor in Downing Street, Daniel Korski, whose background was primarily in government roles in Washington, Brussels and Iraq.

Instead of speaking of an abandonment of business, the decision says two things about the direction of the new government. First, it suggests May’s rhetoric about standing up for ordinary working people, who often get a raw deal, is more than just talk. This seems to be a sign that she will take more of an interest than her predecessor in the man-and-a-van businesses which drive so much growth, and less in the lavish boardrooms of the City. Interestingly, the FSB speaks warmly in today’s Financial Times of the reception it has enjoyed in Downing Street. Second, and more immediately, it suggests she is asserting her control over the whole Government, including the Treasury. The immediate target of that appears to be to ensure she can mould the Brexit talks in the way that she would like.

Lots of column inches have been allotted to the Prime Minister “slapping down” cabinet ministers for loose talk about the timing of Article 50. Boris Johnson got just such a stinger on the wrist in today’s Telegraph for discussing the probable timing of Article 50 – something May rightly reserves as her own decision.

The question of timing is a largely cosmetic piece of information, though – of far more importance to the negotiations themselves is the actual content of Britain’s demands. On that, the Treasury has proved more troublesome than any other department, suggesting it is unclear who is in charge of Brexit and implying that it wishes to remain in the Single Market. Each risks doing some material harm to the success of the talks – it ought to be clear that the Prime Minister, and second to her the Brexit Secretary, are in charge of Brexit, and it would be the height of folly to encourage the EU to believe we overvalue Single Market membership. The former would confuse the message and the latter would discourage our negotiating partners from being flexible, neither of which would serve the national interest.

Seen in that light, it seems even less of a coincidence that the small club of big businesses who trooped into Downing Street once a quarter to deliver a message that, more often than not, the Treasury agreed with is being closed down. Who, after all, are the businesses most likely to argue precisely the same case on Single Market membership? Not the vast majority of small businesses that don’t export but bear the costs of Single Market regulation nonetheless – who never had a seat at that table in Number 10. For its more serious offence, the Treasury appears to be suffering a more serious sanction.

6 comments for: May’s decision to close down the Business Advisory Group has implications for Hammond

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