Hopefully we can all agree that the Conservative Party ought not to be the Party of “f*ck business”. Now that one is settled, time for a trickier question: are we “the Party of business”? And if so, what does that mean?
The tag is one often applied to our Party, and sometimes deployed by prominent Tories about themselves, normally without much thought. What thinking there is tends to go something like this: we like markets, we’re good on the economy, we don’t hate profits or indulge in the politics of envy, and traditionally business people tend to support us, and it’s a memorable line, so let’s use it. Brexit, however, has caused some to scrutinise the slogan in more detail.
For example, when Airbus fires warning shots about leaving the EU with no deal, people are quick to deploy the slogan to justify what they claim to be obvious conclusions. If a business wants something, surely the Conservative Party should obey? If it does not, how can it any longer be “the Party of business”?
It’s an obviously flawed suggestion. Who for a moment really believes that the Conservative Party ought to leap to fulfil the demands of any and every business, all the time, regardless of what it might be?
Such a thing would be impossible; different businesses often have conflicting requirements – some want subsidies while others want tax cuts, some want to drive up the price of what they sell while others want to drive down the cost of buying the same commodity or service, and so on. Greg Clark, the Business Secretary, had warm words for “the business voice” at a summit of business leaders this week, but it isn’t as simple as there being one clear voice of private enterprise. The whole point of competition and the free market is that there are a myriad of different operations, all approaching business in different ways, addressing different problems, and all out to outdo their rivals.
Choosing which businesses to listen to is therefore both difficult and important. Unfortunately, those who shout loudest and communicate most effectively aren’t always the right companies to prioritise. Economies of scale, and the simplicity of speaking to single points of contact, mean that giant firms with famous brands tend to hog attention in Westminster. They have the money to spend on good lobbyists, and politicians hoping to communicate that they are “listening to business” prefer for obvious reasons to be able to say “Last week I sat round the table with x, y and z household names, with 250,000 employees between them” because it sounds like convincing evidence that they take on board the concerns of the private sector.
However, the real economy does not quite bear out the assumption that the biggest companies alone are the most important. They might individually have large payrolls, but Small and Medium-sized Enterprises (SMEs) are in fact the engine of growth. Almost half the UK workforce, an outright majority of private sector workers, is employed by an SME – and the bulk of new jobs are created by such businesses. And yet they are under-represented in the corridors of power and in the media.
Worse, such businesses often have interests which are directly threatened by the large operations who wield more power. The natural instinct of highly profitable established players is to maintain the status quo, which includes raising or preserving barriers to entry against smaller competitors. In that instance, doing whatever current large businesses might desire is not inherently pro-business, it’s pro-some-business, and anti-other-business. There have been some efforts to give a stronger collective voice to such enterprises to counterbalance the lobbying power of the dominant big players – the Federation of Small Businesses and the British Chambers of Commerce both claim that mantle, and various trade bodies try to fulfil it on a sector-by-sector basis, but the fact remains that a supermarket CEO can offer a minister a press release announcing new jobs, or amass a workforce to play backdrop to a speech, while collective organisations are inherently less nimble and more bland.
That power imbalance is even more stark when you consider the near-total lack of a voice for the interests of businesses which are yet to be created. That might sound abstract, but it’s a very real issue. It would be a serious mistake to interpret the mission of “the Party of business” as a responsibility to simply preserve current businesses from change or even destruction. The FTSE100 was founded in 1984, and today fewer than 30 of the original companies still hold a place on the index. Those which have departed have variously failed, been bought out or broken up, or eclipsed by younger rivals. That is life, the inexorable outcome of Joseph Schumpeter’s concept of creative destruction. It cannot be defied – or, rather, you can try but attempting to stave off the inevitable simply adds a vast cost to your eventual defeat. “You can’t buck the market”, as Margaret Thatcher put it.
So who speaks for those businesses as-yet unborn? A “Party of business” that allows itself to be cast with a protectionist role, guarding existing businesses against change, would be the enemy of such new enterprises. Indeed, it would soon become the enemy of many existing businesses, too, as its attempts to sustain failed business models would produce first subsidy, requiring heavier taxation, and eventually attempts at nationalisation, all with the added downside of making life worse for consumers in the process. Few if any Conservatives would like to see a state that uses taxpayers’ money and restrictive regulation to defend HMV against iTunes, for example.
Some organisations – like my former employers at the Institute of Directors – have sought to persuade existing business-people to defend the conditions that make new competition viable, as do think-tanks like the IEA, but again such voices are easily drowned out if politicians allow themselves the indulgence of simply considering the smooth tones of the lobbyist a phone-call away, rather than the real but as yet unrealised potential of future businesses.
So the concept of the “Party of business” should not be a binding instruction to obey big businesses at the expense of small businesses, or to indulge existing businesses at the expense of future businesses. As I’ve noted before, it also cannot mean acting as apologist for bad businesses – the rip-off merchants, those handing out rewards-for-failure at the top while employees lose their jobs, the people privatising profits while seeking to nationalise losses, and the outright fraudsters. If anything, those seeking to champion free enterprise must be even tougher on miscreants who abuse such freedoms than the left are.
If those are all the things that the term should not mean, is it a meaningful phrase at all? It clearly comes with a load of baggage, misrepresentations and misunderstandings.
Perhaps we should think of it a different way. When socialists propose heavy taxes on businesses, the common Conservative response is to restate the fact that taxes are not really paid by businesses, they are paid by people: workers, consumers, and investors. Similarly, our reply to the demonisation of profit-making business is to point to the fact the beneficiaries are real people, who receive the fruits of growth in their pay packets, their standing of living, the technologies and luxuries available to them, and through the public services funded by the profits those businesses make. Our rebuttal to demands to preserve failing enterprises in aspic is that doing so is not only doomed and costly, but it holds back progress and harms consumers, too. Ultimately, business is a means to advancement, for individuals and families, as well as for society and the nation.
Workers, consumers, investors, growth, and advancement. These are the things we should be “the Party of”. That means being supportive of the right and opportunity to do business, not servile and obedient to whichever big business phones up next. The latter might sometimes be easier than the former, involving more immediate comfort and fewer hard truths, but eventually it offers only disaster, politically and economically.