Jonathan McHugh illustration of Camilla Cavendish column ‘It’s pure folly that Johnson isn’t listening to business’
© Jonathan McHugh 2020

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The writer, a former head of the Downing Street policy unit, is a Harvard senior fellow

In the midst of a pandemic, citizens expect their government to work hand in hand with business to preserve the economy while limiting the virus. Indeed, governments around the world have supported jobs and bailed out industries on a huge scale. But prosperity will return fastest to those countries where policymakers also grasp the challenges that companies face.

Sadly, in the UK, business and government increasingly look like separate tribes. Successive British governments have struggled to listen to business. It’s a Tower of Babel: there are as many views as there are companies and a profusion of bodies purporting to represent them. It is true that multinationals operate in a different landscape from small start-ups. But both are more likely to invest and advance if they feel confident about getting a hearing from ministers who understand them. That confidence is being lost.

This is not just about the woes of the hospitality industry. While Prime Minister Boris Johnson is entitled to change tack in a crisis, the suddenness of the second national lockdown, from someone who had tried to resist it, was frustrating. Some executives worry that the Treasury’s blanket extension of the furlough scheme, while welcome in the short-term, suggests an endless stop-go approach to the pandemic, with no exit strategy.

There is also growing irritation at seemingly arbitrary rules imposed without consultation. The 10pm curfew on pubs was reportedly copied from Belgium, with little scientific evidence to back it up, or understanding of how revenues would plummet as a result. The abolition of duty free shopping is another own goal. It looks set to drive away high-spending tourists; France is already moving to take advantage.

Ministers seem to assume that businesses will adapt, no matter what is thrown at them. Yet the end of the Brexit transition is looming on December 31 with a lack of border preparedness that the National Audit Office has said will lead to “widespread disruption”. Companies are angry that the government fails to provide sufficient detail about what to prepare for. For its part, the government is furious that companies are so slow to comprehend what they need to do.

This atmosphere of on-off, stop-go may be exhilarating for some occupants of Downing Street. But firms have now endured it for four years. The stakes are especially high. Investor confidence is crumbling. Since the start of the year, the FTSE 100 is down 22 per cent, more than comparable European equity indices. Moody’s has downgraded the UK’s credit rating, pointing to what it called a “weakening in the UK’s institutions and governance”. In the circumstances, it was folly that Mr Johnson initially decided to cancel his appearance at the CBI’s annual conference this week, only to reinstate his speech with a rescheduled appearance.

“The only meaningful interactions we have had with government have come about through our own hard graft and endeavour,” one successful entrepreneur told me. “Business just does not seem to be a concern.”

Other executives compare the UK with Germany, Switzerland and France, where the dialogue feels more constructive. “There’s just a different tone,” one chairman told me. “You get the impression they’re not coming to talk to people who are their peers.”

The UK has never been good at translating between the two worlds. George Osborne, the former chancellor, describes past approaches to the business community as “personalised and haphazard”. The profusion of career politicians doesn’t help. Equally, few civil servants come from industry.

Governments in Japan, France and Germany are sometimes accused of having sometimes cozy corporate relationships. But in the middle of a crisis, it should not feel as though Westminster and business are quite so separate. It should be normal for talented people to move between management positions in the private and public sectors.

Ministers naturally tire of being lobbied. They also have a tendency to assume that “big is bad; small is good”. Yet that is often a false distinction. Large companies employ thousands of smaller suppliers. And AstraZeneca is in the race for a Covid-19 vaccine precisely because it has the scale to deliver, can collaborate across the world and attract talented people, and is supported by Oxford university, which has the same characteristics.

If we are to build back better, there are big questions to be asked about executive pay, regional policy and the whole concept of shareholder value. But those are questions for tomorrow, not for today. Rather, the priority must be a convincing recovery plan for the first 100 days after Brexit — and for the 100 days after we are free from Covid-19 — using every resource this country has to offer. The government’s agenda to “level up” the north gets harder every day that the engines of the economy in the south do not fire on all cylinders.

Mr Johnson is working with the entrepreneur Maurice Ostro, who chairs the Business Action Council, a group that brings together the many different trade associations. But no single body can filter all the complexity and messy nuance that is part and parcel of business life. If ministers do not have the patience for that, they will miss out on the gritty detail that can make the difference between a good or a bad decision.

Famously an advocate of having one’s cake and eating it too, Mr Johnson knows that a smaller cake goes less far. He needs to throw open the government’s doors to those who know how to bake.

This article has been amended to correct a reference to the Business Action Council. It is independent of the government.

Letter in response to this article:

An exporter bemoans the lack of Brexit clarity / From Chris Higman, MD, Higman Consulting UK, Chippenham, Gloucestershire, UK

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