Business must wake up to new era of ‘government by media’

One of my favourite bits of the whole “cash-for-cretins” scandal surrounding National Lottery operator Camelot was when ITN’s Tom Bradby quoted a Heritage Department insider as saying of the acrimonious meeting between Heritage Secretary Chris Smith and Camelot’s directors: “They just didn’t get it – they were so arrogant.”

This conjured up some wonderful images along the lines of those pastiches of TV’s The Two Johns (Fortune and Bird). With slightly pained expression: “So what you’re telling me is that you’re paying yourselves a great deal of money just as you’re paying less money to good causes and making less money from the Lottery?” With dead-pan bemusement: “Yes that’s right – and we hope to carry on doing so.”

Now, there is much injustice that has been done to Camelot. Its bonuses lag performance by a year. Camelot has run a highly successful Lottery after winning its licence in open competition with clearly visible incentive schemes for its directors. The Treasury does very nicely from it, too.

It may be that some of these considerations led Smith to sue for peace with Camelot last week. It may also be the Government recognises that, as the National Lottery licence-holder, Camelot cannot be thrown out unless it breaches its contract.

But that still leaves the question of what it was that, in Bradby’s reported phrase, Camelot’s directors “didn’t get”. On superficial examination, it would appear that these men aren’t in the business of not getting things.

I have no idea whether Bradby’s insider was Smith himself, but it would be far from unusual for a modern Cabinet minister to brief a TV reporter on a lobby basis. But, even if it was a Heritage apparatchik, I believe that it reveals a fascinating insight into how New Labour does business.

One of Camelot’s tactical errors, I believe, was to assume that, because some of its directors are close to New Labour and have been for some time, they would receive a sympathetic hearing when the party formed a government. The mistake is an understandable one – the business world had, for nearly two decades, operated on the basis of striking deals with politicians in joke-filled rooms.

A New Labour Government, making sub-Conservative noises about a new partnership with business, could be expected to operate in much the same way. Parties may come and go, but this is the business of government, for goodness sake.

What Camelot failed to account for is that New Labour does not offer government by mates, but government by media. What used to be rapid rebuttal during opposition and the election campaign has now become rapid dissociation. In other words, the media remain the priority and drive the issue, rather than any private axis of interest struck between politicians and business people.

That means this Government is going to be driven by a media agenda far more directly than the previous one (had the previous one been driven by a media agenda at all in its latter stages, the Conservative Party might not be in the parlous state that it finds itself in, today).

At the operational level, this means that Smith was always going to be more outraged about the levels of Camelot’s remuneration (once Marketing Week had exclusively revealed them) than he would anticipate that the media were going to be. In other words, in keeping with New Labour policy, Smith was going to lead the media issue, rather than be led by it.

Camelot is far from being the only example of this aspect of New Labour policy in the early days of the new Government. Perhaps one of the most extreme examples of the previous Government’s indolent and, indeed, bovine approach to issues with a high media profile was its attitude to the BSE crisis. An entire British industry in the shape of beef farming, distribution and retailing was (and is) threatened by an issue on which the likes of the wretched Douglas Hogg prevaricated and humbugged.

By contrast, Dr Jack Cunningham, the new minister at the Agriculture department, has decided to play to the press gallery by giving continental Europe six weeks to clean up its beef act or he’ll ban imports from those countries of which he disapproves. Between now and the end of July, he may well find a way to climb down from this radical position, rather as Smith found a way to climb down from his demand that the Camelot chiefs donate their bonuses to charity or face some unspecified consequences. But, in the meantime, he has upstaged the media in righteous indignation.

Is this important? Well, British business had better get used to a new system in which the Government will seek to take the media initiative rather than consider the relationships it has with British industry. As a consequence, there could be a lot more knee-jerk than handshake in industrial policy.

But it also means that British industry can play the Government at its own game. Who knows how the story might have developed if Camelot had been on the front foot with the media, rather than allowing Smith and his spinners to take the initiative? And there are healthy implications – at least British industrial relations will be played out in the open, rather than through the discredited parlours of the parliamentary lobbyist.