Why business people are always right to distrust the politicians

After opposing many of the policies of the Conservatives and backing Labour, George Pitcher now concludes that all governments are the enemy of business. George Pitcher is chief executive of media consultancy Luther Pendragon.

Over the years, I have been accused of being something of a leftie. It’s true that, for the first nine years of this column, the Conservatives were in power and, in my view, doing so much real damage to the economy and the industrial fabric of Britain, not to mention pursuing isolationist policies that put the UK in solitary confinement in the European Union, that I took every opportunity to clobber them.

And it’s true that, in the edition of May 1 this year, I urged readers to vote Labour in the best interests of British business. Recent events have not led me to review that opinion. But they have led me to realise that, while Labour was needed to balance and, in some cases, to reverse the industrial and economic policies of 18 years of Tory management, the true enemy of business is government, irrespective of what party forms it.

The Tories grasped the principle of profit only too well. They knew that for businesses to survive and prosper, they had to reward their shareholders and, in order to do that, they had to make profits. This was the principal tenet of their industrial faith. The trouble was that it was also their only one. What made New Labour so attractive was that it acknowledged that there were other priorities and other principles. But it will always be driven by political, rather than commercial, motives.

Political parties these days need money to get elected. Because there are few landed aristocrats or wealthy trade unions around, they need subsidising by business. Once elected, their priority becomes to stay elected. This means running the economy for short-term political effect and pleasing what they perceive as public sentiment. This is an entirely different set of objectives to those of the business community, whose members must beat rivals by satisfying customers, while delivering value to their shareholders. It could be argued that governments have to beat rivals by satisfying electors, but they never have to deliver value to shareholders – and that makes them different.

Events that demonstrate government is the enemy of business have been slow to gather momentum since May, but are now appearing with sufficient regularity to confirm that the new victors are not interested in, nor knowledgeable about, business.

One such event was Chancellor Gordon Brown’s fluffing of the issue of Britain’s entry into a single European currency. It is hard to imagine any incoming government making a worse job of European policy than the Tories, but Brown had a bloody good try.

I remain convinced that one reason that Brown partially handed responsibility for interest rates to the Bank of England so soon after arriving at the Treasury was that, after joining a single currency, he could abdicate responsibility for oscillating interest rates to keep Britain in line with Europe. In the event, he has delayed entry for political reasons. Either way, he has done British business no favours.

Another such event has been the manner in which New Labour has caved in to powerful lobbies. The funniest and most visible of these has been the Formula One débâcle. Say what you like about the Tories, but at least they knew how to take a bribe. By contrast, this Government took 1m, provided what Bernie Ecclestone wants by way of an exemption on tobacco advertising and then gave the money back (or will give the money back, just as soon as it can find it).

I am not suggesting for a moment that Ecclestone, who appears to have the intuitive street-cunning of the truly successful business magnate, does not understand government. Quite the reverse. What I am saying is that the Government does not readily appear to grasp the relationship between the tobacco industry, its enormous contribution to excise duties, its value to motor racing and the accepting of 1m from Ecclestone. But then that’s government all over – it wants the money, but it doesn’t want to have to understand the business that provides it.

Similarly, I fail to understand the Government’s position on the National Lottery. It was not so long ago that Chris Smith, the well-meaning Minister for New Fun, was carpeting Camelot’s directors for earning too much and telling them that they had but a few days to give it back or there would be trouble. As it turned out, someone took Smith gently by the arm and explained that he couldn’t do that to a company in the private sector and an elegant climbdown was executed by Peter Mandelson.

Now, the Government seems intent on protecting Camelot’s monopoly by tabling legislation to ban charity lotteries in pubs. I won’t dwell on this, because my firm has a professional interest in the sector, but it would seem that a re-direction of National Lottery funds into education funding has proved more powerful an influence on government than any commitment to Tony Blair’s “caring, giving age”.

We might call this period The Blooding of Blair. To date, he has attempted to run the Government as one imagines Cliff Richard would: “Hey, guys, y’know, let’s stay cool and hold the show right here.” Life’s not like that. Business isn’t like that. But politics is like that – this is why British business will always be in unofficial opposition.

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