Dear Rishi, Jeremy, Keir and Rachel
An open letter about growth
It is the accepted view of both main parties in the UK right now that what this country needs is growth.
That is, in significant part, a political expedience. If you can make the cake bigger then it is easier to avoid difficult discussions about the increasingly uneven way it is divided into slices.
There are, though, genuine reasons why orienting our economy towards growth is a sensible goal. Growing the economy helps us deal with our very high national debt (essentially making it smaller in proportion to our ability to pay it). And historically, economic growth has been a powerful engine in bringing the poorest in society out of of poverty.
So even though I question the motives, I can get on board with politicians centring their economic policies on getting the country back to growth, after what has been quite a long period of stagnation.
What is often missing, however, or simply bizarrely wrong-headed (hello Liz and Kwasi) is any understanding of how growth is actually generated.
Like many regular readers of Moving Tribes, I’ve spent quite a lot of my career making those small investment decisions in business which, in the end, add up to economic growth. The new product launch, the hiring of some more people, the successful overseas expansion, the capital investment programme.
Rarely, in my experience, have the discussions that led to those investments involved a long time reviewing the likely future of Inheritance Tax or the corrosive effect on British society of 20mph speed limits. Nor, frankly, have those investment decisions been made any easier by the existence of yet another government quango or scheme designed to ‘boost jobs’. Just look at the disastrous white-elephant that is the Apprenticeship Levy for a worked example.
But that’s not to say that Government makes no difference at all to the investment decisions that businesses make and therefore to the direction of GDP. Here, then, are a few things that might actually help:
A soundly managed economy, defined as one that delivers low interest rates and relatively stable tax structures.
An effective and working lending and fund-raising environment where good business ideas can find the funds they need to get going
The availability, ideally from within the UK, of the technologies and machinery required.
The availability of a skilled workforce
Consumer confidence and the associated willingness to spend
High quality local infrastructure so that staff can find somewhere to live and get easily to work and deliveries can travel around the country
And yes, at the margin the tax system does make a difference - it is much easier to invest when the taxes you’ll ultimately pay are based on the project’s success (corporation tax, capital gains tax) rather than being levied on activity whether it works or not (business rates etc). As the balance shifts from the former to the latter, the risk of a new venture rises and the incentive to invest in it drops.
Simplicity - every new announcement or scheme from government seems to translate into another blizzard of paperwork. The UK tax code alone apparently contains over 10 million words.
So what do I (and I suspect many others in business) want to hear from this conference season? Some quality thinking about how you can help us achieve this wish list. That means:
A strong focus on skills and training, ideally one that also drives inclusion as far too many people in our society are excluded from participating in work.
Investment in infrastructure (which means not just roads and rail but critical enablers like the electricity grid)
A clearly articulated industrial policy that incentivises investment in the new economies of green technology, AI and other growth drivers
A planning policy that allows the development of the industrial parks, trading ports (and yes, houses) that the country needs
A financial system that supports investment, keeps interest rates low and delivers stability
Trading relationships that give us the ability to operate businesses overseas, import and export - the UK is a trading nation.
(And if you want bonus points on that last one, getting us back into the Single Market would be a big help!)
If you are Rishi, Jeremy, Keir or Rachel, I hope you find that useful.
If by some chance you are not one of those four, please take the opportunity to have your say too - what do you want to see from Government that would help you, in your business, grow? Let me know here or on social media, and I’ll update this list.
P.S. As I wrote this piece, the news broke about Dame Sharon White’s decision not to take a second term as Chair of the John Lewis Partnership. I wrote pretty much all I’m going to about JLP back in March, in the post linked below. I’d be careful, though, not to be too quick to join the chorus of “I told you it would never work” about White’s appointment to JLP. The Partnership was in a pretty weak state when she joined and the jury remains out on whether its resistance to her strategic changes was ‘wise protection of what makes the partnership great’ or just ‘if we wait long enough with our eyes closed, the world will go back to normal’.
