Cameron’s dilemma. Diverse Business-needs


Patience Wheatcroft
26/01/06


Cameron’s dilemma. Business needs, and deserves, a climate of appreciation and encouragement.

Business does not ask a lot of government. A stable economy and an absence of unnecessary intervention would be the prime requests of most in the commercial world. Beyond that, a hospitable tax regime, efficient infrastructure and well-educated workforce would be on the wish list – and what the majority of citizens would expect of their administration. But what those who struggle to create wealth do want, and deserve, is a climate that appreciates and encourages rather than reviles the contribution that they make to the country.

In his first torrent of soundbites as leader of the Conservative Party, David Cameron has been careful not to portray himself as the creature of big business. As he strives to widen the party’s appeal, that stra-tegy is understandable. But in his efforts to court new voters, he must beware of sending out negative messages to those who believe in the profit motive.

Telling an interviewer, as he did at the end of last year, that he disliked ‘capitalism’ because, like ‘communism, socialism and republicanism’, it represented extremism was bowing just a little too far in the direction of another ‘ism’, popularism. Just two months earlier, he had bemoaned the fact that ‘for too many people, profit and free trade are dirty words’. The answer, he declared, must be ‘a campaign for capitalism’. The difference in sentiment is explained by the fact that his rallying cry for capitalism was made at the CBI conference, in the last days of the Tory leadership election process. Some of those gathered at London’s QE2 conference centre would undoubtedly have been eligible to vote, and Cameron told them what they wanted to hear.

He may subscribe to the view that all is fair in love, war and elections. Nevertheless, as a former head of communications for a media company, he will know that the market quickly picks up on inconsistencies in the messages put out by organisations. Now that he is repositioning the Conservative Party, he needs to deliver a consistent line on business.

Once installed as leader, he pronounced that a Tory government would be prepared to ‘stand up to big business’. If that amounts to ensuring that big business plays by the rules, then not even those who head Britain’s most successful companies can object. But they will be hoping that even allowing for his new-found dislike of ‘isms’, Cameron will soon show an attitude of support rather than an- tagonism to business.

New Labour has regularly trumpeted the case for ‘entrepreneurialism’, with Chancellor Gordon Brown staging star-studded conferences to discuss how enterprise can best be fostered. Yet the enthusiasm that business originally had for New Labour has waned. Business feels that despite the regular promises to cut regulation, it is more burdened than ever with unnecessary red tape.

Now, the relationship is coming under even more strain because of a hardened attitude towards taxation issues. The CBI calculates that between coming to power in 1997 and the end of this financial year, the Labour government will have raised an extra £51 billion in business taxes.

Perhaps not unconnected with the Chancellor’s need to rake in extra cash in order to avoid breaking his ‘golden rule’, companies feel that the Inland Revenue is being increasingly heavy-handed in its efforts to maximise revenue. So uncomfortable are some finding a regime that no longer seems to accept the concept of tax-avoidance that they are reconsidering whether they need to be domiciled in the UK.

So business is probably more in the mood to be receptive to a new Tory leader than it has been for many years. Cameron has plenty of time to develop policies that might appeal to business voters and, in setting up six separate review groups, he has a chance for innovation. John Redwood, who is leading the commission on competitiveness, can be expected to produce some positive thoughts on reducing red tape and developing a tax regime that encourages business to locate in Britain rather than withdraw.

He is also likely to stress the need for more efficient public spending. Cameron has pledged repeatedly that he would share any increase in revenue between public spending and tax cuts, convinced that the electorate does not want a government that would cut back on public spending. But the money now being poured into the NHS, for instance, could be spent far more effectively. A willingness to make more use of private-sector expertise and efficiency in the public service seems likely, and would certainly win an enthusiastic response from business. But business is a catch-all term that does not reflect the diversity of those who wish to see a government support the profit motive. Those who struggle hardest against the weight of regulation are those who run small businesses. New Labour espoused entrepreneurialism; the Tories must applaud entrepreneurs of all sizes.

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