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Where’s the beef? What Cameron has to do to win the business vote

Simon Nixon says the Conservatives should start saying a lot more about tax cuts and deregulation and a lot less about ‘work–life balance’

27 September 2006

5:13 PM

27 September 2006

5:13 PM

Simon Nixon says the Conservatives should start saying a lot more about tax cuts and deregulation and a lot less about ‘work–life balance’

To see where business stands in the Conservative leadership’s current list of priorities, take a look at next week’s party conference agenda. The platform that used to proclaim the Thatcherite gospel of enterprise will this year debate whether to ban advertising to children and crack down on the booze trade. Instead of the traditional promise of a bonfire of red tape, the session devoted to ‘competitiveness’ will feature a homily on corporate social responsibility and a debate on ‘work-life balance’. Delegates will even be treated to a star turn by Will Hutton, the left-wing columnist and trenchant critic of Thatcherism.

This is clearly not an agenda aimed at big business or small business, let alone the self-employed. There is nothing here for fat cats, greedy cats or capitalist pigs. Cameron’s emphasis on ‘General Wellbeing’ — his favoured measure of economic success — is a manifesto for middle-class public sector workers and employees of big companies. It is directed at those sufficiently shielded from the effects of globalisation to worry more about lifestyle than about how to make a living — in other words, typical Lib Dem voters. This is the Tories rebranded as the Capitalist Workers Party: ‘Professionals of the world unite! You have nothing to lose but your private health insurance, gym membership and extended maternity leave’.

Following Cameron’s earlier attacks on WH Smith for selling chocolate oranges and Topshop for selling ‘creepy’ clothes to young girls, and his declaration that he won’t be in the pocket of big business, it has been claimed the Tories are now anti-business. The suggestion makes the shadow trade and industry secretary Alan Duncan visibly agitated. ‘People say politicians need to understand business. But business also needs to understand politicians. We’ve got to overcome the perception we are a hard-nosed bunch only interested in helping our rich friends get richer. We have never been the party of big business, even though we may have let ourselves be caricatured as such. We’re on the side of employees and consumers as well as employers.’

Even so, the party has chosen a curious moment to don the mantle of the workers. As a result of Labour’s huge burden of social and environmental legislation, workers now enjoy better conditions, for more money, with more benefits than ever before. What’s more, all big companies now produce detailed corporate social responsibility reports; from BP to Tesco, they are desperate to promote their environmental credentials. So business wants to know where all this talk of GWB and CSR is going: does Cameron truly believe business has not gone far enough?

It’s a hugely important question because the business vote is up for grabs for the first time in years. And it’s a vote that could prove decisive at the next election. There are four million self-employed in Britain and a further 12 million working for small companies, according to Stephen Alambritis of the Federation of Small Businesses. Business largely abandoned the Tories following the ERM debacle and has never swung back. Labour has reaped the electoral rewards of economic stability and a public-spending splurge that has spilled into private sector coffers thanks to lucrative consultancy projects and construction contracts. But now business is getting twitchy again. The spending splurge is coming to end. The government is up to its eyeballs in debt. Globalisation is biting. And companies are worried about how to stay competitive. They feel overtaxed and over-regulated compared with foreign competitors. The number of start-up companies employing more than one person after three years — a measure of the health of the vital small business sector — is falling. And Britain has slipped down the global competitiveness league from fourth in 1998 to tenth in 2005.

So are the Tories gearing up for a raft of new corporate social and environmental policies? Absolutely not, says Duncan. It’s not about making laws, it’s about changing cultures. Politicians may not be trusted, but business needs to put its house in order too. Richard Lambert, the new CBI chief, has pointed out that in the 1970s 60 per cent of the British public agreed with the idea that the profits of large companies help make life better for everyone who uses their products and services. Today that has fallen to 21 per cent. Prosperity depends on healthy companies, says Duncan, and healthy companies are respected by customers and employees as well as by shareholders.

Tories used to adopt a more Darwinian approach: healthy companies would prosper and unhealthy companies would wither. That was the law of the market. It wasn’t the job of politicians to dispense management advice. But if the Tory emphasis on these issues is really about presentation rather than policy, then no harm done. More important is whether, deep in the Tory engine room, plans are afoot to address the issues that really worry business: tax and regulation, Britain’s woeful infrastructure and the failings in its education system.

Back on familiar Tory territory, Duncan is more animated. He’s a wholehearted supporter of Cameron’s efforts to modernise the party’s image, but he also insists that only business can create the wealth to pay for social objectives. Unlike Labour, all the Tory DTI team have business experience. Duncan himself worked for Shell and the controversial oil trader Marc Rich. So what would he do differently? He’s worried by Whitehall’s ‘gold-plating’ of EU directives and is reviewing each one for ways to cut unnecessary rules. He would also do more to promote UK trade interests overseas. He’s just back from the Gulf, one of Britain’s biggest export markets which, disgracefully, has received barely a single high-level ministerial visit in nine years. But those hoping that the Tories will abolish the DTI are likely to be disappointed.

Indeed, when it comes to specific policies, Duncan is vague. The party will soon hear the reports of two policy commissions. The former Scottish secretary Lord Forsyth is heading a tax review, and John Redwood will make recommendations on economic competitiveness. Both are notable right-wingers, and leaked reports suggest their conclusions will be radical. Forsyth is said to have identified £19 billion of tax cuts, and Redwood has spoken admiringly of the contribution Ireland’s very low business tax rates have made to its economic success. But there is no obligation to accept their findings, and The Spectator has reported that Forsyth is under pressure to tone down his conclusions.

Instead, the Tory message to business is ‘trust me’. And, in fairness, that’s a message business is happy to take at face value, says John Cridland, deputy director-general of the CBI. ‘It’s clear the party needed to change its message. Business recognises why Cameron is doing it and is prepared to cut him some slack. What’s more important is that there is an effective opposition. For the first time in years, it’s realistic to talk to politicians from a range of parties to convince them to do things differently. That’s good.’ Indeed, the renewed interest is clear from the number of businesses sponsoring events at the party conference — up to 25, compared with 18 last year.

Besides, Cameron and his team have shown that they understand what is at stake. Earlier this month Cameron gave a thoughtful and far-sighted speech on globalisation to business leaders in India, striking all the right notes about the need for open markets and better skills. Meanwhile George Osborne has floated the idea of cutting stamp duty on share deals — a move that could add tens of billions to stock market values — and has spoken of the need for ‘simpler, flatter, lower and fairer taxes’.

But at some point before the next election, business wants to see some beef. The business vote is not going to fall into the Conservatives’ lap. All three main parties are committed to economic stability. And the other two will both go into the election with new leaders eager to prove their modernising credentials. Cameron must show that his Capitalist Workers Party can also be the party of capitalists. It’s possible. Blair more or less managed it. But he did so in the most benign economic conditions in history. Cameron may not have it so easy.

Simon Nixon is the executive editor of breakingviews.

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