Martin Vander Weyer

Soothing mood music from Hammond and May disguises challenges ahead

Also in Any Other Business: the royal family renovates its corporate HQ; and hard or harder Brexit?

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Theresa May likes to give a kitten-heeled kicking to conference audiences, even when they are police officers or her own party delegates. But at the CBI gathering at Grosvenor House in London on Monday, she was out to make friends with soothing (if essentially hollow) remarks about Brexit, and promises of the lowest corporate tax rates in the G20 and an extra £2 billion a year for research and development to help the UK stay close to the forefront of technology and bioscience. Assembled fat cats may still have been irritated by her commitment to binding annual shareholder votes on executive pay, but at least she backed away from putting workers’ representatives on boards, a threat that contributed to the anti-business tone of her Tory leadership campaign in July.

So far so good, you might say, and Chancellor Philip Hammond’s commitment in his Autumn Statement to infrastructure spending, on roads and railways as well as broadband, was another gesture in the right direction: any spending that relieves congestion, shifts freight and helps small firms trade online is a useful jab in the flabby backside of national productivity. Business drives and shapes the economy, creating the jobs and the spending money that pay the taxes that fund the state; so every government needs business on its side, and even Jeremy Corbyn paid his respects with some waffle about Labour being ‘on the side of the innovators, entrepreneurs and investors’, even if his more pressing concern is ‘injustice in the workplace’.

It was polite of the CBI folk to give Corbyn a hearing at all, given his irrelevance to their fortunes, but they should recognise also that most of the offerings from Hammond and May are piffling in relation to the scale of the challenge facing Britain as a global competitor. Presented by any other recent frontbench team, they would have been dismissed as window-dressing.

The low corporate tax promise is by far the most important: a carrot for inward investors as well as an incentive for domestic companies to channel more profit into capital investment — if they don’t distribute more profit in executive bonuses, that is. But we’ll still be well below the OECD average for R&D spending, and we lack the critical mass of venture capital and investment expertise to take brilliant ideas from laboratory to public market before they’re bought up by foreigners to be developed elsewhere. We’re not turning young people out of our colleges with adequate skills in maths, sciences or foreign languages. The Chancellor also threw some money at affordable housing, but nowhere near enough to accommodate the low-waged workforce our expanding cities depend upon. And we have absolutely no idea how Brexit is going to end (on which more in a moment).

Against that background, this week’s messages from Downing Street amount to little more than mood music.


We’ve all had those moments when the electrician prods a wobbly plug-socket, sucks his teeth and says, ‘Lucky this old wiring hasn’t burned your house down, mate.’ But still, £369 million sounds a big estimate for sorting out Buckingham Palace over the next ten years — unless you recognise that the mansion at the end of the Mall is also the nerve centre of a monarchical conglomerate that was last valued (by brand consultants in 2012) at £44 billion. It includes two huge property businesses, the Crown Estate and the Duchy of Lancaster, which recorded net income between them of £322 million in 2015/16 and can easily foot the bill for the palace makeover. Some might say lavish expenditure on head-office fixtures is a sign of a firm in decline, and that this one (like Tesco in the last days of Sir Terry Leahy) will face serious issues when its long-serving chief executive finally departs. But at least her designated successor has no plans to knock the palace down and build a new one to his retro taste; and on the upside, City analysts might observe, Prince Harry is working on a North American acquisition that could add exciting value in the next generation.

Hard or harder?

Here’s a pre-Christmas party game. Each player comes up with a word to fill the blank in ‘If Brexit was a …, which one would it be?’, and everyone else has to come up with witty answers. If the word is ‘film’, for example, obvious answers are Independence Day or Death Wish, according to taste, though a much funnier one was offered to me by former Tory MP Jerry Hayes: The Italian Job — in which Michael Caine, in the David Cameron role, famously complains ‘You’re only supposed to blow the bloody doors off’ after a bullion van is accidentally obliterated, and the whole caper ends up hanging over a cliff edge.

At the CBI meeting, Mrs May promised to avoid such cliffhanging, while the corporate lobby group’s chairman Paul Drechsler observed that for many of his members, ‘It’s not about a hard or soft Brexit but a smooth Brexit.’ Likewise, eager Leavers such as Norman Lamont have been arguing for a ‘clean’ Brexit, with certainty of timetable and outcome, as opposed to a ‘dirty’ one that drags on unresolved. But a Whitehall mandarin whispered to me recently that ‘soft just isn’t an option, the truth is it’s a choice between hard and harder’ — the latter meaning not only zero concessions on single-market access for favoured sectors, but also huge demands for compensation from the UK as the price of leaving and no substantive agreement on anything at all by the time the Article 50 two-year notice period expires.

Negotiating positions apart, all these adjectives bring me back to my party game. So here goes: if Brexit was a brand of toilet paper, which one would it be? Clearly we’re not talking Velvet Comfort, ‘the perfect balance of softness and strength’. Older readers will know what I mean if I say this is beginning to feel like the Bronco Brexit.