Some of you may have seen this from the headline in The Times (which I won’t link to because they have a firewall). This story being about alleged plans for the heads of big business to be given a ‘hotline’ to ministers – which was trailed in both the Telegraph and the BBC. There are a number of reasons why I am very worried about this.
Due to watching the trials and tribulations of the global economic system in horror – if only because of the human impact of lots of people being made and staying out of work because of the lack of jobs, this story seems to have snuck in without any real scrutiny. The proposals – as reported (I’ve not seen any detailed briefing or press releases so am going on trust by what I’ve read in the mainstream press) are flawed for a number of reasons.
Pro-business vs pro-market
I’ve always been sceptical of any politician who claims to be “pro business”. Being pro-business and being pro-market are not the same thing (in my book). The role of the state in a market economy is to ensure that a legal framework is in place to ensure a level playing field for all of those who want to enter a given market. The USA and subsequently the EU have at least recognised this in parts of their legislation, if not in the application of it – e.g. the US anti-trust laws. In terms of being ‘pro-market’, the responsibility of the state is to reduce the barriers to entry to markets so as to promote competition, reduce prices, increase quality and output and generally be of benefit to the consumer. (I’m going by traditional textbook economics here). This role includes taking action against individual firms that take steps to increase illegally those barriers to entry. This might be from the well-known such as price fixing and the formation of cartels, to the less well-known such as artificially lowering prices to below cost price when a new competitor comes in for long enough to send a competitor out of business, to buying up land or inputs that might be essential for a new competitor to set up, thus preventing them from doing so. These less-well known ones are both hard to prove and some of them may well be perfectly legitimate. Favouring businesses just because they happen to be big – i.e. giving them privileged access to ministers of whom regulators are directly accountable strikes me as being irresponsible at best – especially given the current perception the general public has on politicians anyway.
What is the selection criteria?
The Telegraph reports the ‘top 50 firms’ and quotes a BIS spokesman as mentioning ‘strategically useful firms‘. BAE Systems is a ‘strategically useful firm’ in terms of our defence industry but when it comes to corruption allegations, it has form. BAE Systems was fined again by US authorities only this year. Shell has also been mentioned as one of the firms – yet it too was fined this year following a gas terminal blast at Bacton a few years ago. What sort of firms are being given very high level public access to ministers that other firms can only dream of? How do we know that the firms that are being picked are not firms on the decline? Is the Coalition picking firms today that in a few years time may wither on the vine? Who fancies sending a freedom of information request to BIS to ask them what the selection criteria were for selecting the firms?
Will this help innovation?
By selecting big firms, what message does this send out to small firms – in particular small but successful and growing firms? One of the continual messages from NESTA (the former non-departmental public body that in 2010 cut its ties with state funding) is how small firms are one of the key engines that drive innovation. Why put so many eggs into the basket of big business? Would it not be far better for ministers to focus their efforts on levelling the playing field and rebalancing things towards small businesses rather than giving even more advantages to big business that can already afford to recruit and retain full-time lobbyists to do their bidding?
Apart from the issue of tax avoidance and tax evasion – issues that have risen up the ladder of the public’s conscience to the extent that ministers are being forced to take action in a way the previous administration to its shame never did – transparency is a big issue here. Familiarise yourselves with Michael Cockerill’s series Inside Whitehall – and in particular the roles of private offices. Whenever I have met with ministers someone in my team (usually me) always took a note of who said what and what was agreed. The same is true of one of the minister’s assistant private secretaries. This is essential for transparency and for the public record in terms of decisions taken.
How will we know that ministers have not been unduly influenced by big business to behave in a manner that is of the benefit to big business, but not to consumers and the general taxpayer? Will these telephone calls and meetings be minuted? Will these minutes be published? How will Parliament scrutinise what happens as a result of these meetings? This is a completely different league to businesses ‘buying access’ to senior politicians at party political events – all three main political parties have sponsorship opportunities for their big conferences. The reason why this is in a different league is because the civil service – and by definition the tax payer – is footing the bill for all of this.
There is nothing wrong with ministers meeting businesses and representatives from businesses as part of their ministerial duties. In fact, I’d argue it is essential – especially where the private sector is going to play a key role in the delivery of a government policy that has been developed in a transparent manner, or where the input of the private sector is essential for reasons of public safety or the delivering of a service that later on may become universal – radio frequencies for the next generation of mobile phones or exact designs and arrangements for charging points for electronic vehicles. (Thinking off of the top of my head there). But with those sorts of developments, all interested parties are invited to take part, the consultations are public and the meetings with them are minuted. What unnerves me in particular about these proposals – and they are only proposals at this stage – is the issue of transparency.
Will these proposals really help restore the public’s trust in politics and in politicians? These proposals must be dropped and they must be dropped now.