Business leaders be warned

June 24, 2014

In the space of one morning, the former editor of Conservative Home and a former senior advisor to Tony Blair have both fired warning shots across the bows of our boardrooms. Speaking at CentreForum’s Orange Book conference today, Tim Montgomerie unloaded both barrels on Britain’s business trade bodies. He argued that the CBI and IoD were losing the air war with consumer pressure groups, partly through presentation (he effectively ordered a Taliban-esk ban on pinstripes on telly) but principally by not explaining how an open free market brings societal benefits that help large parts of the country.

While Tim was declaring Jihad on the trade bodies, political strategist and former No 10 advisor, John McTernan, wrote in the Financial Times that, “British business urgently needs to become actively involved in politics”. McTernan castigated UK Plc for sitting on the sidelines during the Scottish independence campaign and for, so far, taking a backseat in the debate over the future of the UK’s relationship with the EU. One of the most striking elements of the FT piece was a statistic taken from a Populus survey this May which showed that 49 per cent of voters think big business is a bigger threat to the public than trade unions, with only 12 per cent disagreeing.

When leading commentators from the centre right and the centre left are making the same point it would be extremely sensible for our business leaders to sit up and take notice. Ed Miliband has already made it crystal clear that he has big business in his cross hairs. Over the past twelve months, the Labour leader has set out the case for government intervention in the housing market (a cap on rent increases) and the banking sector (a potential cap on a bank’s share of the high street).  He has also benefited from his headline grabbing announcement of an energy price freeze for the first two years of the next parliament. These are extremely popular policies which are difficult to counter without delving into the technicalities of why they will have unintended and negative consequences.

The question for business is how best to respond. Having advised major corporations in my past life I am aware of the risk factor associated with a chief executive making a public intervention which could be construed as taking a political position. Advisors fret about the consequences of associating the brand with a specific position, potentially favoured by one but not all of our main political parties. This is counsel stuck in the dark ages. It is now impossible for a businesses  – especially when they reach a certain size – not to be embroiled in a major political debate. Take Google and the debate over who is responsible for monitoring child abuse imagery on the internet. Or Amazon and Starbucks who – even though they are abiding by the rule of law set out by the government – are heavily criticised over their tax affairs. The bigger you become, the more politicians will see you as easy prey to deflect attention away from themselves.

A new approach is needed. Long gone are the days when simply adding an appendix to the annual statement setting out a firm’s Corporate Social Responsibility (CSR) achievements is enough. I’m not saying that business shouldn’t aim to reduce their energy consumption or increase diversity levels at board level. But unless companies are able to show their customers and the general public the wider societal benefits they are delivering (building more homes, creating apprenticeships, financing small businesses, investing in local infrastructure projects) they will constantly be on the back foot.

I don’t profess to have the answers but this will require brave leadership and a willingness to take a proactive approach when it comes to talking to the national media as well as directly engaging with policymakers, charities, think tanks and campaign groups. But make no mistake capitalism and the free market are under attack. The time has come for business to shoulder arms and fights back.

This article originally appeared on Public Affairs News

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