Lord Bilimoria recently shared his thoughts about the aftermath of the 2015 General Election and a reluctance to celebrate British achievements in an article published in the Telegraph. In the feature he hailed the stable business conditions created by the election result and argued for the new wholly Conservative government to take decisive action to tackle the decline in the UK’s productivity, while continuing to reduce the nation’s deficit.
Why are we so shy of celebrating British achievements? Cameron must learn from Modi
The surprise majority achieved by David Cameron’s Conservatives in this week’s General Election will have allayed the worst fears of business owners about an Ed Miliband and SNP government. Like many in business, I was critical of Labour’s anti-enterprise attitude and apparent eagerness to interfere in markets. Moreover, the prospect of higher taxes and spending risked wrecking the economic revival that has been so hard won in the aftermath of the 2008 crash.
Just as in last year’s Indian election, when Narendra Modi and the BJP defied the polls to earn a majority, we have seen a party of business win through against expectations. For Modi, majority government has meant the chance to enact far-reaching reforms that coalition would have made impossible. We can hope that the new Conservative government is similarly liberated to offer its full support to entrepreneurs and businesses, not least by maintaining the competitive corporate tax environment we enjoy in this country, with 20% being one of the lowest in the world.
Yet this election marks not the end, but the beginning, of the battle to safeguard and enhance Britain’s commercial culture. For now, the productivity of the UK economy lags behind the bulk of the developed world, owing to a shortfall in investment in research and development, innovation and higher education, areas in which we spend a very modest proportion of GDP by comparison to the United States, the EU and the OECD.
In the next two years, we face a referendum on Europe, something that is causing understandable concern among businesses who rely on the Common Market. I believe that Britain will vote to stay in the European Union, but it will be a drawn-out campaign and creates potentially damaging uncertainty.
With the SNP’s huge presence in parliament the Prime Minister is going to have a challenge in maintaining the unity of the UK and in taking the initiative to promote England’s interests in what is increasingly emerging as a federal united kingdom with the possibility of an English parliament in due course not being unrealistic.
I do believe that if the continued cuts that are going to take place, the Conservative Government is going to have to be realistic. Rather than reducing spending to 36% GDP, they should target a more realistic 40% of GDP, which is achievable.
If they can continue the low inflation, low interest rates, high employment and high growth trajectory, the tax revenues should approach 40% of GDP, thus eliminating the deficit and, of course, borrowing, which has been increasing over the last parliament and needs to be reduced. Our borrowing costs and our debt amounts to 2.5% of our GDP, more than our entire defence budget.
The other, lesser-appreciated, risk resides at Westminster. After the minor miracle of a majority government, you might be forgiven for thinking that the Conservatives will have a reasonably free rein to pursue their legislative programme. Yet, among the roughly 760 members in the House of Lords, only 224 are Conservative peers, against 214 for Labour and over 100 for the Liberal Democrats, an unheralded legacy of five years of coalition government. The challenge of piloting legislation through an Upper House whose composition has changed markedly, is something that should not be underestimated.
If the immediate threat posed by a change of government and a lurch to the left has been averted, that does not mean it will be plain sailing for business in the years ahead. While it is encouraging that the electorate has rejected Ed Miliband’s 1970s rhetoric about business, there is still some way to go in enshrining the importance of wealth creation in the national debate. While the Coalition Government had a good story to tell about the increase in entrepreneurship and business creation under its watch, the subject merited hardly a mention in any of the campaign debates or set-piece occasions. To pay for the public services that politicians are much fonder of debating, you need businesses creating jobs and paying taxes that fund the expenditure. Governments never stop talking about how to spend taxpayer money, but generally say far too little about how it is created in the first place.
A failure to recognise the essential role of business is part of a wider malaise that manifests itself in a sometimes-negative attitude to Britain and its achievements as a nation. Around the world, Britain is respected and admired, a country with less than 1% of the world’s population but which boasts world-class talent in almost every field you could name. The Made in Britain marque still carries real clout on the global stage, something that the government’s GREAT campaign has done much to support, as I was able to witness when speaking at the recent Milan Expo.
Yet domestically there is still a reticence to big up Britain, and the uncertain public relationship with business plays some part in that. We need to celebrate how good Britain can be, and there is a greater role for business in being assertive about its own achievements, and more ambitious too in trading internationally.
While the decisive election result means anti-business rhetoric may go into abeyance for the time being, that does not mean the private sector can afford to take a back seat. Only by ensuring that Britain remains open to the world around us, and celebrates its thriving business culture, can we ensure that the economic progress of the last five years is sustained and furthered as we enter this new Parliament.