Director gave IoD members the opportunity to put questions to David Cameron. We selected nine and quizzed the prime minister. Here’s what he had to say – and what you thought of his answers.
On a bright, chilly afternoon in November last year, 20 purposeful figures braced themselves against the cold as they filed through the security hut at Downing Street and made their way towards Number 10. Once through the famous old door, though, they found the welcome warm. The delegation of IoD representatives and leaders from a wide range of British companies had been invited by the prime minister for an informal meeting to voice the latest thoughts and concerns of the UK’s business leaders.
At the head of the group was IoD director general Simon Walker: “The institute has historically had a very strong relationship with the government of the day, whoever is in power, and I think that reflects the fact that we represent the men and women who lead businesses of all sizes in the UK,” he says. “It’s the individual quality of IoD membership that means we can be so effective in representing the business community, because it is made up of people, not just of companies.
“We talk to all political parties and have always done that. There’s an IoD activist standing as a Labour candidate in the election, we attended Ed Miliband’s business launch on 16 February, and we stay closely in touch with all the parties which have a view on business. Even when we don’t agree with them, we try to find the best aspects of their policies and help shape and develop them.”
Of November’s meeting, he says: “It was warm and friendly. We canvassed a range of issues of importance to business. Members who are leaders from across the business spectrum were there, including Peter Digby from Xtrac and Dame Margaret Barbour, as well as many of our own key activists, including our Midlands chairman Jason Wouhra of East End Foods. It was very clear that the government, and David Cameron personally, are very committed to business and need us to take forward economic growth.”
In the spirit of keeping that dialogue between business leaders and the political parties at the top of the agenda in the run-up to the election, the IoD brokered an exclusive interview for Director with the current incumbent of Number 10. We asked for your questions and selected nine to put to the PM. Below are his responses – and what the business leaders who asked them thought of his answers…
Q A lot of us in business are concerned about the rise of the professional politician, those who have never done anything other than work in Westminster politics before getting to the top. Do you share these concerns? How can politicians understand businesses, of any size, if they’ve never had to consider the realities of risking their capital, battling regulation or worrying about cash-flow?
George Griffin Principal, commercial accounts, Sterling Global Operations, IoD Hereford and Worcester
A“We’ve got an incredible array of talent on the Conservative benches, from a wide range of backgrounds – medicine, the arts, teaching, media, law – and yes, business. I think of Grant Shapps, who set up his own printing company. Philip Hammond worked in small and medium companies, at home and overseas. Jeremy Hunt ran his own educational publishing business. I spent seven years working for a FTSE 100 company. We understand business – the challenges that directors face day in and day out. That is why we are delivering the joint lowest corporate tax rates in the G20. It’s why we have reformed planning, slashed regulation and cut business taxes – because we are the party of business.”
Griffin’s response: While it’s reassuring to get a sense of the number of current ministers who have a business background, I think the problem of a professional political class is deep-rooted and stretches across all parties. Parties must work harder to broaden their talent pool and recruit from a range of backgrounds and professions.
Q What’s the most interesting or exciting business idea you’ve come across since becoming prime minister, and what’s been the biggest change or trend in business that you’ve noticed?
Karelia Scott-Daniels Director, Manse & Garret Property Search, IoD London
A “The great privilege of this job is that I get to visit so many different companies, large and small, across so many different sectors. With 760,000 more businesses in this country since 2010, every day we are seeing business ideas being turned into a reality. Recently I was struck by SwiftKey, which I took with me to the CeBiT fair in Germany. They produce smart prediction technology to make mobile typing easier, and look set to take off internationally. The trend that I think is the most profound is ‘big data’. I’ve seen hotel groups capitalise on this by offering new services via their club card. I’ve seen smaller, newer companies challenge the established firms by using data in smarter ways. It’s an exciting trend, and there is so much scope for British companies in this area.”
Scott-Daniels’s response: Fifteen years ago many tech businesses were simply working out how to make money from websites, whereas these days half the tech firms at Silicon Roundabout have the sale of their big data as their exit strategy. This may make commercial sense, but those of us who value privacy should keep a close eye on the extent to which big business uses our data.
Q What else can government do to encourage businesses to work more closely with schools to prepare young people for employment after education?
John McGuinness Head teacher, Grainville School, Jersey, IoD Jersey
A “Children need to know how money is made, about turning over a profit, about working in a team. The future Richard Bransons and Karren Bradys are out there. We need to bring alive their ambition by showing them what they can do – and our top business people will do just that by sharing their own stories and passing on their hard-won knowledge. That is why I have repeatedly asked CEOs to get involved in their local schools, for example through the Speakers for Schools programme. Fiona Kendrick, Nestlé’s CEO, for example, is someone who has taken up the challenge and gone to schools to talk about her life of enterprise and achievement. We have revamped the way schools give careers advice and will be setting up a new school careers company to better guide students. And we will ensure that local enterprise partnerships are more closely involved with their local schools and FE colleges by creating a new national volunteer network of enterprise advisers.”
McGuinness’s response: The prime minister is a good name-dropper but this will be insufficient to change the examination board-driven curriculum in schools. Skills and experiences for employment need to be higher on the government’s own agenda if we are to tackle the huge increase in youth unemployment.
Q Do you think it was a mistake to try to reduce immigration on the backs of skilled and professional migrant workers from Commonwealth countries?
George Reed Director, Thorold Dewling Oil and Gas Recruitment, Winchester, IoD Hampshire and Isle of Wight
A “I have been very clear that Britain has to welcome the brightest and best. Our economy depends on it. That’s why we’ve opened new centres for visas in China and India. We have a 24-hour visa service in China. We have entrepreneur visas and tech visas. At the same time we needed control – the British people demanded it. Too many low-skilled people were coming to this country. That’s why we have set a cap on non-EU economic migration – but the important fact is the cap has been under-subscribed every month. No engineer or scientist has been turned away because of it.”
Reed’s response: It is reassuring to know that we are encouraging highly skilled migrant workers to the UK, and I was not aware that the government is actively promoting the country to China and India. To enable the UK’s global competitiveness it is vital that we continue to attract the brightest and best.
Q The distinction between tax planning and tax avoidance has been blurred of late, often by people who should know better. Do you defend the right of businesses to plan and mitigate their tax liabilities, so long as it does not involve aggressive tax avoidance?
Gordon Lee Director, Glee Communications, IoD Kent
A “Companies have a responsibility to pay the taxes that they owe – pure and simple. Taxes pay for the framework within which companies operate: the courts that honour their contracts, the roads they use to ship goods, the NHS that keeps their employees healthy. We need to keep taxes low so we remain competitive globally and reward enterprise and risk – but we also need to ensure that taxes are paid. That is why this government has done more to clamp down on tax evasion than any other.
“The truth is, however, that the globalisation of many businesses has developed at a faster rate than the world’s taxation systems. As a result, ever more complex tax structures have been devised, allowing companies to divert profits away from jurisdictions where their profits are taxed at higher rates into ones with lower ones. To address this we have led efforts in the OECD to address profit shifting and George Osborne has taken further action in the autumn statement to deal with this.”
Lee’s response: A fair answer, but I don’t think those messages are being communicated strongly enough at present. More could be done to detail the initiatives planned by the OECD and within the autumn statement and also to celebrate businesses that ‘do their bit’ and how much they contribute to the nation’s tax fund.
Q With 96 per cent of UK enterprises being classed as a micro business (up to nine employees), could the government please acknowledge that they have very different needs to the largest SMEs (up to 250 employees) and perhaps introduce a new minister for micro business?
Paul Lancaster Founder, Plan Digital UK, Newcastle upon Tyne, IoD 99 member
A “I am the government’s small and micro- business minister! And I have made sure that we give as much, if not more, attention to small and micro businesses as we give to large corporations. We are pioneering the first-ever small business bill, which will help firms get credit and improve payment terms. We have cut up to £2,000 from the employer national insurance bills via the new employment allowance and doubled the small business rate relief. I am proud of the way that we are looking after the country’s smallest firms, and we are seeing more start-ups in this country than ever before.”
Lancaster’s response: I think the coalition government has done some great things to support entrepreneurship. However, the feedback I hear every day at grassroots level is that the broad definition of SME means it’s impossible to introduce policy that works for both the smallest and biggest in that group. Recent problems caused by the complicated new ‘Vat Moss’ EU legislation are the perfect example. As such, I’d urge ministers to look more closely at this issue and make sure that micro business owners are front of mind.
Q As the proposed referendum on the EU marches forward and Ukip gains a voice within the mainstream political landscape, can you now share any of your evolving beliefs on the importance of the UK’s continued participation within the EU and the impact this involvement will have on nurturing our overall SME economic environment?
Carlos Oliveira Founder and CEO, Shaping Cloud, Manchester, IoD 99 member
A “We are seeing a great revival in this country – jobs are up, foreign investment is up, a record number of start-ups have been set up. Britain is back in business. That hasn’t happened by itself – it’s happened because of our long-term economic plan, a plan that is keeping inflation low, regulations limited and the business environment friendly for both large and small corporations. But we now need to ensure that the EU creates a similarly business-friendly environment. The EU’s single market on our doorstep is a great opportunity for British firms. But all too often the market is hampered by job-killing regulations. That is one of the reasons why I set out a plan to reform Europe and renegotiate the UK’s relationship with the EU. I am convinced we can get a result that will benefit British businesses, large and small.”
Oliveira’s response: There is no question that SMEs greatly benefit from foreign direct investment – including softer measures such as raw human talent and diverse creativity. An SME’s business ecosystem is always governed by uncertainty: cashflow challenges, sourcing new clients, tightening margins and nurturing ever-scarcer talent. We simply ask that you continue to truly engage with a consortium of SMEs from across the country to really appreciate how the prospect of a referendum may impact the progress you note. SMEs live with uncertainty every day – but we prefer to compete in business environments that do not unintentionally add more.
Q Why has trust in business fallen even as the economy improves, and should politicians be more vocal champions of business? [Edelman’s Trust Barometer puts trust in business in the UK at 51 per cent, the lowest level since the immediate aftermath of the crash].
Jason Wouhra Director, East End Foods, regional chair, IoD West Midlands
A “It is natural that, during and after a recession, people worry more – about their pay packets, job security, and yes, also about the role that larger firms play. But rather than focus on the negative I would say people are still very supportive of keeping Britain’s economy free and open, welcoming investment from far and wide. That said, businesses, especially large businesses, should consider how they can win back people’s trust – pay the tax they owe, ensure they do not exploit workers, at home or abroad, protect their employees and give them opportunities for pay and career progression, which German companies are so good at, and create good communities where they operate. That’s the way to win back people’s trust.”
Wouhra’s response: I agree that businesses should be doing more to win people’s trust. However, in the main, trust has been lost by large multinational corporations who have the financial capabilities to pay for advisers to enable them to aggressively avoid tax and bend the rules. It is SMEs and mid-sized businesses which are the lifeblood of our economy – the vast majority of which are law-abiding businesses, looking after their employees and working hard to grow, in most cases organically. Britain needs to welcome business and celebrate success to encourage entrepreneurship within an increasingly competitive landscape with regard to taxation, employment laws, skills and opportunities for growth. The majority of business people are doing things the right way and also encouraging employees to develop within the organisation, because this too encourages business success. I congratulate the government for its initiatives over the past five years, which have resulted in job creation and an increasing appetite for investment. We must continue with this to create stability and not keep repeating the same ‘soundbites’ to please the media.
Q What do you think the next great opportunities will be for SMEs over the course of the next parliament?
Tarasyn Whitehead-Patey Director, Inigo Search, IoD Central London
A “The global economy is changing dramatically. Technology is allowing the smallest businesses to compete with the largest, long-established firms. Just see how much production is being reshored – one in six companies have done so, according to one report. That will give great opportunities for small firms in large supply chains. We are doing what we can to help this process. We have opened up government procurement to small firms and will look at ways to go further. And we have just launched a Help to Grow scheme – giving fast-rising firms access to debt finance so they can grow, take on employees and invest.”
Whitehead-Patey’s response: The pace of change is surely as much of a challenge as it is an opportunity. When seeking to regulate and tax this new global and digital economy the government must strike a balance between supporting such growth and managing its impact on society and the wider economy. The opportunities are immense, but innovation has to take the public with it.
Quickfire PMQs Favourite novel? Uber or black cab? House of Cards: new version or original? Favourite view? Curry or Chinese? Blur or Oasis? Favourite film? Zoella or Alfie Deyes?
I do the weekend shopping at Sainsbury’s
The Human Factor by Graham Greene
Francis Urquhart over Frank Underwood
Daymer Bay in Cornwall
At home, cooking with the family
Lawrence of Arabia
Zoella – according to my eldest daughter
Uber or black cab?
House of Cards: new version or original?
Curry or Chinese?
Blur or Oasis?
Zoella or Alfie Deyes?