Business left high and dry

If you were a UK business that had once commanded enormous global respect but had run through four chief executives in the past six years, each of whom had left in something close to disastrous circumstances, where would you expect your brand, your reputation and your share price to be?

Not high, would be the most charitable assessment. Rock bottom would be the realistic view. No business could survive it. Yet recent politicians seem to see such a state as normal. They bounce around with more slogans. But a business can’t do that.

Do or die

In the long run, companies survive largely on their achievements. And mostly they do so by understanding their business and getting on with it. At no point would the chief executive utter the words ‘**** business’, as a recent prime minister did.

The great wash of external events, global politics and its likely outbreaks of instability, black swans, floods, pestilence and war could set you back on your heels, though these days you would hope that carefully nurtured sustainability strategies might mitigate the effects. Plans would have been made. And hopefully stuck to.

You would not expect, when disaster loomed, to chuck away an estimated £5bn to people you hardly knew and then be surprised that the money was mostly lost, as was the case with the government’s Covid Bounce Back Loan scheme, much of which didn’t bounce, and which is almost certainly not coming back.

And you should not be surprised then that, politicians, if their opinion of business is as low as they make out, are hopeless at business decisions and should not be allowed near them. The trend in what used to be called the Anglo-Saxon nations (to differentiate the perceived cultural difference between the US and the UK on one hand and continental Europe on the other) is for politics to be simply a full-time all-year-round electioneering campaign regardless of how soon the next election is due.

Pearls before swine

In this world of hour-by-hour, almost minute-by-minute, slogan waving and slogan bashing, anything that might result in a long-term achievement is likely to come about only by accident. You lose count of the number of bright business elders who have offered advisory and even executive help to politicians only to come away, genuinely upset, when the realisation sinks in that long-term change is not anywhere on the politicians’ radar.

As a veteran head teacher friend of mine always points out, the relief felt at the departure of another less than useful education minister should always be held back. Nothing could be worse than this, my friend’s colleagues would say to each other, but it invariably was.

Dereliction of duty

It has been extraordinary to watch across the late summer months this year a lengthy time of almost complete inactivity. A business might complain that a substantial number of executives and staff have vanished to the beach, but the place would still be running, initiatives would be continuing to make headway, action plans would still be rolling out.

The idea that all the senior heads of departments would have been stood down for weeks would simply not be contemplated as anything other than complete madness and dereliction of duty. And having an outgoing chairman still hanging around with no executive powers and allowed to showboat round past areas of influence would be equally bizarre and unacceptable.

Yet that, sadly, is what has happened in UK government. Running a business that way would have the share price plummeting and the corporate vultures gathering. And don’t forget, all this happened in the midst of uproar over energy prices, war and rocketing inflation, most of which has gone unattended for weeks.

The problem is not just the lack of what you might call tone from the top. It is about the detail too. Over the past four years the need for urgent audit reform has been obvious. And a consensus exists between audit firms, companies and regulators that there is a need for new rules. We have had three major reviews and a white paper. And what has happened to this rare opportunity? In May 2022 the result of all this work was ditched by the government when it decided not to go ahead with a draft bill on audit reform until some other, later, time.

The lack of urgency was said to be down to a feeling that reform relating to corporate governance and audit was, apparently, boring. Running the business of government seems to be about slogans, so no one is going to bother mentioning the word ‘audit’.

Politics above principle

The result of this inexcusable laziness is that investment banks and their advisers have had half a decade to exploit the loopholes and to plan evasive action should the government ever get around to implementing reforms. The integrity of corporate reporting is diminished and the headlines around lax behaviour bring business reputations lower.

The same feeling of a tide going out relates to sustainability issues. In the business environment, sustainability issues are increasingly valuable, particularly when it comes to reputation. Yet the issues have become politicised. Politicians see votes in diminishing their importance. In the US the main securities regulator, the SEC, is pushing green issues and sustainability, while here in the UK the department of business is telling companies not to prioritise them.

This makes little sense to business but a great deal to politicians fighting their perceived corners. In the long term it can end only in more tears. The idea that politicians should start setting specific policies within business for reasons of their own party political agendas rather than that of the needs of business is a slippery and disastrous slope. Instead of more slogans, what is needed is leaving business to itself, as far as seems sensible.

And rather than policy objectives jumping to and fro, there should be a degree of certainty on long-term objectives and deep competence in delivering them. None of that has been happening for a long time.