Brown Bairns Watch For Signs Of Red Mist
officebroker.com is typical of the businesses I have in mind. Jim Venables and Andy Haywood, its founders, have sticky-up hair and sticky-up aspirations. In 2001, even as technology stocks tumbled, they saw an opportunity to broker office space over the internet. Their target market would be the proliferating small companies that traditional property consultants saw as too costly to service. Visit officebroker.com at its premises in an old mill in Staffordshire and you come away infected with its energy. The open-plan office is crowded with young people rattling away on keyboards or jabbering on telephone headsets. “Our market has never been so buoyant,” Mr Venables says. Sales have doubled yearly, reaching ┬ú3m in 2006, when they yielded ┬ú1m in profits. The company has opened an office in Dallas and should have a third, in Asia, by 2008.
The expansion of businesses such as officebroker.com are menaced by two main external threats. The first, fretted over with surprising nervousness in business circles, is that Mr Brown will be harder left in his sympathies than Mr Blair. It does not help that a senior civil servant called him a “Stalinist”. Mr Brown might pander to the unions by restricting the hiring and firing rights of employers, or by clamping down on private equity transactions.
Semi-reconstructed lefty Peter Hain gave a flavour of how one wing of Labour feels about business at deputy leadership hustings. “I am not in favour of increasing taxes, but when a handful of people get ┬ú8bn in City bonuses it is not acceptable,” he thundered, calling for British plutocrats to give more to charity. So they should. But those who are UK subjects will already be paying 40 per cent income tax to provide state benefits for the less well-off. In contrast, Mr Hain’s Neath constituents cost the Treasury more than they contribute. The deficiency is covered by taxpayers who work in the south-east, including some who get City bonuses.
Mr Hain also proposed the establishment of an employment rights commission to enforce workplace laws such as the minimum wage, which are widely flouted. Good idea. It would show ministers such as Mr Hain how expensive it is to make laws that people actually obey – and discourage them from inventing too many new ones.
The audience were Labour activists, so this was crowd-pleasing stuff. Mr Brown, by the same token, could expect little credit for plugging entrepreneurship. He did so anyway. Twice. That did not suggest he will cacklingly reveal
himself to be a red-hued militant when enthroned as Labour leader next month. This is the man, remember, who helped Philip Green get a knighthood, even though billionaires with homes in Monaco arouse some suspicion among traditional socialists.
Mr Brown will doubtless find ways to annoy business when he is prime minister, just as he did as chancellor. But hopefully he has learnt from such disasters as zero rate corporation tax that interventionism is fraught with dangers. As Mr Venables puts it: “I cannot see him doing anything detrimental to business because the best way of keeping tax revenues high is to leave it alone.”
The second external threat to fledgling companies is a deterioration in the business environment for which Mr Brown is not responsible. He would still get the blame, that being the fate of politicians. Ian McCafferty, chief economist of the CBI, says: “This is a decade we will tell our grandchildren about in terms of the benign economic conditions.” Our grandchildren will be bored stiff, of course, but all our reminiscences will have that effect on them. Mr McCafferty’s point is that long periods of steady growth, low interest rates and restrained inflation are unusual, which makes a return to “normal, or more uncertain, conditions” likely.
Since the outlook for the UK economy is healthy by most accounts, the main danger is that a catastrophe on the financial markets will damage confidence and depress growth. Trevor Williams, chief economist of Lloyds TSB, gloomily says: “There is a mountain of risk out there that has yet to be tested.” UK shares are modestly priced in earnings terms even if indices are high. So Mr Williams expects any cataclysmto involve international debt. A Romford recruitment consultant whose only liability is the cost of Whiskas for the office cat could thus be badly, if indirectly, hit by the unravelling of interest rate arbitrages involving the yen.
Mr Brown is comfortingly familiar when such exotic perils are abroad. Having spent 10 years droning at business about prudence, he will now spend another two or three droning at the public about social justice. That may be no better than a least worst option to business people who would prefer a Tory government, but who are glad to see the back of Tony Blair. They should reflect that many fine institutions are least worst options – democracy, monogamy and compromise itself.