Event review: Keynote Lecture, 'Business Delivering Prosperity for Britain'
27 May 2014
John Cridland CBE, Director-General, CBI: Business Delivering Prosperity for Britain. Despite the transport disruption in London, Henley Business School’s Keynote Lecture, hosted by Norton Rose Fulbright on 29 April 2014, attracted an eager audience.
John Cridland CBE, Director-General, CBI: Business Delivering Prosperity for Britain
Despite the transport disruption in London, Henley Business School’s Keynote Lecture, hosted by Norton Rose Fulbright on 29 April 2014, attracted an eager audience.
The School’s Deputy Dean, Professor Ginny Gibson, opened the event, and introduced the evening’s speaker, John Cridland CBE, Director-General of the CBI.
The following is a summary of John’s presentation:
- Following a period of sluggishness, business has started to run again, and is now firing on all cylinders, giving consumers more choice, and boosting confidence.
- At the heart of a thriving Britain is a prosperous business community, led by the private sector.
- We need to get the national debt down, but we also need to generate growth from sustainable business investment and export, not just from consumer and state spending.
- The latest quarterly economic figures, as at April 2014, show growth of 0.8%, the fifth consecutive quarter of positive movement; wages are up and unemployment has fallen to below the 7% threshold.
- Business optimism is strong, and the business investment cycle is moving into a new phase, away from purely operational spending and into capital investment.
- The CBI is predicting overall growth of 2.8% this year, and the same or better next year.
- And while the Eurozone is also growing, our own development is accelerating more rapidly than the average across the EU.
- But we must be slightly cautious – there are new risks, notably from ‘lowflation’.
The CBI has set out five key priorities for future growth and prosperity:
1 Securing a global position for the UK
- For this to happen, the CBI believes we need to continue to be an active player in Europe, and that we are far stronger being able to influence it from within.
- We must, however, improve our alignment with the emerging markets, from which our current trade is disproportionately low. For example, only 5.5% of our trade is with the BRIC (Brazilian, Russian, Indian and Chinese) markets and their associated sub-markets.
- A strong global position is especially important to small businesses.
- Despite the frustrations, we have to get this right, and we cannot deal with the bigger issues such as climate change in isolation from the commercial challenges.
2 We have to boost the capacity of business to grow
- The foundation of this is a stable tax system, and much has been done to improve this.
- Nevertheless, we also need to increase access to finance, particularly long-term ‘patient capital’.
- This will provide an impetus to the largely ignored mid-market companies, which are a key engine for growth; we must recognise and encourage the development of our Mittelstand.
3 The benefits of the growth we create must be spread to all
- Long-term, sustainable growth has to be for everyone, for example, by providing guaranteed jobs for the young, and help for women returners and low-skilled workers.
- The recent upsurge in enthusiasm for apprenticeships is a positive development, and we must ensure that the care, retail and hospitality sectors, for example, continue to provide opportunities for workers with limited education and skills.
- There needs to be more focus on early years, formative education, and a greater emphasis on improved social fabric, as demonstrated by one manufacturing company whose workers volunteer to help with children’s reading at a local primary school, providing youngsters with much-needed male role models.
- Business must show its commitment to this ethos.
4 We have to invest more in our infrastructure
- The scale of the challenge is enormous – equivalent to half a dozen Olympics – but we simply have to get on with it to boost the growth rate.
- The focus should be on transport links, energy generation, digital connectivity and economic regeneration. These are not dispensable and not negotiable.
5 Trust – we have to restore public confidence
- This is the glue that binds the other elements together.
- Business must manage expectations and manage its reputation, driven by the extraordinary rise in social media.
- Corporate social responsibility is irrelevant unless you’re running a world-class business.
- We need to show the value we deliver to society, and get more positive coverage, in order to encourage innovation, jobs, education and – ultimately – prosperity.
John then answered a number of questions from the audience, including the following:
- Asked about his views on the proposals for additional airport capacity in London, John answered that there was increasing recognition of the requirement for more capacity, and that the Airports Commission, led by Sir Howard Davies, was taking an appropriately ‘forensic view’ of the economic advantages and environmental impact of each of the options.
- Following his comments about infrastructure, John was asked about where he felt the priorities should be. John put forward the view that private investment should have a bigger role than we could previously have anticipated, and implored for a careful assessment of what is urgent, and what is important.
- On the question of the Scottish independence referendum, John suggested that whatever the outcome of the vote, we must allow the government to develop viable policies. He recognised the particular expertise that Scotland adds to the UK, in sectors such as higher education, oil and gas, financial services, and food and drink, but emphasised that the choice will not change the principles.
- Questioned on immigration and a reported drop in education standards, John suggested that in times of economic growth, one of the consequences is a skills shortage, which can best be addressed by open markets. But whatever the reality, Britain is suffering from a change in perception – that we are less open to entrepreneurs, less open to students, and less open to skilled workers – and that while we have to address our educational weakness, we have to balance them with economic prospects and they are not mutually exclusive.
- It was suggested that there were three ‘elephants in the room’: the Russian Bear, the austerity cuts (the worst of which are yet to come), and the risk of an economic boom, along the lines of the 15% inflation witnessed in 1973. In response, John admitted that the recovery was taking longer than expected, but felt that the signs are better than they were in the 1970s, although we have to look for more creative ways of balancing the economy. However, he also recognised that there are things ‘we don’t know that we don’t know’ and that geopolitical factors – such as the Russian situation – could still have a marked impact on the future of the economy.
- Finally, there was a question on regulation, and how it might play a more effective role, to which John was clear that regulation – however necessary – must not stifle growth and must allow the delivery of long-term financial stability, partnership and mutual respect. Ultimately, it hangs on business confidence, consumer trust, innovation and differentiation, and how we handle the perennial challenge of the ‘law of unintended consequences’.
Ginny closed the event, highlighting how many of the evening’s topics resonated with Henley’s own research and focus, particularly in relation to globalisation, reputation and infrastructure planning.