A mission to explain

Businesses must be more transparent if they are to win the trust of a sceptical public

Columns Magazine

This article is taken from the December/January 2023 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

The most important episode both politically and economically in 2022 was September’s mini-budget and the spectacular fallout that ensued. Many lessons can be drawn from it, not least the importance of communication. Liz Truss’s government failed to lay the ground for a raft of pro-growth measures that took many by surprise.

Support is rising for more tax and regulation

Given the market reaction, it is easy to forget the mini-budget initially left business groups swooning. The Confederation of British Industry said (not inaccurately) that it represented a “turning point for our economy”. The Institute of Directors called it “a good news day for British business”. And the Federation of Small Businesses said that the Truss government was “off to a flying start”.

But despite the pro-growth policy direction being spot-on, the general public did not share this enthusiasm. Shortly after the mini-budget’s release, YouGov dubbed it the “worst reception of any financial statement since Tories took charge in 2010”. 

Their survey revealed that half of the public (50 per cent) expected the mini-budget to leave the country worse off, while only 15 per cent believed that it will improve economic growth. What’s more, most Britons (57 per cent) thought the mini-budget was unfair. That score even trumped the notorious “Omnishambles Budget” of 2012.

For free marketeers such as myself, there are clearly lessons to be learned. A key one is the importance of communication. Whilst we cheered as the government talked about “growing the pie”, most voters scratched their head, having never come across a pie that grew when planted and watered. And talk of a “supply-side agenda” left them equally bemused. 

Sadly, it also fuelled a growing public scepticism towards business and enterprise. Polling I commissioned from Research Interactive reveals that an increasing number of Brits view businesses as a “necessary evil” rather than a crucial wealth-creating part of society. In an online survey of 1,501 voters, conducted from 30 August to 5 September, 43 per cent of the public said they had an unfavourable view of CEOs and almost half (49 per cent) blamed businesses for worsening the cost of living crisis.

As a result of such sentiments, support is rising for more tax and regulation on businesses. The latest NatCen social attitudes research shows that a majority of the British public favour higher taxes and higher spending, the highest level to do so since the 1990s. 

Two-thirds (67 per cent) believe that ordinary working people do not get their fair share of the nation’s wealth. A further 52 per cent think that the government should increase taxes and spend more on health, education and benefits. 

So how can this pitch that businesses are good for society be made? First, businesses must restore a sense of fairness in the ways they operate. Voters think that businesses do well at generating profit and considerably less well at paying tax. 

This perception is particularly true of larger employers, as exemplified by a focus group participant in Birmingham Erdington: “We all know big businesses don’t pay enough tax.”

For the vast majority of businesses, this couldn’t be further from the truth. The reality is that a fraction of company-generated value is left as profit after taxes, employee salaries and other business costs are deducted. 

Companies must therefore become more transparent about how much tax they pay and how much profit they make if they want to reverse this misperception and restore a sense of fairness.

Selling economic growth shouldn’t be left to the politicians

Businesses must also work to rehumanise themselves. Currently, almost no emotional connection exists in the public’s consideration of business. It’s no surprise then that my research shows that almost two-thirds of the public (64 per cent) want businesses to know more and talk more about their people. This should be done by emphasising the importance of workers behind companies’ financial success and by being clearer about how companies support people in both the short- and long-term, be they employees, consumers or communities.

Most importantly, businesses need to focus on what consumers really want from them. That means providing the basics first — creating jobs, paying tax, providing a good product at a fair price, and treating employees fairly — something that has been obscured by the race to compete on the social issues of the day. 

Or as a first-time 2019 Conservative voter in the red-wall seat of Wakefield told us: “They shouldn’t be lecturing. Absolutely no telling me or telling anybody what we should be doing.” I tend to agree.

Ultimately, businesses must be seen as being run by people for people (a concept about which the public is currently dubious) if they are to reverse negative public sentiment and protect a pro-enterprise environment.

The mini-budget shed light on a stark truth: that economic growth is meaningless to the general public without an explanation of what it is and why they should care. 

But selling economic growth shouldn’t be left to the politicians — business leaders and entrepreneurs have a role to play too. They must step up to the plate now if they want a warmer reception for pro-enterprise policies in the future.

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