Free markets. Economic orthodoxy has been telling us for forty years that market forces would clear the dead wood from manufacturing; financial deregulation would make sure funding is available to young, thrusting start-ups; and free trade would keep British industry competitive. Industrial policy would create an open door to inward investment and low corporate taxes. The political decision-makers have not been successful. Larry Elliott has described how they have sat back and watched as the economy has stumbled from one housing/consumer-driven boom/bust to another. The UK has been here before, but the figures are more frightening. Rebalancing the economy and solving the country’s deep-seated problems is a bigger issue than simply devaluing sterling. There is no shortage of ideas and an important, but ignored link between them. Britain needs a considered and determined industrial strategy. The starting point has to be an awareness that the current model – low investment and competing on cost rather than quality – has failed and will continue to fail.
Costs of living wage. Few people would say that the living wage is a bad idea. It has been clear for some time that our economy has become too reliant on cheapish labour. Matthew Lynn has emphasised the connection between the system of tax credits and the labour market. It meant tax payers were subsidising employment on a huge scale. Things will change. We can expect more automation. As the cost of labour rises, use of information technology will become more cost effective. Immigration is likely to fall. Low-skill jobs was one key reason for many people coming to the UK, especially those from eastern Europe. The wages were not generous, but better than at home. Productivity will start moving upwards at last. The increases in pay will stimulate incentives to invest in capital. Of course, those with the least valuable skills will be unable to get a job. The outcome might be higher productivity, but additional unemployment. The trade deficit is high at above 5% of gross domestic product. It will increase. Some manufacturing will not be viable with higher wages. This kind of work will move to other countries. We will import these products, making the deficit worse. There will be closures, especially of retailers, which have the highest concentration of poorly paid staff.
Engagement. Giving information matters. Planned and consistent communication puts managers in the driving seat. Regular dialogue with shareholders, employees, customers and suppliers creates an atmosphere of understanding and builds trust. It enables the inspiration of confidence in the business and integrity of its management. Such an approach is essential in setting expectations and guidance for all stakeholders relating to values.
Value for money? There are strong suggestions that our Government is convinced that some top universities are not worth the £9,000 in annual fees most of them charge. The Russell Group of higher education institutions has demanded ministers provide proof of the allegations. A study by the Institute for Fiscal Studies has found that male graduates from twenty-three universities earned less, on average, than men who had not been to university at all.
Fair day’s pay for ... ‘I wonder if BP’s Bob Dudley, whose £14m pay package has angered shareholders, could walk into a room of 30 Royal Navy admirals, 30 Army generals, 30 Crown Court judges and 30 NHS consultants and say: ‘I am so good at my job that I should be rewarded better than all of you put together.’ Christopher Knight in The Week (23 April).
Being misled. ‘Can there be a more horrible object in existence than an eloquent man not telling the truth?’ Thomas Carlyle (1795-1881). Scottish historian and essayist.