London 2012 - To The Point

Like many others my potentially bank busting efforts to get a ticket, just about any ticket, for London 2012 have failed. Am I bothered, well yes actually but I expect I’ll get over it. In the meantime, however, and whilst pondering the injustice of it all, my thoughts have turned towards other questions arising from the process. If, for example, we are all experiencing such hard times how come the offer was oversubscribed so many times over? What has been the impact of so much cash being tied up over the last month or so waiting for the call? And, if the chance to attend the Games has passed so many people by will there be other opportunities arising from them?

Maybe less cash was tied up than we might suppose, perhaps most people were simply gambling on their credit cards not getting ‘maxed out’. We will probably never know but it will be interesting to see if there is any impact on the various economic indicators covering the period when they are published over the next few months. In time, though, what may come to be regarded as more important is whether the games were fully exploited for the benefit of the widest number of people.

Lest anyone should think I am anything other than totally supportive of the Games I would just like to say that, like millions of other people, I am delighted that London won the bid for the 2012 Games and will bathe in the glow of what I am sure will be one of the most memorable events to have occurred in the UK during my lifetime. I am delighted that they are here and, apart from the many social and sporting benefits they will undoubtedly bring, I am convinced that they will also have a significant impact on the country’s economy. Nevertheless I am not blind to the opportunities that may be missed.

I have always thought that the best possible Games legacy would be the raising of peoples aspirations in general and those of young people in particular. Not just as the result of witnessing great sporting achievements but also arising from the tremendous feats involved in constructing the stadia and other facilities on time and largely to budget. With a year to go it is not too late, and maybe plans are already in place, to fully exploit the inspiring stories arising from planning, building and delivering the greatest show on earth.

Does it matter? Yes I think so. At a time when more than ever we need to be competitive raising aspirations and developing a greater understanding of the value of skills is essential. The Games presents a wonderful opportunity to facilitate this, and to promote the benefits of Apprenticeships and other forms of training, whilst demonstrating the ability of people in this country to achieve great things and by showcasing the development of new technologies. I understand perfectly well the need to have pushed on and build facilities without undue constraint or distraction but, given that so much seems to have been delivered ahead of time, might more have been done. Thus far it would seem that more effort still is required to engage young people and their teachers in particular in the non-sporting aspects of the games.

I am convinced that the Games will live long in the memory being right up there with events such as Stevenage FC winning back to back promotions and Saracens winning the Guinness Premiership for the first time (many congratulations to them both). We will, of course, remember and celebrate our sporting winners but I also hope that we will look back and recall how the Games inspired a generation of young people to greater achievements in other aspects of their lives.

Businesses Need Support Too!

As the Government calls for business to lead the country out of the economic difficulties we have faced over the past two or three years I am inclined to ask the question ‘can it do it on its own’? Whilst I am absolutely positive that business will give it its best shot I am becoming increasingly concerned that collectively British society needs to do more to help. I know it’s tough out there and, that for perfectly understandable reasons people are concerned about the future, but the truth is we all need to knuckle down and do our bit.

Over the years I have visited parts of the world where the local population would give their eye teeth to be able to enjoy some of the advantages we have. Anyone who has walked the back streets of a Chinese city or parts of Eastern Europe would be staggered at how people eke out a living without complaint and certainly without expectation that someone else will bail them out. Here our default position seems to be that someone else should find a solution for us.

Most business people, particularly those running small businesses, understand that if they are to succeed they will need to do so through their own drive and determination. I am yet to meet a successful business person that has factored in support from government as being key to their growth, nor have I met one that has folded at the first sign of adversity. The fact is that successful people get on with it and make things happen but they need support and encouragement the same as everyone else.

Several times in recent weeks I have heard people snipe at businesses. Whether it be the man in the street, a journalist or Trade Union leader, ‘they are only in it to make money’ seems to be a frequent refrain. It would be easy to respond that any business that does not make money will soon go out of existence and, perhaps more appositely, will not be able to create the jobs we all need to exist. More fundamentally, though, the remark totally misses the point that making money is a by-product and rarely the initial objective. It also fails to recognise that it is the business people who have backed their own judgment and taken the risk.

Of course the people who have supported them should be able to share in their success but at the end of the day it is people with entrepreneurial drive and eye for innovation and hard work who will make the difference. We need to get behind them.

Interest Rates – Just go along with the ride

It was good to open my paper this morning to discover that a number of renowned economists had begun to realise what businesses had been telling us for months, a rise in interests rates at the moment would be anything but good news. Businesses who had been speaking to us had not applied any great economic academic ‘know how’ to their thinking just the highly valuable, but all too sadly rare commodity, common sense.

Who would have thought that adding to the costs of people mortgages at a time of economic uncertainty would not have an effect on already fragile growth? Who would believe that raising rates would have an impact on inflation largely caused by increased taxation, rises in the cost of oil and soaring world food prices? Well at least three members of the Bank of England Monetary Policy Committee apparently.

There are occasions when one should ‘doff one’s cap’ to the experts but when they are driven by old fashioned dogma which dictates that when prices rise too fast the only cure is adding to the cost of borrowing they deserve to be castigated. We find ourselves in a world which is very different to the one that used to respond to such a course of action. If proof of that were needed one has only to consider that on a day when Portugal is seeking to be ‘bailed out’ there are also mutterings about the credit rating of the good old USA.

I have no doubt that the world will work its way through this challenging period but it will be made more difficult if we get our strategies wrong. There will certainly be times when it will be essential to stick doggedly to old beliefs but for the time being, and as far as interest rates are concerned, now is the time to hold our nerve and be pragmatic. It might not be a comfortable experience for some members of the MPC but they should just accept that there is little they can do and that they should hold tight and go along with the ride.

Economy!!

It is frightening to think that we live in an age where it seems that the country is being driven by those who can shout the loudest and shout the longest providing sound bites for the press and applying pressure on politicians.

The publication this week of the inflation figures attracted just such a response from the city hoping presumably that press and politicians alike would ‘lean on’ the Bank of England. “Inflation must be brought under control, interest rates must be raised to do so”. It seems to me that many of those making such assertions are several places removed from the realities of every day business life and, in any case, are pursuing a very narrow agenda.

I cannot believe that anyone would argue against the view that inflation needs to be brought under control but I have serious concerns for anyone who suggests that interest rates should rise. Our current levels of inflation are not driven by domestic business nor do they result from consumers entering a new age of profligacy. Inflation is higher than we would like because indirect taxes and world commodity prices have risen. Quoting figures published by the BBC, if it were not for these factors, domestic inflation would be below target at 1.9%. It is difficult, therefore, to see what difference raising interest rates would have on inflation in any case.

In difficult economic times businesses and employees (except those working on London Underground) have displayed incredible levels of restraint, the former absorbing as much cost as it can and the latter resisting the urge to make impractical wage demands. Few would be able to continue to do so if the cost of borrowing rises too.

The last thing any business needs is an increase in borrowing costs (assuming of course it can get it) and an increase in the cost of mortgages, etc. hitting their employees and customers could be catastrophic.

As confidence in the economy grows I acknowledge that the Monetary Policy Committee will have to carefully manage a rise in interest rates but I cannot see that being justified in the foreseeable future. In the meantime if the powers that be are going to listen to those that shout too much I hope they listen to me.

Shared Parental Leave Proposals Ignore Needs of Business

Commenting on today’s Government announcement concerning Shared Parental Leave David Frost, Director General of the British Chambers of Commerce, said,

"While Nick Clegg’s announcement may prove to be politically popular it fundamentally ignores the needs of business.

Last week, David Cameron claimed a pro-growth, pro-business, pro-jobs agenda, but now the Government expects small businesses to cope with yet more red tape".

David went on to say, "This is yet another example of rushed thinking. It suggests that the Government is out of touch with how to support business owners. This sort of red tape is like a sledgehammer hitting small businesses which should be sources of growth and jobs."

We agree with him, what do you think?

ECONOMY, ECONOMY, ECONOMY...

A great deal has been said about the current economic climate, probably too much, there seems to be an ongoing competition amongst experts and the press as to who can come up with the most dire forecast. One says things are bad another says it’s worse. This may serve to burnish certain egos but it does nothing for consumer confidence and certainly doesn’t do anything for the majority of businesses that have been well run. In Hertfordshire we are fortunate to have many companies large and small that have set the standard in terms of innovation; companies that have been developed using sound business practice; companies have been run responsibly. Whilst some will need to tread cautiously they remain viable and will continue to be source of wealth generation and employment.

In any period of challenge those that have the ability to demonstrate clear thinking will come to the fore, thrashing around for one solution after the other is not the answer. The problem is within the financial system not, by and large, within the run of the mill businesses that most of us know and understand. Of course they are affected but it is not a problem of their making left to their own devices with sensible levels of financial support they will continue to succeed.

What is needed is a period of reflection enabling the myriad of initiatives to work, the seemly endless drive to fill column inches or airtime must come to an end. In the same vein the apparent need by some to provide justification has to cease. We all have a good idea what went wrong and where the blame lies. It will be the innovative non-financial businesses that will get us out of the problems that face us we are calling on politicians, regulators and the financial press to clear their heads and ensure that an environment is created that will enable them to so.

Getting the message across...

My colleague David Frost at the British Chambers of Commerce has certainly stirred up a hornets nest with his description of the outcome of BCCs most recent quarterly survey. Frightening, awful were just a couple of the adjectives he used. Personally I am concerned about the seemingly endless queue of people lining up to tell us how bad things are but, nonetheless, can understand where he is coming from. Things are certainly not as we would wish them to be.

I would prefer it if we all drew breath and allowed time for some of the measures that have been put in place to work. The reality of course is that until the banks start doing business very little is likely to change but, at least, the announcement by Lord Mandelson that there will be further funding to support lending should help. Following fast on David’s words I am sure he will claim that the BCC were instrumental in speeding up this process and, in fairness, so would I. Indeed it is correct to say that the British Chambers have led the debate throughout and I wouldn’t mind a small wager that they will be the first to call the recovery too.

Balancing the requirements to encourage government action and the need to protect business interests is not always an easy trick but the BCC has generally trod the line with a high level of expertise.

Looking forward it seems to me that one of the key messages arising from the problems in the economy is to learn the lessons. The current economic conditions not only cause difficulties but also identify, and amplify, some of our existing shortcomings.

As we fall down the OECD skills tables one cannot help thinking that if we are to continue attracting high levels of inward investment we will have to raise the level, and relevance, of the skills we seek to give our workforce. Despite announcements of redundancies there are still vacancies but sadly many require skills that we are short of, skills to support the engineering, electronics and pharmaceutical industries to name but a few.

If we are looking for some good news it is that we have many innovative and creative businesses with growth potential, we simply need to find more effective means of supporting them.