Plan E

Let me ask a question…

When did we stop being a nation of shop keepers?

The famous quote “L’Angleterre est une nation de boutiquiers” was uttered by Napoleon and was intended to disparage, I guess in the same way De Gaulle was actually quite apt when he described the British relationship with Europe. However, (thanks Wikipedia…) Napoleons’ was not an original quote, as Adam Smith wrote in the Wealth of Nations…

"To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."

And therein lies part of the problem. It is my contention that The UK is suffering from not having a strong base of local, independent and entrepreneurial business activity. Part of our problem is that we no longer have shopkeepers influencing government, that role is now filled by multinationals and lobbyists. Don’t get me wrong, we need multinationals but there are weaknesses in other areas of our economy and these need to be addressed.

There are two things that we need to target to turn our economy around, firstly we should target help in this week’s budget to entrepreneurs and small businesses, for there lies the holes in our economy. The problems at the root are that apprenticeships and training are at an all time low, as we target too high a rate of higher education and university placement. There are aspects of apprenticeships that cannot be taught in a classroom, the tricks of the trade as such. We risk losing much.

Secondly, we need people with trade skills, and we need people who can innovate in engineering and sciences. We need to be manufacturing items here that can be sold abroad for a profit, this bringing into this country much needed cash. We will not be able to compete with Asia and possibly in the future Africa on mass production techniques as we will never be able to produce volume products as cheaply. But there is an abundance of opportunity for manufacturing jobs still.

We do not seem able to hold together big manufacturing works in the UK, but I bet if we supported our smaller engineering and manufacturing firms that target solutions, and can offer multiple products and/or seek to further technological advancements we could nurture new industries and thus new jobs. Most of all, we know that in the UK large manufacturing is on life support. Where a though leader is needed we can prevail.

We need products to export to bring some cash into the country, we can’t just magic up a profitable car factory or reinvent an aerospace industry. We require skilled jobs to manufacture things that are demanded in the emerging markets AND in the developed markets of the EU and the USA. Eventually, some of these small businesses will grow and that can in the long run help replace industries that have already been lost.

So I hope that either in this budget, or perhaps more likely with an upcoming Conservative Government we can move the discussion along to how we can help entrepreneurs and raise the number skills based and manufacturing jobs. It is they who will seek out new markets and new opportunities, it is also they, that if supported will be best placed and most willing to hire workers at varying skills levels and help our economy back on track.

Here is where and how I think Government can help.

1. We need to kill the idea of 50% university placement. We do not want people leaving school without education or skills (or ambition), but we should allow apprenticeships and vocational training to those who at 13 and 14 know what they want to do. I am not advocating we neglect core education like Maths and English, but will (I feel) help target ambition and by doing that can help them to understand what they need to do to achieve their goals. We have to accept that the individuals choice will be better than providing the same for all.

2. We need to cut red-tape and taxes to the productive part of the economy, so as to let them trade and innovate. It is they who will then pick up and place our skilled workers with jobs in technology and science. (Those businesses will also need clerical and manual workers and with success with require the financial services to help manage their profits.) Business rates should be reduced on small companies and traders, and employment legislation needs to be drastically simplified. In some industries, Health & Safety is unnecessarily strangling industry. We need to have parliament debate on all legislation that concerns business, not just enact all directives sent over from Brussels.

3. We need Government recognise that Small business and Entrepreneurialism is as important to our economic success as the large corporations are. Small businesses sometimes have a shorter lifecycle than larger companies but sometimes that is a result of success. What we need is to always help new businesses get started, and recognise and reward those who are prepared to take calculated risk to get started. We should recognise more entrepreneurs who have excelled more often. The achievements of so called “Fat Cats” who were schooled up to Director level, then spend a few years in the board room do not compare to those of Richard Branson or James Dyson.

4. It is entrepreneurial spirit that can help innovate. If like individuals cannot afford in cost of money or time to get started we will lose a generation of invention. Though some ideas can be realised via selling onto established corporations it is fresh intellectual property and ideas that will be the cornerstone of a rejuvenated market. As the so called bail-outs have shown, corporations are too risk averse. Give 50 local Joe Bloggs the freedom to start a business, and to make personal wealth then they can eventually hire more additional people than all the local bank branches that were supposed to have benefitted from a costly bail-out.

5. Forget bank bail-outs. Business needs to be reminded that if it fails it will fold. Target grants instead at small UK businesses that are trying to get a foothold in Asia, if they succeed those companies will be bringing home much needed foreign cash and will be paying taxes at home. It needs to be a grant system, rather than a subsidy system. Accept that not all companies will be successful, but hold up as an example those which excel.

6. Support the business we have now. We have tough trading now, but Government should not extend it's reach beyond what is required. When it choses to reach or regulate, it is the level of type and effectivity which is important, not the volume of legislation.

As a nation we have very quickly moved away from a culture which encourages an independent entrepreneurial spirit to one where the cost of failed risks is so high we are no longer prepared to take them. We have in short moved from being a nation of shop keepers to being a nation of shop workers, as can be evidenced now on most High Streets.

I say we cannot borrow our way out of debt and recession, we need to trade our way out. And Government can help by encouraging training and education in the right areas and by reducing the reach of Government in others.

The next Google could very likely be conceived in the bedroom of a teenager, and the next online media craze could be conceived in the free time of an inspired software programmer. The next great mechanical invention, like so many before could be put together in a shed in Scotland. But it will count for nothing if the potential for those great idea’s and inventions cannot or will not be harnessed.

In targeting our sectors and people, we also need to target our markets. Our focus today should be on where the cash is now (China, India and the Tiger nations). The UK cannot do this alone as it has now no control over external trade agreements. Personally I would like out of the EU, but that being unlikely (for now), trade at EU level needs to be completely re-thought and a whole new decision making process implemented. (That is perhaps another, longer blog post)

In effect, we need to a budget and a long-term direction that will actually help White Van Man and also help a new generation of Branson’s and Dyson’s get going. If we can help them target their ambitions, our economy can get going again. If we cannot do this, or if a corporatist/Statist outlook prevails then I fear we will not be seeing any green shoots for a long time.