Politicians should listen to big businesses – but not too much

Businesses have been sounding a Brexit chorus of warning. 

In recent days Airbus, BMW, Siemens and Jaguar Land Rover have all raised their voices to highlight the severe economic damage that will be done to their operations if the cabinet’s hardline Brexiteers get their way and wrench Britain out of the EU’s customs union and single market. Some have even said the harm could be so grave that they would pull out of the UK altogether, costing jobs and investment.

Choruses need a conductor. And it’s more than likely that these interventions were coordinated to prepare the ground for Friday’s Chequers meeting to force a cabinet agreement on what proposal the UK government should submit for a post-transition Brexit trade deal with the rest of the European Union.

But not everyone in the audience has been appreciative.

“Fuck business” was the concise review of one of those cabinet hardliners, Boris Johnson. The pro-Brexit Conservative internet entrepreneur Tim Montgomerie sought to present this four-letter reaction from the foreign secretary last week in the grand tradition of Adam Smith, citing the father of economics’ renowned alertness to firms’ tendency to anti-competitive behaviour.

Others have made the point that the voice of a handful of large pro-EU multinationals could be drowning out a different perspective from smaller firms.

It’s a curious consequence of Brexit that it has got “pro-business” right-wingers to pay attention to the dangers of monopolisation and lobbying by big firms. The fact that such concerns have surfaced now that businesses are warning about Brexit puts one in mind of the jailed dictator who suddenly becomes an advocate of prisoners’ human rights.

Yet even if the source of the argument is dubious, that doesn’t mean it’s an empty one. No serious person disputes that businesses often lobby in their own narrow interest. And it’s a fact of life that large firms with tens of thousands of employees usually have a degree of political access that smaller firms with only tens of workers lack. Even those who welcome big businesses’ interventions over Brexit would have to acknowledge these truths.

But that leaves us with a dilemma. When should politicians listen to big business? And when shouldn’t they? When should the public pay particular attention to their arguments? And when should we discount them? How can we distinguish relevant interventions from irrelevant special pleading? 

One sound criterion would seem to be when a question of public policy directly impinges on a particular firm’s operations, giving them a special expertise. That’s clearly the case with Brexit. No one is better placed to talk about the impact of customs delays than a car manufacturer which runs a “just in time” assembly plant. When businesses write letters to newspapers supporting the Conservatives because of the general thrust of their tax policies the voice of business should command less reverence.

Jeremy Hunt, the health secretary, has called Airbus and BMW’s airing of their perspective on the dangers of leaving the customs union “inappropriate”. He would be more credible if a record could be found of him telling businesses to pipe down in the past. Yet proximity to the consequences of policy can’t be the sole criterion of when we should listen to businesses’ views.

Soft drink manufacturers know a great deal about how the soda tax is likely to affect the public’s consumption of their wares. Cigarette manufacturers know all about the impact of plain packaging rules.

Banks are experts in how regulatory requirements to increase their capital safety buffers will impact their profits. And so on.

But as all those examples show, having a financial interest in a policy doesn’t necessarily equate to that interest aligning with the broad public interest. Other criteria are necessary when it comes to evaluating lobbying.

The first is transparency. Private lobbying by big money is particularly insidious. If Jeremy Hunt wants to talk about inappropriate behaviour he might consider David Cameron’s non-disclosed “kitchen suppers” in Downing Street for Conservative Party donors.

Transparency relates to another vital criterion: equality of access. If a minister only listens to one section of business, such as large firms or finance, there is a danger that they start to see the world through the eyes of that section. We saw this clearly with Gordon Brown’s ultimately ruinous love affair with the City of London.

If ministers only hear from businesses and shut out other social stakeholders, such as trade unions and charities, that too is liable to be distorting and dangerous. Transparency about how often ministers meet various groups is a vital defence against this kind of capture.

But, in the end, there is no foolproof rule, or set of rules, that can reliably separate social useful business lobbying from the socially useless kind. It will always depend on a judgement about context.

Business has a right to a voice in politics. And sometimes that voice deserves a special hearing. But it should only ever be one voice among several.

If a minister only listens to one section of business, such as large firms or finance, there is a danger they see the world through the eyes of that section

#AdamSmith #bigbusiness #lobbying

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