Reaffirming faith in business & addressing public mistrust must lie at the heart of the #GE2015 campaign.
Recent polling has shown that public trust in business is at its lowest point since the immediate aftermath of the financial crisis. Broadly speaking, this mistrust is founded on the impression that the pace of innovation is leaving too many behind, the benefits of globalisation are all too often absorbed by the few, and that big business is as distant and as reckless as ever.
Despite strong jobs figures, a steady increase in GDP and nascent improvements in the standard of living, high profile debates over executive pay, tax avoidance and corruption in the financial services (Forex, Libor etc.) have all contributed to widespread public disaffection with UK business. At the same time, global attitudes towards CEOs and company directors have soured noticeably. This sense of anger will surprise no one. After all, public scepticism has been directed towards the practices of large corporates and ‘faceless’ multinationals for far longer than the period between now and the 2008/2009 financial crisis. However, this scepticism may now be reaching a point where firms of all sizes simply cannot afford to ignore concerns. The era of ubiquitous engagement, driven by the internet and the pace of technological innovation, has well and truly arrived and public anger can coalesce around an issue almost immediately.
The Institute of Directors believes that by being more vocal about sound corporate governance, we can move towards addressing this mistrust. We have been active in calling for temperance on executive pay, more accountability to shareholders, and greater transparency in business practice. In turn, we’ve felt encouraged recently to see more restrained pay packages across the executive leadership of many high street banks, as well as large UK corporates and multinationals. As a case in point, BG Group cut the salary (the ‘Golden Hello’) of their incoming Chief Executive by a staggering 53% in December 2014. This was after considerable and high profile pressure from the IoD, and their own shareholders. These indicators point to a growing realisation by large firms that they no longer operate in their own unique world.
However, key for both business and politicians in the coming months must be addressing the growing mistrust of small businesses, entrepreneurship and innovation in the UK. A recent YouGov poll put public trust in small businesses at 49%, while trust in entrepreneurs sat at a lowly 30%.
Senior political figures from all parties have set out to be the champions of entrepreneurship. The coalition Government has put entrepreneurialism at the heart of their business agenda over the past 5 years, while Chuka Umunna, Shadow Business Secretary, has spoken passionately about the ‘next chapter of our national history with aspiration at its heart and entrepreneurship as its state of mind’. In the face of weakening public trust, they must reiterate this support. The same must go for the UK’s small and medium sized businesses, whose share of the public goodwill has also been diminished, somewhat unfairly, by the fallout from the financial crisis.
For too many people, ‘wealth creation’ and ‘profit’ are now synonymous with greed and corruption. All too often, entrepreneurs and small businesses do not have the platform to explain that to them, profit does not represent some simple excess that goes into the pockets of those at the top. It is the extent to which small businesses can provide staff with a wage rise, or entrepreneurs can create new jobs and expand their horizons.
At a time of restricted bank lending and national belt tightening, these are businesspeople that have channelled their often meagre profits back into their businesses and helped to ensure that the UK labour market remains one of the most resilient in the world. The 2015 General Election campaign is the moment for politicians of all stripes to address the mistrust that is taking hold in parts of the electorate, and to reaffirm their commitment to the profit making small businesses, entrepreneurs and innovators of the UK.