Breaking down the barriers: How government and business can work better together

Breaking down the Barriers: How Government and Business Can Work Better Together

Speakers

Lord Simon, former Minister for Trade & Competitiveness in Europe, former Chief Executive and Chairman, BP

Dame Helen Alexander, former President, CBI, former Chief Executive, The Economist Group, Chancellor of the University of Southampton, Chairman of UBM plc, Port of London Authority and Incisive Media

Martin Donnelly, Permanent Secretary, Department of Business, Innovation and Skills

Chair: Peter Riddell, Director, Institute for Government

This was the first event in our government and business series of public events and private roundtables, in conjunction with the City of London Corporation, with the Financial Times as media partner.

Peter Riddell explained that the purpose of the seminar was to explore how barriers between business and government could be broken down – which was a theme in the Civil Service Reform Plan.

Three tribes

Lord Simon characterised the relationships as being between “three tribes” – political government, administrative government and business. He said that the major barrier between them was cultural – they had different language, experience and knowledge with different learned strengths. Business acted as a team while government worked more in silos. Understanding differences made it possible to do something about them. The differences were demonstrated by the definitions of growth for each tribe. It was possible to grow a business in an unsuccessful nation. But when government talked about growth it talked about very different things such as jobs and GDP. In turn those cultural and definitional differences made it difficult to define a clear strategy and there was a blurring of responsibility and accountabilities. That made it hard to achieve outcomes said Lord Simon. He identified four key problem areas:

• timescales – political government looked at “today” or the election but business was driven by reporting deadlines.
• balance between policy and delivery – The Civil Service was good at policy but mediocre at delivery, although the scale of the public sector management challenge far exceeded anything in business.
• incentives – business worked with positive incentives but government often dealt with negative ones. For example, Business could never have a strategy of austerity.
• metrics – electoral metrics were very different to any faced by business.

In an ideal world there would be very clear roles and responsibilities with business making money and the Civil Service doing the rest. Lord Simon made some final reflections:

• business and administrative government needed to talk very often
• business NEDs on boards were a good idea
• ministers needed more training as few were excellent at either leadership or management
• government could learn from business on creating effective teams and horizontal problem solving.

Clear messaging

Dame Helen Alexander said that many people thought there should be more business people in government – but politics was much more difficult with far more dimensions. She said business people were not out to get the best possible compromise – and that this required very different skills. Business people were less in touch than MPs with constituents.

Dame Helen highlighted the issue of how government got messages from business – in her experience the British government was better at listening than the French. Business complaints reflected that they did not like the answers. Bodies such as the CBI and trade associations were good routes for getting messages across. She outlined things that had surprised her at the CBI:

• The degree of clarity and repetition in the message required. For example, business concerns on the anti-bribery act had failed to reach the relevant minister. Business also needed to know when to use its political capital and where its red lines were.
• The differences between politicians and civil servants. The new permanent secretary objectives would enable business to frame their messages to help them achieve their goals.
• On deregulation, business was not concerned with what it felt like; growth presented challenges to both sectors – but the government needed new skills to negotiate big actual contracts.

She said that the departmental NEDs were a “great baby step” to improve implementation and the establishment of the OBR had boosted business confidence. But she was taken aback by the degree of churn. She said one department had “given up having business cards”. The identification of sectors in the new industrial strategy would also be an enormous plus. Finally, she thought we had a remarkable civil service – as shown by the way it had helped to pull the coalition together in a few days.

Cooperation not corporatism

Martin Donnelly noted that it was impossible to look at business-government relations in a vacuum – it was all part of an interlinked global economy. If we didn’t get it right, others would with global impact. There had to be effective trust between government and business at all levels – and that meant there had to be an effective partnership between the Civil Service and ministers. The Department for Business, Innovation & Skills (BIS) had to be an effective advocate across government – and that meant BIS needed good evidence from business on issues such as visas. BIS also had to understand the many different sorts of business and realise what different relationships they needed – not just between large and SMEs but between high and low tech companies, including disruptive innovators and those not based here, where BIS worked closely with the FCO and UKTI.  

Communications were crucial, he said, and BIS was experimenting with using digital channels to reach more businesses. BIS wanted to work with business – the more input there was, the more effective BIS could be – without being “corporatist”. He too saw business NEDs on boards as a really effective step forward and it was impossible to imagine running BIS without them. They also gave people in the department confidence in what they were doing, offsetting the effect of criticism.

Getting better?

In discussion, Lord Simon thought the administrative side of BIS was very different from 15 years ago – but that there were still political blockages on infrastructure issues and he was worried about the EU referendum. Dame Helen noted a huge change in the FCO’s attitude – they were now much more business friendly and regulators were now better at their job. Martin compared the attitude to growth in departments with exposure to business with that of those that dealt less with business. There was general agreement that diversity of background – among ministers and civil servants, including “GOATs” – helped relations but there was no substitute for continued close working, with Lord Simon noting that it was impossible to run business separate from government.