Opinion from Lord Digby Jones

A Lesson Not Learnt

Published Tuesday 20 September, 2011

Some things never change …

As the World gets back to work this month, one is left seething with frustration at the seemingly limitless capacity of leaders (and especially political leaders) for again and again "doing the wrong thing".

A short walk through last week is sufficient to show what I mean.

Let us start with the crisis surrounding the Euro. I am indebted to Harry Mount, in his excellent article in the Financial Times, for putting this in an historical context. The Medicis founded their Bank in 1397 and dominated Florence until it collapsed in 1494."The reason for the collapse" says Mount was that "The Medicis ignored [the Middle Ages'] Banking Rule Number One - never lend money to an English Monarch." Evidently Edward IV (rendered penniless by spending more than he earned on the Wars of the Roses) took 'em to the cleaners, the Medicis having ignored the recorded fate 150 years earlier (presumably on that well-worn but fatal principle of "this time it'll be different!") when the Florentine Bardiand Peruzzi Banking families had gone bust because of default by Edward III. "These were huge loans sanctioned by spoilt bankers who thought they were a master race - ring any bells?" asks Mount. Insert Greece or Italy for a couple of Edwards (sovereign states living beyond their means), replace a Bardi or a Medici with a French or German Bank, observe the constants of arrogance and greed … and ‘plus ça change', etc. etc. etc. Merkel and Sarkozy can kick this can down the road all they like, morphine can be administered to the patient in the vain hope it cures cancer rather than relieves pain, every party in this can bleat that "they will change" or "this time it will be different" but we all know (yes, I believe even they know) that Greece has no more chance of making a much-vaunted austerity programme stick in the face of strong Unions, corruption and the weak … errr … non-existent implementation by the EU, than the Medicis did of getting Edward to mend his profligate ways and pay up. Frustrating? You bet. Laughable actually, if it wasn't so serious.

So we come nearer home and listen to the Secretary of State for Business at his Party's Conference in Birmingham. He talks of supporting manufacturing; the nerve of it! He cites the Regional Growth Fund. I wonder if he has ever seen the hoops, the bureaucracy and the sheer impedimenta that a small business has to jump through and overcome just to get a few bob from the pot. He mentions the support for a steel manufacturing facility in Redcar; the people of Sheffield (a long way from his constituency in Twickenham … not many steel mills in Twickenham!) who could by now be in the world-class division for making innovative equipment at Forgemasters, a project canned by this government, presumably wish they lived in Redcar. He boasts of support for electric vehicles … errr!! He mentions Rolls-Royce and Airbus, sheer brilliance of global proportions that have succeeded in spite of, and not because of, Government down the decades. I didn't hear him mention Bombardier. Just 30 miles up the road from “Brum” 1500 skilled men and women are out of work (and the UK's last train manufacturing facility is in danger) because Dr Cable's Government won't do what Germans and Frenchmen do all the time; appreciate the value delivered by procurement rather than just the price. It is not too late! That is what is so frustrating. Tear up the tender document Vince and start again. Buy your trains in your own Country! Why add value to Germany with UK Taxpayers' dosh? … And don't blame Europe or the lot you took over from (or Edward III for that matter!) …Just do it! You can!

The Member of Parliament for Twickenham did actually get one thing half right in his speech. He said that many politicians believe that Government is Father Christmas; presumably thinking that Government is there to dish out the readies to anyone who comes calling. Many people do of course; but what he failed to go on to say (and what causes great frustration to businesses up and down the land) is that very few understand (or fail to show by their actions that they understand) just where the money Governments have at their disposal comes from. It doesn't grow on trees (despite what Mr Sawotka and his beneficiaries of Pensions Apartheid in the public sector unions say); it doesn't materialise in "Brussels" or "Frankfurt" after yet another summit called to draft a communiqué stating that everyone can have prizes and no-one will break the rules (and, if they do, then they are a very naughty boy!); it doesn't come up from some bottomless well, administered by a civil servant whose knowledge and experience of business is on a par as that of Herod's was of baby-sitting. No; every penny, dime, cent of wealth that is dished out by Governments and Central Banks all over this crisis-ridden developed world of ours comes from Business. The only creator of wealth; the only generator of taxation; the only source of income in the Nation.

Leaders show by their actions a total disregard of that fact. That is what I find so frustrating. At least the Medicis gave the World a Florence full of beauty. What will be the legacy of this little lot I wonder?