Opinion from Lord Digby Jones

Creating wealth in our society

Published Wednesday 25 November, 2009

The CBI meet this week against a backdrop of its members emerging from the most difficult year for business since the second world war.

As politicians from all the main parties stream into the conference hall craving the business vote they would be well advised to bear one key fact in mind above all else.

It is business, and only business, that generates taxation.

It is only business that creates wealth in our society. No other part, no matter how essential and important, makes the money from which comes the tax which pays for the nation's schools, hospitals, armies and welfare benefits.

Business can do only three things with the wealth it creates: it can distribute it to those who take the risk on its enterprise-the shareholders-who pay tax on it. Or it can keep it in the business as retained profit ... and pay tax on it. Or it can employ people ... who pay tax on it! Some of that tax goes to pay for those who work in the public sector ... who pay tax on it! But it all comes back to the wealth that the private sector creates.

So as the nation starts to work its way out of this recession it is very clear that it will only succeed if it trades its way out.

That calls for a government of any party to work with the grain of profit-making, to understand that in a globalised economy business can pitch its tent anywhere, it cannot be taxed to the point of destruction, it cannot be over-regulated (although it is crying out to be better regulated) and it badly needs a level playing field in the market in which it operates ... the globalised economy.

Would the French or the Americans allow some sixty fund managers ( looking only to the next huge short-term based bonus ) three thousand miles away preside over the fate of one of the great British examples of socially-inclusive wealth creation? Cadbury has stood for a set of values in its money-making of which we should all be proud. Somehow I just can't see our major competitor countries allowing the free market they affect to follow to have its way ... so why do we?

Some say that it is the only way to deliver the best management ... well the French and American management tend to do just as well (and often better) as the Brits.

Business must win back its spurs after such a torrid time. It will only have the high ground from which to ask the politicians to work with it, it will only have right on its side as it calls for a vastly more productive and efficient public sector, if it shows by its actions that it can be on the side of the communities it affects.

Businessmen and women across the land do not get out of posh cars with a big cigar and shout "you're fired!".  Business must succeed if we are to rebuild our nation's fortunes. All business asks is the chance to get on with the job with a chance of success in an even-handed environment.