Government Intervention In Business Is Coming

Political intervention in business is set to rise in 2018. Whilst governments know they need the private sector to grow and thrive, they are also under pressure to show their electorates that they are in control. And business behaviour isn’t helping.

Everything from non-disclosed data leaks, through to poor personal behaviour and deliberate product slow-downs have all impacted on the reputation of business. Several years ago the CBI recognised that business had a reputation issue and tried to do something about it by launching The Great Business Debate.

The collapse of Carillion will have done nothing to help rectify that situation. Whilst everyone can see the benefits that an entrepreneurial spirit can deliver many perceive a growing list of failures of the corporate world – not looking after people, bullying cultures, failures to pay equal rates, failing to deliver, cutting corners, and simply charging too much often to the public purse. Not that the public sector is exactly immune to any of this, of course.

Even the IoD has laid into Carillion for its behaviour and the way it was run. That is all well and good but if poor behaviour could be identified in the immediate aftermath of the company’s collapse then why does it appear that no-one did anything in advance?

Whilst there seems little doubt that the Labour Party is winning the debate on the benefits of the public sector, even Mrs May herself talked early on about wanting business behaviour to change and promised market intervention in her infamous conference speech.

The often repeated criticism of ‘we don’t want a return to the 1970s’ assumes that the private sector was somehow responsive, delivered what people wanted and real value back then. It is not entirely obvious that they did. The private sector operated under very different circumstances back then as well.

There were also critical reasons why the public sector was seen to fail in its delivery; a lack of long-term funding and planning, not least. So it is not about an inherent inability of the public sector to deliver but about providing it with the tools to succeed as many public sector bodies already do both here and across the world.

Businesses now need to realise that more public sector provision is highly likely and is no longer just the call of the marginal wing of the left but is becoming mainstream thinking. As a result, businesses need to take seriously the prospect of greater public sector involvement in their sector. Is it a fundamental challenge or something that could actually be made to work for them? This requires thinking beyond ‘private sector good, public sector bad.’ Businesses also need to appreciate that for large swathes of consumers, especially millennials, want them to behave ethically, look after their employees, speak out on social matters, reflect the diversity of society and, generally, behave themselves!

The Government needs to be seen to be doing something and quickly. That could mean more regulations around behaviour and activities. These could range from higher standards when working with the public sector, through to higher penalties for failure and new reporting requirements.

The fact that this will impose additional ‘costs’ on business will no longer be much of a consideration But the main driver of change during 2018? The expectation from the electorate is that something must be done.