Political Intelligence for Businesses working with Government

GUIDE delivers political and market intelligence for corporate clients. To find out more, email Chief Executive Greig Baker on greig@theguideconsultancy.com 


POLITICS: What the Industrial Strategy is and is not

There’s a common misunderstanding about the Government’s industrial strategy. It’s not a throwback to the 1970s and it’s not about picking winners. Instead, it’s closely tied to Brexit, in three ways.

First, all the time we’re still a member of the EU, the Government can’t pick winners, even if it wanted to, because of state aid rules. Second, the Industrial Strategy is about preparing the economy for Brexit through legal tax breaks and Government incentives that can also be ramped up the day we leave. And third, those benefits will be designed for areas with lots of marginal seats, to help protect the Government against the wave of electoral populism that’s crashing over traditional parties around the world.

University towns and towns close to the M1 corridor are set to gain. So are industries that can invest in tax-efficient R&D for tech innovations in line with upcoming policy changes – like driverless cars, personalised medicines, and fintech. The Government will publish its Industrial Strategy Green Paper shortly and then a White Paper in 2017.

POLITICS: BUSINESS CAN PROFIT FROM ROLLERCOASTER WESTMINSTER

The following article is based on a speech given by Greig Baker in Westminster on 16th November.

Politics might look like a wild rollercoaster at the moment, but for many businesses it can actually be predictable, practical, and even profitable.

At the broadest national level, fewer people are making more of the important decisions in Whitehall, which means political coordination is easier (and easier to predict) as long as capacity issues are addressed. Government focus is, inevitably, on Brexit – the strategy for which is closely aligned with the Industrial Strategy.

Industrial policy will be designed in part to help those who are ‘just managing’, but also to encourage foreign investment in the UK and do everything within EU state aid rules to keep existing companies here before Brexit actually happens. The criteria of geography, population and risk will help determine individual policy decisions.

So-called “mid-range” political issues like the National Living Wage, the Apprenticeship Levy and Social Value Procurement will also affect businesses directly – and to varying degrees by sector and location. The new National Cyber Security Strategy has big implications for business, too and has been discussed in more detail elsewhere on this blog.

Together with political relationships at the local level (affecting things like planning and contract decisions), these factors demonstrate how politics and business are intertwined. But if you can see what’s coming round the corner, the rollercoaster of politics can be a lot less scary.

COMMENT: In praise of Sarah Champion and Sir Alan Duncan

This week, Sarah Champion MP told the House of Commons that some African nations want to stop the UN appointing a human rights watchdog for LGBT people. Champion’s concerns were rightly echoed by Members of all parties and, on behalf of the Government, Sir Alan Duncan made clear that “the UK’s entire diplomatic network” has been put to work to defend the UN’s appointment and LGBT people around the world.

It is galling that we still have to make the case for all people to live free from the fear of violent discrimination – but we do. Sarah Champion’s speech in Parliament and the Government’s response were not some form of “virtue signalling”, but a necessary affirmation that we will do everything we can to protect people’s rights.

History reassures us that prejudice against LGBT people is more unusual than LGBT people themselves. Many great civilisations of the past have been happily led by openly LGBT people like Greece’s Alexander the Great, Rome’s Hadrian, and the Azande warriors…of African Congo.

We can be optimistic that the wheel will turn again and today’s prejudices will be recognised as a sad anomaly – but it will take people like Sarah Champion and Sir Alan to get us there.

POLITICS: Apprenticeship apprehension

The DfE told the Lords that the Apprenticeship Levy “may cause a small initial fall in demand” for apprentices among SMEs concerned about training costs. The Government has announced new measures to ameliorate things, but there is still some confusion about the system. We have been following this issue closely, so if you would like guidance please get in touch.

Will the Government win its EU appeal?

Political commentators, some of whom are still wearing the blinkers that meant they missed Brexit, dismiss the Government’s appeal to the Supreme Court to trigger Article 50. The Government’s decision to appeal rests on three things: first, there is precedent for Royal Prerogative giving laws force in the UK (not least in enacting decisions by Brussels); second, Parliament already has the means of forcing a vote on Article 50 (Gina Miller could have spent a fraction of her court costs on lobbying Labour to force an Opposition Day vote instead); and third, Brexiteers in Whitehall will argue that MPs have no more power to decide the date of Article 50 after the referendum than they do to choose Ministers to fill posts after a General Election. Success in the Supreme Court would make politics so much easier for the Government that they will push their appeal hard – and defeat is not inevitable.

Government hints at state intervention, the Industrial Strategy, and Brexit

Media coverage of the Government’s National Cyber Security Strategy focused on the Russian cyber security threat trailed by MI5 over the weekend, stoking fears of a new “Code War” if not actually a Cold War. However, the new document says a lot about issues close to home, too:

The Chancellor has staked his personal reputation on the cyber strategy. The 2011 iteration was led by the Cabinet Office but Hammond has launched this one himself. As the strategy requires cross-Government action, it will be a good measure of the Chancellor’s power in Whitehall – and, in turn, over Brexit.

The new cyber plans point to the Government’s Industrial Strategy. Key themes like using public funding to realise the commercial potential of academic research and targeted regulation to promote key sectors will run through the Autumn Statement and be a key part of the Industrial Strategy. If the Cyber Strategy is successful, it will also be a refreshing and admirable example of ‘joined-up Government’, as it will require deep cooperation between Departments that don’t normally see eye-to-eye.

The Government is willing to intervene in the private sector. The Cyber Strategy hints at vast swathes of new regulations on business, including forcing big companies to be ‘secure by default’, introducing a new cyber security rating system, and Government testing of suppliers’ cyber security measures. The Government thinks there is a competitive advantage in the UK being more cyber secure than any other market, so it explicitly says regulation here will be “as high as, or higher than, comparative advanced economies”. Public bodies, companies and even charities are all in the Government’s sights.

Private companies will be blamed when things go wrong. The new strategy paper makes clear that “businesses must understand that if they are the victim of a cyber attack, they are liable for the consequences”. The Government says it will take over a supplier’s functions if they are not cyber secure and pose a threat to national security (including risks to the delivery of public services). We think early engagement with the National Cyber Security Centre will be essential for companies looking to mitigate this risk – businesses will have to show they have at least tried to be cyber secure if they want to avoid the wrath of Whitehall.

The full National Cyber Security Strategy document is here: http://bit.ly/2fqrgca

Clients pay for the Brexit hangover

When I worked in the intelligence community, we were warned that military planners often use briefings like a drunk uses a lamppost – for support rather than illumination. Now, I am often struck by the number of organisations who are still working with political advisers who have been drowning their ideological sorrows since the referendum. Advisers who failed to see Brexit coming and who still seem to think it can be undone or pretended away might offer a shoulder to cry on, but astute political planners don’t need sympathy, they need cold hard insights and accurate predictions.

In the same way that we won business when the Conservatives took office because we understand Tory politics, we also got new work because we understand the Leave campaign – and how the Government can implement the result. The “Nissan deal”, for example, is likely to strengthen the Government’s negotiating hand by showing other EU countries it is willing to go a long way to keep businesses here. The EU now knows the UK won’t fold at the first signs of economic pressure and we are likely to get a better deal as a result.

Investment decisions are often complicated by political issues, but those companies that turn to inebriated advisers still mourning the Remain campaign are only making life harder for themselves. Clients need clear advice – and clearer heads – from their political consultants, because we all make the best choices when we are sober.

Clients paying for the Brexit hangover

When I worked in the intelligence community, we were warned that military planners often use briefings like a drunk uses a lamppost – for support rather than illumination. Now, I am often struck by the number of organisations who are still working with political advisers who have been drowning their ideological sorrows since the referendum. Advisers who failed to see Brexit coming and who still seem to think it can be undone or pretended away might offer a shoulder to cry on, but astute political planners don’t need sympathy, they need cold hard insights and accurate predictions.

In the same way that we won business when the Conservatives took office because we understand Tory politics, we also got new work because we understand the Leave campaign – and how the Government can implement the result. The “Nissan deal”, for example, is likely to strengthen the Government’s negotiating hand by showing other EU countries it is willing to go a long way to keep businesses here. The EU now knows the UK won’t fold at the first signs of economic pressure and we are likely to get a better deal as a result.

Investment decisions are often complicated by political issues, but those companies that turn to inebriated advisers still mourning the Remain campaign are only making life harder for themselves. Clients need clear advice – and clearer heads – from their political consultants, because we all make the best choices when we are sober.

COMMENT: The case for "tax years"

Using a low-end estimate, our annual tax take per head is more than £8,000 every year. That sum is reached by excluding local taxes like Council Tax, ignoring the future tax burden of the public sector debt and dividing the rest of the money collected between every man woman and child in the UK. Using that £8,000 figure, public spending should not only be measured in pounds and pence, but also in “tax years” i.e. the amount of time it would take a normal person to earn that money.

This would help us appreciate what a slog it is to create tax revenues and ensure that they are only spent on things we really value. For example, a nurse’s annual starting salary is £21,692. Under this measure, this is about three “tax years”. An MP can be employed for twelve months at a cost of £74,000 – or about nine tax years. Further up the scale, it takes 9,375 tax years to build a £75m hospital, and a whopping 35,000 tax years to pay for the redundant airport on St Helena (to foot that bill, the artist responsible for the very first cave painting in human history would still need to be plugging away at their 9-5 today).

COMMENT: Brexit Select Committee should call EU leaders

As Chair of the Exiting the European Union Select Committee, Hilary Benn will rightly play a leading role in Parliament’s scrutiny of the ongoing Brexit negotiations. That role, of course, includes questioning Government Ministers. The national interest will be even better served if the Committee spends much of its time collecting evidence from leading figures on the other side of the Brexit negotiating table – officials and politicians from the EU institutions and other member states. There is plenty of precedent for this as Committees often take most of their evidence from external, not Ministerial, sources – indeed, only last week the Lords’ EU Committee interviewed senior politicians from Ireland. More importantly, a distinct focus on European witnesses would not only provide invaluable insights into what the EU wants from Brexit talks, but would also ensure the Committee does not come to be seen as a final and frustrated redoubt for those who seek to undo the referendum result. 


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