The Fixed Term Parliament Act brings to mind another, unofficial, statute – namely, the law of unintended consequences. When introducing the Bill back in 2011, Deputy Prime Minister Nick Clegg told the House of Commons that “by setting the date that Parliament will dissolve, our Prime Minister is giving up the right to pick and choose the date of the next general election – that’s a first in British politics”.
Clegg was driven less by constitutional principle than fear the Liberal Democrats might be ditched as coalition partners, with the Tories calling a snap election as soon as their poll ratings improved. This self-interested ploy will, in my view, seriously damage British politics – in turn, undermining the economic policy process, making it more rancorous and subject to extremes.
Prime ministers could previously decide when to call a general election. Once Downing Street gave the word, Parliament would dissolve, the country then experiencing a brisk, full-blooded election campaign lasting around a month. The media would go into a frenzy and our national debate into overdrive, as party policies were subject to scrutiny. Inevitably, amidst the policy discourse, there was a fair bit of political argy-bargy.
Thanks to the Fixed Term Parliament Act, though, everybody knows Parliament will be dissolved on March 30, with votes being cast on May 7. As such, the election campaign is already several weeks old, having unofficially begun just after Christmas, and there’s still another three months to go. Unable to help themselves, the parties went into campaigning mode way before the vote.
Public perceptions of Parliament, and politicians in general, have lately plummeted – driven down not least by the expenses scandal and a remote political class. But now, thanks to an Act quietly passed back in 2011, we’re just a quarter of the way through a four-month election campaign – and there’s a palpable sense voters are already sick of the political jousting.
During previous campaigns, four weeks of claims and counter-claims were more than enough. There is only so much assertion, rebuttal and heavily spun rival “dossiers” the public can take. Even before the Fixed Term Act, our public discourse would risk venality towards the end of a month-long election campaign, with politicians accusing one another of lying and any notion of serious policy debate going out of the window.
What can we now expect during a four-month campaign? We’re only a month in and the debate has turned nasty, with the main parties “going negative” on each other’s leaders. Campaigning is already centred on snarled accusations and class war – as opposed to debate about how Britain should best address the problems facing an ageing, heavily-indebted, post-industrial power – and there’s still almost 90 days to go.
Such behaviour was much in evidence last week when, faced with criticism from Stefano Pessina, the acting chief executive of Walgreens Boots Alliance, Labour and even some senior Liberal Democrats responded with a personal assault. In a globalised world, nations must compete for business. As such, firms prominent in the UK, many of them employing thousands of people, will increasingly be owned and led by foreign entrepreneurs who, as an election approaches, are fully entitled to voice their view.
If Labour’s response to business criticism is to attack the critic rather than the critique – in Pessina’s case, that high taxes and regulation will hinder investment – then other business leaders will be discouraged from speaking out for fear of an ad hominem. That would be counter-productive. Schools, hospitals and other public services only exist because entrepreneurs and businesses have taken risks and created the wealth that funds the wages and taxes of all the rest of us. Business leaders’ insights are vital.
The UK remains a long way from paying its way in the world. Our external deficit – a colossal 6pc of GDP – is the biggest in our peacetime history, our partial recovery too reliant on ever more household and government debt. Yet when one of the world’s most powerful investors, who can put money anywhere he chooses, comments on the UK investment climate, a large part of our political class turns him into a pariah. If that’s how it is with three months to go, how spiteful will British politics become just before polling day, after months of campaigning hype, and at what damage to our international reputation?
Business leaders should clearly be involved in politics. Men and women with a track record of significant and lawful commercial achievement have much to contribute. Their experience and know-how can inform policymaking – particularly in times of financial instability and economic weakness, when there’s a particular need for truth-telling and lateral thinking.
Those still active in business when helping to formulate specific measures may face conflicts of interest. The remedy isn’t to exclude them, but insist on disclosure and total transparency. When politicians and business leaders get too close, and relationships are shady, I agree the results can be bad. In recent years, lawmakers in the UK and US have become far too entwined with the financial services industry. That why, while I’m concerned about Labour’s attack on Pessina, I’m also disturbed by last week’s news that City financiers have replaced entrepreneurs and industrialists as the biggest source of Conservative party funds.
There’s nothing inherently wrong with financial services. I’ve worked in the sector myself. But through a combination of political donations and post-dated job offers, certain financial institutions on both sides of the Atlantic have captured lawmakers, leading to inadequate regulatory safeguards and a failure to defuse “too-big-to-fail” banks. As the May election approaches, while business leaders must raise their voices, we don’t want undue influence in specific areas linked to opaque campaign finance.
As Westminster was fixated on a puerile row between politicians and business leaders last week, the Institute of Fiscal Studies released its annual green budget – which surveys the fiscal landscape before the Government’s upcoming Budget statement. The UK faces the toughest fiscal consolidation of the world’s advanced economies over the next five years, the IFS reported, given that real terms spending cuts over the last Parliament were smaller than planned. In particular, there has been no real reduction in spending on social security since 2010.
The IFS also released important research by the Institute of Chartered Accounts of England and Wales, showing the net fiscal deficit to be far greater once off-balance-sheet items such as public sector pensions and the private finance initiative are included. On a so-called “whole of government accounts” basis, the 2013 net deficit was £179bn, almost double the official £94bn figure.
Such information, vital to our national debate, was practically lost in the coverage of politicians insulting business bosses. Yet, commercial leaders generally know their stuff. Those who thrive tend to be self-reliant, high-achievers, proven wealth-creators, often with international experience, who know how to keep large organisations on an even financial keel.
Far too many politicians, certainly our senior ministers, have no commercial experience, having spent their entire adult lives inside the Westminster bubble. They need the worldly wisdom and financial reality checks business chiefs can provide.
This is especially true now, given how the Fixed Term Parliament Act is about to subject us to a marathon election campaign, during which our politics will become increasingly squalid and detached from financial reality.