This government is too close to big businessby David Davis / February 22, 2012 / Leave a comment
Published in March 2012 issue of Prospect Magazine
Troubled relationship: David Cameron, right, has admitted getting too close to newspaper proprietors, says David Davis, left
It is fashionable to declare that the western model of capitalism has failed. Some laud the success of China, but that stems from state capitalism which rests on an average wage one tenth of that in Britain. Others admire the chaotic capitalism of India, but it succeeds for the same reasons. The differences are not always that clear cut; within western capitalism there is a wide spectrum of societies. A recent report by the OECD, the international economic body, showed social mobility in Britain and the US was far lower than in Australia, Canada and Scandinavian countries.
In Britain, the symptoms of western capitalism’s sickness—rocketing executive pay, bankers’ bonuses, shameless tax avoidance and cosy relations between politicians, press barons and business leaders—have become known as “crony capitalism.” Since the term was coined, coalition and opposition leaders have battled to be seen to lead the fight against crony capitalism and all that it entails. But when it comes to crony capitalism, government is often not the solution, but part of the problem.
In September last year it was announced by the Department for Business, Innovation and Skills that the bosses of Britain’s 50 biggest companies would be assigned ministerial “buddies,” to give them a hotline to discuss their concerns. The aim? To boost investment and kick-start the economic recovery. But many will see this as proof the government pays too much attention to big business and is too close to its top executives. Where is the hotline for small business leaders?
Then there are the revelations that Her Majesty’s Revenue and Customs (HMRC) has allowed some of the world’s biggest companies to pay far less tax than they owe. Companies that have allegedly benefited from HMRC’s generosity have been investigated by the Public Accounts Committee following reports in the media and dismay among the public.