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Confidence is a rare commodity today. In politics, business and everyday life, the ability to make quick and bold decisions or clinch the big deal requires a sense of confidence. The past 18 months have dented our collective confidence and that is reflected in our relationship with leading institutions such as banks, regulators, business and government.
Our trust in these organisations has been eroded. The banking crisis, rising unemployment and the current expenses row engulfing the House of Commons has shaken us all. We need to restore a sense of collective confidence to get Britain moving again and ensure we come out of this recession in good shape to capitalise on future opportunities.
The Government stabilised the banking system last autumn with a large bailout. It has followed this with a series of announcements to help the car industry and address the challenges for small businesses and the lack of available credit. The Government deserves credit for all this, as action was needed.
In recent weeks some commentators and investors have proclaimed that it is starting to work and the “worst is over”. I think the picture is less clear- cut and the signs are mixed. Some sectors are starting to see signs of recovery, while the oil price has risen and stock markets recovered somewhat; but talking to other business leaders, they remain cautious about this year and next.
Britain is at a crossroads and it will require more than just words to ensure we negotiate our way through this crisis. We need to address the confidence factor with clear, decisive and targeted action to enable our key industries to be revived, restructured and in some cases, such as energy, reinvented.
As a start we must make certain Britain is still seen as a great place to do business. For more than 10 years, Britain and in particular London has been an attractive and confident place to be.
Britain drew on its strength as a financial centre, its geographical position and the appeal of the English language to draw international companies and talented people to come here. We are in danger of losing that status through complicated regulations and uncompetitive new tax proposals.
We have seen the Government move to try to restore stability through heavy public spending; this has resulted in a growing imbalance between the public and private sectors. The spiralling public debt needs to be addressed soon and government spending and intervention cut back. This is clear in banking, where the crisis needed massive intervention by government; but now the market is more stable.
We must reintroduce competition through greater private initiative. A state-controlled banking system will not attract or keep the best talent. The Government has the ability to exert considerable influence over the sector, given its big shareholdings in many banks. The sale of these stakes must promote competition and government should look to break up the larger groups as soon as is possible. We must ensure that we prevent such a crisis again — but we must also bring back competition if we want the consumer and small businesses to be protected.
As a country (as the banking crisis has vividly demonstrated) the UK has put too much faith in well-established “incumbents”. This is true in transport, financial services and the media. Almost by definition, these companies have a deep vested interest in the status quo and are resistant to change. The key to a dynamic economy is to make it easier for younger, more innovative and consumer-centric brands to challenge these companies.
Government should be bold and disciplined in targeting public investment and intervention on areas where the market can't deliver. This is true of sectors as diverse as energy and transport, where we also still need to encourage private investment alongside government to build future infrastructure.
In energy, we face the dual challenge of embracing a low-carbon economy and maintaining the security of supply. We have used much of our own strategic reserves in oil and gas and we now need to invest heavily in future power generation. Some will come from the renewable sector such as wind but as James Lovelock, the eminent scientist argues, we must also look at the next generation of nuclear power.
Here government must take the lead and set challenging targets so that within 10 years, 100 per cent our power needs come from fuels that do not damage the environment at all. We should make it clear that we will not invest in more coal power stations and that we will develop enough nuclear capacity to power all our buses, cars, trucks, trains, homes and offices by clean electricity.
This would leave shipping and aviation as key transport businesses whose fuels still pollute; but the Virgin Group has developed — through one of its subsidiaries — a clean fuel, biobutenal. This should be capable of the addressing the future fuel needs of aviation and shipping, once enough quantity can be produced.
On the railways, the Government has taken a growing and in some cases stifling role over management and investment in the sector. The opportunities for private companies to make significant investment have been curtailed by the short-term franchise system and over-prescriptive rules. We hope Network Rail is drawing to a close on the West Coast Mainline upgrade but Britain's track, stations and rolling stock need more investment and involvement from the private sector.
In the end, governments will not dig us out of this mess; it is Britain's entrepreneurs and best companies that will drive the recovery.
Government's role should be one of setting policy and enforcing responsible regulation. It needs to show confident leadership — but it is not geared to running business.
Reader views (9)
There is no doubt that "BRANSON" is a genius with money ! Unfortunatly he has made his fortune ,by ripping of the ordinary folk of this Isle.
- Anthony Coxon, wolverhampton England, 01/06/2009 21:46
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Getting the balance right between the roles played by the public and private sectors is the key. They need to cooperate on a deeper level now more than ever in order to revive our economy. Richard, it is very easy to say that the government should leave the private sector alone now that the worst is seen as over, but in reality can it really afford to let go that quickly? Remember, it was exactly a LACK of regulation together with banks' irresponsible and greedy actions that have gotten us into this mess in the first place! Therefore I think that Gordon Brown will seek to "control" our economic activities for a while longer...
- William, London, UK, 18/05/2009 21:55
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Richard you are a wise man but the country is going through a painful divorce with a system we once trusted. Since we learnt we have been lied to on a grandiose scale. For the past 12 months or so we have seen a government squander our hard earned money and most people have no faith in the elected leaders, even business's we thought were rock solid like banks have failed us.
I can not see confidence recovering till the pain is over and like a divorce this can only happen when we get the 'the Decree Absolute' or an election and are able to start our life's again free from the problems haunting our past.
- Gary, Brentwood, 18/05/2009 17:10
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Please spare us people like Branson and Esther Rantzen! Lets just find some decent people to represent us properly
- Sheila, london uk, 18/05/2009 17:05
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"Government should be bold and disciplined in targeting public investment and intervention on areas where the market can't deliver. This is true of sectors as diverse as energy and transport, where we also still need to encourage private investment alongside government to build future infrastructure."
Translation: "private business should not be expected to invest in the infrastructure it will then supply extortionately prices public services through"
Public services: public cost: public implementation. Higher taxes? Worth it. Rest of europe: better transport system, lower fuel bills, higher taxes.
Britain doesn't get it - you want your population to stay healthy, happy, educated, get to work on time? The country as a whole should do this, not profiteering private businesses. Private business simply CANNOT PROVIDE PUBLIC SERVICES: quality, availability and price all suffer as a result.
No more PPP please, we simply can't afford the personal cost.
- Andy Watt, Reading, UK, 18/05/2009 16:15
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Richard Branson should admit that Virgin Rail has not delivered acceptale service for good value to its hapless customers, and asking that government should stand aloof to let the likes of V-Rail set the standard is to ignore the British public. Instead, we should demand closer monitoring of service delivery by elected representatives.
- Olufemi Babalola, Lagos, Nigeria., 18/05/2009 15:43
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I agree with Glynn Evans. Virgin is not such a paragon of free enterprise. Once it has a public franchise, it tries to milk it as much as it can. I avoid all things Virgin whenever possible.
- William, London, 18/05/2009 15:07
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"The opportunities for private companies to make significant investment have been curtailed by the short-term franchise system and over-prescriptive rules"
Translation: We railway companies would like a chance to really shaft railway users without any chance of us being chucked out when we are rubbish.
Haven't we heard this rhetoric already. Branson is another one who doesn't get it!
- Robert C, London UK, 18/05/2009 14:48
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I would have more confidence in doing business in this country if big companies such as Virgin treated their customers more fairly. My employer no longer uses Virgin trains because of the ridiculously high fares now being charged for a very indifferent service.
- Glynn Evans, London, 18/05/2009 12:05
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