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Graham's latest column for The Journal
This summer, as people take their holiday both the weather and the economy has appeared set fair, I’m not alone in believing the economy has now entered a sustained recovery, the Bank of England was confident enough to raise interest rates. Ten years ago I established two shadow Bank of England committees in both Yorkshire and the North East. They started by pushing for more easing and lower rates but in recent months the sentiment has hardened and raising interest rates has increasingly been seen as a tangible symbol of an economy that is in good health.
Of course, it is never universally good news. The bricks and mortar retail sector continues to supply a steady stream of headlines about high street blight, consumers continue to face rising energy bills and niche sectors, such as newspaper publishing, continue to be challenged by digital business models.
Over my summer holiday I have been reading an excellent biography of the reforming Republican US President Theodore ‘Teddy’ Roosevelt. The Bully Pulpit, describes the rise of the progressive movement in the USA, which believed the Government had a right to regulate in order to protect consumers and workers. At that time the regulation was aimed at anti-competitive trusts which had become monopolies in sectors such as railways, food, oil. It led to some of the world’s biggest businesses, such as Standard Oil, being broken up or prosecuted for anti-competitive behaviour.
Natural Conservatives, like me, are instinctively pro-business but our support is always inclined towards challengers and innovators rather than large corporations, which prefer the status quality once it is delivering a pipeline of profits.
A new acronym emerged recently, FAANG; Facebook, Apple, Amazon, Netflix, Google. It describes five businesses which have been changing the world. Facebook, Apple and Google have competed to be the first business valued at $1 trillion dollars, on 2nd August Apple took the top spot. The value of its shares has risen 50,000% since the company first listed in 1980. That dwarfs the 2,000% increase for the S&P 500 index over the same period. The same day that Apple broke its record, it emerged Amazon’s UK tax bill was out of all proportion to the size and scale of its operations in Britain.
No Conservative should want to support business models that dominate markets and exploit their size and scale to snuff out competition and innovation. That is why I support Newcastle’s NE1 BID, which has rightly called for a new way of taxing internet retailers at a time when High Street shops face business rates that are higher than any warehouse or distribution centre when compared square foot for square foot.
William Hague has recently called for businesses like Facebook and Twitter to be regulated so that part of them are be reclassified as publishers, not merely tech-platforms. Yes, technology offers new ways of transmitting news, the benefits of which should not be denied to the public. But when technology platforms hollow out the advertising revenues that formerly accrued to publishers and then deny that they are in the publishing businesses, something is surely wrong. After all, publishing is subject to the laws of the land, not in order to stop free speech, but to prevent libel and contempt of court.
Sometimes the global scale of large tech-businesses intimidates Governments, but influential countries and states can be a force for change. California has a smaller population than the UK but once it regulated certain new standards for cars, manufacturers were forced to adopt them throughout the world. Similarly, the City of New York then Scotland introduced the first indoor public smoking ban and Governments throughout Europe have followed.
The privatisation of our utilities also needs a regulatory review. What was right in the 1980s, as a means to smash up state monopolies and bring new investment into the market, now needs updating. Are the six big firms pricing like a herd, with all acting together once the first has moved? Are the poorest and elderly being deprived of fair deals because energy firms favour ‘online’ accounts? Why can I, as a business customer, choose my water supplier, but my domestic supply is stuck with Northumbrian Water? Mrs May is introducing a price cap on energy, it should not have been needed. Vigilant regulation and a more active market should have made it unnecessary.
Practical politicians shouldn’t put ideology before results. In Tees Valley, our Conservative Mayor, is proposing changes to the ownership of the formerly privatised airport because he recognised the public interest argument. He has no desire to run an airport but needs to take control to set right what is being seen by the public as a botched privatisation. If his plan comes off, there should be no need for the airport to be public forever, but the fact he is willing to take a decision against the grain of his party’s normal thinking is to his credit.
Roosevelt talked about a ‘Square Deal’ that balanced the needs of business, consumers, shareholders and workers. It was the right approach a hundred years ago and could keep the business weather outlook bright today.