Friends in high places: the paradoxical relationship between business and government

By Charles Pitt


The relationship between business and government is paradoxical. At one level government pontificates on how businesses operate and regulates their working practices - posing as our doughty defender against the unacceptable face of capitalism. At another, government is dependent on business to drive economic growth and raise tax revenue. And government is a customer - buying huge chunks of expertise to deliver its agenda whether that's rolling out smart-meters or getting people off benefits and into work. Telling someone how to do their job, relying on them to do it for one's income and buying stuff from them all at once does not make for clear cut roles and responsibilities.

Politicians and big business are widely distrusted so it is unsurprising that businesses invest more and more of their external relations function in getting those relationships right -- both for their reputation as well as for their profit margin.

This week the Business Minister published the list of chief executives who have been offered a hotline to ministers. This new scheme designates six ministers as the go-to person in government for some of the UK's biggest firms.

British business is split on the benefits. Some, such as the CBI, argue that British business needs this degree of "account management".  Others contend that the largest businesses in Britain already enjoy cosy relationships at the top of government and that formalising relationships in this way might crowd out smaller players - the very companies that need extra help with investment and exports.

However, obsessing over who at the top of business is talking to who in Whitehall distracts from the far more complex web of relationships in play. The fantasy that multi-million pound government contracts are sealed on the golf course is just that - and the fact that the very hint of such underhand dealings frightens politicians and businessmen alike reflects the better-informed consumer landscape in which they both operate. Consumers have exploited growing choice by making ever more demands on those from whom they buy, demanding ethical behaviour across the supply chain. Consumers have also forced transparency on politicians; formerly smoke-filled rooms are not only smoke-free, they are now made of glass.

Rather than nostalgically pining for a cigar in the 19th hole, the smartest business people are responding to their customers' needs and recalibrating their relationships with government. In some cases they are investing ahead to develop proactive solutions - businesses that spot problems that have yet to be noticed in Whitehall are well-placed to offer (and charge for) the solutions.

Rather than adopting defensive positions, the best external relations managers understand the need to stay focused on the horizon. In other cases businesses are leveraging their experience to deliver what the government can no longer afford to do itself, paying for it and recouping their costs in the future savings made by the state. And chief executives have sat up and noticed - the best in-house public affairs managers are not looking to merely create opportunities for executives and politicians to meet over lunch but using their political insights to drive business growth.

Politicians and businesses are both subject to brutal accountability - whether at the ballot box or on the high street. But rather than colluding in damage limitation the wisest amongst them are embracing their shared agenda: delivering the services people want for the best possible price. Business and government working hand-in-hand, and out in the open, is in all of our interests. And if they fail us they know what we can do about it.

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