In the 90s and early 00s, a recurring theme of New Labour was the party’s desire to become more like business. Both Blair and Brown lauded bosses as wealth creators and courageous leaders who had sufficient expertise to advise on welfare (David Freud) and the NHS (Derek Wanless), and Blair was forever demanding that government become “much more business-like”.
Things have changed. One feature of the Starmer government (and indeed its Tory predecessor) has been to act in ways that no sane business would. I’ll give nine examples.
- Good businesses know that it’s easier and better to keep existing customers than to try to win new ones. Labour, however, has done the opposite. Shabana Mahmood has told socially liberal party sympathizers to “fuck right off” whilst chasing Reform voters who never in fact moved to Labour.
- A good business learns from best practice around the world. UK governments have not done this, for example failing to learn from Japan (or pretty much anywhere else) on how to reduce the cost of infrastructure projects.
- No decent business would have appointed someone without experience to a senior position and without doing basic due diligence, as Starmer appointed Mandelson.
- Businesses don’t deliberately deprive themselves of revenue. But the government does, by keeping us out of the single market thereby causing the economy and tax revenues to be smaller than they’d otherwise be.
- Businesses know what their core competence is, and try to cultivate it. Labour has done the opposite, allowing even top universities (one of the few sectors in which the UK has world-class establishments) to decline, whilst trying to support a steel industry in a country with the highest energy costs in Europe.
- Businesses know that balance sheets have two sides. The government has been unaware of this. Rachel Reeves is reported to be considering using a regulated asset base model to finance the building of new towns, whereby a company provides infrastructure in exchange for charging a regulated price for its use such as a toll for roads or an electricity price for nuclear power stations. This makes sense only because it allows her to meet fiscal rules that consider only the liabilities side of the balance sheet and ignore assets such as the future revenues from toll roads. But this is unbusinesslike. Unless they are in financial distress (which the government is plainly not) businesses don’t have self-imposed rules which prevent profitable investments. And if it’s profitable for a private company to borrow to build a new town then it must be profitable for the government to do so too, simply because the government can borrow more cheaply than the private sector.
- A good business knows that you sometimes need to spend money in the short-term to make it in the longer-run. Successive governments have not done this, for example by closing Sure Start centres even though these save the Treasury money in the longer-run, and by not investing enough in net zero even though the benefits of doing so would exceed the near-term costs.
- In business, contracting out is a matter of detailed economics, not ideology or favours to cronies. Good businesses buy in services only if doing so is cheaper and if they have the ability to ensure the precise quality of what they’re getting. Indeed, as Ronald Coase pointed out (pdf) companies only exist at all because the costs of contracting out exceed those of doing the job in-house. Governments, however, have been more careless about this than any decent company would be. For example, the privatization of probation services and children’s homes led to a collapse in quality; Sam Freedman’s Failed State is good on this. And military procurement has for years been as much about corporate welfare as about building good defences. The House of Commons Defence Committee recently said the procurement system was “broken” and that “multiple, successive reviews have not yet fixed it”. And the NAO has found (pdf) that of 52 of the latest major procurement projects only two were delivered on time and within budget. Very few businesses could survive by being so sloppy (or worse) for so long.
- Businesses know that ownership matters. Takeovers, buy-outs, flotations, and sales of some units are quotidian events. The government by contrast keeps issues of ownership off the agenda, despite clear evidence that private ownership of the water industry is a failure.
Of course, I’m not saying that business is a paragon of how organizations should behave. It’s not. It is, as Marx pointed out, a sphere of exploitation, alienation, domination and unfreedom. And it often fails by its own lights. Nick Bloom and John Van Reenen have shown that there’s a “long tail of badly managed firms”, partly because of nepotism and perhaps because managerialism has supplanted actual good management.
But the government has not abandoned the business paradigm for these reasons. Quite the opposite. It’s kept many of the bad aspects of business and abandoned the good, acting in utterly unbusinesslike ways**. It’s given us not actual competence but rather competenciness - a simulacrum of the real thing. The centre-left’s pretence to being the hard-headed grown-ups in the room is merely a narcissistic fantasy. It no more gives us competent government than children playing at doctors and nurses provide qualified medical professionals.
So, why are politicians so unbusinesslike?
One reason could be that they have so little experience of business that they just haven’t a clue how it works. As Martin Robbins says:
Our political system is so out-of-touch with any semblance of what effective management looks like in the modern world that in their minds basically any dull man in a suit will do.
Politicians get their image of business not from the real world but from The Apprentice, wherein a bunch of talentless wannabees mistake ambition and gobshitery for any ability to run things.
But there’s something else. In the 1990s, Labour saw business as a paradigm of successful achievement, in contrast to the party itself which had been out of power and sometimes in chaos since 1979. Today, however, two decades of stagnation have left us with very few British businesses that are models of success*. Instead, the paradigm has changed. Politicians now aspire not to be like businessmen but like “influencers” trying to grab eyeballs. Badenoch is the exemplar of this in the digital age: like a cushion that bears the imprint of the last arse to have sat on it, she repeats the last tweet to have impressed itself upon her. Farage is the analogue equivalent, with his dominance of legacy media. Starmer’s tragedy was like Coriolanus’ - unable to either parlay his old skills into his new role, nor adapt to it.
Which poses a question about Burnham. To what extent is his rise the result of him seeming to be a better influencer, with nice eyes and an ability to speak human, and to what extent because of superior ideas and ability to govern? We can but hope.
* One exception to this is Games Workshop, but politicians don’t want to appeal to their client base.
** Don’t tell me that Labour needs to act like this because of public opinion. I might buy that if they were at 35-40% in the polls, but at 15-20% it is just drivel.

