Business must be coupled with sustainability so we all benefit from growth.
Business must be coupled with sustainability so we all benefit from growth, writes Darren Jones
With the proposed take over of Astra Zeneca by Pfizer, the debate on the question of ‘what role for Britain’ in our ever globalising World has once again arisen.
Are we a tax haven for global businesses or are we a knowledge centre? Do we re-build our manufacturing base or should we work harder to increase our existing exports to developing countries? Is government intervention good or bad for business?
For Labour, these questions should always be framed within the context of jobs and social justice.
This week my law firm, Bond Dickinson LLP, produced a report on sustainable business and the role of in house counsel. As a lawyer I often have to consider this topic with an eye to compliance – ensuring that my clients understand their regulatory obligations and work to meet them.
But as the Bond Dickinson report suggests, major British businesses have traditionally seen legislation and regulation as a stick and not a carrot.
So what role can government play in using the legislative tools at its disposal to give business some carrots to promote sustainable business – a practice that will ultimately create better jobs, more sustainable business practices and contribute to a better stewardship of our environment and communities?
The obvious place to start is the tax system.
If you’re an entrepreneur with a high growth start up business you can already use the tax system as an incentive for growth and job creation, by claiming capital gains exemptions on your share of the business. Only last week Ed Balls and I visited an exciting and quickly growing digital business in Bristol who raised this very issue – an incentive to start ups that use share options to acquire talented leaders to grow their business.
More traditional tax incentives also exist – such as tax relief for businesses that invest in new plant or machinery to improve the efficiency of their business – but what more can be done to create the type of business environment that we want to see in Britain?
Marks and Spencer, with their Plan A sustainability strategy, had to invest an initial £200m into re-structuring their business. The good news is that the long-term benefit of that investment was a gain of £320m to its shareholders; but the upfront cost would be too prohibitive for many businesses in continuing challenging times. Perhaps we need, therefore, new tax incentives for businesses that operate sustainably or tax reliefs for those that can evidence efficient use of carbon or relief for investment into making your business sustainable.
What about jobs?
A passion of mine is bringing businesses and schools together to better prepare young people to be the next generation of workers that business requires – ultimately helping businesses to succeed and preparing young people to share in that success. In Bristol I have created the Bristol Schools Business Forum as a vehicle for doing just that and time and time again I hear from business that the required talent doesn’t exist in Bristol – at entry level, apprentice level, graduate level and beyond. Instead of business telling me, they ought to be telling schools and colleges and universities. Perhaps tax incentives to help businesses work more closely with schools could help.
I’m no tax expert, but it seems to me that legislative carrots are the way forward. George Osborne has reduced business taxes time and time again without using those opportunities to spell out this government’s strategic vision for British business. Some may argue that it isn’t the role of government to do any such thing – indeed no doubt Osborne would make that very argument – but I agree with Ed Miliband and Chuka Umunna that government very much has a role to play; both in terms of setting out what type of country Britain ought to be and in establishing a credible active industrial policy to get there.
When the market left alone creates a recession like the one we saw from 2008 with unsustainable and unacceptable risk taking, or when we see rewards for the top 1 per cent ever increasing by the millions whilst the 99 per cent see the cost of living spiral in relation to the wages they bring home, then it certainly is, in my view, the role of our elected representatives to step in and set the framework.
Government has a whole toolbox of ways to help build a framework for sustainable British business. Reforming company law so that company directors have a duty to their shareholders to not only maximise shareholder value but to act sustainably is a good start.
Taking a look at competition law to ensure that competitors working together on creating sustainable markets don’t fall foul of anti-competition law is another.
And using our place at the table of the European Union – which vastly opens up the possibilities of Britain being a global leader in creating a globally sustainable market place – could result, for example, in ground breaking frameworks for the role of supply – chain good practice or the better management of downstream disposal, recycling and circular economy practices.
Devolving power and money to cities and regions – to give the flexibility to define what that national strategy looks like to local communities – could be a key enabler too. Using our Local Enterprise Partnerships and their associated Enterprise Zones could be an easy starter for ten for government to define sustainable business practices through the piloting of tax and regulatory changes.
Let me be clear. This isn’t about central government planning or a burdensome state – it is about setting the broad strategic framework within which business can freely innovate, take calculated sustainable risks and generate jobs and wealth. I do not challenge the fact that the pursuit of wealth is crucial to a prosperous business environment and nor do I challenge the right for people who work hard and take risks to reap the benefits of their efforts.
I do, however, challenge government and the business community to couple that with sustainability to ensure that we can all benefit from long-term prosperity over short-term, damaging and unequal greed.Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.