Cameron declares war on the "enemies of enterprise"

He should remember that he's the public-sector workers' Prime Minister, too.

"We are the party of enterprise," said David Cameron in his Cardiff speech. Well, that's fine and dandy. The problem is that he then foolishly declared open season on the "enemies of enterprise". This seems to be pointed directly at the six million people employed in the public sector -- or nearly 21 per cent of total employment who are doing the nation's work. And they are all voters. It's unclear why he would want to upset them even further just as the austerity measures -- ie unemployment -- are about to hit the public sector.

So I can announce today that we are taking on the enemies of enterprise.The bureaucrats in government departments who concoct those ridiculous rules and regulations that make life impossible, particularly for small firms. The town hall officials who take forever with those planning decisions that can be make or break for a business -- and the investment and jobs that go with it.The public-sector procurement managers who think that the answer to everything is a big contract with a big business and who shut out millions of Britain's small and medium-sized companies from a massive potential market.

So, let's get a few things straight here. First, the financial crisis was caused by failures in the private sector that the public sector had to rescue. RBS and Lloyds were moved from the private sector and are now in the public sector. Second, spending cuts that reduce local authority budgets are probably going to increase the amount of time that it takes to deal with planning applications. The procurement officers, also faced with spending cuts, will try to buy goods as cheaply as possible, which will often mean in bulk from one large supplier. Now, Dave is telling them to spend more and buy the goods from lots of small suppliers. Isn't the coalition supposed to be making efficiency savings? Now, he wants a reduction in the size of such savings. Idiotic.

Third, there are not millions of small to medium-sized companies being squeezed out by bureaucracy. According to the Department of Business Innovation and Skills estimates for 2009, there were only 1.2 million enterprises with any employees at all in total in the UK. So that claim simply is not true. Fourth, despite Cameron's claims that it is a good idea to give money to the unemployed to set up a business, academic literature suggests that there is little evidence that such programmes work. They do not seem to be good value for money. There is a large, deadweight loss in such schemes, which means many of the successful firms would have been successful anyway. Interestingly, the scale of a deadweight loss was exactly the argument the government used for the abolition of the Future of Jobs Fund. One rule for business and another rule for the young.

Fifth, there is also little evidence that countries with higher self-employment rates are more successful on any outcome measure. The problem with self-employment is that failure rates are high and for most self-employed people, incomes are low. Indeed, many have negative incomes as they make a loss. So, unlike bankers, they do have pay for performance and, when things go wrong, they make losses. For many, a business failure is devastating, as they have pooled rather than diversified their assets. It often involves loss of business, job, savings, pension, home and sometimes even marriage. For most people, becoming self-employed is a bad idea. Plus, governments are very bad at picking winners.

Finally, there are around six million workers today employed in the public sector, which, since December 2008, includes both RBS and Lloyds. Of these, nearly 60 per cent are union members. Hard to think they will sit idly by in the face of such attacks. You can't legislate good industrial relations; a disenchanted worker can always drop a spanner into the works. Dave's remarks are unlikely to motivate public-sector workers arriving at work on Monday. He doesn't seem to understand that he is everyone's Prime Minister. No wonder the coalition's poll ratings are falling.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Show Hide image

No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.