The National Lottery recently celebrated its 15th anniversary with a party for its millionaire winners. The BBC journalists covering the event rejoiced in the recipients’ good fortune. And so they should. After all, there’s nothing wrong with someone having a flutter and hitting the jackpot.
If only the BBC could show similar enthusiasm for business success stories, instead of the cartoonish versions of enterprise shown in such programmes as The Apprentice or Dragons’ Den. It is true that we have, as a nation, advanced over the past 30 years in our view of business. We no longer see it as something slightly shabby and more befitting Dickensian London. But there is a danger that the current economic crisis has given the anti-business lobby the opportunity to lambast the wealth-creating sector.
Take the vexed issue of bankers’ bonuses. Of course there should be a clear alignment of bonuses and shareholder interests. And institutions receiving taxpayer funding should not be allowed to spray bonus money at their staff at will. But, whipped up by politicians on both sides of the House, this whole issue has spilled over into a general attack on the City.
There is a strong argument that banks should be broken up into much smaller entities. There should be a clear dividing line between high-risk investment banking and clearing banking. The bankers’ over-lending in the good times and unwillingness to lend to business in the bad is a scandal. These are serious issues requiring debate and speedy action.
But it is quite wrong to blame the City alone for what has happened to the UK economy. Gordon Brown’s profligate spending over the years – when he should have been saving for the rainy days – is a major component of our current frailty. What about all the people who took silly risks: 125% mortgages and buy-to-let properties that they could ill afford? Should not this rash behaviour be taken into account when divvying out the blame?
Furthermore, what about the regulators? What was the Financial Services Authority doing about the lending practices of Northern Rock or RBS? When the former collapsed, there had not been a run on a UK bank since the Overend Gurney crash of 1866. So the blame should not be borne uniquely by bankers, although a small minority do deserve the rack.
There is an acute danger of overdoing the attacks on the financial sector and the executives employed within it to the serious detriment of our economy. Already the looming 61% tax rate and levies on the ‘non-doms’ have caused an exodus by these big taxpaying wealth creators to friendlier habitats. If measured criticism turns to persecution, the trend will quickly accelerate.
Not only is the financial services sector a major contributor to the UK’s national wealth, accounting for around 10% of gross domestic product, but it is also something about which the UK can justifiably feel proud. It’s a world-beating industry that has for years been the envy of rivals in Europe and New York.
So why should entrepreneurs care? They may say bankers caused the current mayhem and deserve every bit of flak. But a vibrant City, properly regulated, is the lifeblood of British commerce. A wealthy country is one in which entrepreneurs have far more opportunity. So next time someone invites you to bash a banker, think twice.