Opinion: We need to tackle ‘crony capitalism’ on our watch

The Liberal Democrats’ vision of a John Lewis economy, and an end to ‘crony capitalism’, articulated by Nick Clegg, is welcome. So how does Government need to change?

The answer, it seems, lies in the habitual practices of the Department of Business, Innovation and Skills (BIS) and its notorious revolving door to pet trade interest groups. So when the British Beer & Pub Association (BBPA), the in-house lobbyists of the pubcos that have closed countless community pubs, come calling, the condemnation of the outside world seems not to matter.

BIS ducked the solution supported by the cross-party BIS Select Committee and a huge range of business and consumer groups including the Federation of Small Business, according to MPs of all parties in a Commons debate on 12 January. Instead, as Parliament heard, the BBPA were not only invited into BIS regularly to discuss the Government’s response to the fourth critical recent Select Committee report on pubcos; they were allowed to draft most of the reply. This was revealed in an extensive Freedom of Information investigation by the All-Party Save the Pub Group, chaired by Greg Mulholland MP.

That FoI request lists dozens of communications with the BBPA between the Select Committee reporting and the Goverment responding. In that period, none of the bodies supporting the Select Committee – CAMRA, the Federation of Small Businesses among many others – were given the courtesy of a meeting to discuss the response at all. One rule for one side of the debate, another for everyone else. – Hardly evidence-based and independent decision-making. It rather smacks of the ‘crony capitalism’ Nick wants to bring to an end.

The ensuing headlines saw a Liberal Democrat Minister, Ed Davey, accused of ‘collusion’ by his own colleagues, as well as coming under repeated fire from Tory and Labour MPs in a debate on a cross-party motion against irresponsible capitalism and the failure of successive Governments to act on numerous concerns about the treatment of tenant lessees.

Instead, without evidence that an alternative would deliver the reform needed, Ed turned to the BBPA, discredited by the Select Committee, for a solution of self-regulation. The detail – see Greg Mulholland MP’s website – delegates almost the entire Government policy to the BBPA – and the covering press release.

I have some sympathy with our Minister’s room for manoeuvre, given the availability of Parliamentary time and the ‘one in, one out’ regulation limit. This and the need for proper consultation may have meant delay to Government taking the action the Select Committee called for. However, I have no sympathy for what has happened. No wonder the Save the Pub Group and others have questioned the appropriateness of the relationship between BIS mandarins and the pubcos’ lobbyists.

Ironically, if Nick Clegg’s model of increased worker participation were extended to the pub trade, pubco tenants would work to radically change the broken business model. Instead, Nick’s ‘economy driven by immensely powerful vested interests…. that politicians have abjectly failed to stand up to’ seems alive and well in BIS. Whitehall has faced criticism for years about the ‘revolving door’ between top civil servants (not just BIS but also the MoD) and the senior arms trade posts they walk into and vice-versa.

The underlying issue here concerns BIS itself. Our Ministers have effectively encouraged long-termism and developing long-neglected industries (not enough, in my view, to green industries – but that’s for another day). Now it’s time to clean the stables. Get the builders to take out the revolving door for the likes of BAe and the BBPA. Sack civil servants who let cronies and lobbyists dictate government policy; and listen to the small entrepreneur as much as big business. Much of this was highlighted by Vince himself in opposition: now it’s time to change the culture of Government.

* Gareth Epps is a member of the Federal Policy Committee and the BIS Parliamentary Committee, and is also Public Affairs Officer of Reading & Mid-Berkshire CAMRA. He writes here in a personal capacity. A fuller version of this article can be found on Gareth’s website here.

* Gareth Epps is a member of FPC and FCC, a member of the Fair Deal for your Local campaign coalition committee and is an active member of Britain’s largest consumer campaign, CAMRA. He claims to be marginally better at Aunt Sally than David Cameron, whom he stood against in Witney in 2001.

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5 Comments

  • Thanks – this completely passed me by the other week. The article on Greg Mulholland’s website is damning.

  • “crony capitalism”

    Like there’s another variety? All ideologies, such as capitalism and communism, end in cronyism. That’s why we invented a modern, liberal democracy with a mixed economy and proper checks on the balances of power between workers/employers & land-owners/renters to prevent one lot from exploiting the other and inhibiting their freedom. That liberal democracy is now being undermined by a coalition government hell-bent on introducing more of the failed ideology that cause the current economic malaise. Very much like the dying days of the post-war consensus in the late 1970s, when labour weren’t really capable of winning an election and relied upon the support of the liberals, but kept on pushing the same agenda. Now we have the polar opposite, after 33 years of neo-liberal consensus, with an unelelectable tory party continuing to push a failed ideology with the support of the liberals.

  • David Allen 24th Jan '12 - 5:23pm

    Steve,

    What a brilliant ten short lines!

    A truly liberal democratic state promotes freedom by imposing checks and balances on the powerful vested interests – business versus unions, landlord versus tenant, landowners versus citizens, financiers versus consumers, producers versus the environment, and media opinion formers versus the listening public. In turn, this powerful state must be subject to its own checks and balances to avoid an undue concentration of power in the hands of a few. This of course requires balances between the legislature, executive and judiciary, but above all, it requires an effective and vibrant democracy which puts the voting public in the driving seat.

    Democracy isn’t just the battlefield. It’s our weapon.

  • Gareth, thank you for posting this.
    It is deeply disturbing and perplexing that this seems to have been so readily overlooked by the more senior members of the Lib Dem hierachy. Didn’t Vince Cable assure the BISC, last year,that they would take on board their reccomendations? If so what has he to say for his actions, or lack of them.
    The smell of collusion taints everyone in politics and at no point has anything been done to stop the shadier practices of the pubcos who are able to carry on with some very unpleasent behaviour towards their tenants.
    It is, and should be, embarrasing for Lib Dems everywhere and something needs to be done about it.

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