313: There is still much to teach the government about the private sector

Governments always talk as if they know and understand everything about how business works. But that isn’t the case. The process of educating them remains a key job of public affairs.

Governments, and particularly, the Johnson government, do intervene directly in the operation of markets even if they claim otherwise. That very intervention is not always deliberate but can be a result of unintended consequences. On other occasions, some sectors simply get forgotten about. I am sure we can think of examples of both from during Brexit and COVID-19.

The challenge

Sometimes it can be difficult to untangle the impact on the private sector from reforms that governments want to introduce. Take healthcare for example. The intertwined relationship between public and private makes it difficult to introduce change in one area without having a direct impact on another. But policy makers can be solely focused on health outcomes without a full appreciation of all needs and motivations of all the various actors involved. In other words, a change to health policy is not solely about the structure of the NHS but also the health workers involved and the private companies helping to deliver health (a sore point for some I appreciate).

Take the football review and the widespread expectation that a regulator will be established. That is a direct intervention in a market that delivers a high profile, internationally ‘sale-able’ product that attracts investment to the UK and is, it could be argued, a fundamental cornerstone of ‘Global Britain’. But the expectations of fans, aka voters, means that intervention will happen.

Public and private; public vs private

So, in public affairs, the basis of much engagement is around educating audiences about what the private sector really does and how it operates. ‘Profit’ can be seen in so many ways. Viewed as ‘bad’, ‘excessive’ or spent on the wrong things or ‘good’, ‘a driver of investment’ and the key objective of a business. These are overly simplistic cliches, but the public sector needs to be open to listen and the private sector open to educating.

Of course, companies must think about how to convey this process of education. Their own behaviour, the tax they pay, the way they reward senior executives, the way they open themselves to diverse communities and other issues also play into the success, or otherwise, of the education as well. There is a fundamental link between successful engagement and reputation,

Governments are completely within their rights to introduce whatever policies they want, if they follow their process, otherwise they face the possibility of legal challenge.

But no company really wants to challenge the government in that way. There is obviously no guaranteeing success and says nothing about the impact on reputations and relationships. So, such a challenge is often entered into with a heavy heart and only after other potential avenues have been exhausted. It is not about corporates with deep pockets trying to bully government as some would have us believe.

Ongoing education

In my experience, local government often has a better handle on business needs, incentives, and drivers. They must work closely with businesses to deliver for their communities. It can suit central government to say that they understand business, but local government doesn’t as it puts them in a position of power. That doesn’t mean to say the relationship is perfect and for some authorities, the finance that the private sector offers, for instance during planning, is extremely attractive.

Essentially, the process of education about how the private sector really works is ongoing. Even if government says it understands the needs of business, we should never make any assumptions.