Lobbying is a dirty word. The unfolding story of former Prime Minister David Cameron’s Greensill shenanigans will serve to further muddy the practice.
But lobbying, in the broadest sense of the word, is a necessary part of a representative democracy. Politicians can’t know all of the ways that the laws of the land are impacting the country, so it’s an important part of civil society that individuals and groups are able to petition the government when things need changing. Banning lobbying isn’t really an option.
Lobbying is particularly important for the most innovative entrepreneurs, as there are plenty of regulations that aren’t fit for purpose or else become out of date when new technology is created. In an excellent article for Sifted (which inspired me to write about this topic), friend of the network Nicholas Colin mentions the 1835 Highways Act, which effectively prohibits anyone in the UK from riding an electric scooter on the road. Every entrepreneur, in every sector, has their own examples of changes that would support their business.
However – and it’s a big “however” – not all lobbying is good. Beyond the flagrantly bad examples of businesses trying to circumvent what should be open tenders, sometimes business leaders will call for more regulation of their sector as a strategy to stifle smaller competitors and increase the barriers to entry to deter new entrants.
Sector-specific lobby groups might be pushing for what’s best for their sector – say, manufacturing or tech – but their desired policies can come at the expense of other sectors and ultimately make taxpayers and consumers worse off.
Even sector agnostic business groups aren’t always acting in the public interest, as their job is to represent their members, not necessarily the best ideas. Lobbying for the special treatment or exemption for certain types or sizes of business often distorts the market and perverts competition-friendly incentives, once again making consumers worse off.
So while lobbying is necessary, it’s lopsided. And despite what you hear, the main issue isn’t between small and big businesses, but between large established cohorts and newer challengers. While large and small businesses have well established and effective lobby groups, innovative startups and scaleups still don’t get the same level of support. Their voice is important because their businesses have the greatest potential to scale and create wealth and jobs. And as they are trying to disrupt incumbent industries, they are also often the businesses pushing up hardest against existing regulations backed by organised lobbies.
While there is a strong case to be made for more business-friendly policies across the board, startups and scaleups need particular attention. As a think tank, we and other organisations have a role to play in this (I’ll share more details about how we will do this at an event with UKBAA next week), but politicians can help by working harder to seek out these innovative businesses, which still lack the institutions and resources to get their voices heard in parliament.
Dynamic systems
On the blog, Sam Dumitriu asks the question: Is declining business dynamism to blame for our productivity woes? Business dynamism relates to measures of birth, growth and decline of businesses and drawing on a recent presentation from Professor Mark Hart from the Enterprise Research Centre, Sam makes the case for why we should pay more attention to it.
I highly recommend reading it in full. And if you like the idea and would like to get involved in supporting a paper on this topic, please feel free to get in touch.
GB News
Rhys Gunter, a Senior Producer at GB News, has reached out to see if any entrepreneurs are open to being guests on the TV channel when it launches later in the year. If you would be keen to be added to their database to talk about business, startups, tech, tax, education – whatever your passions are. Just drop an email to Rhys with a little about you, your business and what you would like to talk about (include your phone number).
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