Lord Digby Jones’ route to UK prosperity
Former head of the CBI Lord Digby Jones gives us his take on the UK business landscape
As unemployment rises, many people are finding being out of a job in their early fifties is no fun. When you are Lord Jones of Birmingham and have the director general of the Confederation of British Industry on your CV, though, your problems are not so much what to accept as what to decline. Digby Jones has spent the weeks since he resigned as Minister of State for Trade and Industry (UKTI) drawing up a shortlist.
He did so much travelling for UKTI – 45 visits to 31 countries – in his 15-month tenure that ‘ambassador’ fits him rather well. His first new job, we can reveal, will be as corporate ambassador and advisor for Jaguar UK, now owned by India’s Tata Group. This links his favourite company with his passion for India. “The cultural and commercial history we have with the country makes the UK a natural partner for investment and research collaboration,” he says.
Barack Obama’s election as US president was announced just five hours before we meet. “The Bush years were a disaster for America’s standing in the world, and this result is a fantastic opportunity to change that,” says Jones. “But Obama is going to need all the help his friends can give him, and I do worry he has protectionism in his DNA. The last time a slump was followed by protectionism we got Hitler.”
While he doesn’t think the US is in that kind of danger, he fears that while India, for example, is abandoning its protectionist past, if America goes the other way, the West will be diminished. “In any case, Obama will have to realise that America is no longer alone at the top table – India, Europe, China, Russia and the Middle East will all want a place there too,” says Jones.
He also intends to top up his portfolio with three other jobs, in telecommunications, manufacturing and financial services, all with an international focus. But the main legacy of his stint in government will be the peerage Gordon Brown gave him on his appointment. “I want to take a big role in the Lords as an independent voice for business,” he says. “I intend to be a vocal advocate for the wealth creation process, and give serious time to parliamentary committee work. My constituency is business!”
Jones warns against talking up the recession. “I see three different aspects to our present situation,” he says. “The first is that it is levelling off a boom, and I’m not sure that’s a bad thing. Capacity and demand were running unsustainably. The second is confidence: the automotive industry is bracing itself for a horrible year in 2009, but why aren’t people buying cars? We don’t have an acute depression or mass unemployment. People don’t want to spend money when they are worried about their jobs, but cars have never been cheaper and foreign crude oil hasn’t been priced as low for a couple of years. Seen that way, you have the ingredients for stimulating consumer demand, but it’s not happening because of a lack of confidence.”
Jones’ third aspect is that the contagion of financial services is hitting the real economy. “The absence of working capital for small businesses and the refusal of some institutions to pass on interest rate cuts has been alarming,” he says.
While Jones understands the anger taxpayers felt when asked to bail out an industry that has got itself into the mire through ignorance and hubris, he warns against over-reaction. “The funds had to be found,” he says. “I find that frustrating too, but it would be even worse to move into an era of overburdening regulation. The frustration can move quickly from banks to business in general, and that’s what we have to avoid. I don’t want to wake up in 2015 to find the world’s business hub has moved from London to Mumbai, Shanghai or Dubai, but if we constantly tell people they can’t get the rewards of their success and even bonuses here, they’ll go abroad.”
If we cease to attract capital, we won’t attract enterprise, and that worries Jones. The success of AIM in drawing businesses fleeing over-regulation elsewhere needs to be built on, he believes, as it encourages innovative entrepreneurship, which will be a key to getting Britain through the recession. If innovation is defined as taking ideas to market, he says, then a lot of enterprise doesn’t qualify. “On the one hand there are lots of small businesses that are doing simple things well,” he explains. “Innovation is not their modus operandi and businesses like that have problems in a slowdown because their market and working capital dry up.”
The government has a role to play in helping these businesses, and has a unique opportunity to put pressure on banks to make growth finance available, because of the way they are now funded. “Beyond that, cash flow is often a make or break issue for smaller businesses, and since the government is such an enormous procurer of goods and services, it can help by paying its vendors quicker,” says Jones.
Enterprise and sport
There are a few truly innovative businesses with the potential to put the UK on the global map and attract like-minded people here, according to Jones. He has always had a lot of time for Alastair Lukies and sat on the board of Monitise until becoming a minister, so it’s no surprise he considers it a good role model. “Al had a very good idea and took Monitise round the world, working with big banks and big mobile phone companies. He has taken his ideas to market, so he is an innovator. He risked everything, so he is an entrepreneur because risk is a function of enterprise. We don’t want people like Al to move their businesses to America, France, Germany or India,” he says.
His summoning of British sports executives to breakfast on his last big official overseas visit to Beijing during the Olympics, shows his faith in sport administration as a viable UK investment. “Britain is extremely good at holding sporting events and building the infrastructure,” he says. “The Birds Nest Stadium, the Water Cube and the Laoshan Velodrome in Beijing all used British consulting engineers. Beijing airport had a British consulting engineer and architect. We are the best in the world at this stuff. Over the next 10 years, there’s a huge opportunity for British business expertise to leverage off our Olympic success and work with those organisers.”
An interest in sport is appropriate for a man who in the last decade has cycled from Land’s End to John O’Groats and ran the London Marathon for charity. If that sounds energetic, though, consider how Jones’ work portfolio is padded out by numerous community and charity posts, a non-executive directorship at Leicester Tigers Rugby Club and the job he still has at his old firm as a Business Ambassador for UK Trade & Investment. “I’m going to be a busy lad,” he says.
Born: October 28 1955Educated:BromsgroveSchool and UniversityCollegeLondon1978-1998: Worked at Edge & Ellison as a corporate lawyer1980: Admitted solicitor1995: Appointed senior partner1998: Vice-chairman of Corporate Finance, KPMG2000-2006: Director-general of the Confederation of British Industry 2004-2007: Ambassador for Investors in People2005: Appointed Knight Bachelor2007: Created Lord Jones, and appointed Minister of State for Trade & Investment (UKTI)2007: Resigned from UKTI on October 4