The Sunday Times April 24, 2022 7
A ‘ruin‘: Dominic Cummings berated health procurementIt was billed as a big event. On
February 1, Boris Johnson
unveiled “a new cohort of
business leaders to
turbocharge the UK
economy”. The latest in a line
of No 10 initiatives, the
creation of this new Business
Council was to mark “the two-
year anniversary of Getting
Brexit Done”. It gained barely
a mention in the media.
A City grandee recalled: “I
happened to be with a senior
Treasury person the day this
Boris initiative was
announced. He had heard
nothing about it, which says
all you need to know about its
chances of success. Just
dismal boosterism.
“Frankly, I wouldn’t want
to have anything to do with
this lot at the moment. They
lack seriousness.”
It is not easy to find
business enthusiasts for the
current government or prime
minister. A schism occurred
during the Brexit referendum
that has not been mended.
This mistrust and division
continues even though the
government has a lot of work
to do on the economy and
will rely largely on business to
pay for and deliver it.
Outsourcing is the sector
that has the most direct
contact with the government.
But almost everyone who
works in it now says the same
thing: it’s a game of high
reputational risk and low
margins, and it often ends
with an organisation being
thrown under the bus if
anything goes wrong.
This matters, because
according to the Institute for
Government think tank,
about one-third of total
government spending goes
on private procurement.
Ismail Amla, who spent
three years at the top of the
outsourcer Capita, said: “The
attitudes in government and
the civil service are always
more about not making
mistakes than making
progress. The result of this is
that it’s very difficult for the
best ideas... to get into
government.”
This is, of course, the kind
of thing one hears from the
prime minister’s former aide,
Dominic Cummings. He
talked of how at the start of
the pandemic, the
Department of Health was “a
smoking ruin in terms of
procurement”, claiming the
vaccine programme was only
a success because it was taken
out of the department.
Dame Kate Bingham, the
private sector venture capital
specialist who led the vaccine
initiative, said civil servants
treat business with “hostility
and suspicion”.
A consultant who has
worked in government is
pessimistic about its ability to
use the private sector to
deliver a better society.
He sighed: “I find myself
yearning for the well-oiled
machine of the Blair years — ifWork with Whitehall?
You must be joking
Outsourcers tell
Matthew Gwytherthey pine for the
Blair era of robustcivil servants
know what value for money
is,” adding: “You talk to
people at [the Ministry of
Justice] and the Home Office
and ask on the subject of
prisons, ‘Are you building
warehousing for people or
[seeking] a reduction in
recidivism?’, and they are
terrified of the risk involved
in answering it.”
He added: “The primary
business of politics is politics
and you learn never to forget
that. I saw those who had a
genuine sense of service to
citizens never get on, while
those who revelled in the...
political game advanced.”
Now awaited is Morrell’s
review, post-Grenfell, of the
country’s systems for testing
construction products. This
was commissioned in April
2021 by housing secretary
Robert Jenrick, who was
relieved of his post soon after.
Business has become far
more politicised in recent
years amid the advance of the
ESG (environmental, social
and governance) agenda. The
responsibilities of companies
have become broader and
fuzzier — and harder to
negotiate — than even a
decade ago, when
shareholder returns were all.
Many from the old school
dislike this. Hence fund
manager Terry Smith’s attacks
on the corporate virtue poster
child Unilever, which he
pilloried for “wokeness”,
asking what is the “purpose”
of Hellmann’s mayonnaise?
Smith wrote: “We believe the
Unilever management ...
should focus on getting the
operating performance of the
existing business to the level it
should be, before taking on
any more challenges.”
To counter this, former
Unilever chief Paul Polman
suggested that if the world’s
problems cannot be solved by
government, then business
should step up to the task.
“The political system that
has been designed to deal
with global issues dates from
the time of Bretton Woods ...
This was in 1944 when 80 per
cent of the global wealth was
in Europe and the US.
“Now we can be cynical
about politicians, we can be
mad about them, we can
laugh at them — but that
doesn’t serve anything. We
have to fill that void.”
Perhaps Polman should
stand for office and bring
some businesslike rigour to
the job — though he might
find that electorates are even
less forgiving than
shareholders.you weren’t on your ‘A game’,
there’d be trouble... I don’t
think the current regime has
given business a second
thought. They see themselves
as the battle-scarred warriors
of Brexit — you were with
them or against them. And
they know business does not
trust them. In fact, there’s an
active antagonism there.”
He praised Lord Agnew, a
businessman who resigned as
minister for efficiency in
January over the
government’s failure to stop
Covid fraud. Agnew described
how “a combination of
arrogance, indolence and
ignorance” was “freezing the
government machine”.
Despite ditching Theresa
May’s Industrial Strategy, the
prime minister now promises
an active state that will invest
in skills and infrastructure,
focused on technology and
reforming the machinery of
government. This is a mantra
that dates back to Harold
Wilson’s “white heat of
technology” in the 1960s —
but to succeed, it will require
patience, diligence, planning
and leadership from the very
top. Leadership that many in
business say is lacking.
Critics of the government
say the old Tory pro-business
stance is now being rolled
back. In many ways, however,
the private sector has only
itself to blame. The financial
crisis, the fall of outsourcer
Carillion, the Grenfell tower
disaster and now the P&O
Ferries scandal have left
business’s image tainted.
Paul Morrell had a long and
distinguished career in
construction, becoming
senior partner at surveyor
Davis Langdon before taking
the role of chief construction
adviser in the Cabinet Office
in 2009. He was sufficiently
well thought of to be hired by
a Labour regime and retained
by a Conservative-led
government. But, he recalled:
“I found government doesn’tI wouldn’t
want to have
anything to
do with this
lot at the
moment
LEON NEAL/GETTY IMAGESHOTEL CUTS
lCharge extra for
toothbrushes and toiletries
lReduce number of
available rooms to cut
cleaning costs
lClose for quieter periods
during the week
lClean rooms and change
sheets less often during
customer staysis likely to be costing the exchequer bil-
lions of pounds.”
Meanwhile, by pushing the boundaries
of fast fashion, Shein is adding to the
enormous environmental damage caused
by the textiles industry. Clothing produc-
tion creates greenhouse gas emissions on
a par with those produced by the UK,
France and Germany combined.
After being slow to regulate fast fash-
ion, the government announced last
month that it would consult on a plan to
make firms contribute to the cost of
recycling mountains of clothes being sent
to landfill. It is questionable, though,
whether companies such as Shein
would be covered by any legislation.
“We are going to be hammering our
own fast-fashion brands, and yet
Shein can flood the market with their
stuff and that’s apparently all fine,”
said Patsy Perry at the Manchester
Fashion Institute.
Most western brands have
sought to ensure that they are
not sourcing from China’s
Xinjiang province, where
an estimated one million
Uyghur Muslims have been
detained in camps and made to
pick cotton.
Shein, which faces no such pres-
sure, declined to say whether it relies
on cotton from the region. It did say
that it was working to assess the
social and environmental impact of
its business at all levels of its value
chain.
So what next? Shein, which bid
unsuccessfully for Topshop last year, is
expected to start buying fashion brands
to supplement its in-house designs. And
speculation is mounting that Xu is work-
ing towards a blockbuster float, which
would require it to reveal how profitable
it is. One City source who speaks to Shein
regularly, said its explosive growth had
cooled amid a wider industry slowdown,
though it was holding up better than
others.
But before it bursts out onto the pub-
lic stage, Shein will need to do a better
job explaining from where it sources its
clothes — and whether it pays its taxes.cult to police overseas firms such as Shein
that are selling direct to British consum-
ers without establishing a UK base.
The government estimates
that there is a total VAT collec-
tion shortfall in Britain of
£12.3 billion — a chunk of
which is attributable to Chi-
nese companies taking advan-
tage of domestic tax breaks to
sell into the UK without regis-
tering here for VAT.
“People in China have
worked out that if you send
something to the UK, you
won’t get charged VAT. They
have spotted the loophole
and are exploiting it,” Allen
said.
Lord (Howard) Leigh, who
raised the issue this month in
the House of Lords, said that Chi-
nese companies were setting up
websites and creating fake reviews
to provide a veneer of legitimacy.
“HMRC doesn’t have the resources
to check items properly for VAT [at
Customs], so they slip through the
net,” he said.
As well as the lost tax revenue, the
tax advantages enjoyed by the likes of
Shein are damaging British competitors.
“We are effectively exposing our busi-
nesses to very unfair competition,” said
Conservative MP Kevin Hollinrake, who
sits on the Treasury select committee. “It$100bn
Shein’s latest valuation$10bn
Shein’s sales in 2020£20,756
UK corporation tax in last two yearsShein’s celebrity fans: (anti-
clockwise from top) Georgia
Toffolo, Khloé Kardashian,
Jess Gale and Eve GaleILLUSTRATION: TONY BELLNEVER MIND THE QUALITY...
MENU
ENGINEERING
lSwitch salmon for
mackerel in dishes such as
pâté
lUse British charcuterie
instead of Italian bresaola
lSwitch to cheaper proteins
— pork instead of beef
lUse more rapeseed oil
than olive oil. Blend cheaper
oils into olive oil
lBuy wines direct from the
winery and promote them
above wholesale-bought
wines
lDitch imported foods and
buy local in-season
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REDUCTIONS
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baskets cheaper
lStack shelves during the
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lCut number of staff on tillsTRICK 1
CHINA
Shein dispatches garments
direct to customers’ homes
from a distribution centre in the
Guangdong free-trade zone,
where goods are not liable for
export dutiesNEW MERCEDES
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