Martha Lane Fox, the new president of the British Chambers of Commerce, has warned policymakers that businesses are holding off making big investment decisions given the UK’s recent political and economic upheaval.
Chancellor Jeremy Hunt made restoring business investment a priority in the Budget this month, with an extension to tax breaks for capital spending and measures to keep people in work.
But Lane Fox, who took over from Ruby McGregor Smith at the UK business group last October, said when it came to the long-term spending decision her members were “just waiting and seeing . . . everybody still feels a bit like they’re holding fire”.
She told the Financial Times: “People just don’t feel like taking risks, investing or thinking about international trade when they’re still feeling anxious about the political situation and the economy.”
Lane Fox describes herself as a “dotcom dinosaur” — a reference to her first venture as co-founder of start-up lastminute.com during the tech boom and bust of the late 1990s — but has since served successive governments as a digital adviser, and founded businesses such as karaoke chain Lucky Voice.
Until the takeover by Elon Musk last year, she was on the board of Twitter as it fought to make the US billionaire follow through on his buyout of the social media group. “We held him to account,” said Lane Fox, referring to Musk’s attempt to pull out of the deal. She is the chancellor of the Open University, and chairs the board of Dutch tech group WeTransfer.
The 50-year-old sits as a crossbench peer in the House of Lords, with the title of Baroness Lane Fox of Soho, and has championed causes around diversity and social rights. “It’s really hard to put myself in a box,” she said, before adding: “That does make me sound a bit of an arse.”
UK prime minister Rishi Sunak has tried to restore economic stability after the chaotic shortlived tenure of his predecessor Liz Truss, but Lane Fox said more work was needed as it was clear from her discussions with businesses around the country that confidence was still fragile.
Added to that was the uncertainty about a possible power shift in Westminster with the next general election — which must be held by January 2025 at the latest — fast approaching.
The opposition Labour party is well ahead in the opinion polls and has been on a business charm offensive in recent months. Lane Fox said her members had been impressed by what they had heard from its leadership so far, especially shadow chancellor Rachel Reeves.
“Labour is a very different party to five years ago, 10 years ago. I’m sure that this incarnation of Labour leadership understands the importance of business.”
Whichever party wins the election, the new government needed to help “make sure there’s a clear plan for Britain, and what our economy looks like in 2030”, she added.
“It needs to be a clear ambition for what we’re trying to build, what our economy looks like, how we’re filling those jobs shortages, and how we’re building the skills for the future.”
This included encouraging exports, she added, with Brexit still a headwind for British businesses three years after the UK left the EU. “We’re doing 40 per cent less trade with Europe than we were before. That’s just an astonishingly large number. We know that the skill shortage has been amplified by Brexit, we know that trade is not ramping up anytime soon because of the complexities and difficulties around the bureaucracy of Brexit trading.”
The BCC already provides help for businesses to export, she said, something she is keen to champion as BCC president. “With only 10 per cent of British businesses exporting, that feels to me like such rich and low hanging fruit. We’ve lost a significant chunk of our trading, and we need to build that back up. All the talk of global Britain is not going to happen if we don’t.”
Businesses are also concerned about help with energy bills being scaled back from next month and many complain about the lack of skilled labour. “The consistent message I’ve heard in every single chamber is that they struggle to find the right skilled people.”
She describes the 53 regional chambers that make up the BCC as the “life and soul of . . . British business”. She said that regionally there is a “mixed picture” on business confidence, with some areas still feeling left behind, despite the government’s levelling up strategy.
“I appreciate why if you’re sitting in Nottingham, or even if you’re sitting in Coventry, or places that aren’t top of the political agenda, it feels as though it’s not happening.”
The government could also help with “better digital infrastructure and more digital skills”, she said, pointing to the lack of fast broadband in rural areas. “It’s great to talk about innovation but you do need non-headline grabbing stuff,” adding that it was important to encourage all SMEs to adopt technology to boost productivity.
In terms of the tech sector itself, she described the recent sharp correction in valuations as “a massive dose of realism”, adding: “I’ve seen these cycles before. And, of course, if you’re in a business, and your valuation has collapsed, it’s harder to raise money, your VCs being tough on you, that’s tough.
“I do understand that probably more than most people. But I’m still so fundamentally optimistic about the sector itself. Betting on a good tech business is not going to be a bad bet.”