Anthony Hilton: Westminster is clueless about supporting UK talent

A recent letter to the Financial Times suggested that the millennials were the least entrepreneurial generation in half a century. The burden of student debt, the challenge of astronomic housing costs and the morale-sapping years of stagnant incomes had worn them down and killed any desire to take risks. This lack of adventure would not serve us well in a world where success would depend on the ability of the brightest and best to turn ideas and imagination into businesses and jobs.

But most people take quite the opposite view. Nigel Wilson, the chief executive of Legal & General, for example, argues fiercely that we have more ideas and launch more companies than almost any other nation. This generation is far more likely to launch a business than his ever was, he says. And, given that his company is in the forefront of a nationwide programme of urban regeneration and infrastructure investment to rebuild our inner cities, he is in a good position to judge.

Interestingly, the challenge comes in other areas. The chief executive of one of Wilson’s rivals said the other day that the hardest part of his job was persuading his junior executives that it was fine to take a risk. How do you encourage risk-taking in an increasingly risk-averse culture? The art of being a business leader today was getting subordinates to understand that it was okay to fail, that every idea did not succeed first time and that progress came from constant trial and error.

That was the message, but in a world where the first rule of any corporate disaster is to find a scapegoat, and where so many of the early rewards to junior executives go to those short-term thinkers who do only what is necessary to secure the annual bonus, too few believe it.

That said, taking the economy as a whole, the issue is not a shortage of ideas nor a willingness to launch companies, but a difficulty in growing these companies to any scale. In America, someone with a good idea will set out to conquer the world. In this country, by contrast, entrepreneurs — too often encouraged by professional shareholders who are themselves obsessed with short-term performance — sell out just when it is getting interesting.

The number of potentially world-beating British companies which have been taken over by the Americans, the Japanese or the Germans, and become the core of their subsequent success is a national tragedy.

And it is getting worse since the Brexit-induced collapse of sterling has cast a cloud over the prospects for this economy while making British assets significantly cheaper to foreign predators.

We have already lost ARM, the chip-maker. We are about to lose Worldpay, the electronic money-transfer system. It is hard to see how we build a future when we are not prepared to secure its foundations.

The other problem this country faces is that it is so lop-sided. Urbanisation creates growth and there is a virtuous circle between dynamic economies and dynamic cities which is why London does so well.

But that is the end of the story: according to one source, nine of Europe’s 10 most deprived cities are in the UK. They lost their heart with de-industrialisation and they lost their power to recover when Thatcher emasculated local Government and made all the money flow through Whitehall.

A generation later and Manchester, Leeds, Liverpool, Birmingham and Newcastle are beginning to claw their way back but the odds are stacked against them because London still gets the lion’s share of the available resources. Sometimes, as in the case of Crossrail, this makes sense, other times less so. Why is HS2, the railway line nobody wants, being built from London to Birmingham where it is not needed? If it must be built, start it in the North where it would make a difference. Use it as an M25 to link Birmingham, Nottingham and Stoke or Manchester, Sheffield and Leeds or some similar combination which would give the places critical mass. It might well cost half as much to build; it would certainly deliver twice the value.

But the other challenge is with the universities. One of the intriguing aspects of Britain’s industrial decline is that, while so many northern cities have been hollowed out, the one thing they have managed to maintain are their universities.

It follows, therefore, that if we are to develop a high-tech knowledge-based economy spread evenly throughout the country, then these universities should have a central role.

But again there is no coherent plan. The last few weeks have been full of talk about the pernicious long-term effect of student debt.

What is interesting, however, is that politicians are happy to launch this debate entirely from the perspective of the students and with not a thought given to the financial position of universities and why it is essential for them and the communities they serve to have a stream of income on which they can rely.

No doubt at the next election the major parties vying for the student vote will offer all sorts of goodies. But these will be put in the shop window without any thought given to how universities are expected to adjust to yet another upheaval in their funding.

Achieving economic growth is difficult; being internationally competitive is difficult and the history of the past 100 years is of one British world leader after another falling off its perch. Our hand is now much diminished but we still have a few cards left — what we do not have is a government which shows even a remote understanding of what it needs to do to help.