E-business needs hard facts, not touchy-feely phrases

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The Independent Online

A couple of months ago, a senior civil servant from the Department of Trade and Industry started a speech about the promotion of e-business by pointing out that this should be a general rule of government and was, in any case, particularly appropriate for industrial policy. Given the record of government intervention in British business over the past half-century, it seemed a sound starting point.

First, do no harm. A couple of months ago, a senior civil servant from the Department of Trade and Industry started a speech about the promotion of e-business by pointing out that this should be a general rule of government and was, in any case, particularly appropriate for industrial policy. Given the record of government intervention in British business over the past half-century, it seemed a sound starting point.

If you look at what governments can do to promote e-business the policy pot does seem void. The US developed commercial uses for the internet without push from the government, this being a bottom-up, not a top-down, movement.

Sure, there are lots of things that governments can do to curb e-business or at least to drive it offshore. But promoting it? Short of saying they should try to create a business-friendly tax and legislative environment, there doesn't seem to be a lot they can do. So what should we make of the Tories saying they want to make Britain a magnet for e-business? So, too, are the Lib Dems. And, for months, the Government has been saying it wants to do the same.

You can see why they are all so eager to take this line. Any government worth its salt has to pretend it is pro-e-business: to say otherwise would be to suggest it rejects the great revolution sweeping the world economy, and the prosperity that goes with it.

To be fair, as far as our Government is concerned, there are more than just words here. It has, for example, its Foresight programme, which, among other things, has an Electronic Commerce Task Force looking at the steps needed to make Britain competitive in e-business over the next decade. Its consultative report - a sighting shot at what will matter in e-commerce success - is not a bad starting point. The report looks at the background for success under three heads: "the confident society", "the energised economy", and "the active consumer, the interactive citizen".

The first is about people and culture: the extent to which a confident society attracts confident people and the way in which these people will take risks. The task force cites the way Britain straddles the EU and the Anglophone world and notes that confident societies also need a sense of place. "Confident economies promote spaces, symbols ... which convey the idea of leadership". It cites the London Eye, the revamping of Trafalgar Square as a "world square" and Glasgow's development as a European City of Culture.

The energised economy is about the need for clusters, skills, appropriate financial markets, rewards for risk-taking and so on. And the consumer/citizen theme is that active consumers are good for business, that governments have to be more nimble, the need for life skills and so on. To quarrel with the detail of the report is easy. Things such as the London Eye have little to do with e-commerce, and the experience of the Dome (which the report, ahem, does not mention), surely points to the dangers of grand projects. The bigger criticism is that the west coast of the US manifests few of the qualities identified by the task force, yet is the epicentre of the internet revolution. It has risk-taking in spades, attracts talented people, is a vibrant capital market and has low taxation. But it has little government intervention and no grand projects.

Where the report is most useful is as a benchmark for UK government performance. Thus the report notes the need for the UK being a magnet for talented people, yet UK companies run into dreadful problems trying to get visas for just such people, even if they come from the US, Canada or Australia with all the language skills many EU citizens (who can get in) lack. It notes that the tax system has not kept pace with need to reward risk. It notes the need for government to put its own services on the net, which the Inland Revenue is trying and failing to do.

But it would be unfair to see our Government as particularly inept on e-commerce matters. Merrill Lynch has produced a report, Benchmarking the New Economy, on the extent to which Europe is lagging the US in the various structural shifts needed to adjust to the new economy. The UK and other northern European countries do pretty well, but the central European economies (including the Netherlands and Germany) do only middling-well. The southern European ones (which, for the sake of this exercise, include France, as well as Spain and Italy) do worst. If one looks at the potential for catching up, of course, this southern group have the greatest opportunities and have made the greatest progress. But they are still a long way behind the US.

In overall new-economy ranking, the UK comes second to the US, ahead of the others, and, it is the best of all in one crucial area, barriers to entrepreneurship. Along with Ireland, Britain also has the shortest time needed to start a business, which is a week. In Germany that takes nearly four months and in Spain the better part of six months.

The most striking thing about the two reports, one from the DTI, the other from Merrill Lynch, is their difference in tone. The ground covered is much the same. But one is full of charts and facts and the other is full of grand sentiments. No prizes for guessing which is which.

So maybe the message for the Tories and the Lib Dems is to focus on facts, not on touchy-feely catch-phrases. There is a political opportunity here for the two opposition parties to distinguish themselves from the Government. I'm not convinced governments can do much more than "do no harm", but if they want to explore the need for positive policies they need to start with a factual analysis of the extent to which Europe has fallen behind the US in the e-commerce department. Then they can begin to figure out what to do about it.

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