A low-tax agenda that Tories would be mad to surrender

PPP for the Tube; British Telecom

One of the hallmarks of a company in crisis is that it loses its self-confidence, its belief in its own culture and in the superiority of its own ideas and products. As a business commentator, I wouldn't normally presume to write about the Tory Party, but I couldn't help but be struck by the reported remarks in this newspaper yesterday of Archie Norman, a businessman turned politician, now apparently rapidly turning back into a businessman again.

In an interview, Mr Norman admitted that politics has been a big disappointment to him. He had two political objectives when he became an MP – to make the Tories electable again and to serve in government. He's failed in both and he feels it personally, as all successful people do when they try their hands at something else and it doesn't work out.

In truth, he could not have succeeded in the tasks he set himself. From the beginning, his mistake was to regard the Tory party as tantamount to a corporate turnaround. Apply the right management, the right strategy, the right medicine, the can-do approach of business, and like Asda, the old beast would soon be up and running again. Politics is not like that, as Mr Norman has learned to his cost. But even now he may not fully have taken on board the lessons.

Mr Norman is a Tory moderniser. He thinks public services should be put before the party's traditional tax cutting agenda. Indeed he goes further. Better public services, even at the expense of higher taxes in the short term, may be a good deal, he says. "Change must be relentless and must not be allowed to slip back. We must transform the party so it is unrecognisable," he says. There speaks a true McKinsey's man. This is management consultant speak, and he couldn't be more wrong about it all.

Great political parties do die. The Liberal Party is proof of it, but it did so because the Tory party stole so much of its free-market agenda at a time when the Labour Party was stealing and bettering its policies for social reform. There would be no better way for the Tory party to finish itself off for good than to start imitating New Labour. As a businessman steeped in the quest for the unique selling proposition, Mr Norman must understand that better than anyone.

Like a big company in crisis, the Tory party needs much modernisation, but does it really need to be made unrecognisable to boot? Maybe that's what they teach at McKinsey's but the reality is that very few corporate salvage endeavours survive a total revolution. That's just throwing the baby out with the bath water.

To disengage from the one thing that still unambiguously distinguishes mainstream Tory thinking from Labour policy – that is lower rather than rising taxes, with public spending constraints to match – would be utter folly for any party of the right that hopes one day to be in power again. If the Tory party were to adopt such an agenda tomorrow, a new political party would be formed the day after, for the tax cutting slate will always have its constituency, and one day, once everyone has had their fill of higher taxes, it will also have its place in government again.

Political turnarounds take a lot longer than corporate ones, but they don't happen at all, either at a corporate or political level, if an organisation loses sight of its core beliefs and traditions.

PPP for the Tube

The public private partnership for the London Underground has been the most sorry and tortuous of affairs. On and on it drags as the Tube sinks further into the silt. The contracts were finally to have been signed and let next month, but now the London Mayor, Ken Livingstone, promises to throw another spanner in the works by lodging an appeal with the European courts.

All legal objections have so far been thrown out, but Mr Livingstone believes the mere act of appealing would be enough to delay the PPP yet further. For some companies involved, another delay might prove terminal, a possibility that seems to delight Mr Livingstone. The firms would "not get a damn penny before the next election", he told a conference at the the weekend. "They are about to go up the Swanee".

Mr Livingstone has scored some good points off the Government during his battle over the PPP. The Treasury never did succeed in credibly demonstrating that the contracts represented value for money. What's more, the detail of the contracts makes it plain that the private sector would have to be completely incompetent in its performance to make a loss on the contracts. The way things are going, that seems only too possible with Amey and W S Atkins. Much more likely is that even they will end up coining it.

The PPP, on the other hand, is not really about value for money. It is neither the best or the cheapest way of improving the Tube, but for a government with so many other public spending priorities, it may be the only way of ensuring that the necessary maintenance and upgrades for a system strained to breaking point actually take place.

Mr Livingstone cannot or doesn't want to see this. Instead he seems intent only on further disruption. Politically he may be right in thinking this a bigger vote winner than buckling under and ensuring that the PPP is a success. But it cannot be the responsible thing to do. The battles have been lost and so essentially has the war, but still Mr Livingstone believes he can strike a blow against the Government and its capitalist bedfellows. It is vital that the Tube gets the extra investment it needs. Like a Luddite, Mr Livingstone stands in the way of progress and Londoners will eventually curse him for it.

British Telecom

British Telecom is getting a touch forward by dashing headlong into the £2bn-a-year home computing market. Shouldn't it be getting its broadband proposition right first? Anecdotal evidence is of severe teething problems for many BT broadband customers, and a consequent high degree of customer dissatisfaction. This is not obviously receptive territory for flogging new kit. Indeed, to be piggybacking off broadband to enter a market where BT has no previous experience might seem like a recipe for disaster. If customers are already fed up with the quality of service they are getting when they sign up to broadband, they are going to be doubly so when sold a wonky computer on top.

On the face of it, the idea is logical enough. If you are already selling the customer broadband, you might as well try to sell him the physical equipment necessary to use it too. Furthermore, the double sales pitch allows BT to bundle the cost of the computer into the monthly charge for broadband connection. For some, £36 a month for broadband plus "free" desktop computer will look like good value for money.

There's not much choice. Only two makes of computer are on offer – Hewlett Packard and Toshiba – but then PCs are these days so much of a commodity product likeness that this may not matter very much. PC buyers, especially younger ones, are in any case opting for self-assembly in growing numbers.

BT is confident of achieving 1 million broadband customers by 2003. It has a secondary target of 5 million customers by the end of 2005, or about a quarter of its customer base. Home computing is by that stage budgeted to be providing a substantial proportion of all broadband revenues.

Again, it is hard to argue with the underlying thinking. BT's problem in the past is that it has taken its customers for granted, rather than regarding them as the potential asset they are. But has BT yet got the systems, culture and expertise to deliver the value for money customers now demand, in computing as well as everything else? We'll see.

jeremy.warner@independent.co.uk