Lord Hunt says firms will rely on insurance policies to protect them from market turmoil.
When David Cameron asked me to join the Conservative front bench as part of the team shadowing Peter Mandelson, the new business secretary, I accepted without hesitation. Since I resigned from John Major’s cabinet in 1995 to become senior partner of what is now Beachcroft, I have often spoken from the front bench on an ad hoc basis, on matters as diverse as jury trials, freedom of expression, the Lisbon Treaty and pensions – but this was one of the few posts that could have tempted me back.
Readers of a certain age may recall the actor Nicholas Courtney, who played Brigadier Lethbridge-Stewart in Doctor Who in the 1970s. Nick’s motto was “survival is all” (happily, he has followed his own advice and will be back on our screens soon).
I think those three words must be the mantra for every UK firm as our economy slides into recession. We still hear a lot about the credit crunch but, increasingly, my concern is not with financial institutions or arcane questions of bank liquidity that seem far removed from the lives of our citizens.
I am much more concerned about the many firms, large and small, in the real economy that suddenly face an uncertain future.
Our priority as politicians in the period ahead must be to do everything we can to enable British businesses to survive. So far, even those sectors that are predicted to be hardest hit by a downturn (pubs, restaurants, and the building and repair sectors) are generally reporting patchy rather than plummeting sales, so there is still everything to play for.
The point I really want to make is that the financial services sector will have a critical role to play in enabling UK plc to steer a relatively safe passage through stormy waters.
Firms will rely more than ever on not only their insurance policies, but also on that elusive combination of government action and enlightened banking practices that can make the difference between survival and foreclosure.
Individuals may be well advised to invest in debt and income protection products, if they can afford them. Firms, individuals and public authorities alike all need to ensure they are adequately protected against the changes in behaviour that tend to accompany a downturn. Unfortunately we should probably brace ourselves for increases in slips and trips claims, fraudulent claims, thefts and burglaries. Such risks have to be pooled, efficiently and economically.
So, the financial services sector must be there for its clients and there for the nation in its hour – or year, or more – of need. This recession will not last forever but, while we hunker down and dream of green shoots, let us all work to ensure this downturn is no worse than it absolutely has to be.
The businesses that do endure are going to be managed by those who take decisive action in the face of an unpromising scenario. The techniques best suited to times of plenty are unlikely to be relevant now.
As a lawyer, a former president of the CII and, once again, a front-line politician, I know what my core message will be: survival is all. Together, we must do everything we can to bolster the resilience of British business.
Lord Hunt is a partner and chairman of the financial services division at Beachcroft.