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Leading article
Dyson’s move shows he thinks the Brexit opportunity will be squandered
If knighthoods could be removed by vote of parliament, Sir James Dyson would be first in line. Knighted for being one of Britain’s most celebrated entrepreneurs, he backed Brexit — only to decide this week to scarper to lower-taxed Singapore. To Sam Gyimah, a former Tory minister, it is a ‘betrayal of the public’. To Labour’s shadow business secretary, Rebecca Long-Bailey, it exposes a ‘culture of short-termism’ in British business. To the Lib Dem Layla Moran, it is an act of ‘staggering hypocrisy’.
This response encapsulates a failure to understand the economically liberal case for Brexit. The truth is that Brexit, in and of itself, will do very little for Britain. It brings new powers. If they are used well, we can walk taller; used badly, we can fall further. Brexit will not make global competition any easier.
Let us set aside the question of whether Dyson is a villain. His decision to designate his Singapore office as the global HQ offers useful insights into business, power and the need for realism. Dyson’s ‘move’ means just two senior staff moving to Singapore, while investment in the Wiltshire plant will not be stopped. Dyson’s decision will allow the company to avail itself of lower corporation tax (17 per cent to Britain’s 19 per cent) and better access to Chinese markets. Multinational companies are obliged, by shareholders, to conduct a regular review of whether to move their headquarters and they weigh up various factors when doing so. Forbes magazine recently conducted a worldwide survey on the best place in which to do business in terms of property rights, innovation, taxes, technology, corruption, freedom. All told, it found, nowhere was better for business than the United Kingdom.
And why? We can thank, in no small part, the ministers within the coalition government who brought in reforms to help Britain cope in the ‘global race’: it prioritised regulatory restraint, lower corporation taxes, more students in world-class universities and a pro-business environment in general. It tended to favour software firms and, as a result, London now has more computer programmers than San Francisco and New York put together. For all manner of endeavours, Britain is the best place in the world.
But not for everyone. Dyson is focusing on Singapore not because he is thinking short-term but precisely the opposite: he can see that the growing market for his company’s products lies in the Far East. This is especially true for its next big venture, driverless cars. He has sought to develop them in Britain but found the government obstructive over basic issues, like allowing him to test the cars at disused RAF airfields. Even within the vacuum cleaner market, there were problems. Dyson ended up in a five-year legal battle with the European Union, at the behest of German rivals who feared competition from bagless models. This was simple harassment, and he eventually won.
Is there any reason for hoping that Brexit will make British innovators less vulnerable to all this? Theresa May’s various proposals have involved the UK going along with all of EU regulation, even green targets. We might end up with precisely what Remainers feared all along: having technically left the EU, only to have signed up to all of its various regimes but without a say in how they are decided. Brexiteers seem to forget that their optimistic vision of a global Britain requires leadership, which does not, alas, seem to be forthcoming from the Conservative party.
EU membership did not really help companies like Dyson. Nice though it was to have tariff-free trade with the EU, two-thirds of its customers were outside the continent and there was a far bigger potential prize beyond. Of course, Brexit could, in theory, mean a more globally minded UK that lowers tariffs. But in practice, what will we get?
We have a prime minister who is preoccupied with cutting immigration, the architect of the justifiably derided ‘hostile environment’ for migrants. And if the Tory government falls, we could end up with a red Brexit. Jeremy Corbyn could use his new freedoms to push through nationalisation and state aid programmes, which would be much more difficult to enact if we were still members of the EU.
Brexit is not a proxy for political imagination and leadership. While MPs have been arguing about backstops and parliamentary standing orders, the world is moving on. Companies are moving, too. So the way to win business for Britain is not to shake fists at British companies for daring to relocate parts of their operations abroad. Instead, we must create the environment which allows Britain to compete. MPs will find it easier to denounce Dyson than ask questions about why his company found it so hard to develop driverless cars in the UK. Two decades ago, Britain was poised to become a global centre of GM technology only to see the industry driven abroad because the EU made it all but impossible to conduct trials.
After the EU referendum result, it seemed as if the government understood what it needed to do in order to seize the opportunities presented by Brexit. The Chancellor, Philip Hammond, spoke of following the example of pro-business Singapore. But he then went back on it, and the government as a whole then lost momentum and the initiative. The relocation of Dyson HQ to Singapore is no disaster for Britain, but it does raise questions about the country we want to be and how to make sure that the legacy of Brexit is a positive one.