Michael Fallon: ‘We salute those who risk their own money to create jobs’

The first trip abroad by the new minister of state for business and enterprise did not end well. A strike by Lufthansa cabin crew left Michael Fallon, who had been at a marine industry conference, temporarily grounded at Hamburg airport on Friday. He eventually arrived back – several hours late – at Birmingham rather than his original destination, Heathrow.

“Rather refreshing to have a strike in Germany rather than here,” he remarked wryly, after finally touching down, reports The Telegraph.

When David Cameron sent Mr Fallon into the Department for Business Innovation and Skills (BIS) in his controversial reshuffle last week, it was assumed that the former Conservative Party deputy chairman would be a “spy in the camp”, keeping a watchful eye on Vince Cable, the Liberal Democrat who has been dubbed the “anti-business Business Secretary” by the Tory Right.

In something of a pincer movement, Matthew Hancock, the Tory MP who is a close political ally of George Osborne, the Chancellor, was also brought in to the department, where there are now five Tory ministers to two Lib Dems, in an effort to turn the department into an engine room of recovery.

“It isn’t so much about keeping an eye on Vince, as keeping both eyes on growth,” Mr Fallon says in his first interview since taking up the post. He has not gone into the department to declare war on Mr Cable and the Lib Dems – everything he says is carefully calibrated. But the thrust of his plans – more and faster deregulation, new privatisations, changes to employment laws to make it easier to sack poor-performing staff, and a change in culture so that wealth creators are “saluted” and not hit with new taxes – suggests there will be plenty of rows ahead.

Mr Fallon’s appointment is, in the end, the result of the economic difficulties piling up on Mr Cameron and Mr Osborne. Faced with a crisis in the eurozone worse than virtually anyone had predicted and a double-dip recession at home, it is harder and harder to keep the diverse elements of their Coalition happy.

The Prime Minister and the Chancellor were particularly stung by criticism from Tory MPs, led by those on the Right, that the Government had done little or nothing to boost growth. Only modest reforms were being attempted, backbenchers complained, and even those were being blocked by Mr Cable. Business leaders chimed in, too – with Justin King, chief executive of Sainsbury’s, demanding drastic deregulation and accusing ministers of lacking coherence in their growth plans.

“Above all, I want business to feel it has a strong Conservative champion in the [business] department,” says Mr Fallon, a familiar face from his endless media appearances defending the Government (often when others appeared unwilling to do so) in his previous role as deputy Tory chairman. He is one of the few senior Conservatives who can communicate a strong message effectively without frightening a large numbers of voters.

“The genius of Michael,” one Tory backbencher said, “is that he’s actually quite a hard-line ideologue, but he comes over unthreateningly, like your uncle sitting in the golf club.”
Mr Fallon, 60, who served in the governments of both Margaret Thatcher and John Major, readily admits that not nearly enough has been done for business since the Coalition was formed in May: “We’ve got to accelerate and scale up.”

To this end, he will announce tomorrow a radical new “scrap as you go” plan aimed at doing away with (or substantially scaling down) 3,000 regulations that hamper business by the end of next year. Cynics will say they have heard such claims before, but Mr Fallon at least appears determined to deliver. “I’m re-lighting the bonfire [of regulations]. The current ‘one in, one out’ rule only limits new regulation. But there’s far too much existing regulation: pointless annual checks, box-ticking that small firms have to pay consultants for, repetitive checking of certificates, and more.”

He also promises to harness the spirit of the 1980s by changing employment law – particularly in an area which sparked bitter Coalition rows when it was put forward some months ago, in a report (subsequently kicked into the long grass) by Adrian Beecroft, the venture capitalist. The so-called “no fault dismissal” plan – making it easier to sack poor-performing staff, or even those who fall out with their bosses – had to be dumped after howls of protest from Mr Cable and other Lib Dems. But now, it appears, it is back.

“It’ll make employment easier,” says Mr Fallon. “It will simplify the process of employing people. And where they underperform, it will make it easier… where relationships break down it will make it easier for that relationship to end.”

Also on the agenda will be a new wave of privatisations – another nod to the Thatcher era. “Deregulation and privatisation worked before – we’ve got to set business free to grow. The Government shouldn’t be owning successful businesses.”

First up will be a final, and it is hoped successful, attempt to privatise Royal Mail after several previous efforts (under Labour and the Coalition) failed. Going through the books, Mr Fallon has also identified other pointless government shareholdings, including a 33 per cent stake in Urenco, a nuclear fuel company which operates uranium enrichment plants. This will also be sold.

Above all, Mr Fallon wants to change the culture of how Britain treats its wealth creators. Again, there is no direct attack on Mr Cable, but Mr Fallon’s language is a world away from that of his departmental chief, who has branded some working in the finance industry as “spivs and gamblers” and is planning a new tax on wealth.

Time and again Mr Fallon repeats the point that those who create wealth also create jobs. “We need to change the attitude towards wealth creation in this country,” he says. He cites “the people I’ve worked with in business… who have created thousands of jobs for others”: Jon Moulton, the founder of private equity firms; Duncan Bannatyne, the Dragon’s Den entrepreneur whose interests include hotels and health clubs; and Terry Smith, the financier.

“We need to salute that and stop thinking of new ways to tax it. That’s an attitude I want to help change. We’ve got to get away from the politics of envy in this country, and salute those who risk their own money to create jobs for other people. They’re the Olympian champions.”

As he settles into his new role, Mr Fallon hopes he will no longer be cast as the Tories’ “minister for the Today programme and Newsnight”, and that he will be helped by a new generation of Tories who can get their message across. He praises Liz Truss, Anna Soubry and Helen Grant as “dynamic women” who have entered the Government for the first time in the reshuffle. With Sajid Javid, Mr Osborne’s former private parliamentary secretary who has joined the Treasury as its economic secretary, Mr Fallon has identified a “new generation of ministers who are committed reformers and good communicators.”

At the other end of the age scale, he describes Ken Clarke, 72, who stepped down as Justice Secretary to take up a rather ill-defined “roving” ministerial role on the economy, as “our Ryan Giggs. He’s had a long career, but there comes a point where you have to move across to the coaching side.”

Mr Fallon, by contrast, is once more very much in the game. While critics will justifiably point out that there is a big gap between confident promises of change and the reality of achieving it in a coalition government, at least business now has someone who will give it his best shot.