Covid-19: Businesses and the Private Sector

Lord Gadhia Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Gadhia (Non-Afl)]

My Lords, Milton Friedman’s dictum that the business of business is business was always an exaggerated and oversimplified representation of the role of private enterprise in society. Today’s debate has highlighted how the vast majority of businesses take their wider responsibilities seriously and are playing a crucial role in our effort to combat the current pandemic. This forms part of a much broader secular trend, from shareholder supremacy to stakeholder primacy. From the pioneering work of the Quakers in Bournville or Port Sunlight in the late 19th century to the aerospace and munitions manufacturers in World War Two, and through to the modern manifestation of stakeholder capitalism enshrined in Section 172 of the Companies Act 2006, this shift is increasingly being reinforced by the attitude of institutional investors and their use of ESG metrics to evaluate sustainable corporate performance. Indeed, Covid has been a live test of business resilience and agility. The mass implementation of homeworking and the reconfiguration of supply chains and business models to accommodate physical distancing has been a remarkable feat. Covid is accelerating trends and bringing the future closer.

It is clear that businesses will not return to the status quo ante, but the road ahead remains uncertain as we learn to live with the virus. Soon, our health anxieties may be overtaken by concerns for the economy and our livelihoods. Once again, businesses will play a pivotal role in this next phase. While the near-term priorities will be incorporating health and safety protocols into the workplace and any customer interactions, we should also seize the opportunity to address the fundamentals that are holding back our economic performance and productivity.

If there is a silver lining to this human tragedy, it will come from building back better. To borrow from a sentiment expressed previously by the most reverend Primate the Archbishop of Canterbury, we can recast Milton Friedman’s dictum to demonstrate that the business of business is human flourishing.