The UK Treasury's Robert Jenrick talks to Business Insider about inequality, productivity, and whether he'd rather fight 100 duck-sized horses or one horse-sized duck
- Robert Jenrick MP, currently the UK Treasury's lead spokesperson on economic growth and productivity, was once attacked by the Daily Mail for being too rich.
- We asked him whether he believes that wealth inequality might be holding back economic growth.
- He also talked about the economic effect of companies like Deliveroo and Uber, as they create thousands of poorly paid jobs.
- And he had a crack at the "horse-sized duck" problem.
LONDON - Robert Jenrick knows a bit about inequality.
When he was running for his seat as Conservative Member of Parliament for Newark, a rural-suburban constituency near Nottingham, he was attacked by the Daily Mail for being too rich: "Tory candidate Robert Jenrick says that just because he has three homes 'it doesn't mean I don't know about life on the breadline,'" the tabloid wailed.
"Jenrick presents himself as a 'father, local man and small businessman,'" the paper fumed, "In fact, he owns two £2m homes in London and a £1m country pile."
It was an odd line for the Mail to take, given that the paper generally supports Conservative candidates and isn't usually bothered by differences in wealth.
Worse, Jenrick's "country pile" is Eye Manor in Herefordshire, a 17th Century mansion once owned by a slave trader. It later became the childhood home of Jeremy Sandford, the writer of Cathy Come Home, the gruelling 1960s TV drama about a poor couple's descent into homelessness.
Depending on your point of view, the whole episode either typifies the British disease of suspicion toward people who are successful (Jenrick made his money as a lawyer for Skadden Arps and Sullivan & Cromwell before becoming a director at Christie's, the auction house); or it underlines the way that the UK is riven by inequality - a country where a generation of young people have been priced out of the property market, ruled by a narrow band rich people with multiple homes.
Britain's inquality problem "requires the government to take some very long-term decisions in terms of improvement in education, investment in apprenticeships," Jenrick says
Needless to say, there is more to Jenrick than this tabloid caricature. His record suggests he is not part of the clueless-toff wing of the party. He was an anti-Brexit Remainer, who is now putting a brave face on Britain's retreat from Europe. ("When you talk to entrepreneurs, that isn't their driving concern. They [just] want to know they're in a country which respects entrepreneurship," he says.) The few news stories he has generated since he was elected tend to centre on hyperlocal constituent-service stuff: What to do about a local rail crossing, whether a run-down hotel should be preserved, that sort of thing.
He sat down with Business Insider on a rainy spring day at the Treasury's museum-sized building, facing Buckingham Palace across St. James' Park in London, to answer a few questions about inequality, productivity, and economic policy. (He also gave us his view on whether it is better to fight one horse-sized duck or 100 duck-sized horses - more on that later.)
We put it to him that investment bank analysts - not known for their socialist tendencies &mdash have increasingly complained that the sustained level of inequality in Britain might be a drag on economic growth. If people are too poor to buy things, then aggregate demand declines, hurting GDP, their theory goes.
"Inequality in the UK is at its lowest ever level," Jenrick says.
Hmm. Inequality may have declined a little since Tony Blair's premiership (1997-2007), but it is still much higher than it was before the Thatcher years ushered in the era of disparity we live in today.
When challenged on that, Jenrick adjusts course. "It depends how you measure it, obviously."
"If you look at inequality in the UK today the most important thing for us is working to ensure that the lower-paid can earn a good wage, and that's something that we've taken very seriously in the past, since we came to power in 2010," he says. "You see that through the living wage ... which has gone up to £7.83 (about $11.21) and ensures that the average worker, working full-time, on that wage, is receiving £2,000 more than before we created it."
OK, but does inequality hurt economic growth?
It's not an easy question for a Conservative government official to answer. Say yes, and you admit that inequality under the Tories is hurting the country. Say no, and you risk sounding callous.
Jenrick deftly skirts the topic: "What I do think is that in order to increase productivity, we have to ensure that more of the lower-paid jobs in Britain today are upskilled and converted in the future into higher-paid jobs. And that requires the government to take some very long-term decisions in terms of improvement in education, investment in apprenticeships, and high-quality apprenticeships, like degree-level apprenticeships ... oriented toward the jobs of the future. Jobs that are likely to be paid more."
"We have a large tail of businesses which, for a variety of reasons, have struggled to adopt and embrace the new technologies"
"Productivity" is Jenrick's pet topic, as it is for everyone in economics.
Productivity is the abstract but incredibly important concept that suggests the output of the economy should grow over time as technology becomes more efficient, and as workers become more skilled, thus generating growth. The problem is that productivity appears to be in decline globally, especially in Britain. If that is true, it suggests there is something fundamentally flawed with the British economy, holding back growth.
But does Britain have a particular problem with productivity?
"We have a large tail of businesses which, for a variety of reasons, have struggled to adopt and embrace the new technologies," he says. "Within [any] industry there's a quite a large group of businesses which are slow to adopt new technologies - where there is less automation than some of their competitors in France and Germany - where perhaps management skills and training is lower."
Jenrick is not alone in the idea that Britain, compared to other countries, has worse managers. It's the David Brent theory of economics: British bosses are disinterested in good management as an end in itself, unlike their American counterparts who famously devour book after best-selling book about the "secrets" of good management.
Perhaps fearing headlines, he is quick to back away from blaming British CEOs for their failings. "I don't think that's the case. I think there is less management training in the UK than in some of our competitors. ... I think there are fewer business schools and fewer opportunities to learn."
One factor that reduces productivity is when employers find they can generate more revenues by adding more low paid workers rather than investing in new equipment or facilities that might scale up your business faster, with greater profits. Two examples of this are Uber and Deliveroo. Both companies match customers to suppliers faster than ever before through new technology, but the majority of the jobs they create are low-paid driving positions. The productivity of those drivers cannot increase any faster than they can drive, and the drivers won't get rich either. But the success of Uber and Deliveroo relies on creating as many of these jobs as possible.
"We shouldn't be down on the fact that the UK is leading the world in new technology and new industries. The fact that Deliveroo is a British business and I hope one day will list in the UK, and be a business worth more than £1 billion, the fact that today there are today at least 15 businesses like Deliveroo that could list tomorrow for over £1 billion, is an amazing achievement for the UK economy," he says.
But aren't the Deliveroos of the world creating inequality, because most of the jobs they create are not very good jobs?
Jenrick's advice is that we have to take the rough with the smooth:
"Some of the new technology businesses like Deliveroo, and those operating in the gig economy, are creating new types of jobs which are low-paid. Equally there are a whole raft of new technology businesses that are creating highly paid jobs. So if you look at fintech or life sciences or any of those other fields ... there are now 60,000 jobs in fintech in the UK, none of which existed 15 years ago."
"Fighting a legion of ducks sounds a bit Hitchcockesque"
Lastly, we asked him the classic Reddit AMA question, would you rather fight a horse-sized duck or one hundred duck-sized horses?
He laughs. "I don't know what the right or wrong answer is. Fighting a legion of ducks sounds a bit Hitchcockesque."
It's a common mistake, so we try the question again: It's either 100 small horses the size of ducks, or one really giant duck?
"I think one giant duck sounds easier."
Because ... ?
"One-on-one combat sounds better than taking on this troop of horses!"