Suffolk entrepreneur hits out at Miliband’s ‘predators’ and ‘producers’ speech
A SOFTWARE supremo has hit out at Labour leader Ed Miliband’s keynote speech at the party conference yesterday, suggesting that his attempt to make a distinction between the “predators” and “producers” of the business world is too simplistic.
Mike Lynch, who lives in east Suffolk and owns a highly successful hi-tech firm, Autonomy Corporation, which is based in Cambridge, was responding to the speech on BBC Radio 4’s Today programme this morning.
Mr Miliband told yesterday’s conference that he was pro-business, but made a distinction between good and bad businesses as “producers” and “predators”.
General Secretary of the Unite union, Len McCluskey, supported what he had to say, but Dr Lynch, chief executive questioned how easy it was to make the distinction between ‘good ‘ and ‘bad’ businesses, pointing out that his own firm could not have succeeded without help from venture capitalists, which might be termed ‘bad’ by some.
Mr Lynch, who created his technology company from scratch, hit the news recently after it was announced the firm was to be taken over by Hewlett-Packard in a �7.1bn deal that will net him more than �500m.
Mr Miliband suggested a Labour government would use tax, regulation and contracts to favour companies which invest in their communities, offer apprenticeships and training and create wealth for the nation, while penalising those which simply seek to make money by asset-stripping.
Dr Lynch said it was difficult to disagree with the sentiment behind the words, but suggested there were practical problems in making such distinctions.
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“You can’t help but like the idealist in the speech but the reality is it’s not like a Saturday morning cowboy matinee where you have the guys in the white hats and the black hats,” he said.
Autonomy had relied on venture capitalistm or private equity and without that, wouldn’t be here, he pointed out. The fundamental problem was we would “like it to be like the films”, but reality wasn’t like that, he said.
“The first thing is, who decides? Presumably you would have to set up a new department of civil servants to decide whether a business is good or bad so you can decide what the tax rate is,” he said. “What is an asset-stripper and when is an asset-stripper a recycler?”
Although BAE Systems, which has announced job cuts, was a company we might admire, a large group of people would argue that it was a “bad” business because it makes weapons, he said.
Mr Miliband’s statements created uncertainty for business, he suggested.
The moral idea behind the speech was “motherhood and apple pie - no one is going to disagree with this”, he said. However, he said the Labour leader should have looked at how to create jobs and growth.
“British business has got to be supported, not accused of having some kind of a deficit of its moral dimension,” he said.
Autonomy, which employs about 2,700 people in the UK and US, supplies software for searching unstructured information such as emails and text messages. Clients include Procter & Gamble, Nestle and Shell.
If the takeover is approved by shareholders, founder Dr Lynch will realise more than �500m from his 8pc stake in Autonomy, although he has agreed to remain at the helm of the business. The deal came just 15 years after the company was founded.