In 2014, an ambitious young Tory outlined a utopian vision for an economy unshackled from bureaucracy and the dead hand of the state. Cumbersome employment laws and misfiring government departments such as business would be scrapped, declared Kwasi Kwarteng, MP for Spelthorne in Surrey. Any company’s first 12 staff should be treated as self-employed, “with no questions asked”, he wrote in Towards 2025, a pamphlet produced on behalf of the Free Enterprise Group of Tory MPs.
Also those with up to three employees and £75,000 of turnover “should be exempt from employment regulation including unfair dismissal, auto-enrolment of pensions, paternity and maternity leave (these could be paid direct), and the minimum wage”, he added.
Kwarteng, 45, now has a chance to put some of those free-market principles into practice. An ardent Brexiteer, he has become the fourth business secretary in less than two years, replacing Alok Sharma, who was moved to become full-time president of November’s Cop 26 climate-change conference in Glasgow.
Employment rights have become Kwarteng’s first battleground. The Financial Times reported last week that ministers planned to axe key EU regulations, such as the 48-hour working week. While Kwarteng insisted on Twitter that “we are not going to lower the standards of workers’ rights”, it set up a scrap with unions.
Kwarteng was an unexpected choice for the job, which was tipped to go to Anne-Marie Trevelyan or former business secretary and chancellor Sajid Javid. His experience in government was limited to 18 months as a junior energy minister and stints at the Department for Exiting the EU and as a private secretary to then chancellor Philip Hammond. His business experience was similarly underwhelming — spells as an analyst at JP Morgan Cazenove, WestLB and at Odey Asset Management.
Yet he takes his desk at 1 Victoria Street, home of the Department for Business, Energy and Industrial Strategy, at a pivotal time. Crushed by the pandemic, companies are working out how to trade with the UK’s biggest partner after leaving the EU while navigating the turbulence of climate activism. Not all are convinced that Kwarteng has the skills.
Early clues as to his priorities were set out last week with plans to carry out long-awaited reform of auditing and a push to ban eight former directors of the bust construction giant Carillion. “You need someone with a sense of the big picture and real clout,” said Lord Mandelson, the two-time Labour business secretary. “It all needs much bigger thinking through, a bigger personality to drive and project it, and the whole government getting behind it. The first thing Kwasi has spoken about is audit reform. Is that really his priority when the UK is at a big crossroads in our economic future?”
Kwarteng was born in Waltham Forest, London, in 1975 to parents who migrated from Ghana as students in the 1960s. His mother was a barrister, his father an economist. He attended the fee-paying Colet Court school in Barnes, southwest London, then Eton, where he was a King’s Scholar. Such was his precociousness that he was said to have told a nervous don after his Cambridge interview: “Don’t worry, sir, you did a great job.”
At Trinity College, where he read history, he was part of the winning University Challenge team of 1995 — even making page 3 of The Sun when he swore. After unsuccessfully applying for two academic fellowships at Cambridge, he joined JP Morgan Cazenove and later Crispin Odey’s asset management firm in the run-up to the financial crisis.
His heart lay elsewhere. An observer during his early career said he “was never interested in finance at all”: “He’s an absolutely charming person and was always determined to have a political life. He has a lot of the attributes of [Boris] Johnson. He’s got a love of the good life and a good brain. Would you trust him? He was good at sucking up, but he just didn’t have ‘it’.”
Until now Kwarteng’s political career has meandered. It began while he was working in the City in 2005 when he was the Tory candidate in the safe Labour seat of Brent East. He chaired the Bow Group, a conservative think tank, in 2006 and stood for the London Assembly in 2008. He won the Spelthorne seat in 2010 when his predecessor, David Wilshire, quit over the expenses scandal.
Yet despite being touted as a rising star who could become the first black cabinet minister, Kwarteng marked time for five years as an MP, devoting himself to writing mainly historical books instead.
In Diary of an MP’s Wife, Sasha Swire described Kwarteng as “essentially an academic; he is enthusiastic and bombastic, and barely draws breath”. He was in an on-off relationship with former home secretary Amber Rudd and in 2019 he married City lawyer Harriet Edwards. Lately his ascent has been fuelled with funds from Tory donors such as Lord (Michael) Spencer, Michael Hintze and even a shadowy foreign policy forum, Le Cercle, which in 2019 paid for flights worth £3,344 to Bahrain so Kwarteng could discuss international affairs. In 2016 and 2013 he also visited Saudi Arabia — trips funded by the kingdom.
Kwarteng has displayed political clumsiness. In 2013 he stirred a flurry of criticism when he advocated cutting the VAT rate to 15%, funded by charging VAT on children’s clothes and food. That year, he also appeared to rub up then-chancellor George Osborne the wrong way by criticising — albeit prophetically — his Help to Buy housing scheme: “Obviously if the amount of supply remains the same and you are making credit easier, the tendency would be for the prices to go up.”
Of Kwarteng’s books it is Britannia Unchained: Global Lessons for Growth and Prosperity, written in 2012 with Priti Patel, Dominic Raab, Chris Skidmore and Liz Truss, that reverberates the loudest. At its heart is a dilemma that Kwarteng will have to overcome in his new role. It described a world of low taxes and nimble enterprises freed from the state, influenced by the tiger economies of China, India and Singapore. The phrase “industrial strategy” did not appear once.
“There is a feeling that initiative and individual enterprise have been stifled by an obsession with rules, regulations and ‘health and safety’,” it thundered. “This climate of excessive bureaucratic control has made Britain less competitive on the international scene.”
While it pontificated about developing hi-tech industries, it did not have much truck with boosting deprived areas — the “levelling-up” Johnson trumpeted in his 2019 election victory. “We should stop indulging in irrelevant debates about sharing the pie between manufacturing and services, the north and the south, women and men,” it said.
Kwarteng is now distancing himself from that book. In 2019 he told a party conference debate: “There’s nothing [better] to convert someone from being a radical free marketeer to seeing the virtues of government action than making them an energy minister.”
He is in a government that is intervening in people’s lives, businesses and the markets in unprecedented ways — paying wages via the furlough scheme, extending huge sums to businesses via loans and grants and relying on the Bank of England to keep the economy inflated via its £895bn quantitative easing scheme.
Johnson has signalled that intervention will continue apace. The 2050 net zero emissions target will require a huge remaking of the energy system, with more wind, solar, nuclear and hydrogen power, and an electric-charging infrastructure — all requiring huge dollops of taxpayers’ cash. The state will need to step in to help industries such as car-making and aerospace switch to lower-emission technology. Vast swathes of the workforce will need to be retrained.
That will require bold decisions and vision from Kwarteng. “He’s quite a ditherer and prevaricator when it comes to decision-making,” said a Tory source.
“It could go in two completely different directions. He’s obviously intellectually bright. If he lives up to what he’s been saying, which is that he wants to be the ‘voice of business’, it could be brilliant.”
An entrepreneur and Tory donor described him as “articulate, intelligent, decent and straight”: “The only criticism that’s sometimes raised about him is that he likes life to be at a civilised pace. [But] He gets business. He’s a very smart guy. Some people don’t always take him seriously so I hope this job changes that.”
Lord Heseltine, who in the 1990s pledged to “intervene before breakfast, lunch and dinner”, said: “The real world in which our companies have to compete is a partnership in which the public and private sectors co-operate and work together to do what best they can do for … wealth creation. Boris’s quotations fit the bill, but there isn’t any substance. There are no short-term fixes. These policies are long term.
“I have been deeply disappointed in what I perceive to be any understanding of the scale of what has to happen.”
Mandelson, business secretary in the wake of the financial crisis in 2008, said: “There is a parallel with the present day. Gordon Brown realised that in fighting the financial crisis, as we are fighting the pandemic now, it was going to have massive economic ramifications. He wanted to demonstrate that we were not going to take a massive hit lying down, but also that we were not going to waste a crisis. We’ve literally got to reshape our economy.”
At least Kwarteng appears to be starting with good intentions. Last week he pressed the flesh, virtually, with the bosses of some of Britain’s biggest businesses, such as Rolls-Royce, Shell, Jaguar Land Rover and Astra Zeneca. Perhaps significantly, he also spoke to Frances O’Grady of the Trades Union Congress. Staff at the business department were also told that a new offshoot focused on low-carbon buildings and industry would be established in Manchester. It is finally time to deliver on that precocious promise he showed all those years ago.