Theresa May is playing a blinder but has a blind-spot on business

Last month – in those seemingly distant days when David Cameron was Prime Minister, when ‎Boris Johnson and Michael Gove shared a battle bus and when Theresa May was in hiding – the then Tory leader was of the view that of the potential contenders to succeed him, at some date assumed to be several years down the line, the only two of his colleagues who could do the job of Prime Minister were “George or Theresa.” George Osborne having been blown up by his incredible warnings in the referendum, that left Theresa May.

Cameron’s faith in May – of whom he was always mildly afraid, according to friends – has certainly been vindicated in the last month, and some. She has played a blinder, for the most part.

Back in the referendum – which seems an age ago – the Home Secretary was for Remain but was too sensible to campaign for it. She instead remained out of the way, readying herself for the possibility of a Leave win and a resulting Tory leadership election. In the weeks after David Cameron’s defeat, May then ‎handled the wacky races contest impeccably, by doing as little as possible while her rivals, as a wag put it, one by one set themselves on fire. Cue Theresa in Number 10, the second woman Prime Minister in British history.

It would be a mistake to say that her assumption of office has been effortless. Afterall, she is – a little like Osborne – not a natural performer and no stranger to nerves. The visible sigh of relief when she exhaled at the culmination of her first (highly successful) outing at PMQs in the Commons this week was a revealing and humanising touch. The coldness of which May is often accused may well be a by-product of that reserve and an English disinclination to show off. She can do funny, though, when called upon to deliver jokes, as I discovered when I was the support act speaking at a Burns Supper in London and she was the main event.

May’s critics are not laughing now. The few she has in the Tory party seem pretty awe-struck. This winning of office is not – as some cynics say – “the easy bit.” In handling recent events, May put on one of the most deft and accomplished exhibitions of pure power politics in modern times.‎ Since becoming Prime Minister she has expertly positioned herself as the strong leader with no rivals. The perception and reality is that the first cabinet minister who tries it on with media grandstanding or plotting will get whacked quicker than you can say “the Prime Minister will see you now.”

In terms of demeanour, the new PM looks to be on track for a glorious honeymoon. Her style is perfectly suited to the moment. A public bewildered and battered by the ‎excitements of recent weeks is in the market for a no-nonsense leader who knows what she is about. The diplomatic trips to Berlin and Paris this week were well-handled and May is leader who seems to have Nicola Sturgeon’s number. By that I do not mean she has Sturgeon’s telephone number. May is on to a Nationalist leader who likes strutting about saying she is going to achieve the impossible (Scotland staying in both the EU and the UK) and threatening another independence referendum. In truth it is SNP fear of defeat that is holding back the Nationalists. May seems prepared to smile and call Sturgeon’s bluff.

‎It is not all praise for the new PM. Some in the Establishment are appalled by her treatment of the Foreign Office. The appointment of Boris Johnson is a bad joke played on it diplomats, apparently.

Think of it the other way round, for a second. Some of us are appalled by the Foreign Office’s treatment of Britain in recent years, when the institution relentlessly drove its pro-EU agenda (quite often in conflict with the Treasury) and allowed itself and the country to be diminished. The FCO contains many talented people, and it is to be hoped they embrace the post-referendum reality and help to make it work. They’ll also find out that Boris is not the media caricature he himself created.

It is then an impressive start made by May. This is the point at which I should say “these are early days”, or it is “a game of two halves”, or she’ll be in trouble soon because honeymoons never last and her advisors are paranoid, and all that jazz. Some of that will probably turn out to be true by Christmas at the latest.

Brexit will certainly be fraught with difficulty, although the new Tory boss seems capable of capitalising on her dominance by advancing towards a compromise that delivers the UK’s departure from the EU on friendly, pro-trade terms. The German Chancellor Angela Merkel, the main broker in these talks, seems to understand the need for this.

What has troubled me more in recent days have been the noises – some of them off stage – about the new administration’s plans to “reform” business. I speak as someone who thinks capitalism is not “too big to fail”, and that following the financial crisis of 2008 pro-market forces are overdue a rethink about the impact of crony capitalism, and the side effects of globalisation. The May solution to the unpopularity of big business seems to be to order worker representation on boards and the setting of diversity quotas.

With the economy facing difficulties adjusting to Brexit, and fresh waves of technological change about to sweep through industries such as finance,‎ interfering with boards is footling stuff that is at best counter-productive and at worst downright corporatist. It is just an additional distraction from the urgent business at hand.

There are far bigger problems and opportunities out there. How can the UK’s debt-driven economy be reformed so that more of the effort is on growing companies and attracting invetment? The tax system needs to to be redesigned and simplified to favour equity and the growth of next generation companies in finance, retail, technology, transport and healthcare. The surge of start-ups in Britain was one of the most important and exciting developments of the Osborne years. The challenge now is to help – with minimal government interference – translate that into the growth of firms that will replace the jobs that are about to be destroyed in areas such as banking, which is particularly ripe for digital disruption and destruction.

The driving force behind the May agenda is Nick Timothy, the Prime Minister’s joint chief of staff and policy and strategic supremo. Nick Timothy is highly capable and a serious thinker. Let’s hope he does not get trapped in the Number 10 bunker and instead engages with the academics and entrepreneurs grappling with the next wave of change that is about to hit the economy.

On Reaction we’ll be writing more on that theme in the next few months. But it would be a shame if in the afterglow of the assumption of power, and with a new Prime Minister likely to be justifiably popular, too much is squandered on headline-grabbing announcements on business that have a political logic but make no economic sense.