Business takes centre stage in election battle

Charlotte Henry
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Zero hours contracts… support from big bosses… tax rates… Charlotte Henry looks at the election row engulfing the City

BUSINESS has become a key battleground in a fraught election campaign, with parties appearing to invest more time vying for the support of comp­any leaders than they spend trading statistics over the NHS or the economy.

Labour even started its official election campaign by launching its business manifesto.

But yesterday, a fully blown row broke out between business and Labour. The party announced that it plans to force firms to fire people who had been on zero hours contracts for 12 weeks, or hire them on a permanent contract. Business groups were unimpressed, and publicly hit back.

Holger Schmieding, chief economist at Berenberg bank, said that zero hours contracts have helped “make the UK labour market so flexible”. He was not in favour of Miliband’s move. “I regard such a policy as being bad for the labour market. To put it mildly,” he said.

Schmieding believes that if other similar policies were implemented, it risks making the growing UK economy more like the sluggish French one. “It will result in fewer people being employed,” he said.

The Chartered Institute of Personnel and Development (CIPD) takes a more compromising approach. Ben Willmott, head of public policy at the CIPD told City A.M: “Our research shows that the majority of zero hours workers are satisfied with their jobs, mainly because of the flexibility that they provide. However, there is some evidence that some people on zero hours contracts are potentially exploited.”

Willmott also warns: “If [employers] think that this flexibility will be compromised by this proposal then they will look to other forms of flexibility, for example short hours contracts, or greater use of agency staff.”

Leading employment lawyer Mat­thew Irvine, an associate at Thomas Eggar LLP, said: “The risk is that this proposal goes too far and would endanger the continued economic recovery.”

More than 100 business leaders also yesterday signed an open letter, praising the Tory party for its approach to business.

The names include Prudential’s outgoing chief Tidjane Thiam, and Ron Dennis of the McLaren Formula One team.

Controversially, former Diageo chief executive Paul Walsh also signed, despite being in line to succeed Sir Mike Rake as president of the politically neutral Confederation of British Industry (CBI).

Labour insiders said they are not too worried about the business leaders’ intervention, though. Indeed, such a move was expected, and they regard such things as priced into the public perception of the party.

Labour insiders also think the move risks making the Tories look beholden to the establishment. Indeed, there are some people in Labour that believe the party should embrace being attacked by business. Former Labour spin-doctor Charlie Whelan tweeted: “Labour should get into a big row with big business and not pretend they are friends. They would then be on the right side of public opinion.”

It is nevertheless embarrassing that former Labour- friendly business people, such as Duncan Bannatyne, Sir Charles Dunstone and Moni Varma, signed the letter and are now endorsing Conservative policy.

With the economy a central issue of the election, the views of business are likely to remain keenly monitored.