How Labour can win business back

Dan Corry
LABOUR’S new leader Ed Miliband certainly has a job in reconnecting the party with the business community.

Think back to the election campaign. Hardly a business or business group had anything good to say about Labour, while many lined up to publicly back Tory policies.

But business did pretty well over the Labour years since 1997 – at least until we hit the financial crisis and world recession. If you look at new firm creation, profitability, the progress of the FTSE, or the path of business investment – it all looks pretty decent.

What business certainly does not like is change and uncertainty – it wants a bit of predictability and consistency in policy and Ed Miliband needs to give that high priority.

But in addition he should be aware that the phrase “the business community” is wildly misleading.

Big business cares about international tax rates, having infrastructure built and skills upgraded, wants to keep Britain at the heart of Europe and – frankly – cares greatly about personal tax rates. SMEs on the other hand worry most about new regulation they cannot even keep up with – and want government to keep the big boys off their backs.

White van man has more practical concerns (not least on the price of petrol).

At first, Miliband can enjoy the coalition burning its own bridges with business. If recovery does not result soon from the drastic deficit reduction plans then no strand of business will be best pleased – including those who do business with the public sector.

We may get corporation tax reductions but if they are paid for by the end of investment and other tax reliefs then there will be as many moans as cheers. And what will business make of Vince Cable and his take on modern capitalism?

Second, he should make sure he and his team talk and listen to business as much as possible. Behind the lobbying and self interest, business always knows what is going on.

Third, as soon as he can he should try to set out some principles for where reform of tax and regulation would head under a Labour government – and, if he gets in, promise to stick to it.

Fourth, while he may want fairness in industrial relations – as would most businesses – he must make clear that strikes are rarely the solution.

Finally, he must set out what he feels is best for the country in creating wealth – including a more active industrial policy and a sensible macro policy.

Some of this business will welcome, some they may disagree with – but clarity and no special favours is the right policy and the only sensible way to regain the respect of business. And maybe even a bit of their support.

Dan Corry was an adviser on the economy to ex-Prime Minister Gordon Brown