Repeated accusations that Labour are 'anti-business' wear thin after examining the Tories' dubious track record with UK businesses
Ed Miliband has today launched Labour’s business manifesto. The Labour leader chose to delive his pledges in person, in what many will view as an extra attempt to reach out to British business.
Meanwhile David Cameron has told voters they face a ‘stark choice’ between himself and Ed Miliband, after visiting Buckingham Palace to seek the dissolution of parliament.
With the short campaign about to take off in earnest, we look at five reasons why another Conservative government would make things worse for British business:
1. EU referendum
The issue of a possible Brexit has dominated Labour’s argument about business. Conservative policy is to promise an in-out referendum on EU membership, which could happen as early as next year. Their Eurosceptic rhetoric has already drawn criticism from EU leaders who have warned the UK that its position will be marginal outside of the EU.
Business leaders have been vocal about the detrimental impact an EU withdrawal would have on UK business, emphasising huge job losses and the tariffs and quotas that could be imposed. Meanwhile new economies like Asia and Latin America will be looking to invest in the EU and not a small and isolated UK.
As Ed Miliband said today:
“[An EU withdrawal] threatens to shut UK businesses out of a market that gives them access to the world’s largest trading bloc – it’s simply the wrong direction for our country.”
2. Executive pay packets
A survey by the High Pay Centre this month showed that executive pay is damaging the public’s perception of business. 52 per cent of respondents (members of the Institute of Directors) said that ‘anger over senior levels of executive pay’ was the biggest threat to public trust in business. Ironically, the Conservatives may be bad for big business because they are simply too close to it.
Huge pay inequality hardly makes for a positive climate for businesses to flourish in, especially as this leaves smaller businesses feeling that their own work is not rewarded.
Deborah Hargreaves, director of the High Pay Centre, said:
“Outside the boardrooms of big corporations, ordinary small and medium-sized business owners are as appalled by the culture of top pay as anybody else.”
3. Tax dodging
Last week, Conservative MEPs in Brussels voted against measures which would have clamped down on dodgy tax practices. In February, 12 wealthy Tory donors were investigated by HMRC on suspicion of immoral tax practices. Cameron also appointed former HSBC boss Stephen Green as Trade and Investment minister, allegedly after he had been made aware that, under Green’s leadership, the bank’s Swiss subsidiary had helped wealthy clients to evade and avoid tax.
Tax avoidance undermines the system that provides the infrastructure necessary to maintaining strong businesses, as well as taking millions out of the UK economy – the PCS estimates that the tax gap cost the UK economy more than 119 bn in £2013/14. The Tories’ continued reluctance to clamp down on these practices raises serious questions about their commitment to a growth that is fair and proportionate.
4. Green business
Ed Davey, the Lib Dem energy secretary, has pointed out that leaving the EU would mean the UK lost influence in climate change negotiations, and that pledges to lower carbon emissions sit uneasily alongside a potential EU exit.
Davey said last week that:
“The Conservative position on Europe is potentially economic and environmental irresponsibility of the highest order. Overall our voice in the debate will be dramatically reduced if at the time we are trying to renegotiate our membership of the EU club before a referendum.”
The Conservatives are bad for green business because they are heavily reliant on donations from the traditional energy sector. David Cameron has personally met with representatives from the ‘Big Six’ energy companies, leading Labour to accuse the party of having vested interests in remaining hostile to green alternatives.
George Osborne’s Budget was met with dismay by Green business leaders, who accused the chancellor of being dangerously out of touch with environmental issues. David Nussbaum, the chief executive of WWF-UK, said:
“Opportunity knocked but the chancellor only partially opened the door to greener, smarter growth.
“The chancellor could have created jobs and boosted growth through long-term incentives for clean technologies. Giving the Green Investment Bank access to private capital would help more enterprises prosper.”
Labour has proposed giving the bank significant powers to borrow from the private sector.
Immigration is good for business. As CBI director John Cridland puts it:
“Immigration has helped keep the wheels of this recovery turning by plugging skills shortages. This has led to more jobs for British people and driven growth. Without free movement of workers, the recovery would grind to a halt.”
Hospitals and care homes could not function without overseas workers; nor could the building industry. Research has shown that EU migrants have made a positive contribution of around £2,732 per person per year since 2001.
The immigration caps and targets that the Conservatives are proposing run counter to the advice of business leaders and economists. Changes to the visa system have made it harder for the best foreign students to move into work after university, robbing the UK of potentially strong assets. Tightening the borders even further will mean that investors, students and companies start to look elsewhere.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter
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