Labour needs to take ownership of capitalism, defining its vision as something business can believe and trust in
Labour lost the support of business in its election campaign. From the former Labour enterprise champion Lord Sugar, who in his resignation from the party cited a loss of “confidence in the party due to their negative business policies and…anti-enterprise concepts”, to former Brown trade minister Lord Jones, who said Labour had “created an anti-business mood music where profit is a dirty word”.
Trust needs to be rebuilt. The question Labour faces is how?
Although by no means a simple task, three areas can help Labour start this process.
First, a positive and inclusive approach to business is central to winning trust. Labour’s 35 per cent core vote strategy that sought to add disillusioned Lib Dems to the 29 per cent core vote won in the 2010 election (traditional working and squeezed middle class), obviously failed to win this election. But more importantly, it created an ‘us and them’ narrative which alienated and ostracised business as wealth creators, almost forcing them by default to become part of the other 65 per cent opposing messages from Labour.
A senior figure from the City supportive of Labour summed up this point. Talking about financial services, he said:
“No one wants to be vilified. Yet eight years on from the financial crash, Labour’s position seemed to be solely on the side of banker bashing.”
This 35 per cent strategy allowed the press and Conservatives to position Labour as anti-business without a strong riposte. It also meant that positive messages toward business did not cut through.
Going forward, Labour’s messages must be ones that resonate with its ideals, such as tackling inequality. But they must be positioned in a way that allows us all to embrace them.
Second, even with a positive tone, the party needs strong pro-business policies to underpin its offering to business. This election, by contrast, saw policies that seemed to be hostile to business as flagship offerings, ranging from rent caps to energy price freezes. As one social enterprise founder who is a Labour supporter said, it seemed that
“Labour wanted to wrap business up in chains without giving anything in return.”
The key point here is that the goals of business and Labour are not mutually exclusive. Common ground includes a strong economy, fair distribution of reward, creation of opportunity married to merit and talent.
The challenges facing Labour and business are shared, such as the housing crisis. Both the Confederation of British Industry and the London Chamber of Commerce have highlighted the cost and lack of affordable housing for employees as the biggest threat to London’s position as one of the world’s greatest cities for business.
Labour’s new leadership will need to give an answer as to how it will positively incentivise, support and enable business to be the means to realise potential and deliver wealth and opportunity into the hands of the many, e.g., through an improved education system to help achieve aspiration and social mobility. After all, this was the role foreseen by Labour for business 20 years ago when it modernised Clause IV of the party’s constitution to abandon nationalising principles.
Finally, Labour needs to take ownership of capitalism, defining its vision as something business can believe and trust in.
So far the party has failed to deliver consistent detail on what this alternative Labour brand of capitalism is. In part this is because Labour has previously relied on charismatic figures such as Blair and Mandelson to hook business, i.e., pitch over content. It is also, though, undoubtedly because for many in the party there is a continuing scepticism toward business. At best business still seems to be a necessary evil tolerated to secure victory, rather than a central constituent and area of Labour’s agenda.
Going forward, Labour has the template for this alternative brand of progressive capitalism. This focuses on an inclusive race to the top through long-termism, high value/skill jobs, innovation and regulation to boost firms’ competitiveness and productivity. In practice this means a positive route to success for business that offers obvious benefits, as opposed to greater costs and burdens.
Practical areas that would seem ripe for strong focus as part of this progressive vision include economic drivers such as infrastructure. Infrastructure helps industry to grow in capacity and create jobs while offering more inclusive growth and greater quality of life for the many.
Innovation on practical ways to minimise the burden of regulation will also need to be explored. A prototype of what this might look like comes in the potential to implement ideas such as those from the Small Business Federation (FSB) and Institute for Public Policy Research (IPPR) in 2014 for a maternity insurance scheme, where SMEs can club together to share the cost of maternity pay. This is a very real way to help SMEs cover the costs of regulation, while giving them the potential to improve their packages to employees.
So a positive and inclusive approach, flagship pro-business policies, and ownership of a Labour brand of capitalism are the initial ways Labour can seek to regain the support and trust of British business. It sounds simple, but the reality of properly embedding these ideas in the party will require strong leadership and radical thinking. Are the party up for it?
Crispin Oyen-Williams is the founder and director of Business Innovate
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