How Labour can regain the trust of British businesses

If Labour is going to make the changes it wants to, it needs a new partnership with business.

If Labour is going to make the changes it wants to, it needs a new partnership with business

On taking office, the next Labour government must make a ‘big, open and comprehensive offer’ to British businesses that it will seek to govern in coalition with the private sector, according to a new Fabian Society report.

In light of persistent concerns about Labour’s relationship with business, In It Together, supported by the Portman Group, proposes a template for a new charter to restore trust between Labour and business.

This would build on the pro-enterprise elements of Labour’s policy platform and move away from the populist rhetoric that has characterised Labour’s business policy.

Labour’s Charter for Business should include:

  • A ‘no surprises’ approach to business policy, with regulation a measure of last resort along a spectrum of intervention.
  • If regulation is necessary, government should aim to announce it with the endorsement of the companies affected. If politicians can’t secure this endorsement, they should explicitly say why not.
  • Appointing a Business Partnerships Manager in the Leader’s office comparable in stature to its current Trade Union Liaison Manager.
  • Praise businesses that do the right thing rather than shaming those that don’t.

The report also recommends a new institutional framework to embed stronger relationships between government and business including:

  • Re-establishing the National Economic Council – established in response to the financial crisis – to improve government-business coordination and develop a national strategy for sustainable economic growth.
  • Establishing a series of sectoral councils, modelled on the successful Automotive Council to coordinate.
  • Strengthening the role of LEPs in driving local priorities for skills provision.

Ed Wallis, co-author of the report, said:

“The financial crisis of 2008 provoked an outbreak of soul searching about the way we do business. Yet much of our post-crash reality has strengthened the old rather than unleashed the new. As Britain moves out of recession and into recovery, our economic fundamentals remain essentially unchanged.

“We need a new way to do business in Britain, one that makes economic long-termism, public health, environmental sustainability and strong local communities integral to a profitable British business model.

“And there is a real challenge for Labour in doing so. While business likes Labour’s noises on skills and industrial policy, they’re worried by the rhetoric over markets.

“It doesn’t have to be this way – if Labour is going to make the changes it wants to as the next government, it needs a new partnership with business.”

Henry Ashworth, chief executive of the Portman Group, said:

“Companies with long-term visions understand their responsibilities to consumers, and prioritise delivering social value alongside growth.

“A government that builds partnerships with industry, can harness the resource and innovation that businesses use to improve the communities they serve.

“So rather than simply reaching for regulation, government should make an open and comprehensive offer to the business community to work together to grow the economy and deliver effective social policy.”

Ed Wallis is editorial director and a senior research fellow at the Fabian Society

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