by Samuel Dale
During his doomed leadership contest David Miliband said Labour could not afford to go into the 2015 general election with no business support.
One year ahead that election and that is exactly what is happening. Labour is at open war with business with signs it is about to step up the offensive rather than build bridges.
The list of proposed interventions into industry is dizzying with almost every major sector targeted.
I’m told Labour is planning a policy blitz on no fewer than eight sectors ahead of party conference later this year. It is part of an ambitious agenda to significantly boost consumer rights and hand power back to consumers and away from huge corporations.
Ed Miliband positions himself as US President Teddy Roosevelt breaking up monopolies and boosting competition. His modern incarnation has been called many names from pre-distribution to progressive austerity or socialism with no money. In 21st Century Britain let’s see what Miliband is actually proposing in your crucial industries.
Firstly, financial services. Labour is threatening to break up banks, tax bonuses and impose much higher governance standards on fund managers, advisers and bank staff.
Secondly, pensions. The government has just cracked down on the excesses of the pension industry by removing the need to buy an annuity and imposing a charge cap. Labour has talked even tougher than the Treasury or DWP so will surely want to go further with a lower charge cap of tougher industry standards.
Thirdly, energy companies. Labour will freeze energy prices from 2015 to 2017 while it reforms the regulatory system.
Finally, transport. Labour has floated the same idea for railways with a price freeze while reforming the market.
As if that wasn’t enough Labour wants to re-introduce the 50p tax rate and increase corporation tax by 1p. It has also launched verbal assaults at “predatory” capitalism and criticisms the profit motive.
It is hard to imagine a more unattractive agenda for businesses going into the election and they are simply not going to take it lying down.
Leading fund managers have already pulled out of politically sensitive sectors such as energy and banking at the mere prospect of Labour government.
On Labour’s current policy trajectory this will only intensify in the run up to election day.
Institutional investors will fear for their share prices and could hit out in a series of damaging blows to Labour’s economic credibility.
If anyone thinks this doesn’t matter then think back to Gordon Brown’s proposed 1p increase to employers’ National Insurance at the start of the 2010 campaign.
The tax rise was immediately dubbed a jobs tax and vehemently opposed by leading business figures. It derailed the election campaign.
Miliband’s agenda makes Gordon Brown look like as libertarian as Ronald Reagan so the blowback will be far more severe next May.
Dire business warnings about job losses and investment pouring out of Britain are not a good look for an opposition when the country is in the grip of a recovery.
Without business support winning an election is incredibly tough so Miliband should heed his brother’s advice and not isolate himself from business. Has he bitten off more than he can chew?
Sam Dale is a financial and political journalist
Tags: banking, bonuses, Business, corporation tax, energy price freeze, Samuel Dale
I honestly do not think that Labour is at war with business. Sensible business people will be able to live with the policies mentioned even if they do not actually support Labour.
Just think of all the votes that would be lost if Labour fails to win the backing of at least some major corporations. Millions of them, millions and millions of votes.
Steve –
Gordon Brown’s decision to raise employers’ NI by 1p in April 2010 was slammed by business. It ruined the start of the election campaign and gave all momentum to the Tories. The polls moved and it cost Labour votes.
People listen to their employer so when a major employer says “Labour is bad for business” they listen, worry about their jobs and change their votes. Credibility with business matters.
Business couldn’t care less who is in government. What business doesn’t like is changes of government.
really, this site leaves me utterley perplexed. When I first read it I thought it was a spoof site; perhaps run by 5th column neoliberals. Then I checked to see if it was the 1st of April. Please, please, is their even the slightest most tenous link between the articles such as this one on this site and anything that could be remotely associated with left of centre politics. Where’s the humanity, where’s the historical an philosophhical input, there appear to be no principles behind any of the dead minds that write these articles. Have you even heard of George Lansbury ?
@poundinyourpocket
Historical and philosophical input does not pay bills. Unfortunately your comment is typical of the far left who have no grasp on the realities of life.
However here is some historical and philosophical input for you. The problem with socialism is that you eventually run out of other peoples money. Ask the last Labour government.
Poundinyour pocket, normally i find its the other way round, that the odd, Student ,style policitics, writes those Capitalists in the Tory party they’re a nasty old bunch they are,it is possible to have heard Of george Lansbury and still accept that labour in power accetps capitalism, regarding LOansbury he was that bloke who swung labour to the left after they lost in 1931, and he lost even more than in 1931, the lessons of history were learnt and we didn’t do the same thing in 1951 or 1979,oh no wait!!!!
Well – apologies for yesterdays rant , it was just my immediate response to this rabid tea-party attack on all that I thought the Labour Party stood for. It also offended me as it is so shockingly partisan, ignnorant and fact-free diatribe against Milliband. But to atone for my previous rant I’ll go through it again.
“Labour could not afford to go into the 2015 general election with no business support”
Really ? I thought it was a democracy , or do business people have additional votes to cast ?
“Labour is at open war with business”
Really ? Do they disagree with our clear and unequivocal pro-EU stance ?
You seem to confuse those Tory privatised businesses that operate in an artifically constructed market with other areas of business that are competetive and provide useful benefit.
It sounds like you oppose making “rigged” markets more competetive as it upsets “business”.
I tthought that reforming those sectors that are clearly rigged in favour of large investors was not only popular with the consumer but also with anyone who believed in a “free-market”.
“Dire business warnings about job losses and investment pouring out of Britain”
Really ? What have you been reading ? I haven’t seen these.
By the way I am not “hard left”. If Heath was resurrected I’d vote for him. I haven’t moved – it’s Labour that have jumped on board the “free-market” band-waggon.
@ John Reid : Lansbury is just someone I admire for the work he did in deprived areas of London and in support of the suffragettes. I haven’t read about his influence on post 31 election campaigns.