How a business backlash could cost Miliband the election

by Samuel Dale

One of the reasons Labour won in 1997 was the prawn cocktail offensive.

Labour ministers launched a three year schmoozathon with the City and business leaders.

It worked. When the Tories brought out their New Labour, New Danger fear campaign it had no bite.

Business leaders had listened to New Labour and would give them a chance.

The Tories couldn’t build a coalition of business leaders to make dire warnings about Labour as they had done in past elections.

Ed Miliband’s Labour party has undergone no sustained prawn cocktail offensive.

Instead it is at open war with business promising a waterfall of new taxes and regulations with no upside. It’s all stick and no carrot.

Tobocco firms, energy companies, rail operators, recruiters, hedge funds, banks, Sports Direct and pension companies are all in Labour cross-hairs to name but a few.

There are two serious consequences to the relentless attack on companies. Both point to serious political naïvety.

Firstly, when the Tories try their scare tactics next year they will find a rush of business leaders to join the cause. It will add bite to the attacks and damage Labour.

The best example is the Scottish referendum campaign when big businesses and employers made decisive interventions in the final few weeks.

Firms promised re-locations, job losses and market chaos. Voters were scared.

The same will happen next May. Big fund managers will warn about pulling investment under a Milibamd government, pension providers will raise the alarm about infrastructure projects and financial services firms will warn about re-locating and jobs.

In the heat of an election, it will be very damaging and support the Tory fear narrative. Business leaders are major employers and trusted more than politicians.

Companies may not have a vote but their employees do, millions of them.

Project Fear worked in Scotland and it worked in 2010 when businesses derailed the general election campaign by opposing Labour’s proposed 1% hike in employers’ national insurance.

It will work again at the 2015 general election under a Tory banner.

There are some in Labour who understand this. Chukka Ummuna gets it but he’s a lonely voice.

Labour is clinging to its no EU referendum policy as it’s sole pro-business policy. It won’t be enough to stop a backlash.

Secondly, let’s assume Labour scrapes home next May. How is it going to implement its sweeping reforms without building business allies?

Tony Blair introduced the minimum wage in the teeth of employer opposition but he had built a network of supporters. He had crucial allies to help drive it home.

Look at Andrew Lansley’s failed health reforms as an example of what can happen when industry is united in opposition.

Miliband needs to build bridges if the scale of his ambition is to be realised.

He won’t change culture and behaviour among employers without a charm offensive.

Sweeping criticism of predator businesses and the profit motive is not going to win friends and influence people in the private sector.

If Labour wins then business allies will be hard to come by, making reform of genuinely bad practices an uphill struggle and costing valuable political capital and energy.

Ultimately, Miliband has a shocking relationship with British business both large and small.

Miliband and his team haven’t even tried to bring employers onside.

There has made no prawn cocktail dinners. No serious attempt to understand legitimate concerns from leaders about being over-taxed and over-regulated. No attempt to understand the struggles of running a company and turning a profit.

Parliamentary Labour candidates struggle to find any donors from local business owners these days. They have loved away from the party under Ed.

A serious One Nation politician would include business interests in its policy debate. More importantly, it’s naive, and misguided politics that could prove costly.

Sam Dale is a financial and political journalist

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13 Responses to “How a business backlash could cost Miliband the election”

  1. swatantra says:

    Labour should be the friend of local and SMEs; they are the hardworking we should be supporting and encouraging. Large Businesses and Corporations should be reminded of CSR and their duty to return a larger proportion of their profits to the community.
    A major failure by Labour. I’m pleased that ‘One Nation’ is recognised as serving the whole Nation, and not just a closed minority of politically motivated factions that are linked to Labour historically. There is a big difference between being a Govt of the People and a Party representing only a special interest group of unions and working class.

  2. Tafia says:

    Labour wooed the businesses in 1997 by promising not to be Labour. If you don’t want to be Labour, change your name to something more applicable – such as the Conservative Party.

  3. Ex labour says:

    Miliband set out his position early with his predators speech and has done nothing to bring business on side. When big business starts pointing out that redundancies will ensue as a result of the tax attack from Labour, then the millions of potential Labour voters in the firing line will get the message. Fear drives behaviour in a positive or negative way. Here it will be all negative towards Labour.

    Good article and I completely agree.

  4. Labour’s present problems isn’t with lack of support in the City, it’s that its core vote has gone walkabout. When the SNP and UKIP are perceived as being more radical than Labour, it’s probably not the best time to be sucking up to the bankers and traders.

  5. steve says:

    Danny Speight: “it’s probably not the best time to be sucking up to the bankers and traders.”

    Quite right.

    A better position would be to emphasise the divide between the City of London and the small businesses who have been ripped-off by the b(w)ankers corporate shenanigans: libor scandal etc.

    But of course, to do this reduces the non-executive directorship opportunities for Labour MPs and earnings opportunities for a large number of Westminster bubble lobbyists/’communications consultants’.

    So it won’t happen.

  6. Henrik says:

    @swatantra: the average company will tell you that it’s only *duty* is to its shareholders, its *obligations* are to its employees, customers and suppliers and that government is, at best, managed as a business risk – and taxation is a legal, not a moral issue.

    I tend to agree. As a very small shareholder, who already pays tax, with shares in a number of companies, all of whom comply with legislation in the tax they pay, I struggle to understand why I should feel *obliged* to pour hard-earned profit into – what was your phrase? – ah yes, the community. What’s your view, should the cheques just be issued straight to the likes of Lutfur Rahman or other luminary community leaders, or is there something else you’d like done with other peoples’ money?

  7. Dave Roberts. says:

    And if all of this isn’t enough Miliban is stuck with Livingstone who has just been named by a judge as being one of the reasons why he is moving the election investigation into corruption in Tower Hamlets to the Royal Courts of Justice.

    He is concerned about witness intimidation and mentioned the threats Livingstone had made against the commissioners appointed by Eric Pickles to run the borough. Livingstone topped the NEC poll and if Milband doesn’t get rid of him he will cost us the election.

  8. John reid says:

    Tafia, how about winning elections unlike ,labour

  9. Tafia says:

    John, what does Labour count as more important – power for power’s sake, or power for it’s principles.

  10. John reid says:

    Tafia,neither, but hanging on to out of date opinions, just because, we felt that union power was a principle, was seen out dated by the electorate

  11. Landless Peasant says:

    It will be a Benefits backlash that costs Labour the next election. Ignore us at your peril.

  12. Landless Peasant says:

    We haven’t heard anything more of the so-called ‘jobs guarantee’ for a while. Wonder if it has been abandoned? I’m very eager to see what job they guarantee I can do, and for how long, and what sort of wage I am guaranteed to earn, and what hours I am meant to work so that I can guarantee (or not) to get there on time (with no transport), never mind what I am guaranteed to experience should I be unable to comply for any reason. Yet Labour expects to get my vote! Not good enough.

  13. uglyfatbloke says:

    Samuel, Project fear worked in Scotland because Better Together had the staunch support of the BBC, ITN and virtually all of the newspapers. I’m not clear that one could hope for that in a General Election.

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