In­dus­try chiefs glad to hear Labour poli­cies

Jeremy Cor­byn went down a storm at last week’s CBI con­fer­ence, de­spite talk of na­tion­al­i­sa­tion. With the Tories in dis­ar­ray, busi­ness seems ready to lis­ten to the party’s ideas, and even to con­tem­plate a Labour gov­ern­ment, say Phillip In­man and Richard P

The Observer - - NEWS -

‘These are great aims. But how­ever much we all want to achieve them, Bri­tish busi­ness is not a bot­tom­less pit of funds’ Lead­ing ex­ec­u­tive

The re­cep­tion for Jeremy Cor­byn as he left the stage, af­ter telling the packed con­fer­ence hall of his plan to na­tion­alise vast tracts of the econ­omy and crack down on tax avoid­ance, spoke vol­umes. Yet this wasn’t a Glas­ton­bury-style gath­er­ing of Labour sup­port­ing mil­len­ni­als; Cor­byn drew this warm ap­plause at the CBI an­nual con­fer­ence, from a room full of busi­ness lead­ers last week. They in­cluded some whose in­dus­tries could be taken into pub­lic con­trol un­der a Labour gov­ern­ment.

Per­haps, rather than his poli­cies, it was the Labour leader’s smat­ter­ing of jokes and his quick-fire re­marks at the busi­ness lobby group’s gath­er­ing this week that helped the au­di­ence warm to him. Or it could have been that the au­di­ence is gear­ing up for a change in gov­ern­ment, as the Con­ser­va­tives’ grasp on power ap­pears to grow more ten­u­ous by the day.

Ei­ther way, this friendly re­cep­tion was in sharp con­trast to the po­lite yet flat ap­plause of­fered to Theresa May ear­lier that morn­ing. The prime min­is­ter stalled dur­ing her ques­tion and an­swer ses­sion – stumped by a ques­tion on pri­or­i­ties for the sci­ence in­dus­try – and made flat-footed re­sponses to ques­tions about tax eva­sion.

Be­hind the scenes, the pri­vate sec­tor is pay­ing se­ri­ous at­ten­tion to Cor­byn. Busi­nesses now reg­u­larly ask their ac­coun­tants and lawyers, and the lead­ers of lo­cal busi­ness lobby groups, what a Cor­byn-led gov­ern­ment would mean for them.

If they don’t ex­actly ex­pect an im­mi­nent Labour land­slide, they cer­tainly think that a Cor­byn ad­min­is­tra­tion has en­tered the realms of the pos­si­ble. The shadow cab­i­net, which un­til the elec­tion in June was a hot­bed of in­trigue and a fount of em­bar­rass­ing sto­ries, is now talked about as a sta­ble out­fit and the ba­sis for a gov­ern­ment in wait­ing.

Above all, Cor­byn stands as a po­ten­tial ally to busi­ness in se­cur­ing ac­cess to the Euro­pean Union’s sin­gle mar­ket at a time when the gov­ern­ment ap­pears un­able to make any progress. Speak­ing at the con­fer­ence – held on the banks of the Thames op­po­site Ca­nary Wharf, home to sev­eral fi­nan­cial sec­tor firms that could leave in the event of a hard Brexit – he said Labour had “com­mon ground” with busi­ness.

He rounded off his speech in lan­guage heard more of­ten on the elec­tion trail than in a hall full of suits. “I value the day-to- day re­la­tion­ship we have with the CBI, as does John McDon­nell, and oth­ers in my team,” he said. “And I look for­ward to work­ing with all of you in the fu­ture, when­ever the gen­eral elec­tion comes, and we, I hope, are in gov­ern­ment, to con­tinue work­ing with you.”

That claim of a day-to- day re­la­tion­ship is no ex­ag­ger­a­tion. There is a re­volv­ing door in Labour’s gleam­ing West­min­ster of­fices, with one busi­ness rep­re­sen­ta­tive leav­ing as an­other en­ters.

McDon­nell, in his role as shadow chan­cel­lor, is the main fo­cus of at­ten­tion. From a rocky start that saw him first con­vene and then dis­band a col­lec­tion of sym­pa­thetic, yet un­ruly eco­nomic ad­vis­ers, he has grown in con­fi­dence to a point where he reg­u­larly wel­comes the busi­ness lobby’s top brass with a cheery “How do you feel about a Marx­ist chan­cel­lor, then?”

On in­fra­struc­ture, his ideas chime with those of ma­jor lobby groups in­clud­ing the CBI, the Bri­tish Cham­bers of Com­merce, the In­sti­tute of Di­rec­tors and the Fed­er­a­tion of Small Busi­nesses. His pledge for a faster dig­i­tal back­bone to match South Korea’s hi-tech econ­omy has also met with ap­proval. Mean­while, busi­nesses are hav­ing to wait un­til the day be­fore the bud­get on 22 Novem­ber to learn about the gov­ern­ment’s in­dus­trial strat­egy.

McDon­nell and his shadow busi­ness sec­re­tary, Re­becca Long-Bailey, plan to take ad­van­tage of his­tor­i­cally low in­ter­est rates to bor­row £250bn for in­fra­struc­ture spend­ing over 10 years as part of a na­tional trans­for­ma­tion fund.

They will also set up a na­tional ed­u­ca­tion ser­vice that will al­low peo­ple to re­train through­out their lives. And Labour wants to raise pub­lic re­search and de­vel­op­ment spend­ing to 1.85% of GDP, in­vest­ing an ad­di­tional £1.3bn dur­ing its first two years in of­fice. By 2030, McDon­nell says to­tal R&D spend­ing would amount to 3% of GDP, dou­ble the cur­rent av­er­age.

As one busi­ness leader said: “These are great aims. But how will they be paid for? How­ever much we all want to achieve them, Bri­tish busi­ness is not a bot­tom­less pit of funds.”

For decades, polling by the CBI has found that cuts to cor­po­ra­tion tax have fig­ured low down in the list of busi­ness pri­or­i­ties. But that’s not to say that its mem­bers sup­port a rise.

McDon­nell’s speeches, and those of close col­leagues, have tended to dis­tin­guish be­tween large busi­nesses and small when it comes to the ques­tion of tax. Large busi­nesses are con­sid­ered mo­nop­o­lis­tic, prone to tax dodg­ing and caught up in the global race to the bot­tom when it comes to wages and work­ers’ rights. Small busi­nesses on the other hand are the bedrock of the econ­omy: in­no­va­tive em­ploy­ers of lo­cal labour, who get pushed around by the ma­jor firms in their sec­tor.

This is why McDon­nell plans to ex­empt small busi­nesses from in­creases in cor­po­ra­tion tax and why he pays more at­ten­tion to their com­plaints about busi­ness rates. Small busi­ness lead­ers also favour Labour’s plans for skills train­ing and a na­tional ed­u­ca­tion ser­vice, aimed at tack­ling their lack of re­sources to train the next gen­er­a­tion of skilled work­ers.

But the di­vide ran­kles with larger busi­nesses, who would rather McDon­nell fo­cused on “the few bad ap­ples” and not lump the vast bulk of civi­cally minded busi­nesses in with them.

As one se­nior lob­by­ist said: “The sense in­side Labour that small busi­ness de­serves spe­cial favours goes back to the Gor­don Brown days. So it’s not new. But it is still wrong.”

Na­tion­al­i­sa­tion is an­other stick-

ing point, though many in the busi­ness world are pre­pared to take a more prag­matic ap­proach, es­pe­cially when Labour’s tar­get list in­cludes sev­eral for­eign-owned util­i­ties.

Can the pub­lic sec­tor do a bet­ter job than pri­vately run mo­nop­o­lies? Most busi­ness lead­ers say they can’t. But as one said: “If Labour is pre­pared to tell us what it is about the cur­rent sit­u­a­tion it re­ally doesn’t like, we might be able to find an­other way to achieve a sit­u­a­tion that has a longer life ex­pectancy. Is it lack of in­vest­ment, for­eign own­er­ship, or own­ers run­ning things in their own in­ter­ests? If we can pri­ori­tise, then a model other than na­tion­al­i­sa­tion could be ap­pro­pri­ate.”

Dur­ing Labour’s re­cent con­fer­ence in Brighton, the CBI made it clear that it found McDon­nell’s speech about na­tion­al­i­sa­tion and bring­ing PFI con­tracts un­der gov­ern­ment con­trol alarm­ing. Di­rec­tor gen­eral Carolyn Fair­bairn said: “The shadow chan­cel­lor’s vi­sion of mas­sive state in­ter­ven­tion is the wrong plan at the wrong time.”

Af­ter Fair­bairn’s com­ments were pub­lished, McDon­nell ap­peared to bear her no ill will. He was his usual cheer­ful self and told CBI staff he was keen to con­tinue de­vel­op­ing Labour’s ideas based on a ro­bust dis­cus­sion with busi­ness. With May’s gov­ern­ment wob­bling more each day, it is a gaunt­let that busi­ness is only too keen to pick up.


It’s the way he tells them: Jeremy Cor­byn on stage with CBI pres­i­dent Paul Drech­sler at last week’s CBI con­fer­ence. How­ever, di­rec­tor gen­eral Carolyn Fair­bairn, right, said Labour’s vi­sion was ‘ the wrong plan at the wrong time’.

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