Labour donor backs May over Brexit
MILLIONAIRE Labour donor John Mills wants to have his cake and eat it. Or that’s how it appears. As the party’s biggest private donor he would like to see Labour ‘back in power’. He is putting his money where his mouth is and will be adding to Labour’s coffers in the coming weeks. ‘A five figure sum,’ he says.
But Mills, founder of the JML household goods business, is a Brexiteer and also fully backs Theresa May’s call for a General Election to sweep away opposition to Brexit in the Commons.
‘As a long time Labour supporter I am not happy to see the situation the Labour Party is in because the country very badly needs a strong opposition and I would like to see a Labour Government back in power doing the kind of things that it could do.
‘But, leaving that on one side, I think calling a General Election and providing more certainty about what is going to happen over Brexit is a good idea.
‘It seems to me that what Theresa May said last week is correct – the danger of having any negotiations with the EU overpowered by people in the House of Commons and the House of Lords is a very destabilising element that needs to be removed.’
He is also not optimistic for Labour in this Election.
‘The Labour Party is not likely to do very well,’ he concedes.
His backing for Corbyn’s party seems less than fulsome. Even his pledge of a ‘five figure sum’ for Labour’s campaign seems modest in comparison with the £1.6million worth of shares he gave Labour when Ed Miliband was in charge. A snub to Corbyn, surely? ‘Certainly not!’ insists Mills. He argues that the real value he has given the Labour Party is the dividends it now earns from those shares. ‘They have a shareholding in JML and they get a dividend that continues all the time.’ The shares amount to about 2.5 per cent of JML and have paid dividends worth tens of thousands of pounds to Labour since 2013.
Mills, who founded JML in 1984, has himself earned millions from the business, which sells a raft of household goods from irons to slimming devices through its website and retailers such as Argos, Dunelm and Robert Dyas. The 79-year-old Mills, an Oxford economics graduate, ran the firm from his Camden home for years. It now naturally has its own HQ and turns over about £100million a year.
As our conversation continues it is clear that while tribally loyal to Labour he has strong concerns about the state of the party, but as a Brexiteer his main target appears to be the Blairites who still cling to the hope of reversing Brexit.
‘What I’ve been doing is trying to persuade people in the Labour Party that going back to try to reverse the Brexit decision and not accept the result of the referendum is a really dangerous position.
‘They must accept the result and get the best deal we can. I think quite a lot of people in the Labour Party recognise this now, but I think a lot of people don’t. They want to turn back the clock and keep us in the European Union despite the decision by the British people last June.’
Mills was chair of the Labour Leave Campaign and his opposition to Britain’s EU membership extends back to the original referendum in the 1970s. ‘In 1975 I was National Agent for the NO campaign,’ he says.
His Brexit beliefs stem from his economic outlook. For Mills, Britain has thrown away its industrial manufacturing past and needs to rebuild its status as an exporting nation and to do so it must allow the value of the pound to fall sharply. Naturally he welcomed the slump in sterling since last June and is wary of its recent rise.
‘There is no doubt that the economy has done much better since the referendum because the pound went down from about $1.45 to $1.25. This led to much better export performance which has galvanised the economy and this is why it has done much better than the economists expected. The fact that it is back up again means export performance will fall off again. You cannot run an economy like the UK without manufacturing as a substantial component.
‘We need to get manufacturing back from about 9.5 per cent of GDP to something like 15 per cent. All the calculations I have done suggest this won’t happen unless you get the exchange rate back to $1 or $1.05.’
Mills goes further: ‘For a successful economy you need to have an explicit exchange rate policy. Most countries keep a very close eye on currency rates. The Chinese clearly do.’
Countries that take such an approach infuriate most advocates of free trade – not to mention Donald Trump. But Mills’ own business does not obviously benefit from a weak pound.
‘Having a low exchange rate doesn’t help JML in the short term,’ he admits, because it imports many of its products. But with cheaper UK manufacturing he believes that could turn around. ‘I would dearly love that,’ he says.
With exports at the core of Mills’s economy prescription, the shape of Britain’s post-Brexit trade deal is naturally central to his hopes and thus his backing for a strong Government to get the best deal possible with Europe – preferably a free trade agreement with the EU.
‘It’s between three outcomes. One is free trade which is the best outcome and the one Labour ought to put its back behind supporting.
‘The second is one in which we are still part of the single market because we are still in the European Economic Area – but then we’d still have to pay money into Europe and we’d still be covered by the European Court and would still have no border control. The third alternative is the WTO option which also has disadvantages.’
The World Trade Organisation option would expose the UK to trade barriers including tariffs on some goods. Mills believes a lower exchange rate would offset those costs. Average WTO tariffs are about 3 per cent. Even after last week’s bounce, sterling is still down about 10 per cent since the referendum and Mills hopes it will fall further. But what is the worst outcome? ‘The worst outcome is that we negotiate whatever deal we can, but then it doesn’t get accepted by Parliament. We’d end up with a complete standoff with nothing in place and that strikes me as a really dangerous outcome that must be avoided at all costs.
‘That is why it seems to me on balance the General Election that’s coming up now is worth having.’
So we are back with politics. Mills brushes aside the idea that there is a contradiction in his backing for Labour and his hopes for a strong UK Government which he accepts will be led by Theresa May.
‘If you look at the polls, it’s going to be a tough call. But if the Labour Party is decimated, it is not good for the country. The country needs to have a strong Government, but it needs to be one that is held to account and there is a question whether in the next Parliament Labour will be strong enough to do that.’
But in many ways Mills is a contradiction. A millionaire Labour Party member, he campaigns for weaker sterling, yet has made his fortune buying and importing cheaper goods made in Asia.
He believes in free trade, but also believes Britain should have an explicit exchange rate policy – an approach which horrifies many free traders. And while donating to Labour’s Election campaign he doesn’t want the opposition in the House of Commons to hamper May’s Brexit negotiations.
Somewhere he is surely going to be very disappointed.
They must accept the result and get the best deal we can – a lot of Labour people recognise this now
For a successful economy you need to have an explicit exchange rate policy. The Chinese do