Earlier this week, we asked what a Labour victory would mean for business. Now it seems a rather large group of business leaders have answered the question for us. In an open letter to The Telegraph, 103 senior figures said ‘a change in course will threaten jobs and deter investment’, sending a ‘negative message about Britain’ and putting the recovery at risk.
The signatories didn’t mention any specific opposition party by name, though it doesn’t take a brain surgeon to figure out which one they meant. They did, however, mention the Tories.
‘We believe this Conservative-led government has been good for business and has pursued polices which have supported investment and job creation,’ they said.
The signatories represent a cross section of British business, and include the leaders of nine FTSE 100 companies. They range from BP boss Bob Dudley and Pru chief Tidjane Thiam (soon to be of Credit Suisse), to Ocado’s Lord Stuart Rose and ABF’s George Weston, to Robert Walker of Travis Perkins and the founder of 99p Stores, Nadir Lalani.
The main reason they seem to be backing the Tories is because of the government’s record of lowering corporation tax. From today it stands at 20%, having been reduced by 1% in the Budget and by 8% overall since the Coalition took power.
The signatories say this shows ‘the UK is open for business’. Labour has refused to rule out raising the tax again, though it has said it wants to keep the UK’s corporation tax regime the most competitive in the G7.
Of course, as Labour Shadow Work and Pension Secretary Rachel Reeves said, it isn’t exactly surprising that large firms support corporation tax cuts, but it’s still got to sting. In time, no doubt, business leaders will come out backing Labour, but this time Miliband had better wait for them to do it of their own accord.
On the weekend, Labour published a full page ad in the FT containing pro-Europe quotes from various business leaders, only for several of them – including Siemens UK chief Jürgen Maier – to distance themselves from it, saying their words weren’t intended to indicate support for Labour. Perhaps the party can start with ‘Bill somebody’, the famed chief executive that Shadow Chancellor Ed Balls named, when asked which business leaders backed them in February.
Though Miliband and Balls clearly want to be seen as a credible when it comes to economic policy, it’s not really business leaders they’re hoping to sway. Presumably, it’s people who are on ‘exploitative’ zero-hour contracts, which Miliband intends to abolish, though some of them might have concerns about losing their jobs altogether if new rules do come into force.
In Labour’s business manifesto unveiled on Monday, Miliband focused on helping small businesses by ‘cutting and freezing’ business rates, which have risen 25% over the last six years. Clearly he sees SMEs as more likely to get behind Labour than the big beasts of the FTSE 100.
Miliband also proposed a ‘revolution’ in vocational training and to tackle Britain’s low productivity, which is a bit like saying you’ll raise incomes for everyone, with free ice cream for all – a fine idea, but how are you actually going to make it happen?
Labour faces an uphill struggle to convince people that it’s equal to the Conservatives in business and economic matters. A recent YouGov poll of 1,277 ‘senior business decision makers’ found that only 18% thought Labour would be best running the economy (compared to 58% for the Tories), while 47% thought Labour would be bad for customers of big companies.
To make matters worse for Miliband (if that’s the right way of putting it), Britain’s recovery is picking up faster than expected. Growth was 2.8% in 2014, the highest since 2006. Ultimately, though, it’s voters who count, and voters aren’t in fact only swayed by the economy, stupid. The polls still have it as far too close to call.