Labour’s relationship with business and the folly of drawing false distinctions

Joe Wright, 26 August 2015

In the politics of business relations, there is cozying up to business in order to obtain the veneer of economic competence, and there is creating blunt divisions between good and bad business in order to curry populist favour. At least this is the narrative which has dominated internal Labour politics. In the 2015 general election, Ed Miliband came unstuck trying to convince the electorate there were predators which could be weeded out from among the producers. Despite the popularity of retail offers such as the energy price freeze, his economic credibility suffered.

In the words of the Labour Finance and Industry Group chairman, ‘it is already quite clear that Labour was perceived as anti-business, and that this played a significant part in our defeat. Whether our policies were actually anti-business is another matter. I don’t think they were…But perception is all.’ Can the leadership candidates change this?

Andy Burnham provides an element of continuity Miliband, banning forced zero-hours contracts and unpaid internships, but without the retail offers of energy price freezes etc. There are also more definitive nods to more capital spending. On narrative, however, there is a subtle but flawed shift: ‘Far too rarely over the last few years has Labour spoken up in praise of the everyday heroes of our society: the small businessman or woman; the sole trader; the innovator; the inventor; the entrepreneur.’ Just as Miliband drew a clumsy distinction between producers and predators, Burnham has sought comfort by championing an ill-conceived and narrow idea of what wealth creation looks like.

Yvette Cooper  claims ‘[Labour’s] rhetoric can’t be set against the wealth creators and drivers of our future economic growth.’ Her focus is on the digital economy, which is a good place to start given the rate of growth in the sector and obvious future importance. She also calls for more small business support, but doesn’t attempt to pretend they are more virtuous or worthy of attention than established companies.

Jeremy Corbyn also offers some interesting ideas on industrial strategy. His pitch identifies many things which hold back business: poor skills, low productivity, bad infrastructure and lack of investment. Where he falls down is once again by offering a clumsy narrative for Labour. He too draws fanciful distinctions between the virtues of big and small, only this time he backs it up with policy: raising corporation tax while offering a modest rate freeze for small businesses.

Liz Kendall is more direct, claiming it is time for Labour to ‘wrap our arms around business’. She also wants to see businesses create room for better relations with employees. But her struggle to distance herself from Blairism means the message is tainted.

The pitches should be taken with a pinch of salt; the gallery demands at least one tune they recognise. But even at this stage the party needs to be alive to the dangers of creating false distinctions and lazy narratives. There are brilliant big businesses and crummy, exploitative small ones. There are large companies which do bad things but don’t deserve to be written off as predators. Clumsy rhetoric only suggests that Labour still struggles to find a worthy intellectual critique of modern business. More than attempting to admonish rampant, capitalist big business, the focus must on be making common cause.