The Labour party, rightly, is obsessed with public services. Scratch the surface of any party member, and you’ll get a deluge of views about the health service, education system, libraries, railways and the local council. This is partly a reflection of the prism through which modern socialism sees the public sector: as a method of securing equity and tackling disadvantage, as well as providing services to people. It also reflects the fact that the Labour party is packed to the gunnels with teachers, NHS workers, and local authority staff.
But what of the private sector? Labour people struggle with the simple concept that without a private sector, there is no public sector. In a capitalist economy, no matter how tamed by state intervention and regulation, it is taxes on profits, assets and work that generate the funds to pay for the schools, hospitals, roads and parks we cherish.
The next Labour government needs a robust policy to revive the private sector. Of course we want to ensure fair wages, decent workplace conditions and consumer protections. The horsemeat scandal shows what happens when profit is king and the consumer is conned: a reality that would have been well understood by the Rochdale Pioneers. Of course we resent profiteering in the sectors we rely on: the price of our gas bills, or the fares commuters are forced to pay for the privilege of going to work. But Labour must recognise that we need to do more to help business, to encourage start-ups, to encourage investment.
If you think about the current frontbench, who has experience of starting a business, turning a profit and creating jobs? It may be a calumny on some shadow cabinet member who I’ve ignored, but I can think only of Liam Byrne, who started a profitable IT firm and holds an MBA from Harvard Business School. Chuka Umunna, Labour’s shadow business secretary, had a summer job selling shirts for TM Lewin. Indeed, the last Labour leader to have experience of working in the private sector was probably Keir Hardie, who worked down a privately owned coalmine.
This is a huge blind spot. The party is talking about cutting VAT for shops and help out businesses that employ fewer than 10 people and have a turnover of less than £1.7m by giving them a national insurance break. The proposals to kickstart the economy with more infrastructure projects, particularly housebuilding, are also welcome. But as Labour develops its platform, more needs to be done.
To win the next election, Labour needs policies which appeal to entrepreneurs and risk-takers: people for whom profit is not a dirty word. We need to win over people who work in small firms, in sectors such as IT. We need to win over the David Brents of this world: people who work in offices for struggling firms, who travel the motorways by day and spend their nights in Travelodge.
First, we need a tax system which rewards innovation, risk and imagination. This might include tax holidays for new firms, rewards for creating jobs, and, most of all, freeing up the banking system to release more capital for loans.
Second, we need an imaginative regional policy, which creates hubs of enterprise throughout the UK. Regions where business taxes are low, or even non-existent could drive the revival. Face it: the next Labour government will not be able to afford to put tens of thousands onto the state payroll like the last one.
Third, we need state-directed investment in the next wave of technology and innovation. The obvious candidate is green energy. Why shouldn’t the next generation of wind turbines, solar power and other renewables not be invented and made in Britain? But Labour should never forget the millions employed in other, less fashionable, sectors too: nuclear power, defence, vehicle manufacture, food processing and so on. We need a policy for them too. It won’t happen if we leave it to the market.
Fourth, the next Labour government needs to provide the macroeconomic platform for business to thrive. There are billions sitting on British companies’ balance sheets, just waiting to be invested once business sees the time is right. Labour must build the certainty and stability that business needs.
Back in October the British Chambers of Commerce complained that engaging the Labour frontbench on business policy was an ‘uphill struggle.’ Since then Ed Balls’ team, and Umunna, have improved relations with the business sector. John Armitt, former chair of the Olympic Delivery Authority, is carrying out a review of Britain’s infrastructure needs for the party. The policy review includes talking to business leaders and entrepreneurs. Labour’s shadow business minister Toby Perkins has launched the Labour Councillors Business Network to encourage more support for businesses. All good stuff.
As ever in politics, the danger is the ‘optics’. The wind is whistling through our town centres and high streets. Businesses are struggling and failing, thanks to the Tories. If Labour looks like the party wedded to the public sector, and the Tories look like the party of the private sector it would be a travesty of the truth, and cost us thousands of votes. Labour should rightly condemn the predators, the big bonuses and the profiteers. But Labour should also praise the entrepreneurs and investors. Only by winning them round will we see the growth we need to pay for the things we want. If you value the NHS: back British business.
This article is part of a series we are running on Labour’s relationship with business and how we create growth, to coincide with our event on Tuesday: ‘Going for growth: How can Britain pay its way in the coming decade?’ with Chuka Umunna MP, Paul Drayson and Joe Greenwell. Follow the series here.
If you would like to attend the event, please email email@example.com.
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