The Party of Business

As Labour’s new Shadow Small Business Minister, I’m looking forward to taking forward our argument on how government leading us towards the ‘good economy’ will support Britain’s businesses to compete internationally, thrive and win new business in new markets.

I am proud to have arrived in parliament after a working life spent entirely in the private sector. At the age of 17, I was a telesales boy on a YTS scheme, earning £35 a week. My career then progressed through sales into a middle managerial role in one of the UK’s fastest growing companies and ultimately to five years running my own business.

Informing all of the work we do in this policy area will be the voice of experience – of the men and women at the sharp end. Britain’s small and medium sized businesses already employ over half of the workforce and will be expected to provide two-thirds of business growth. Already thousands of firms put the stamp “Made in Britain” on goods that are used across the world. We know that they have to first survive in order to thrive.

The message that is coming back from more and more of the businesses we meet is as consistent as it is worrying.

They tell us that the Merlin agreement, which the government promised would make it easier for businesses to borrow from banks, still isn’t making finance available to business, and good firms cannot grow because of the lack of available cash. More businesspeople than ever before are funding company borrowing on personal credit cards rather than through the channels that should be supporting our economic growth. They tell us that increasing inflation, energy prices and the VAT hike has taken money out of people’s pockets and so consumers have less money to spend on the high streets. They tell us that the huge cuts in government capital expenditure –over 60% in schools for example – are leading to more job losses in the construction industry.

Labour’s five point plan provides the fuel to get our economy growing again. A temporary reduction in VAT would put more money in people’s [consumers] pockets; boosting the construction industry with a targeted cut to 5% for home improvements and by bringing forward capital projects of government spending from this electoral term as soon as possible; a repeat of the bank bonus tax to create 100,000 jobs for young people and to build 25,000 new homes; and a NI holiday for micro businesses for any new staff they employ.

No-one who has spent years in the corporate world at both fast growing companies and firms battling to stay afloat would be under any illusions that the core purpose of a business is to trade profitably. However whilst the profit motive will always be the main thing, it doesn’t have to be the only thing.

Already many of Britain’s best and most profitable businesses recognise that their relationship with their staff, customers and suppliers can be one of co-operation not just competition; that most business transactions can deliver for both parties; that providing good value for shareholders can be compatible with sustainable planning for the long term.

Too often the way we do business encourages firms to look for the fast buck not the long haul. Good firms recognise that their relationship with their staff, customers or suppliers should be based on mutual benefit. Businesspeople see the financial rewards that Sir Fred Goodwin took from taking RBS to the brink and the directors of Southern Cross took whilst leaving the firm and their patients to face a torrid future and they wonder why the system allows this to happen and want to see a level playing field for firms who do the right thing.

That’s why Ed Miliband’s message – that his government will care about how a business acts, as well as how much it makes – is not anti-business it’s pro-business. That’s why Labour will work with Britain’s top businesses and with small and medium sized businesses across the country to explore how we can make it easier to succeed.

And whilst the Tories and the right wing press may have reacted hysterically, the reality is that across British boardrooms there is the same realisation and the same anxieties that the long term ethical approach isn’t more readily rewarded.

If society is quick to criticise (rightly) people taking something for nothing at the bottom of society, we should also challenge the same values where they drive those at the top.  Just last week, in defending his failure to get jobs or growth into the British economy, George Osborne created a crude caricature of Ed’s Miliband’s conference speech in order to undermine the principles he outlined.

And it seems to me that there are two stages to this process. The first is to recognise that the problem exists. When businesses can positively profit from doing things that are against the broader interests of our country – that are even against the long term interests of their own company. When other businesses who are the very best of British feel that the odds are stacked against them, should government look to act?

At this fundamental level there is a stark choice. Whilst Ed Miliband says his government will be on the side of the millions of businesses who do the right thing, who look to put something back, who add to Britain’s wealth – Osborne stands aside.

The immediate challenges are intense, but alongside our plans to return growth to our economy in the short term we face a big choice – to carry on as before, or to set a different course for our economy and our society.

When Labour say we can do business better, we mean that our policy review will examine how we can use all of the levers at a government’s disposal to support our real business heroes. It means developing institutions for collaboration and support, making sure affordable finance backs growing businesses. It means building the research base, the skills base and delivering an entrepreneurial environment for innovation and growth. It means investing in infrastructure, offering certainty in the policy environment, giving businesses the confidence to invest. It is active government growing key sectors of the economy, and supporting the growth of more companies which build value over time, invest long term, innovate, offer good jobs, pay fair wages, and train.

Governments cannot tell individual companies what strategy to pursue but neither should governments be indifferent to the choices they make.  That’s why Labour people can go out into their communities and know that they are speaking up for British business when they tell people about Labour’s pro-business message and about our five point plan. British businesses need a pro-business government that recognises the central role British business will play in returning our economy to growth – and will deliver the environment to help them do just that.