What’s Labour’s problem with business?

What, exactly, is Labour’s problem with business? For much of the media and a few in the party it’s that there aren’t enough super-rich business backers. Ed Miliband can’t stand up in front of a grey-suited 50-something chief executives who’ve just written fat cheques and pledged their undying support to the Labour Party. Of course, the Conservatives have plenty of these, often from business sectors which not too long ago helped crash the economy. Most are men (yes men) who’ve make their money by owning assets rather than any truly productive kind of activity. They are hedge fund managers or bankers, and one or two private equity bosses. George Osborne’s march of the makers are not in evidence on the Conservative donor list.

I think British politics has moved on. We don’t trust bankers. The kind of elitist assumption that whoever holds the most money knows best went out of fashion as men and women with possessions in boxes started to stream out of Lehmann brothers. When even Conservative grandees call for reductions in inequality, you know the game is up. The Conservative case is increasingly that the British economy is just fine as it is unless you vote Labour. But our case, Ed Miliband’s case, is that there’s something deeply wrong with the way British capitalism is configured. That argument is popular and right.

The point Miliband made strongly three years ago is that there are different ways capitalism can be organised. A top-heavy economy dominated by southern asset prices and the City of London is no way to create real economic growth. Labour has never been an anti-capitalist party. No-one in the Labour Party seriously doubts that the welfare of Britons depends on a vibrant private sector economy. But instead of an over-concentration of economic power in one place and one sector, our vision is of a political economy with power dispersed throughout the country so wealth comes from labour not property.

Mending Britain’s broken business model will be long and slow. A good start has been made in policy work done over the last few years, led by Jon Cruddas’s policy review. The core argument made is that dispersing and sustaining economic growth relies on local institutions with money and power: on new local investment banks; locally-run welfare to work services that can respond to local economic circumstances; universities more firmly embedded in the life of their cities; vocational colleges; an enhanced role for local enterprise partnerships; sector skills councils. The big idea is for people to have more power in their workplaces and communities. Economic revival needs to rely on people feeling valued and rewarded enough to labour and be creative, and that won’t happen if they’re bossed around by distant managers whether they come from big business or the state.

Last Monday should have been a good day for Labour’s relationship with business. Ed Balls was announcing a concrete set of measures to devolve power and money to cities and counties to support local economies, including £30 billion in funding. It’s not enough, but it’s a start, and I think this is one place where Labour will be more radical in government than before.

The business leaders I know worry about whether their bank will call in their overdraft, where they will get skilled technical staff or how they can access the supply chain of the local big firm – not the mansion tax. But instead of talking about an approach that will tackle those issues, on Monday the Labour leadership were held hostage by the silly comments of Stefani Passini. Labour’s mistake was to attack these individuals. Instead, we should tell our own story. Rather than trying to undermine the ill-judged comments of two men, we needed to talk about the way our plan supports business throughout Britain.

Labour politicians need to be standing up with ordinary business leaders, with shop-owners and factory managers, sole traders and small enterprise owners, most of whom are squeezed by the Conservatives and suffer as badly from the destructive force of global finance as the rest of us. Forget the millionaires. Our problem with business is that Labour doesn’t have the relationship with the small businesspeople who will benefit from our being in power. More party members are in business than you might think. But the party hierarchy is dominated by public sector employees. Its time to get out there knocking on doors and having millions of conversations, but in our industrial estates and office blocks as much as houses.