Labour can win with the business community but we must end the pseudo-religion of trickle-down economics

9th August, 2017 11:30 am

Business needs a Labour friend

There is a perilous and reactionary shift in attitude in Britain that puts at risk everything Labour has ever hoped to achieve.

Business is increasingly mistrusted, disliked, and resented – and we all know it. Profit has become a dirty word for many and as the public moves against business, we will see business increasingly ignored in policy decisions – removing their expertise from the broad governance of our country.

This is a problem for Labour, and it needs a Labour solution.

If Labour cannot repair relations between people and business, we lose any hope of our country meeting the aspirations of millions of working families, graduates, and everyone else who has a stake in the wellbeing of our society. We lose our healthcare, our education, our policing, and even a part of who we are as a party of working people.

The trickle-down myth

To set about a solution, Labour needs to dispel an insidious myth. When Boris Johnson said people should be grateful to the rich because they create wealth and pay taxes that fund our services and lifestyles, he was wrong.

The economy is not about businesses benevolently creating wealth for us fortunate little people to consume. The economy is a partnership of millions of working people generating wealth before taking a fair share of it home with us in the wages and tax-funded services we earn.

In return, business gets to keep its share of that wealth too, and with the biggest shareholders being pensions and the insurance funds that protect our homes, cars, and pets, we are all on both sides of the partnership.

So we must replace “trickle-down” pseudo-religion with the truth. If we do, we will find a lot of new friends in business, and here’s why:

The core problem

Take the railways. Train companies make vast profits from zero risk thanks to invented monopolies created by government. Yet there is no more sure-fire way of turning people against business than 30 years of being robbed blind for awful services we are forced to use.

Likewise, when Vodafone reduces its tax bill, rivals don’t want to see them agree a deal with someone in Whitehall. They want competitors to be held to account.

This should be good for Labour.

We have proposed rail renationalisation to provide a better deal for passengers. Likewise, John McDonnell has committed to international collaboration to save taxpayers billions of pounds from loopholes exploited by global corporations.

These policies are great news for business reputation, for the flexibility of workforces, and for those firms who pay their taxes (which is most of them – especially smaller domestic firms).

Yet somehow, Labour has been cast as “anti-business”.

The fundamental mistake

Labour has failed to counter a perception that rail nationalisation or closing tax loopholes reflect some wider mistrust of – or failure to understand – business.

But that can change.

Creating better commuting conditions at lower cost means better flexibility for hiring firms and a lot less anger at unfair business practices. A level playing field on taxes might hurt some big companies, but only by removing their unfair advantage and thus benefiting many times their number in smaller companies.

These policies and others – a national education service not least among them – reflect a Labour honesty about what business really need and stand in stark contrast to our opponents pushing more of the same damaging behaviour as mistakenly “pro-business”.

Yet we haven’t told the world that story.

The great opportunity

We know the Conservatives don’t listen to business. They hear only an echo chamber of small-state chums pretending to speak for industry.

They never listen to the many landlords who support the landlord register established by Labour in Newham – tackling slum housing that hurts their reputation and business.

They don’t hear that City fintech firms celebrate achieving regulated status – and the great trust it confers on their fledgling products.

And they don’t care about Whitbread suffering unfair competition by paying its Costa Coffee taxes when Starbucks doesn’t pay enough.

So let’s shout that from the rooftops.

The willing audience

Fortunately for Labour, while the public may not know the terminology of economic theory, we do “get” economics.

We like companies that sell us things we want at prices we can afford. We only hate business when it feels unfair. Unfair, in that sense, is a feeling not a definition. But it correlates strongly to lack of choice, shoddy services, or immorality, particularly on tax.

And business too, wants better representation. Other than a tiny clique of small state chums, industry in the UK has largely disengaged from politics because its views are ignored.

Like young voters, Labour can get them back in the game. We can listen to real business and rebuild a sense of fairness and opportunity in partnership.

So let’s put that partnership at the heart of our policies and rhetoric.

Let’s speak for real business.

And let’s win by doing it.

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