Jonathan Reynolds: Business has nothing to fear – and much to gain – from a Labour government

9th March, 2018 8:02 am

The UK is led by a weak government and a diminished Prime Minister. It is no secret that Theresa May only remains in place because enough Conservative MPs fear a leadership contest would saddle them with an extreme right-winger who would take the country off a cliff edge in the Brexit negotiations.

At such a pivotal time in British history, the country is crying out for better leadership. Many businesses are therefore looking at Labour and wondering if they’d be better off with a change of government. My answer is: yes, they would.

The truth is Labour and the business community are no strangers to one another. Labour has supporters in every sector and at every level of the British economy. Over the last few decades, progressive Labour councils have rebuilt the great cities of the UK in partnership with local businesses: just look at my patch in Greater Manchester to see what has been achieved. There aren’t any ‘no-go areas’ for Labour today. As the shadow city minister I know that we have huge backing, both in the Square Mile and Canary Wharf, and even more in the large ranks of people working hard in financial and professional services across the UK.

Brexit has clearly given an impetus to this support. The Conservatives’ decision to hold a referendum for the purposes of settling party conflict on so profound an issue rightly causes scorn. The behaviour of senior Conservative politicians in the referendum and their treatment of those who raised valid opposition to Brexit still provokes anger.

Their conduct since has hardly improved – suggesting companies should be forced to list foreign workers, wasting the first critical months of the negotiations on an unnecessary general election, failing to give any clarity on a transitional period, which has forced companies to plan for the worst-case scenario of a no deal Brexit. This is dangerous, shameful and an enormous threat to the UK’s national interest. Businesses shouldn’t feel that they cannot speak up about the real impact of poor Brexit planning by the government for fear of being branded unpatriotic or spreading panic.

Labour was first to offer sensible transition arrangements, full protection for EU workers already here and an immigration policy designed for the benefit of the economy, not the tabloids. Our proposals on forming a new customs union with the EU once we leave offer further assurance that only Labour is willing to put jobs and investment first. Crucially, for us this is simply a question of making a pragmatic and hard-headed assessment of what is in the national interest. The Conservatives can cater to the ideologues – some of us are still willing to listen to experts.

And what of Labour’s other policies? A publicly-owned railway? They’ve got that in Switzerland. A National Investment Bank? It works in Germany and South Korea. When you’ve got the world’s best financial centre and yet poor rates of investment, especially outside London and the South East, it is critical to the overall success of our economy to look at ways of changing that. Our policy proposals are very clear on how we would bring together both public and private sources to get vital investment flowing to where it is needed.

It’s true that we would raise corporation tax – to a level still lower than it was under Tony Blair. Income tax would also rise for the top five per cent of earners. However, I have enough confidence in the UK to believe that it does not need rock bottom corporation tax to compete globally. As I desperately try to remind my Conservative colleagues in debates, there is more to competitiveness than the corporation tax rate alone. In fact, UK businesses stand to benefit much more from significant investment in infrastructure and public services, such as improved education and transport, than they would a few percentage points off a corporation tax rate that is already well below the OECD average.

Everything Labour proposes will be published in full before any election, with complete transparency and open dialogue. As John McDonnell has repeatedly said: there is not, and there never will be, a secret plan or list of measures that go beyond the manifesto we will publish. We are not interested in capital controls or restoring other relics from Britain’s past. Where we seek to end the poor deals offered to the public on utilities like energy and water, we will use proven vehicles like cooperatives to deliver it. We want a dynamic and prosperous mixed economy, that addresses some of the endemic economic problems this country faces: low productivity, shocking regional inequality, underfunded public services and a labour market creating too much insecure, low-paid work.

Throughout history, from the introduction of old-age pensions under Lloyd George, to the post-war Labour government that built the NHS, and even to the early days of the 1997 Labour government, people have sought to cast progressive governments as a threat to the orderly conduct of business and commerce. Yet far from being a threat to the economy, they usually provide its salvation: spreading opportunity and the chance of a good life to more people than ever before. And – incidentally – 10 years on from it where might we be if instead of Alistair Darling and Gordon Brown at the helm when the financial crisis struck, we’d had the ideologues of the Conservative right? Rescuing the banking sector was not an easy decision, but it was a necessary one. Though as Jeremy Corbyn recently said: “the public should have had more of a say over how those banks were then run”.

With each passing day, the end of this government seems more likely. Business has nothing to fear, and much to gain, from it being replaced by a Labour government.

Jonathan Reynolds MP is Labour and Cooperative MP for Stalybridge and Hyde and shadow economic secretary to the Treasury.

 

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