Labour struggles to gain backing of business leaders after Ed Balls gaffe

Left-leaning bosses helped Labour begin a belated fightback over its relationship with business on Wednesday night, as the party battled to shrug off Ed Balls’s gaffe when he told Newsnight viewers he had won the backing of someone called “Bill” whose surname he could not recall.

Lord Allen, chair of Global Radio and a long-time Labour supporter, spoke out in the Daily Mirror, warning that a Tory government could lead Britain out of Europe. “One thing that we the business community want is clarity and certainty. If David Cameron spent two years in a debate about whether the UK should be in Europe, there would be neither. We cannot and we should not push Britain towards the EU exit door or put Britain’s future at risk for the sake of party management,” he said.

The former Labour City minister Lord Myners also issued a supportive statement, saying: “Labour is pro-responsible business. It will promote an environment that is consistent with effective competition; it will challenge abusive monopoly behaviour, take steps to promote competition where customers are being disadvantaged (for instance, in retail banking) and promote long-term investment rather than the casino capitalism that has disadvantaged the UK’s economy and social cohesion.”

On the BBC’s Newsnight programme Ed Balls, the shadow chancellor, forgets the name of the Labour’s small businesses leader, Bill Thomas.

Labour pointed to a clutch of senior business figures who have recently conducted reviews for the party, including Graham Cole, chairman of helicopter-maker AgustaWestland, which is looking into exports, and Sir John Armitt, chairman of National Express and a close ally of Balls, who led Labour’s infrastructure review.

However, after the shadow chancellor failed to remember the name of Bill Thomas, a director of the Co-op Bank, it proved challenging to find other business leaders willing to make a public statement in support of Ed Miliband’s party.

Even some Labour peers from the business world were reluctant to lend their support to Miliband, whose promise of an energy price freeze, a mansion tax and a 50p top rate of tax have sent a frisson through boardrooms.

Lord Leitch, a Labour peer and now chairman of Bupa, said he did not want to comment.

Long-time Labour supporter and former boss of media conglomerate UBM Lord Hollick said: “You’ve got the wrong person: I’m a former business leader.”

A spokesperson for Sir Ronnie Cohen, one of Gordon Brown’s most high-profile business backers, said that Cohen “said several years ago that he would henceforth focus on policy not politics and would no longer be involved in backing political parties”.

Thomas, with whom Balls claimed he had just had dinner, could not be reached for comment.

Labour spent many years assiduously courting the business vote, beginning with the now-notorious “prawn cocktail offensive” in the early 1990s.

But since the great recession that followed the financial crash of 2008, Labour believes there is little kudos to be won with voters by snuggling up to big bosses. Miliband has talked about nurturing a new kind of business culture, promising to back “producers” but rein in the “predators” who mistreat their workers and give consumers a raw deal.

Lord Mitchell, an IT entrepreneur and Labour peer who continues to support the party, said, “I think when Tony Blair was prime minister, business people liked him, so they all came out.” Asked about the scepticism of business towards today’s Labour party, he said: “People are just sticking together and, once a group of people has it in their minds that a political party is anti-business, it’s really hard to dispel that.”

He said some business leaders could be motivated by the potential hit to their personal finances from some of Labour’s proposals. “Here I am sitting in Hampstead, looking at a mansion tax coming towards me and I might not like it, but that’s the deal,” he said.

William Sargent, chief executive of visual effects company Framestore, who worked with Balls and Miliband when he chaired the Better Regulation Executive during the last Labour administration, warned: “The body language is making people like me uncomfortable at the moment. I don’t know that Ed Miliband understood the role of business in the economy in terms of the power for good: it just isn’t a place that he’s been to in his life. My exposure to him suggested there was a natural suspicion of business and its motives.”

Lord Haskins, the former boss of Northern Foods, who was a Labour peer until he was thrown out for giving a campaign donation to Liberal Democrat MP Danny Alexander, said his former party was mistaken to think it could win without the support of business. “It’s very important for political leaders to listen to sensible business opinion,” he said.

Among the signatories to a 2005 letter backing Labour contacted by the Guardian, just one, Martin Littler of IT firm Inclusive Technology, would stand up for the party publicly.

“I would certainly back Ed Balls: he’s a great guy. Everything I have asked him for, he’s been great,” he said. However, he expressed some reservations about some of the party’s current policies. “Where they’re doing anti-market things, like the cap on energy prices or whatever, I’m not too happy about that.”

Labour received staunch support from its biggest individual donor, John Mills, chairman of JML, a TV shopping and consumer products company with an annual turnover of £85m. “I think business leaders are missing the point when they talk about Labour,” he said. “George Osborne’s austerity cuts are going to delay the recovery and make consumers think twice about spending. That’s a bigger issue. Labour’s economic policies will boost investment and growth.”

Kitty Ussher, the former Labour Treasury minister and chair of the Labour in the City group, said the existence of the group showed “there is no contradiction whatsoever between being Labour and working in the epitome of private sector work”.

The row over business perceptions of Labour erupted when Stefano Pessina, the acting chief executive of Boots, claimed that the election of a Labour government would be a catastrophe.

The business secretary, Vince Cable, became the most senior member of the government to question the right of the Monaco-based billionaire to pronounce on UK politics.

“I am afraid that the head of Boots lost quite a lot of moral authority once it was discovered he was lecturing political parties from the standpoint of paying his tax in Monaco,” Cable told the Guardian.

Pessina lives in Monte Carlo, with an estimated fortune of £7.5bn. Boots was criticised by tax campaigners when it moved its formal tax residence from Britain to Switzerland following Pessina’s private equity-backed buyout in 2007.

Powered by article was written by Heather Stewart, Jennifer Rankin and Rowena Mason, for The Guardian on Wednesday 4th February 2015 20.43 Europe/London © Guardian News and Media Limited 2010