When Labour’s business team are out with the great and the good from Britain’s boardrooms over a City dinner, there has of late been a moment when the convivial hum of chatter subsides – and someone mentions the mansion tax.
The planned charge, which would cost £250 a month for the owners of homes worth £2m-£3m – has become symbolic of Ed Miliband’s determination to shift the burden of taxation towards the wealthy.
It is not a business policy – Labour argues it is about fairness, and bringing some proportion back to Britain’s soaraway property market. But it encapsulates what some business leaders see as a deep suspicion of the rich – and thus of entrepreneurialism, aspiration, and a bundle of other things the post-Thatcher consensus decreed politicians must cherish.
The restoration of the 50p top rate of income tax is in the same category. It’s not couched as an anti-business measure: but it will hiturt bosses where it hurts.
When stirred together with rhetoric about corporate “predators”, and creating a new kind of capitalism many of Britain’s business leaders have, privately at least, expressed anxiety about the prospect of a Labour government.
Hence Ed Balls’s difficulty in mustering any heavy-hitting Labour-supporting business leaders when he was caught out by the question on Tuesday’s Newsnight.
Both Balls and the shadow business secretary Chuka Umunna receive a ready welcome in their relentless trek around the small firms of Britain, whose owners tend to like the party’s policies on apprenticeships, infrastructure and cutting business rates.
But at FTSE 100 level, there is more scepticism, even despite Labour’s supposed trump card – its opposition to Britain leaving the EU. It is a far cry from the Blair years, when top bosses by the score signed letters to the Financial Times backing New Labour.
Several former Labour supporters have gone public with their concerns. Simon Woodroffe, founder of restaurant chain Yo! Sushi, who appeared in a 2004 party political broadcast for Labour, said last week he was now scared by its approach to business. His tone was echoed by the Carphone Warehouse founder Sir Charles Dunstone, who backed the party when Tony Blair was leader, but said he was frightened by the prospect of a Labour victory. Even donors apparently have their doubts. Lord Noon, the ready-meal tycoon, who has continued to give money to the party since Miliband took over, admitted Labour had a problem with the perception that it doesn’t understand business.
Miliband’s team believe it does Labour no harm at all to pick a fight with big business – or at least to hit back hard when attacked, as they did last week when Boots boss Stefano Pessina warned that electing Labour would be a “catastrophe”.
There are at least three reasons for this calculated gamble. First, they believe the public’s attitude to the men and women Margaret Thatcher’s muse Keith Joseph called “wealth creators” has fundamentally changed since Tony Blair’s assiduous wooing of the corporate world in the run-up to 1997.
After the global financial crisis that plunged the economy into the deepest recession in living memory, Labour believes that corporate bosses are no longer highly regarded nor viewed as wise, neutral stewards of UK plc.
Instead, after a string of scandals and cons (from payment protection insurance to libor fixing, Tesco’s accounting woes and Wonga’s huge rates of interest), Labour reckons cynical British voters regard their bosses as better at lining their own pockets than pronouncing on the future of public policy.
Labour believes its anti-business stance plays particularly well with the kind of working class, anti-establishment voters who might be potential Ukip converts.
Second, Ed M, as Labour insiders call him, has made clear that he wants to champion a different kind of politics – not the Punch and Judy kind that includes party leaders saying “my business mates are bigger or more credible than yours”.
Third, they believe that where necessary, as in the Pessina punch-up, they can spear business leaders, and paint them as more concerned about the risk Labour poses to their personal finances than any of its business policies.
But however solid Labour’s reasoning, there are also big risks for the party on the business terrain as the general election campaign approaches. Veterans of the mid-1990s charm offensive by Blair and his lieutenants are muttering darkly about the dangers of ignoring business support.
Business leaders’ credentials may be tarnished by the crash, but if the news agenda is dominated for several days, as this week, by the narrative that business doesn’t back Labour, it may play on voters’ doubts about whether the party can be trusted with the fragile economic recovery.
The tricky subject of Labour’s relationship with business also exposes a rift, or at best a difference of tone, between the two Eds.
Despite his late night memory lapse, Balls is not heard castigating corporate predators. He expends every bit as much energy on courting capitalists as Blair’s team did. He and Ummuna think of themselves as the party’s ambassadors to business. But some who have been at lobbying events with Miliband claim he is disengaged, uninterested, and sometimes appears not to have done his homework on the attendant money men.
The more the question of business backers plays, the greater the threat that a difference of substance, as well as style, is revealed between the two Eds.
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