It’s been a lucrative week for the Labour Party. Tickets for its business conference next year are reported to have sold out in four hours on Wednesday, raking in a cool £400,000 for the party’s war chest – and that’s before you add in the dozens of sponsors for the event, which will be paying a pretty penny to have their logos placed next to the rose.
Sir Keir Starmer and Rachel Reeves’s prawn cocktail offensive seems to be working. The shadow chancellor’s pitch for “Securonomics” – a spin on “Bidenomics” – is a risky strategy, now that the era of ultra-low interest rates has come to an end. Yet it’s been music to the ears of some bigger corporations which may be looking with envy at the subsidies and investment schemes brought in by the Inflation Reduction Act.
The party is also almost starting to look like a safe pair of hands – certainly one that won’t do anything too radical. And while Starmer has made clear that his No10 would not consider any effort to rejoin the European Union, it seems almost certain that Labour would forge a tighter relationship with the bloc – one that some businesses would likely welcome.
But perhaps most importantly, business leaders are reading the same polls we are, and are starting to prepare for the possibility of a Labour government. This isn’t just bolstering the party’s finances; it’s ushering in endorsements as well. Starmer received accolades this week from Blackrock’s chief executive Larry Fink: speaking to the Wall Street Journal, the billionaire gave his backing to Starmer, saying his leadership offered a “measurement of hope”.
It seems Labour is benefitting from two very low bars: one set by the party itself, the other set by its opponent. The simple fact that Starmer is not as rabidly socialist as his predecessor has given him the benefit of the doubt in the eyes of many business leaders. That he’s not a Marxist makes him seem like a centrist (despite there being plenty of options in between). So Starmer has established himself a pro-business leader, without revealing many details about what his party’s strategy towards business might actually be.
Meanwhile, the Tories have provided Labour with gift after gift. The recent hike in corporation tax, coupled with a “temporary” windfall tax on energy companies – which now looks more like a permanent fixture – has left plenty of companies in despair.
Then last year’s mini-Budget fiasco did incredible damage to the party’s reputation for economic competence. It was an overnight destruction of trust which Rishi Sunak, hard as he tries, is struggling to rebuild.
So if the Tories can’t make good on their supposed pro-business reputation, why not take a punt on another party which seems to have got its house in order?
But as the titans of the corporate world line up to kiss the ring, we must ask what sort of businesses can expect to do well under Labour.
The answer is unlikely to be the thousands of entrepreneurs and countless small business owners who are in desperate need of a more competitive business environment.
Stamer seemed to sum up his feelings at the start of the year when he attended the World Economic Forum’s annual conference for the glamorous and well connected in Davos, Switzerland. When asked to choose between Davos and Westminster, the Labour leader chose the former, without a hint of doubt.
Davos has come to epitomise the worst of crony capitalism: an opportunity for the biggest businesses and politicians to schmooze – and come up with ways to keep others out of the club. It’s the sort of place where plans for global minimum corporation tax rates are praised; where government intervention is often cited as the solution to the economic challenges countries face.
Already you can see this view of the world trickling into Labour’s plans for business. Look at what was announced at Labour Party conference: some kind of digital sales tax to increase the (already record high) revenue coming into the Treasury.
The promise of such taxes is always that they will hit the profits of the “online giants” who won’t miss the money. But the real damage will be done to smaller businesses which are also operating online, or selling their products through bigger platforms like Amazon, which they rely on to promote their products to a wider consumer base.
More generally, nothing Labour has proposed looks set to reverse the catastrophic decline in British competitiveness. The Tax Foundation’s 2023 International Tax Competitiveness Index, published this week, revealed that the UK now sits 30th out of 38 OECD countries – falling three places from last year. This is largely thanks to the changes in corporation tax. The only reason the UK hasn’t fallen even further is the temporary “full expensing” scheme, which is encouraging businesses to invest.
The Centre for Policy Studies has released a briefing to go alongside the new rankings, suggesting a range of policy changes that could raise the UK from 30th to 3rd on the list. They include making full expensing permanent, abolishing stamp duty and business rates, and overhauling the UK’s income tax structure – policies the think tank says would raise the same amount of revenue, but in a more business friendly way.
But apart from ensuring full expensing – a policy that both the Tories and Labour want to make permanent if the public finances permit – there is no evidence that the Opposition is ready to take up any of those pro-growth proposals.
But are the Tories? For all the talk of turning the UK into the “world’s next Silicon Valley”, the Government somehow manages to keep putting up barriers just as they take others down. The Digital Markets, Competition and Consumers bill, which would hand over huge swathes of power to the competition watchdog, risks becoming the next example in series of mishaps in which the UK’s firms and disruptors are further held back by Conservative-sanctioned red tape.
And so Labour ends up looking like the better option once again: not because of anything the party is offering, but because business feels like it’s been failed one too many times by the governing party. It’s hardly an inspiring narrative.
Labour is the party of Davos, not business
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It’s been a lucrative week for the Labour Party. Tickets for its business conference next year are reported to have sold out in four hours on Wednesday, raking in a cool £400,000 for the party’s war chest – and that’s before you add in the dozens of sponsors for the event, which will be paying a pretty penny to have their logos placed next to the rose.
Sir Keir Starmer and Rachel Reeves’s prawn cocktail offensive seems to be working. The shadow chancellor’s pitch for “Securonomics” – a spin on “Bidenomics” – is a risky strategy, now that the era of ultra-low interest rates has come to an end. Yet it’s been music to the ears of some bigger corporations which may be looking with envy at the subsidies and investment schemes brought in by the Inflation Reduction Act.
The party is also almost starting to look like a safe pair of hands – certainly one that won’t do anything too radical. And while Starmer has made clear that his No10 would not consider any effort to rejoin the European Union, it seems almost certain that Labour would forge a tighter relationship with the bloc – one that some businesses would likely welcome.
But perhaps most importantly, business leaders are reading the same polls we are, and are starting to prepare for the possibility of a Labour government. This isn’t just bolstering the party’s finances; it’s ushering in endorsements as well. Starmer received accolades this week from Blackrock’s chief executive Larry Fink: speaking to the Wall Street Journal, the billionaire gave his backing to Starmer, saying his leadership offered a “measurement of hope”.
It seems Labour is benefitting from two very low bars: one set by the party itself, the other set by its opponent. The simple fact that Starmer is not as rabidly socialist as his predecessor has given him the benefit of the doubt in the eyes of many business leaders. That he’s not a Marxist makes him seem like a centrist (despite there being plenty of options in between). So Starmer has established himself a pro-business leader, without revealing many details about what his party’s strategy towards business might actually be.
Meanwhile, the Tories have provided Labour with gift after gift. The recent hike in corporation tax, coupled with a “temporary” windfall tax on energy companies – which now looks more like a permanent fixture – has left plenty of companies in despair.
Then last year’s mini-Budget fiasco did incredible damage to the party’s reputation for economic competence. It was an overnight destruction of trust which Rishi Sunak, hard as he tries, is struggling to rebuild.
So if the Tories can’t make good on their supposed pro-business reputation, why not take a punt on another party which seems to have got its house in order?
But as the titans of the corporate world line up to kiss the ring, we must ask what sort of businesses can expect to do well under Labour.
The answer is unlikely to be the thousands of entrepreneurs and countless small business owners who are in desperate need of a more competitive business environment.
Stamer seemed to sum up his feelings at the start of the year when he attended the World Economic Forum’s annual conference for the glamorous and well connected in Davos, Switzerland. When asked to choose between Davos and Westminster, the Labour leader chose the former, without a hint of doubt.
Davos has come to epitomise the worst of crony capitalism: an opportunity for the biggest businesses and politicians to schmooze – and come up with ways to keep others out of the club. It’s the sort of place where plans for global minimum corporation tax rates are praised; where government intervention is often cited as the solution to the economic challenges countries face.
Already you can see this view of the world trickling into Labour’s plans for business. Look at what was announced at Labour Party conference: some kind of digital sales tax to increase the (already record high) revenue coming into the Treasury.
The promise of such taxes is always that they will hit the profits of the “online giants” who won’t miss the money. But the real damage will be done to smaller businesses which are also operating online, or selling their products through bigger platforms like Amazon, which they rely on to promote their products to a wider consumer base.
More generally, nothing Labour has proposed looks set to reverse the catastrophic decline in British competitiveness. The Tax Foundation’s 2023 International Tax Competitiveness Index, published this week, revealed that the UK now sits 30th out of 38 OECD countries – falling three places from last year. This is largely thanks to the changes in corporation tax. The only reason the UK hasn’t fallen even further is the temporary “full expensing” scheme, which is encouraging businesses to invest.
The Centre for Policy Studies has released a briefing to go alongside the new rankings, suggesting a range of policy changes that could raise the UK from 30th to 3rd on the list. They include making full expensing permanent, abolishing stamp duty and business rates, and overhauling the UK’s income tax structure – policies the think tank says would raise the same amount of revenue, but in a more business friendly way.
But apart from ensuring full expensing – a policy that both the Tories and Labour want to make permanent if the public finances permit – there is no evidence that the Opposition is ready to take up any of those pro-growth proposals.
But are the Tories? For all the talk of turning the UK into the “world’s next Silicon Valley”, the Government somehow manages to keep putting up barriers just as they take others down. The Digital Markets, Competition and Consumers bill, which would hand over huge swathes of power to the competition watchdog, risks becoming the next example in series of mishaps in which the UK’s firms and disruptors are further held back by Conservative-sanctioned red tape.
And so Labour ends up looking like the better option once again: not because of anything the party is offering, but because business feels like it’s been failed one too many times by the governing party. It’s hardly an inspiring narrative.
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