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Shadow chancellor Rachel Reeves will next month up the ante in Labour’s fight with the Conservatives to be “the party of business” when she travels to New York to meet big investors in the UK.
Reeves’s message to Wall Street and political leaders in Washington on a three-day visit to the US will be that “with a Labour government, Britain will be open for business”, according to one ally.
Rishi Sunak on Monday launched a major new effort to reconnect the Tories with business leaders after the breakdown in relations between the two sides when Boris Johnson was prime minister.
Although Downing Street denied that Sunak’s Business Connect event in London was intended to counter Labour’s recent success in wooing corporate leaders, privately Tory officials conceded that they need to raise their game.
One said: “Labour have been doing this big prawn cocktail offensive. It may not amount to much in substance, but they have clearly been doing a lot of work on it.”
A former Tory cabinet minister added: “Business wants the Conservative party to understand it and was disappointed under Boris’s leadership when it didn’t. There’s a sense of relief now that Rishi is PM, but the jury is still out, given the history with Boris.”
Sunak’s appearance at the London event, in which he gave a speech and took some occasionally spiky questions from an audience of 250 business leaders, won some positive reviews.
Chancellor Jeremy Hunt admitted that business taxes were too high after UK corporation tax rose from 19 to 25 per cent this month, as Sunak was pressed by company bosses to make good on pledges to repair ties with the private sector.
Burberry chair Gerry Murphy said the government had scored a “spectacular own goal” by scrapping tax breaks for tourists, while the marketing veteran Sir Martin Sorrell said Sunak had excellent business knowledge but now needed to deliver.
The legacy of Johnson and his abrasive approach to business — he notoriously said “fuck business” in 2018 in response to corporate concerns about a no-deal Brexit — has given Labour a head start over Sunak in wooing UK plc.
Tesco chair John Allan has praised Labour’s economic plan, saying he was “hugely pleased” with party leader Sir Keir Starmer’s “five missions” for transforming Britain. Business leaders have flocked to Labour events.
The party’s successful engagement with business coincided with the implosion last year of the premierships of Johnson and Liz Truss, and the opposition party’s double-digit opinion poll leads.
Some Conservatives argue that Labour’s charm offensive is a PR exercise to paper over the fact that Starmer, if elected prime minister, would not act in the interests of business.
This week the Financial Times revealed that Starmer and Reeves have held a series of meetings with private equity bosses to discuss future investment from an industry they plan to hit with a £440mn annual tax raid.
Lord Michael Heseltine, former Tory deputy prime minister, expressed scepticism about Labour’s “prawn cocktail offensives” with business as long ago as 1992, declaring: “Never have so many crustaceans died in vain.”
Franck Petitgas, the former Morgan Stanley executive hired this month by Sunak as his business and investment adviser, has told friends that the prime minister has already reversed the damage of the Johnson era.
But Jonathan Reynolds, shadow business secretary, said: “Businesses can see Labour has changed.” He insisted that the party was serious about “partnering with firms” to restore growth to the economy.
There has been large-scale schmoozing. Reynolds claims that he, Starmer and Reeves have met thousands of business leaders, normally holding a business breakfast every Tuesday before the shadow cabinet convenes.
This helps explain why Labour has had to book a bigger space for the business forum at its party conference in Liverpool this October. Labour is also recruiting more business engagement staff.
For Starmer, who has declared that Labour should be “proud of being pro-business”, forging strong links with Britain’s boardrooms is an essential part of his centrist rebranding of the party.
The Labour leader has binned some of the policies of his hard-left predecessor Jeremy Corbyn, such as nationalising half a dozen industries and seizing £300bn of shares in listed companies.
Starmer has also promised an iron grip on the public finances, as well as supportive corporate measures, including an industrial policy and a freeze on business rates.
But some business groups have been quietly urging Starmer to water down a package of Labour employment reforms which would reverse recent anti-strikes legislation and impose new obligations on employers, such as providing staff with full sick pay, holiday and parental leave from day one at a company.
Ben Page, chief executive of Ipsos, a polling firm, said there were reputational benefits for politicians talking to business leaders given that the latter group were more popular with the public.
“For Labour right now it’s about showing you’re not full of crazed ideas like trying to expropriate everything and tax everyone to hell,” he added.
“Labour are not traditionally seen as a business-friendly party. The idea has always been that Tories are ‘mean but efficient’ and Labour are ‘generous, nice but not competent with money’.”
Peter Bingle, a veteran lobbyist, said business leaders had been impressed by Labour, and Reynolds in particular.
“The Tories have forgotten that they are supposed to be the party of business and they aren’t at the moment: it’s a mix of higher corporation tax and also just not spending time with people,” he added.
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