What was unimaginable in the days of Jeremy Corbyn has become routine under Sir Keir Starmer. The rapprochement between Labour and capitalism was on lavish display last Thursday when a throng of business bosses crowded into an executive suite at the Oval cricket ground in south London for an audience with the Labour leader and Rachel Reeves, the shadow chancellor. Both told some 400 senior corporate leaders that Labour is now “the party of business”. The mantra was repeated by Jonathan Reynolds, the shadow business secretary, and Tulip Siddiq, the shadow City minister.
Organisers gleefully reported that every £1,000-a-head ticket for this all-day “Labour business conference” had been snapped up within four hours of being offered. Among the attendees were representatives from AstraZeneca, Barclays, HSBC, Goldman Sachs, Google, Legal & General and Shell. No one said, as Ed Miliband once did as Labour leader, that elements of business act like “predators”. The event was the most explicit demonstration yet of Labour’s concerted effort to get close to business and to be seen to be close.
There’s clearly an audience among companies and investors for the message that they would be better off with Labour after the havoc inflicted by Brexit, the “fuck business” posture of Boris Johnson, the financial chaos unleashed by Liz Truss and Kamikaze Kwarteng, and Rishi Sunak’s screeching U-turns over net zero and high-speed rail. One senior Tory involved in his party’s effort to rebuild broken bridges with business reports that whenever he visits the chief executive of a FTSE 100 company he finds that “Rachel Reeves has got there before me”.
This romance invites the question: who is seducing whom? Is business falling head over heels for the steely charms of Ms Reeves and Sir Keir’s chat-up lines about desiring “a partnership”? Or has Labour’s leadership gone weak-kneed by gazing at the corporates through rose-tinted spectacles? Some of the attendees at Labour business events are genuine long-term supporters. There are also a few converts from across the aisle. Shortly before the schmoozefest at the Oval, Labour was delighted by an endorsement from Richard Walker, the boss of the Iceland supermarket chain and an erstwhile donor to the Tories.
Truth to tell, the great majority of corporate executives aren’t attracted to Labour because they have been melted by Sir Keir’s inspirational oratory. They want to be in a relationship with Labour because they can read the opinion polls. Like bees to a honeypot, money swarms in the direction of power. Business chiefs almost universally expect that it will soon be Labour ministers who are deciding how they are regulated and how much they are taxed. That’s why they want to rub shoulders with the next government.
It is not so self-evident to all members of their party why Sir Keir and Ms Reeves seem mad keen to be seen as chummy with the captains of industry and bosom pals with the potentates of finance. The corporate world is not regarded with affection by the electorate. The most recent Ipsos Veracity Index gives business leaders a public trust score of 30 out of 100, just ahead of estate agents, but some way behind trade union officials. Nurses come top, as they always do. Don’t ask about journalists.
Labour’s leadership reasons that while voters may not love big business, they do tend to associate entrepreneurship with success and aspiration, and Sir Keir would like to be associated with those things too. An even more important assumption in Labour’s upper ranks is that it is good for their credibility if people who handle lots of money indicate that they think the party can be trusted not to crash the economy or wreck the national finances. The leadership has not just studied the New Labour playbook; there are people on Sir Keir’s team who helped to write it. There’s been conscious imitation of how Labour wooed business leaders over lunches and dinners – the so-called “prawn cocktail offensive” – in advance of Tony Blair’s landslide election victory in 1997.
Labour also thinks it is imperative that it is trusted by the City after the election. There will be rapid and severe trouble for a Starmer government if it doesn’t command the confidence of the money-movers in financial markets. It is not simply to armour herself against Tory attacks that Ms Reeves puts so much relentless stress on her “iron-clad commitment” to “fiscal responsibility”. She doesn’t want the “bond vigilantes” to pull the plug on a Labour government the way they went after Ms Truss when she shattered her credibility.
The central pitch to business is that a Labour government will sustain a stable environment in which to invest and won’t mess with company planning by constantly fiddling with the tax regime. Compare and contrast, they tell chief executives, with a Tory party so volatile it changed prime minister twice and chancellor three times in a single year.
Labour also thinks it won’t achieve its ambitions for government without the help of business. Sir Keir’s boldest claim is that, under Labour, Britain can achieve the highest sustained growth in the G7. He is also promising that he can get 1.5m homes built in five years while accelerating the construction of critical infrastructure projects. He won’t pull all that off without buy-in from business. There is persistent doubt about the strength of Labour’s commitment to the green prosperity plan, its most future-facing and potentially transformational project. Making a success of that is heavily dependent on persuading the private sector to put more of its money into the transition to a carbon-free economy.
Ms Reeves is offering some lollipops to business by pledging not to raise corporation tax above 25% in the first term of a Labour government and promising to retain the “full expensing” regime that rewards companies with a tax break when they invest in new plant and technology. She upset some of her colleagues by saying that a Labour government will not reimpose a cap on bankers’ bonuses. That came as a surprise because it is not so long ago she was whacking the Tories for scrapping the cap.
There are issues with bringing it back. While popular with voters, there’s little evidence the cap changed the behaviour of banks for the better. It is ineffective as a curb on excessive pay because there are other ways for banks to lavish lucre on top traders and executives. The argument Ms Reeves chose to make was that Britain needs a thriving financial sector because it employs a lot of people and generates a lot of revenues. While true enough, this didn’t shield her from attacks by some on the left. The Scottish National Party seized on what it called a “shameful” volte-face as evidence for its claim that there is nothing to distinguish Labour from the Tories. There have even been some rumbles of dissent, a rarity these days, from within the shadow cabinet. Some of Ms Reeves’ perplexed colleagues question the wisdom of Labour coming over as plutocrat-friendly when the typical voter has been so crunched by the cost of living crisis. That’s a warning to the Labour leadership not to take its wooing of the City so far that it leaves everyone else feeling jilted.
The zeal with which Labour is promoting itself as the party of business can make its approach to the world look more skewed than it actually is. Labour is also putting some demands on companies by saying it wants more done to address the gender pay gap and to improve the diversity of boardrooms. Labour hasn’t resiled from its plans to abolish non-dom tax status, impose VAT on private school fees and close a lucrative tax loophole exploited by private equity dealmakers. It is also planning a significant increase in the responsibilities employers owe to those who work for them. This includes one pledge to ban zero-hours contracts and another to end the pernicious practice of fire and rehire. “We are going to level up workers’ rights in a way that has not been attempted for decades,” Sir Keir told the audience at the Oval. He added: “That might not please everyone in the room.” And it didn’t.
Scratch below the surface of this apparent romance between Labour and business and you won’t find true love. It’s more a marriage of convenience.
A Labour government will be in power to serve the whole country, not just one sectional interest, however important. Collaboration in the pursuit of common goals makes sense. Cosiness would be a mistake. Labour should be guided by Goldilocks when setting the temperature of its relationship with business. Not too cold, but not too hot either.