So, is it really time in invest in Britain, as the heads of fourteen banks and other financial institutions have declared in a letter to the Times today, ahead of Keir Starmer’s investment summit? Sorry, but the more that I read the letter, signed by Amanda Blanc of Aviva and David Solomon of Goldman Sachs among others, the more it reads like a note scrawled by hostages suffering from Stockholm Syndrome.
Do they really believe that Britain was a basket case under the Tories but that now under Starmer and Labour it has suddenly become a land of opportunity? Or are they fearful of what Rachel Reeves might have in store for them in the Budget, with this part of a lobbying effort to avert the worst?
When Labour does seek dialogue with business it just ends up listening to the loudest voices
The flattery in the letter has been laid on with a trowel. ‘With greater stability,’ they write, ‘[Britain’s] attractiveness is increased even further.’ What stability would that be? We have a government which is suffering the same ructions after three months that the Tories suffered after a decade in power. We have a transport secretary who nearly drove away a major investor in a UK port by calling it a ‘rogue operator’. And we have a public sector wage bill which is going through the roof as the government nods through fat pay rises without any agreement to increase productivity.
The saddest thing about this letter is that its fourteen signatories will very likely get their way: as a result of this saccharin charm offensive Reeves probably will pull a few proposals which would have impacted on them. Proposals to equalise capital gains tax with income tax seem already to have been watered down; ditto to remove the higher rate of pensions tax relief, which would have harmed Aviva and Legal & General – both signatories of today’s letter. But you can bet Reeves and her government won’t be listening nearly so much to the smaller businesses which look to suffer from higher employees’ National Insurance contributions – now being mooted as a means of raising government revenue in blatant disregard for Labour’s manifesto promise not to touch NI. The government will be ploughing ahead with its employment rights bill, which will make life a little more inconvenient and expensive for large business but a lot more so for their smaller competitors.
This was the curse of the Blair government. Overall it wasn’t too unfriendly to business, but it was the big companies which ended up getting their way, as reams of regulations took out smaller competitors. The care home industry was a case in point: pettifogging rules over door widths and the like pushed a lot of privately-run homes out of business while larger competitors mopped up business for their purpose-built care homes.
This is the nature of Labour. Not a natural ally of capitalism, when it does seek dialogue with business it just ends up listening to the loudest voices – the corporate bigwigs who can afford to entertain ministers royally, not to mention donate to their wardrobes. Small businesses, on the other hand, tend to go unheard. There are too few MPs on the Labour benches with experience of setting up and running businesses – as a result, they think the big corporates are representing the private sector as a whole.
So no, don’t be fooled by this hostage letter. Britain hasn’t suddenly become a paradise for investors; rather it has become a country where business people are scared of what Labour might do to them.
Comments