Making sure the green shoots don’t wither away

The UK may be in recovery, writes Scott Barnes, but how can we keep it that way?

Recent third quarter GDP figures for the UK showed a growth of 1.0 per cent, however when these figures were announced, many commentators were keen to point out that discounting this summer’s Olympic Games and Diamond Jubilee spending, the economy has remained stagnant year on year. Although this is a continuation of the current pessimism around the UK economy, the question is whether when you take a closer look at the situation, this is justified. 

Some recent research undertaken by us in conjunction with the Centre for Economics and Business Research (CEBR) found that mid-sized businesses have actually, for the most part, been growing well during the past few years of economic stagnation. After taking a closer look at this growth, it found that mid-sized businesses have been able to boost their productivity, with turnover per employee 18 per cent higher than the UK average, and as a result increase their turnover by £25.7bn over the past year. 

In addition, the third quarter of 2012 company liquidations were down 2.8 per cent from the previous quarter, and 6.6 per cent less than the same quarter in 2011. One of the major factors behind this is that the current low interest rates mean that struggling businesses are better able to service their loans and pay off the interest. As a result, banks are less concerned about calling the loan in. Those businesses that can’t afford to tackle the debt itself are given a bit more breathing space, allowing them to concentrate on growing revenue, rather than struggling to meet loan payments. 

The latest quarterly Business Confidence Monitor from the Institute of Chartered Accountants of England and Wales and Grant Thornton shows that business confidence is actually higher in regions outside of London and the South East. There have been some encouraging initiatives recently from the Government and it will be interesting to see how this glimmer of regional confidence is affected by the recent review by Lord Heseltine and the Coalition Government’s "City Deals" plan. Together, these schemes have called for more government funds to be diverted to regional governments and greater powers for mayors to support this entrepreneurialism and dynamism across the UK.

The pervading economic climate continues to be a proving ground for companies, with those that are still in business emerging lean, organised and efficient. Businesses are taking a fundamental look at how their business is run in order to weather the worst of the economic storm. Clear effective governance, robust planning and attention to financial levers mean they are now equipped to deal with this kind of environment. 

Before businesses start to invest again, economic confidence needs to come from somewhere, and the government must shout about how well we’re doing, and keep providing support for British businesses. If just a fraction of the estimated £720bn of cash reserves in British businesses was invested back into the economy, business investment would return to pre-crisis levels. While the "new normal" means we have to adjust our growth expectations, confidence is needed to ensure the recent economic growth doesn't just prove to be an anomaly and continues.

Green shoots. Photograph: Getty Images

Scott Barnes is the CEO of Grant Thornton UK.

Photo:Getty
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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.