Are the Tories tipping into anti-business rhetoric?

The government announces more regulation business won't like.

This announcement was always going to be tricky for a Conservative prime minister to make. The relationship between the Conservatives and the business community is stronger and longer established and runs much deeper than the marriage of convenience between business (and the City especially) and New Labour, and stronger than that with the LibDems. While the Labour Party continues to try hard to re-engage and woo business leaders (its top team were out in force at a Labour Party business reception earlier this week, including the one-man charm machine that is shadow business secretary Chuka Umunna) it still has a long way to go.

The Conservatives on the other have been trying to juggle keeping business onside with not being seen to be too cosy with such natural allies as large corporate donors and wealthy business leaders. This balancing act partly explains both the prime minister and his chancellor making so much noise about anti-tax abuse regulations.

At an awards dinner recently one senior FTSE100 executive told me he was fearful that all the aggressive government rhetoric on tax was in danger of tipping into anti-business rhetoric. He was appalled by what he felt was precisely the opposite of the sort of language he expected from a Conservative prime minister, even one leading a coalition government.

The lobbying debate got even more heated when another announcement – that plans to force cigarette brands to adopt generic packaging were to be shelved – was linked to alleged lobbying activities of Conservative Party strategist Lynton Crosby (whose firm counts tobacco giant Philip Morris among its clients).

The rights and wrongs of who asked for what favours from which politicians (which is essentially what lobbying is) matters less than the message the whole affair sends out. While the boisterous, point-scoring politics of Prime Minister’s Questions is a bit of noise and we can enjoy the “banter” of David Cameron being called “the prime minister for Benson and hedge funds” Ed Miliband being accused (again) of sitting “in the pocket of the unions”, these stories continue to undermine public trust and confidence in both politicians and business.

Trust is already at a something of a premium, following the financial crisis. The recession may have been caused more by a reckless few financiers than the business community per se, but for much of the public there isn’t that much to distinguish bankers from big business. It’s a problem business secretary Vince Cable started the week trying to address. He launched a consultation paper at the London Stock Exchange called Trust and Transparency, which proposes a whole raft of measures on areas ranging from beneficial ownership (much of which was announced at the G8 Summit earlier in the summer) right through to a much-needed review of the system for pre-pack administrations.

Cable launched the paper in the City because many of the current problems with trust started in the Square Mile during the financial crisis. As Cable said, there has been “a seemingly endless succession of mis-selling and price-rigging scandals; and accusations of greed and unethical behaviour against leading figures in the industry.”

It’s no surprise that this year’s Edelman Trust Barometer found that UK banking scores some of the lowest trust scores for any sector in any country.

The problem with any trust is that it takes a long time to build, is shattered in an instant and takes even longer to rebuild. If the public mistrusted the relationship between business and politics in 2008 it is not surprising the only thing that has changed since then is that the sense of mistrust and the outrage have grown.

Politicians need to be seen to be tackling these problems and as much as businesses won’t like it, that always means more regulation. Cable is right to introduce measures to give investors more power to influence executive pay. While the details of plans to introduce a register of the beneficial owners and detailed issues such as bearer shares will not be raised by the public when politicians start pounding pavements at the next election, it is essential the public understands that politicians and the business community are taking steps to put their respective houses in order. Without that trust will never be restored.

This piece first appeared on economia.

Photograph: Getty Images

Richard Cree is the Editor of Economia.

Photo: Getty
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“If not evolution then revolution”: temperature rises in Catalonia as independence vote looms

Clashes between Barcelona and Madrid over the disputed referendum lead to protests and arrests.

Summer may finish today according to astronomers, but the heat in Barcelona has been steadily rising over the past few weeks. Things reached boiling point yesterday when the Spanish police arrested 14 Catalan officials responsible for organising a referendum on independence for the region. They also seized about 9.8 million ballots intended for this vote, which the Catalan government wants to hold on 1 October.

The Spanish central government, the conservative People’s Party (PP), is completely opposed to the referendum and has so far refused even to discuss it with the Catalan administration. This prompted the pro-independence Catalan parties in power to start planning it unilaterally.

On 6 September, the Catalan parliament passed the Self-Determination Referendum Act, which established how the vote will be organised and held. The question would be: “Do you want Catalonia to become an independent state with the form of a republic?” And since the electoral register can only be accessed by the Spanish authorities, whoever is allowed to vote in the Catalan regional elections can have their say.

Legal experts are divided over whether this kind of independence referendum is allowed by the Spanish constitution, which was approved in 1978. This was just three years after the death of fascist dictator Francisco Franco, and one year after the first democratic elections since the 1936-39 Spanish Civil War.

According to the constitution, sovereignty resides with the Spanish people. Opponents of Catalan independence claim it is therefore up to the whole of Spain to decide such a matter – and that in any case, it would have to be approved by the Spanish government.

But those in favour of the Catalan process argue that, given the complete lack of political will in Madrid regarding the referendum, the unilateral way is legitimate even if it may be declared illegal according to Spanish law.

As expected, two weeks ago the constitutional court suspended the Catalan Self-Determination Referendum Act, and yesterday’s police operation followed. Shortly after the raid began, during a government control session in the Spanish parliament in Madrid, prime minister Mariano Rajoy said “the rule of law has worked and it’ll continue doing so”. He insisted that the government was just “doing its duty”.

In this charged atmosphere, while Rajoy was still speaking, the MPs of the Catalan parties supporting the referendum walked out of the room, while those of the ruling PP chanted: “Leave here your salaries!”

Later in Barcelona, the Catalan regional prime minister, Carles Puigdemont, said Spain had “de facto suspended self-government in Catalonia and de facto applied the state of emergency”. Surrounding him during his speech, several other high officials looked funereal.

Applying further heat to the situation, the head of the Spanish tax agency signed an order on Tuesday that gave control of the Catalan public finances to the Spanish state. From then on, and at least until the end of the year, the Catalan administration isn’t allowed to allocate any money that hasn’t been sanctioned by Madrid.

However, the Spanish central government could still go even further and, using Article 155 of the constitution, suspend self-government in Catalonia – not de facto but officially. This extreme measure, never used in modern Spain, would in theory make possible what Catalans often joke about: tanks from the Spanish army would drive down the avenues of Barcelona.

Catalonia is the richest Spanish region, last year contributing 19 per cent of the country's GDP, while its population represents about 18 per cent of the total. It has long considered itself historically and culturally different from the rest of Spain, and yet just a decade ago an independence referendum would have been inconceivable.

In 2006, just 15 per cent of Catalans wanted “an independent state”. But that year the ruling PP referred the Catalan statute to the constitutional court, which declared part of it illegal. Then, after the PP won the general elections in 2011, the Spanish government started refusing to engage with Catalonia on the issue. 

Support for Catalonia becoming an independent state remains at around 41 per cent in favour and just under 50 per cent against. However, when Catalans were asked if they would vote in a referendum not sanctioned by Madrid, 67.5 per cent said yes, and of those, 62.4 per cent would vote “Yes”.

As of today ballot boxes are still being kept in a secret location, and Puigdemont and other Catalan officials insist the referendum will be held one way or another. In the past, the Catalan PM has said that if “Yes” wins, Catalonia will declare its independence within 48 hours.

For now the atmosphere is tense. On Tuesday, thousands of people took to the streets of Barcelona to protest against the police operation, in front of several offices of the regional government that were being searched.

The biggest demonstration was next to the Catalan finance ministry, which was being searched by the Guardia Civil, the Spanish paramilitary police. Many protesters were carrying the estelada, the unofficial flag of the independence movement – some worn it as a cape, others waved it in the air.

“We are protesting against this unjust situation”, said 47-year-old sales rep Ferran Batalla. “[The referendum] is not an aggression, it’s an option to have justice, an option to ask the people what they think."

The protesters chanted in Catalan, “We will vote!”, and in Spanish, “We want to vote!” Some were distributing flyers that read in Catalan, “We vote to be free”, and graffiti on a telephone booth said in Catalan, “Voting is not a crime.”

In English a giant banner on top of the building that hosts the Catalan finance ministry read: “Welcome to the Catalan Republic”. At one point, police coming out of the building were met with deafening whistles before the crowd started chanting in Catalan: “Out with the occupying forces!”

“I don’t want to fight anybody in Spain, but we’ve reached a point in which we can’t understand each other any more”, said Batalla, who complained about the fact that the central government has always sternly refused to talk about planning a referendum. “When the state doesn’t want to negotiate, and doesn’t want you to leave, and doesn’t want to hear from you, and mistreats you… They think we are stupid, and we are fed up and this is over, because they are making us feel as if we are the bad ones."

In nearby Plaça de Catalunya just a month ago, barely a flag could be seen among the huge vigil following the terror attack on Barcelona. And if that proved to be a show of social and political unity between Madrid and Barcelona, today the Spanish government on the one side, and the Catalan authorities and many of their people on the other, couldn’t be more polarised.

Many Catalans mention the Scottish independence referendum in 2014, and the agreement with Westminster that preceded it, as an example of how things could and should happen. But the two situations are actually very different.

Catalonia makes up a far larger chunk of Spain's population and economic output than Scotland does of the UK. Meanwhile, Spain has a constitution that the government considers untouchable, while there is nothing similar in the British legal framework.

Late Tuesday, Rajoy made an official statement urging the Catalan government to get back to  law and to democracy, and stop at last this “escalation of extremism”.

"This referendum can’t be held, it has never been legal nor legitimate,” he said, before adding: “And every illegal act and every infringement will get its response, which will be determined, proportional and rigorous”.

The PM’s intervention was followed by a huge cacerolada in Barcelona and many other Catalan cities – meaning people started banging pans in their windows in protest. In the streets, demonstrations went on through the night as people tried to prevent the Guardia Civil from leaving the Catalan finance ministry. The protest was mostly peaceful, but police cars parked outside were destroyed while people chanted a rhyme in Spanish: “¡Esta noche os vais sin coche!”, or “Tonight you will leave without a car!”

Finally, at around 4am the first Guardia Civil agents started leaving the building. There were moments of tension between the protesters and the Mossos d’Esquadra, the Catalan regional police, who opened the way for the Guardia Civil.

Wednesday began calmer, as both sides considered their next steps. The Spanish government remains focused on preventing the vote from happening, but has said it will be open to dialogue afterwards. “On 2 (October) we will talk and this new dynamic will take us to look for solutions because the coexistence of all Spaniards must continue in Spain... We’ll have to sit together and talk, and that we will do”, Íñigo Méndez de Vigo, the spokesperson for the government, told Spanish Radio. 

By the afternoon, there hadn’t been word of response from the Catalan authorities, but having invested so much in the referendum and seeing the atmosphere in the streets, it’s not clear how they could backtrack.

In a bar in the Eixample area of Barcelona, right outside the city centre, people discuss the situation over their mid-morning coffee. “What happened yesterday was shocking, independently of whether one supports independence or not,” says 37-year-old Italian IT consultant Paolo Mosca, who has lived Barcelona since 2013.

“I understand that within the Spanish legal frame the referendum isn’t legal, I know this, but within the Catalan legal frame it is legal because it was approved in the Catalan parliament”, says Sergi Pedraza, a developer and who was born in Catalonia as the son of Andalusian parents.

“The only possible solution, because the situation has become unsustainable, is a referendum, but one well planned and agreed with the state”, says Álex Castaño, 28, also a developer, originally from Seville and who has lived in Barcelona since 2015.

All three would be eligible to vote and Sergi says he’d vote “Yes” while Álex says he wouldn’t vote. Paolo says he’d vote “Yes” because he understands and supports the will of those who want independence. But he and Álex say they’d probably leave if Catalonia becomes independent, because of the uncertainty of what may happen to today’s cosmopolitan Barcelona.

By noon the street demonstrations had resumed, this time in front of the Catalan High Court, where hundreds of people, many of them again carrying and wearing esteladas, were protesting against yesterday’s arrests. Loud Catalan music could be heard.

“The government in Madrid is insulting the intelligence of the Catalan people,” says retired businessman Enric T Coromina, who adds that he studied law and is “politically from the right”. He is wearing a barretina, a Catalan traditional red wool hat, and a T-shirt saying in English: “Make no mistake, I’m Catalan, not Spanish”. He’s sitting on a folding chair; has brought food, water and a blanket, and says he’s ready to spend the night here. He’s sure the vote will happen – he will back “Yes”– and will be legitimate even if not legal under Spanish law.

"If evolution is not possible from within the system, then there’s only one other way left and that’s revolution, civil disobedience,” he concludes, as more and more people join the protest.