Why small businesses must be at the centre of Labour's economic strategy

By promoting balanced growth and increasing employment, small businesses exemplify the investment economy Labour wishes to build.

At the recent Progress conference, Ed Miliband gave a speech in which he talked about the need to establish a new political and ideological consensus, different to that of the post-Thatcherite settlement we live in now. But it was in the subsequent Q&A that one of the most interesting points was raised. "Small businesses," Miliband said, "should be a natural constituency for Labour". It is an area of policy and a section of society largely ignored by the party’s dialogue, but it shouldn’t be.

Small businesses represent many of Labour’s economic philosophies: connection with communities, accountability and high-quality work. For a "One Nation" party, with all of its Blue Labour flavourings, the idea of a connection between community and business is has obvious attractions. By employing locals and contributing to regional growth, small businesses exemplify the investment economy Labour aspires to build. 

Those who wish to demonise the British left have long depicted Labour as anti-capitalist, anti-business and narrowly pro-union. As always, the words of Tony Crosland are a great help here. Crosland argued that post-war capitalism is not the impossible framework for pursuing equality that Marxism believes it to be – the Labour Party is fundamentally a parliamentary socialist party, not a revolutionary one. If the 20th century Labour governments taught us nothing else, it is that Labour wants to harness capitalism to achieve greater equality; the minimum wage from New Labour, the technological investment of the Wilson years and the Attlee government's welfare state, are all examples of how the party has sought to curb the destructive tendencies of the modern western economy. If nothing else, this is the pursuit of 2012’s political buzzword, 'responsible capitalism', a progressive agenda within the contemporary socio-economic framework.

Politically and economically, Labour is an anti-monopolistic party. It makes perfect sense for it to support small businesses in the face of large nameless multinational corporations. One of the guiding principles is that of accountability, for which Tony Benn’s five questions of power are always relevant: what power have you got? Where did you get it from? In whose interests do you use it? To whom are you accountable? How do we get rid of you? These questions are far more easily answered when asked to a small business than a large multinational; an issue never more relevant than at the moment with the tax-dodging antics of Google and Amazon.

Labour has made its objective clear; to get people into good work and to get the economy moving, both of which are staples of the German business model much feted by the left. This attitude has been personified by the reinstatement of the Small Business taskforce and its resultant policy review report, putting businesses back at the centre of the push for growth and greater economic diverity. The 2008 crash and subsequent recession demonstrated the overdependence of the UK on the City and its lack of economic variation. Businesses, both small and medium-sized, will go some way to addressing this and toward meeting the challenges of regional struggles during austerity, injecting growth back into deeply affected areas such as the north east. The Labour Party is a progressive political force and small businesses should be, and are, a key part of its programme for a better economy. 

Dan Holden is deputy editor of Shifting Grounds

Shadow business secretary Chuka Umunna speaks at last year's Labour conference in Manchester. Photograph: Getty Images.

Dan Holden leads on political research at ComRes. He tweets @DanSHolden.

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The Brexit Beartraps, #2: Could dropping out of the open skies agreement cancel your holiday?

Flying to Europe is about to get a lot more difficult.

So what is it this time, eh? Brexit is going to wipe out every banana planet on the entire planet? Brexit will get the Last Night of the Proms cancelled? Brexit will bring about World War Three?

To be honest, I think we’re pretty well covered already on that last score, but no, this week it’s nothing so terrifying. It’s just that Brexit might get your holiday cancelled.

What are you blithering about now?

Well, only if you want to holiday in Europe, I suppose. If you’re going to Blackpool you’ll be fine. Or Pakistan, according to some people...

You’re making this up.

I’m honestly not, though we can’t entirely rule out the possibility somebody is. Last month Michael O’Leary, the Ryanair boss who attracts headlines the way certain other things attract flies, warned that, “There is a real prospect... that there are going to be no flights between the UK and Europe for a period of weeks, months beyond March 2019... We will be cancelling people’s holidays for summer of 2019.”

He’s just trying to block Brexit, the bloody saboteur.

Well, yes, he’s been quite explicit about that, and says we should just ignore the referendum result. Honestly, he’s so Remainiac he makes me look like Dan Hannan.

But he’s not wrong that there are issues: please fasten your seatbelt, and brace yourself for some turbulence.

Not so long ago, aviation was a very national sort of a business: many of the big airports were owned by nation states, and the airline industry was dominated by the state-backed national flag carriers (British Airways, Air France and so on). Since governments set airline regulations too, that meant those airlines were given all sorts of competitive advantages in their own country, and pretty much everyone faced barriers to entry in others. 

The EU changed all that. Since 1994, the European Single Aviation Market (ESAM) has allowed free movement of people and cargo; established common rules over safety, security, the environment and so on; and ensured fair competition between European airlines. It also means that an AOC – an Air Operator Certificate, the bit of paper an airline needs to fly – from any European country would be enough to operate in all of them. 

Do we really need all these acronyms?

No, alas, we need more of them. There’s also ECAA, the European Common Aviation Area – that’s the area ESAM covers; basically, ESAM is the aviation bit of the single market, and ECAA the aviation bit of the European Economic Area, or EEA. Then there’s ESAA, the European Aviation Safety Agency, which regulates, well, you can probably guess what it regulates to be honest.

All this may sound a bit dry-

It is.

-it is a bit dry, yes. But it’s also the thing that made it much easier to travel around Europe. It made the European aviation industry much more competitive, which is where the whole cheap flights thing came from.

In a speech last December, Andrew Haines, the boss of Britain’s Civil Aviation Authority said that, since 2000, the number of destinations served from UK airports has doubled; since 1993, fares have dropped by a third. Which is brilliant.

Brexit, though, means we’re probably going to have to pull out of these arrangements.

Stop talking Britain down.

Don’t tell me, tell Brexit secretary David Davis. To monitor and enforce all these international agreements, you need an international court system. That’s the European Court of Justice, which ministers have repeatedly made clear that we’re leaving.

So: last March, when Davis was asked by a select committee whether the open skies system would persist, he replied: “One would presume that would not apply to us” – although he promised he’d fight for a successor, which is very reassuring. 

We can always holiday elsewhere. 

Perhaps you can – O’Leary also claimed (I’m still not making this up) that a senior Brexit minister had told him that lost European airline traffic could be made up for through a bilateral agreement with Pakistan. Which seems a bit optimistic to me, but what do I know.

Intercontinental flights are still likely to be more difficult, though. Since 2007, flights between Europe and the US have operated under a separate open skies agreement, and leaving the EU means we’re we’re about to fall out of that, too.  

Surely we’ll just revert to whatever rules there were before.

Apparently not. Airlines for America – a trade body for... well, you can probably guess that, too – has pointed out that, if we do, there are no historic rules to fall back on: there’s no aviation equivalent of the WTO.

The claim that flights are going to just stop is definitely a worst case scenario: in practice, we can probably negotiate a bunch of new agreements. But we’re already negotiating a lot of other things, and we’re on a deadline, so we’re tight for time.

In fact, we’re really tight for time. Airlines for America has also argued that – because so many tickets are sold a year or more in advance – airlines really need a new deal in place by March 2018, if they’re to have faith they can keep flying. So it’s asking for aviation to be prioritised in negotiations.

The only problem is, we can’t negotiate anything else until the EU decides we’ve made enough progress on the divorce bill and the rights of EU nationals. And the clock’s ticking.

This is just remoaning. Brexit will set us free.

A little bit, maybe. CAA’s Haines has also said he believes “talk of significant retrenchment is very much over-stated, and Brexit offers potential opportunities in other areas”. Falling out of Europe means falling out of European ownership rules, so itcould bring foreign capital into the UK aviation industry (assuming anyone still wants to invest, of course). It would also mean more flexibility on “slot rules”, by which airports have to hand out landing times, and which are I gather a source of some contention at the moment.

But Haines also pointed out that the UK has been one of the most influential contributors to European aviation regulations: leaving the European system will mean we lose that influence. And let’s not forget that it was European law that gave passengers the right to redress when things go wrong: if you’ve ever had a refund after long delays, you’ve got the EU to thank.

So: the planes may not stop flying. But the UK will have less influence over the future of aviation; passengers might have fewer consumer rights; and while it’s not clear that Brexit will mean vastly fewer flights, it’s hard to see how it will mean more, so between that and the slide in sterling, prices are likely to rise, too.

It’s not that Brexit is inevitably going to mean disaster. It’s just that it’ll take a lot of effort for very little obvious reward. Which is becoming something of a theme.

Still, we’ll be free of those bureaucrats at the ECJ, won’t be?

This’ll be a great comfort when we’re all holidaying in Grimsby.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.