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 is deputy editor of Shifting Grounds

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

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