John Cridland's assault on Miliband completes the CBI's divorce from reality

The CBI head presents the Labour leader's plans as dangerous Bolshevism. But in an age of market failure, most businesses won't agree with him.

"[It] raised the hairs on the back of my neck". That was the reaction of CBI head John Cridland to Ed Miliband's conference speech. What could have inspired such terror? In an interview in today's Times, Cridland cites "price controls, wage controls, land controls, increased corporation tax" and Miliband's alleged contempt for "large companies" as evidence of his nefarious socialism. "It’s the aggregation of those five. It has caused business to scratch their heads...It’s quite a philosophical speech, and a shift to the left," he says. 

But look beyond the rhetoric, and Cridland's intervention is more revealing of the CBI's conservatism than it is of Miliband's radicalism. His attack on "wage controls", for instance, is a reference to Miliband's pledge to examine the possibility of increasing the minimum wage in sectors such as finance, construction and computing. At present, with the minimum wage now worth no more than it was in 2004 (after being continually eroded by inflation) and with 4.8 million workers paid less than the living wage, it is the taxpayer that is forced to pick up the bill in the form of tax credits and other in-work benefits. Why should making those businesses that can afford to pay their staff more do so, be considered dangerous leftism? Were Cridland a more enlightened figure, he might have noted that those companies who pay their employees the living wage of £7.45 an hour (£8.55 in London) report increased productivity, reduced absenteeism, improved morale and higher staff retention rates. 

And it's not only here that Cridland is engaged in crude political spin. On corporation tax, Miliband has modestly proposed increasing the main rate from 20% to 21% in order to fund a reduction in businesses rates for commercial premises with an annual rental value of £50,000 or less. This move would still leave the UK with the second-lowest corporate tax rate in the G20 (after the coalition reduced it from a starting level of 28% in 2010) and one well below the US's 39%, Japan's 38% and Germany's 30%. It was the Conservatives' Zac Goldsmith who quipped after Miliband's speech, "The CBI attacks Miliband's plans for small firms. That suggest he might be on to something."

As for the Labour leader's plan to force developers to "use or lose" their land, framed by Cridland as Bolshevik-style requisition, that enjoys the support of that well-known radical, Boris Johnson. As the mayor recently told the London Assembly: "To constrict supply to push up prices by land-banking is plainly against the economic interests of this city. I’m all in favour of using the powers where there are clear cases of land-banking, where people could go ahead with developments that would be massively to the benefit of this city."

While developers sit on vacant land and wait for its value to go up, thousands of houses with planning permission are left unbuilt. Figures published by the Local Government Association show that there are 400,000 homes with permission that have not developed, while in London, where demand is highest, there are 170,000, this at a time when housing starts have fallen to 98,280, less than half the number required to meet need (230,000). Is it really anti-business to want to ensure employees are able to live in the city where they work? 

On energy prices, Cridland argues, "I think we have to be honest and open with the public that bills are going to have to go up for households to make up for years of insufficient investment". He is certainly right about the need for greater investment, but why should families be penalised at a time of collapsing living standards?

As another famed socialist, John Major, observed at last week's Press Gallery lunch, "I do not regard it as acceptable that they have increased prices by this tremendous amount. Nor do I regard their explanation as acceptable, that they are investing for the future. With interest rates at their present level, it’s not beyond the wit of man to do what companies have done since the dawn of time and borrow for their investment rather than funding a large proportion of their investment out of the revenue of families whose wages have not been going up at a time when other costs have been rising".

One searches in vain in Miliband's speech for any evidence of his alleged loathing of all large companies, but when the head of the UK's biggest employers' group (albeit one that still represents just 5% of businesses) so casually dismisses reforms that would improve conditions for millions of workers and owners, it becomes clearer what the Labour leader meant when he first spoke of "the predators" and "the producers". 

CBI Director General John Cridland addresses the CBI Scotland annual dinner on September 6, 2012 in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

The new catchphrase that John McDonnell hopes will keep Britain in Europe

The shadow chancellor's gambit could prove decisive. 

John McDonnell has a new catchphrase: “Tory Brexit”.

It may sound uncomfortably close to the name of a new character in Star Wars but it’s what McDonnell and his team believe is the best route to turn Labour voters out for a Remain vote in the coming referendum.

Shadow ministers and Labour MPs are increasingly worried that Labour voters don’t know what the party’s stance on the referendum is – and even more troublingly, they don’t much care. That much of the media has covered the contest largely through the prism of the Conservative succession has only made matters worse. The government’s message about the dangers of Brexit, too, are calibrated towards the concerns of Tory voters: house prices, security, and the economy.

As I write in this week’s New Statesman, Vote Leave, the official campaign to secure a Brexit vote on 23 June, has long known that the referendum will be won and lost among Labour voters, hence their early focus on putting more money into the National Health Service and the dangers of the Trans-Atlantic Trade Partnership (TTIP).  

Vote Leave have also, quietly and effectively, been putting it about that a Brexit vote would allow fairer immigration rules for non-European migrants, something that, I’m told, is beginning to make itself felt among Labour voters who have relatives in Africa and from the Indian subcontinent in particular. It is families from these nations that have felt the biggest effects of Theresa May’s failed attempts to meet the government’s net migration target, with even short trips to attend weddings, funerals or graduations falling foul of the Home Office.

McDonnell’s “Tory Brexit” line is intended to defuse those lines of attack. As one aide puts it, “the idea you can get away from TTIP by leaving Europe under a Tory government – it’s nonsense. You’d have TTIP max”. Similarly, the party will push back in the minority press against the idea that a Leave vote negotiated by a Conservative Prime Minister to the right of David Cameron would be more liberal on migration from outside Europe after Brexit, with Seema Malhotra, the shadow chief secretary to the Treasury, to play a big role in that enterprise.

(It also has the added bonus of keeping open the idea that Brexit under a leftwing government mightn’t always be the worst thing in the world, which, depending on your perspective, either defangs the minority of Labour politicians who are pro-Brexit, or allows McDonnell and Jeremy Corbyn  to keep the party united while not closing the door on supporting a Leave vote at a later date. Either way, it’s canny politics.)

Will it work? The fear for Remain is that Vote Leave have a strong message to get their voters out, though the Remain campaign are confident that they are out-organising the Leave campaign on the ground. The fear of an unmuzzled Conservative party may prove decisive in getting Labour voters to the polls on 23 June. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.