One of Labour's most effective operators. Photo:Getty
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Why Labour is playing for a draw as far as business is concerned

Labour's policies deserves a better relationship with business that it has. But its aggressive rhetoric has done it unnecessary harm.

On Monday Ed Miliband launched a brave if somewhat forlorn attempt to neutralise some of his more strident business critics in the run up to May 7th.  By making an appeal to pro-EU sentiment the centrepiece of his election manifesto for business, the Labour leader attempted to play up fears that a future Conservative government would preside over an EU exit, with all that would mean for the dampening of trade and investment.

As an electoral tactic, reinforced by a full page advertisement in the Financial Times, the move was only partially successful.  Grumbles quickly emerged from business leaders like Siemens UK boss Juergen Maier who had been quoted in Labour’s ad saying “The prospect of a referendum that may or may not happen, at a date yet to be decided upon, with a choice between two unknown options, is profoundly worrying for business leaders”. 

Individuals and their companies did not deny the quotes, which were all in the public domain.  But there was clear irritation at the apparent co-option of business voices in the Labour Party’s election campaign - particularly as the business leaders in question were given very little opportunity to prevent the inclusion of their quotes in such a partisan communication.

Frosty Relations

The communications between Ed Miliband and the corporate world have been somewhat testy ever since his infamous caricaturing of businesses as either predators or producers in a party conference speech in 2011.

And in a pre-election skirmish in January that was clearly calculated to undermine Miliband’s business credentials, the Daily Telegraph carried a critical interview with outspoken multi-billionaire Stefano Pessina, chairman of high street chemists Boots.  Pessina – an Italian citizen who pays his personal taxes in Monaco – was quoted saying that if the Labour Party acted in government as it speaks in opposition “it would be a catastrophe.”  

Some commentators believe that  Miliband came off better in the ensuing controversy, pointing out that it is not for foreign tax exiles to tell the British people how to vote.  However, it was not long before Miliband was forced to defend his personal approach to tax planning and indeed the tax practices of his small band of business supporters in the right wing press. 

Meanwhile, other British business leaders accused the Labour leader of stifling debate by making personal attacks on Pessina.

Unfortunately, in a Newsnight interview around the same time Shadow Chancellor Ed Balls struggled to recall the name a business supporter he had met earlier that day. 

It seems safe to say that the business community will not be coming to the rescue of Ed Miliband in time for May 7th, save for a few Labour-created peers in the House of Lords and individuals like Simon Franks, the philanthropist co-founder of on-line movie business LoveFilm, and Dale Vince of green energy firm Ecotricity.

It was all very different under New Labour.

The Cosy Years

Tony Blair’s biographer John Rentoul described how much the former Prime Minister was fascinated by entrepreneurs, identifying with their reforming instincts and propensity for risk taking.  Blair was also keen to attract alternative sources of party funding as New Labour sought to reduce its financial dependency on the unions. 

His team pursued business endorsements assiduously in the run up to the landslide victory in 1997.  Building on the party’s long term seduction of business leaders, dating back to John Smith’s ‘prawn cocktail offensives’ of the early nineties, Body Shop founder Anita Roddick was one obvious target for the New Labour team.  At that time she was one of only two business people recognisable to the general public, the other being of course Richard Branson.

Roddick had long been courted by the Liberal Democrats and took some convincing that it was worth her while switching sides in order to defeat the Conservatives.  But like many people in the mid-1990s she was despairing of the visibly fragmenting Conservative government of John Major.  She had felt particularly let down by Major’s lack of action on behalf of Ken Saro Wiwa, the Nigerian environmental and human rights activist executed by military dictator Sani Abacha in 1995.

Labour’s first TV broadcast of the meticulously executed 1997 campaign was a masterstroke. It focused on why big business was delighted by the prospect of Prime Minister Tony Blair.  Anita Roddick’s interview led the broadcast followed by comments from Terence Conran of Habitat and Chair of Granada TV Gerry Robinson. Labour never did get a plug from Branson, who restricted himself to a photo-op with Blair standing next to one of his red locomotives.

Of course it all ended in tears.   In his damning history of the rise and fall of New Labour, The End of the Party, Andrew Rawnsley catalogues how allegations of corporate influence started early for  Blair, with the appearance of a direct conflict of interest over relations with Labour donor Bernie Ecclestone and the protection of tobacco advertising in Formula One racing.  The story broke in 1998 but dated back to a personal meeting between Ecclestone and Blair just a few months after his election.

The perception of favouritism to business donors and lenders persisted throughout Blair’s time in office, reaching a low point with the ‘cash for honours’ scandal in 2006.  Despite receiving a knighthood, Anita Roddick gave up on Blair over the Iraq war

Too Late to Tango?

It is interesting to speculate whether the Blair and Brown governments would have played out differently if they had paid less attention to business leaders as sources of cash and instead paid more serious attention to supporting the growing movement for socially and environmentally responsible ‘stakeholder inclusive’ business practices.

Blair certainly had sufficient popular support - and the parliamentary majority - to effect progressive reforms to corporate governance and regulation, but he and his ministers had no interest in that particular form of modernisation. 

Perhaps a less timid company law review in the early years of New Labour might have tempered some of the excesses of ‘financial capitalism’ that caused the Great Recession of 2007-9.   However in all likelihood such reforms would not have had a material impact on the global banking madness that precipitated the financial meltdown.  

Although Gordon Brown was among its most hubristic cheerleaders, light financial regulation was not invented by New Labour.  And countries with more effective systems of corporate governance and regulation such as we see in northern Europe were not immune to the crash.  Casino banking can only be prevented by effective system-wide regulation as Brown has now accepted

So with the benefit of hindsight, how is Labour is to learn the lessons of the Blair/Brown years and the deeply troubled relations with big business they represented?

In my view it is unhelpful to create simplistic caricatures of business people.  The predator versus producer commentary was a divisive mistake and should have been withdrawn.  Businesses are social institutions, just like political movements - neither wholly virtuous nor completely venal.

That is why Labour must continuously emphasise principles of good corporate governance, regulation and transparency, creating real forums for effective policy making with business organisations both in opposition and in government.  Businesses need help navigating the rampant forces of globalisation, competition and social and environmental change through high level dialogue and engagement with political leaders.

The Labour party should also champion cross-party initiatives to support small business and entrepreneurship, which are the real drivers of a productive and competitive economy.  To his credit Chuka Umunna has been particularly effective in this regard. 

And finally political leaders should avoid like the plague any action that implies preferential treatment for any source of promised support whether that is from individual business leaders or any other special interests, and this should apply before, during and after their time as government ministers.

Ed Miliband and Chuka Umunna have provided solid evidence that this is the general approach they favour.  So it is a pity that their good work to date has been drowned out in the absence of more cordial and constructive relations with the business community.

But we can perhaps forgive the Labour Party for not focusing on pre-election celebrity endorsements this time around.  It would do them no good in government and is probably not what the public is looking for. 

David Wheeler is President and Vice-Chancellor of Cape Breton University in Canada.  He was an academic advisor to the British Labour Party between 1986 and 2001 and worked at The Body Shop International from 1991 to 1998.  He is writing here in a personal capacity.

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Chuka Umunna calls for "solidarity" among Labour MPs, whoever is voted leader

The full text of shadow business secretary Chuka Umunna's speech to Policy Network on election-winning ideas for Labour's future, and the weaknesses of the New Labour project.

There has never been an easy time to be a social democrat (or “democratic socialist” as we sometimes call ourselves in Britain). Whereas the right can demonise the poor and extol the virtues of the market, and the hard left can demonise the market and extol the role of the state, our position of constraining the domination of markets and reforming the state is, by definition, more complex.

It is nonetheless the case that social democracy has a historic responsibility, in every generation, to renew democracy and preserve a civic culture. This is achieved not through soundbites and slogans, but through the hard-headed development of a progressive politics that reconciles liberty and democracy, new comers and locals to our communities, business and workers, in a common life that preserves security, prosperity and peace.  This historic mission is all the more urgent now and my determination that we succeed has grown not weakened since our election defeat last May.

But, in order to be heard, it is necessary to make balanced and reasonable argument that both animates and inspires our movement, and which is popular and plausible with the people.  The first is pre-requisite to the second; and there is no choice to be made between your party’s fundamental principles and electability. They are mutually dependent - you cannot do one without the other.

We are in the midst of choosing a new leader and it is clear to anyone who has watched the UK Labour Party leadership election this summer that amongst a significant number there is a profound rage against Third Way politics – as pursued by the likes of Bill Clinton, Tony Blair, Gerhard Schröder and others - as a rejection of our fundamental values.

In the UK there is a view that New Labour accepted an uncritical accommodation with global capital that widened inequality, weakened organised labour and we were too close to the US Republicans and too far from the European left.

I do not believe this is fair, not least because we rescued many of our public services from the scrap heap when we came to office in 1997 and there were very significant achievements  we should celebrate.  New Labour renewed our National Health Service in a fundamental way; we built new schools and improved existing ones; we set up new children’s centres all over the country; we brought in a National Minimum Wage; we worked with others to bring peace to Northern Ireland; we introduced civil partnerships.  Just some of our achievements.

However, though we may take issue with the critique, I do not think we can simply dismiss out of hand those who hold critical views of New Labour. Like any government, the New Labour administration made mistakes - it could and should have achieved more, and done more to challenge the Right’s assumptions about the world. In the end, it is not unreasonable to be ambitious for what your party in government can achieve in building greater equality, liberty, democracy and sustainability. It is far better we acknowledge, not reject, this ambition for a better world, as we seek to forge a new politics of the common good fit for the future.

Realising our values in office has been disrupted by globalisation and the surge of technological forces that are displacing and reshaping industry after industry.

Some argue that globalisation as an ideological construct of the right. But we must recognise that we live in an increasingly integrated world in which markets have led to an unprecedented participation of excluded people in prosperity, a rise in living standards for hundreds of millions  of people and a literacy unprecedented in human history – this is particularly so in emerging economies like my father’s native Nigeria. And the internet has led to a level of accountability that has disturbed elites.

Yet, this has been combined with a concentration of ownership that needs to be challenged, of a subordination of politics that requires creative rather than reactive thinking, and these global forces have exacerbated inequalities as well as helped reduce poverty.

So it is important that we understand the sheer scale and impact of new technologies. At the moment we are engaged in a debate about Uber and its threat to one of the last vestiges of vocational labour markets left in London, those of the black taxi cabs and their attainment of 'The Knowledge'. But the reality is that within the next decade there will be the emergence of driverless cars so we have to intensify our exploration of how to support people in a knowledge economy and the realities of lifelong learning, as well as lifelong teaching. As people live longer we will have to think about how to engage them constructively in work and teaching in new ways.

Once again, I'm addressing all of this, Social Democracy requires a balanced view that domesticates the destructive energy of capital while recognising its creative energy, that recognises the need for new skills rather than simply the protection of old ones. A Social Democracy that recognises that internationalism requires co-operation between states and not a zero sum game that protectionism would encourage.

Above all, Social Democratic politics must recognise the importance of place, of the resources to be found in the local through which the pressures of globalisation can be mediated and shaped. Our job is to shape the future and neither to accept it as a passive fate nor to indulge the fantasy that we can dominate it but to work with the grain of change in order to renew our tradition, recognising the creativity of the workforce, the benefits of democracy and the importance of building a common life.  Sources of value are to be found in local traditions and institutions.

This also requires a recognition that though demonstration and protest are important,; but relationships and conversations are a far more effective way of building a movement for political change.

One of the huge weaknesses of New Labour was in its reliance on mobilisation from the centre rather than organising. It therefore allowed itself to be characterised as an elite project with wide popular support but it did not build a base for its support within the party across the country, and it did not develop leaders from the communities it represented. It was strong on policy but weak on strengthening democratic politics, particularly Labour politics.

Over half a million people are now members, supporters or affiliated supporters of our party, with hundreds of thousands joining in the last few weeks. Some have joined in order to thwart the pursuit of Labour values but many more have joined to further the pursuit of those values, including lots of young people. At a time when so many are walking away from centre left parties across the Western world and many young people do not vote let alone join a party, this is surely something to celebrate.

So it is vital that we now embrace our new joiners and harness the energy they can bring to renewing Labour’s connection with the people. First, we must help as many them as possible to become doorstep activists for our politics. Second, I have long argued UK Labour should campaign and organise not only to win elections but to affect tangible change through local community campaigns. We brought Arnie Graf, the Chicago community organiser who mentored President Obama in his early years, over from the U.S. to help teach us how to community organise more effectively. We should bring Arnie back over to finish the job and help empower our new joiners to be the change they want to see in every community – we need to build on the links they have with local groups and organisations.

I mentioned at the beginning that in every generation Social Democracy is besieged from left and right but the achievements of each generation are defined by the strength of a complex political tradition that strengthens solidarity through protecting democracy and liberty, a role for the state and the market and seeks to shape the future through an inclusive politics. Solidarity is key which is why we must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office.

Yes, these are troubled times for social democrats. All over Europe there is a sense among our traditional voters that we are remote and do not share their concerns or represent their interests or values.  There is surge of support for populist right wing parties from Denmark to France, of more left wing parties in Greece and Spain and in Britain too. There is renewal of imperial politics in Russia, the murderous and abhorrent regime of ISIL in the Middle East, volatility in the Chinese economy and in Europe a flow of immigration that causes fear and anxiety.

But, the task of Social Democracy in our time is to fashion a politics of hope that can bring together divided populations around justice, peace and prosperity so that we can govern ourselves democratically. We have seen worse than this and weathered the storm. I am looking forward, with great optimism to be being part of a generation that renews our relevance and popularity in the years to come.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.