Why it's time for Labour to reset its relationship with business

A new partnership.

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It’s time for Labour to reset its relationship with business. A new Fabian report In It Together by Ed Wallis and Robert Thinker today proposes that the party should make a ‘big, open and comprehensive offer’ to British business, to show that Labour is ready to govern in partnership with industry.

The idea is that government, at every level, should seek to develop high-trust relationships with businesses, seek to agree shared objectives, and jointly develop the solutions. It is government ‘in coalition’ with business, with new institutional arrangements including a National Economic Council to bring it to life.

This is not a call for Miliband to surrender to his critics; there are no white flags here. Rather it is a practical manifestation of what Ed aspires to: a ‘coordinated’ Germanic model of capitalism. Our hope is that major businesses and a Labour government would be able to come to something near consensus on the direction of travel needed to create a more balanced, fairer economy. The heads of agreement would cover skills, productivity and innovation, the distribution of earnings, carbon emissions, pensions, public health and local community impacts.

A Labour administration would no doubt push to embrace goals more radical than some businesses would find comfortable. However, others would welcome a government working to create the incentives and expectations which would enable them to do the right thing without suffering at the hands of competitors.

Labour should always reserve the right to regulate, but it should first try to help businesses find solutions themselves, in dialogue with all those concerned. The starting point for addressing each of the economy’s major challenges should be to support businesses to change, with firms working together where competition concerns are not an issue.

A new partnership should draw together all issues of mutual concern, in a series of overlapping conversations and relationships. The point of covering so much ground is that it creates the space for give and take. For example, the government might want large firms in a particular sector to be prioritising the Living Wage; while the firms might desperately need help with early-stage innovation or new product standards: with multiple talking points, the scope for constructive relationships expands.

Labour’s first response to the report will come tomorrow at the Fabian New Year Conference. Ed Miliband will address almost 1,000 delegates in a wide-ranging speech and will again show he is not afraid to talk about the economy. Later in a breakout session Andrew Adonis, the Labour peer who has done most to champion a fresh Labour industrial strategy will discuss the report in a session asking how to build more responsible markets.

A fresh approach to business, must sit alongside a fresh approach to politics more widely. Throughout the day, the Fabian conference will consider how politics can rebuild trust with the public. It will consider the constitution, youth disengagement, European reform, and the rise of the minor parties.

This might seem a long way from the question of business-government relationships, but the resolution to both problems may actually be the same. With respect to business mistrust and the crisis of politics, Labour needs to seek out new institutional arrangements which create the incentives for people to come together in the public interest and the setting for stronger, more trusting relationships.

The Fabian Society’s New Year Conference 2015 takes place on Saturday 17 January at the Institute of Education, London. Ed Miliband will deliver the keynote speech and non-members who purchase a ticket will get six months free membership of the Society. The New Statesman is a media partner for the conference and political editor George Eaton will chair a session on "Ukip after 2015"

Andrew Harrop is general secretary of the Fabian Society.

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