Is Labour really the party of business?
Labour is “being recognised as the natural partner of business”, declared Rachel Reeves today, as she delivered her first major speech of the election campaign and vowed to lead the most “pro-growth Treasury in our country’s history”.
Addressing an audience at a Rolls-Royce factory, the shadow chancellor – who labelled her party both “pro-worker and pro-business” – vowed that there would be “no additional tax rises” beyond those she has already set out if Labour wins the general election.
Reeves gleefully pointed to a letter published in The Times today, in which 121 business leaders have endorsed Labour’s economic plans.
“It’s time for a change”, declare its signatories – including the JD Sports chairman, Wikipedia founder and former CEOs of Heathrow, JP Morgan and Aston Martin – who warn that Britain is “in urgent need of a new outlook to break free from the stagnation of the last decade”.
“Labour has shown it has changed and wants to work with business,” the letter adds.
Labour is borrowing from the Tory playbook. Ahead of the 2015 election, over 100 corporate leaders endorsed the Conservatives.
It is symbolic of an apparent shift in business mindset. Today’s letter contains one of the very same signatories from 2015: the former Tory donor and Iceland boss, Malcolm Walker, who, as recently as January 2023, had even toyed with the idea of standing as a Tory MP at the next general election. (At the time, Reaction’s ever-prescient Hound did ask if he had picked the right party).
Labour’s shadow business secretary Jonathan Reynolds, celebrated today’s endorsement from big business as “an extraordinary turnaround” and “a recognition of how Labour has changed” since the Corbyn era.
But is the list as impressive as he makes out?
While the list contains some fairly big names, it is difficult to gauge just how representative this group of Labour backers are of business in general.
In truth, behind closed doors, Labour may be somewhat disappointed that – despite the immense efforts of Starmer and Reeves to woo business leaders – no chief executives of the UK’s very largest FTSE 100 companies are among the signatories.
Why not?
Labour’s plans to strengthen protections on workers’ rights – including curbing the use of zero-hours contracts – may have put some off signing. Or perhaps it is rather more due to an increased wariness among business leaders to take a partisan stance. In the lead up to Brexit, a number of high profile learnt that taking a political side in an election period alienates customers.
Can we feel confident that a Labour government would do a better job than our current one in helping Britain “break free from the stagnation of the last decade”? And does her depiction of Labour as the “natural partner of business” feel convincing?
It is a little difficult to escape the conclusion that, at least in the more immediate term, Reeves is largely promising more of the same. Which helps to explain the uncharacteristically muted reaction of the markets to last week’s shock general election announcement. As Maggie Pagano wrote in Reaction last week, their reaction – or lack thereof – suggests it may well make marginal difference to the economy whether it is Labour or the Tories in power.
The shadow chancellor has been clear that the focus of a Labour government will be on investment rather than a Corbyn-style nationalisation. She is not promising a spending splurge nor is she promising to raise corporation tax (which she has pledged to cap at its current rate of 25%.)
And she mimics Liz Truss with her incessant emphasis on growth. Albeit with one key difference: Reeves insisted today that a Labour government will not hold a budget until the party has an accompanying independent forecast by the Office for Budget Responsibility. She has learnt a salutary lesson from Britain’s 49-day Prime Minister.
Write to us with your comments to be considered for publication at letters@reaction.life