Britain's business community has largely ignored the Labour Party since the fall of Gordon Brown, but with a general election on the horizon, the corporate world is tuning in again.
A sign of this renewed interest is that business delegates turned up to Labour’s annual conference in Manchester this week if not in droves, then at least in greater numbers than at any time since Labour was in power.
At £1,300 (€1,655) a head, Labour’s corporate package, which included breakfast, lunch and a place at Monday night’s reception, was a snip compared with the Tory’s £2,500 (€3, 189) business offering, although the Tories will provide a lunch with David Cameron and George Osborne.
The corporate world’s interest has been piqued not by cost-saving, but by concern at what a Labour government might mean for business should the party win next May’s general election.
At last year's conference, Ed Miliband, the Labour leader, announced plans to tackle runaway energy bills by placing a cap on prices. The energy giants howled and Centrica's then chairman, Roger Carr, called the policy "a recipe for economic ruin". The rest of the UK's business community – the majority of whom are, of course, energy users – quietly dismissed the policy as populist rhetoric that would never come to pass. But one year closer to an election and business is starting to worry Labour might actually get in.
Electoral lead
While Miliband’s personal ratings remain abysmal, even when compared with those of David Cameron, opinion polls consistently give the party an electoral lead.
Business delegates who made it to Manchester would not have heard much to cheer them. Among Miliband's proposals are a return to a higher personal taxation rate of 50 per cent (despite evidence a tax hike is unlikely to boost overall returns and will damage investor sentiment); an extraneous levy on tobacco firms, which already contribute billions to Exchequer, but appear to have replaced banks as the new bogeymen; and a hike in the UK minimum wage, against the advice of the independent Low Pay Commission, a creation of the former Labour government.
Business bodies were quick to respond. John Cridland, director-general of the Confederation of British Industry (CBI), said: "We heard very little about the crucial role of healthy and thriving businesses in creating prosperity for all,". Simon Walker, director general of the Institute of Directors called Labour's tax plans self-defeating and envy-driven.
High-cost London
But just because business doesn’t like these ideas, it doesn’t mean the voters won’t. Miliband has put improving the National Health Service (NHS) at the heart of his manifesto, fixing his banner to a British touchstone. It is just a shame for business that Labour can’t think of more economically-friendly ways to fund this popular investment.
Ignore the rhetoric and whoever wins the election will be so fiscally constrained by the UK’s huge deficit that there can only be a marginal difference between Labour and the Tories in power. The escalating cost of operating in London is far more challenging for most investors in the UK than all that political posturing.
Estate agency Savills says London is now the most expensive city in the world for companies, having risen up the rankings from fifth in 2008.
The news will compound fears that multinationals see London as high-cost because of the capital’s world-leading property prices, despite the promises of both Labour and the Tories to attract investment by keeping business taxation in the UK at the lowest level in the G7, (if not nearly as low as Ireland’s 12.5 per cent).
