At a party in London’s St James’s on election night, the many senior business figures present were ecstatic.
We’d had dinner, and the mood during the meal was one of fearful anticipation. At 10 p.m. we gathered round the big screens and up snapped the television exit poll. At a stroke, the atmosphere was transformed. When confirmation came with the firstsignificant results, the backslapping and mutual congratulations began.
What was provoking most of the instant smiles — if I’m honest — was not the thought that the demise of Ed Miliband meant the minimum wage would not be raised (something he’d promised) or that residential rents would not be capped (another Labour pledge) or energy prices frozen (still another), or zero hours contracts scrapped (one more). Rather, it was the disappearance of the mansion tax.
These chairmen and chief executives would no longer face the threat of paying the proposed levy on houses worth more than £2 million. Indeed, as their chortling and toasting made clear, some of them were facing not one but two lots of duty — if their country homes, in addition to their London ones, were also caught.
It’s easy to interpret this reaction as typical of the greedy self-interest Labour had complained so loudly about during the campaign. There’s no question that for many people, the sight of these braying corporate chiefs would have confirmed that Miliband and Co were right to pursue the new property charge.
The glee, though, was not simply relief that the mansion tax had been avoided — after all, these people could afford to pay it, even twice over, without blinking. More, it was a response to genuine deep-seated anger. They believed they had worked hard for properties they had aspired to own, and they deserved them. Labour’s attack was unfair. It was a stifling of ambition. It was anti-business.
Labour claimed not to see it that way. Not once in their rhetoric did the party hierarchy justify the policy by saying they wanted to punish business. It was a measure against those with more than enough, an attempt to begin restoring equality, to raise much-needed funds for the NHS.
But the mansion tax was one of several Labour gambits that inspired loathing in the business community: the prospect of a higher income tax band; market interventions in property and energy; abolition of flexible working via zero-hours contracts; the imposition of a bankers’ bonus tax; overhaul of the rail franchise system; cracking down on fixed-odds terminals in betting shops; ambiguity over the renewal of the Trident nuclear defence contract.
Shares in the companies affected by Labour policies rose sharply on Friday morning after the poll. Similarly, investors’ delight at escaping a Labour government goes much deeper than pleasure at avoiding these plans, some of which were notable for their pettiness. The belief was always that this was the slippery slope: that once in power, a socialist administration under Miliband would let rip.
If challenged, Labour stuck to the script and repeatedly maintained it was pro-business. But you can’t poke the rich on the one hand and maintain you’re for business on the other. Unless someone has inherited money, the likelihood is they acquired their mansion, or mansions, by dint of success in some form of business.
Confirmation of Labour’s anti-business stance came from the fact that nowhere in the party’s manifesto or in media interviews did the leadership spell out how they intended to achieve economic growth, and create wealth. They talked a good game on clobbering the wealthy but had no idea how to create wealth themselves. They’re smart at spending other people’s money, but much less sure about how to generate it.
For Miliband the leftist ideologue, assisting business was nowhere near the top of his agenda. That’s because, fundamentally, he’s at best suspicious of and at worst downright hostile to the needs of capitalism. He was forever talking about ‘Britain’s hard-working families’ and how they should be feted and helped, without giving any thought to where they actually find that work.
This disconnect lay at the heart of the Labour effort and was the prime reason it collapsed so badly: by not promoting wealth creation, it showed itself to be a party that was offering nothing to the aspiring middle classes. Worse, with its mealy-mouthed strictures against business it revealed itself to be a party that would make work more difficult, not easier.
Tony Blair realised the folly of being anti-wealth and thus being seen to be anti-business. To the criticism of many in his party he embraced them both. He knew a fundamental truth: that most people want to get rich, and that their only realistic hope in doing so lay through business.
Miliband’s contradictory claim to be pro-business while attacking those who have succeeded in business was also undermined by the lack of people around him who had ever held down a senior job outside politics. No one in Labour’s senior team, with the exception of Chuka Umunna, the shadow business secretary who used to be a solicitor in a City law firm, had any real commercial experience.
This meant Miliband existed in a bubble of ignorance and suspicion, fuelled by the dated dogma of the trade unions that propelled him to the leadership in the first place. The naivety of Labour in this regard can be frightening. I well remember a senior party figure who went on to become a Cabinet minister telling me how he’d uncovered a plot to fund the Tories ‘using corrupt Hong Kong money’. It transpired that a certain Tory had connections with a Hong Kong property family. There was no suggestion of them making a donation, and no evidence they were corrupt. In the Labour politician’s eyes, however, they were corrupt because they were rich.
But if business has buried its Labour bête noir, what does it think of David Cameron? Don’t imagine the business community has an unconditional romance with Cameron’s Tories. There remain serious misgivings about poor infrastructure (scarcely touched upon nationally during the campaign), lack of skills and suitability for work among British school-leavers and graduates; excessive restrictions on foreigners with those skills; too much red tape; too much tax; and among the banks, a sense of being unwanted and unloved.
These are also corporate chiefs who argued passionately for the Union to be saved, albeit only towards the end of the Scottish referendum campaign. They won that argument, but now find, thanks to the general election, that Scotland is moving ever closer to independence and Cameron may make even further concessions to the rampant SNP.
Their concern about Scotland is as nothing, though, to their anxiety at the possibility of a British exit from the EU. Labour’s only saving grace was that Miliband was pro-EU. Big business in Britain is resolutely pro-EU — although of course they want to see proper reform, an end to the profligacy and the removal of barriers to trade (for all its promise, the EU has still to deliver on the notion of a single market with one set of rules).
Cameron had said he will hold a referendum on Britain’s continued membership. That’s welcomed, although business leaders will not relish any attempt by Cameron to appease the right in his party that may involve a hardening of attitude towards Europe. It should be borne in mind, too, that support for Britain staying in is strongest among multinationals, many of which have made this country their base for Europe, the Middle East and Africa. Already we’ve seen HSBC thinking aloud about moving. If Britain left, the pressure on these companies and banks to relocate away from the UK would be intense.
The pro-EU lobby group Business for New Europe counts on BAE Systems, WPP, the London Stock Exchange, BT and Royal Bank of Scotland. Another pro-EU group, TheCityUK, includes Goldman Sachs, JPMorgan Europe, Bank of America, Citigroup, Deutsche Bank and BNP Paribas. The only major UK company in the Eurosceptic camp is Next, headed by the Tory peer Lord (Simon) Wolfson.
What the pro companies are looking for is a clean, short campaign, with a decisive result in favour of staying in. A protracted debate, laced with xenophobia and watched closely by the EU, would not go down well. Much worse would be defeat and ‘Brexit’.
The hope is that a galvanised, rejuvenated, strengthened Cameron will deliver results that match his talk of greater prosperity and opportunity. For business there’s no question: he’s a lot better than the alternative.