With an election looming and politics in upheaval, companies and lobbyists are looking hard at the Labour party’s business policies. Aside from wrangling over its position on Brexit, Labour has been devising the most radical rethink of business’s role in the economy and society since the 1980s.
Rebecca Long-Bailey, the shadow business secretary, and John McDonnell, the shadow chancellor, want big companies to give employees a 10% stake in their business and a seat on their boards. They plan to renationalise rail, water, energy and Royal Mail, increase corporation tax and the minimum wage, and extend workers’ rights. Companies doing business with the government will have bosses’ pay capped and there will be a tax on financial transactions.
There’s plenty more – and this should be no surprise. McDonnell and Labour leader Jeremy Corbyn have waited decades for a chance to run the country and probably thought it would never come. If they make it to Downing Street, why would the veteran leftwingers tinker at the edges?
The Confederation of British Industry is taking Labour seriously and will be doing the rounds at Labour’s party conference in Brighton this week, where Long-Bailey, a Corbyn ally, is likely to announce plans to boost infrastructure and manufacturing.
Josh Hardie, the CBI’s deputy director general, said the lobby group held regular meetings with Corbyn and McDonnell, and his members supported ideas such as infrastructure, “engaging” with workers, and investing in skills. Business also prefers Labour’s version of Brexit – staying as close as possible to the EU – to the Tories’ willingness to crash out.
But Hardie has concerns, too: “Often the Labour solutions are ideological rather than based on evidence. We don’t agree with their approach because we think it will have damaging consequences for our country and communities.”
He added that nationalisation would be a big distraction on top of Brexit and, along with giving workers shares, would send the wrong signal to investors. The economy, he said, was too fragile to increase the burden of taxes and wages on businesses.
There may be something to this, but are Labour’s proposals really so extreme? Many European countries have state-run utilities and railways. Labour’s plan to increase corporation tax from 19% to 26% would simply restore it to the 2011 rate. Theresa May once proposed putting workers on boards. Labour’s plans, including a £250bn investment bank, show a greater commitment to industry than the Tories, who didn’t even talk about industrial strategy until recently.
If anything, received wisdom is swinging in Labour’s direction. You don’t have to be a Marxist to believe capitalism has big problems. The financial crisis, the climate emergency and the rise of populism have left business leaders wringing their hands about how to save capitalism from itself.
Last month, Apple, Amazon and Wall Street bank JPMorgan were among 200 big US companies that redefined their purpose as “improving our society” and not just making money for shareholders. Similar debates are taking place in the UK.
Carys Roberts, chief economist at the Institute for Public Policy Research thinktank, said: “The policies that are being proposed aren’t actually as radical as some people are making out.
“There is a growing recognition in quite unexpected circles that the way capitalism is set up isn’t working for most people and that there needs to be a sea change.”