I was on 5 Live this morning (very early), talking about Ed Miliband and Labour's relationship with business. They asked me in, partly because I'm a former Treasury official - but also because I wrote the opening chapter to Labour's Business - a collection of essays on what Labour needs to do to regain its credibility on economic policy.
Miliband took a step backwards with business in his party conference speech in Liverpool last September - all that talk of predators didn't do him any favours with big biz. Digby Jones called it a "kick in the teeth" at the time, and the CBI's John Cridland wasn't too pleased either.
Since then, Miliband has recrafted his pitch to business - he's dropped the "predator" language, and to his credit pioneered the "responsible capitalism" agenda. His call for Stephen Hester to refuse his bonus will have scored him a few much-needed points on his own backbenches, and with the public - but equally it will have alarmed some business leaders.
Miliband's biggest headache, though, is the deficit. Following the OBR's gloomy projections last November, it's now clear if Labour were elected in 2015, it would have to continue cutting spending. That's why Ed M and Ed Balls decided to agree with the public sector pay freeze, and are injecting a small dose of fiscal conservatism into their rhetoric.
But Labour is still not credible with business, on the economy or the deficit - despite the worsening economy. The latest Guardian ICM poll says only 28% trust Miliband and Balls on the economy, well below Cameron/Osborne's 46%. Even though GDP went negative in Q4, most business leaders are sticking with the Coalition's plan - for now. Miliband's hope is that business runs out of patience with the Government, and starts looking to Labour for an alternative. But that moment has not yet arrived.
This is in stark contrast to 1997, when Labour was riding high with business. Back then, Labour figures such as Geoffrey Robinson, David Sainsbury and Ronald Cohen (I worked for all three) led the party's charm offensive with the City, and succeeded in securing the loyalty of British business for a decade.
Fast forward to 2010, and - as David Miliband pointed out in the New Statesman this week - no major business endorsed Labour in the general election.
As I say in my chapter for Labour's Business, the party must do more to reassure business that it has the right approach to the economy, and adopt more of a private enterprise approach to job creation - as it can no longer rely on growing public sector employment.
Here is John Springford from the Social Market Foundation, responding to my chapter - he argues for a stronger "people" approach to growth, with more investment in skills. But he warns that Labour invested heavily in skills in the boom years, and much of it was wasted. The challenge now is to find more effective ways to upskill our workforce.
Recent Comments