Miliband's attitude to big business must change

As the party faithful gather in Manchester later today for the start of the four-day conference, parts of the business community will be heading north.

Although recent Labour conferences have been notable for the relative absence of business people, this year, given the party’s standing in the polls and the proximity to the general election, will be different.

Stewart Wingate of Gatwick Airport, Mark Stephens of Aldermore and Angela Knight of Energy UK are among the City names who may not have been as easily convinced in past years to make the journey.

Other executives from companies including TSB, Asda, Deloitte and the London Stock Exchange are also due to be in attendance. But they, and the hundreds of business executives and lobbyists who will help populate the fringe events around the main body of the conference, will be there to ensure that in producing its manifesto for the 2015 election, Labour is at least aware of the vital role the business community plays in the economy and beyond.

It was at last year’s Labour conference, in Brighton, that Miliband set the tone for how an administration led by him would deal with big business.

“Labour would freeze energy prices,” read one headline at the time; “Labour to freeze energy prices for TWO years,” screamed another.

But, aside from his specific plans to appease concerns about rising energy bills by freezing prices while carrying out a competition review of energy suppliers – a review that has already been started by the Competition and Markets Authority, it should be noted – what his speech last year demonstrated was a step change in the way Labour treated big business.

Although having previously spoken of supporting “productive businesses” over alleged “asset strippers”, what he failed to do until this point was to vocalise exactly which industries he believed fell into the latter category.

With last year’s speech, he did just that, picking on the “Big Six” energy suppliers. He has since gone on to target the big banks, property landlords and train-operating companies, among others.

With each attack, the mantra has been the same: large monopolistic corporations are “ripping off” consumers and this must not be allowed to happen.

Miliband’s solution has also been highly similar for each industry – to propose competition reviews to help end such monopolies and allow what he perceives to be an equal playing field for smaller companies.

If only it were that simple. What he has failed to appreciate, despite much advice from some within his party and outside, is that simply aiming fire at big business will not work.

For one, many of the policies he has proposed have already been overtaken by competition reviews initiated by the current administration.

Others are fundamentally flawed. His ideas for the property industry were met with widespread derision and, though intended to make renting more affordable, led to suggestions that property landlords would simply sell up and reduce the available housing stock.

As we report this weekend, the long-respected Institute of Economic Affairs is warning that policies such as the energy freeze are “trivial” and designed simply to win votes.

We also report that he and shadow Chancellor Ed Balls are expected to commit to cut business rates, which will be welcomed by many smaller retailers.

Such popular measures aside, on the one hand it would seem that many of Miliband’s business policies are either unworkable or likely to lead to unintended consequences. But on the other hand, what he risks doing by propagating them is alienating an important part of the society that he is trying to win over.

Although large corporations do not themselves have a vote, their employees do and often take note when their employer is criticised. More importantly, as was demonstrated during the latter stages of the Scottish referendum campaign, big businesses are not afraid of speaking out when they need to.

Banks, insurance companies and energy companies helped frame the debate in Scotland in the last few weeks of the campaign, pointing out the concerns of their industries were the Union to end. Although these were not party-political overtures, they emanated from a sense of frustration that their place in the Scottish economy appeared to be taken for granted. It also marked the first time since the financial crisis that companies from sectors perhaps once viewed by the electorate less favourably than others have chosen to stand up and be counted.

I am not suggesting, for example, that one of Britain’s biggest banks might come out in April in favour of the Conservative Party – far from it. But, if Miliband is to learn anything from the Scottish campaign, it should be that business is ready to stand up and be counted in a way that it has not done for some time.

Although its voice in the forthcoming general election debate is likely to be more muted than it was over the past few weeks, it is likely to use key lobbying organisations such as the CBI and industry-specific groups to make sure that Miliband’s plans are fully debated and understood by the electorate at large.

Although the Labour leader may feel that, with the Scottish referendum out of the way and the polls in his favour, he has much to be pleased about, the business leaders gathering on the sidelines of his conference will feel that he has much to do in order to please them.

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