James Frayne: Watch out for Tories moving against business in Birmingham
A number of Tory strategists and commentators are guilty of mis-attributing anti-business sentiment to the electorate.
No business executive that even vaguely follows political events can have been surprised at the anti-business policy and rhetoric coming out of the mouths of politicians and delegates at Labour Conference this week. It’s been clear what politicians like Jeremy Corbyn and John McDonnell think about many businesses for years. If elected, we’d see nationalisation, higher taxes and vast swathes of new regulation designed to give additional new rights to workers. It would all cost businesses a fortune.
The Commons and the polls are tight and we face uncertain times. The Brexit negotiations are up in the air and a number of powerful Conservative politicians are angry with the Prime Minister. It’s not impossible to imagine that chaos will simultaneously further damage the Government’s popularity and bring about an early election. While I find it hard to imagine English voters in the Midlands and the North electing Corbyn as it stands, amid chaos it’s at least a possibility. Businesses are therefore right to start thinking about how they would deal with a new and hostile Labour Government.
But business executives can only take so much comfort from Corbyn’s struggles with the provincial English electorate. Because there is an increasingly vocal movement within the Conservative Party that capitalism needs reform - and with it, the role of business too. It would be too much to claim there was political consensus on the role and limitations of modern businesses – as Corbyn and McDonnell’s Labour really are out on the fringes - but there is developing cross-party agreement that ordinary people are being let down by the way the economy works and the way businesses operate. There are very few defenders of the thing that businesses tend to love: the status quo.
Somewhat out of the blue, Theresa May this week gave a very pro-business speech in New York City, pledging to keep corporation tax low and to create a dynamic, business-friendly economy. This will be welcomed. And we occasionally hear - in what amount to threats to the EU - that Britain will create something of the equivalent of a North West European Singapore that will out-compete the EU. Again, many executives will welcome this.
But business leaders should keep a close eye on what happens at the Conservative Party conference next week in Birmingham. Not just from the main Conference platform, but amongst the various think tank and campaign fringe meetings. This will give a better idea of what businesses are likely to expect from the Conservative Party in the medium term.
The chances are that they will hear MPs, commentators and strategists arguing that the Conservatives have got to show that they’re on the side of the “little guy” against big business, that the Party should stand against the excesses of high executive pay and that the Party should insist big businesses pay more in tax. May's speech aside, slowly but surely, Conservatives are shaking off their self-conscious affiliation to limited Government – and, with businesses in mind, their belief in very low taxes and light regulation. As I’ve written before, Thatcherites are becoming a rare breed in the Party.
Business leaders could be forgiven for saying they’ve heard it all before. For a few years now, a small number of senior Conservative politicians and commentators have been saying similar things and it ultimately hasn’t led to decisive Government action. A few well-placed briefings with the FT and others, and some concerned public briefings by senior businesspeople has usually helped quieten Conservative voices down: “of course we’re on the side of businesses”. And again there will be May's NYC comments to cling to.
But things are different now for four reasons. Firstly, because the types of people calling for change within the Conservative Party aren’t eccentric, marginal figures that can be written off as “thinkers” (a derogatory term in politics). Those calling for change include hard-headed strategists like Nick Timothy, the PM’s former Chief of Staff. Secondly, big businesses are in many Conservative activists' bad books because of their behaviour in the referendum, when many came out for Remain and backed the Government’s lurid threats about what would immediately follow a Leave vote. Thirdly, there are increasing signs that Conservative voters are open to paternalistic action to deal with supposed excesses of modern businesses and so the prospect of a backlash from core voters has diminished. And fourthly, and by far most importantly, the Government needs money to pay for its massive NHS spending pledge.
In short, the Government has a huge need for cash fast – and more voices calling for action than restraint. The Party conference will likely set mood music for future Conservative policy, rather than marking an actual policy shift. Any real shift is more likely to come in the Budget. But the mood music will be important. Businesses leaders should be watching out for signs of how Conservatives would justify – practically, morally and electorally – a move against them. Will the Conservatives focus on apparent tax avoidance? Or will they focus on those that apparently do harm to society – either against the environment or against public health?
I strongly believe that some Conservative strategists and commentators have mis-attributed anti-business sentiment to the electorate. In my experience, unless you actively put it in voters’ minds, they rarely volunteer anti-business ideas and they practically never use the language that many are now suggesting the Party uses on the economy. Furthermore, also in my experience, voters are extremely nervous about the prospect of businesses quitting the country post-Brexit – even Leave voters.
However, I’m in a minority: it’s becoming near-orthodoxy within the Conservative Party to suggest that the status quo on the economy is no longer tenable and that something must be done to convince voters that Conservative politicians are on voters’ side against misbehaving big businesses. Given that businesses rarely enter into political combat against Government, it looks like this Conservative experiment might just have to play itself out.