Labour gets off on wrong foot with bosses
Setback for Miliband over business manifesto blunders
At the launch of his party’s business manifesto, the Labour leader bemoaned Britain’s poor productivity record and lack of certainty over issues such as membership of the European Union.
But business leaders gave his plans a lukewarm response and accused him of playing down the party’s plans to tax and curb business activity. One said the party could even RAISE corporation tax. They:
- distanced themselves from being included in Labour’s campaign material.
- criticised his plans for capping energy prices
- raise the top rate of income tax to 50%
- attacked proposals to put workers on boards, and
- said his intention to create a British Investment Bank was pointless.
However, a number of top firms complained about Labour using their comments in a full-page newspaper advert.
Juergen Maier, chief executive of Siemens UK, said the party had “overstepped the line” by using his quote for party political purposes.
Kellogg’s also took exception and a spokesman said “eyebrows were raised” by the use of a quote in the advert.
The firm said it was contacted by the Labour party but was not given the chance to remove its association to the advert.
Labour argued that party had simply quoted public statements by these businesses about the place of Britain in the European Union.
Mr Miliband, launching A Better Plan for Business said Labour would seek to close the productivity gap, saying it was Britain’s biggest economic challenge. He said businesses succeeded “despite the odds against them” and a lack of certainty about the long term.
However, today’s launch drew a sceptical response from business leaders.
Simon Walker, Director General of the Institute of Directors, said: “Labour’s policy on Europe may not be the trump card Miliband supposes it is. There are plenty of other important issues that will be in the minds of businesses in the run-up to the election.
“Labour must make sure that warm words are backed up by practical policies. Businesses will support their commitment to remove international students from arbitrary net migration targets, for example.
“However, their pledge to keep the UK’s rate of corporation tax the lowest in the G7 still allows scope for an increase, and a crude ‘freeze’ on energy prices will do little to reform the market and could complicate the ongoing Competition and Markets Authority investigation.”
There was greater support for Labour’s plan to improve transparency on pay is welcome, but the IoD warned that putting employees on remuneration committees “will have far reaching ramifications for corporate governance.”
The IoD also questioned the value of a new British Investment Bank. Malcolm Small, the IoD’s Financial Services Adviser, said: “It is hard to see what value the proposed British Investment Bank would add, since we already have the British Business Bank and various other schemes to boost lending to small and medium-sized businesses.”
George Bull, senior tax partner at Baker Tilly said Labour was intent on raising the top income tax band and could meet its commitment on corporation tax even by increasing it.
“The publication of Labour’s business manifesto today confirms beyond doubt that the party intends to reverse the cut to the top rate of income tax, which would see rates for those earning £150,000 or more a year rise from 45% to 50%.
“There may be manifesto scope for Labour to increase corporation tax rates. The party has reiterated its pledge to maintain the most competitive corporate tax rate in the G7. Currently, the G7 country outside the UK with the lowest corporation tax rate is Canada at 26.5%.
“This means that a Labour Government would have the flexibility to raise UK corporation tax rates by up to six and half percentage points from its current level of 20% without breaking its manifesto commitment.
“In a nod to small businesses, Labour has also promised to cut and then freeze business rates for more than 1.5 million small business properties, instead of going ahead with another cut to corporation tax.’