News reflection: Does lost credibility matter?

January 15, 2015

Is the Labour Party – which under Tony Blair’s leadership carefully constructed a pro-business stance – in danger of losing any remaining credibility it has with business?

The UK news this week has been peppered with stories about a bust up between the Labour Party and some high profile business leaders.

The mudslinging began when Stefano Pessina, the executive chairman of Walgreens Boots Alliance (owner of Boots the Chemist) and its single largest shareholder, told the Sunday Telegraph that a Labour government would be “catastrophic”.

Labour leader Ed Miliband hit back by saying that the head of the UK’s biggest chain of high street chemists “ought to pay his taxes” rather than “lecture people” about how to vote, adding that he would “brook no criticism from a tax exile from Monaco”.

Some well-known business figures including Sir Martin Sorrell, chief executive of WPP, Lord Rose, former chief executive of Marks & Spencer, Brent Hoberman, co-founder of and Jacqueline Gold, chief executive of Ann Summers, then criticised the Labour leader by saying that he was trying to shut down criticism of his policies with personal attacks.

While such a response from well-known Conservative supporters was unsurprising, business people with links to the Labour party, such as Simon Woodroffe, founder of Yo! Sushi and a former Labour Party donor, and Lord Jones of Birmingham, a former director general of the CBI and a trade minister in Gordon Brown’s government, also joined the attack. Lord Jones said he worried about the “mood music being created by the Labour Party” and that he had “not heard Miliband utter one world about why it’s good to make a profit in Britain”.

Chuka Umunna, shadow business secretary and the man whose job is to build bridges between the Labour Party and business, retorted that outspoken attacks by business people on a potential party of government were “not in in their shareholders’ best interests”.

Both ‘sides’ eventually lowered the temperature. Chuka Umunna said: “We’re not spoiling for flight with business at all – we’re very, very keen to work with business”, while a spokesman for Stefano Pessina said his comments had been “taken out of context” and that he was “expressing his personal views only and is not campaigning against Ed Miliband or the Labour Party”.

So it ends with a grudging handshake, but is Labour’s credibility with business all but gone now? Maybe, but it is an issue the party will worry about on the other side of the General Election in May. Its election strategy is one of courting its ‘core voter’ which does not include the business community. A recent Populus poll found that 61% of voters want the next election winner to be “tough on big business”. There are more votes to be gained in attacking business people – especially if inequality and tax avoidance angles can be used – than in nurturing relationships with them.