Labour: the party of business

“Fuck business”. These words of Boris Johnson should be as great a propaganda coup for Labour as Liam Byrne’s equally stupid “I’m afraid there’s no money” note was for the Tories.

This is because it is the final nail in the coffin of the idea that the Tories are the party of business. Which poses the question: how might Labour exploit this?

Of course, politicians should not be in hock to cronyist big monopolies. But the overwhelming majority of businesspeople are not grasping plutocrats but rather people who are struggling to get by, much like ordinary workers. Of the 5.7 million businesses (pdf) in the UK, 4.3 million have no employees and only 41,000 have more than 50.

And the interests of these small businesses are often opposed to those of bigger ones. Smaller firms face high rents (and often upward-only rent reviews) from landlords; banks that deny them finance and sometimes actively try to destroy them; rip-off and unreliable utility providers; the huge buying power of oligopsonistic supermarkets; competition from big firms that can hold costs down by dodging tax; and massive losses if one of their big clients (such as Carillion) goes belly-up. If you want to hear anti-capitalist attitudes, forget Momentum and just ask a small business owner what he thinks of bankers. 

It would be very easy for Labour to position itself as the party of business by championing smaller firms’ interests. For example, more infrastructure spending, not least on broadband. The IoD’s call for more and better infrastructure spending could pretty much be cut and pasted into a Labour manifesto. Also, a national investment bank (pdf) would provide the finance for small firms that banks sometimes deny them, and have the extra virtue of relaxing the grasp of banks over their clients simply by providing competition. And a switch from business rates to a genuine land value tax might help shift the balance of power between firms and landlords; if empty properties were taxed as much as occupied ones, landlords would be incentivized to cut rents.

You might object here that John McDonnell’s talk of the need for “new forms of ownership” and control are anti-business. I’m not so sure. For one thing, it’s possible that some changes to what Diane Coyle calls our “ridiculous IP laws” would help start-ups at the expense of monopolies. And for another, the main problem with ownership is not that of smaller firms but of bigger ones. Kathleen Kahle and Rene Stulz have shown that the number of stock market-listed firms has shrunk in recent year and that those that are listed invest less than they used to. This might be because dispersed outside shareholders do a lousy job of monitoring management; it’s insufficiently appreciated that the financial crisis was due at least in part to a failure of ownership. Looking for alternatives to stock market-type ownership is therefore perhaps compatible with – and even conducive to – the thriving of many other types of business.

You might also object that Labour’s plans for higher taxes are anti-business. Only up to a point. For many small businesspeople, the chance to pay more tax would be a fine one: Labour’s last manifesto promised higher taxes on incomes over £80,000 which is a fortune for many small business owners. Insofar as Labour offers more sensible ideas on fiscal policy and Brexit, it will increase profits. Sure, the state will take a bigger chunk of these, but net some businesses might well benefit.

In principle, therefore, even (especially) a quite radical Labour party could – with only the smallest of effort – present itself as a party of business. I suspect that what is stopping it doing so – and what’s stopping such a presentation from being very plausible – is tribalism and history rather than current actual policies.

Comments

[Dave Timoney]

Surely Johnson meant "fuck big business", not "fuck SMEs"? Given the widespread small business support for Brexit, and the increasing importance of petty rentiers in driving policy, I think what we are seeing is simply the Tory party lurching from the more progressive to the more reactionary capitals.

While I think you're right that Labour might well be able to make an objectively better offer to SMEs, that in turn assumes that the latter are able to identify their own best interests. But if they were, they'd probably already be a lot more successful.

Too many small business people are either entrenched in their resentment, in which "socialist" is as much of a swear word as "banker", or are delusional enough to believe that "this time next year we'll be millionaires, Rodney".

[UserFriendly]

Don't seek voters you don't want to represent. It starts with small business then next thing you know Labour is just as big corporate shills as the democrats.

[Metatone]

Just for accuracy, the polling shows most SME's against Brexit now.

[Mark]

I agree with 'From Arse to Elbow' that Johnson meant Fuck Big Business rather than Fuck Business Generally.

As Big Capital gets more powerful and less accountable, the Conservative Party is casting itself adrift of that power base, leaving it to the remaining Blairites, many of whom, such as Umumma, are doing Mammon's bidding by trying to preserve EU protectionism and cheap labour access.

Where I disagree with FATE is that I see this as a move from the reactionary (rentier multinationals) to the progressive (entrepreneurial SMEs). It may seem otherwise if your start point is Blairism: Big Capital says nice things about the EU, diversity and CSR, donates money and staff and generally signals virtue. But when it pays little or no tax, seeks to protect rents and buys politicians, its decline can't come too soon.

[Dipper]

I'm sure we have all noticed that a significant part of the Labour Party now just repeats the CBI. There is an implicit belief that whatever is good for business is good for the workers. Of all the things that have happened in UK politics this is possibly the strangest.

[Mariner]

Well, as an employee of a (small) family business which supplies low value items to many customers in Europe (as well as the UK and elsewhere around the world), we're extremely anti-Brexit.

The additional amount of work required to produce customs declarations once we're out of the customs union will put a huge strain on things at busy times of the year. Not to mention the time wasted at less busy times which could be better spent.

The double-whammy is that pre-advice is beginning to be brought in by some postal services around the world which will require more clerical work. When your profit margin is often just a few quid or less per package, you don't want to have to waste several minutes filling in virtual paperwork (the Royal Mail's system is terrible at present).

I'd imagine majority of Brexiteers have never had to deal with a customs declaration in their lives so haven't given a second thought to what leaving the CU will mean. The dicks.

[Dipper]

@ Mariner. Surely this works both ways. Low value imports into this country would also be subject to expensive paper work putting up the price of imports. This makes your goods more attractive in the UK market.

[Halfwit]

The Tories CBI and Labour are forgetting the price/value of risk. It is risky to set up a business, employ staff and make a return (harder still if you don't enjoy some of the big business benefits). Just at a point when you are starting to make more money; for investment in staff (mainly staff if you are a service industry) the tax that kicks in stifles growth. The recent changes to dividends tax for directors and reductions in entrepreneurial relief show that no governmnent understands risk and reward for investment at SME level.

You could argue that if you fail in your SME adventure the government rescues you and so is entitled to some of the upside if you succeed. I would argue that if the government has made no contribution to this upside and in fact taxed you along the way, they should be entitled to nothing (then what you make in upside you reinvest which the government gets its fair share in then).

[lbc]

small businesses do not support brexit at all.

[Dipper]

so no business anywhere support brexit.

Just what do those opposing Brexit suggest is the way to reverse the reduction in real wages, increase our exports, and improve productivity? I'm hearing nothing other than the status quo which was rejected at the ballot box in the EU referendum.

Much of politics, business, and life in general is about deals. What are you prepared to give up to get what you want. So far, I'm seeing no deals on the table at all for those who voted Brexit, just overturning a democratic vote because the losers don't agree. This just isn't acceptable in any way, so perhaps some anti-Brexiters can state what deal they are putting on the table.

[Mariner]

Dipper. 99.9% of the items we sell are produced in Britain, so the answer is "nope", the additional paperwork for imports will make practically no difference to our business.

I suppose that, in theory, the depreciating pound ought to make our goods more attractive overseas, but we've not seen much sign of this being the case since the referendum.

Quite the opposite, in fact, as our European sales have fallen despite the fact that they are effectively cheaper for our friends across the channel (and, of course the items we import from Europe are more expensive for us). My view is that some of the fall in sales is down to ill sentiment caused by the leave vote, though I have no way of proving it, of course.

[Mariner]

One thing that the Brexiteers seem to forget/ignore is that, during the campaign for the 'advisory' referendum, I don't recall much of a mention of leaving the free market or customs union, but now these seem to suddenly be policies which were never in doubt, not just never discussed.

Probably the fault of the media to some degree - they should certainly have asked for detail of exactly what the various Leavers were looking for. Would probably have been pointless, however. Looking at the clusterfeck that is the cabinet at the moment, we're hearing half a dozen contradictory positions from ministers every day. Even they don't know what they want - Brexit was always a hopeful dream and not apparently something worth putting any logical thought towards.

[Dipper]

@Mariner

I don't recall an advisory referendum but I do recall one that we were told would be implemented whatever the outcome.

Lots of mentions were made of the SM and CU in the debate, so in as much as anything specific was being voted for, it was to leave everything. People who argue we should stay in the CU or SM need to do the convincing, and saying you didn't vote to leave either is only going to convince people their vote is being ignored..

Parliament was in charge of the vote, the question, the debate. There was only one thing asked of the voting public and that was to vote on the question being put to it. Parliament can do whatever it chooses but it is playing with fire if it decides to retrospectively change the question and the debate,

[Dipper]

@ MarinerI think you missed my point. I assume you are competing in the UK with people importing from abroad. Their imported product will cost more so your goods will be cheaper in the UK by comparison?

Unless I misunderstand WTO rules, it is not possible for barriers to trade to work in one direction only. Surely If it is harder to export it will also be harder to import, so if exporting is harder then importing is also harder?

[Mariner]

99.9% of the items which we sell are produced and manufactured in the UK. How could these be imported from abroad cheaper? The mind boggles!

We compete with other sellers within the UK (who, of course, source all their goods here as well). That's not the issue. The issue is the great amount of additional clerical work which will be required when we exit the customs union. It's the sort of thing that occurs when you leave the world's largest trading bloc on a poorly-considered whim.

I don't even want to imagine how our UK sales will be affected when the economy tanks after what is surely going to be the hardest/least competent of Brexits, given the clowns running the show on this side of the channel. 2008 onwards was bad, I'm expecting something similar again.

[Dipper]

@ Mariner

"99.9% of the items which we sell are produced and manufactured in the UK. How could these be imported from abroad cheaper? The mind boggles!"

Lets try this again.

Do your customers have a choice of supplier? Do any of those suppliers import from the EU the same or similar product you make here in the UK? If so, then those suppliers will face higher charges due to the extra paperwork, so the price of competitor products imported from the EU will rise, hence you will be more competitive and possibly can increase your sales here in the UK.

[Zaster]

@Mariner

The cost of customs delcarations will, eventually, be low as they can be done electronically. The UK is introducing a new customs IT system but as luck would have it, it will not be ready in time for Article 50 day in the event of no deal. Unlike the Irish system, haha!

More of a problem would be tariffs but these are low except agriculture. There isn't much difference in what we pay in the EU net budget contribution and the amount we avoid in tariffs by being in.

As for the economy tanking, this is the difference between short term damage from a bungled Brexit and the long term picture, which I don't think will be much different either positively or negatively.

Some Brexiters will have thought it was worth short term pain because they imagine long term benefits. Others will have risked long term effects because they thought it would improve things in the here and now i.e. because of the slow economic recovery so they thought lower immigration and red tape would boost the economy. My fellow Remainers have really failed in convincing them by addressing this stuff head on.

[Zaster]

@Dipper

Parliament is sovereign and can ignore the result of course. However I agree Remainers are leaving something out when they take this line namely:

1. The Tories made implementing the result of the referendum a manifesto promise in 2015
2. Article 50 has already been triggered, it may not be legally possible to rescind it, in which case Brexit is happening automatically even if you want to rejoin.
3. Implementing the result was a manifesto promise in 2017 too, and for the DUP, which is a majority of seats.

On the SM and CU thing I think you're basically right, not all Leave voters want out of those but Leave-led Tories have won the GE. Remainers have wasted a year trying to overturn the result by saying we "can't" leave over the Irish border (wrong, read the GFA), lack of preparation etc. But Article 50's signed.

Issue's the shape of the deal. Remainers have lost a year trying to affect it, as well as pressuring the govt to get the practical details right -- the customs system etc so there won't be a disaster on the day, and a recession, in the event of no deal.

[Sam]

This is something I've thought for years - a left wing party that succeeded in appealing to small business owners could do really very well. There are potentially a lot of shared goals here, and it might well be good for the economy to give smaller businesses more favourable treatment than big, in taxation and other ways.

But it would require a substantial change in how Labour operates. Labour (across the board, not just Corbynites) have typically tended to regulate business by enforcing bureaucratic procedures on it, without really distinguishing big and small businesses. A few hours filling in a form might be no big deal to a big business, but a huge expense to a small one. Small businesses really hate this type of thing.

Those methods would need to change to gain small business support, and with a lot of fanfare.

[Zaster]

@Sam

My parents were in small business and while regulation is a factor among developed countries the UK is one of those where it's relatively easy to start and run a business. Some admin is just difficult for small business because of their size as you say but also due to how they handle it. My parents did all their bookwork on paper and only used their PC to print ads and price lists.

Paradoxically what regulation we've got often is from the EU now, even if we may have had it anyway. Why some business supports Leave is in the hope of deregulation.

I agree Labour should have a body in the party which is to go through procedures from the POV of small business and blitz them where they can, then legislate for that when back in power.

In America and Sweden the New Deal coalition and Social Democrats succeeded because they united urban workers and farmers. In the UK maybe we can have the current Labour voters plus small businessmen.

[Mariner]

Dipper, the 99.9% of items which we sell are books published in the UK. I hope this explains my confusion as to why our UK customers are unlikely to buy from EU sellers!

Some are certainly manufactured in printers in the EU and elsewhere in the world, but they are only otherwise available through the UK book trade.

I suppose our UK customers could perhaps order from some of the booksellers we deal with directly in the EU (we also publish books ourselves), but they would have to be a bit daft to do so!

Zaster, the low value customs declarations (our orders are often for a single copy of a book) will be relatively easy to deal with. My issue is with the additional amount of time which will be required to complete them. In fact, the current Royal Mail system allows you to generate the CN22 digitally and this is pretty straightforward for single items, though you still need to sign it and fill in the pertinent information. However, this system breaks down when more than a single book is sent as it is too stupid to understand that packing and sales literature weigh an extra amount to the books and the amount of packaging required can also vary depending on the make up of the order. You end up having to fudge the figures because the system won't even let you put in average weights if you enter a total as much as 1 gram different to the average! Perhaps this will be resolved in the future. Knowing the Royal Mail as well as I do, I'm guessing not.

Regardless, there will still be additional clerical work of the sort which hasn't been required for EU sales in my lifetime. This is what chafes especially - we'll be poorer with more work to do and more barriers to overcome.

The pre-advice bit I mention is the double-whammy. Some countries postal services are already delaying packages without a digital customs declaration or giving priority to those with them - which is perfectly understandable. The problem here is that entering the information digitally is more difficult and time consuming that just scribbling the price and contents of package on a CN22 sticker which is what we currently do with items sent to most of the world.

Back on topic, to some degree - regarding regulation of small businesses, the halfwits running the government at the moment are making it a requirement that quarterly digital accounts are to be filed by businesses. For some reason, they claim that this will make things easier but for a small business such as ourselves, this is an absolutely ridiculous idea! Annual accounts work perfectly well so, digital or not, requiring quarterly accounts is just mind-boggling. A good time to be getting into the accountancy trade, I'd have thought, as many small businesses would struggle to complete their accounts without professional assistance. How can this be cheaper in any way?

All this occurring at the same time that Companies House doesn't investigate the many tens or even hundreds of thousands of fraudulent businesses which open and close their 'doors' each year. Many never file accounts of any sort so who knows what money-laundering and crookedness is occurring? Certainly not HMRC, that's for sure.

[Zaster]

Mariner: well as you can tell I don't know anything about this area. I will say that we are not gonna be able to prevent Brexit over this problem because we're obviously not paying £10 billion net to be in the EU to get around problems with Royal Mail IT systems. It sounds like businesses of your type rather than voting Tory to escape Labour bureaucracy, which has not helped in this case, will have to make representations to govt directly to solve the problem. Or indeed to Labour in case they get in.

I hope with a suitable transitional period we solve stuff like this before Brexit day otherwise the disruption is part of the risk that we get a recession out of it -- not a faster recovery as Leave voters naively seem to have hoped.

I presume quarterly accounting is to reduce under- and overpaid taxes that needs to be fixed afterwards. Limited Liability Partnerships etc getting away with not filing accounts is really a New Labour problem. Being the party of making it easy to start a business is one thing, but it has to be making it easy to do *legitimate* business...

[Dipper]

@ Mariner thanks - understood.