It's Time For Corbyn To Talk Business And Explain How His Policies Can Benefit The Private Sector

Corbyn does not need to make himself the first choice of the business community, nor will he aim to do so. But he now has an opportunity to articulate how his agenda can benefit the private sector. He should seize it.
yoh4nn via Getty Images

To Labour supporters like myself, last week's election result felt like victory. And yet - the party did not win a majority, nor even enough seats to make a progressive coalition viable. It appears Corbyn now has a difficult choice to make. On the one hand, he could compromise on policy and reach out to the centre ground. However, this risks puncturing the enthusiasm of the very people who managed to get him this far. On the other hand, he might hope that his current support will be sufficient to carry him into Downing Street, when Conservative disarray over Brexit forces another general election a few months down the line. Yet this strategy overlooks the fact that even many Labour voters had serious misgivings about a Corbyn premiership, and only felt able to support the party because they were convinced that Corbyn could not win.

There is, however, a third option. The election result means that Corbyn will be taken seriously as a potential Prime Minister by people who had previously dismissed him. That gives him an opportunity to explain his existing policies to new audiences - in particular, the business community. And, provided he is willing to compromise on his rhetoric, he need not depart in substance from the manifesto that inspired millions of people to back Labour last week.

To do this, Corbyn must hammer home the message that his manifesto constitutes a credible plan for growth. That involves more than just showing his policies are fully costed. When voters ask where the money will come from, they are not asking for a set of audited accounts, but rather an economic vision that explains how a Labour government will deliver the prosperity necessary to fund future public spending.

The starting point for that vision is an account of the investment that the economy needs - in infrastructure, in skills, in childcare - to support the ambitions of business. Not only will these public investments directly benefit UK companies, they will also help to propel demand. UK business confidence has never properly recovered from the financial crisis; for all Osborne's corporation tax giveaways, business investment as a percentage of GDP continues to languish well below the EU average. Brexit uncertainty means that picture is unlikely to change. With consumers squeezed by inflation, and with household debt levels rising back above their pre-crisis peak, government stimulus will be essential to short- and medium-term growth.

On top of this, Labour should emphasise how its redistributive policies can actively facilitate growth. For too long, rising inequality has concentrated the means of aspiration - such as access to finance and valuable social networks - in the hands of an elite few. A more equal society will be one in which more people can reach their potential, meaning more people will be more economically productive. Recent research by the IMF shows how GDP growth suffers when the richest in society streak ahead, or the poorest fall behind. The progressive nature of Labour's tax proposals, coupled with spending plans designed to combat poverty, constitute an evidence-based growth strategy.

At the same time as explaining how its policies can drive economic growth, however, Labour must also demonstrate that it recognises the value of the private sector, and thus appreciates that there are limits to how much governments should interfere with it. Businesses not only create jobs and pay taxes; they also help households by giving consumers more of what they want at more competitive prices. Consider this: since the financial crisis, how much has the average family saved through the expansion of budget supermarkets such as Aldi and Lidl? Well-functioning competitive markets improve people's living standards. If Labour can convince businesses that it values their contributions, then it can alleviate fear of a Corbyn government. The last Labour manifesto promised a modest rate of corporation tax, relative to other advanced economies; however, many in the business community will have seen this policy as the thin end of a red wedge.

Finally, the EU referendum result offers Labour a chance to position itself as the true defender of the open economy. This does not mean any shift in its position on Brexit. Rather, the party should argue that the Brexit vote illustrated how inclusive prosperity is a necessary precondition for economic openness. If Britain is to cultivate close trading relationships with the EU and with the rest of the world, then the people and places that benefit most from that openness must contribute more. Only Labour has policies radical enough to rebuild popular support for a global Britain.

Corbyn does not need to make himself the first choice of the business community, nor will he aim to do so. But he now has an opportunity to articulate how his agenda can benefit the private sector. He should seize it.

Close

What's Hot