The Blog

Corbyn's Cabinet a Declaration of War on British Business

The appointment of John McDonnell as Shadow Chancellor is nothing less than a declaration of war on British business by the new Labour leader. Businesses must fight it with all our might.

I'll be honest with you. I never really thought Jeremy Corbyn would become Labour leader. No really, even last Friday night I felt there was a chance, albeit slim, that he would fail to get 50% on the first round and would pick up so few second preferences that someone (I thought Yvette Cooper) would come through the middle and claim the crown. So like many people, I was totally stunned by the scale of his victory. Whether all of his MPs like it or not, the Labour selectorate has given him a significant mandate which means he's got the power to take Labour in a totally new direction. Many people (including the likes of Ed Balls, Yvette Cooper, Chuka Umunna and Liz Kendal) questioned whether Ed Miliband was sufficiently pro-business at the LAST general election. Well, I tell you what...they ain't seen nothing yet.

The appointment of John McDonnell as Shadow Chancellor of the Exchequer doesn't just slam the door in the face of New Labour, it kills it stone dead, cremates the body and scatters its ashes far and wide. Mr. McDonnell is, to say the least, a controversial character famous for praising the IRA and reportedly saying he would've liked to assassinate Margaret Thatcher himself. But whilst these things make him unsuitable for office generally, his economic policies should frighten the life out of all business people.

McDonnell is a declared "anti-capitalist" who's own entry in 'Who's Who' talks of "generally fermenting (sic) the overthrow of capitalism". He's in favour of nationalising the banks, railways and energy companies, a MAXIMUM wage, a 60% top rate of tax, and reversing the independence of the Bank of England. He backs Corbyn's crazy 'People's QE' idea, where the Government simply prints whatever money it wants to fund infrastructure while conveniently forgetting that it has to be paid back. Such a policy would have profoundly negative implications for interest and exchange rates.

Although he believes the last Labour government spent too little not too much he is not, to be fair, a 'deficit denier'. He claims he wants to balance the books. On the back of companies. By abolishing what he claims are £93 billion worth of 'subsidies' given to business. For context, companies currently pay around £43 billion in corporation tax. So in other words he's planning to triple the tax companies effectively pay. Triple! That's Syriza, Podemos and Francois Hollande all rolled into one. On steroids. Now I don't believe such a policy would raise anything like what he says but still that's what he wants to do.

So far the response to Corbyn's election from business has been cautious, partly because organisations like the IOD, CBI and Chambers of Commerce have to be diplomatic and perhaps because most bosses believe the nearest he'll come to 10 Downing Street is the next time he marches down Whitehall with his 'Stop the War' Coalition mates. But I think we have to take him and John McDonnell very, very seriously. They're the people the Labour party wants to run the country and they've been recently elected with a thumping majority so I can't see them being dumped anytime soon.

The fact is Corbyn and McDonnell are a serious danger to our economic future. Even a few favourable opinions polls would have serious consequences for investment let alone any chance of victory. So we mustn't countenance even the possibility that they might get a bandwagon rolling. We need to take the fight to them right here and right now.

So I want to see business leaders speaking out against the new Labour leadership, making clear just how disastrous their economic policies would be. If we do, I'm confident we can stop Corbynmania in its tracks. After all, we only have to convince the British people what the parliamentary Labour party already knows.