PATRICK DARDIS: I warned business leaders would regret backing Labour

The contradiction is palpable. Everything Keir Starmer promised at yesterday’s ‘investment summit’ is undermined by the damage his government is already inflicting on businesses.

In what was billed as a keynote speech, the Prime Minister pledged to ‘rip out the bureaucracy that blocks investment,’ to ‘take growth seriously’ and to ‘rebuild our country’ by ‘focusing on investment’.

Welcome words – but you’d be a fool to believe them.

In the run-up to the General Election, I warned in these pages that the business figures then hailing Labour as the ‘party of growth’ were being shockingly naive. 

I predicted that they and the country at large would swiftly regret trusting Starmer and his Chancellor Rachel Reeves with the national economy.

Slavish

Believing that Labour could somehow boost jobs, slash inflation and raise living standards while simultaneously adhering to its pledge not to raise taxes on ‘working people’ was nothing less, I wrote, than ‘blind, uncritical optimism and magical thinking’.

Well, it gives me no pleasure to say so – but the catalogue of blunders, stumbles, lies, U-turns and sheer economic ineptitude during Starmer’s first 100 days has proved the accuracy of my warning.

Last June, 120 self-styled business leaders, few of them people of real influence in the corporate world, announced that they were backing Labour to revitalise UK plc.

The billionaire Phones4U founder John Caudwell, who has at least created a large and profitable business from scratch, also switched to Labour at the last election – but has since revealed that he opposes hard-Left Starmerite policies such as VAT on private school fees and abolishing ‘non-dom’ tax status.

Caudwell said this week that the latter was unfair, adding: ‘We’re going to lose people that can help make Britain prosperous.’ But if he is feeling a touch of buyer’s remorse at the new government, he is far from alone.

Many business leaders seem to have hoped that this administration would be a kind of ‘New New Labour’ –but their faith was sharply dented by the new government’s slavish capitulation towards the unions, who duly received their pay-offs as soon as Starmer arrived in Downing Street.

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Train drivers on £70,000 for a four-day week – and, less controversially, junior doctors – were handed eye-watering salary increases, with no corresponding demands on their productivity or working practices.

Similarly, there’s every reason to believe that Starmer’s warm pronouncements at London’s Guildhall will run foul of the union barons.

Sharon Graham, the general secretary of Unite, has already signalled her opposition, saying: ‘We cannot have a situation where the state writes blank cheques for corporations, who then refuse to protect jobs.’

The fundamental tension at the heart of this government is now crystal-clear. Starmer, even if he does want to improve Britain’s growth prospects, is hamstrung by his party’s paymasters, as well as the instinctive antipathy among many on the Left towards business itself.

The result is that businesses are already reacting to the uncertainty created by multiple badly considered government policies – from union firebrand Angela Rayner’s ‘workers’ rights’ package to Reeves’s and Starmer’s feigned outrage at a ‘£22billion black hole’.

According to the British Chambers of Commerce, the number of businesses seeking to recruit staff has fallen to just 56 per cent, the lowest since the summer of 2021, when the UK was under stringent Covid restrictions. And only yesterday, a report on the Bloomberg news channel predicted that unemployment is set to rise from 4.2 per cent to 4.6 per cent.

This is the grim backdrop to Reeves’s first Budget. Multiple ministers, including the Chancellor herself, are dropping heavy hints that employer contributions to National Insurance will be hiked: a flagrant breach of Labour’s manifesto commitment: ‘We will not increase National Insurance.’

Business Secretary Jonathan Reynolds has justified the tax hike by stressing that Labour did not specifically promise not to ramp up employer NI contributions, only that ‘taxes on working people’ would not rise. But this is frankly weasellish.

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It’s evident that the party sees corporate NI contributions as an easy target. They don’t understand the unintended consequences for jobs and business, and the knock-on effect this will have on Treasury income.

This approach stinks of incompetence, ignorance and inexperience. Does anyone in the Cabinet have any serious business background? Reeves insists she has, because she has worked in banking, but that’s very different from running a company and dealing with its daily challenges.

Belittled

As for the Left-wing hardliners, led by deputy PM Angela Rayner, they nurse a deep-rooted and infantile prejudice against business. They appear to have no understanding that most company bosses treat their staff and colleagues with respect – as that is the only way to retain good staff.

Rayner has an immature, shallow perception of employers, in both large and small businesses, as modern-day descendants of Dickens’ Mr Gradgrind in Hard Times, working the poor to death.

But her views are far from unusual in this Cabinet. The pink-haired Transport Secretary Louise Haigh jeopardised a £1 billion investment in London Gateway when she mocked and belittled P&O Ferries, dismissing the company as a ‘rogue operator’.

With blithe self-righteousness, the privately educated millennial, who dropped out of the London School of Economics to study politics at the University of Nottingham, boasted: ‘I’ve been boycotting P&O Ferries for two and a half years and I would encourage consumers to do the same.’

P&O’s parent company DP World, a ports and cargo operator based in Dubai, was justly outraged. Haigh’s vacuous virtue-signalling would have embarrassed a nose-ringed undergraduate sounding off on social media. Its stupidity is staggering from a senior member of government.

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Waste

All this magnifies the perception of employers that our economy is at the mercy of people who simply don’t know what they are doing. Reeves asks us to believe that Labour inherited a huge deficit that was somehow hidden in the ledgers until after the election, which is nonsense.

The reality is that at least £9 billion of the missing money has gone to fund public sector pay rises.

Taxes are already at the highest level in my lifetime. Raising them will only stifle the economy further.

The Chancellor has one hope of balancing the books, and that is to tackle the egregious waste in State spending. Every government department is inefficient, more so than ever because of Labour’s deluded enthusiasm for ‘flexible working’ and working from home.

Getting the country’s public sector workforce out of their onesies and back into the office would be a viable first step to restoring Britain’s productivity.

Identifying where the wasted money goes could slash billions off the deficit without any noticeable austerity measures.

We need growth, not bloat. And to achieve that, Labour’s front benchers are going to have to grow up fast.

Patrick Dardis is the former CEO of Young’s Pubs.