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Labour and Business fail to see eye-to-eye, despite Brexit offering opportunity to align

Written by Tom Reynolds, Account Director in Madano's Energy Practice. 

The strong turnout of business at the Labour Party Conference in Brighton this week lends credence to the idea that the Party really is being viewed more and more as a “government in waiting”. However, it also serves to remind the leadership that it now has even greater responsibility to outline what a future Labour Government would bring to the table, particularly when it comes to Brexit.

Watching from the side lines at the Bloomberg Economic Briefing on Tuesday morning, the tensions between CBI Director-General, Carolyn Fairbairn and Shadow Chancellor, John McDonnell were plain to see.

Fairbairn almost appeared to roll her eyes as McDonnell confirmed that Labour’s Private Finance Initiative (PFI) policy was in fact as radical as the CBI had first interpreted. In response to McDonnell’s speech outlining the policy the day before, the CBI’s view was that a move to bring billions of pounds’ worth of PFI projects back under state control would send investors “running for the hills”.

While Fairbairn failed to see eye-to-eye with McDonnell, she clearly had more joy with the Shadow Brexit Secretary, Keir Starmer. And it is on the issue of Brexit where businesses may align with Labour more closely. Starmer’s line, which highlighted the Conservative’s “extreme” interpretation of the vote to leave the EU, was met with unequivocal support from Fairbairn.

If Labour can continue to articulate their attack on the “Tory Brexit”, they may win favour in some business circles. However, this will not be enough for the Party to shake their current “anti-business” tag. PFI is just one example of Labour’s broader state interventionist agenda, which includes nationalisation of railways, water, energy and even Royal Mail – all of which is a big turn off for business.

Perceptions of Labour may be moving towards “government in waiting”, however, if they can’t (or are not willing to) win the confidence of British business, they may be left waiting for longer than they’d like.