Labour leadership: Who's better for business?

Jeremy Corbyn
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And so, the serpentine course of this Labour leadership race reaches its end. The deadline to vote is this Wednesday at noon.

Jeremy Corbyn, the socialist firebrand, on the one side and Owen Smith, the parliamentary Labour Party (PLP) sweetheart. It’s been a deeply ideological battle; a bitter civil war between the Labour Party’s two different camps.

It’s been a wonderful story for the media, it practically writes itself. The emphasis on drama is understandable (newspapers need to be sold, after all). But any talk of actual, nuanced policy proposals has been lost in the political pantomime.

To inject a little more substance into the simplified ‘Commie vs. Blairite’ narrative, we’ve decided to look at what Corbyn and Smith have planned for business in this country.

So if you’re voting on Wednesday, know what you’re actually voting for.

Jeremy Corbyn

Okay, no prizes if you predicted the strong influence of socialist ideals on Corbyn’s policy platform. And not the soft, centrist corporate friendly ‘socialism’ of New Labour either; it’s a platform with a potent twentieth century flavour.

Under Corbyn, the worker – that old leading man of the far left – takes centre stage. Corbyn has repeatedly promised to end zero hours contracts and promises to oversee a new golden age for collective bargaining (mainly through enshrining the right to union participation in legislation and repealing the Blair government’s 1999 Trade Union Act).

If the worker is centre stage for Corbyn, then government-led public investment is the stage itself. Corbyn has pledged £500bn for a massive public stimulus, nationalising the railroads and buses, and rebuilding bridges and roads.

This £500bn would be apportioned out by a new national investment bank (supplemented by smaller regional banks). Investment, Corbyn’s campaign says, will focus heavily on “high speed broadband, energy, transport and homes that our country needs” and “allow good businesses to thrive, and support a new generation of co-operative enterprises”.

On a more granular level, Corbyn promises rent control for small businesses to stop them being frozen out of expensive urban environments. This good news, however, is tempered by Corbyn’s strong commitment to increasing the minimum wage. If you weren’t a fan of George Osborne’s pretty modest National Living Wage of £7.20 per hour for those aged 25 and over, Corbyn’s hike would be hard to swallow (although we don’t know what rate he would set yet).

The Corbyn campaign has promised to freeze small business rates, however. This freeze will be paid by “modest increases” in the corporation tax rate. As far as tax goes, Corbyn has, since his first day in the leader’s seat, promised to crack down on tax avoidance (specifically the corporate variety).

Owen Smith

Much has been made of Corbyn’s left wing bona fides, but Smith doesn’t lag far behind when it comes to lefty policy proposals.

Smith has tried to cast himself as the more pragmatic socialist, contrasted to Corbyn’s grumpier, hard-line leftism. “We need revolution not evolution. Not some misty-eyed romantic notion of a revolution to overthrow capitalism and return to a socialist nirvana. But a cold-eyed, practical, socialist revolution where we build a better Britain and look the country in the eye and say ‘this is possible’,” he said during a speech in late July.

That said, in many respects, Smith matches Corbyn stride-for-stride on policy.

At the heart of Smith’s economic proposals is “a pledge to focus on equality of outcome, not equality of opportunity”.

Smith’s campaign has said that it will scrap the Department of Work and Pensions. Instead, it will become two separate departments: one focusing on labour and one on social welfare.

Zero hours contracts will be banned and the public sector pay freeze will be discontinued.

And, in an eye-catching pledge, Smith says he will implement “modern wage councils for hotel shop, and care workers to strengthen terms and conditions”. There will also be an extension to the right of information and consultation when it comes to redundancies all workplaces over 50 people (Smith has repeatedly name dropped BHS). Workers would also have to be represented on remuneration committees.

As far as public investment, Smith has made the bold move to appropriate the label of Franklin Roosevelt’s New Deal. “A British New Deal,” says Smith, that will offer a chunky investment of £200bn in public stimulus.

And, if the Great British Bake Off has captured the collective British imagination, Smith hopes his Great British Tory Tax Repeal will have the same popularity. Smith has promised to “reinstate the 50p top rate of income tax, reverse the reductions in corporation tax due to take place over the next four years, reverse cuts to inheritance tax announced in the Summer Budget, reverse cuts to capital gains tax announced in the Summer Budget and introduce a new wealth tax on the top 1% earners”.

Will you be voting in the leadership election? Leave a comment below or tweet @BusinessZone.

Francois Badenhorst
Deputy editor
BusinessZone and UK Business Forums
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