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Monday, 14 May, 2001, 12:52 GMT
Who's backing Labour?
Asda logo
One Asda ex-boss backs Labour - the other is a leading Tory
by BBC News Online's Steve Schifferes

Labour has attempted to claim the mantle of economic competence by citing a letter written in its support by some prominent business leaders.

According to the letter published on Monday in the Times newspaper, "there is a growing sense of enterprise and innovation in British businesses that bodes well for the future of our country."


Labour can never be the party of business

Andrew Lansley, Conservative Party
"We believe that business should support the party that since May 1997 has done so much to promote stable economic growth and a renewed spirit of enterprise in the British people," they wrote.

Gordon Brown said he was "grateful" to the businessmen who signed the letter, which he said was "a sign of the relationship this new Labour government is forging with business".

But Digby Jones, director general of the Confederation of British Industry warned at the weekend that increased business taxes under Labour meant Britain's reputation as a low-tax economy was under serious threat.

And another employers organisation, the British Chambers of Commerce, said that "the cumulative burden of regulation is taking its toll on entrepreneurs and small business: on their productivity, job creation, investment and management effectiveness."

So how does business view Labour?

Who signed?

Those company bosses who signed the letter include seven who run FTSE 100 companies - but also many leaders who switched to the Labour Party in 1997.

Those who switched previously include Gerry Robinson, former boss of ITV company Granada Media, Sir Tim Waterstone, the bookstore owner, Sir Alan Sugar of electronics company Amstrad, and Sir Terence Conran, the founder of retailer Habitat.


There is a growing sense of enterprise and innovation in British businesses that bodes well for the future of our country

Business leaders' letter to The Times
In fact, the biggest new name among business leaders backing Labour was Allan Leighton, the former head of Asda (when it was run by prominent Tory frontbencher Archie Norman) who is now chairman of internet travel group Lastminute.com.

But William Hague said that small businessmen were crying out for a change of government, after suffering from stealth taxes and more red tape.

And the Conservatives' Andrew Lansley said that Labour could never be the party of enterprise.

Meanwhile the Liberal Democrat Treasury spokesman Matthew Taylor also questioned Labour's record.

"Businesspeople cannot have total confidence in Labour. They are disappointed with Gordon Brown's fence-sitting on the euro, at a time when hundreds of thousands of manufacturing jobs have been lost as a result of the high value of the pound."

Repeating old tactics

There always have been a small core of Labour business supporters, including Chris Haskins of Northern Foods (now chairman of Labour's deregulation task force), and Lord Clive Hollick, former owner of the Express newspaper, who served as an advisor to Gordon Brown.

But in the run-up to the l997 election, Labour managed to attract significant business support for the first time in a generation.

It launched an independent commission on competitiveness, which attracted support from prominent business leaders like Lord David Sainsbury and Lord George Simpson, then head of British Aerospace and now head of Marconi.

In its carefully orchestrated campaign, Labour launched its special business manifesto on the same day as another letter of support appeared in the Times from 87 small businessmen.

Now Labour is seeking to repeat these tactics, with Tony Blair prominently touring the Midlands last week in the company of small business leaders like Stephen Alambritis - and another Labour manifesto for business expected next week.

But after four years in government, what is more surprising is how few prominent new names Labour was able to attract to its letter.

David Potter of Psion, Peter Harper, the deputy head of Lonmin (formerly Lonhro, the mining company) and Adam Singer, the boss of Telewest are among the new names on the list.

But many others - including Chris Powell, head of Labour's former advertising agency and brother of Tony Blair's chief of staff Jonathan Powell, and Lord Swraj Paul of steelmaker Caparo - have long backed Labour.

And one prominent businesswomen who backed Labour in 1997 - Anita Roddick, the founder of Body Shop - has withdrawn her support over the issue of free trade and the environment.

Among the names missing are Niall Fitzgerald of Unilever, a prominent supporter of the UK's membership of the euro, and other major figures from UK manufacturing industry.

Worries over euro

One reason for the reluctance of some manufacturing leaders to openly back Labour is their concern over Labour's attitude towards euro membership.

Business bosses like Sir Brian Moffatt of Corus, the former British Steel, and many in the automotive industry have called for an open campaign by the government to back a single currency, which they believe will boost British exports to Europe.

But the euro issue cuts both ways, with many prominent Tory business supporters - such as Sir Stanley Kalms of Dixons, the electrical retailer, Sir Anthony Bamford of JCB construction equipment, and Stuart Wheeler of IG index betting - being strong eurosceptics.

Fears about the euro are probably stronger among small businessmen who do less of their business overseas.

And small businesses also are more likely to fear increased government regulation, such as the minimum wage, which they fear might cost jobs or make their businesses uncompetitive.

Wooing business

Tony Blair had made it Labour's strategic objective is to ensure that the Tories are no longer identified in the public mind as the only party of business and enterprise.

And Labour in office has gone out of its way to cultivate business support, and especially to aid small businesses. In the last few years, Chancellor Gordon Brown has cut the headline rate of corporation tax, and promises further tax cuts for small businesses.

He has given more tax incentives for capital investment, and backed legislation to stop late payment by companies.

And Labour has backtracked on plans to give councils the power to increase business rates, and promises tougher measures on deregulation.

Labour's trade and industry secretary Stephen Byers said: "The letter in today's Times shows our success in building this new coalition between labour and business grounded on the economic stability we have achieved."

But on the evidence of the this letter, Labour still has some way to go before it can gain the whole-hearted endorsement of the business community.

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