Industry leaders throw weight behind Conservatives in open letter
More than 100 senior figures at major UK companies have warned that a Labour government would send out a “negative message about Britain” – but party says it will lower business rates for SMEs
Senior executives from British firms that collectively employ more than half a million people have publicly backed the Conservative Party, arguing that its economic policies have revived the nation’s economy. Signed by 103 captains of industry, an open letter to the Telegraph praises prime minister David Cameron and chancellor George Osborne’s policy to reduce corporation tax to 20%, and argues that a change of leadership at No. 10 would set the recovery on a backward track.
The tax cut for businesses compares to a 28% corporation tax rate that existed when the Coalition took office in 2010. Labour leader Ed Miliband and shadow chancellor Ed Balls have promised to reverse the cut if the party wins the general election on 7 May.
Signatories include bosses from nine FTSE 100 companies and a number of well-known British brands – such as Cobra beer, Primark, Pizza Express and Iceland. Famous names emerged in the shape of football director and TV personality Karren Brady, and significantly, Lord Rose – who called Miliband a “1970s throwback” in a recent hostilities between Labour and business chiefs that Insights covered in this article.
However, the element that could prove most damaging for Labour’s campaign is the contingent of businesspeople who have previously backed the party – including Dixons Carphone and TalkTalk chair Sir Charles Dunstone, and former Dragon’s Den panellist Duncan Bannatyne.
In full, the letter said:
We run some of the leading businesses in the UK. We believe this Conservative-led Government has been good for business and has pursued policies which have supported investment and job creation.
David Cameron and George Osborne’s flagship policy of progressively lowering Corporation Tax to 20% has been very important in showing the UK is open for business. It has been a key part of their economic plan.
The result is that Britain grew faster than any other major economy last year and businesses like ours have created over 1.85m new jobs.
We believe a change in course will threaten jobs and deter investment. This would send a negative message about Britain and put the recovery at risk.
Official figures released yesterday found that the UK economy is growing faster than expected, and that household disposable income has returned to pre-2010 levels. The Office for National Statistics also reported that GDP swelled at its fastest rate for nine years in 2014, growing by a stronger-than-expected 2.8%.
Overall, the letter’s impact is hard to gauge. On one hand, the letter reflects the already well-documented tension between some members of the business community and Miliband – and many of the signatories are Tory donors and peers, hinting that the public’s reaction would be along the lines of “well, they would say that, wouldn’t they?” However, a similar letter emerged in support of the Better Together movement during the Scottish referendum campaign, and was widely seen as a key factor in securing the No vote.
Labour responded quickly by dismissing the letter, explaining that it is focused on lowering business rates for small firms and tackling zero-hours contracts for low-income workers. The party also cited a survey released this week by the Centre for Macroeconomics, which showed that two-thirds of Britons did not think that the Coalition's austerity policies had been positive for overall economic activity.
Chuka Umunna, Labour’s shadow business secretary, echoed comments from Miliband that the economic recovery had “reached the City of London”, but not working people. “No one will be surprised that some businesspeople are calling for low taxes for big businesses,” Umunna said. “That’s nothing new, and under Labour Britain will have the most competitive corporation tax rate in the G7.”
He added: “While the recovery may have reached some firms, it hasn’t reached many others – which is why we will prioritise tax cuts for the smallest firms with an immediate cut in business rates for 1.5 million small-business premises. And because we understand that Britain only succeeds when working people succeed, we are today announcing our plans to ban exploitative zero-hour contracts. We don’t believe, as David Cameron does, in more tax cuts for the richest in society. The priority is tax cuts for small firms, working people and saving our NHS.”
In its recent Future Forecast report, though, the Chartered Management Institute (CMI) indicted that, in broad terms, the priorities of Westminster politicians often failed to reflect those of senior executives – which currently focus on closing skills gaps. To compile the report, CMI polled more than 1,200 CMI members. Asked what they thought was the most important point for parties to include in their manifestos, 79% of the survey group backed policies to ensure that every young person will receive work experience before leaving school. Closing tax loopholes to focus bosses' minds on ethics and integrity garnered the same level of support.
Upon the report’s release, CMI chief executive Ann Francke said: “Employers want people-focused policies that will help them up skill and motivate their teams. Rather than election rhetoric, we need to see a commitment to shifting business culture in this direction. We must move away from an obsession with short-term priorities and help organisations to be clearer about their purpose, to better support their people, and to invest to grow future potential.”