How Labour is getting business on board

Keir Starmer and Rachel Reeves have worked hard to woo the private sector. But the honeymoon may not last long

January 30, 2024
Iceland executive chairman Richard Walker (left) has backed Keir Starmer for prime minister. Image: PA Images / Alamy Stock Photo
Iceland executive chairman Richard Walker (left) has backed Keir Starmer for prime minister. Image: PA Images / Alamy Stock Photo

At Labour’s most recent business breakfast, Keir Starmer told the assembled chief executives and tech entrepreneurs: “If we do go into government, we want to go into government with you.” Over coffee and croissants at the Marylebone headquarters of Global Counsel, the consultancy founded by former Cabinet minister Peter Mandelson, the Labour leader stressed that he saw power as a partnership between the public and the private sector, and between voluntary organisations and the state.

It is a long way from Ed Miliband’s attempt to separate companies into “predators” and “producers” in his 2011 leader’s speech, further still from John McDonnell’s commitment to “fermenting [sic] the overthrow of capitalism”. There was a similar theme in Starmer’s speech to the Civil Society Summit last week when he told his audience of charities and faith groups that he understood that governments “couldn’t—and shouldn’t—do everything by themselves”. 

The corporate world, sensing the way the political winds are blowing, is lapping it up. Labour’s one-day business conference on 1st February sold out within four hours, with 400 companies paying £995 for a ticket. Demand was so high that at least 250 people are still on the waiting list to attend the London event. Hundreds of thousands of pounds have also been raised through 20 sponsorships and partnerships. Among the corporate speakers will be Debbie Weinstein, the managing director of Google UK, who will join a panel on skills and technology.

Last week, shadow chancellor Rachel Reeves was in Davos, schmoozing with the global elite. Although she is still not in government, she was selected to sit with senior world leaders at a dinner hosted by the World Economic Forum, tucking into frisée salad and Swiss Gotthard pike-perch alongside the Canadian finance minister Chrystia Freeland and the Belgian prime minister Alexander de Croo. Her message was that Labour has changed and “success is celebrated”. The rich and powerful seem happy to take her at her word. Mark Carney, the former Bank of England governor, pre-recorded a video endorsing Reeves ahead of her latest party conference speech.

The Iceland supermarket boss Richard Walker was the latest business leader to endorse Labour, saying Starmer's party was “the right choice” for his customers. The former Tory donor said that Labour had “progressively moved towards the ground on which I have always stood”, while the Conservatives “have moved away from it.”

With the polls indicating that Labour is heading for power, a two-way charm offensive is in progress. Starmer has embarked on a series of policy roundtables with CEOs to discuss in detail Labour’s plans for power on everything from energy to education. If he does make it to Downing Street, his allies say business leaders will be given a more formal role in government with a place on the “mission delivery boards” that will be set up to drive through policy across Whitehall. When I interviewed the Labour leader recently, he pointed to the vaccine task force, headed by the venture capitalist Kate Bingham, as the model for how he wants to run government. “What you had was a grouping of people who came together and knocked barriers out of the way. You had the private sector, university sector and the government all around the table saying—‘how do we fast track the delivery of the vaccine?’” he said. “On clinical trials, on delivery of preventative measures [for public health] I want to see the same mindset. It’s a shame that having done it during the pandemic that’s all been put to one side.”  

Wes Streeting, the shadow health secretary, talks of creating a “coalition of the willing” to see what more can be done to tackle the obesity crisis. However, he also told the Times Health Commission that Labour would be more than happy to use the “heavy hand of state regulation” if business does not pull its weight. Bridget Phillipson, the shadow education secretary, intends to involve businesses in the review of the curriculum and assessment system to ensure schools develop the skills the economy and children need. 

Starmer’s allies say that having come into Westminster late in life after another career, he is non-ideological about his politics and keen to tap into the expertise of those most likely to be able to help him deliver on his plans. If Labour follows through on the rhetoric in government, it will be a fascinating experiment that will undoubtedly lead to tension with the left of the party—as well as with the companies that have their own agenda.

For now, though, the bridge-building is having a positive impact. The relationship between Labour and business is totemic for voters and the collaboration is starting to cut through. Starmer’s party is consistently ahead of the Conservatives on the economy by a significant amount—a position it did not even achieve in 1997 in the run up to Tony Blair’s landslide victory. Boris Johnson’s “fuck business” rallying cry to the Brexiteers, followed by Liz Truss’s disastrous mini-budget and Rishi Sunak’s U-turns on net zero and HS2, have left many chief executives yearning for stability, whichever political direction it comes from. There is a growing sense of disillusionment about an education system that does not prepare young people for the workplace and a health service that has left a record number of people economically inactive because of long-term sickness. 

Iain Anderson, the founder of the Cicero public relations firm and a former Liz Truss ally, quit the Conservative party last February after nearly 40 years. He has now written a report on business engagement for Starmer that will be published this morning. “I remember going to the Tory conference in 2022 and I had to leave after 18 hours because I thought they had all gone mad,” he tells me. “Labour has an opportunity because the Conservatives, from the perspective of business and the economy, have completely blown up.” Having spoken to more than 300 companies of all sizes, Anderson thinks most business leaders are not ideological but just want a return to competence and courtesy in Whitehall. “Regardless of whether it’s the red team or the blue team in charge, people want our country to thrive—they are sick of the discombobulation,” he says. “Business needs clarity, clear direction from government, predictability and stability. People might not like a particular policy but that’s not the point, what they are absolutely tired of is the constant changing of policies and priorities.”  

There needs to be better systems in place to harness good ideas and investment opportunities, Anderson suggests. “At the moment people are sending things into the machine, they have to prod it and chase it, they don’t know whether it’s been received. The system is Byzantine. If you are sitting in Silicon Valley or Singapore and you compare that with the response you get from the French or the Irish or the Germans, the contrast is huge. There’s no courtesy, and at its worst, business engagement turns into a photo op,” he says. “The starting point is: are we governed well? Is government able to have conversations with business and interrogate the best experts in their field regardless of their proximity to power?” The “time for a change” sentiment is strong among business leaders as well as voters—but in the current economic climate, if Starmer does win power, the honeymoon may be short lived.