Ed Miliband's triumph over his brother David isn't going down
well in many camps. All accusations aside of underhandedness in
using the unions' vote to swing his victory, the City and private
sector generally are deeply troubled by his hard left
proposals.
The big picture
Ed Miliband marks a strident return to old Labour views - taxing
the rich harder, moving money away from the private sector,
creating social 'equality' rather than the social mobility New
Labour strove for. The City is concerned his wealth-strangling
measures will make the UK's economy non-competitive: his aims to
tax the banks harder and break them up, make the 50p tax rate
permanent, introduce the Tobin tax, tax bonuses more heavily and so
on. All proposals, of course, which provoke the usual fears about
damaging the entrepreneurial culture here as rich investors and
top-earning entrepreneurs are deterred from investing or living
here.
The shift away from the far more centralised New Labour beliefs
is obvious - nowhere more so than in the self-penned mini manifesto on his website and assertions
like the one yesterday in his interview with Andrew Marr: "The era
of New Labour has passed - a new generation has taken over."
City AM's political editor David Crow sums things up thus: "Gone is
the emphasis on social mobility, on reward for hard work and
entrepreneurial spirit. It will be replaced by 'equality',
essentially old-fashioned redistribution of wealth. Labour no
longer wants to grow the pie - it just wants to cut it up more
evenly."
'Red Ed' also wants to get the private sector out of public
service affairs and to move management of as much as possible back
to the government. The City is not alone in its fears about what
this could do to the rate of progress in this country. Miliband has
also been accused of deficit denial - not having a solid-enough
plan to tackle our huge public debt.
Broadly speaking and in line with his return to old Labour core
values, Miliband is much more worker-supportive than
employer-supportive. Which is great for the average punter, but
troubling for businesses. Here are how his proposals, which reflect
that heavily, could affect small businesses in the future:
Red tape
Miliband backs more government intervention in private business
than we currently have. As a trickle-down effect, the risk of more
red tape for small businesses runs high, though no new legislation
has been proposed that fully confirms this. We will have to wait
for suspicions to be confirmed or dispelled.
The Living Wage
The Living Wage has been an ongoing tenet to Miliband's
leadership campaign. Miliband writes on
his website: "I am for a living wage over £7 an hour, not just
a minimum wage, so people can feel more comfortable that they will
get a decent day's wage for a decent day's work." Though he says
this will be 'not at the moment as a matter of law, because there
will be some small businesses who can't afford it', the worrying
tell here is in 'not at the moment'. An increased minimum
wage could hit small business owners hard - particularly when it
jumps up this far from the current £5.80 position (going up to
£5.93 next month).
Fairer Internships
He also backed the campaign for Fairer Internships,
which in essence wants interns to be paid as short-term
workers.
Although this will affect a far slimmer portion of small
businesses than any new red tape, it's still a consideration for
those who do make the most of free or cheap labour from
grunt-working interns.
Fewer working hours
Miliband says: "I am for greater protection for time
outside work so people don't feel compelled to work harder for
longer for less. [...] Our economic strategy should change the
culture of working time." He hasn't laid out any clear ideas for
how to achieve this, but any enforced restrictions on how many
hours an employee can work would again be a blow to small
businesses who need to squeeze as much work as possible out of
staff and for whom any extra regulation creates more admin.
Unions
Though rumblings from the unions don't affect most small
businesses, it's worth pointing out that many big businesses are
worried about the unions being granted extra influence and power,
as part of some kind of behind-doors trade-off for their votes for
Ed Miliband which swung him to victory. (His brother David gained
more votes from MPs and MEPs and party member, and in the previous
four voting rounds than Ed - it was only the final 6.53% lead from
trade unions and affiliates over David's 13.4% for that voting
section that edged Ed to his 0.9% victory.) Particularly after the
British Airways debacle, the private sector is particularly on edge
about unions' power, and this will only fuel the fire of worry that
the business world would be slowed and restricted by an Ed Miliband
leadership.
We will be blogging the reactions from business
lobby groups later today when they have released their
views.