How Labour lost the business vote

http://www.theguardian.com/commentisfree/2015/may/24/how-labour-lost-the-business-vote

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Two weeks before the general election, I visited my barber, a small business employing four people in north-west London. Paul, the owner, is of Cypriot descent, born and brought up in London. He has had his business for about 25 years.

Paul told me that he and his family had always voted Labour, but that in the election they would all vote Conservative. When I asked him the reason, his arguments were simple – he said that if Labour won the election they would destroy his business. Paul feared that Labour just didn’t know how to handle the economy, that it didn’t understand the needs of businesses like his and that it didn’t have anything to offer him.

Sadly for the Labour party, Paul was not the only one thinking that. What had started as politically motivated bank bashing became big business bashing, which was then perceived as all business bashing – big and small.

Whatever the reality, the problem with businesses believing that Labour was against them is that those who run businesses and those who are employed by them are voters. And who is going to vote for a party they think will put their livelihoods at risk? My peers in business often complain that politicians don’t understand business, but they say Labour politicians are on a different level – they don’t even pretend to be interested, inquisitive or enthusiastic about businesses.

A second problem was that Labour failed to challenge effectively the Conservatives’ factually inaccurate accusation that it was Labour that caused the economic crash in 2008. In fact, Labour’s economic record in its last 13 years in government was by and large enviable, and before the global recession hit the UK it had lowered the debt-to-GDP ratio that it had inherited. The British economy was so good, in fact, that some economists thought we had finally got rid of the boom-and-bust cycle. When the financial crisis happened, the Labour prime minister, Gordon Brown, showed global leadership, hosting the G20 summit in London where leaders pledged $1.1tn towards restoring credit, growth and jobs.

After losing the 2010 general election, for a variety of reasons, the new leader, Ed Miliband, decided to rubbish all Labour’s achievements and start from ground zero. Rather than fighting for a fair evaluation of Labour’s real record in the government, Miliband made a huge strategic error by accepting the Conservatives’ narrative and allowing the Tories to brand Labour as the party that crashed the economy.

A third problem was that while focusing its campaign on inequality, Labour failed to make a convincing case that this phenomenon is a problem that should concern the majority, not just the minority most brutally affected. Data released by the OECD last week revealed that inequality is on the rise in the UK and that with the current Tory government’s policies it will continue to rise for the next few years. This will damage Britain.

While it was not, therefore, wrong of Miliband to challenge the abuse of zero-hours contracts and highlight the rising number of people resorting to food banks (both being shameful realities in modern Britain), his mistake was in the failure to explain why this was a problem for the 90% of the British population not affected.

Fundamentally, voters needed to understand why inequality was bad for them. Bad for business, bad for society, bad for public services. Labour failed to articulate that.

Finally, Labour has always been a people’s party and one with strong support from, and links with, Britain’s ethnic minorities at grassroots level. But the last five years have seen a decline in this relationship.

Take the British Indian community as an example; Labour lost a big vote share. Why? In my view, it was a simple lack of effort. While David Cameron went to the lengths of learning a few words in Hindi for his speeches and visited temples and major festivals throughout his campaign, Labour seemed to have given up. The party must do better than this if it wants to win a majority. British Indians play an important role in society and the economy and, as in other minority groups, there are many swing voters among us.

The Labour party must now be very thoughtful about the way ahead. Rather than rushing into selecting the new leader, deeper thought and wider debate is needed about the kind of party we want to be and how we best present ourselves in the years ahead. Just electing a new leader will not end the problems of the last few years. A leader is not a messiah but a messenger. Find the right message and you will find the messenger.

We live in an increasingly interdependent and interconnected world. The countries and societies that are more open, agile and adoptive will flourish and the closed, sluggish and isolated will be left behind. Although values remain important, the rigid traditional ideological politics of left and right have declining relevance.

In real life, when we encounter a challenge, we find solutions and implement the ones that work best. In business, it’s called entrepreneurship. It is now time for the Labour party to become more entrepreneurial. Britain is great because it is inclusive, it is open to ideas, new technologies, new businesses, inventions, new challenges and new cultures.

Labour needs to be all of that. Britain succeeds only when British people succeed – and to an extent when the rest of the world succeeds. Labour’s vision in 2020 must communicate how it will achieve this for the benefit of the many, not the few.

Rajesh Agrawal is chairman and chief executive of Rational FX