Magazine article The Spectator

So Far, So Tory

Magazine article The Spectator

So Far, So Tory

Article excerpt

FOR the first time since 1979 we have a Labour government, set to continue for the next five years. So, after a month in office, what are the prospects for business?

Many of Labour's new attitudes and policies are healthy, so, rather than adversely criticising the new government, let us give praise where it is due and seek to be constructive. That will help Britain, which is what we all seek and need to do. Further, by being positive at the outset, we will be in a better position to give New Labour the help, support and criticism it will need from industry in sticking to its declared aims, when events and voices from old Labour conspire to blow it off course.

First the economy. Having inherited one of the strongest economies this country has known for generations, New Labour promises stable economic growth, an inflation target of 2.5 per cent or less, a twoyear ceiling on public expenditure, and government borrowing only for investment, not for funding current expenditure. These are admirable aims and will receive widespread support.

It has already shown some commitment to those principles by handing over responsibility for interest rates to the Bank of England, although its woeful handling of the subsequent announcement removing some of the Bank's controls was no way to deal with the governor of one of Britain's principal institutions and could have brought about his resignation. The government must beware of policy announcements by spin doctors.

On Europe, social chapter and minimum wage notwithstanding, Labour is displaying commendable caution. `Europe isn't working the way this country and Europe need,' Tony (I prefer `Prime Minister') Blair tells us. So there will be no rush into a single currency; reform of the CAP and fisheries policies will be sought and Europe will be viewed as an open single market rather than as a federalist political project.

Those of us who lived and worked under previous Labour governments certainly see welcome changes. Penal individual and corporate taxes were the worst feature of the bad old days and now we have an administration committed to no tax increases. Right, Chancellor of the Exchequer? Of course. The majority believed that and voted for it. I didn't and I'm not so sure, but let's give it a try.

However, when his delayed budget is finally introduced, let's read Gordon Brown's lips and see how far New Labour's promises stand up. He has to pay for his manifesto's massive spending programme, and while it promised `no increase in personal taxes', let's not be fooled by that word 'personal'. Any increases in taxes, however remote, affect every individual taxpayer, and the first impost in that category is to be a `windfall tax'. Unfair and probably illegal, it will affect you. Labour must resist temptations to get round its tax pledges by any increases in corporation tax or national insurance, which would immediately damage our competitiveness abroad as well as general consumer and business confidence.

On business itself we have promises to promote open and competitive markets; of regulations which are `simple, helpful and fair' and of the elimination of red tape and government interference. These sentiments any businessman would endorse, perhaps a little ruefully, because we've heard it before. Will Labour actually reduce the army of civil servants who ensnare us in ever tighter bureaucratic nets? …

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