Sharp knives will be wielded by 80 corporate executives in Birmingham’s Hyatt Regency Symphony Ballroom as they gather this lunchtime at the annual conference of Britain’s Conservatives.

The cutlery is intended to dissect the fine cuisine rather than the policies of guest of honour George Osborne, the party’s finance spokesman. But there is an unmistakable air of ambivalence hanging over relations between the opposition party and business this week as both sides throng the halls and bars of England’s second city.

Companies are flocking back to the Tory fold, scenting a party on the verge of power – but they remain uneasy about the policies of David Cameron, the modernising Tory leader. The Conservatives, meanwhile, are proclaiming themselves the true party of business but seeking to keep their distance – at least in public – from supporters in the City of London now demonised in tabloid newspapers as “spivs” responsible for the ruin of financial institutions.

Mr Cameron sought on Monday to make a virtue of corporate unease about elements of his party’s emerging manifesto, stating that “the Conservative party should never be frightened of standing up to big business.” By contrast, he told the BBC: “part of the problem with [the ruling] New Labour [party] is that they were so enamoured of trying to suck up to business that they were never able to deal with the difficult issues.”

In fact, such “sucking up” to business crosses the political boundaries in Britain. Companies cannot vote. But the support of business is seen by all the main parties as a reassuring endorsement of their economic competence, as well as a highly valued source of party funding.

Donors seek a winner

Britain’s tabloid newspapers this week took a characteristically populist approach to the financial backing that David Cameron, the opposition Conservative leader, has received from hedge fund managers. “Bankrolled by the City wolves,” is how one put it.

The sums involved – a reported total of almost £2m – highlight a broader increase in donations to the Tory party, a trend that observers argue reflects a shift in the political balance of power. Donors “want to see a winner”, says Lord Oakeshott of the Liberal Democrats, the UK’s third party. While Tony Blair, former premier, “looked the part”, his successor Gordon Brown is “a loser on a very short lease. So big money wanting face-time or favours now floods to Cameron.”

The link between donations and potential “favours” from politicians remains a contentious element of British politics. All the main parties rely on donations from individuals, companies and other organisations. Attempts at reform have so far foundered on the inability to reach cross-party agreement.

Mr Cameron maintains a big lead over Mr Brown in the fundraising race. The Tories have raised more than Labour in the last 10 financial quarters. In the three months to June the Tories raised almost 50 per cent more, pulling in close to £5.6m. Labour has become increasingly reliant on the unions as it faces a dearth of willing individual donors – partly as a result of media scrutiny following the “cash for honours” furore, in which business figures were caught up in allegations that donations were linked to promises of a seat in the House of Lords.

The Tories, meanwhile, have been expanding their base of donors. More than 500 people gave £5,000 or more to the party in the year to June 2008, yielding £14.2m, according to official data – an increase on the 321 people yielding £7.4m in the year to June 2006.

On that score, the opposition party can now count a clear victory over Labour, at least in terms of attracting corporate representatives to its annual gathering. The Tories might as well hang a “no vacancies” sign above the entrance to Birmingham’s ICC conference centre. The exhibition space, where organisations pay a five-figure sum to promote their wares to delegates, has sold out.

A report in the FT this month that the Tories had also sold out this Tuesday’s “corporate day” – a £995-a-head event offering extensive access to shadow ministers – prompted desperate last-minute requests. “We had hysterical calls from people saying ‘I’ve got to come,” says Richard Spring, the MP who co-chairs the Conservative City Circle. In contrast, Labour last week struggled to fill its “business forum” and exhibition space in Manchester.

The opposition party’s ability to woo business more effectively than Labour might not seem surprising. For most of the 20th century, business saw the Tories as its natural political home, in much the same way that the trade unions affiliated with Labour. The New Labour project of Tony Blair, the former prime minister, broke this link in the 1990s, mounting a “prawn cocktail” offensive that convinced the City it was a government they could do business with. A succession of Conservative leaders has struggled to win back the corporate vote.

But Mr Cameron’s tenure as Conservative leader appears to have changed this dynamic – particularly since Gordon Brown took over as prime minister from Mr Blair last year. The sense of business switching allegiances has been evident for some months.

Conservative party coffers are bulging and business donations are sharply up. Party officials report a sea change in corporate engagement in other ways, with business people anxious to meet the shadow ministers who appear increasingly likely to form the next government. The Conservative City Circle networking body has swelled its ranks by about 40 per cent to 7,800 since Mr Cameron became leader in December 2005. A sister organisation set up recently for young City professionals now has about 1,000 names on its database.

“The Conservative party has regained its rightful place as the party of business,” asserts Alan Lewis, chair of Conservative Business Relations, a party body dedicated to building its corporate links. He reports “full houses – standing room only” at a series of seminars the Tories have run for business, focused on specific issues such as manufacturing and trade promotion.

“There’s been a really huge effort on the part of the Conservative party to re-engage with business,” says Mr Spring. The equivalent to New Labour’s wooing of the City in the run-up to its 1997 landslide win – “I suppose you could call it a carpaccio offensive” – is being spearheaded by Mr Osborne.

But this wave of seeming corporate enthusiasm for the opposition party is far from an endorsement of its policies. Indeed, leading business organisations stress their reservations about Mr Cameron’s stance on some core issues.

Two factors are driving the increased interest. The first is disenchantment with Mr Brown’s premiership. Business relations with the government have soured over the past year, with increases in capital gains tax and levies on wealthy foreigners fuelling a sense that Labour’s commitment to enterprise has weakened.

The parallel factor affecting business sentiment is the upending of the opinion polls since last autumn. From a double-digit deficit to Labour last summer, the Tories have surged to a significant lead, peaking at 28 points in a poll earlier this month. Even after Mr Brown enjoyed a bounce on the back of last week’s Labour party conference, surveys suggest the Tories are still some 10 points in front.

“When you have a big lead in the polls, more people come to your party,” says Richard Lambert, director-general of the CBI employers’ organisation. “Business people don’t tend to be that ideological but they are interested in power.”

Mr Spring admits that the “complete and radical transformation” in business relations under Mr Cameron’s leadership owes much to the state of the polls. “Quite frankly, [companies] sense a winner and they want to be able to influence the team that’s going to be the next government.”

The next few months will be a critical test of business influence, as the Tories start to firm up their manifesto for the next general election, which has to be held by June 2010. “This is not about the schmoozing, it’s about what sort of Tory party do we get for business after a 2010 election. It’s completely up for grabs,” asserts Job McLeod from Weber Shandwick, a leading firm of lobbyists. “In the next period, we’ll see business engagement really intensify as that battle [over the Conservative manifesto] rolls out.”

Employers’ organisations know they cannot take for granted the historical Tory commitment to a smaller state, with lower taxes and minimal regulation. Mr Cameron has endorsed these principles. But his ideological stance so far has reflected his fear of repeating the “lurch to the right” policies that the Conservative leadership believes lost the last three elections.

The opposition party leader has underscored his determination to fight Labour on the political centre-ground by backing a policy of matching Labour’s spending commitments to 2010 while eschewing unfunded, up-front tax cuts. A key test of Tory policy, seen from a business perspective, will be whether the Conservatives commit to cutting public spending once in power.

Companies remain uneasy about Mr Cameron’s rhetoric. He has attacked high street brands by name for perceived corporate irresponsibility, while backing greater regulation in some areas, such as extending the right for employees to request flexible working to all parents of under-18s.

The Tory leader’s “vote blue, go green” commitment to the environment is another cause of business concern. The opposition party this week reaffirmed its commitment to increasing green taxes as a proportion of the overall taxation burden and could see business as the easiest way to levy such taxes without provoking an electoral backlash.

Business complains that the Tories have also backed off from making potentially unpopular but essential commitments to improving Britain’s creaking infrastructure. Mr Cameron on Monday angered business by opposing a third runway at Heathrow – London’s main international airport and Europe’s busiest. He has also pledged to ban new coal-fired power stations that do not include carbon capture and storage technology that has yet to be proven on a commercial scale.

“Business is not featuring large enough in the debate that’s going on at the moment,” says David Frost, director-general of the British Chambers of Commerce. “There are big issues for business we just don’t think are being faced up to, transport being absolutely at the heart of that. When it comes to the Tories, we don’t see any evidence of a coherent transport policy yet.”

Miles Templeman, director-general of the Institute of Directors, says Mr Cameron “looks like he’s trying to appeal to all the different constituencies [and] may be getting hung up on the green lobby.”

The undoubted surge in corporate support for the opposition party is being matched by a call to fill the many gaps in its manifesto for business. “Conservative policy formulation is still in some areas at quite an early stage,” says Mr Lambert. “That’s one reason business is very keen to engage [with the party] now.”

The leading business organisations warn the Tories that they should not confuse an increase in corporate backing for the party with automatic support for its policies. “I wouldn’t say necessarily [the Tories], as seen from a business point of view, are any more appealing than they were before,” says Mr Templeman. “There’s a general belief that, almost for negative reasons, they’re in a very strong position. They’re winning more by default of the Labour party than by the appeal of the Tory party.”

BUSINESS BASE

The choice of Birmingham as the location for this year’s Conservative party conference is symbolic. Both the opposition party and Britain’s second city have experienced – as David Willetts, Tory front-bencher and proud “Brummie”, notes – being “deeply unfashionable” though both are now undergoing a revival. The city in England’s Midlands also holds a place in Tory history as the power base of Joseph Chamberlain (left), a crusading Birmingham mayor and MP who split from the Liberal party in the 1880s to form a rival alliance with the Conservatives, thus uniting the Tory rural base with the urban, Liberal business vote. This reshaping of the political landscape allowed the Tories to become “a significant urban force”, says Mr Willetts, laying the basis for the party’s domination of power for much of the 20th century.