What Labour would mean for business — Corbyn insiders talk to the FT
Beyond the divisions in Labour over Brexit and antisemitism problems, the party has a radical economic agenda being led by shadow chancellor John McDonnell. FT chief political correspondent Jim Pickard talks to the Labour insiders behind the policies including economist Ann Pettifor, Cat Hobbs from WeOwnIt, Laura Parker from Momentum and Bob Kerslake, former civil service head
Filmed by Petros Gioumpasis. Produced and edited by Josh de la Mare.
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Britain may be just weeks away from yet another general election, and business leaders around the world are nervously trying to find out what a potential Labour government would mean for them.
This shadow chancellor is different. I want you to know, the greater the mess we inherit the more radical we have to be.
Behind deep divisions over Brexit and the crisis over anti-Semitism in its ranks, there's been less attention on Labour's radical economic agenda. Lobbyist Ian Anderson says his clients, blue-chip international companies, are hungry to know more, and in particular about shadow chancellor John McDonnell and his promise to rewrite the rules of the British economy.
When I'm abroad, when I'm in New York, or when I'm in Asia there's a huge amount of interest in Labour's policies. What does higher corporate tax actually mean? What would the change in the approach to regulation mean? And on the wider economic agenda, is there a partnership between business and inward investors to help build Labour's infrastructure plans? And would you say that it's a positive sense among the business world about what a Corbyn government would mean? Most businesses are uncomfortable about prospect of John McDonnell as chancellor. There's not a lot of common ground. And whilst John McDonnell will say that he's talking to business, a lot of the time he's talking at business.
Corbyn and McDonnell have taken much of the limelight. But behind them there's a large policy network of leftwing MPs, activists, advisers, Trotskyists, Greens, pressure groups, think-tanks, academics... the list goes on. In this film, we meet some of the faces behind the most radical leftwing policies seen in Britain since the Labour government in 1945: large-scale redistribution with taxes on the rich and business, borrowing for infrastructure, the renationalisation of water, the railways, and other privatised companies, with shareholders paid back below the market price, the gradual transfer of 10 per cent of the shares of every big company to their workers, strengthening the rights of consumers, workers, and tenants against shareholders, landlords, and bosses. And these are only the current existing policy. There are also ideas being knocked around for a three-day weekend, a universal basic income, and the land value tax. And on it goes.
In the network of policymakers, Ann Pettifor, a leading critic of neoliberal economics, stands out as a longtime adviser to shadow chancellor John McDonnell.
What would you say to business people? Are they right to be watching this with some measure of alarm?
Yes, if I think if you're a rent-seeker, you know, if you're one of today's rentier capitalists, there will be a lot to worry about. It's not going to be so easy to drain valuable public assets of wonderful rent easily. In the future, that may be the case.
But I think most of your readers will actually look forward to this. Because what they want more than anything else, I would think, is economic stability and economic prosperity. As long as we have the low levels of income that we have now, where we have the kind of insurrection that is represented by Brexit and that is very destabilising in the economy.
And what business people often ask... they kind of see two John McDonnells. They see a shadow chancellor who has a very amiable bank-manager manner. There's also the John McDonnell who's suddenly very angry about bringing down capitalism. Which is the real John McDonnell?
There's no doubt that he's on the left. But when it comes down to it, John is really pragmatic and sensible, and sometimes, in my view, a little too conventional, really.
When it comes to Labour's ambitious plans for renationalisation one campaigning group has been very influential among the Corbynistas, We Own It, founded by Cat Hobbs, who wants to reverse the privatisations of the 1980s Thatcher era, a policy that was largely left untouched by Labour under Tony Blair.
Some critics of Labour's nationalisation policy suggest that it is very labour-intensive, time-intensive. Do you think it is the best use of the time of a radical Labour government?
Absolutely. Because what this is about is taking assets that will make a profit for the public purse back into public hands. So it means ending the rip-off that we've got right now. It means giving everybody a fairer deal in terms of our bills and the money that we're paying out for these services. But it also gives us a really vital tool that we can use in delivering a Green New Deal, in tackling the climate crisis.
Are there other private-sector industries which you would like to see nationalised which, at the moment, are not being discussed?
So We Own It is calling for all public services to be run in public hands. And so what that means is it means energy, water, the railways, buses, the NHS, schools, council services, libraries, care work, parks, all of those things...
But what about...
...the defence industry?
...in public hands.
What about airports?
Yeah, I think wherever there's a public service. So defence industry, yes, airports, yes. All of these things are public services that we don't have a choice about relying on, really. We're not talking about the whole economy here. So we want to see a mixed economy. Public services should be run for people rather than profit. Private companies and private investors can invest in the rest of the economy.
The chance of these radical policies becoming reality is being taken seriously in some quarters. Former head of the Civil Service, Bob Kerslake has been charged with advising McDonnell and team on the potential transition into government.
I'm not a member of the Labour party, nor am I developing their policies. What I'm doing is helping them think about the task of moving into government. And it's worth saying they face some real challenges. We have huge social divisions that are matched by economic divisions. And in my view, the important thing is that we have a government that has the courage to see through the radical responses that are going to be needed.
We're talking about a very ambitious programme of radical change. But most of the people around Jeremy Corbyn have not been ministers or running the government under previous Labour administrations. Does that make it harder for them?
Yes, it is a radical programme. And indeed they have some who have got experience of government, but not many. And in a way, that's not surprising if you've been out of power for nearly a decade.
But I think if you look at the policies, many of them are policies, if you went to Europe, would not be hugely surprising - national ownership of the railways, for example. So they're radical for the direction that this country has gone in for the last 50 years. But they're not so radical when you look at some other countries in Europe.
But Labour is deeply divided, and the radical Corbyn agenda has alarmed many more moderate MPs. In February 2019, it was enough for Chris Leslie, a former shadow chancellor, to resign as a Labour MP against what he said was Labour's shambolic Brexit policy, anti-Semitism in the party, and its hard-left economics.
Ultimately, it is anti-capitalist. It's not about regulating markets, it's about overthrowing markets. From my point of view, looking at a choice of finite amounts of money, are you going to spend £90bn to nationalise the water industry, or should that £90bn be used for something more socially productive?
But they'll make the point that that is covered by the profits that you then get by owning the water industry. And they would suggest the £90bn is far too high an estimate.
Yeah, but only in an environment where the market is going to say, oh, yeah, we're absolutely fine with you taking assets below market value. I mean, the idea that a Labour chancellor is going to go to the market and say, we'd like to borrow £500bn pounds. Oh, but the person in front of you, we just sequestered their assets below market value. Those behind are going to say, well, we might lend you some money, but at a much, much higher risk premium. And of course, when the interest rates increase, who pays the price for those? Ultimately the poorest in society, or the public services that will suffer as a result.
Laura Parker, the national co-ordinator of Momentum, the grassroots movement founded four years ago to support Jeremy Corbyn, believes that Labour can move beyond the current rows over Brexit and anti-Semitism and its election defeat in 2017 to win the next general election on a radical platform.
Do you think the movements around Jeremy Corbyn, Corbynomics, will have a life beyond the current leader?
Yes, absolutely. And I think that now we have mainstreamed this thinking about economics in particular, throughout the party. We've got a new generation of people in parliament. I mean, I don't think it's that, you know, when Jeremy takes off to his allotment, suddenly there's nobody left. You know, we're not stuck for people. I mean, you know FT readers are probably pretty smart folk. And smart folk will have understood that we can't continue as we are.
Whenever that general election comes, we're ready. We're ready to campaign for victory. We're ready for government. We're ready to build the future. We'll be proud to call that future socialism, solidarity.
Some pundits believe Labour has little chance of winning a general election, not least because of Mr Corbyn's low opinion poll ratings. But elections are unpredictable. In 2017, Labour started out 24 points behind the Conservatives, but ended up winning 30 seats and almost gaining power. Business leaders in the UK and around the world are looking very carefully to see what a Labour government could mean.