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IoD response to Labour’s business manifesto: “There’s more to business than just Europe”

31 Mar 2015

Responding to the launch today of ‘A Better Plan for Business’ by the Labour party, Simon Walker, Director General of the Institute of Directors, said:

“Business leaders will welcome Ed Miliband’s focus on strengthening the UK’s position as an open and outward-looking country, and share his desire for continuing membership of the European Union. However, there is little desire in the business community for maintaining the status quo.

“Only around one in ten IoD members think the EU social and economic model is working, and significant reform is needed to boost the private sector across the continent. While our members would not vote to leave, they think it is sensible to hold a referendum based on reforms, which the UK can achieve if it works with European partners.

“Labour’s policy on Europe may not be the trump card Miliband supposes it is. There are plenty of other important issues that will be in the minds of businesses in the run-up to the election. Labour must make sure that warm words are backed up by practical policies. Businesses will support their commitment to remove international students from arbitrary net migration targets, for example.

“However, their pledge to keep the UK’s rate of corporation tax the lowest in the G7 still allows scope for an increase, and a crude ‘freeze’ on energy prices will do little to reform the market and could complicate the ongoing Competition and Markets Authority investigation.”

On plans to reform corporate governance, Oliver Parry, the IoD’s Senior Corporate Governance Adviser, said:

“Labour’s recommendation to improve transparency on pay is welcome. For too long, our largest firms have designed pay packages that are inaccessible to the general public. Executive pay should promote the long-term interests of companies and should be as transparent and rigorous as possible.

“Putting employees on remuneration committees is an innovative idea, but asking regular employees to make decisions on executive pay in isolation will have far reaching ramifications for corporate governance.

“Encouraging fund managers to disclose how they vote on remuneration policies would have a much more immediate impact on improving long-termism and we support measures which push companies to take action without legislation.”

On proposals for a new British Investment Bank, Malcolm Small, the IoD’s Financial Services Adviser, said:

“It is hard to see what value the proposed British Investment Bank would add, since we already have the British Business Bank and various other schemes to boost lending to small and medium-sized businesses. Areas such as crowdfunding and peer-to-peer lending have emerged in recent years and are helping to plug the funding gap to SMEs. We would be cautious about potentially stifling these innovative sectors through further top-down intervention, and await further details on Labour’s proposals.”

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