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Keir Starmer is right to oppose a Tory corporation tax increase

Alan Johnson
·4-min read

As a business minister around the turn of the century, I remember the then director general of the CBI, Digby Jones, offering me a typically forthright slab of his cracker-barrel philosophy. “The thing about you Labour guys,” he said, in his best Brummie accent, “is that you know F-all about business, so you listen and learn. The Tories think that having a couple of directorships makes them experts and so they never listen and never learn.”

The Labour party had spent most of the previous two decades in an internal struggle to free ourselves of the accusation that we had no interest in how wealth was generated, only how it was distributed. As George W Bush is believed to have said about the French, we had no word for entrepreneur.

Digby’s backhanded compliment was entirely apposite. The perception was that because we cared about the workers (as we did, and as we do) we were, at worst, the enemies of enterprise and, at best, entirely ignorant of how a modern economy works.

I well remember the conference debates of the 1980s, when giving workers a stake in their companies was denounced as “sleeping with the enemy”, and propositions to introduce a minimum wage were defeated on the grounds that they would interfere with something called “free collective bargaining”.

The Labour administration I served in was the first to govern under a party constitution that pledged to create a “dynamic economy” in which we partnered with “the enterprise of the market and the rigour of competition”. Labour, which introduced central bank independence, kept Britain out of the eurozone and presided over sustained economic growth, was good for business.

Related: Keir Starmer unites his Labour critics with 'no tax rises' stance

Since then, thanks to George Osborne’s age of austerity, our public services have been degraded, police numbers have fallen and we’ve seen the longest squeeze on wages since the Napoleonic wars. And where did it get us? As the shadow chancellor, Anneliese Dodds, has pointed out, since 2010 Tory chancellors have missed every debt and deficit target they themselves have set.

When Keir Starmer was elected last April he faced a bigger mountain to climb than any previous leader (with the possible exception of Clement Attlee in the 1930s) and he’s begun his assent with skill and courage. From being 26 points behind in the polls, by November Labour had a five-point lead and Starmer’s ratings were well above the prime minister’s, particularly on issues such as decisiveness and competence. It’s true that those figures have slipped a bit lately, but for those seeking an explanation, there is a one-word answer, and it begins with V.

As the Labour leader pointed out in his keynote speech last week, the vaccine programme is working because the government stepped in rather than stepped aside. It’s a perfect example of public/private partnership, as opposed to the £22bn wasted on a privately outsourced track-and-trace programme.

In that same speech, Starmer said this was no time for austerity or for tax rises on business. There are those on the far left who think it’s the duty of the party to impose tough taxes on business, and they recoil at the thought of Labour opposing Tory proposals to increase corporation tax. But the country is about to feel the full economic consequences of the pandemic. In such circumstances, with businesses struggling to survive, increasing taxation on them would be as much of an austerity measure as cutting pay and benefits.

The job of an opposition leader is a thankless one. In the main it consists of waiting for the governing party to make a mistake and then exploiting it.

This government has lost the trust of business. From Osborne’s inept handling of the economy to Boris Johnson’s four-letter tirade against them, the business community has been ignored and insulted. On Brexit the issue wasn’t the need to comply with the referendum result, it was the Tories’ insistence that departure should be as masochistically hard as possible. Thus we have a border in the Irish Sea and significant extra costs for businesses trading within the UK, let alone the EU.

By zoning in on these catastrophic errors on Brexit, on Covid and on the economy, Starmer is echoing concerns made not just by business organisations but by the Institute for Fiscal Studies and the National Audit Office.

Just as with his opposition to increases in corporation tax, it’s smart politics, and Labour members haven’t seen much of that over the past few years.

• Alan Johnson is a former home secretary and Labour MP