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What the Labour Leadership Election Could Mean For Businesses

The election this year produced a very noticeable sensation of a great many people nervously holding their breath – and only starting to breathe again with any degree of comfort once they knew that Labour had not won. It’s not that they believe the Conservatives are so wonderful – simply that that alternative was likely to jettison us back into an economic hellhole. This was borne out by one of our clients, a high end residential property developer. Many of their buyers are foreign investors. My client didn’t make one single sale in the five months before the election. The day after the results, things started to move again.......

So Ed Miliband didn’t impress the electorate, the music started and the Labour leadership merry-go-round started up again. If you’ve watched any news item about the Labour leadership election in recent days, you’ll know one thing: all eyes are on Jeremy Corbyn. Mr Corbyn was the underdog candidate who supposedly joined the race only to bring some balance, but is now the joint favourite to win in the polls. If he does, the Labour party will shift to its farthest left point since the days of Michael Foot. Mr Corbyn, in his “Working with Women” document has said that he would make it his party’s policy to:

  • abolish tribunal fees;
  • give all workers the right to claim unfair dismissal from day one (whether that includes employees, employee plus casual workers or just means “up the workers!”, we don’t yet know);
  • extend the three-month limitation period for sex and maternity discrimination claims;
  • start mandatory equal pay audits for all companies irrespective of size; and
  • strengthen trade union recognition and bargaining positions.

Will he win? Let’s hope not. It would become almost impossible to risk employing anyone in Corbyn’s Britain – much like it is in France at the moment. During Nicolas Sarkozy’s era there was 25% unemployment amongst young people (because it’s so difficult to dismiss, so the French simply won’t employ them),many people work on le noir – the illegal non-tax workforce – because it’s the only way to make a living. An English friend had moved to France many years ago and set up an entirely legitimate tax paying business. He employed six people. Under President Hollande, things have got even worse. The tax regime and employment rights are not so much stringent as punitive. He said he simply had no choice but to close his business, lay off six people and set up a sole tradership. How does that political approach help anyone? Will Labour never learn from other countries very public, proven mistakes? It seems not.

If Mr Corbyn does win the leadership election, it would take a very big swing in UK public opinion to get him into Downing Street. I can see many small businesses – the absolute backbone of the British economy having to follow my friend because they will have no choice. No one wants to work their socks off, taking all the worry and risk for no return.

Liz Kendall is the other favourite, closely trailing Mr Corbyn in the polls. She is the very opposite of a 1970s tribute act, claiming to champion wealth creation to support jobs and public services. Talk of confronting inequality is present but vague in her manifesto. Her biggest selling point to the party is her NHS background. Having been Director of the Ambulance Service Network and worked with the Maternity Alliance, she is in a strong position to claim real life experience of one of the most treasured parts of the public sector, without having had close ties with Tony Blair or Gordon Brown. If Ms Kendall wins, the days of Blair may return but under a new banner.

What of the other two candidates? Andy Burnham was a front-runner, having championed the NHS in his role as Health and then Shadow Health Secretary. But the links to Blair and Brown’s front benches will forever tarnish him as “one of the people who got us into this mess”. However much the members may like him, the Unions do not and nor does the public. The same applies to Yvette Cooper. The secret that she is the wife of Ed Balls came out long ago and that tars her with the Blair-Brown era brush. She also served as Chief Secretary to the Treasury in 2008 when the economic crisis hit. Burnham and Cooper also have one other problem – as soon as Ed Miliband lost they immediately started criticising him, saying Labour needed to send out a positive message of aspiration and achievement. This naturally led party members to ask “Why didn’t you do something about it before we lost the election?”

So what can we expect? Despite his popularity, Mr Corbyn probably won’t win. Nick Clegg was popular once and so was Ed Miliband, but that was a fad. Even with Unison’s support (which got Ed Miliband into power),at the last minute a lot of party members and most MPs (including those who nominated him) will likely see the disaster Corbyn would cause and go for Kendall. Even Harriet “Harperson” has said Mr Corbyn would seal Labour’s fate as a party of opposition.

If Liz Kendall does win then it could have a significant impact on who the Conservatives choose after Cameron goes in 2017/18. Will they, as some have suggested, go for a more traditionally right wing Tory to emphasise a difference from Labour, or will they elect Cameron Mk II to compete for the centre ground?

The 2020 election could be a very significant one for the country, but less significant for businesses if both major leaders take a pro-wealth creation and pro-business stance. Either way, as long as Mr Corbyn stays out we shouldn’t expect unfair dismissal rights from day one to be on the agenda.

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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