Comment: Business should still be suspicious of Blair

The battle between the two main parties for the "business" vote becomes a laugh a minute. First there was Tony Blair on Monday with his extraordinary claim that Labour is more a party of free market economics than the Tories. Now there's John Major with his belated pounds 800m off the rates for small business. Anyone would think there were votes in it.

The more interesting question about Labour and business, however, is whether Labour when in power is going to be the party of small or big business. There's an important difference here, for the interests of the two are often not the same and sometimes diametrically opposed. The rhetoric, from Tony Blair at least, is that Labour is the party of small business, which would imply a vigorous competition policy. But what little action and defined policy there's been so far would rather indicate the contrary - Labour as the party of big business and the corporate state. This would imply that the interests of domestic competition will always take second place to those of Britain's big business national champions.

The most glaring example of this so far is Mr Blair's "deal" with British Telecom under which BT gets early release from restrictions on its freedom to offer broadcast TV across the network in return for wiring up schools and other public institutions to the superhighway. Both Labour and BT are these days keen to play down the significance of the arrangement, but there is none the less little doubt that BT expects a very sympathetic hearing from a Labour government, not just on this issue but on a number of other fronts as well.

There are some important tests for Labour looming almost immediately it gets into power. First there is the Monopolies and Mergers Commission report on gas charges. Will Labour want to back the hardline consumerist stance of Clare Spottiswoode, the gas regulator, or does it have some sympathy for TransCo's plight? If it wants gas included in the windfall profits tax, something is going to have to be left in the kitty. Another test comes from the MMC report on whether to allow further consolidation in the brewing industry. And just how wedded and glued is Labour to the cause of competition in the gas and electricity market? Not very, seems to be the answer.

Tony Blair's talk of "partnership" with business should send out the strongest possible warning signals. It is not the function of government to set up exclusive "you scratch my back and I'll scratch your back" arrangements with companies and business. The proper function of Government is to provide a stable economy for business to flourish in and a set of rules and regulations to ensure fair play. It is to be hoped that this is what Labour does stand for, but there are good grounds for suspicion.

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