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Election 2017: Business groups lambast Labour manifesto as unrealistic and ‘knee-jerk’

Labour is vowing to introduce new taxes on the 2 per cent of adults with the highest income, expand childcare dramatically and renationalise rail and mail services

Josie Cox
Business Editor
Tuesday 16 May 2017 16:46 BST
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But think tanks and groups representing businesses across the UK have said that the manifesto doesn’t address some of the crucial issues, particularly relating to the economy and Britain’s competitiveness
But think tanks and groups representing businesses across the UK have said that the manifesto doesn’t address some of the crucial issues, particularly relating to the economy and Britain’s competitiveness

Some of the UK’s pre-eminent business groups have criticised Labour’s election manifesto, dismissing certain policies as unrealistic and labelling others as knee-jerk reactions that don’t fully consider the challenges facing Britain as it begins the arduous process of disentangling itself from the EU.

In the manifesto, published on Tuesday, Jeremy Corbyn's party vows to introduce new taxes on the 2 per cent of adults with the highest income, expand childcare dramatically, renationalise rail and mail services and enhance price controls in the energy sector.

But think tanks and lobby groups representing private enterprise across the UK have said the manifesto fails to address some of the most pressing issues, particularly relating to the economy and Britain’s competitiveness in an evolving Europe.

“Although this is a short election campaign, businesses have been deluged with policy proposals, and it is a criticism of politicians of all parties that pledges have been made with seemingly little thought of the consequences,” said Stephen Martin, director general of the Institute of Directors.

“Some areas Labour have identified, such as the importance of a sensible immigration policy and investment in infrastructure, are clearly in the country’s economic interests. But other policies, like banning zero-hour contracts, or introducing pay ratios for companies with Government contracts, are worryingly knee-jerk reactions,” he added.

He said that Mr Corbyn’s policies are ambitious, to the point where he would question whether they are realistic.

“Individually, policies to renationalise the railways, water and sections of the energy industry, or to abolish tuition fees, may sound popular. But the costs would be staggering, the benefits unclear, and the related tax rises would make the UK a less competitive economy,” Mr Martin said.

Meanwhile, Carolyn Fairbairn, director general of the Confederation of British Industry, responded to the manifesto by saying that, taken as a whole, the proposals “prioritise state intervention over enterprise, and fail to offer the pro-growth and competitiveness agenda the country so badly needs”.

“While employers will welcome new commitments on skills and infrastructure, living standards will only rise if open markets remain the mainstay of the UK economy, rather than stifling new rules, regulations and burdens on firms,” she said.

The CBI, which represents around 190,000 businesses across the country, has been one of the most vocal business lobby groups on the subject of Brexit.

It has repeatedly urged the Government to ramp up efforts towards making the UK more competitive, especially through training programmes and ensuring adequate infrastructure.

Ms Fairbairn on Tuesday said she welcomes elements of Labour’s manifesto that focus on quality apprenticeships and on growing apprenticeships at higher levels, “but a target may not necessarily be the right approach”.

Some of the policies outlined, she said, show what businesses and the Government can achieve when working together. But many - from renationalisation to rules that she says might undermine the UK’s flexible labour market - are “far wide of the mark”.

Adam Marshall, director general of the British Chambers of Commerce, also voiced his support for some policies but dismissed others as inadequate.

He said that “bright spots” included Labour’s commitment to reforming “Britain’s broken business rates system” and proposing an immediate guarantee for EU nationals currently in the UK. Others, however, will “give business communities across the UK real cause for concern”.

“High personal taxation, sweeping nationalisation and deep intervention in business decision-making are not the hallmarks of an ambitious and enterprising society,” he said.

“While Labour are making some specific and targeted propositions that could boost the growth prospects of small- and medium-sized firms, these will be largely eclipsed by their proposals for higher personal and business taxes in the eyes of business leaders around the UK.”

Lewis Johnston, parliamentary affairs manager at the Royal Institution of Chartered Surveyors, said that it is encouraging to see the parties starting to establish clear policies but warned that the test of applicability is whether they can be funded.

He described Labour’s proposed inflationary cap on rent rises as “misguided” and said that it could “squeeze supply, with negative consequences for tenants”.

A survey released by recruitment website Indeed on Tuesday showed Prime Minister Theresa May is generally more trusted to support a policy that will help people retrain for jobs.

But it also shows that Ms May and Mr Corbyn are level pegging when it comes to who is trusted more on the issue of tackling youth employment.

Mr Corbyn, meanwhile, is seen to be more likely to increase the minimum wage and the supply of affordable housing in areas where most jobs are concentrated.

“The UK’s labour market remains a key economic battleground for the parties, and crucial territory to claim as we edge closer to next month’s election,” said Mariano Mamertino, an economist at Indeed said.

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