Now comes the hard part, Chancellor

City & Business

After the euphoria of a landslide election victory the Labour Party must now deal with the harsh and more mundane reality of government. How different Cabinet ministers will find life as they emerge from the shadows and discover that broad generalities are no longer sufficient to secure a warm reception. It is specific action, not soothing words, which are now demanded over luncheon tables and early evening cocktails.

There is a residual will on the part of the industrial and financial sectors not to offend the new masters of the universe. That will make their transition from vote-winners to policy-makers less traumatic. However, at some point the reassurances that New Labour is different will have to give way to some definition of what New Labour actually means for the business world.

There will be no shortage of opportunities to provide that definition. It will be, however, a process not without its difficulties. It is easy for a party in opposition to sign up without question to prudent management of the economy. It is more contentious for the government of the day to implement the policies which will deliver said management.

An immediate question facing Chancellor Gordon Brown is whether or not to raise interest rates. In its most recent public statements the Bank of England has been pressing for a quarter point rise. However, inflationary pressure is relatively subdued at the moment and the arguments for an automatic hike are less compelling.

Indeed manufacturing industry will argue quite vehemently that an interest rate is not only unnecessary, but that it would also be extremely damaging since it would underpin the strength of the pound which is costing exporters dearly.

However, financial markets have already factored in a quarter point rise in base rates and anticipate a further quarter point increase during the summer. Indeed the anticipation of rising interest rates is cited as a reason for international confidence in the pound and the new Labour Government.

There is a clear temptation then for the Chancellor to signal his contempt for inflation by obliging with the requisite rise. But how will that look to an electorate which has just swept his party to power? Interest rate rises are rarely seen as tools of economic management, rather as the cause of higher mortgage payments.

If he does increase rates, will Mr Brown be seen as a tough chancellor, or a push-over for a Bank which never seemed to get its way with his predecessor?

However, if he resists a rate rise then the Chancellor will be drawn down a path of tax increases to secure the necessary dampening of consumer demand. He may delicately manage the exchange rate lower and help exporters, but how will a back-door tax-raising Budget be judged by those who have been assured that direct tax rises are not on the agenda?

It is an extremely tough call made tougher by the fact that the decision will be pored over and analysed by City pundits and the media for some indication of what this means for long-term economic policies.

Right across the business spectrum there are other decisions which require immediate attention. The proposed British Airways alliance with American Airlines was put on hold during the election. It is now nearly a year since it was first announced but is no nearer to resolution. Margaret Beckett, the new President of the Board of Trade, must handle the complexities of a deal which are only compounded by the intense lobbying of rival airlines including Virgin Atlantic, headed by Prime Minister Blair's new friend Richard Branson. The deal is linked to US demands for a new open skies agreement and also faces opposition from the European Commission. It is a political minefield but it has to be dealt with.

In the next few weeks, Sir Andrew Large will step down as chairman of the Securities and Investment Board. A new appointment must be made. But will that appointee be someone to keep the seat warm or the person who will oversee a fundamental overhaul of the financial regulation structure?

There are other difficult calls, such as whether to do Henley or the men's semi-finals at Wimbledon. But no one said running the country was easy. Welcome to the real world.

Raising the stakes

IT IS no coincidence that this week sees the publication of The Stakeholder Corporation by David Wheeler and Maria Sillanpaa. Regular readers have had a flavour of this excellent book in articles penned for us by the authors over the last three weeks. Stakeholding is one of the New Labour mantras but this is a business book not a political tract. However, on the assumption that stakeholding will underpin much of the new government's policy-making in the commercial sphere, The Stakeholder Corporation's appearance is timely.

Appealingly, it adopts the tone of practical guide rather than moral lecture. Its aim is to assist businesses rather than shame them into action. Most crucially it demonstrates that there is no conflict between the stakeholder and the shareholder. Maximise the value of the former and you maximise value for the latter. The book provides compelling evidence that businesses run with the broader stakeholder in mind ultimately succeed in increasing long-term shareholder value.

But the authors do much more than float this as a tantalising proposition. Extensive case studies along with what is in effect a how-to-do- it manual make it the ideal companion for any executive interested in transforming their business.

Unfortunately there is no quick- fix solution for the lazy company. The stakeholder corporation requires energy and commitment. But by the end of the book it is difficult to question the value of making such an investment. It is well written, well structured and well worth taking the time to study.

The Stakeholder Corporation, by David Wheeler and Maria Sillanpaa, is published by Pitman at pounds 19.99.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?