David Prosser: Labour still wants the business vote

Outlook There will not have been many people in Labour's high command more irritated by the party's run-in with big business over the past week than Lord Mandelson. It's not just that as Secretary for State for Business Lord Mandelson will feel uncomfortable with Labour's run of bad headlines falling on his patch, but also because, Treasury-sponsored national insurance increases aside, he will feel entitled to make a strong case for having fought the business sector's corner.

Privately, many senior business figures say Lord Mandelson "gets" the issues they face, particularly leaders of Britain's hi-tech manufacturing companies. They have benefited from the sort of industrial interventionism that Labour's manifesto championed again yesterday. It is a strategy – support that includes tax breaks for growing businesses but goes as far as direct loans from Government to companies such as Sheffield Forgemasters – which Lord Mandelson himself says would have been unthinkable under Tony Blair's administrations, let alone a Tory government.

Moreover, Lord Mandelson appears to have sought to frustrate at every turn those in his party who are keen to extend the march of social policy into business. The manifesto reveals he has successfully fought off the campaign for an inquiry into high pay. Nor has an extension of maternity rights, which would have cost employers as much as £500m, seen the light of day. Lord Mandelson has, instead, limited reform in this area to minor changes to paternity leave.

A minor setback – from the business lobby's perspective, at least – is that there will be a review of the default retirement age, but the business minister has at least given employers every chance to ensure the outcome of that inquiry is to their advantage.

As ever, Lord Mandelson has managed to successfully straddle the difficult divide between public opinion and his business constituency. Despite opposing the high pay commission, he spent the weekend sounding off about the injustices of high pay. He has also successfully given the impression that Labour intends to introduce a "Cadbury Law" on takeovers, which will please those for whom the confectioner's takeover by Kraft was such a betrayal, but will not prevent such deals in the future.

The headline-grabbing part of Labour's new takeover rules is its determination to reinstate its right of veto over foreign buy-ups of key utility and infrastructure companies. In fact, this is nothing to do with Cadbury – it reflects concern about the finances of some of the multinationals that have bought up British interests in airports and elsewhere – but, in any case, it is difficult to know when such a veto might be applied. There is precious little left in Britain in these sectors to sell to foreign buyers.

The rest of the takeover shake-up, meanwhile, is dependent on the outcome of an ongoing review of the rules by the Takeover Panel. Labour appears to support the idea that the threshold for takeover approval should rise from 50 per cent plus one share to more like 66 per cent, and has also given some support to the proposal to exclude investors defined as short-termist – think hedge funds and other speculators – from voting on such deals. Both these suggestions will find some hostility in the City – not least because fear of a takeover is one driver for keeping companies focused on decent performance – but will be popular elsewhere in the business community.

In other areas too, Labour is bowing to business as it never has before. Support for a third runway at Heathrow, for example, is a policy that the private sector largely wants, but one which potentially exposes the party to a very painful battle with environmentalists (not to mention voters living in several key west London marginals). Lord Mandelson even made it clear yesterday that despite a manifesto hint to the contrary, he regards the partial privatisation of the Post Office as a possibility in the next parliament.

The business minister has been in politics long enough not to expect too many thanks for getting it right – and plenty of opprobrium from the critics. But given what Lord Mandelson has managed to deliver for business – both in this manifesto and during the depths of the recession – you might forgive him a little frisson of anger about the ever-growing number of captains of industry backing the Conservatives.