When Boris Johnson blundered through his “Peppa Pig” speech to business leaders at the CBI conference on Monday morning some of the UK prime minister’s own colleagues were left watching “through their fingers”, in the words of one.
But Labour officials could not believe their luck. “We were dumbfounded,” said one adviser, arguing that Johnson’s performance highlighted the difference in temperament with Sir Keir Starmer, the leader of the UK’s main opposition party.
Starmer’s own CBI speech a few hours later was a very different oration: serious, almost ponderous, and lacking in jokes. He emphasised Labour’s plans to scrap business rates and reintroduce a formal “industrial strategy” while maintaining stringent fiscal responsibility.
The Labour leader won the praise of Lord Karan Bilimoria, president of the CBI, who welcomed Starmer’s attempt to “seize the initiative”.
He told the Financial Times: “To have a Labour leader standing on a CBI platform championing the role and success of business shows just how far the party has come. The leader of the opposition’s commitments to sound public finances, the green economy and making Brexit work for business will be heard by firms up and down the country.”
Starmer is seeking to emulate the success of former leader Tony Blair, who sought to reassure business leaders that the left-leaning party did not pose a threat to corporate Britain in the years before returning Labour to power at the 1997 election after 18 years in opposition.
Labour is generally seen as strong on the NHS, one of the key electoral issues. But much like the pre-Blair days it has tended to lag behind the ruling Conservative party on economic competence, not least since the global financial crash of 2008, two years before it was kicked out of power.
The credibility gap widened even further under Starmer’s hard-left predecessor Jeremy Corbyn between 2015 to 2019. John McDonnell, Corbyn’s shadow chancellor, had once threatened “the overthrow of capitalism”.
By contrast Rachel Reeves, who Starmer appointed shadow chancellor in May, has played up her sober credentials as a former HBOS banker and Bank of England official.
Supporters of Corbyn have been left dismayed at the decision by the new leadership to drop plans for an £80bn annual tax-and-spend programme and the nationalisation of utilities.
After Starmer declared “when business profits, we all do” during his speech to the CBI this week, James Schneider, Corbyn’s former spokesman, hit back, calling it “economically illiterate, greed-is-good bullshit”.
Many business figures find the Labour front bench easy to deal with, although that admiration is tempered by the view that the party is not exactly on the brink of power. The next election must take place by 2024 and over the two years since the last one Labour has rarely been ahead in the polls.
Starmer’s team sees proximity to business as a key part of improving the party’s economic credibility. In February, Labour was behind the Tories on four different economic indicators, according to Opinium.
The same survey this month found it still trailed the governing party on “running the economy” and “bringing down the national debt”. But Labour had taken the lead in the other two metrics: “spending government money efficiently” and “improving your financial situation”.
Senior Labour politicians now meet on Zoom every two weeks with the so-called “B5” group of the largest business organisations, which comprises the CBI, the Federation of Small Businesses, Make UK, the British Chambers of Commerce and Institute of Directors.
This is a marked change from Corbyn’s time. The meetings are normally attended by one of Ed Miliband, the shadow business secretary, Reeves or Starmer, or a combination of the three.
“Labour has changed dramatically with its engagement with business,” said Craig Beaumont, chief of external affairs at the FSB. “We have a closer and more structured relationship with the opposition now, which wasn’t the case under Jeremy Corbyn.”
Beaumont said that Reeves “in particular gets it — and you can see the policy decisions beginning to flow from that, like on business rates”. He added that “for the Conservatives, this is now a much more competitive space”.
One Conservative MP who attended the annual dinner of UK Finance, a financial services trade body, on Tuesday night admitted Starmer and his team were cutting through. “I chatted to a few bankers who said, very pointedly, that Labour was wooing them in a very concerted way. They said ‘you need to watch your backs’.”
Reeves has been busy wooing business figures over breakfast, lunch and dinner. “She’s probably met 30 or 40 chief executives since starting the job in May,” said one colleague.
The pro-business reputation of the Conservative party has taken a knock since Johnson forced through a hard Brexit, Reeves told the FT. “Businesses big and small are increasingly shut out by the government, and Labour . . . has given them a new home.”
The main opposition party has adopted many of the policies that business groups have been pushing for, ranging from manufacturers’ calls for a new industrial policy to retail bosses pleas for an overhaul of business rates.
“Labour have made strong efforts to engage, and we have regular meetings with Ed Miliband and Rachel Reeves,” said Roger Barker, policy director at the Institute of Directors. “It’s a very good thing that all the major parties have a business focus.”
Yet one ally of Reeves said there were numerous areas of disagreement, citing City anger towards her policy of cracking down on carried interest — a tax perk enjoyed by private equity dealmakers. “It’s good to have frank and honest conversations,” the person said. “We are honest that we won’t always agree with people.”