Eight years ago, the Labour party’s shadow chancellor John McDonnell brandished Mao Zedong’s Little Red Book in Parliament. As the party prepares for a general election campaign which opinion polls indicate it will win, its top team today prefers very different associations from the Chinese Communist leader.
(Bloomberg) — Eight years ago, the Labour party’s shadow chancellor John McDonnell brandished Mao Zedong’s Little Red Book in Parliament. As the party prepares for a general election campaign which opinion polls indicate it will win, its top team today prefers very different associations from the Chinese Communist leader.
Goldman Sachs Group Inc., Barclays Group Plc, Vodafone Group Plc and Google are among the big corporate names taking part at Labour’s conference in Liverpool next month, where the voice of private equity – the British Private Equity and Venture Capital Association – is also paying to back an event.
Since McDonnell’s Mao gambit, which backfired amid laughter in the House of Commons, Labour has gone on a journey. The aim is to be taken seriously after middle-of-the-road voters were put off by McDonnell and the equally left-wing Jeremy Corbyn, who guided the party to a thumping defeat at the last general election in 2019.
Its current leadership — Keir Starmer and shadow chancellor Rachel Reeves — are also keen to win the confidence of the business community whose backing was key for Tony Blair ahead of his landslide victory in 1997. Reeves is a former Bank of England economist who also worked for a commercial bank. While company bosses may not be thrilled by the prospect of higher taxes and more regulation, many are keen to back a winner, and there’s increasingly a view that a Labour government would present new opportunities.
It’s common for businesses to attend party conferences, yet the level of engagement in Liverpool is expected to be significantly greater than during the Corbyn years. It’s the first time Goldman has paid to sponsor an event at the conference, which the US bank is doing through the Goldman Sachs 10,000 Small Businesses program. (Michael R. Bloomberg, the majority owner of Bloomberg LP, is a co-chair of the Goldman Sachs 10,000 Small Businesses Advisory Council.)
It is also the first time that major UK companies such as pensions specialist Phoenix Group Holdings Plc and Ovo Energy Ltd. have sponsored events at Labour’s conference.
‘I Was an Ardent Tory’
One supporter of Labour’s new direction is Gareth Quarry, a British businessman who has made a fortune in legal recruitment including at a business he created, SSQ.
“I was an ardent Tory. Margaret Thatcher caused carnage but a lot of the changes were for the good of the country,” Quarry said in an interview. He donated £75,000 ($91,850) to the Conservatives over the years but that stopped when Boris Johnson became prime minister.
Last year Quarry turned to Labour and has with his wife now donated £200,000 to support Starmer, who he says is “level-headed” and “willing to be tough.”
The entrepreneur has also invested in several startups on the basis of a Labour victory. “If I thought the Tories were going to win at the next general election I would be keeping my powder dry. But I wanted to get in at the start of the new government,” Quarry said.
Labour has also improved its relationship with small businesses ahead of a general election which must come by January 2025.
“From the moment after Corbyn, they’ve been trying to get back with business,” said Craig Beaumont, chief of external affairs at the Federation of Small Businesses. That involves meetings with the front bench – including Reeves and shadow business secretary Jonathan Reynolds — about every fortnight, and Starmer every couple of months.
There is also a network of small businesses specially for Labour, led by entrepreneur Ibrahim Dogus, which he started after 5,000 micro firms endorsed the Conservatives in the run up to the 2015 election. “The Labour party neglected many small businesses in the UK for a long time. We now have a party that is committed to small businesses and working people.”
Bigger businesses have been courted during Labour’s breakfasts and other gatherings, which have been dubbed the “scrambled eggs and smoked salmon” circuit, a modern take on New Labour’s so-called “prawn cocktail offensive” in the 1990s.
Both Sides
Still, many companies and business groups will attend the Conservatives’ conference as well as Labour’s, including the BVCA buyout association, Barclays and Goldman. There is a common view that Prime Minister Rishi Sunak is a serious person, while City Minister Andrew Griffith has won praise for his energetic championing of competition and deregulation.
TheCityUK, the lobby group for financial and professional services, is hosting a dinner at the Conservative gathering in Manchester, sponsored by American bank JP Morgan, while it is also sponsoring drinks events at the Labour gathering alongside Barclays. Tickets for the Conservatives’ business day sold out in June, compared with September last year, according to a person familiar with the matter.
But, according to people involved in business and politics, the real interest is in getting time with the Labour team, and especially the shadow chancellor. “Reeves is one of the most in-demand women in the UK right now,” said Alice Perry, an associate director at H/Advisers Cicero and former chair of Labour’s National Executive Committee.
Labour is expecting about 200 business attendees at its conference, with another 200 on a waiting list. Overall, 16,000 people and businesses are registered to descend on Liverpool — the biggest ever turnout, according to its records.
For the financial services industry, meeting Starmer and Reeves in Switzerland’s Davos in January was a turning point. Others are trying to get access via their lobbyists now, with Peter Mandelson’s Global Counsel playing a role in facilitating meetings for clients with the Labour team. Boutique Hakluyt is also connecting executives with the politicians.
Read More: Labour Taps Hakluyt as Adviser to Woo Business Ahead of Vote
With the economic chaos caused by then Conservative leader Liz Truss’s mini-Budget a year go, two-thirds of finance professionals believe a Labour win or coalition led by the party would be the market’s preferred option, according to a Bloomberg survey this month.
“The Labour party has changed its spots,” said Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.“The policies of its Corbynite radical wing — from imposing higher taxes on high earners to nationalizing utilities — have been abandoned.”
Money, Money, Money
Is the love turning into cash? In the first half of this year the Conservatives raised £22.3 million, compared with £16.3 million for Labour. However, Labour’s donations are on the rise; it received the highest amount for any quarter in a non election year since 2014, despite falling contributions from trade unions.
In what many on the left hope is a symbolic moment, supermarket baron David Sainsbury recently handed £3 million to Labour, having stopped his donations to the party during the Corbyn era.
Sainsbury’s return reflects a wider shift in views, according to businessman Justin King, who used to run the eponymous supermarket chain and now sits on the board of Marks & Spencer Group Plc. The Conservatives under Johnson were “at best taking business for granted,” King said on a phone call. Labour now “has a credible business story” based on financial stability, “the high ground that was historically the preserve of the Conservatives.”
King is not a member of either party and does not donate, but others are, thanks in part to the return of some big names from the past, including Michael Levy, Labour’s chief fundraiser under Tony Blair.
When Levy first came on board for this new crop of Labour politicians, “many were wary” and it was hard to raise funds, Levy told Bloomberg News. That has changed.
Business leaders are “literally busting the door” to get into key events at the Labour conference, Levy said. Business people are keen to support a change in government and also “don’t want a party dependent fiscally on the unions.”
–With assistance from David Hellier, Greg Ritchie, Kitty Donaldson and Eamon Akil Farhat.
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