Ed Miliband and business: talking loud, saying something

http://www.theguardian.com/commentisfree/2013/sep/25/ed-miliband-business-talking-loud

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What would Ed Miliband actually do as prime minister? In Brighton this week, the Labour leader offered his first serious answer to a question that's going to be asked again and again in the 20-month countdown to the next general election. In doing so, he also tackled a question that's dogged him since the crash: what's Labour for when there's no money left? Mr Miliband's answer is that he will lean harder on the private sector to deliver public-policy objectives. Take his injunction to housebuilders and other investors in land to do less hoarding and more house construction. His announcement of higher corporation tax, with the cash given to small businesses. The forcing of companies to take on British apprentices. Biggest of all, there was the proposed freeze in energy prices.

The result was that on Wednesday morning a speech by an opposition leader made eight out of the nine front pages of the national papers. The interest is justified: it's taken three years, but Mr Miliband has graduated from generalities about predatory capitalism to vague, albeit winningly cheeky, rhetoric about a "one-nation Labour party" to at last showing voters who fits into this nation. And who doesn't: namely, multinationals that don't invest in Britain or that don't play fair (with rip-off prices).

The problem is not that these strictures outrage some supposedly natural laws of economics. To argue that, as jittery Conservatives and even Labour's meddlesome Lord Mandelson have tried, is to display an ignorance of economic terms such as "market failure" and "imperfect competition". It's also to close one's eyes to the brokenness of the retail energy market, with the big six firms happy to greet rises in wholesale prices by jacking up household bills, yet almost never dropping them when prices fall. Besides, it's a funny old world when George Osborne's multibillion-pound bung to housebuilders and estate agents, otherwise known as Help to Buy, is capitalism, but taking money from energy firms is summoning the ghost of Lenin.

A more serious problem is practical: these standards are ethical more than they are technical and will be tough to enforce. How does one legislate according to whether things smell right and if the public is riled up? Thorniest of all will be dealing with the political fallout. For now, it can't do a Labour leader much harm to cross swords with the CBI and the energy giants – not when polls show that the majority of voters feel "energy companies treat people with contempt". Similarly, the Conservatives can have hardly been helped by the Treasury's decision yesterday to fight in court for British investment bankers to get bigger bonuses.

The risk is, after Lord Mandelson's intervention, that this becomes another story about Labour infighting. In any case, as Harold Wilson could have told his current successor, temporary price controls do not an economic strategy make. Mr Miliband now has to counter the accusation always levelled at social democrats: that they know how to spend money, but not how to make it. To counter this, Labour should do two things. The first is rhetorical, which is to stress that the party wants to attack certain antisocial behaviours by companies, rather than industries. The second is to do with industrial policy: how can the party encourage good behaviour?

This last point has been a problem for Labour, partly because all main parties now talk so much about the virtues of industrial policy that they all sound the same. Labour badly needs a distinctive offer. It should consider cutting taxes for those companies which source and make more in the UK. Ed Balls should cut national insurance contributions for companies that recruit workers and keep them for more than a couple of years. And Chuka Umunna should think about how to use the nationalised banks to channel credit to strategic industries and regions. Mr Miliband made a satisfactory splash this week. Now he and his team need to keep putting in the effort and the hard thinking.

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