Labour and the Economy: “There’s more to business than just Europe”

Business leaders will welcome Ed Miliband’s focus on strengthening the UK’s position as an open and outward-looking country, and share his desire for continuing membership of the European Union.

However, there is little desire in the business community for maintaining the status quo.

Only around one in ten IoD members think the EU social and economic model is working, and significant reform is needed to boost the private sector across the continent.

While our members would not vote to leave, they think it is sensible to hold a referendum based on reforms, which the UK can achieve if it works with European partners.

Labour’s policy on Europe may not be the trump card Miliband supposes it is.

There are plenty of other important issues that will be in the minds of businesses in the run-up to the election.

Labour must make sure that warm words are backed up by practical policies.

Businesses will support their commitment to remove international students from arbitrary net migration targets, for example.

However, their pledge to keep the UK’s rate of corporation tax the lowest in the G7 still allows scope for an increase, and a crude ‘freeze’ on energy prices will do little to reform the market and could complicate the ongoing Competition and Markets Authority investigation.

Labour’s recommendation to improve transparency on pay is welcome.

For too long, our largest firms have designed pay packages that are inaccessible to the general public.

Executive pay should promote the long-term interests of companies and should be as transparent and rigorous as possible.

Putting employees on remuneration committees is an innovative idea, but asking regular employees to make decisions on executive pay in isolation will have far reaching ramifications for corporate governance.

Encouraging fund managers to disclose how they vote on remuneration policies would have a much more immediate impact on improving long-termism and we support measures which push companies to take action without legislation.