Manifestos are like buses: slow and rather dull. Labour’s Manifesto, which was launched today, proved no different.
If you’re a dyed-in-the-wool Labour supporter you’ll be content enough with the content. While if you’re political predilections swing the other way, the Manifesto won’t be enough to persuade you to cancel that one-way ticket to Monaco on 8 May.
In truth, most entrepreneurs are too busy running their business to worry about Westminster’s machinations. But there is no denying that the outcome of next month’s election will have an impact on the state of entrepreneurialism in the UK.
To save you the bother of reading the eighty odd pages, following are the key Manifesto promises that could impact entrepreneurs.
Corporation Tax
Labour has committed to keep corporation tax low:
“With Labour, Britain will continue to have the most competitive rate of Corporation Tax in the G7.”
But they’ll reverse the Coalition’s cut, reinstating the 21% rate:
“Instead of cutting Corporation Tax again for the largest firms, we will cut, and then freeze business rates for over 1.5 million smaller business properties.”
Putting the 20% versus 21% debate to one side, the answer to the business rates debacle is a swift revaluation, rather than a freeze. This may not be the popular move, but it’s the economically literate one.
High-Speed Broadband
It’s amazing how quickly technological miracles become the source of rage. For those of us who grew up on dial-up internet, today’s internet speeds are the first, second and third wonder of the modern world. Yet the moment our connection drops – if only for a second – we turn from Dr Jekyll into Mr Hyde. My heart goes out to those living out in the sticks with a tardy connection and Labour is promising to fix this:
“Labour will ensure that all parts of the country benefit from affordable, high speed broadband by the end of the Parliament. We will work with the industry and the regulator to maximise private sector investment and deliver the mobile infrastructure needed to extend coverage and reduce ‘not spots’, including in areas of market failure. And we will support community-based campaigns to reduce the proportion of citizens unable to use the internet and help those who need it to get the skills to make the most of digital technology.”
But though it’s a noble aim (and one close to my heart), the evidence suggests that this might not be the best use of public funds. The What Works Centre for Economic Growth recently reviewed the literature, and it seems to conclude that there isn’t a great deal of evidence to support ploughing millions into this policy.
Small Business Administration
Labour has taken inspiration from the US in its plan to set up a Small Business Administration:
“Small businesses are the backbone of our economy. Their creativity and dynamism are vital for raising productivity and competing in the global economy. Labour will give them a voice at the heart of government – a Small Business Administration, which will ensure procurement contracts are accessible and regulations are designed with small firms in mind.”
Ensuring government procurement is opened up to small businesses and regulations are proportionate is vital, and a Small Business Administration could prove useful to those ends. Or it might not.
Banking Reforms
Labour’s Manifesto contains plans for banking reforms:
“We will develop a banking system that works for businesses in every region and every sector in Britain. The long-standing problems of our banking system mean that too many small and medium-sized businesses cannot get the finance they need to invest and grow.
Labour will establish a British Investment Bank with the mission to help businesses grow and to create wealth and jobs. It will have the resources to improve access to finance for small and medium-sized businesses, and will support a network of regional banks.
We will increase competition on the high street. Following the Competition and Market Authorities inquiry we want a market share test and at least two new challenger banks. And we will deal with the scourge of household debt by introducing a new levy on payday lenders, using the funds raised to boost low-cost alternatives like credit unions.”
Over the years, banks have been quasi-nationalised through mounting regulation (and since the Financial Crisis fully nationalised in a number of instances). The British Investment Bank is the next natural step in this process. Whether you think this is a good thing will depend on the degree to which you think the blame for the Financial Crisis lies with banks versus regulators. Perhaps more interestingly, we are seeing the rise and rise of crowdfunding, which is relatively unregulated and may prove to be the remedy to the problem that Labour is seeking to solve.
National Minimum Wage
Labour will raise the minimum wage:
“Too many people do a hard day’s work but remain dependent on benefits. We will raise the National Minimum Wage to more than £8 an hour by October 2019, bringing it closer to average earnings. We will give local authorities a role in strengthening enforcement against those paying less than the legal amount.
And we will support employers to pay more by using government procurement to promote the Living Wage, alongside wider social impact considerations. Our Make Work Pay contracts will give tax rebates to businesses who sign up to paying the Living Wage in the first year of a Labour Government. Publicly listed companies will be required to report on whether or not they pay the Living Wage.”
It’s difficult to argue with the sentiment behind raising the minimum wage, but good policies aren’t made on sentiment alone. When instituting the national minimum wage, the previous Labour Government set up the Low Pay Commission – an independent body that advises the government on what rate to set it at. The very existence of this Commission is a tacit acceptance that raising the minimum wage comes at a cost. More often than not this cost is articulated as a cost to employers (which it is), but it’s also a cost to wannabe employees who cannot command the minimum wage and are therefore unemployable. Politicising the setting of the minimum wage is a mistake (Labour aren’t alone in this). The experts at the Low Pay Commission should be left to do their job.
There are lots of policy areas not covered in the Manifesto but I suppose we should be grateful that it’s not War and Peace. In any case, the odds are that the next Government will be a Frankensteinian coalition, in which Manifestos have been torn up and replaced with an agreement decided behind closed doors. And whether you think that is a good thing will depend on you faith in democracy versus politicians.