Why business leaders must start thinking like Starmer

Business leaders have had months to prepare themselves for a Labour government but they are still not entirely sure whether they might be about to swap the frying pan for the fire. That’s because, like the rest of the country, they haven’t been offered much in the way of concrete specifics from Labour.

There may be good strategic reasons why Labour doesn’t want to reveal its hand – it’s adopting the “Ming vase” strategy and doesn’t want to slip up. Any decent policies would be stolen by the Tories, and every new idea has to be extremely carefully costed – but business, like nature, abhors a vacuum.

Labour’s “Plan to Make Work Pay”, a 24-page dossier released just after Rishi Sunak called the surprise general election, hasn’t helped matters.

Are these promises to increase the power of trade unions, ban zero-hours contracts and give all workers equal rights from day one of their employment for real?

Or is Unite general secretary Sharon Graham nearer the mark in describing the plan as having “more holes in it than Swiss cheese”, suggesting the bulk of the proposals are really just a sop for the unions and destined for the legislative long grass once Labour gains power?

Talking to party insiders over the past few weeks, one thing is clear: those searching for clues to Starmer’s thinking in what he said before becoming leader of the Opposition are likely looking in the wrong place.

One former special adviser pointed to Liz Kendall’s leadership pitch – it was all good, solid, centrist stuff about winning over the electorate – and it went down like a lead balloon.

Starmer had to win over the “selectorate”.

He has since about-turned on many of his leadership pledges, which has burnished his centrist credentials while opening him to accusations of duplicity. There have certainly been cries of betrayal from those on the Left of the party. There is, however, a more positive interpretation.

“Having been around the Labour party for a long time, I would say that adaptability is not the Left’s strong suit,” says Heather Vernon, former political adviser to shadow cabinet ministers and now co-founder of the public affairs agency Woburn Partners.

“The fact that Starmer has been able to adopt different positions suggests he is pragmatic and flexible, and therefore closer to the centre of mainstream politics.”

On the flip side, Tom Baldwin, the Labour leader’s biographer, says lots of business leaders appear to have convinced themselves that the current Labour leader is some kind of Tony Blair redux. That expectation is wide of the mark.

“Blair was a free-market globalist,” says Baldwin, who is said to know Starmer’s mind better than the man himself. “Starmer will take an approach that is far closer to Joe Biden’s and some social democratic leaders in Europe. He will be far more interventionist than Blair.”

Starmer can be “stubbornly opaque”, concedes Baldwin, but he also believes it’s a mistake to try and pin an ideological label on him.

“He has values not an ideology,” says the former journalist and Labour party adviser. “I suspect they will be expressed in an iterative way and it will be hard to detect a pattern for a while. This is not that unusual. Neither Thatcher nor Blair were properly defined before their second term.”

But is Starmer sincere in his desire to make Labour “the real party of business”?

The so-called “smoked salmon and scrambled egg” offensive, involving literally hundreds of breakfast meetings with chief executives and chairmen, was widely welcomed – but some wariness remains. “They have certainly been in listening mode,” says one business executive. “Whether they’ve heard what we’ve said is another matter.”

These meetings with shadow chancellor Rachel Reeves and shadow business secretary Jonathan Reynolds may have started out as an attempt to reach out to the private sector and persuade it that Labour could be trusted with the economy.

But the sheer volume of interactions has started to shape Labour thinking. Having placed herself in a fiscal straitjacket in an attempt to prove she’d be a responsible steward of the economy, Reeves knows she’s going to need lots of private sector investment.

However, some Labour insiders believe the leadership team has been a little too fast and loose with talk of developing a “partnership” with business.

This is one area that is likely to evolve once the party has gained power. While Starmer has been forced to backtrack on his pledge to spend £28bn a year on energy transition, he remains committed to a state-planned and privately financed green industrial policy.

Nevertheless, there’s still an open question as to what such a partnership would look like. Which companies might be invited into the room to shape those plans? Will Labour want to be talking to the energy suppliers who know how the system works or some of the more innovative firms who are challenging the status quo?

The best guide to Starmer’s thinking, according to those who know him, are the five missions he set out in February 2023, which a future Labour government would seek to deliver if elected: get Britain building again, switch on Great British Energy, get the NHS back on its feet, take back our streets and break down barriers to opportunity.

You can quibble with these priorities or complain they are too amorphous to be meaningful. But they appear to be important to the likely next prime minister. Starmer repeatedly asks in meetings: “Is this mission critical?” If it is, he’s interested; if not then he quickly zones out.

Here, then, might be UK plc’s best chance of getting its foot in the door of No 10.

Rather than making special asks of a future Labour government for this or that concession, businesses would be well advised to study the language of those missions, adopt it in their interactions with ministers and suggest ways in which their own interests align with those key aims.