Bellenden

Labour needs to look to the long term as it develops a new economic vision
By Mark Glover

In a week when we are reminded of the perils of the sea, it is somewhat risky to start a political article with a seafaring analogy. Yet, I am reminded when talking about the UK’s obsession with short termism of the captain of a ship, on a long voyage, facing the onslaught of a particularly bad storm. Whilst it might be easier for the Captain to turn back or shelter for the duration of the storm, if the ship continues in the face of the winds, then when those gales die down it will be much nearer its destination than if the Captain had chosen any of the alternatives. With a professional crew and so long as the ship is not in peril, riding out the storm is nearly always the Captain’s best option.

In both progressive politics and business, I believe leaders in the UK have too often sought shelter when a better option would have been to ride out the storm.

In Labour politics, short termism has often meant too great a focus on the next day’s media headlines and not enough thought about aligning the party, and in particular its leadership, with a series of issues which give the electorate clear reasons to vote for it. Too often Labour has been seen as changing tack in the media to garner favour with the electorate. Over time, that can lead to voters losing sight of the overall direction Labour is heading in, or worse, what the party stands for. Sometimes we must be prepared to accept a day’s bad headlines in order to position the party better for the long term.

Another example is a perceived fear of internal debate within the party. One of the things that has become apparent to me after joining my wife, NEC member Johanna Baxter, on some of her 50 or so constituency visits over the last year, and hearing about the ones I didn’t attend, is how keen the membership of the party is for debate around new ideas. Too often those at the centre of the party seem scared of letting ordinary members have their say, scared to discuss new ideas which they themselves have not developed, and as a result debate is stunted – with members left disillusioned as they fear their contribution has not be considered.

In my experience the best decisions a political party makes are the ones which involve the most people and when Labour trusts its entire membership, then the membership tends to take a more considered and long term view in return. I believe in particular we need a candid internal debate about Labour’s position on the economy — and if that causes a few storms in the short term, then how Ed Miliband handles that will help define his leadership and demonstrate his strengths. Let us not forget that a major problem with Gordon Brown’s leadership was that he was not able to properly define himself in the minds of the voters in a leadership election, as he did not have a serious challenger to test him.

There are perhaps some parallels with short termism in business. Too often the long term good of a company or indeed the long term good of the economy is a secondary consideration to a short term dash for profit. On a microeconomic scale, I have seen my company and those of my competitors which I admire succeed through having a long term plan and then ensuring that short term profits are invested to the benefit of that long term plan. Those who have stalled have tended not to reinvest enough in their capacity to grow or in the retention of their best people, preferring instead to take money out of the business early, or being content with a comfortable return on their investment without making the financial investment needed to grow. For some of those business leaders this may well be an acceptable personal financial plan but it is not necessarily to the benefit of the company.

On a macro-economic scale we have seen that over-emphasis on short term returns and the pressurising of captains of industry to pursue that goal over and above the goal of investing in a company for its long term growth. I find myself drawn to the example of Germany and its greater focus on investment for the longer term. I support the role of the City and it is vital that London remains the financial capital of the Western World. However, we must recognise that the UK’s economy as a whole is a different beast from those economic factors simply driving the City. We need to get back to an economic model, supported by government, which allows companies to invest for the longer term. That would allow companies to be led by the people who understand the products and markets they are involved in, and which rewards business leaders for working towards long-term business goals.

As we now expand Labour’s Business, we do so to contribute to a Labour economic plan that focuses on the long term success of companies and the long term growth of a competitive and sustainable economy, and to help shape a credible economic narrative that is acceptable in the main to both unions and business. We aim to put forward part of that vision, and support Labour’s leadership in its delivery.

Published on Labour’s Business