Without Comment . . .

Financial Times, 3 July an interview with Alistair Darling, the new Chancellor of the Exchequer:

“But what emerged far more strikingly was his determination not to pander to leftwing Labour prejudices against big business and the City.

On private equity, Mr Darling declared that any decisions to alter the tax structure needed to be carefully considered, despite the growing pressure for change.

“I think there’s a number of things that need to be done, but I’m very clear that if you make changes to the tax system you need to think them through,” he said.

He was equally cautious over another clamour – the demand from many in the Labour party for a crackdown on the non-domicile tax status of wealthy business figures resident in the UK.

“I am well aware of the fact that there are a number of people who do business here, and who are contributing to business here who can go somewhere else,” he said.

Above all, he was determined to be as strong a champion of the City of London as Mr Brown, expressing few qualms that the City was pulling away from the rest of the country in terms of economic dynamism.”

Epolitix on speech by John Hutton, new Secretary of State for Business and Enterprise (3 July):

“Labour is set to undergo a "serious redesign" as part of a drive to replace the Conservatives as "the natural party of business", John Hutton has said.

The business, enterprise and regulatory reform secretary pledged to be "aggressively pro-business" in his new brief.

The Department for Business, Enterprise and Regulatory Reform replaced the Department of Trade and Industry as part of a Whitehall shake-up following the appointment of Gordon Brown as prime minister.

Hutton told the FT that David Cameron's "harebrained" policies presented "a major opportunity for Labour".

Pointing in particular to the Tories' carbohydrates trading scheme, Hutton argued that Cameron had made "some major mistakes in their rebranding exercise in downplaying the importance of business".

And he insisted the new government structures - including the creation of a Business Council - were more than "rebranding".

"It's a serious attempt to redesign across government how we work with business," he said.

He added: "In the whole debate about more employment regulation, you have to be mindful of the costs to British business," he said. "You've got to be very careful and always take into account the impact and burden on business."

Referring to Brown's reshuffle, Hutton commended the "inspired appointment" of former CBI chief Sir Digby Jones as trade and investment minister.”

Comment by rightwing columnist Anatole Kaletsky entitled “Finally, Darling reveals Brown’s true nature” (London Times, 5 July)

“Mr Brown did something I have long suspected he might do, but never fully believed: he started to outflank David Cameron from the Right and to reposition Labour as Britain’s most solidly pro-business party. Mr Brown’s reasons for trying to do this are quite simple: he has always believed that the steady growth of the British economy in the past ten years has been his greatest achievement as Chancellor.
Maintaining this growth is now the indispensable condition for his success as Prime Minister, and justified the sacrifice of impractical socialist precepts he once believed. Outflanking Mr Cameron on economic policy would also be politically attractive, because it would cut the Tories off from their natural electoral heartland. But while the logic of a shift towards pro-business policies under Mr Brown was always quite compelling, almost nobody believed it would happen, and even I had my doubts.

Partly this was a matter of style. Mr Brown has always been very unpopular in the City of London and the business community and his elevation to Prime Minister has been a big source of worry to British businessmen and financiers.

Even though they could never quite put their finger on what they were worried about, the visceral distrust of Mr Brown was impossible to disregard. In the past few days, however, this attitude has been noticeably changing.
The flanking operation began with Mr Brown’s decision to appoint Sir Digby Jones, the outspoken former Director-General of the CBI, as a minister without forcing him to join the Labour Party, and invite Damon Ruffini, Britain’s most prominent private equity boss, to join the new Business Council. The pincer movement continued on Tuesday when John Hutton, the new Secretary of State for Business, accused Tories of “downplaying the importance of business” and added that Labour “wants to be the natural party of business”. But these were just preludes to the real thrust of the new strategy, revealed by Alistair Darling in yesterday’s Financial Times.

In this interview, the new Chancellor ruled out any rush to impose new taxes or regulations on private equity and hedge funds, as demanded by a strange alliance between the trade union movement and populist tabloids.

Much more importantly, he hinted as clearly as a Chancellor ever can that foreign financiers living in Britain would continue indefinitely to enjoy their present very favourable treatment under the nondomiciled tax regime. And he justified this favourable treatment with the most pragmatic, and hence most persuasive, reasons: “I am very well aware that people who do business, and who contribute to business here, can go elsewhere.”

More generally, Mr Darling repeatedly emphasised the importance of the City and of liberal financial markets as “absolutely critical” to the prosperity of the whole British economy, adding for good measure that Britain’s increasing specialisation in finance was something to be welcomed, not opposed.

He showed his intense awareness of just how important it is to maintain a pro-business environment by contrasting Labour’s approach with the damaging overregulation of financial markets by American politicians after the dot-com crash.”