As Rishi Sunak emerged as the UK’s next prime minister this week, an experiment was taking place on the outskirts of Stevenage. Huddled around the fume cupboards and petri dishes of GlaxoSmithKline’s global research lab, two of Labour’s frontbench team were testing the water with big business. On the face of it, Jonathan Reynolds, the shadow business secretary, and Wes Streeting, the shadow health secretary, had donned lab coats and safety specs at the Hertfordshire plant to learn more about Britain’s world-beating life sciences sector, with a tour from GSK’s chair, Sir Jonathan Symonds. Yet the subtext was perhaps more important for the shadow business and health secretaries than any lesson in immune system research: to experiment with replacing the Conservatives as the most trusted party of business. “We’re looking to the future,” said Reynolds, speaking to the Guardian at the GSK research hub. Aiming to strengthen ties with industry after links wore thin under Jeremy Corbyn’s leadership, he said the party had a clear opportunity to supplant the Tories reputationally after the period of unprecedented economic chaos under Sunak’s predecessor, Liz Truss. “I think the kind of stability businesses like this need, they will find a better partner in a Labour government than they’ve had at any point with this government,” Reynolds said. The GSK tour comes amid a Labour blitz to woo the sector under Keir Starmer’s leadership, branded in the media as the “prawn cocktail offensive 2.0” after Tony Blair’s push to win favour among leading City figures before the party’s 1997 landslide victory. A conference costing £600 a head is to be held at Canary Wharf for business leaders next month, with speeches from Starmer, Reynolds, and Rachel Reeves, the shadow chancellor. After raking in more in cash from business sponsors and exhibitors than at anytime since the 1990s at its annual conference in Liverpool last month, the party is confident it is making progress.
Months of work charming executives helped bring a ringing endorsement from the Tesco chair, John Allan, during the height of the Truss government’s economic chaos, with the head of Britain’s largest private sector employer welcoming the party’s “plausible” growth plan. “You only have to see what the chairman of Tesco said the other week,” said Streeting, who was on his fourth meeting with the life sciences sector in a fortnight. “Labour is the only team on the pitch thanks to the work that Johnny and Rachel and Keir have done in setting out Labour’s economic stall.” Executives from the banks HSBC and NatWest, the professional services firm EY and the manufacturers Siemens and Nissan have held meetings. However, despite Brexit eroding Tory relations with industry, Boris Johnson’s “fuck business” retort, his rambling speech about Peppa Pig at the CBI, and Truss’ disastrous brief reign, Sunak’s rise could snap shut Labour’s window of opportunity. The former Goldman Sachs banker and hedge fund investor was seen as the City’s preferred replacement as prime minister, and has enjoyed a cautious welcome to the job so far. Reynolds insisted the window was nonetheless still open. “You need more than just someone who comes along and says ‘I’m not Liz Truss’, you can all breathe easy now. You genuinely need to look at why the last decade has been so poor and what are the real fresh ideas. “I just don’t see from Rishi or from any bit of the Conservative party, a serious analysis about the barriers to economic growth.” Britain’s economic performance has faltered in the 12 years since the Tories came to power, with lacklustre GDP growth and average wages worth less today than in 2007 after inflation is taken into account. Had the pace of economic growth seen before the 2008 banking crisis been maintained, Britain’s economy would have been almost £300bn bigger, according to the New Economics Foundation – as much as £4,400 a head in today’s prices. Most advanced economies have suffered weaker rates of growth, and Britain has not been alone in suffering a damaging inflationary shock exacerbated by Russia’s war in Ukraine. But experts fear a blend of austerity, failure to grow business investment, and Brexit mean the country has suffered a worse performance than many rivals. “The choices made by successive conservative chancellors meant that not only did they fail to fix the roof while the sun was shining, they dismantled the roof and removed the floorboards,” said Streeting. “Of course those global factors have had an impact, but it’s the domestic choices of Conservative governments that have left our country far more exposed than we would otherwise have been.”
International Monetary Fund forecasts show the UK is on course for the second-lowest levels of business investment in the G20 over the next few years, behind countries including Mexico, Argentina and Germany. Business leaders have warned against a “doom loop” of public spending cuts and higher taxes, while suggesting that partnerships between government and industry would be more pro-growth than slashing the state to the bone. For GSK, the priority is stability and support from government for the vital life sciences industry – the sector that contributes the most towards the almost £40bn spent annually by public and private sector sources on UK research and development. “Britain’s future success in this area can’t be taken for granted, particularly when you have other countries like France and the US competing fiercely for valuable life sciences investment,” said Symonds. Despite inviting Labour to the GSK lab, the company’s chair refused to be drawn on whether he supports any political group. “It’s really important that politicians from all parties recognise the importance of the sector and pursue policies that can help it grow,” he said. Labour has set out plans for a long-term industrial strategy to work in partnership with the private sector to boost business investment. Flagship policies include scrapping business rates – a perennial irritation of bosses – and investing vast sums of public money in green energy to “crowd-in” private sector involvement. However, the party has pushed harder for windfall taxes in the energy sector – pointing to suggestions from the Shell chief executive, Ben van Beurden, that governments may need to tax energy companies to fund efforts to protect the “poorest” people from soaring bills. Having prioritised a message of economic competence during the mess of Truss’ premiership, Labour will inevitably come under pressure to show clear differences with Sunak. The new prime minister has set out a very similar offer, while economists say budget constrains and jittering markets could limit the options for radically different tax and spending plans. In his conference speech in Liverpool, Starmer said the mess Truss had made of the public finances meant not being able to do “good Labour things” as quickly as the party’s members might like. The party will also face a challenge to be pro-business, and pro-worker, in a year of escalating strike action. Reynolds said business was, however, willing to give Labour an audience as it builds itself up to be a government in waiting. “You don’t turn around 12 years of this kind of poor decision making by the Tories and the last four weeks of damage overnight. But fundamentally, I think we can say to people, that we offer hope for the future.”