John Denham MP, Labour’s Shadow Business Secretary, in a keynote speech on the role of the companies in the UK economy, will argue the lasting success of the UK economy will depend on the spread of the “good company” – profitable businesses and corporations which add value both to the economy and to society by being good at what they do, not exclusively focused on the bottom line.
Setting out Labour`s vision for Business and Enterprise in the UK, John Denham will tell the Social Market Foundation on Tuesday that British business ‘stands at a crossroads.’
He will highlight two different business models that British companies could pursue:
“In one direction lies the short-term pursuit of profit, at the expense of long term business growth; the banker who tells families to get over the banking crisis when its real impact on their lives , incomes and public services, had only just begun; companies who don’t train the workforce, and who assume customers don’t care if low wages services are delivered by the unsuitable or the uncaring; investors in Southern Cross who managed to separate their financial interests from the very purpose of the company itself; and asset strippers who cash out on the value of cherished brands. Every British company up for auction every day."
John Denham will throw Labour’s support behind those arguing for a better alternative, the “good company”, which will ultimately serve the UK economy and its businesses and employees better:
“There are increasingly insistent voices in British boardrooms and beyond who argue that a different model is better both for business, and the wider society. They include companies like Aviva, like PwC, GSK, GKN, DESSO, Rolls Royce and many more. And it’s not just large corporates, either, but voices from SMEs.’
Strongly supporting the “good company “, John Denham will launch a debate on creating the conditions for successful business models which create economic value in a way which also achieves social value.
John Denham will say:
“Both our economy and our society will be stronger if we have a higher density of companies which:
• Grow their businesses for the long term, not the short term
• Are committed to constant innovation and investment
• Develop the skills of their own workforce
• Nurture their supply chains
• Value their customers for the long term not just the short term
• Are open and transparent with high standards of corporate governance
• Build sustainability into their core activities
• Value employee engagement and trade union relationships
• Deliver fair rewards at every level.
• See their success as part of a broader, national, success story
Business with these values will deliver a resilient economy with profitable companies that are competitive abroad, fair at home, and strengthens our communities.”
On the day that growth figures are published, John Denham will highlight the political and social impact of the right business models. Pointing out that average wages already fell between 2003 and 2008, are now set to fall for many more years, and that many people had jobs with low skills and productivity, John Denham will say:
‘You don’t have to predict Greek style conflict to recognise that both politics and business are surely going to run into trouble if the best we can offer is years of falling living standards, followed by growth whose benefits are as unfairly shared as they have been in recent years.’
He will say:
“We look to work for ability to pay our way, to raise our families well, to secure our retirement. And for the lives we build around it; the friendships we make; the way we are valued; the ability it gives us to develop our skills – to get on; the respect and autonomy we enjoy.
“In a free society with a free economy, that’s surely the deal.’
“Yet the evidence suggests that our economy is not offering those rewards to millions of people who have jobs but who do not have decent work.”
John Denham will argue that:
• Long term business models can be encouraged by activist government polices to develop key sectors of the economy, supported by reform of the financial system and changes to merger and acquisition policy.
• Fair pay policies can be encouraged by a combination of regulation, incentive and transparency.
• Strong consumer protection and enhanced disclose can enable consumers to make fully informed choices in fair markets.
• A fundamental review of regulation will ensure that the burden of regulation and enforcement falls on the poor company without imposing new risks on the good.
• Government procurement and regulatory policy can reward innovative companies with new markets
• Labour law should encourage effective employee engagement.
John Denham will say:
“The Tory led Government is making the wrong choices for Britain. Just as they have made the wrong choice on the rate of deficit reduction, so they are making the wrong choices on business policy. There is too little policy certainty to encourage long-term investment, and no vision of a better balanced and resilient economy. The emphasis is on making work less secure and less well rewarded. Investment in skills is being reduced. Consumer rights and protection are being eroded.”