Labour’s business naivety is palpable, says ALEX BRUMMER
Keir Starmer’s government is not getting any business. Forget the pre-election fuss about working with entrepreneurs and the £63 billion in pledges made at the October 2024 Investment Summit.
Starmer and Chancellor Rachel Reeves have no idea how to fulfill the growth mission.
Labour’s agenda is to put working people first and end industrial strife. But it comes at the expense of British business.
The dissonance from the CBI, which has warned that Britain is facing a ‘recession made in Downing Street’, should be taken seriously.
The lack of understanding goes beyond the highly regressive £25 billion increase in employers’ national insurance contributions.
It is reflected in the raw decisions every government confronts trade.
Struggling: Keir Starmer’s government isn’t getting any business, says Alex Brummer
Nationalizing the railroads could appeal to aggressive and well-paid railroaders.
But by unnecessarily putting the entire network on the national balance, the trains will never be able to run on time.
Naivety and ignorance have been shown in the government’s handling of the sale of Royal Mail owner International Distribution Services to Daniel Kretinsky.
Business Secretary Jonathan Reynolds ignored the fact that his wealth comes from his co-ownership of pipelines that bring fuel from President Putin’s Russia to Europe.
To do business with Gazprom, the beneficiary of the trade must visit the Kremlin and pay tribute.
What is more worrying, in terms of Labour’s future dealings with business, is the company’s failure to ask the simplest questions about Daniel Kretinsky’s £3.6 billion bid.
Everyone has a role in the game, except the people who really matter.
These are the end users in homes and offices across the country.
The bankers who raised some £3 billion in loans for the deal are not the least bit interested in whether the Universal Service Obligation is met; they just want the interest to be paid.
Other British companies that have allowed debt to pile up, including troubled companies such as Thames Water and grocer Asda, have found themselves in deep trouble.
Royal Mail employees may think they’ve landed a golden deal for the next five years.
History tells us that such a thing does not exist. If the costs are too high and there is some sort of fiscal problem, workplace agreements are ruthlessly abolished.
City bankers, advisers and consultants will already be enjoying ski holidays or the luxury of St Barts in the Caribbean, ahead of the potential £146 million in fees coming their way.
What Jonathan Reynolds and the board of Royal Mail owner International Distributions Services should be asking themselves is: why is Kretinsky so enthusiastic?
The fast-growing Global Logistics Services, its European offshoot, is a jewel that must be unloaded at a high price.
IDS occupies freehold land, including valuable development sites in central London such as King’s Cross, valued at £1.8 billion.
Maximizing assets through development and sale-and-leaseback will be a priority. Last but not least is the Ofcom review.
If Royal Mail changes the Universal Service enough, despite declining mail volumes, Royal Mail could become a profit buster, robbing existing shareholders (including union members) of revenues that should be theirs.
The failure to investigate these issues, any of which could hold up sales of a ‘royal’ brand far more embedded than Cadbury, is gross negligence. It will come back to haunt Reynolds and Labour.
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