Labour’s business naivety is palpable, says ALEX BRUMMER

Keir Starmer’s government doesn’t get business. Forget the pre-election hoopla of cosying up to enterprise and the £63billion of pledges made at the October 2024 investment summit. 

Starmer and the Chancellor Rachel Reeves are clueless on how to fulfil the growth mission. 

Labour’s agenda is to put working people first and end industrial strife. But it is at the expense of corporate Britain. 

The dissonance of the CBI, which has warned that Britain is facing a ‘recession made in Downing Street’, needs to be taken seriously. 

The lack of understanding goes beyond the deeply regressive £25billion rise in employers’ National Insurance Contributions. 

It is reflected in the raw decisions with which every government confronts commerce.

Nationalising the railways may appeal to aggressive and well-remunerated railwaymen. 

But unnecessarily putting the whole network on the national balance sheet will never make the trains run on time. 

Naivety and ignorance have been on display in the Government’s handling of the sale of Royal Mail-owner International Distribution Services to Daniel Kretinsky. 

The Business Secretary Jonathan Reynolds ignored the fact that his wealth derives from his part-ownership of pipelines delivering fuel from President Putin’s Russia to Europe. 

Dealing with Gazprom requires the beneficiary of the trade to visit the Kremlin and pay obeisance. 

What is more worrying, in terms of Labour’s future dealings with business, is its failure to ask the simplest questions about Daniel Kretinsky’s £3.6billion bid. 

Everyone has skin in the game except the people who really matter. 

These are the end-users in homes and offices across the nation. 

The bankers who have assembled some £3billion of loans for the deal are not in the least bit interested in whether the Universal Service Obligation is met, they just want the interest paid. 

Other UK firms which have allowed the debt to pile up, including such problem firms as Thames Water and grocer Asda, have found themselves in deep difficulty. 

Workers for the Royal Mail may believe they have secured a gold-plated deal for the next five years. 

History tells us there is no such thing. When costs are too high and there is a fiscal problem of some kind, workplace deals are ruthlessly abrogated. 

City bankers, advisers and consultants will already be enjoying skiing holidays or the luxury of St Barts in the Caribbean in anticipation of the potential of £146million in fees coming their way. 

What Jonathan Reynolds and the board of Royal Mail-owner International Distributions Services should be asking is: why is Kretinsky so keen? 

Fast-growing Global Logistics Services, the European offshoot, is a jewel in the crown to be offloaded at a high price. 

IDS sits on freehold property, including valuable central London development sites such as King’s Cross, worth £1.8billion. 

Maximising assets through development and sale-and-lease back will be a priority. Last is the Ofcom review. 

If it amends the Universal Service sufficiently, the Royal Mail, despite falling postal volumes, could become a profit gusher depriving existing shareholders (including union members) of income which should be theirs. 

The failure to probe these issues, any of which could stop the sale of a ‘royal’ brand far more embedded than Cadbury, is a gross dereliction. It will come to haunt Reynolds and Labour. 

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free fund dealing and investment ideas

interactive investor

interactive investor

Flat-fee investing from £4.99 per month

Saxo

Saxo

Get £200 back in trading fees

Trading 212

Trading 212

Free dealing and no account fee

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investing account for you