Manifesto receives mixed reaction from business

Businesses welcomed Labour's promise to be fiscally prudent while improving Britain's infrastructure on Monday, but they remain deeply uneasy about its plans to intervene in the labour and energy markets.

Labour's election manifesto, which claimed to be "both pro-business and pro-worker", drew a mixture of praise and criticism from business organisations.

Ed Miliband has not hesitated to confront what he calls "business as usual" during the past five years, creating a strained relationship with corporate Britain in the run-up to the UK general election on May 7.

However, business figures praised the Labour leader's promise to keep cutting the deficit every year, with the caveat that they were yet to see detailed plans on how he would achieve it.

"It's always good to see any political party talk about fiscal responsibility because that is of huge importance to business," said Adam Marshall, executive director of the British Chambers of Commerce, which has more than 100,000 members.

"The litmus test is whether the next government actually delivers on those promises of responsibility, and I think it's fair to say for all of the parties the jury's still out on that."

Simon Walker, director-general of the Institute of Directors, which represents 35,000 company directors, said Labour was "to be commended for recognising that deficit reduction is now a centre-ground issue, and an issue of paramount importance for our economic security".

Businesses also liked Labour's promise to depoliticise infrastructure planning by setting up an independent National Infrastructure Commission to address the UK's chronic under-investment problem. The CBI lobby group said it had "long argued [this policy] will help unlock vital long-term investment".

Terry Scuoler, chief executive of the EEF manufacturers' organisation, said Labour was correct that a long-term approach to infrastructure would boost the UK's poor productivity performance. He also said Labour's manifesto pledge to provide long-term funding settlements for science and innovation would "go some way to providing certainty and stability in these vital areas of investment".

But employers dislike Labour's plans to intervene in the UK's flexible labour market in an attempt to boost wages and job security, for example by banning most zero-hours contracts. They said Mr Miliband's promise to raise the minimum wage to more than £8 an hour by October 2019 threatened the independence of the Low Pay Commission, the body set up in 1997 to recommend minimum wage rates each year.

"I think anyone would share the desire to see a higher wage, higher productivity economy, but you don't do that by arbitrary political decisions, you do that through an evidence-based, careful approach," said Dr Marshall of the BCC.

There was also unease about Labour's stance on corporation tax: the party plans to reverse the government's latest 1 percentage point cut in corporation tax in order to fund business rates cuts for small premises.

John Cridland, the CBI's director-general, said business rates reform was "long overdue" but added: "Quick fixes funded through a rise in the corporation tax rate would undermine progress to make the whole tax system more competitive and send the wrong signal to firms of all sectors and sizes."

He also criticised Labour's plans to intervene in the energy market by freezing prices until 2017 and separating the generation and supply businesses of the "big six" energy companies.

"The independent Competition and Markets Authority already has a mandate to ensure markets are working for customers, and its work should be allowed to continue unhindered, free from political interference," he said.

"Proposals to separate the generation and supply businesses of the big six energy companies pre-empt the CMA's independent investigation."

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