I do not expect next April to read in letters from big businesses recommending voters to vote for a Labour or a Conservative government.
This is curious, given the belief of a few big businesses that they have a duty to speak out in referendum debates because they may be affected by the outcome.
The next general election will have a substantial impact on many businesses. Labour has policies to control utility prices, regulate payday loans and gambling, intervene in bankers’ pay and bonuses, and make business more accountable. Some in business will like this, many others will see it as a threat to their future profitability, to their investment and to the recruitment and retention of talent.
Big businesses are unlikely to tell people how to vote because to do so may be counterproductive, and may be damaging to their relations with their shareholders, employees and customers. Labour’s policies are designed to attract the votes of those people who dislike large companies, who think them unaccountable and too powerful. Trying to exert influence on this in a general election may send entirely the wrong message from business implying that Labour is right.
I first offered advice to business about referendums before the Scottish vote. Even though I expected more big businesses to side with my preference in the debate, with keeping the union together, I thought it wrong for the businesses to take a strongly political stance in such a highly charged debate.
Arguing for a “no” vote when up to half their customers and employees wanted an independent Scotland can cause trouble after the event in trying to regain the confidence of these important people. It also can lead to shareholders asking the chairman or chief executive why they choose this route and in what sense they speak for the company.
A chairman of a large listed company or multinational does not know the balance of views of the large shareholder list of his company on political matters, and may find the shareholders strongly disagree with his personal politics. I was also concerned that business interventions pro the union could sound threatening to people who thought the debate was about their sense of identity and how they wished to be governed for the next 100 years, rather than about prices or individual company investment decisions.
I repeated this advice to business in an answer to a question after a talk I gave this week at a meeting at the Conservative party conference. My remarks were twisted in ways I did not intend. My two main points about a future EU debate were the same as I had written without controversy on Scotland. Businesses need to make sure they do not intervene in politics in a way which sets their customers, employees and shareholders against them. If a large company has a big UK shareholder list, many of those shareholders will not agree with the line of the chief executive or chairman on the politics of the UK and the EU. It would be destabilising for the company if shareholders decided to express their views and show the spokesmen of the company did not speak for them on this important matter.
I also suspect it will be counterproductive if pro-EU companies intervene by telling people we have to stay in the EU at all costs. It is likely to lead to an examination of the track record of any large company expressing such a view. I well remember big car manufacturers telling the UK it had to join the euro. If we did not they would not invest more in the UK or worse. I well remember City firms telling us the City would be disadvantaged if we stayed outside the euro and could lose substantial foreign exchange and bond business if we refused to join. Both groups were wrong with the advice they gave. The UK rightly stayed out of the euro thanks to the common sense of the voters who always indicated they would not support membership in a referendum. Leading automotive companies have stayed and continue to invest here. The City came to be the main market in the euro and grew rapidly in the first decade of euro life. Voters will remember this big error of judgment, especially if large companies have another go at offering EU opinions.
I also remember the disastrous advice much of business gave on joining the exchange-rate mechanism in the 1980s. I was one of the few advisers and then ministers who kept up strong opposition to the idea of joining. I wrote a pamphlet explaining how membership would either cause a nasty inflation or a sharp recession. I was too cautious — it caused both in quick succession.
The business community was wrong again in ways that did much damage to the wealth, income and employment of people in business. I was the chairman of a large quoted industrial company for part of the time of that protracted debate. I never once thought I should attach the name of my company to the strong views I was expressing, even though I knew exchange-rate mechanism membership would damage our group. I always understood that as a small shareholder in that group I needed to speak for all the shareholders, and avoid upsetting major customers. Speaking out on European issues would not have fulfilled my stewardship. In business I needed to get on with the many people who did want to join the exchange-rate mechanism.
I do not belong to the school of politics which suggests government should punish business when it makes mistakes or intervenes in politics. I am a strong upholder of the importance of business and enterprise in our society, and often champion the cause of business against its critics. I also believe in free speech. My advice was nonetheless heartfelt to business. Do in referendum campaigns what you do in general election campaigns — express your views as individuals. Above all I say to business do not prejudge how people should vote on the EU. Instead get behind trying to negotiate a better deal for the UK which meets our wishes to trade successfully with the continent but to be a self-governing democracy as well. Business needs to understand and sympathise with the many people in the UK, their customers and employees, who do not like our current relationship and want it changed.