Labour’s biggest challenge has always been to connect with business. Chuka Umunna is the latest person to take on the task. He took time out to talk to Richard Cree about his vision for active government
When Harold Wilson first said that a week was a long time in politics, he might have had the shadow business secretary Chuka Umunna’s career in mind. A relative newcomer to politics, Umunna only entered parliament at the last general election. In the two years since, he has experienced a career trajectory that would give astronauts vertigo. Having entered parliament in May 2010, representing his home constituency of Streatham, Umunna was elected to the Treasury Select Committee in June, became Ed Miliband’s parliamentary private secretary when the latter was elected opposition leader in October and became shadow minister for small business and enterprise in May 2011. He then joined the shadow cabinet as shadow business secretary when John Denham stepped down from the post in October 2011.
The beauty of the business brief is that it is very broad and covers education, foreign policy and trade. It is the largest brief in cabinet with more ministers than any other ministry
Before becoming an MP, Umunna was an employment lawyer. When I ask what has surprised him most about his new career, he doesn’t hesitate. "The most unexpected thing is the demand on your diary," he says. This is partly due to an impressive media profile, which Umunna says is because the business brief touches on so many areas, from the economy to employment to foreign policy and overseas trade. Other observers suggest that Umunna’s busy schedule is partly of his own making, pointing to his honest, engaging style, lawyer’s intellect and ability to carry an argument – not to mention the fact that he is so damn easy on the camera. As our interview gets going, it’s also clear that he has an admirable ability to stay on message. In short, he’s that rare politician who is loved in equal measure by the media and by his party’s spin doctors. The fact that his brief covers such a broad range is grist to the spinners’ mill.
But it’s also obvious that Umunna is relishing the brief, claiming there isn’t another shadow cabinet post he would rather hold. He also bemoans the fact that this great office of state has been "emasculated" by its current occupant.
"The beauty of the business brief is that it is very broad and covers education, foreign policy and trade. It is the largest brief in cabinet with more ministers than any other ministry. But it has been emasculated under Vince Cable, because he doesn’t have clout across Whitehall and doesn’t have the ear of Number 10 or the Treasury. That’s why it became such a powerhouse and a great office under Peter Mandelson, because he had that clout."
Personal and political
Umunna describes his personal politics as those of a "European social democrat", and places himself "right in the centre of the broad church that is the Labour Party". Those politics are becoming increasingly influential within Ed Miliband’s senior team, as Labour attempts to formulate a cohesive and coherent ideology and build a set of policies that might resonate with voters. Umunna believes the current government has misjudged the public mood. The UK, he says, is not a place for the "me, myself and I" politics of the Conservatives. He adds that he doesn’t know what the LibDems stand for any more. The country, he says, is in the mood for government that acts for the common good. Indeed, apparently not afraid to sound a little naive, he admits a desire to help others remains his driving force.
"Ultimately I got into politics because I wanted to change the world, not because I was after praise and glory – you are quickly disabused of that notion," he says. "It sounds glib and idealistic but I want to make a contribution that will impact on millions of people. That starts on my doorstep in my constituency. If at the end of my career I can look back and see I have been able to implement policies that have affected millions, it will have been worth it. The starting point is making a difference to my constituency, but I want to impact as many people as possible."
This, he says, is about being a "changemaker". He is on the verge of naming other great changemakers in history before pulling himself up, conscious that such a list might not fit comfortably with party politics. One influential Tory he is happy to name check, however, is Lord Heseltine. The Tory grandee and former secretary of state for trade and industry remains a champion of what Umunna calls "active government". If senior politicians had catchphrases, this would be Umunna’s. His speeches since taking his current role have been filled with variations on the theme of "active government working in partnership with productive business". There are also plenty of references to the good work started by Lord Heseltine.
It sounds glib and idealistic but I want to make a contribution that will impact on millions of people
The state modern
But the idea of active government is more than a mere soundbite. The interaction between government and the private sector looks set to become a key battleground in international politics and a major differentiator between political parties in the UK in coming years. With the global economy still suffering the effects of the 2008 crash, there has been a widespread reaction against completely free markets and growing interest in the exploration of new, more regulated models of capitalism. This leads naturally to the question of the precise relationship between government and business.
"It is very interesting, because there is a big debate in politics about the proper role of the state viz-a-viz business and the private sector and how it works and interacts with government," says Umunna. He says the divide on the best approach doesn’t always cut neatly along party lines, but there is a broad left/right split, with the right seeking to reduce the size and role of government and the left seeking to, if not expand, then at least change that role.
Here Umunna delves into a bit of the management speak all modern politicians are prone to. He admits to sitting "in the same space and mindset" as Vince Cable, Lord Heseltine and even Conservative universities and science minister David Willetts. On the other side of the debate is a group of Tory politicians, past and present, including the likes of current foreign secretary William Hague as well as David Cameron and George Osborne. Umunna names a long list of previous Tory ministers including Nicholas Ridley, Norman Tebbit, Keith Joseph and others on the right who championed the cause of small government. It was an approach and philosophy pursued in government in the UK by Margaret Thatcher and in the US by Ronald Reagan. The complaint is that the orthodoxy they established was only questioned after the crash of 2008. The approach is still best summed up by President Reagan’s joke about the most terrifying words in the English language being "I’m from the government and I’m here to help".
But Umunna’s vision of active government is precisely that it should be there to help. This requires taking a strategic view of industrial policy. But it’s a phrase too redolent of heavy industry and the dark days of the 1970s; hence his preference for "active government" instead. "We have a mixture of excellent industries that don’t fit the classical view of industry, including the creative industries, pharmaceuticals, biotech and business services. These are not what people think about when they hear the phrase industry," he asserts.
He then attempts to explain what an active government should be doing. But, unable to announce policies or commit any spending before the party’s policy review is complete, his answer is somewhat vague. "It is about government using all the tools and levers at its disposal to back business as far and as much as possible. Within that there is a debate about how far you go. There are traditional horizontal interventions that government can affect, for example making sure we have a financial services sector that delivers for the real economy, which is why we have been arguing for a British Investment Bank."
It also includes the policies around skills and education that Labour used when they were in power, including setting up Regional Development Agencies (RDAs). Here he gives one firm policy commitment, setting aside the party political in favour of the practical. He says while he disagreed with scrapping the RDAs and replacing them with Local Enterprise Partnerships (LEPs) – "instead of throwing the baby out with the bath water, we could have improved the model" – he says he is committed to improving rather than scrapping LEPs.
"There is an inherent problem with LEPs because they are reliant on businesses to make it happen. At a time when 50 businesses are going bust every day, expecting people running struggling SMEs to keep their own business going and run an LEP is a big ask. As a result there is under-representation of SMEs on LEP boards."
This grasp of the detail is an example of how Umunna has thrown himself into the business world to get an understanding of the ways his active government strategy might help. He has travelled extensively to see different approaches in action elsewhere. In our short interview he cites examples of best practice from Germany and the US. "SMEs, as the saying goes, are the lifeblood of our economy and if we want to see more people setting up, leading and running businesses then there has to be a support structure to help people do it," he says.
In his view, active government has to function regionally as well as nationally to be effective. "We have to decide what our most competitive sectors are and where we’ve got comparative advantage. We have to pick things we can be the best at. If we try and spread ourselves too thinly we’ll lose the advantage that comes with being the best. But that shouldn’t stop nationally. Regions know their businesses and their strengths better than Whitehall. This control from the centre has been a constant complaint and it’s a point Lord Heseltine has often made."
A point made equally often since the 1970s is that rather than spending money on all this intervention, and rather than build the "right support architecture", to use Umunna’s own phrase, government would be better passing money back to business in the form of business tax cuts, allowing businesses to spend the money themselves. Umunna dismisses this as "the retro-Thatcherite model that is broken and has been proven not to work for our economy". He says this approach, with a lack of coherent industrial strategy, led to the UK’s current structural issues. "Part of the reason we have become imbalanced is because there has been insufficient strategic direction. If we are to become more balanced, which sectors are we going to back? This lack of direction goes back 30 years. Politicians from all parties bear responsibility for it, but the important point is what are we going to do about it in the future? The idea that we will become more balanced without any strategic thought or direction – which is the approach of that retro-business policy – is absurd."
He is reluctant to get drawn into a discussion of what he would target as an acceptable rate of business taxation. Not least for fear of stepping onto the shadow chancellor’s patch. But he points out that in a growing economy, the overall tax take would increase. He adds that seeing taxation as a burden is in itself ideological posturing. "Clearly you want to relieve the tax and regulatory burden for businesses as much as possible. But your readers will recognise that if they want better roads, transport and digital infrastructure to provide a platform for them to do business, it has to be paid for. While we look at taxation as a burden, it can actually be an enabler. How else will we provide the infrastructure business needs to thrive?"
He adds that another reason for not making a promise on corporate taxes is that a large part of the "trust deficit" between business, politics and government has been caused by politicians over-promising and under-delivering. "Part of the problem has been people promising sweet nothings they can’t or won’t deliver. I am not going to go around promising to cut red tape. People have been making that promise for 30 years and, having practised as an employment lawyer, I know that is not people’s experience. Of course we will reduce the regulatory burden where we can, but this is not just an issue of the quantity of regulation, it is an issue of its quality."
The key message is that economic growth won’t take care of itself. He supports his party’s short-term fiscal boost to encourage growth, but adds there also needs to be a longer-term strategy. "We need leaders to properly prosecute an active government strategy with a proper industrial policy," he says. "The starting point is that you have to provide policy certainty if you want to unlock the private sector cash that is sitting on balance sheets. Fostering uncertainty will not give businesses, particularly large ones, confidence to invest. If we want to move away from quarterly capitalism and fast-buck practices, responsibility does not just lie with business. It is also on politicians to provide that certainty."
Just before we leave his office for the photoshoot there is a moment of comedy as he picks up his jacket and some loose change spills out. As he bends to pick it up I joke it’s typical of a Labour business secretary to throw money everywhere. He looks at me mischievously and hoots with laughter.
1978: born, London. Studies law at the University of Manchester, the University of Burgundy and Nottingham Law School
2002: joins Herbert Smith working on behalf of corporate clients
2006: joins Rochman Landau as an employment lawyer
May 2010: elected to represent Streatham
June 2010: elected to Treasury Select Committee
October 2010: appointed parliamentary private secretary to Ed Miliband
May 2011: appointed shadow minister for small business and enterprise
October 2011: appointed shadow secretary for BIS