Scrutineer - CBI dishes the prawn cocktail

THE Confederation of British Industry is not even making a pretence any more of saying Labour is a government it can do business with.

The "prawn cocktail" offensive Labour launched on the City to win its acquiescence prior to its 1997 election has also suffered from subsequent debacles, of which Railtrack is the prime example.

Michael Heseltine joked at a time when the sweet talk did not seem to be working and the Tories were still in office that many millions of crustaceans had died in vain.

But the fact is that Labour was elected to office. It still look most likely to win a third general election with the Conservatives so publicly at war with each other.

The stark difference now is that both business and the Square Mile have become disenchanted with what they increasingly see as a cosmetic exercise by Labour in cosying up to the nation’s wealth-makers before pulling the rug from under them.

The CBI returned to the attack yesterday, saying it would use its pre-Budget statement submission to Chancellor Gordon Brown to call for a halt to the "relentless and damaging" rise in business tax.

It is not about peanuts. The CBI says Labour’s tax rises will have cost business 47 billion by 2005.

The former argument about the imposition of a minimum wage on Britain’s business, by comparison with this scale of tax rises, now just looks like quaint jousting between traditional adversaries.

The straw that broke the camel’s back for the CBI came with the 1 per cent increase in employers’ National Insurance contributions in the last Budget. This will cost British business 8 billion by 2005.

The tone of stridency from the employers’ organisation has been far more shrill since then.

Emollition is out; abrasiveness is in. Despite low headline business rates of tax, the CBI believes its members have been filleted by stealth to fund Labour’s very ambitious public spending plans.

And in Digby Jones, the CBI’s blunt-speaking director general, the organisation has a mouthpiece who does not call a spade a gardening instrument.

The CBI’s president, Sir John Egan, is also a robust individual, much in the mould of his predecessor, Sir Clive Thompson, and he has also signalled a definite deterioration in relations with our political masters.

There is no need to read the runes any more with the organisation’s tone to Labour; no need for Kremlinologists to decipher what is meant rather than what is said. There is a new hostility and resentment abroad.

Jones was forthright yesterday in saying the government could not keep milking company funds without damaging investment, productivity and competitiveness.

This does not necessarily mean the government will listen; but the new tone of debate between it and business shows the gloves are off more than at any time since the mid-1980s when Labour was thought virtually unelectable and there was no mistaking whose side the business lobby was on.

Skimmed milk

UNIQ, formerly the Unigate dairy group, is not reading the script. Companies that change their names as a form of ersatz dynamism traditionally come dynamically unstuck. MyTravel (Airtours), Corus (British Steel), Energis (out of National Grid), and Consignia (the Post Office) spring to mind.

Admittedly, Uniq has had its problems, falling to a 28 million loss at this stage last year. But a sharp retrenchment and refocusing seems to have got it firing on three of its four cylinders again.

The shares bounced nearly 6 per cent yesterday, not too far off year-highs, as Uniq revealed it is back in the black, gearing greatly reduced, and ready to focus on growth again.

Cutting out yoghurts, spreads and pork via business sales has given it a more svelte look. The company has now squarely set its aim on the higher-margin, ready-made meals sector, and has a blue-chip client base to give it a following wind.

Chief executive Bill Ronald knows there is some way to go. But a definite start has been made. It shows that a focused business plan is the real name of the game.

Oil prices

OIL prices climbed again yesterday as some traders took a punt on Saddam Hussein potentially surprising everybody and rejecting the resolution about verified disarmament.

In late afternoon trading, it was reported that an Iraqi parliamentary committee had recommended that its parliament reject the UN ultimatum. Brent crude moved up 62 cents to $24.20 per barrel.

Unsurprising, really, that there was much futures buying to hedge against possible war.

Most economists, citing the percentage rises that happened at the time of the last Gulf War, believe oil could shoot to $40 per barrel if military action is launched against Baghdad.

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