Douglas Alexander comment: Firms should mull impact of political upheaval

With a UK general election increasingly likely, it is right and reasonable that companies are now focusing, not only on the implications of the potential impact of Brexit, but on a potential change in government.

It is right that companies consider what a Labour agenda would mean for their business, says Alexander. Picture: contributed.

Should Labour win such an election, their plans for nationalising rail, energy and water services in England will have a major impact on key regulated industries.

While some have proposed that Labour leader Jeremy Corbyn and shadow chancellor John McDonnell would behave differently in government, having observed two prime ministers at close quarters, my judgment is that crossing the threshold of Downing Street tends to reveal a prime minister’s character more than change it.

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So companies should take seriously the policies Labour is setting out in anticipation of an election because its manifesto pledges could mean the implementation of the most radical infrastructure changes in decades.

Historically, a Labour majority has required a significant number of seats across the urban areas of England, Wales and in Scotland, where in the latter nation the polling remains tough. It’s only on the foundation of support in these traditional Labour heartlands that in recent decades the party has commanded a majority in the House of Commons.

A more likely scenario would be that Labour becomes the largest party but falls short of an overall majority and is therefore forced to form a formal coalition government or, even more likely, an informal confidence-and-supply arrangement involving other opposition parties.

So it is right that companies consider what a Labour agenda for the country would mean for their business moving forward. Prime Minister Boris Johnson’s election strategy appears unchanged by recent weeks in which he lost his parliamentary majority, lost control of House of Commons business and lost crucial votes that have limited his options on Brexit.

He still looks set to fight a general election on a dividing line of “people versus parliament”, where he will claim to represent the people. He is willing to trade seats and votes in more remain-minded affluent and metropolitan areas in return for seats and votes in economically left-behind areas that voted to leave the EU.

This trade, however, carries real risks over the long term for the Conservative party, which ultimately needs both groups of voters for sustainable majorities.

The present polling makes happier reading for the SNP and Liberal Democrats with both parties hoping to pick up votes and seats.

Given that Boris Johnson has just thrown 21 MPs out of his own party, even to sustain power he has to take enough seats directly from Labour to compensate for these losses, and win even more if he is to win a majority. So while it seems near-certain that the UK will face a general election before the year is over, how we get to an election being called is less clear.

Johnson’s hands are tied by the Fixed Term Parliaments Act (FTPA), but he still has less conventional options for forcing an election. If he cannot convince parliament to grant one on the basis of the FTPA, he could table a confidence vote and lead his party in voting against his own government.

Alternatively, he could resign as prime minister to avoid having to seek the extension that parliament demanded last week, leaving Corbyn or someone else as prime minister on a caretaker basis, ahead of an election.

Nobody, including cabinet members or MPs, yet knows what choices he will make. Yet Johnston’s strategy for fighting the election is clear and seems unlikely to change. With the political climate and our parliamentary system being what they are, the general election could yet result in a Labour Party in office – whether on a minority or majority basis.

Douglas Alexander is a senior advisor to law firm Pinsent Masons, a fellow at Harvard Kennedy School, and former Labour secretary of state in Tony Blair and Gordon Brown’s governments.