John McDonnell has been done a disservice. The shadow chancellor has been painted as a socialist firebrand who would strike terror into corporate boardrooms if a Labour government came into power. In fact, on two important business issues in recent weeks, McDonnell has come across as a pussycat.
Exhibit A was mentioned here a few weeks ago: McDonnell’s weak response to the Competition and Markets Authority’s limp report on the banking sector. The CMA recommended a few technocratic tweaks, such as a beefed-up price comparison website, that did not impress mainstream opinion in the world of small- and medium-sized businesses. The British Chambers of Commerce – not a bunch of lefties – said the CMA was “effectively endorsing a status quo that many businesses find unacceptable”.
McDonnell, by contrast, welcomed the CMA report and merely called for the government to “reflect carefully” on its findings. This was doubly baffling since Labour, when Ed Miliband and Ed Balls were at the helm, forced the CMA investigation in the first place and had demanded structural reform in the form of a market share test and the creation of two new “challenger” banks.
Exhibit B arrived on Wednesday as McDonnell gave a speech on businesses’ contribution to society. His big idea? A “good business” kitemark to recognise those companies that pay their taxes transparently and properly and give their employees a living wage. “It’ll be open to any business that wants to apply,” said McDonnell, cheerily.
A similar voluntary scheme already exists, as he did not mention. It’s called the Fair Tax Mark and cannot be said to have taken the world by storm. SSE, the energy company, is the only FTSE 100 firm to sign up.
At the last election, remember, Labour had prescribed stiffer medicine. The manifesto pledged to use government procurement contracts to change corporate behaviour on tax and wages – in other words, good practice could have earned more than a kitemark.
It is still early days for McDonnell’s shadow chancellorship and, in any case, MPs currently have weightier issues to ponder than competition in banking and the promotion of responsible capitalism. But, sooner or later, Labour will be required to have a few solid business policies. On current evidence, the thinking has not even started.
Zoopla homes in on the competition
A 22% fall in advertiser numbers does not sound good but Alex Chesterman, Zoopla’s chief executive, made it sound a triumph. In a sense, he’s right.
In January, a crew of disaffected estate agents – led by Savills, Chestertons and Knight Frank – launched OnTheMarket.com to try to smash the Rightmove/Zoopla duopoly in online property adverts. Zoopla, as the junior player, was most at risk. As expected, an exit of agents followed, obeying OnTheMarket’s edict that members of its club can advertise on only one other website.
But since May, reports Zoopla, the tide has turned and its own agency numbers have risen every month. At the end of September, it had 12,702 branches on its books. That was still a fifth less than a year ago but Chesterman is sufficiently confident to crow about returning customers and taunt OnTheMarket by describing it as a “leaky bucket”.
Well, yes, OnTheMarket’s members will soon face a choice: they can spend more cash to raise awareness of their brand or accept that Zoopla will be harder to dislodge from second place than expected.
It is their decision but, if anything will encourage them carry on, it is the sight of Zoopla’s 51% profit margin on property ads, up from 49% last year despite lower revenues. In the shoes of the angry agents, that will still look too fat to be tolerated.
Serious Fraud Office finally banks two successes
The Serious Fraud Office gets so much flak when cases collapse or fail that it is only fair to mark two successes in a week. On Wednesday, Sweett Group, a quoted firm of quantity surveyors, said it would plead guilty to an offence of failing to prevent bribery in the Middle East. The SFO had been seen as slow on “failing to prevent” cases introduced in the 2010 Bribery Act; now it can argue otherwise.
The other success is more significant – the first deferred prosecution agreement, or DPA. That was with a former unit of Standard Bank of South Africa, which agreed to pay $32.6m. DPAs are an import from the US legal system and have long been regarded as essential in complex cases. Their use is yet to be tested in higher-profile cases but SFO director David Green called the Standard Bank DPA “a template for future agreements”. He’s doing well.
