Incremental credibility and the erosion of confidence

In Liverpool this week, the Headland team joined a lunchtime fringe event hosted by the FSB and the New Statesman. On the agenda was Labour’s small business strategy. Shadow Chancellor John McDonnell was the headline guest, fresh from announcing his plans for a £500 billion investment into the UK economy and a £10 per hour minimum wage.

Given such grand ambitions, we all expected to hear similarly lofty rhetoric. McDonnell, however, delivered the opposite.

Incremental. We all scribbled it. For Labour to win the trust of the small business community – which accounts for 60% of private sector employment – an incremental approach is needed. McDonnell believes that credibility comes from a grassroots, iterative approach, shaping policy alongside those that have a stake in its success. Organisation by organisation, conversation by conversation, confidence in Labour’s business and economic policy will be won.

To many within and beyond the Labour Party, that may feel like a risky strategy. To harsher critics, it may feel like the Shadow Chancellor is simply buying time.

There is, however, another inching trend that may give the approach time to breathe: the erosion of confidence across the country. The FSB’s own research shows that business confidence is slowly draining. Brexit-rooted uncertainty is fuelling pessimism.

The question therefore becomes ones of divergence. If business confidence in the Government’s Brexit negotiations, and by proxy the administration itself, continues to ebb downwards, and McDonnell’s incremental gains can inspire credibility to trend upwards, could Labour take advantage and finally shake off the post-2008 “economically reckless” blues?

Two things stand in the way.

Firstly, McDonnell cannot continue to hide from his big ticket interventionist policies. Scrutiny of a socialist Shadow Chancellor’s approach will be fierce. Many a journalist will enjoy the battle provided by his confrontational approach to media relations. Little time will be afforded to incremental gains when there are headline-grabbing showstoppers in town.

And secondly, in a post-boundary change system, Labour needs to win 97 seats to command a parliamentary majority of just one. This becomes a major issue when considering that many swing seats currently have a Conservative majority of 8,000 or more. Numerous small gains in sentiment from key local constituents may still not be enough.

As a general election approaches, increments may need to rapidly become strides if winning back power is a genuine ambition.