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Businesses caught between Brexit and Corbyn

Andrew Varga is the quintessential small manufacturer that politicians claim to love.

But on a recent afternoon at Seetru, the Bristol factory his family has run for the past 69 years, Mr Varga was not feeling much reciprocal affection for Britain’s political class.

Scattered around him were trays of freshly milled safety valves, the successors to products his father, a Hungarian immigrant, pioneered decades ago. One-third of its £11m of sales go to the EU and Mr Varga has petitioned several MPs over Brexit, to little effect.

“There is no one that expresses our voice, I don’t think,” he said. “I feel completely disenfranchised.”

Since the Thatcher era, British business has generally felt at ease with both of the main political parties. Even when they swapped power, the Conservatives and Labour maintained a centrist consensus built around free trade, free enterprise and a growing role for the private sector.

But as Britain’s politics become more polarised in the Brexit era, many executives are feeling uncharacteristically shut out.

Their political choice has narrowed to a Conservative party that is pushing through policies on trade and immigration that are antithetical to many businesses and a Labour party whose leader, Jeremy Corbyn, is an avowed socialist who wants to nationalise chunks of industry and raise taxes.

‘Who the hell do I vote for?’

It has become a parlour game among executives to debate which is worse — Brexit or Mr Corbyn. “It’s a real problem for me — who the hell do I vote for?” said one grandee who has sat on several boards and now chairs a large financial services company.

Like other executives, he was loath to speak publicly for fear of damaging relations with the powers that be, or offending customers. In private, though, he and others vented their frustration.

The idea, he said, that “if the economy is strong, if business is doing well, the country is doing well” was no longer so widely held. He complained not only about Brexit, which he opposed, but a sense that politicians were no longer listening to business as they drew up policies for energy, education and other areas.

A senior executive in the Midlands said the Labour party under Mr Corbyn “have no appreciation and understanding” of business. Yet he was more perplexed by the Conservatives, who traditionally pride themselves on being the party of business.

“The Tory party is so inward-looking at the moment and tearing themselves apart over Europe, and not worrying about creating a positive environment for business,” he said.

Since she became prime minister two years ago, Theresa May has been regarded as being more distant from business than her predecessors — a stance that may have worried some executives but appeared to suit voters still embittered by the 2008 financial crisis.

She won plaudits this month for providing some of the stability and certainty that executives crave in the form of a transition deal with the EU. It would preserve the UK’s de facto membership of the bloc until the end of 2020.

But it came with a caveat: the transition deal will not be agreed until a final post-Brexit deal is agreed later this year. That means businesses must continue to plan for the worst, or as one fund manager put it: “Everyone is looking into the abyss.”

Some executives say politicians have a good grasp of their problems — be it a lack of skilled workers or high energy costs. But Brexit — and the intra-party fight over it — has become so consuming that there is little capacity to focus on much else.

Right turn

Political analysts see the Conservatives froideur towards business as the consequence of its attempt to appeal to the more nationalist and protectionist voters who backed Brexit and effectively neutralise the anti-EU UK Independence party.

The strategy has worked: in places where more than 60 per cent of voters favoured Brexit, Conservative support increased by 10 per cent in the 2017 general election, according to Geoffrey Evans, an Oxford professor who is co-author of Brexit and British Politics. Ukip has crumbled.

“They got what they wanted,” Prof Evans said. But it appeared to come at the expense of economic liberalism, and the urban, educated voters who tend to support it.

Sir John Curtice, a politics professor who is regarded as one of the UK’s top pollsters, argued that Brexit was not a debate about a remote government institution but rather “a debate about attitudes towards international capitalism”. In that debate, big business is often cast as the villain.

Andrew Dixon, a venture capitalist and one-time Conservative voter, grew disenchanted with what he saw as the party’s shift towards Ukip. He swung his allegiance to the Liberal Democrats after being impressed with their work in the coalition government — particularly their championing of apprenticeships and training.

He is now trying to persuade others to join him. He founded the Liberal Democrat Business and Entrepreneurs’ Network in 2015 in an attempt to bring executives into the party. “The Natural Party for Business,” is its motto. Paid membership has more than quadrupled to about 100 over the past year, according to Mr Dixon, founder of Arc InterCapital.

“I suspect in the [Conservative] party there is a nervousness to be seen to be too pro-business, too globalist,” he said, arguing that the threat of a Corbyn government had caused the Conservatives to become “complacent” about business’ support.

For Mr Varga, who described himself as a “small ‘c’ Conservative, the Lib Dems are not appealing because they only have a dozen MPs. “They’re out of the game,” he said.

Seetru was born after his father, an engineer, was sent to the west of England to work in the aviation industry during the second world war. He invented a type of safety valve that used rubber seals.

The company is particularly vulnerable to Brexit: its valves are components in manufacturing facilities and assembly lines. They often must be in place hours after being ordered.

“Any delay at the border could be catastrophic,” he said. Already, he senses that even longtime European customers are exploring alternatives so they can avoid future headaches.

Tighter controls on immigration would also harm a company that relies on a handful of foreigners among its 130 workers because it cannot find enough skilled engineers in the UK to suit its needs.

Mr Varga has appealed to politicians directly, writing to the prime minister, cabinet ministers and members of parliament. He has received some sympathetic letters from MPs in both parties that sit in parliament’s committee for exiting the EU. But a staffer for David Davis, the Brexit secretary, sent him a letter that more or less trotted out the party line and assured him, Mr Varga said, that “all was going to be wonderful”.

“There are clearly politicians in both parties who understand the situation,” he said, “just not the leadership.”

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