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What Might Labour’s Leadership Contest Mean for Business?

This post is by the Brands2Life Public Affairs team.

A Brexit vote, a new Prime Minister and a mostly-new Cabinet. Yet, while the Conservative up-ending of our political environment seems to be over, the Labour leadership election may have just as significant an impact on UK politics.

The implications of Labour’s leadership battle go far beyond who leads the party. Many believe that the election could precipitate the break-up of the Labour Party into two competing factions: a left-wing, anti-austerity party led by Corbyn and MPs loyal to him; and a more centrist, more pro-business – and, to the wider electorate, believed to be more palatable – party led by an as-yet undetermined leader. There is even talk of a new opposition party uniting centrists from Labour, the Conservatives, and the Lib Dems.

Despite poor levels of support within the Parliamentary Labour Party, Jeremy Corbyn still retains strong grassroots support. In fact, as a recent YouGov poll showed, Corbyn is the first choice for 54% of Labour Party members.

Fortunately for his challengers, the election itself is still some way away. According to the timetable for the contest, which was released by the party’s ruling National Executive Committee last Thursday, voting will take place from late August up until 21st September, with the winner to be announced a few days later at the party’s annual conference on 23rd September.

On Tuesday, former Shadow Work and Pensions Secretary Owen Smith emerged as the sole contender for Corbyn’s crown, following the resignation of Angela Eagle – who is even facing a vote of no confidence in her own constituency, Wallasey, as a result of her criticism of Corbyn.

Eagle’s announcement came after Smith attracted the support of a greater number of MPs than her, and will mean that voters unsupportive of Corbyn will be able to rally behind one alternative.

That Smith is known for his more left of centre politics may prove favourable for voters who would otherwise be drawn to Corbyn, with whom it is believed he shares many values. He has also been described as the candidate most able to reunite the Labour Party – and has even pledged to offer Corbyn the position of president of the party if he wins.

Uniting the party will be a key strand in this leadership contest, as any split would divide the UK’s major political opposition. As Nick Clegg wrote in the Evening Standard last week, an effective opposition is a vital part of our democracy, providing essential checks and balances for those in power.

Were Labour to split in two, the party political system of the United Kingdom will take on a vastly different appearance: a large, one nation Conservative Party in office, complete with new leadership, a new cabinet and a new vision; opposed by a series of smaller parties, united on some issues and divided on others. These parties could even form a coalition – the Green Party has called for Labour, the Lib Dems and Plaid Cymru to form a “progressive alliance” at the next General Election. Doing so may prove more effective, but would be a significant departure from the status quo.

What is clear is that in just two months we may not only have a new Prime Minister and potentially a new Labour leader. We may also have a much more fragmented political landscape. If this does occur, then businesses need to start thinking about engaging with the broadest possible range of political influencers and stakeholders, both inside and outside Parliament. Doing so will be a challenge, but it is also an opportunity to develop more effective and wide-reaching communications strategies to shape policy and build reputation.

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