Miliband Pledges to Tax Asset Strippers, Reward Innovation

Leader of the U.K. Opposition Labour Party Ed Milliband
Leader of the U.K. Opposition Labour Party Ed Milliband addresses delegates at the party's annual conference in Liverpool. Photographer: Chris Ratcliffe/Bloomberg

Ed Miliband, the leader of the main opposition Labour Party, called for higher taxes on “asset-stripping” companies in a speech outlining a “new bargain” for Britain.

Miliband, addressing his party’s annual conference today in Liverpool, northwest England, said there should be tax breaks for scientific innovation and job creation, while companies that rely on short-term business plans to make a “fast buck” should be penalized.

“The 21st-century choice is: are you on the side of the wealth creators or the asset strippers?” Miliband said. “For years as a country we’ve been neutral in that battle. They’ve been taxed the same, regulated the same, treated the same, celebrated the same. They won’t be by me.”

A year into his leadership of the party, Miliband is seeking to shift the terms of the political debate in Britain. With the next general election fixed for May 2015, he is seeking to develop a critique of the policies of Prime Minister David Cameron’s coalition government that raises Labour’s support among voters.

“Labour will always stand as the voice of the people, our people: their values will be heard and we will challenge the vested interests that benefit when the wrong values are rewarded,” Miliband said. “Never again should they be able to take advantage of a system which doesn’t work to the values and instincts of decent people in our country.”

‘Simplistic and Wrong’

“We would like to know how Ed Miliband plans to identify and reward ‘good’ companies over ‘bad’ ones,” Miles Templeman, director general of the Institute of Directors, said in an e-mailed statement. “He should have more faith in customers and investors to decide. Instead of proposing that the state makes choices that are likely to be simplistic and wrong he would be wiser to find ways of boosting competition so that the customer remains king.”

Miliband also took a swipe at Mervyn King, governor of the Bank of England, for backing the government’s deficit-reduction strategy. “Lots of people thought the government was taking the right course,” he said. “The governor of the Bank of England, the International Monetary Fund. But one person in particular stood outside the consensus, Labour’s shadow chancellor, Ed Balls. He was right.”

Goodwin Versus Rose

The Labour leader said the U.K. had gone wrong in emphasizing the importance of the banking sector, “the triumph of finance over industry.” He said that Fred Goodwin, the former chief executive officer of Royal Bank of Scotland Group Plc, which had to be bailed out by the previous government, had been paid three times as much as John Rose, the former chief executive of Rolls-Royce Holdings Plc.

“Fred Goodwin shouldn’t have got that salary,” Miliband said. He said the last Labour government was wrong to give Goodwin a knighthood.

“Britain’s future will be built not on credit-default swaps but on creative industries, not low wages and high finance, but low carbon and high tech, not financial engineering, but real engineering,” Miliband said, adding that banks “must change so that they are part of the solution to our economic future, not part of the problem.”

A ComRes Ltd. poll for the Independent newspaper published last night put Cameron’s Conservative Party ahead of Labour for the first time in a year. It showed the Tories at 37 percent, Labour at 36 percent and the Liberal Democrats at 12 percent. Asked if Miliband was a credible prime minister-in-waiting, 24 percent agreed and 57 percent disagreed. ComRes interviewed 1,000 adults by phone Sept. 23-25. No margin of error was given.

Southern Cross

Miliband cited Southern Cross Healthcare Plc, Britain’s biggest operator of care homes, which announced its closure on July 11 because it was unable to pay its bills, as an example of a bad business.

“Stripping assets for a quick buck and treating tens of thousands of elderly people like commodities to be bought and sold,” he said. “They may not have sold their own grandmothers for a fast buck. But they certainly sold yours. They aren’t the values of British business. It must change.”

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