Labour’s business naivety is palpable, says ALEX BRUMMER

Keir Starmer’s government does not do business. Forget the pre-election fuss about approaching businesses and the £63bn promises made at the October 2024 investment summit.

Starmer and Chancellor Rachel Reeves have no idea how to deliver on the growth mission.

Labour’s agenda is to put workers first and end industrial disputes. But it is at the expense of British companies.

The dissonance from the CBI, which has warned that Britain faces a “recession made in Downing Street”, must be taken seriously.

The lack of understanding goes beyond the deeply regressive £25bn increase in employers’ National Insurance contributions.

It is reflected in the crude decisions with which each government faces trade.

Nationalization of the railways can attract aggressive and well-paid railwaymen.

But unnecessarily including the entire network in the national balance sheet will never make trains run on time.

Naivety and ignorance have been revealed in the Government’s handling of the sale of International Distribution Services, owner of Royal Mail, to Daniel Kretinsky.

Business Secretary Jonathan Reynolds ignored the fact that his wealth comes from his stake in pipelines that transport fuel from President Putin’s Russia to Europe.

Trading with Gazprom requires the beneficiary of the trade to visit the Kremlin and pay tribute.

What is more worrying, in terms of Labour’s future relations with business, is its failure to ask the simplest questions about Daniel Kretinsky’s £3.6bn bid.

Everyone has skin in the game, except the people who really matter.

These are the end users in homes and offices across the country.

The bankers who have raised some £3 billion in loans for the deal are not in the least interested in whether the Universal Service Obligation is met, they just want the interest paid.

Other UK companies that have allowed debt to pile up, including troubled firms such as Thames Water and grocer Asda, have found themselves in deep difficulty.

Royal Mail workers can believe they have secured a golden deal for the next five years.

History tells us that there is no such thing. When costs are too high and there is a tax issue of some kind, workplace agreements are ruthlessly annulled.

The city’s bankers, advisers and consultants will already be enjoying a ski holiday or the luxury of St Barts in the Caribbean, anticipating the prospect of £146m in fees.

What Jonathan Reynolds and the board of International Distributions Services, which owns Royal Mail, should be asking themselves is: why is Kretinsky so interested?

The fast-growing Global Logistics Services, its European arm, is a crown jewel that should be sold at a high price.

IDS is in freehold properties, including valuable development sites in central London such as King’s Cross, valued at £1.8bn.

Maximizing assets through development and sales and leasing will be a priority. The latest is the Ofcom review.

By modifying the Universal Service sufficiently, Royal Mail, despite falling postal volumes, could become a profit-maker depriving existing shareholders (including union members) of income that should be theirs.

Not investigating these issues, any of which could stop the sale of a “real” brand much more established than Cadbury, is a serious dereliction. He will come to haunt Reynolds and the Labor Party.