Yahoo Finance Four tests to prove if Labour really is The Party of Business
Where the City’s movers and shakers have their say. Today, Neil Bennett, co-CEO of H/Advisors, takes the notebook pen to ask whether Labour really is the party of business
Talk the talk, now walk the walk
Like almost everyone I know, I was pitched to the other day by Rachel Reeves, our Chancellor-elect (barring some seismic shock in the ballot boxes tomorrow).
All the Reevesian tropes came trotting out: she used to work at the Bank of England (really?), she wants to be a growth Chancellor, Labour is now the party of business. Reeves after all has spent years on the business circuit, trying to repair Labour’s relationship with the private sector and she knows the buzzwords and catchphrases that will melt the iciest commercial heart.
Still many business leaders hang back. They like what they hear but they don’t quite believe it.
In the next few months however we will find out if Labour means what it says about business. Or if it even knows what it means – to be The Party of Business. In the business world, rhetoric will only get you so far – once in government Labour will have to produce concrete plans and initiatives to stimulate the economic growth it has promised, and some of these will cut right across the entrenched interests of the trade unions and party activists.
Here, then, are four tests to apply to the new government to determine whether they really do understand what it takes to be The Party of Business.
1. A Reasonable Rate of Return
Labour has promised billions of pounds of investment from the private sector to rebuild national infrastructure and has pledged to hold a ‘global investment summit’ in the first 100 days in office. BUT…this is not free money. The investors it has been wooing will require an attractive rate of return in any project – and the UK will be competing for these funds in a global market. Will the new Government be prepared to endure heavy criticism from the left when it launches what will essentially be PPP Mark II? Or is this in reality merely Magic Money Tree II?
2. Taxation, Taxation, Taxation
Labour has made great play in this election about the taxes it will not increase, including the main rate of Corporation Tax. It has naturally stayed schtum about the taxes it will increase, although it is clear that many will rise, including further tightening on non dom status and on the treatment of private equity gains. The UK is in a global market for inward investment and, just as in physics, any action will have a reaction. If Reeves chooses to throw too much red meat to her back benches in the way of performative tax increases, the queues in Heathrow departures will lengthen.
3. Holding back the red tape
Sir Keir Starmer and Rachel Reeves are regulators to the core of their being, thanks to their backgrounds at the Bank of England and the Crown Prosecution Service. Regulation is ominously a theme that appears too often in Labour’s manifesto – including their terrifying commitment to launch a Regulatory Innovation Office. But regulation and red tape stifle economic development and business success. Will they be able to curb their natural instincts and allow free markets to flourish without meddling at every turn?
4. A healthy dose of pragmatism
Lastly, any party of business needs to be pragmatic and flexible. When the policy may dictate one thing, but another course of action will create 20,000 jobs, a good Prime Minister knows when to bend. For example, this government’s decision to abolish VAT-free shopping for tourists was a stupendous act of self-harm for our retail, luxury goods and tourism sectors. Will Reeves be sensible and pragmatic and reinstate it? Or will her socialist principles prevent her from offering discounts on Burberry coats and Harrods teddies? We will soon find out. In the next 12 months we will find out what sort of Chancellor Reeves really is. Let’s hope for
the sake of UK plc that she passes these tests.
Glastonbury for the intellect
My firm H/Advisors was lucky enough to be a sponsor of the Chalke History Festival this weekend, where a Who’s Who of renowned historians gave talks to the sounds of cannon fire from the battle re-enactment fans.
“History doesn’t repeat itself but it often rhymes,” said Mark Twain – and there was lots of rhyming being attempted – from the comparison of the power of the East India Company and today’s tech giants, to Hitler’s contempt for law and Trump’s current legal strife. An excellent event all round. Glastonbury for the intellect.
