As Labour rolls the pitch ahead of what many anticipate will be a painful Budget on 30th October, senior strategists have been warned that they need to avoid talking the economy down – risking destroying any hope for nascent growth before Rachel Reeves stands to deliver her statement.
In a world increasingly re-shaped by the protectionism of Bidenomics, Brussels and Beijing, the two interventions – the investment summit and the industrial strategy – aim to reimagine the relationship between government and business while tackling longstanding issues in the UK economy.
International Investment Summit 2024
The Prime Minister’s flagship investment summit today aimed to attract more investment into the UK, with a particular focus on upgrading infrastructure and the energy industry. Speaking to more than 200 leading executives, Sir Keir pledged to ‘end chop and change, policy churn and sticking plasters’ that serve as a barrier to investors accessing the value of any proposition.
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Labour aims to unleash ‘the shock and awe of investment’. Starmer’s speech this morning outlined his aim to rid the country of regulation that is ‘needlessly holding back’ the investment needed for growth, citing as an example the onerous web of planning laws that delays the building of homes, data centres, roads and energy projects.
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Cutting red tape doesn’t mean cutting corners, said Culture Secretary Lisa Nandy – ‘The Prime Minister was very clear… that regulation can save lives’.
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Substantial investment announced. In her closing speech to delegates, the Chancellor Rachel Reeves announced £63 billion of investment into the UK from companies such as Service now, Eli Lilly and the Manchester Airport Group – thereby creating over 40,000 jobs.
- The Budget looms large. The summit has been overshadowed somewhat by the upcoming Autumn Budget, which will be delivered on 30th October. As befits the ‘spooky season’, Reeves has been warned off a new set of tax raids, with the tax burden already standing at a near-post-war high. In this context, business leaders have called for increased clarity and accordingly, Reeves confirmed corporation tax would be capped at 25% during this parliament, as part of the government’s continued efforts to woo investors.
However, the event has been marred by slip-ups and blunders...
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Choppy waters. DP World, which owns P&O Ferries, threatened to pull its £1 billion investment into the UK’s port expansion following disparaging comments made by the Transport Secretary Louise Haigh. Following a frantic effort on the part of government to repair relations – Starmer said her views were ‘not the view of the government’ – DP World’s chairman Sultan Ahmed bin Sulayem did end up attending and agreed the investment will go ahead as planned.
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Oh Schmidt! An invitation for the summit misnamed one of the most high-profile attendees, with Eric Schmit, the former Google chief executive and chairman, referred to as ‘Ed Schmidt’.
- Data leak. Due to what Whitehall calls an ‘administrative human error’, the government accidently leaked the email addresses of a number of industry heavyweights, including that of Bernard Arnault, the French businessman and the fifth richest man in the world.
Labour’s Industrial Strategy
Labour has laid out plans for a refreshed, growth-orientated Industrial Strategy, the first officially to be published since Theresa May’s administration in 2017 – thereby filling a void which meant the UK was the ‘only major economy not to have a comprehensive industrial plan in place’, according to Make UK.
The return of industrial strategy reflects a core tenant of Starmerism; belief in an active state, playing a role to shape the market and boost Britain’s competitiveness.
Here is everything you need to know about Labour’s plan, distilled for ease:
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Eight ‘growth-driving sectors’ will be prioritised across services and manufacturing:
- Advanced manufacturing
- Clean energy industries
- Creative industries
- Defence
- Digital and technologies
- Financial services
- Life sciences
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Professional and business services
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There is no money left. Cognisant of the parlous state of public finances, the Industrial Strategy seeks to create the right conditions for unlocking private investment. Accordingly, Business Secretary, Jonathan Reynolds pledged that Labour’s “modern Industrial Strategy will hardwire stability for investors and give industry the confidence to plan for the next 10 years and beyond”.
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Change? In practice, Labour’s strategy varies little from the Tories’ priority growth sectors – digital, life sciences, creative, green and advanced manufacturing – as announced by Jeremy Hunt in June of this year. Although Labour’s plan won’t be judged on identifying areas of growth but realising them.
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Seeking views from business, the government today launched a consultation on its industrial strategy. Firms have until 24th November to submit responses. There will also be government organised sectoral discussions, including focused roundtables between now and the publication of the final Industrial Strategy, alongside the outcomes of the Spending Review in Spring 2025.
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Industrial Strategy Advisory Council. Clare Barclay, CEO of Microsoft UK, will chair this new governmental council, designed to provide expert advice developed in partnership with business, unions and stakeholders from across the UK.
- Place. There’s recognition that central government along will not be enough, with stakeholders across business critical to realising the potential across the identified growth sectors as well as focus on places such as city regions, high-potential clusters and strategic industrial sites. Furthermore, the government have promised to devolve powers to Mayoral Combined Authorities across England, so that they have the tools required to improve the local business environment through their respective growth plans.
If you would like to get in touch with the team, please contact Head of Public Affairs, Tim Snowball, at tim.snowball@mhpgroup.com