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What Labour means for business

Time marches on and soon the country will be in the midst of another general election battle. As to when it’ll be, we don’t know, but at the very latest, unless Rishi Sunak asks the king to dissolve parliament beforehand, it will dissolve automatically on 17 December this year with an election held around 25 days later, excluding weekends and bank holidays.

Not unsurprisingly, political parties are already jockeying for position, but none has yet published a manifesto upon which they will stake their claim on the keys to Number 10.
Of course, it’s not over until the fat lady sings, but the view of the man on the Clapham Omnibus seems to be that it’s odds-on that the next government will be left of centre. That’s not to say that Labour are guaranteed a win, as the events of the early part of February indicated, with three electoral candidates either being removed from the party ranks or being admonished for their alleged anti-semitic views.

A year or so ago, Sir Keir Starmer unveiled his “Five Missions for a Better Britain”, which outlined what the Labour Party seeks in its move towards a “mission-driven government.” Naturally, being this far away from an election, the document was short on detail, but it sought productivity gains and new jobs for growth, along with a stronger hand on net zero. But those keenly digesting the media will have heard that in early February Labour walked away from its green investment policy on the basis that the country couldn’t afford to borrow around £28bn to fund such green investments. The party, of course, laid the blame at the door of the Conservatives for spending so much during its 14-year tenure. However, sight shouldn’t be lost of what the government did to keep the economy alive during Covid, and that didn’t come cheap. Regardless, Labour’s retraction didn’t look good.

Will it become the party of old where it seeks to tax and spend?

Soon the Labour Party manifesto will be ready, but until it’s published we can only guess at what it’ll include. Will it become the party of old, where it seeks to tax and spend?

At the annual party conference in October last year, shadow chancellor Rachel Reeves said that Labour will focus on economic growth, not higher taxes and that “Labour will tax fairly and spend wisely.” With a background as an economist and roles at the Bank of England, British Embassy in Washington and once having interviewed for Goldman Sachs, it’s hoped she knows what she’s talking about!

In fact, she has previously gone on record stating that she’d support a 2p cut in income tax if the current government proposed it. And also, in January 2022, Reeves said a Labour government would be pro-business and committed to fiscal discipline.

Labour has said that it would want to further fund the public sector and increase investment through a new national wealth fund. It would reform planning rules to build an extra 1.5 million new homes and invest in infrastructure.

As for new sources of money, those who pay for private education or who qualify for ‘non-domiciled’ tax status will find life more expensive; the former will become subject to VAT and the latter will be abolished.

Notably, Rain Newton-Smith, chief executive of the (scandal-tarnished) Confederation of British Industry, has said businesses would be “encouraged” to hear Labour “speak so ambitiously about driving up business investment and committing to tackle some of the key blockers.”

Of course, there are still issues to resolve – the NHS, the green economy and immigration. That is beyond this column. But if Labour want to win more than one term – and be viewed with the same rose-tinted optics as Tony Blair’s New Labour of the late 1990s – the party must stay well away from Corbinite socialism it espoused not that very long ago.

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