It was standing room only at the Oval cricket ground in south London in February, as more than 400 representatives from some of Britain’s biggest businesses took their seats for a sold-out event. But they weren’t there to watch Surrey in the county championship. They came to hear the Labour leader Sir Keir Starmer explain why they should trust him.
Now the starting gun has been fired on the election by Rishi Sunak, and Labour fancies its chances of unseating the Conservatives after 14 years of rule.
With the major parties putting the finishing touches to their manifestos, business leaders are eager to be heard. But what do they want from the next government, whichever party is elected?
Kevin Ellis, head of professional services body PwC for UK and the Middle East, summed up the views of many following the turbulent recent times. “Business is desperate for confidence, stability, investment,” he said.
The past few years have left UK plc feeling decidedly bruised. The Conservative government elected in 2019 presided over a hard Brexit, Covid, and then a panic in the financial markets during Liz Truss’s 49 days in power.
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“Boris Johnson and Liz Truss, I think, were pretty awful for business,” said Brent Hoberman, the tech entrepreneur and chairman of Founders Forum. “It makes many people’s blood boil thinking about it. But the Sunak government has engaged with business and put some policies out there. They just haven’t had the runway to be as bold as business would have liked.”
Matthew Beesley, chief executive of the FTSE 250 fund manager Jupiter, said the election was an opportunity to inject fresh investment into Britain after Brexit. “We now have a chance to create a fresh slate and have a government with a mandate which shows in their policies they are pro-business and keen to attract capital,” he said.
Some business leaders, such as Dame Amanda Blanc, chief executive of the FTSE 100 insurer Aviva, reckon that a decisive election outcome would help create the stability that business craves. “We want to invest significantly in the UK over the next decade and that requires political consistency and stability. So whichever party forms the next government, we want the outcome of the election to provide a clear mandate,” said Blanc.
Charlie Nunn, chief executive of FTSE 100 bank Lloyds, said a general election was an “invaluable opportunity to re-focus and re-energise” the economy.
The overarching message from bosses is that they want to help spur growth. The economy grew just 0.6 per cent in the first three months of this year, below historic norms.
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The idea, according to Keith Anderson, chief executive of ScottishPower, is to allow companies like his — owned by Spain’s Iberdrola — to unleash investment: “Growth, growth, growth — that’s what this country needs and that’s what we’re offering the UK.”
So what are the policies that business says are needed to boost growth?
Shake up Whitehall
Marks & Spencer’s chairman Archie Norman — a former Conservative MP — feels so passionately about boosting economic growth that he reckons a new government department could be created to focus on fostering government’s relationships with businesses and entrepreneurs.
While most governments have a “business department”, Norman suggested the UK needed “a ministry of micro-economics”. He said: “The Treasury is the ministry of macro-economics but what we need is a department really focused on working with industry, with entrepreneurs to drive investment and productivity and attract skills.”
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Rethink tax
Party commitments on tax, both for businesses and individuals, will receive close attention at a time when the tax burden is already at its highest in decades.
Both parties have announced tax policies that will hit families, with Labour planning to add VAT to private school fees and the Conservatives planning to end the “non-dom” tax break for wealthy individuals.
“There are a lot of successful entrepreneurs running away from the UK and that concerns me heavily,” said Hoberman. “When you add layer upon layer of policies … the super successful people say: ‘enough is enough’. How are we going to make it attractive for them to stay is something I’d love to hear.”
On corporate taxes, one of the more eye-catching hikes in recent years was the windfall tax on North Sea operators — a Labour idea the Tories adopted. David Latin, executive chair of Serica Energy, said his company, and others, would simply stop investing in the North Sea if the tax wasn’t dropped. “If they don’t get the tax system right … the investment money will go elsewhere and the revenues that come with it.”
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The private equity industry is also on alert for any attempts to raise the tax rate that its executives pay on the profits they make on deals — known as carried interest.
For owners of family owned businesses, such as Steve Rigby who employs 9,000 people in his eponymous IT business Rigby Group, clarity on inheritance tax — charged at 40 per cent on the value of an estate — is also key. “It is important to be able to pass down businesses through generations and there’s lots of talk about inheritance tax, which is unsettling,” said Rigby.
Help us build
The delays in getting infrastructure projects off the ground are a recurring theme. Margherita Della Valle, chief executive of Vodafone, said: “The UK will need to prioritise closing the longstanding investment gaps in infrastructure to boost the competitiveness of the economy.”
Both Tories and Labour have acknowledged that red tape is holding Britain back as it embarks on a national effort to hit zero. Greg Jackson, founder and chief executive of energy supplier Octopus, talked of the paperchase behind building out a modern electricity grid: “We need reform of grid connections. Instead of taking 13 years for a connection, as we had in one case, it should take just one or two.”
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Tracy Blackwell, chief executive of Pension Insurance Corporation, which manages £40 billion of retirement savings, said she wanted to invest more of those savings in major building projects, but local authorities stand in the way of planning permission. “That is one of the biggest barriers to regenerating towns and cities across the UK,” she said.
Mark Allan, chief executive of FTSE 100 property company LandSec, said the planning system should be overhauled so that large and small projects are treated differently. “Currently, all types of scheme go through essentially the same system,” he said.
The planning conundrum feeds into the desperate need for new housing. “We look forward to seeing positive policies from all parties aimed at increasing housebuilding [and] supporting people onto the property ladder,” said David Thomas, chief executive of FTSE 100 housebuilder Barratt.
Nunn, the chief executive of Lloyds — the country’s largest mortgage lender — called for “an ambitious programme of social housing delivery, investing in new developments alongside the private sector and bringing back into use homes that currently lie empty”.
Be cautious on workers’ rights
Labour has been talking about reforms to workers’ rights such as scrapping zero-hours contracts and offering more paid leave. This is perhaps the biggest fear businesses have about a potential Labour government. Matthew Percival, a director at the CBI employers’ body, said: “Businesses recognise Labour’s ambitions, but turning those into practice requires understanding the fine detail.”
Percival added: “The zero-hours contracts proposal is a practical example of where the details really matter. Our members aren’t asking us to defend working full-time without any guaranteed hours, but they do need to be able to offer things like flexible working and overtime.”
Shore up defence spending
Last week, Sunak made barbed comments about Labour’s commitment to defence spending at a time of increasing geopolitical tension. The Tory Party has committed to spending the Nato-agreed 2.5 per cent of GDP on defence by 2030, while Labour has said it will make that pledge “as soon as resources allow”. Both parties have been aligned on the need to support Ukraine, and Labour has promised to direct defence investment to British jobs by enacting “deep defence procurement reform”.
David Lockwood, chief executive of defence contractor Babcock, said: “The world is now undeniably a more dangerous place. The UK needs to continue to play an important role … that means backing our defence sector at home and abroad.”
Boost the City
The City of London felt ignored and, in parts betrayed, by the government during the Brexit negotiations. While relations have improved under Sunak and chancellor Jeremy Hunt, the financial sector wants the next administration not to forget its importance. Steven Fine, chief executive at broker Peel Hunt, said: “The equity market doesn’t just serve a small district of capital. It’s the engine room for the entire economy.”
Despite multiple consultations about how to reform the City, the government still needs to find ways to encourage more investment into the stock market by UK investors. Beesley at Jupiter and Mike O’Shea, chief executive of fund manager Premier Miton, both called for the proposed British Isa to be launched. A consultation on the plan to give tax-free investment to investors buying UK shares has started and has a closing date just after the election.
A debate is also raging on how British pension funds could be encouraged to channel more of their investments into the UK — not just into the stock market but also to back projects by entrepreneurs. The Mansion House reforms last July made progress but are yet to be implemented.
Jackson, at Octopus, added: “The UK has got great start-ups, but it’s really difficult for firms to grow. We’ve got to unlock the ability for pension funds in the UK to invest in British businesses.”
It remains to be seen how many of these wishes will make their way into parties’ manifestos. Three months after Starmer’s pitch to business leaders at the Oval, everything is still to play for.
Big decisions kicked into the long grass
The calling of the election has left several major bills and regulatory decisions in a state of limbo, adding to the uncertainty facing companies.
Nuclear: A final investment decision on the £20 billion Sizewell C nuclear power project was due by the end of this parliament. Industry sources suggested that this will now be delayed until the end of this year
Water: The regulator has delayed a planned June 12 decision on whether water companies’ five-year business plans are acceptable
Energy: A consultation on reform of the electricity market in ways that could cut bills has ended but will not now be acted on over the summer as planned
Trains: The legislation to set up Great British Railways was already going slowly. Now it is on hold until further notice.
Wind: The last auction round for windfarm licences flopped after the government was too stingy on the price it would pay for the energy produced. The next round, which was expected in the summer, will be more generous but it is now unclear when it will take place.
Data: The Data Protection and Digital Information Bill to relax the rules for companies holding personal data on customers was well advanced through parliament but missed the cut before the dissolution of parliament.
