Labour’s general election manifesto “A time for real change” promises some eye catching and far reaching changes with a focus on the climate emergency, addressing regional inequalities and increasing research and development (R&D) spending. For businesses of all sizes the manifesto puts out a vision of a future with more efficient (and less costly) transport, the prospect of greener – if not cheaper – energy and a structure of state support for “green investment” intended to support the UK’s transition to net zero emissions.
Commitments around the green industrial revolution in the manifesto go beyond investment. There is an interesting promise to ask the government spending watchdog, the Office for Budget Responsibility to extend its evaluation of policy decisions to include climate and environmental impacts into its forecasts. More controversial, perhaps, is the suggestion that companies failing to contribute to tackling climate change may be delisted from the London Stock Exchange.
A National Investment Bank is proposed, to be backed by regional development banks and so-called Local Transformation Funds. These will support £250 billion of investment in enterprise, infrastructure and innovation over a decade.
This type of regional investment in infrastructure and business development will be much welcomed by firms in northern and more peripheral areas of England struggling with aged transport infrastructure. Plans for new apprenticeships and revisions to the existing apprenticeship levy system might also be welcomed by many smaller firms.
Also trailed widely in the press was a commitment to extend “full-fibre broadband free to everybody in every home in our country” through a new public agency. For rural businesses struggling with poor broadband speeds at the moment it will seem surprising that this commitment is limited to domestic properties and does not extend to “every business”.
Nationalisation has been a key theme of Labour’s public rhetoric to date and as expected the manifesto includes the commitments to nationalise rail, mail, water and energy. The implications of this for the businesses themselves and their millions of shareholders are huge.
Many people might welcome the prospect of lower rail fares and perhaps a more integrated national service but the effects on capital markets and pension funds are also likely to be profound. Critically, a lot would depend on how and over what timescale changes in ownership were undertaken.
Much needed investment
Other types of support for industry are also highlighted in the manifesto. A commitment to supporting investment in R&D of 3% of GDP by 2030 represents a sharp shift upwards of the current target of 2.4% by 2027. R&D investment levels in the UK are currently around 1.7% of GDP – a level which has remained consistent over the last decade despite. R&D investment is crucial for economic growth. But the 2.4% target was already a stretch so Labour’s 3% may well be over the horizon.
At the same time the setting up of a Foundation Industries Sector Council, with a rather uncertain mission, suggests continuing investment in more traditional sectors. The automotive industry also attracts some specific promises around gigafactories to produce batteries for electric vehicles, as well as metal and plastic recycling facilities. Who will own these or where the investment is coming from is less clear. But the aspiration is a brave one and probably necessary if the UK is to retain its position with the global auto industry.
The manifesto is perhaps unsurprisingly dominated by the big picture, with the economic emphasis on nationalisation and climate change. Those owning, running or working in small businesses – around 60% of the UK’s workforce – will need to look elsewhere for much comfort. Small businesses get scant mention in the whole manifesto and attract few specific promises.
Among them are a commitment to a retail strategy and review of business rates, but nothing specific here. The proposed Post Bank, the manifesto says, will be a feature of the newly-public Post Office. It is designed to “ensure every community has easy access to affordable banking”. One interesting suggestion is a Business Development Agency as part of the Post Banks to provide free support and advice for new businesses.
All in all, Labour has developed a bold and ambitious manifesto. The proposals pose significant administrative and regulatory challenges but if carried through they would significantly reshape Britain’s business landscape.