9 July 2024

WHAT DOES A LABOUR GOVERNMENT MEAN FOR BUSINESS?

The General Election on 4 July saw a Labour Government brought to power, with a 174 majority and enthusiasm to hit the ground running. PM Sir Keir Starmer has appointed his no-suprises Cabinet, and promised that “change begins now.” 

So, what is that change? And specifically, what’s on the cards for businesses up and down the country? Labour’s made a undeniable effort in recent years to befriend business leaders, but will that listening ear translate into pro-business action? 

Although winning parties aren’t necessarily obliged to stick to their manifesto promises, a manifesto is always a strong indication of initial direction. And a chunky majority certainly makes it easier for the Government to get things done, especially when legislation needs to be passed. So, let’s take a look at some of Labour’s manifesto pledges  that might impact the UK print industry:

Industrial Strategy

Echoing calls made by the BPIF, MakeUK and others, Labour will introduce a new Industrial Strategy (and statutory Industrial Strategy Council to inform it). A policy paper published in September 2023, ‘Prosperity Through Partnership: Labour’s Industrial Strategy’, provides more detail than the manifesto, setting out the key thinking. In this document, the Party said it would take a ‘mission-based’ strategy, identifying four key missions:

• delivering clean power by 2030 

• harnessing data for public good 

• caring for the future and

• building a resilient economy (including strengthening the resilience of supply chains).

In the same paper, the party said it plans to take a ‘cross-sectoral approach, one that recognises that the different sectors of the economy are inextricably interlinked.’ It criticised previous Conservative Government policy that ‘picked winners’ by identifying high-value-added sectors and using a range of subsidies and investments to drive their growth.  Labour’s plans are instead for a robust set of horizontal policies and institutions to support growth - like strong public infrastructure and world-leading education – that set the general conditions for all businesses across the economy to thrive. It calls this approach ‘picking challenges’, unlike the ‘picking winners’ industrial strategies of the past.  

Particularly relevant for print may be the intention to add resilience to supply chains. Recognising the impact of external shocks such as pandemics and global conflicts, Labour says it wants to avoid situations in which businesses must stop or divert production when key inputs are unavailable, in short supply or become more expensive. It further states it recognises the role Government has to play in responding to these low-probability, high-impact risks. To this end, a ‘supply chain taskforce’ will review supply chain needs, reduce dependency on hostile states and diversify supply chains, including practical fixes to trading relations with the EU.

The Industrial Strategy Council will report to both Government and Parliament and will be a full-time expert body, supported by a board of advisers from across regions and sectors. It will set targets and assess the progress of the Government’s industrial strategy. 

Since the last Conservative industrial strategy fell by the wayside several years ago, the BPIF has long-recognised the need for an effective replacement, including in our 2024 General Election manifesto. In line with what Labour has promised, the Fed called for a strategy which supports industries across the board, instead of favouring certain sectors or regions. The formation of an Industrial Strategy Council should be a good opportunity to feed in to the thinking and it’s encouraging that Labour seems committed to working with business representatives. We will aim to be a part of that process, either directly or via our input into bigger associations such as MakeUK, the CBI, etc. 

Business rates reform 

Labour’s manifesto says ‘the current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets. In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship.’ The Federation called for an evaluation of business rates as part of a wider review of the business environment for SMEs, so this is a promising pledge. However, it’s not clear yet how business rates reform will look and, needing in-depth consultation, it’s unlikely to be an overnight process. High-street print businesses could be set to benefit though.

Business taxation

Labour’s committed to not increasing Corporation Tax, capping it at the current rate of 25% (over £250,000) for at least the next five years, and has promised a roadmap for business taxation before making any additional changes. They’ve also promised just one major fiscal event per year - presumably planning only a Budget and scrapping the Autumn Statement - in an attempt to provide more certainty for business. Full expensing for capital investment will stay in place.  

Making work pay

Labour plans to implement its ‘making work pay’ plans within 100 days following the election, as set out in its May 2024 document, ‘Make Work Pay: Delivering A New Deal for Working People’. It’s likely the bulk of the pledges will form of an Employment Rights Bill, to be included in the King’s Speech on 17 July. Some of the key proposals include:

• Mandatory wages:
• Labour will change the remit of the Low Pay Commission (which advises the Government on NMW and NLW rates) to include cost of living considerations. This could feasibly kick in immediately and could see the LPC’s recommendations for the April 2025 levels creep higher, a likely concern for the print industry, as outlined in our submission to the LPC’s recent consultation. 
• It plans to scrap the NMW age band for 18-20 year olds in order to attract this age group into work. However, this will undoubtedly increase labour costs for businesses with large numbers of younger workers and potentially provide a disincentive to hire those in their late teens. It’s unclear yet whether this will be done swiftly or following consultation. 

Employment law reforms 

A number of changes here for employers to be aware of, though of course we’ll update when timings become clearer. Several existing employee rights are to be brought forward as available from day one of employment, and there’s a further set of changes too.

Post-Brexit trade 

Labour’s manifesto promises to ‘reset the relationship and deepen ties’ with Europe, but clearly states ‘there will be no return to the single market, the customs union, or freedom of movement.’ However, in an intereview with the Financial Times a few days after the manifesto’s publication, now-Chancellor Rachel Reeves added some insight to the ‘reset’, suggesting that a Labour Government would place less insistence on regulatory divergence and approach relations with a less adversarial attitude than the previous Government. On Saturday 6 July, Foreign Secretary David Lammy was already on a flight to Berlin to “start reconnecting with the world”, he told reporters. It’s not clear yet how this might translate into the removal of non-tarriff barriers, not least paperworks and checks, outside of agri-food and touring musicians.

Further business proposals

• Late payment: Labour has promised to ‘take action on late payments to ensure small businesses and the self-employed are paid on time’, though it’s not yet clear what form that action will take, following years of successive tweaks from the Conservatives. The vagueness leaves scope for input though, and no doubt there’ll be another consultation. Read our views here. 

• Access to finance: Labour’s promised a reform of the British Business Bank, setting additional KPIs for its regional funds to ensure they’re providing access to SME financing.  

• Local Growth Plans: The manifesto promises a new statutory requirement for Local Growth Plans that cover towns and cities across the country. The idea is that local authorities will work with an area’s major employers, universities, colleges, and industry bodies to establish long-term plans for growth that align with the national industrial strategy.  

The King’s Speech on 17 July will make clearer Labour’s legislative intentions for the first year of its administration, so check back next week for an update.