What is happening?

Closing out this year’s Labour Party Conference, Leader of the Opposition Keir Starmer set out his idea of what a Labour government would look like. Whereas his predecessor, Jeremy Corbyn, was most enthused by businesses when talking about nationalisation, Starmer set a rather different tone. 

Respect was a word Starmer used often in his closing speech and it is the word he wants businesses to associate most closely with his leadership. Earlier in the week, Starmer told a forum of over 200 businesspeople: “I don’t think we can do your job better than you can and I don’t think we should try.” 

Respecting businesses has become a focal point of Starmer’s campaigning, in part driven by his, and his shadow Chancellor Rachel Reeves’, lack of appetite for significant tax increases. Without scope to increase government revenue by raising taxes, the Labour leader would rely on business growth increasing government revenue at the same rate of tax to support his spending plans. 

Polis spoke with an advisor to a shadow Labour minister, who highlighted that Starmer’s redirection of the UK’s opposition has, for the first time in a long time, created a genuine sense of mutual respect between the Shadow Treasury Team and the UK business community. 

It is not just by promising to listen to businesses that Starmer is hoping to win them over, though. The Labour leader is also keen to push his agenda of “a decade of national renewal”, investing and leveraging private investment in domestic industries and facilitating infrastructure projects. Shadow Chancellor Rachel Reeves put money to the mouth of the agenda in the form of a national wealth fund. 

Starmer has also promised business rate reforms to modernise the system, particularly as part of his plan to rejuvenate high streets. 

However, perhaps none of this is the fundamental explanation behind a recent Savanta poll, which found that of 1000 senior business executives, 45% believe a Labour government would be best for business, with only 32% saying the same about the Tories. 

Perhaps a separate Savanta survey, which found voters most likely to associate Starmer with the word ‘boring’ is where his true strength with business lies. 

Boring is a word rarely used to describe the government in recent years, the role of Prime Minister having changed hands and ideology five times in seven years. Recent roll backs of Net Zero targets from Prime Minister Rishi Sunak are some examples of the type of instability and uncertainty that give businesses pause for thought before considering investment in the UK. 

Stability was a word mentioned seven times in Starmer’s conference speech, and he will hope his ‘boring’ reputation brings with it the requisite stability to increase business investment. 

An advisor to a shadow Labour minister told Polis that Starmer’s ‘bomb-proofing’ of Labour’s policy is not just short-term election strategy, but is critical in creating a stable investment landscape for the entirety of his ‘decade of national renewal’. 

They also highlighted the value of Labour’s conference speaking as one voice, generating further credibility to Labour’s positioning as the party of strong and steady leadership. 

At the same time, Starmer’s speech did not abandon his party’s ‘New Deal for Working People’, stating that he would: outright ban zero-hour contracts, enforce a real living wage, outlaw ‘hire and fire’ practices, and commit to broader strengthening of workers’ rights. Much of Starmer’s speech concerned improving working conditions for people, though he was very cautious to frame such policies as positives for both growth and business.

What is in it for you?

In a conference deliberately light on concrete policy, the gig economy has come away with the most questions about a potential Labour government after the next election. Companies and workers who currently rely on zero-hour contracts will wonder what the nature of banning such contracts would look like, and how drastic adaptations will be following Starmer’s reforms.

Starmer has repeatedly called for his shadow cabinet to listen to and ‘meaningfully’ consult with businesses, along with insisting that "private enterprise is the only way this country pays its way in the world.” As such, those in the gig economy may have to play an active role in shaping what regulation of their industry looks like under a Labour government.

Though not abandoning last year’s ‘New Deal for Working People’, Starmer’s approach this year has clearly veered towards appeasing industry. Last year Starmer claimed he would give all members of the workforce except the “genuinely self-employed” the legal status of ‘worker’.

Doing so would have given all employed people, including gig economy workers such as Deliveroo drivers, the same employment rights and protections, such as sick pay, paid parental leave, and protection against unfair dismissal. 

This year, however, his approach was a slightly more ambiguous commitment to consult on implementing “a simpler framework” for differentiating between types of work. Again, this means that the future of many flexible types of work are likely to be dependent on consultation with industry.

Across the economy, many industries will be excited by Starmer’s promises to fund battery gigafactories, low-carbon steel, and expanded ports. A blended-finance national wealth fund consisting of government and private finance would provide growth opportunities for businesses working in green technologies and national infrastructure.

However, Polis spoke with a long-standing finance executive, who questioned whether financial institutions would trust the government to make more effective investment decisions than the private sector. Further questions were raised around how the government would be able to support its own investment obligations to the national wealth fund given preexisting unsustainably high debt to GDP. As such, Starmer’s flagship policy for business could pose challenges to relations between the government and the UK’s financial institutions.

Small businesses, who consistently rank business rates as one of their biggest challenges, may expect rates reform promises to have a significant impact on their future. Small businesses with physical premises may expect lower rates, as Starmer attempts to rejuvenate high streets. 

However, the rates cuts for small businesses would be funded by increasing the Digital Services Tax, meaning larger online based businesses would be paying more.

What happens next? 

With the promise of reforms across many aspects of business, a Labour government would present businesses with many changes, for better or worse. The last year has seen Starmer’s policies fluctuate, but one thing that has remained constant is his desire to engage with, and win over businesses. 

Whether such a desire would persist once elected remains to be seen, but businesses should rest assured that commitments to work in partnership with them would present genuine opportunities to voice their opinions on reforms and legislation. 

Changes to business rates could represent a rare opportunity for businesses to see material improvements to their daily operation.

Changes to the gig economy could present new opportunities for smaller businesses in the industry to have their voices heard. 

Changes to employment rights will require the voices of business to make sure they work for everyone. 

Changes to the Digital Services Tax will present risks to online businesses that they must get ahead of. 

If you would like to benefit from political intelligence services that would allow your voice to be heard by a potential Labour government, reach out to Polis Analysis through our email at hello@polisanalysis.com.