For businesses, the proof is now in the pudding

We have known for some time that any 2024 UK General Election intrigue would be centred around the scale of Labour’s victory.

And it’s much as-predicted.

The ‘ming vase’ strategy got the job done for Sir Keir Starmer and Labour, delivering a historic majority and a mandate for change. 

But, as the dust settles on this historic election in the days and weeks to come, Starmer and Reeves will not have much time to let the reality of a first Labour government in 14 years sink in. 

Public expectations are not sky high. This was a vote to remove a tired government that had run out of chances after perhaps the most turbulent few years in living political memory, rather than a ringing endorsement of Labour’s plans. Voters did not flock to Starmer as they  did to Tony Blair in 97; in fact, Starmer won a lower vote share than Jeremy Corbyn in 2017 – a result which left the Labour Party in opposition. 

Ironically there may be more hope and expectation among the business community. Deserting their traditional preference for Conservative government, businesses have been crying out for consistency and stability, and in recent months have been on the receiving end of a powerful sales effort from Starmer and soon-to-be Chancellor, Rachel Reeves. 

Business is already watching closely to determine whether Starmer and his top team represents just a change in personnel or in the policies and actions that matter to them. 

Long-time Conservative donor and billionaire John Cauldwell’s very public backing of Labour was the most telling example of a thirst for change. Business has, of course, recognised the inevitability of the polls and acted accordingly, but Reeves’s “stability is change” message seemed to resonate, and the expectation of better days ahead feels genuine. 

Top of the watchlist will be Reeves delivering on her promise to lead the “most pro business and pro growth Treasury ever”. Naturally, this is a welcome commitment for executives, but under the party’s self-imposed fiscal rules there is limited room for manoeuvre. 

If Labour means business, the party will need to get to work quickly. 

Those self-imposed fiscal rules leave the new government to a large extent relying on economic growth to transform the country’s economic trajectory. But rarely is governing that straightforward, as we have seen in recent years. 

Labour and the country’s new Chancellor will need to match rhetoric with rapid action, using all the levers available to build momentum for the next five years. 

Planning seems the most obvious test case for this. If Labour is serious about tackling the country’s planning deadlock, it will need to introduce controversial reforms within the first six months of this government in order to realise some of the economic benefits by the end of the parliamentary term. 

More broadly, can (yet another) industrial strategy quickly set the groundwork for the UK to embrace AI and the sectors of the future – nurturing jobs in high growth sectors?

Borrowing significant amounts to invest has been ruled out. Reeves, alongside Business Secretary Jonathan Reynolds, will need to galvanise private sector investors across those priority sectors. It remains to be  seen what impact increased taxes on ‘carried interest’ - private equity bonuses - will have on a willingness to lean in.

Looking at opportunities presented by net zero, after abandoning the £28 billion annual green energy investment commitment, will Ed Miliband have the financial muscle to deliver his promise of matching the ambition of the EU and U.S on green energy investment?

And what about an improved relationship with the EU? BOLDT colleagues in Brussels and across the member states may see the bloc’s leadership wrangles and French elections as more significant events this week, but business will want Starmer to smooth relations and arrangements with the country’s closest trading partner in short order.

Again, Starmer has limited his room for manoeuvre here – but can he make progress on chemicals regulations, financial services and climate regulations, all without rejoining the customs union or single market?

Labour MPs on the airwaves this morning were on-message – the British people have trusted us, now we need to get on and deliver quickly. Starmer himself acknowledged that it was “time for us to deliver”. 

Business should give the new ministers some (not much) breathing space, but leave Rachel Reeves, Jonathan Reynolds and co in no doubt what the priorities are. Utilising existing relationships with senior civil servants and policy teams is key to this – new ministers will be guided by their ‘experts’ in the coming weeks, and the messages they convey about interests or positions matter.

Labour’s honeymoon period will need to be over before the Tory soul-searching begins. New Secretaries of State will receive their day 1 briefings today, and business will want to see clear signals of intent, quick-win policy changes and a flurry of consultations and conversations to get the machinery of government delivering on the promises made on the campaign trail. 

Now out of government, former Prime Minister Rishi Sunak will seek to steady his ship. For the Conservatives the post-mortem began before the campaign had started, with a number of senior figures seeking to position themselves as Sunak’s successor-in-waiting rather than supporting the PM. Ultimately Sunak’s gamble to go early hasn’t paid off, and the party’s central office has quite a job on his hands to unpick the errors of a failed campaign marred by a steady stream of own-goals. 

After a period where many businesses have distanced themselves from the government, often frustrated at a lack of consistency and stability, there will be an expectation of increased engagement and collaboration. Public affairs and corporate communications teams will likely be challenged to respond. Labour has promised change – the way that business and government collaborate may well be changing too.

Stephen Kelly, Associate Director, London