Family Business Insights: Election Special – Issue #12

With the General Election only a few weeks away, most polling shows a majority Labour government. In this week’s newsletter, we offer a broad overview of key issues which businesses can expect from Labour.

What Can Businesses Expect from a Labour Government?

As the UK approaches a potential transition in government, with most polling anticipating a sizeable Labour majority, businesses are keenly interested in understanding the implications of a Labour victory on several fronts: business growth, employment and skills, commercial and property issues, and taxation. This article explores some areas based on Labour's published plans and recent communications.

Business Growth

Labour’s approach to business growth is anchored in its broader economic vision, prioritising sustainable economic growth and innovation. The party has pledged to create a supportive environment for small businesses, which they describe as the "beating heart" of the economy. Their policies aim to address the unique challenges faced by SMEs, which include access to finance, late payments, and navigating complex regulations.

One of Labour's significant involves substantial public investment in green technologies. This plan is expected to inject up to £28 billion annually into the green economy, fostering innovation and creating new market opportunities for businesses across various sectors. Additionally, Labour plans to boost small business exports by improving market access and providing better support for international trade efforts.

Employment and Skills

Labour’s employment policies focus on enhancing worker protections and addressing skills shortages. Key proposals include granting day-one rights for employees concerning sick pay and protection against unfair dismissal and banning zero-hours contracts.

To tackle the skills gap, Labour plans to establish Technical Excellence Colleges tailored to local economic needs, ensuring that training programs are aligned with the demands of businesses in those areas. This initiative aims to provide a steady pipeline of skilled workers and support regional economic developement. The party also proposes transforming the current Apprenticeship Levy into a more flexible Growth and Skills Levy, enabling businesses to address their specific training needs more effectively.

Commercial and Property Issues

Labour has identified the need for significant reforms in commercial and property sectors to spur growth and development. Their plans include:

1. Scrapping Business Rates: Labour proposes to replace the current business rates system with a fairer model that alleviates the tax burden on brick-and-mortar businesses and better supports high street shops.
2. Revitalising High Streets: The party intends to implement measures to rejuvenate high streets, such as tackling anti-social behaviour, taking over long-term vacant shops to lease to new businesses, and improving safety and footfall in local commercial areas.
3. Planning Reforms: To facilitate the construction of new homes and commercial properties, Labour plans to reform the planning system. This includes hiring additional planners to expedite decisions and increasing grid capacity to support new developments. These changes aim to overcome the current bottlenecks in the system that hinder growth.

Taxation

The party has committed to capping corporation tax at 25% while maintaining essential tax reliefs such as R&D tax credits and the patent box regime. This approach is aimed at providing stable and predictable tax environment.

Additionally, business property relief will seemingly be maintained within the inheritance tax regime. Finally, Labour plans to introduce measures to tackle tax avoidance and close loopholes balancing these efforts with the need to attract private investment.

Conclusion

Labour has been at pains to emphasise the importance of business growth, enhancing employment and skills, addressing commercial and property issues, and limiting tax changes as key benefits for businesses.

Rachel Reeves' Speech to Business Leaders at Rolls Royce

Some key insights can be gleaned from Rachel Reeves, the Shadow Chancellor’s speech to business leaders at Rolls Royce on May 28, 2024. Reeves outlined Labour's vision for economic stability and growth. With the general election just four weeks away, Reeves presented Labour as the natural party for British business, emphasising a break from the instability of recent Conservative governance. Her address highlighted Labour’s commitment to economic stability, investment, and reform, positioning the party as a partner for businesses seeking long-term growth and prosperity. This article considers the key takeaways from Reeves' speech and what they mean for businesses across the UK.

Key Takeaways

1. Labour as the Natural Party for Business Reeves positioned Labour as the new ally for British businesses, stating that the party has transformed under Keir Starmer's leadership to become pro-worker and pro-business. She emphasised the importance of a stable partnership between government and business to foster economic growth and prosperity.

2. Critique of Conservative Economic Management Reeves criticised the Conservative government's handling of the economy, attributing the UK's heightened exposure to global crises to poor domestic policy decisions. She highlighted the chaos and instability caused by the Conservatives, particularly the economic fallout from Liz Truss’s brief premiership.

3. Stability and Certainty Stability was a recurring theme in Reeves' speech. She promised that a Labour government would prioritise economic stability through robust fiscal rules, a new fiscal lock, and a business tax roadmap to provide certainty to businesses. This approach aims to prevent the recurrence of economic shocks like those experienced under the Conservative government.

4. Future Technologies and Green Energy Reeves underscored Labour’s commitment to becoming a clean energy superpower, highlighting plans to invest in green technologies and infrastructure. This includes the establishment of Great British Energy, a publicly owned clean power company, and a National Wealth Fund to attract private investment and drive innovation in renewable energy.

5. Reforming the Tax and Business Environment Labour plans to create a more favourable tax environment for businesses, including capping corporation tax at its current rate for the next Parliament. Reeves also proposed scrapping the current business rates system, replacing it with a fairer model to support high- street businesses.

6. Skills: Labour intends to reform the skills system to meet the needs of a changing economy. This includes replacing the Apprenticeship Levy with a new Growth and Skills Levy, establishing Technical Excellence Colleges, and ensuring that education and training programs align with local economic demands.

7. Planning Reforms Reeves highlighted the need to reform the UK's planning system to facilitate the construction of new homes and commercial properties. Labour’s planning reforms aim to reduce bureaucracy and accelerate development, providing opportunities for small builders and tradespeople.

8. Strengthening UK-EU Relations Labour plans to forge a closer relationship with the European Union to reduce bureaucratic burdens on British businesses. This includes agreements on veterinary standards, touring visas, and mutual recognition of professional qualifications to ease trade and cooperation.

Conclusion

Rachel Reeves' speech at Rolls Royce highlighted key issues of economic stability, growth, and partnership with business. As the election approaches, businesses will be watching to see how these proposals could shape the future economic landscape of the UK, and in particular how they might impact family businesses.

Certainly, family businesses might welcome changes to the apprentice levy and policies to address skills shortages and policies designed to support smaller businesses.

My goal is to provide practical advice and solutions to help your family enterprise thrive. If you have questions on any of the topics discussed in this newsletter, please feel free to contact me.