Government Affairs

Welcome to the Government Affairs pages.

With the General Election campaign heating up, we’ll be using this page to provide the FLA’s daily briefing on the latest developments, including manifesto launches and intel on what those policy positions mean for our markets.

 

UK Election - 21 days to go...

13 June 2024

white boxLabour

The Labour Party has today launched its Change manifesto, promising to deliver economic stability and growth, and to make Britain a clean energy superpower. 

Economic policy 

Labour’s economic policy will be characterised by tight fiscal policy and no increases in National Insurance; the basic, higher, or additional rates of Income Tax; nor VAT. They promise to modernise HMRC and change the law to tackle tax avoidance – large business will be a key target. 

Economic policy shall be boosted via:

  • Delivery of economic stability with tough spending rules
  • A new partnership with business to boost growth everywhere
  • A National Wealth Fund to invest in jobs
  • Planning reform to build 1.5 million new homes
  • Devolution of power across England
  • A New Deal for Working People

Industrial policy 

Labour’s industrial strategy will be mission-driven and conducted via a sectoral approach, including advanced manufacturing. An Industrial Strategy Council will be put on a statutory footing to provide “expert advice.” The strategy will be supported by “a pro-business environment, with a competition and regulatory framework, that supports innovation, investment, and high-quality jobs.” AI is cited as a key sector for development. 

A £7.3 billion National Wealth Fund will seek to attract £3 of private investment for every £1 of public outlay. £1.5 billion will be allocated to build gigafactories which will benefit the automotive industry. £500 million will support the manufacturing of green hydrogen.

Business Taxation/Investment 

A Labour Government will publish a roadmap for business taxation for the next Parliament to provide certainty for businesses, something the FLA has called for. Corporation tax will be capped at the current level of 25 per cent for the entire parliament. In line with FLA campaigning, Labour will retain a permanent full expensing system for capital investment [There was no reference to the inclusion of leasing, however we have discussed this proposal with Shadow Ministers prior to the election] and the annual investment allowance for small business. Firms will be provided with greater clarity on what qualifies for allowances to improve business investment decisions. 

Reform of the British Business Bank, including a stronger mandate to support growth in the regions and nations, will, according to the document, make it easier for small and medium sized enterprises to access capital. 

A ten-year infrastructure plan will guide investment decisions, including better connectivity with the North of England. 

Labour will reform the points-based immigration system so that it is fair and properly managed, with appropriate restrictions on visas, and by linking immigration and skills policy. 

Automotive 

As set out in its automotive sector plan, Labour will support the transition to electric vehicles by accelerating the roll out of charge points, giving certainty to manufacturers by restoring the phase-out date of 2030 for new cars with internal combustion engines, and supporting buyers of second-hand electric cars by standardising the information supplied on the condition of batteries. 

Energy/Net Zero policy 

At the heart of Labour’s energy policy, is the establishment of Great British Energy and warmer homes to “slash fuel poverty”. Great British Energy will partner with industry and trade unions to deliver clean power by co-investing in leading technologies; will help support capital-intensive projects; and will deploy local energy production to benefit communities across the country. To support this, Labour will capitalise Great British Energy with £8.3 billion, over the next parliament. 

The Warm Homes Plan will offer grants and low interest loans to support investment in insulation and other improvements such as solar panels, batteries and low carbon heating to cut bills. They will partner with combined authorities, local and devolved governments, to roll out this plan. Labour will also work with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. They pledge to ensure homes in the private rented sector meet minimum energy efficiency standards by 2030, saving renters hundreds of pounds per year. Nobody will be forced to rip out their boiler as a result of their plans. 

To deliver its clean power mission, Labour will work with the private sector to double onshore wind, triple solar power, and quadruple offshore wind by 2030. They plan to invest in carbon capture and storage, hydrogen and marine energy, and ensure long-term energy storage capacity. A new Energy Independence Act will establish the framework for Labour’s energy and climate policies. 

Financial services will be an important part of the delivery. “Britain’s world-leading financial services industry has a major role to play in mobilising trillions of pounds in private capital to address the greatest long-term challenge of our age. Labour will make the UK the  green finance capital of the world, mandating UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.” 

Brexit 

The manifesto states that a Labour government would reset the relationship with the EU to “make Brexit work” and rules out membership of the Single Market, Customs Union or freedom of movement. 

Regulation 

Labour wishes to create the conditions to support innovation and growth in the sector, through supporting new technology, including Open Banking and Open Finance and ensuring a pro-innovation regulatory framework. It will therefore create a new Regulatory Innovation Office, bringing together existing functions across government. This office will help regulators update regulation, speed up approval timelines, and co-ordinate issues that span existing boundaries. No reference is made to CCA reform as was the case in Labour’s financial services plan earlier this year so we will impress the urgency of this upon an incoming Labour Government. 

Plaid Cymru 

Plaid Cymru have published For Fairness, For Ambition, For Wales. Evidently, its focus is what it can offer the Principality. Some points to note include the: 

  • Re-introduction of the cap on bankers’ bonuses.
  • UK rejoining the European Single Market and Customs Union at the earliest opportunity.
  • Creation of a Welsh Green New Deal with the re-skilling at the heart of this policy. Net Zero would be supported via the establishment a Just Transition Commission.
  • Introduction of a Right to Adequate Housing
  • Publication of a Green Paper on the path to Independence

 

UK Election - 22 days to go...

12 June 2024

Ed

 

 

Today, the Green Party launched their Real Hope, Real Change manifesto

On housing, they favour the introduction of a ‘Right Price Charter’ to create more affordable homes, allied with 150,000 more social housing units every year, along with rent controls. They are also calling for local-authority-led, street-by-street retrofit programmes to insulate homes and provide clean heat. 

 For a Green Economic Transformation, they advocate: 

  • £40bn investment per year (paid for by extra borrowing, a wealth tax and Capital Gains Tax reform) in the shift to a green economy over the course of the next Parliament.
  • A carbon tax to drive fossil fuels out of our economy and raise money to invest in the green transition. 

Green MPs will push for: 

  • £12.4bn investment in skills and training, equipping workers to play a full role in the green economy.
  • A share of community ownership in local sustainable energy infrastructure such as wind farms. 

To support SMEs, Green MPs will press for: 

  • Regional mutual banks to be set up to drive investment in decarbonisation and local economic sustainability.
  • £2bn per year in grant funding for local authorities to help businesses decarbonise.
  • Community ownership to be encouraged through greater access to government funding in the transition to a zero-carbon economy. 

No mention was made of electric vehicles with the focus rather on improving the railways, buses and cycleways.

 

 

UK Election - 23 days to go...

11 June 2024 

skyline

 

Launched today, the Conservative manifesto focuses on tax cuts, including to national insurance, with a long-term plan to abolish it for the self-employed. There is also a promise to cut stamp duty for first-time buyers for properties valued at up to £425,000.

The Conservatives pledge to not increase corporation tax and have included a commitment to extend “our ‘full expensing’ policy to leasing… once the fiscal conditions allow.” This is a welcome mention for one of the FLA’s flagship policy recommendations as per our manifesto

 Other Conservative commitments to business include: 

  • Keeping the VAT threshold under review and explore options to smooth the cliff edge at £90,000.
  • Improving access to finance for SMEs including through expanding Open Finance and by exploring the creation of Regional Mutual Banks.
  • Retaining key tax incentives that encourage small businesses to grow, though none of the schemes listed are relevant for FLA markets.
  • Ensuring that Basel III capital requirements do not inhibit lending to SMEs, which is something the FLA has advocated.
  • Continuing our world leading programmes including the Invest in Women Task Force and the Lilac Review to encourage more female and disabled entrepreneurs.
  • Working with the British Business Bank and private sector fund managers to secure a £250 million Invest In Women Fund to support female entrepreneurs.
  • Retaining the UK’s prominence as “the world’s innovative and competitive global financial centre”
  • Maintaining the “highest standards of consumer protection and prudential standards.”

 A Conservative Government will: 

  • Create 100,000 more apprenticeships in England by the end of the next Parliament.
  • Establish more Freeports and continue to back Investment Zones.
  • Extend the post-Brexit Shared Prosperity Fund for another three years to the benefit of the devolved nations.
  • Will introduce a binding, legal cap on migration “at a level that explicitly takes into account the costs and the benefits of migration.” The cap will fall every year of the next Parliament and cannot be breached and the level of the cap shall be subject to an annual vote in Parliament. 

The Conservatives remain committed to achieving Net Zero by 2050 but will do so in a “pragmatic and proportionate” way which “eases the burdens” on people, for example by not forcing them to install a heat pump. They will guarantee a vote in the next Parliament on the next stage of the pathway, with adoption of any new target accompanied by “proper consideration” of the plans and policies required to meet the target. They rule out further green levies and nor will they introduce road pricing. They pledge to reverse the expansion of the London ULEZ and to not impose 20mph speed limits (though localities may do so via referenda) 

The “world-leading” automotive industry is mentioned in the context of the “unprecedented” competition it faces from China in the electric vehicles market. A Conservative Government would support domestic car manufacturers “if there is evidence other countries are breaking global trade rules.”

 

 

UK Election - 24 days to go...

10 June 2024 

ED2

From the FLA’s perspective, the Liberal Democrats’ manifesto ‘For a Fair Deal’, contains some ideas which mirror points we’ve made in our deliberations with them. The role of the British Business Bank will be expanded to ensure SMEs have access to capital and it will support economic partnerships to boost growth, including through collaboration with the major banks to fund the creation of a local banking sector dedicated to meeting the needs of small and medium-sized businesses. In a move that will upset larger banks, they would like to “restore the Bank Surcharge and Bank Levy revenues to 2016 levels in real terms.” 

The Lib Dems will launch an “ambitious” industrial strategy, including re-establishing the Industrial Strategy and putting it on a statutory footing. There is a concerted focus on investment in green infrastructure which features a pledge to introduce a general duty of care for the environment. In line with the FLA’s manifesto, they call for a “clear and stable roadmap to net zero.” Specifics on the green agenda include:

  • A ten-year emergency upgrade programme to ensure homes are warmer and cheaper to heat, starting with free insulation and heat pumps for those on low incomes, and which also ensures that all new homes are zero-carbon.
  • Providing incentives for installing heat pumps that cover the real costs.
  • Expanding incentives for households to install solar panels, including a “guaranteed fair price” for electricity sold back into the grid.
  • Make it cheaper and easier for drivers to switch to electric vehicles by rapidly rolling out far more charging points, reintroducing the plug-in car grant, and restoring the requirement that every new car and small van sold from 2030 is zero-emission.
  • Cutting VAT on public charging to 5%.
  • Invest in renewable power so that 90% of the UK’s electricity is generated from renewables by 2030.
  • Appoint a Chief Secretary for Sustainability in the Treasury to ensure that the economy is sustainable, resource-efficient and zero-carbon.
  • Establish a new Net Zero Delivery Authority to coordinate action across government departments and work with devolved administrations, and hand more powers and resources to local councils for local net zero strategies.

On the economy, the focus will be to “invest in renewable power and home insulation to drive a strong economic recovery, bring down energy bills and create clean, secure, well-paid new jobs.” More investment will be put into apprenticeships and new Lifelong Skills Grants. The Lib Dems also pledge “to support entrepreneurs, back small businesses, and reform business rates to help our high streets.”

The Lib Dems would introduce a national financial inclusion strategy and require both the Financial Conduct Authority and the Prudential Regulation Authority to have regard to financial inclusion, such as delivering Sharia-compliant student finance and supporting vulnerable consumers. Consumers will be empowered by a new data strategy with the introduction of a requirement for all products to provide short, clear versions of their terms and conditions and ‘key facts’ in relation to peoples’ data and privacy.

They would introduce proportional representation, not only for Westminster but local councils too. They are keen to mend the “broken” relationship with the EU.

 

 

 

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