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UK General Election: How will London businesses react to Sunak and Starmer policies?
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Oct 7, 2024
Bonds & Ballots return for the road to the UK General Election, where the host, City A.M.'s chief city reporter Charlie Conchie, is joined by senior political reporter Jessica Frank-Keyes and Herbert Smith Freehills's head of UK employment Andrew Taggart to discuss everything that has happened during the debate between Rishi Sunak and Keir Starmer and how it will affect businesses across the city. Read more of the story here 👇 https://www.cityam.com/election-2024-five-things-we-learned-from-the-itv-sunak-starmer-debate/ Get more of City A.M. 👇 🌐 http://www.cityam.com X(formerly Twitter): http://twitter.com/CityAM Facebook: http://www.facebook.com/cityam Instagram: http://www.instagram.com/city_am LinkedIn: http://www.linkedin.com/company/cityam #london #generalelection #rishisunak #keirstarmer #conservativeparty #labourparty #conservative #labour #tories #itv #leadersdebate #politics #analysis #uknews #news #trendingnews #trending #business #businessnews #businessgrowth #election
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0:00
It has been a very busy first two weeks on the campaign trail, lots of news to pick over
0:06
lots of detail to digest. I'm Charlie Conchie, Chief City Reporter at City AM, back with Bonds and
0:12
ballots, an election relaunch of bonds and ballots where every Friday will be picking over
0:16
some of the news of the week and particularly some of the detail for business. And I'm very
0:20
pleased to be joined by my colleague, our political guru, Jess Frank Keyes, to pick over, do a bit
0:26
of a post-mortem on the week so far. The two weeks, that have come before. How has it been so far for you? Oh, it's been busy and there's still four
0:33
weeks to go. So, yeah, bring it on. Let's get into some of the details so far. We're speaking on the
0:38
morning after the debate. We've seen a bit of a post-match ysis already. Some polls had it 51
0:44
49 in favour of SUNAC. What were your first impressions coming away from that? Was it the
0:50
punch-up you expected? Well, it was a big moment on the campaign trail for both parties
0:55
both party leaders, and for a lot of people in the country who don't follow politics quite as obsessively
1:00
as some of us are lucky enough to do, it will have been maybe their first real encounter with, you know
1:04
who is Kirstama? I think we're all a bit more familiar with Rishi Sunak based on COVID press conferences, furlough
1:10
you know, all these things that have gone on over the past few years. But for some people, Labour are definitely a bit more of an unknown quantity
1:16
and that's reflected in business as well, I feel. But yes, definitely a bit of a punch-up
1:23
It was a feisty debate. They were, I think I put it as they weren't quite tearing chunks
1:28
but maybe nuggets out of each other. So, yeah, policy-wise, they had a lot to introduce – well, Kirstama had a lot to introduce to
1:36
voters, but – Lots of – my dad was a toolmaker. There was a back story
1:41
There was a pebble dash semi in there, I think, or if not, I've heard it. I've heard it one too many times
1:46
But, yeah, I think one thing that did strike us, and we were discussing this earlier
1:50
was a bit of an absence of a coherent economic business tax focus there
1:56
Because when you've got this debate, you know, this is on ITV prime time, this is talking
1:59
into the ordinary voters and it's about that broad-based appeal. And I think we may see a lot more policy emerge as the manifestos are launched
2:09
and you really get into the detail of what the parties are offering to businesses to the city
2:14
The first debate of the campaign is that the moment for it? We're not quite so sure
2:18
Well, there was this interesting figure that has been bandied round a bit today
2:22
It was rolled out by Sunnet last night. This figure that a Labour government would have been £2,000 more tax per house
2:29
hold. That has sort of been contentious today. There's been a Treasury official saying it didn't
2:35
come from us. What are the actual details behind that? Was there any weight to that figure
2:39
This is an interesting one and there has been a real row over this today. It's a bit of a
2:44
complicated explanation, but it's common for party and government can ask the Treasury
2:49
ask government to look at the opposition parties, figures that they're proposing. However
2:55
what's put forward to the government is put together by political advisors for the
2:59
Conservative Party. So they present the Treasury with those policy proposals, the Treasury come back
3:05
with the costings. This is why they're able to argue that they're independent costings
3:09
but are they based on policy proposals which may have been influenced by politics? You see the
3:14
issue here. So they've been presented in an sort of impartial way and then perhaps packaged up
3:21
with a little bit of spin? I'd say so. And I think what a lot of people were pointing out last night
3:25
is Kirstama was a bit slow during the debate to deliver those rebuttals
3:30
we ended up by towards the end of the debate, him calling them absolute garbage
3:33
We had Labour spinners out on the airwaves today and last night, you know, talking about how it's calling Resistina like a liar effectively
3:41
And, you know, it's politics, it's a bit of rough and tumble. You know, they are going to be going for each other like this during the campaign
3:46
but people will have possibly seen it as a bit of a weakness on the Labour side that he wasn't able to get there and deliver that, you know, outright rejection
3:53
It's not the case. I'm not saying that Labor will be putting up your taxes by £2,000
3:58
but Labour have committed to specific tax rises, which was a phrase Kistama used during the debate
4:05
They have outlined what those will be. They have outlined what those will go towards funding, predominantly public services
4:10
But, you know, it's a focus to the side. So a lot of this feels like it's sort of an issue coming out of a vacuum
4:16
We haven't seen a huge amount of detail and it has been filled by allegations suggestions coming from either side
4:22
which we can expect to an extent. But is there that detail actually there yet
4:27
we haven't had manifestos, business particularly has been calling for a lot of detail over the past week
4:32
I've been writing about manifestos from the CBI, the BCC, all calling for various different intricate tax policies, tax plans, closer ties of the EU
4:41
Is the issue fundamentally that we just haven't got the detail yet and we're filling a vacuum
4:46
I think that's right. And I think it speaks to the, we won't call it a snap election because this is coming, you know, very close to the end of a five-year parliament with just six months to go, really
4:56
but the manner in which it was called, it did take people in Westminster by surprise
5:00
And I think you can tell that based on the candidate selections we seen going on over the past two weeks the deadline for the parties to select all of their candidates to stand in all the seats they want to put someone forward in is this Friday
5:12
So they've had a lot to do quite quickly over the last two weeks to get their people lined up into place, you know, websites launched and activists out on the doorstep
5:19
And that's been the real focus for them of this first fortnight of the campaign
5:24
With that deadline passed, we're then edging into, you know, we've got the debates, you know, coming as well on the BBC over the next few weeks
5:30
weeks, but crucially, we'll have the manifestos. And that's where businesses are going to see
5:34
the detail that they want to see the detail that you're talking and writing about. That's not
5:38
to say the parties at this point don't have those policy proposals, that detail. They'll have
5:43
been working on this for months, if not years. It's just that at the moment, things are still quite
5:47
tightly under wraps and, you know, enterprising political journalists everywhere will be
5:51
aiming to get that leak to them as soon as possible. My DMs are very much open
5:55
I mean, we have seen a couple of sort of softly trailed policy proposals, tax policy proposal for the city particularly
6:04
There's a few that have unsettled people. There's a few that Labor is committed to, like not raising corporation tax, for instance
6:10
But I think one of the interesting ones that we've seen discussed a bit about, and there was a hint at it in the debate last night, was this idea of taxing private equity dealmakers, carried interest earned by those privately dealmakers, lifting the rate on
6:25
that. That's something you've been asking Rachel Reeves a bit about in the past few months
6:30
Is that an issue you see becoming a bit of a flashpoint between the Labour Party, particularly
6:35
in the city? That's right. And I think this is one at City and we've covered with some interest
6:41
No pun intended. But yeah, I spoke to Rachel Reeves about this a few, I believe a few weeks
6:46
now, during the mayoral election campaign when Sadie Khan obviously was re-elected in London
6:51
And she was very clear at that stage that Labour were very much committed to
6:55
increasing the rates of interest on private equity bonuses. That's something which is in a bit of a contrast with labours increasingly warm
7:04
lukewarm, warm relationship towards the city, which they've been very much putting out there over the last few months of smoked salmon
7:10
and scrambled egg breakfast and, you know, Jonathan Reynolds going around all the big white-collar firms
7:15
And yeah, really, really making friends there. So it's an interesting one. I think we will see some pushback
7:22
We will see more pushback from the city on this. And I think we will also see a push from Labour's existing or previous voter base
7:30
They're increasingly looking to win the centreground, to win, you know, Middle England voters to come across as not only unthreatening
7:36
but, you know, actively embracing, you know, big business, big corporations. That's been a very important part of their transformation under Kirstama, they would say
7:44
We will see that tension there. And it will be interesting to see how, where did they remain to that policy
7:49
I could see a divorce could be messy. Another sort of policy we've seen from the Labour Party is this plan around workers' rights
7:57
Again, unsettled some segments of the business community. It would mean a big overhaul for some sections
8:04
How has that plan actually landed now and what form has it taken
8:08
Because there have been a few tweaks to that over the past few months. Yeah, absolutely
8:12
This is another interesting one. And I think this is very much something where we've had a lot of heat and light on this
8:18
It's been very visible. and that's been because of meetings that Labor's had with the trade unions
8:24
which are their, you know, their backers, funders in some cases, to get this hammered out and get to a form of words
8:30
which they can get on board with, which also suits businesses and employers
8:34
That's been a crucial part of those negotiations. And yes, we have seen some changes from the time it was first introduced
8:41
They have reached that point, however, and it's been a bit of a oil has been poured on troubled waters for a while
8:45
And I think this has kind of gone back under the surface, but we will very likely, we will see this rearing its head again
8:52
I think at the manifesto stage, because I think it will be, or there will be some form of words in the manifesto alluding to this
9:00
what exactly it will be guaranteeing, promising, you know, we wait and see
9:04
But similarly, if, as many people expect, you know, nothing's for certain yet
9:10
but increasingly the expectation is Labour will enter government, this is a first 100 days commitment for them
9:16
whether that's to introduce legislation to House of Commons, have that legislation passed into law, you know, depends
9:23
We will see. But it's very much going to rear its head again and I think provide another real point of contention for, yeah
9:29
potentially a Labour government. So lots of plans that still need to be ironed out there
9:33
lots of details still to come. But you're right, it's something that city firms, businesses do seem to be a bit nervous about
9:39
And I'm very pleased to say in the next part of this show
9:43
we're going to be speaking with a leading employment lawyer from a city law firm who's going to be taking us through a bit of how companies are actually
9:50
preparing for those plans and practice and what it will mean for businesses across the city
9:55
So, Andrew, the new deal for workers, as it was once called, there's been a few changes to it now
10:01
It seems like it's caused a bit of a brouhaha in the city. Businesses feel like they been a bit unsettled by unions have been angry There been tweaks now to the document a few times Can you just take a sue I suppose what actually have been the sticking points within that and why it has sort of unsettled some businesses The original documents caused some concern
10:20
among businesses because it looked as if it was creating absolute positions. Banning zero-hours
10:27
contracts, definitely no fire and rehire, changes to worker status and they didn't seem to be
10:36
any exceptions. And that would usually cause some concern among business because they want to have
10:41
some flexibility. Of course, that may be a position that the union wanted. It was keen to have
10:46
absolute positions on important areas. The new document, the make work pay document, has some
10:53
flexibility built into it. So it says, for example, in fire and rehire, that that can happen
11:00
where there are genuinely no alternatives. And that's caused some concern and issue
11:06
among the unions. So they say we would have preferred a more absolute position. And so why has this
11:12
come about? I think the government or new government in terms of the Labour Party will want to
11:19
ensure that there is flexibility. It's got to create a partnership between business trade unions
11:25
and the government. And it will have recognised that there needs to be some flexibility
11:30
There's obviously, you touched on there, there's been a political reframing of this almost from the
11:35
outright new deal for workers to suddenly making work pay. And within some of those key elements you
11:41
picked out there. So fire and rehire, for instance, that felt like it came into the public
11:46
consciousness almost through the pandemic, as it became a big issue for business there. What does
11:51
that actually mean in practice firing and rehiring for businesses? And what is this document
11:55
proposing changing? So you're right. It did come about generally through the pandemic. There was
12:01
high profile fire and replace by P&O, and that captured the public imagination and concern
12:10
And the Labour Party said that it wants to outlaw that kind of practice
12:14
It says it's bad for business. And originally it had said, we're just not going to allow fire and rehire at all
12:21
Now it says, well, we'd only allow it in exceptional circumstances if there was no genuine alternative
12:28
Why do businesses do this? Usually it's a last resort where there are pay or terms and conditions that the company can no longer either afford or doesn't want to continue with. It tries to get employees to agree to make the changes. Employees won't agree. So as a last resort, employers give notice to terminate and offer a new contract with the revised terms
12:53
And zero hours contracts as well, I mean, we can almost imagine what they are fairly selfish
12:58
explanatory in the name, but there's been a key change since January in the wording there
13:03
We've had the word exploitative slipped in now. Is there clarity on what exploitative actually means within that
13:11
No definition of exploitative. What we think it means is to allow some flexibility again to try to create this business, union
13:19
government partnership so that in exceptional circumstances, certain alternative positions would be allowed
13:28
I think there's a recognition by the Labour Party that some people actually want genuine zero hours contracts
13:34
because that's the way they want to work. But the baseline position in the Make Work Pay document suggests that over a 12-week reference period
13:44
there would be a calculation of what your usual hours would be, and that would be what you are entitled to
13:49
And then day one writes, we've touched on as well, another area that has both parties rather than political parties
13:56
the unions and business sort of pulling in different directions. What's the kind of sticking point
14:01
there? Why is that still such a balancing out for the Labour Party to trade? Well, I think the general
14:06
view is that businesses like the flexibility of having a two-year window within which they could
14:14
decide whether an employee was someone they wanted to keep or part ways with, because that was the
14:19
qualifying period for basic rights such as unfair dismissal. An arrangement where you got all those rights
14:26
on day one means that potentially parting ways with an employee might be much more expensive
14:33
especially if that was coupled with the removal of the unfair dismissal compensation cap
14:39
So businesses would have said, well, this isn't going to work for us if you're creating
14:43
another binary position where as soon as we've employed someone, they've got unfair dismissal
14:48
protection, for example, you need to build in some flexibility. They make work pay documents suggests that perhaps the flexibility is in probationary periods
14:58
It doesn't give lots of detail, but it suggests that employers would still be able to terminate a relationship during the probationary period
15:06
as long as it was for a good reason and through some fair process But it doesn give detail about that yet So since the plan was first published we have seen there been nerves there been jitters among the business community I don think people have outright wanted to come out in opposition to the plan
15:26
But you're at the coalface of this, you know, employment lawyer. You've seen what the city reaction has been like
15:31
What is the mood among businesses at the moment? How have they actually been reacting, preparing to sort of get ready for these plans to come in
15:39
I think there's some reassurance in the make work pay documents, so the revised document
15:45
that there is a recognition that binary positions are not good ones for businesses
15:50
There needs to be a bit of flexibility. So that has been acknowledged
15:55
I know we've recently seen 120 businesses right in support of Labor as a new government
16:02
which would be positive for business. And I think the new document does give credentials
16:09
to the Labour Party that it's going to try to make a partnership umbrella between business unions
16:17
and the new government. So the revisions have, in your view, seem to kind of settle some of those concerns among businesses
16:26
I think they've settled some. Of course, there's uncertainty because there's not a lot of detail
16:30
around how some of the exceptions might work. So perhaps the corresponding confidence among business
16:39
leaders in the new Labour Party ideals, probably trade unions are slightly more unsettled about
16:47
them because they will be concerned that businesses and their legal representatives will try
16:53
to find ways around the new legislation. So a balancing act still to be struck
16:58
Yeah, definitely a balancing act. And I think that's going to be the key to success
17:02
If the Labour Party is going to achieve a positive outcome in terms of workers' rights
17:09
and genuinely make work pay, then it has to achieve a balance between keeping businesses, confidence, managing trade union expectations, and genuinely giving the workforce positive views on working future
17:25
So we've touched on the business reaction there. The other big side of this is obviously the unions. It's them that is so sort of enraged by the suggestion that fire and rehire could still be on the table. What has the reaction been like
17:39
from the unions now and what more could we expect in pushback from them
17:45
You're right, the unions are at the heart of this and they'll be looking at what's in the make
17:49
work pay document for them and there are some positive things for them, more opportunity to have
17:56
access to the workplace, which at the moment is often difficult for trade unions
18:01
maybe makes the trade union recognition process a bit simpler. The document says it's going to
18:08
take away some of the archaic procedural restrictions and also simplify some of the rules
18:15
on industrial action, which may make it more straightforward for industrial action processes
18:19
to go through, including modernisation of the balloting system, which currently is by post
18:27
only, the document suggests that it's going to modernise that. So you could see it made easier to strike almost for workers
18:34
Possibly so or certainly easier, a more streamlined. process to go through to see whether strike action should take place. And that must be something
18:43
that unions would have wanted because they say they don't want to strike, but having that
18:48
ability is something that holds businesses to account. So unions likely to be placated for the
18:55
time being they ought to be reasonably pleased with what's offered in the make work pay document
19:01
in terms of access to workplaces, making balloting systems easier and making recognising
19:08
process is more modernised. So Labor win is looking increasingly likely, still a comfortable
19:13
polling lead. If they do come into government, what is the sort of timeline? How are these
19:19
actually going to be brought into law? So what the make work pay document has said and generally
19:26
what the publicity has been is that within the first hundred days, the new government, if it's the
19:31
Labour Party, will introduce new legislation. Of course, that means we'll probably not have any new
19:38
legislation until 2025, but in the introduction process, I'm sure businesses, trade unions and
19:46
their respective advisors will be looking very closely at the detail. And also, there's
19:52
been publicity about consultation with businesses. So it will be interesting to see what
19:58
questions are asked and what responses are given. Still plenty of questions and details to come
20:03
then. But Andrew, thank you very much, Joyce. Thank you very much
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