Chief executives praise Labour’s plans after investment summit – but there’s a caveat

This International Investment Summit has been circled in the new government’s diary from the day it took office as a key opportunity to set out its claim to be a new kind of centre-left administration.

Pro worker, as it’s union funders and core voters take for granted; pro public-services, as the electorate that gave it a majority expects; but unashamedly pro business too.

It’s a trio of ambitions that do not always sit happily together and are usually framed as in competition.

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Eric Schmidt, the former chief executive of Google, put it plainly in the opening session on stage with Sir Keir Starmer.

“I was shocked when Labour said it was strongly in favour of growth,” he said.

Labour say they are serious about changing a perception they know is shared by several of the overseas investors present.

Business Secretary Jonathan Reynolds admitted that plans for supply-side reforms are “unusual” in being proposed from his slice of the political spectrum.

A flurry of announcements, including the resurrection of an Industrial Strategy, a National Wealth Fund and a new strategy for the British Business Bank, were intended to underline that it is serious.

So too the claim of £60bn of committed investment pledges timed to coincide with the event (though the Conservatives claim some of that had already been promised on their watch).

In that pile of good intentions the £1bn promised, withdrawn and then finally committed by P&O Ferries’s owner DP World seems less consequential than it appeared during a frantic 72 hours that threatened to disrupt this event.

But it resonated because it captures the trade-offs inherent in Labour’s plans.

Less than a week ago the government announced workers’ rights reforms that companies believe will add to the cost of doing business, no matter how gently they are introduced.

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In opposition, there was no better example of why they were necessary than P&O’s use of fire-and-rehire in March 2022 to summarily sack 800 workers.

When Louise Haigh made the same point as transport secretary, however, it provided a lesson in the realities of government.

Whether you believe the episode reflects worse on the government or DP World, it demonstrates the compromises required to align the interests of citizens and corporations.

With the DP World deal finally toasted by its chairman and the PM over kedgeree at a working breakfast with other business leaders, Sir Keir and a ministerial team featuring half the Cabinet will consider the summit a good day’s work.

CEOs including David Ricks of drugs giant Eli Lilly and Larry Fink, boss of investment management giant BlackRock, praised the plans, but their praise has a caveat built in.

If reforms are delivered, to healthcare access and planning, to pick just two, they will open the door to investment.

But if they fail, the money will evaporate.

“Let’s be clear. Capitalism, when it smells an opportunity, the money will run towards it,” said Mr Fink. “But likewise, when it smells a problem, it runs away.”