General election 2024: Businesses have a long wish-list from parties

Published

1 year ago

May 23, 2024

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The approach of business to general elections is not what it was.

Not that long ago, it was common for big corporates to make donations to political parties, including big FTSE 100 names such as SmithKline Beecham, United Biscuits, General Accident and Whitbread.

Most of these donations would go to the Conservatives but there were some companies, such as Marks & Spencer and Pearson, which also made donations to other parties.

Some, such as Hanson – whose founder Lord Hanson was a loyal supporter of Margaret Thatcher – continued to do so even after the 1992 Cadbury Report recommended companies stop making contributions to political parties.

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Even after the political contributions dried up, FTSE 100 chief executives were not shy about endorsing or criticising politicians at election time.

In 1997, a number of well-known business people including Robert Ayling of British Airways, Bob Bauman of the old British Aerospace (now BAE Systems) and George Simpson of GEC endorsed Tony Blair’s Labour ahead of that year’s election, while John Major’s Conservatives also had plenty of backers.

Business people were also happy to speak out about particular policies. Ahead of the 1997 election, BT’s chairman, Sir Iain Vallance, lashed out at Labour’s proposals for a windfall tax on the privatised utilities while Brian Stewart, chief executive of the pubs and brewing giant Scottish & Newcastle, criticised Labour’s plans to create a Scottish Parliament with tax-raising powers.

None of that happens any more. Most CEOs, while having their own political opinions like the rest of us, prefer to keep them to themselves. The more astute, realising that it makes sense to speak to politicians, are careful to ensure they are seen to be behaving even-handedly and not expressing a preference for one side or the other.

Business wish-lists

That does not mean businesses do not have their own wish-lists of policies.

This is particularly true of small businesses. Their wish-list has not changed in the last couple of decades and is topped by wanting a change in the law to enforce prompt payments from larger businesses to their suppliers and the reform of business rates, which is also a bugbear for larger companies in sectors such as retail and hospitality.

Higher up the corporate food chain, what big businesses crave most is clarity and consistency in policy.

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As Dame Amanda Blanc, chief executive of insurance, savings and pensions giant Aviva, told Sky News today: “Obviously we’re apolitical. What we want is for the environment to be one where we can invest, with certainty. You know, we want consistency and stability and so that whoever is the winner of the election, we want the election to be decisive, and we really want there to be certainty for us to be able to invest in things like UK infrastructure.”

Dame Amanda, who has served on both the prime minister’s business council and on the business taskforce put together by shadow chancellor Rachel Reeves, added: “We’ve invested £9.5bn in UK infrastructure in the last three years.

“Our commitment is £25bn over the next 10 years. In order to do that, you have to have a more certain environment. And so that’s what we look forward to.”

That desire for stability and consistency was why the brief tenure of Liz Truss in 10 Downing Street was so damaging and why, off the record, a lot of business executives will admit to being grateful to Rishi Sunak and Jeremy Hunt for restoring order to public finances after the firestorm created by Kwasi Kwarteng’s mini-budget in September 2022.

They feel it is the first time, since David Cameron was in office, that a PM had the corporate world’s back. Theresa May alienated a lot of globe-trotting CEOs with her infamous 2016 speech in which she said “if you believe you are a citizen of the world, you are a citizen of nowhere”. She was replaced by Boris Johnson who, as foreign secretary in 2018, infamously said “f*** business.” And then came Ms Truss.

If business leaders are grateful to Messrs Sunak and Hunt, there is also warmth towards Sir Keir Starmer and Ms Reeves for their constructive approach.

Yes, there is some unease about deputy Labour leader Angela Rayner’s proposals to ban zero-hours contracts, end fire and rehire and to give workers full rights and protections from day one of their employment.

But there is a sense that after the leadership of Gordon Brown, Ed Miliband and Jeremy Corbyn, who went into the 2019 election campaign threatening to nationalise much of the energy industry, the water industry and BT’s broadband network, this is the most pro-business Labour leadership since the days of the much-missed Tony Blair.

While big businesses chiefly seek stability and consistency of policy, that is not to say they do not have specific wish-lists of their own.

The big leisure, hospitality and luxury goods companies would like the restoration of VAT-free shopping for international visitors, the loss of which, they argue, has driven business away from the UK to destinations like Paris and Milan.

Most businesses with property interests – which is nearly all of them – would like to see a more coherent planning regime. Housebuilders would like a relaxation of rules requiring a proportion of housing developments are devoted to affordable homes.

Shoplifting scourge

Retailers would like the police to be required to make tackling the scourge of shoplifting a greater priority.

Manufacturers, in particular, would like to see an easing to some trade frictions that have built up since Brexit.

And carmakers – currently under threat of being fined if a certain proportion of their sales are not electric vehicles – would like to see a restoration of government incentives to buy EVs and for the roll-out of EV charging points.

Businesses, it is often pointed out, do not have votes.

But they do create the jobs and wealth on which this country relies. Those hitting the campaign trail over the next six weeks will need no reminding of that.

Business

UK economy figures not as bad as they look despite GDP fall, analysts say

Published

16 hours ago

July 11, 2025

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UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.

Business

UK economy remains fragile – and there are risks and traps lurking around the corner

Published

16 hours ago

July 11, 2025

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UK economy remains fragile - and there are risks and traps lurking around the corner

Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.

Business

Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

Published

22 hours ago

July 11, 2025

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Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

The government is speeding up its adoption of AI to try and encourage economic growth – with backing from Facebook parent Meta.

It will today announce a $1m (£740,000) scheme to hire up to 10 AI “experts” to help with the adoption of the technology.

Sir Keir Starmer has spoken repeatedly about wanting to use the developing technology as part of his “plan for change” to improve the UK – with claims it could produce tens of billions in savings and efficiencies.

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The government is hoping the new hires could help with problems like translating classified documents en masse, speeding up planning applications or help with emergency responses when power or internet outages occur.

The funding for the roles is coming from Meta, through the Alan Turing Institute. Adverts will go live next week, with the new fellowships expected to start at the beginning of 2026.

Technology Secretary Peter Kyle said: “This fellowship is the best of AI in action – open, practical, and built for public good. It’s about delivery, not just ideas – creating real tools that help government work better for people.”

He added: “The fellowship will help scale that kind of impact across government, and develop sovereign capabilities where the UK must lead, like national security and critical infrastructure.”

The projects will all be based on open source models, meaning there will be a minimal cost for the government when it comes to licensing.

Meta describes its own AI model, Llama, as open source, although there are questions around whether it truly qualifies for that title due to parts of its code base not being published.

The owner of Facebook has also sponsored several studies into the benefits of government adopting more open source AI tools.

Mr Kyle’s Department for Science and Technology has been working on its mission to increase the uptake of AI within government, including through the artificial intelligence “incubator”, under which these fellowships will fall.

The secretary of state has pointed to the success of Caddy – a tool that helps call centre workers search for answers in official documents faster – and its expanding use across government as an example of an AI success story.

He said the tool, developed with Citizens Advice, shows how AI can “boost productivity, improve decision-making, and support frontline staff”. A trial suggested it could cut waiting times for calls in half.

My Kyle also recently announced a deal with Google to provide tech support to government and assist with modernisation of data.

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Joel Kaplan, the chief global affairs officer from Meta, said: “Open-source AI models are helping researchers and developers make major scientific and medical breakthroughs, and they have the potential to transform the delivery of public services too.

“This partnership with ATI will help the government access some of the brightest minds and the technology they need to solve big challenges – and to do it openly and in the public interest.”

Jean Innes, the head of the Alan Turing Institute, said: “These fellowships will offer an innovative way to match AI experts with the real world challenges our public services are facing.”