Labour Party Archives - WA Communications

Regaining momentum: Labour’s double by-election win despite political difficulties

Last Friday, Labour gained a double by-election win in the Conservative safe seats of Wellingborough and Kingswood, despite a tough couple of weeks for the party politically.

Labour secured 44.9% and 45.9% of votes in Kingswood and Wellingborough, respectively, with a 28.6% swing in Wellingborough, making it the second biggest Conservative to Labour swing in a by-election since the Second World War.

Critically, this boosts Labour’s tally of seats gained from the Conservatives in by-elections since July to six.

Last month, WA were delighted to host political polling guru Professor Sir John Curtice. His analysis outlined many of the issues at play in these two by-elections – the Conservative Party’s misreading of public priorities, the rise of Reform, yet a mixed record and lack of enthusiasm for Labour.

A strong cause for Conservative concern

Locally, in Wellingborough, Helen Harrison, partner of the constituency’s former MP Peter Bone, emerged as the candidate. The by-election arose after the suspension of Bone following allegations of bullying and sexual misconduct. While Harrison expressed confidence that these distinctive circumstances would not affect her electoral prospects, it would not be unexpected if they had done so.

Conservatives like Jacob-Rees Mogg have pointed to low voter turnout as the crucial element responsible, with 38% in Wellingborough and 37.1% in Kingswood. But when you delve into the details, the argument loses its edge. Low turn-out in by-elections is not unusual, and considering Labour’s prior successes, it seems they have developed a trend of consecutive by-election victories.

Nationally, the Conservatives have faced a myriad of issues that may have impacted electoral outcomes:

On Thursday, the ONS announced that the UK economy is in a recession, adding to voters’ concerns about the NHS and the ‘cost of living’ crisis. This is a significant setback for Rishi Sunak, who pledged to ‘grow the economy’, and instead is now faced with a 0.3% shrinkage in the economy in the last quarter of 2023.

Another influential factor in shaping the by-election results likely stemmed from the government’s handling of immigration issues – where ‘stopping the boats’ is now closely intertwined with ‘stopping Reform’.

The by-election has underscored that significant challenge posed by Richard Tice’s party to the Conservatives. Reform fielded candidates in both by-elections, securing 10.4% of the vote in Kingswood, and 13% in Wellingborough – demonstrating that their appeal translates from hypothetical opinion polling into votes (and more … with Wellingborough’s 13% result for the party a record result, and comfortably exceeding its 10% national poll figure).

Plans to put up a candidate against every Conservative in the upcoming general election means the Conservatives may find themselves engaged in a multi-front battle that hands victory to Labour – Reform splitting the Conservative vote to the extent seen on Thursday could result in dozens more Tory MPs losing their seats.

Tough time for Labour politically.

But Labour has also had a tough time politically. (One poll by Savanta conducted the weekend before the by-election even suggested a seven-point drop for Labour).

One source of this political difficulty stemmed from the abandonment of their flagship £28 billion green energy spending commitment. This decision has proven to be a significant dilemma for Shadow Chancellor Rachel Reeves – as she tried to balance the overriding priority of demonstrating responsible economic stewardship, with a spending pledge portrayed by opponents as reckless, and the perception that a policy reversal portrayed the party as indecisive and overly responsive to opposition critiques.

A second political challenge had arisen from the controversial remarks made by Rochdale candidate Azhar Ali that Israel had used the October 7th attacks as a justification for invading Gaza. Many criticised the Labour Party for not suspending him fast enough. Given Keir Starmer’s efforts to distance the party from the Corbyn era, especially concerning accusations of unaddressed antisemitism, the handling of this situation created opportunities for the opposition to attack.

A further setback for the Conservative Party than a substantial advancement for Labour?

The outcome is the same nonetheless, Keir Starmer adds a further two seats to his tally of consecutive by-election victories, and the political weather moves on (at least for now) from what has been a difficult few weeks for the Labour Party leader.

The double by-election victory has undoubtedly alleviated concerns within Labour, suggesting that these challenges have not significantly affected voter behaviour.

But for the Conservatives, public enthusiasm has waned, perceived government failure on immigration is pushing voters towards Reform, and those Reform voters are turning out at the ballot box.

While there remains a question regarding the level of enthusiasm among voters for Labour, the party seems to be on a trajectory toward forming the next government – while the Conservatives added a new front to their list of problems.

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Tackling the £28bn question

It’s been the political headache facing Labour for nearly a year – questions over exactly how their Green Prosperity Plan will be funded and delivered. The multiple climbdowns and the significant deliberate ambiguity were not enough to fend off their critics, who identified – rightly or wrongly – an area of vulnerability for the party.

The electoral and political implications are dominating the media, but what exactly does this now mean for the energy industry?

For industry, the ambition and targets are more important than the funding

While the media has been focused on the level and sequencing of government funding for the Green Prosperity Plan, for industry this is arguably the less critical issue. Generators and others in the sector want policy certainty and ambition in order to be able to make the case to their boards and investors to deploy capital in the UK.

The 2030 target – even if it is recognised as being virtually impossible to deliver – provides this. While backsliding over the £28bn figure could be perceived as a signal that Labour is wavering on green investment, it’s the 2030 target that really matters. Recommitting to this yesterday was key. The question now is whether Labour is willing to take the bold steps required to deliver it…

As political and media attention shifts to how 2030 power decarbonisation can be achieved, there’s risks and opportunities for the sector

However, the reality is that the political and media focus will simply – and we’re already starting to see this – shift to scrutiny of how this target will be delivered, with critics arguing that Labour now have a hugely ambitious target in place with no investment behind it to enable delivery. The political argument that the government and others will prosecute will be that either Labour are selling a vision to the electorate that they know cannot be delivered and so aren’t prepared for office, or that there will inevitably be ‘secret tax rises’ coming to fund this.

Further backsliding from Labour on the 2030 target should not be expected, but the risk of disagreements opening up within the party over it is unhelpful for industry particularly if enhanced media focus ends up driving up public scepticism over the right route to net zero.

The opportunity for industry now is to highlight even more clearly how it will be private capital that will do the heavy lifting to decarbonise the economy. As Labour – and the media – look even more closely at how power decarbonisation is achievable, now is the moment – in a highly political year – for industry to be explicitly showcasing the projects that will practically get the UK to net zero.

Strengthening the argument for bold supply side reforms?

To achieve private sector delivery at pace, the case for non-financial supply side reforms that enable projects to move from plans to reality in order to achieve 2030 power decarbonisation becomes even stronger. Grid connections and planning reform; swifter, longer-term and more consistent policy decisions; the right fiscal environment to encourage investment are all being pushed.

Ed Miliband has spoken ambitiously about a ‘Covid taskforce’ approach to government, hitting the ground running from day one to deliver the Clean Energy Mission. Industry is getting the right noises from government with a recognition that it gets the scale of the challenge, but if there is any chance of coming even close to the target, these things are now non-negotiable. Labour has already notionally committed to acting on these things, but the industry’s ability to press for these changes at pace and ensure full accountability for delivery has arguably been strengthened significantly this week with funding now reduced.

There are inevitably still plenty of gaps

While the ‘plan’ published yesterday provides a little more detail in some areas – particularly on the Local Power Plan – there are inevitably still large gaps and areas where industry is still lacking detail.

There are also still questions over exactly how key parts of Labour’s net zero vision – including carbon capture – will be funded.

This gives industry the chance to continue to shape the right pathway for delivery. Labour wants solutions – ideally with no or little costs attached – that will help the delivery of its Clean Energy Mission. This is the moment for industry to share thinking on how specific elements of the plan can be implemented, aligning business priorities with Labour’s language, structures and funding envelopes.

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The Labour Party and Carried Interest – why does it matter?

Carried interest. What does it mean? Why does it matter? If you know the answers to those questions, feel free to skip a couple of paragraphs. But for everyone else, carried interest sounds so opaque that it couldn’t possibly be of any interest (excuse the pun). So why does the Labour Party keep going on about it?

Whenever you hear Sir Keir Starmer or Rachel Reeves talking about the economy, chances are they’ll mention carried interest. Not usually by name – that would be too direct for politicians – but in more generic language. Official Labour Party documents talk about “closing tax loopholes for private equity fund managers.” Reeves claims that “private equity bosses say that their income is capital gains…we would close that loophole.”

These are all references to carried interest. But what is carried interest?

It’s more straightforward than it sounds.

After the return of capital to investors, private equity fund managers typically receive 20% of a fund’s overall profits as payment for sponsoring and managing that fund. So far so simple. The controversy arises because private equity managers only pay capital gains tax (a rate up to 28%) not income tax (a rate of up to 45%) on carried interest. The majority of countries where PE is well-developed have a favourable tax regime for carried interest.

Many will argue there is good reason for this. The profits of private equity funds come from the sale of assets. It is reasonable that they attract capital gains tax. Others argue that a fund’s profits basically amount to income for private equity managers and should be taxed as such. Labour is clear about which side of the argument it supports. Reeves has claimed that taxing carried interest as capital gains is “absurd” and gives “tax breaks for fund managers averaging £170,000…as they asset strip some of our most valued businesses.”

That doesn’t sound like the basis for a great relationship between Labour and the private equity sector. But the Labour Party is not alone in calling for a change. A similar debate has been raging in the United States, where carried interest is also taxed as capital gains. Initial drafts of the Inflation Reduction Act would have required fund managers to hold an asset for five years before receiving the advantageous tax rate. The Senate Democrats argued this would raise $14 billion over 10 years – a relatively modest revenue-raiser in the context of the US economy. But according to Senate Majority Leader Chuck Schumer, the Act would also ensure “the wealthiest corporations and individuals pay a fairer share in taxes”. A political rather than economic motive.

Back in the UK, the Labour Party is trying desperately to appear pro-business. In a speech to the CBI in November, Starmer said that Labour Party was “not just a pro-business party but a party that is proud of being pro-business.” So why the attack on private equity? As in the United States, the money raised from changing the tax rules on carried interest would bring in relatively little – around £440 million a year. Which means, as in the United States, the motive can’t be primarily economic. It must be political.

This is because Labour is eager to appear pro-business in order to gain economic credibility, but it isn’t afraid of criticising business when it’s politically expedient to do so. And those sectors of which the public may have a less positive impression – such as private equity – are first in the firing line. By pitting wealthy financiers, whom Labour argues are avoiding tax, against ordinary working people who pay their fair share, Labour aims to present itself as the party of economic justice. Redistributing wealth from a small number of financial elites to support the greater mass of ordinary people.

In other words, the Labour Party is looking to get the keys to Downing Street and will do whatever it can to appeal to voters (as all political parties aspiring to government should do). It believes that increasing tax on carried interest and bashing financiers will achieve this. Which means that carried interest, as niche and as dull as the term may sound, is actually rather interesting, particularly as a microcosm of Labour’s economic approach in the round.

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Starmer speech – On a mission for a decade of renewal

Yesterday Keir Starmer set out the five ‘missions’ which will form the “backbone of the manifesto and the pillars of the next Labour government”, in the first of many pre-general election speeches to come over the course of the next year.

With Labour maintaining a commanding lead in the polls, and the Conservative government in constant crisis mode, the Labour leadership’s main concern is not to do anything to upset that trajectory.

However, it’s not the first time Starmer has tried to “reset” Labour’s vision and there is still work to be done by him and his top team to fully rehabilitate the Party’s image before voters go to the polls. Starmer needs to prove that he – and his Party – can take up the mantel of Government and deliver significant reform in a short time frame.

Importantly though, for the first time in a long time for a Labour leader, the national media treated the speech as a significant political event, giving it the live broadcast, rolling news coverage and instant analysis that is usually reserved for a Prime Minister’s speech.

Bearing all this in mind, this was, understandably, a carefully crafted (and clearly heavily focus grouped) speech, designed to reassure the public that Labour has the ideas and clarity of purpose to address the challenges facing Britain and the long-term vision that has been found lacking from the Conservative benches.

Drawing heavily from management theories used commonly in the business community, Starmer was setting out his goals – painting a picture of what success would look like by the end of his government’s first term in office:

To have the highest sustained growth in the G7
To fix the NHS
To make the streets safe
To raise educational standards
To make Britain a clean energy superpower, decarbonising the energy system by 2030

For businesses and investors there was the strongest possible message that a Starmer led government’s approach to the economy would be neither “state control” nor “pure free markets” with Starmer stating that “I’m not concerned about whether investment or expertise comes from the public or private sector – I just want to get the job done.”

With the foundations set, the window for influence is open. Work is clearly well underway to put more meat on the bones of these missions, with measurement criteria and granular detail to follow as we get closer to a likely Autumn 2024 general election, with Starmer due to speak on Monday to set out his thinking on the economic mission.

For businesses looking to future proof and inform policy in the long term, these missions provide a framework for engagement at a critical time for the Labour Party.

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A guide to the challenges of 2023: A tell-all year

As the second week of 2023 draws to a close, it’s clear the year ahead will be rife with economic and political challenges.

WA Partner Rhoda McDonald was joined by WA Senior Adviser, broadcaster and journalist Steve Richards to discuss the issues that will dominate 2023.

Here are our key takeaways from the event:

Labour finding it’s feet

The Labour party enters 2023 with renewed enthusiasm. Starmer is keen to whip the Party in to shape and prove they are a Government in waiting. As he prepares for an offensive, there will be high expectations for his cabinet to perform, and with reshuffle rumours circling, there will be no room for idlers.

His team has largely been moulded by a new New Labour era, with some Blair flair, and it is clear that top of his agenda is modernising central government, stimulating economic growth, and reforming the British energy sector.

One of the key policy differences between the Conservative Party and Labour is around industrial policy – Rishi Sunak shows no great interest in an overarching Industrial Strategy, whereas Labour’s looks potentially very substantial, extending to light manufacturing, transport, and even retail, to underpin their ambitions for higher productivity and growth.

A Tory Party divided

Meanwhile the Prime Minister is tending to a wounded Tory party and attempting to rebuild political and economic stability. With wavering Tory voters, and the threat of a new Reform Party poaching his MPs, Sunak needs to be constantly appealing to the public and his backbenchers if he is to retain control.

Although Sunak appears to be relishing the challenge and leaning in to his role as the peace maker of the party, it is unlikely to be smooth sailing as the year kicks off with headlines dominated by strikes and pay disputes.

It’s all about the economy

The country’s economy is top of the inbox for the current Government and the Opposition alike. As Sunak’s forte, he is busy emphasising his brand as the fiscally minded Prime Minister who can stabilise the markets and bring public spending under control.

For Sunak the pivotal moment will come in the March Budget. The Prime Minister had prepared a draft budget during the leadership campaign, which was very business focused – looking at tax rates, business needs, and how to get people back into the workforce. As Corporation Tax rises take effect this year, against a background of a dire economic environment, the message of ‘growth, growth, growth’, and delivering the incentives needed to shape company and labour market decisions, are likely to be at the forefront when the Chancellor stands up at the Dispatch Box on 15^th March.

On the other side, Labour are in the midst of deciding whether they follow a New Labour approach and stick to Tory spending plans, or to reinvent the fiscal wheel and risk further unease. Either way, the position they take will be determined by Shadow Chancellor Rachel Reeves.

Fixing the NHS

With the NHS hitting the headlines every week, healthcare reform will be a prominent issue throughout the year. The Government cannot shy away from the mounting pressure to act.

Having already passed the 2022 Health and Social Care Act, the Conservatives are unlikely to introduce new reforms this side of the election. However, talk of how to use the private sector and discussions of outsourcing are starting to snowball, with Labour saying they would consider this approach to relieve demand on the NHS.

Energy crisis

While the energy crisis continues and with geopolitical factors such as the war in Ukraine determining future supply issues, the Government is facing further spending pressures. The clock on household support is running down, and businesses are already feeling the pinch.

The risk for Sunak is inaction should the energy crisis become more acute. Although he has been avoiding Government intervention, he will be forced to change tact and avoid taking heavy fire from Labour as they seek to differentiate themselves.

The Deregulation agenda

With growth set to be the buzz word of the year, the regulatory landscape remains a battle ground yet to be won. As the realities of an EU regulatory bonfire threaten chaos, the Government is looking at lighter regulatory initiatives.

With businesses calling for clarity over the regulatory landscape, there are opportunities for both the Conservatives to make their mark and for Labour to carve out fresh ground for putting the UK on the front foot.

All eyes on GE2024

2023 is set to be the tell all year. Sunak and Starmer are facing the toughest set of challenges any leader, especially a newly incoming Prime Minister, have faced for decades. How they respond to and address the economic turbulence and address the nation’s discontent will ultimately determine their fate at the ballot box.

While Labour may be 20 points ahead in the polls, Sunak’s momentum over the summer appears to have closed a once-gaping gap. However, unless either party makes marked progress on the issues of the year, the prospect of a hung parliament with a minority government will become a looming possibility.

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A tale of two speeches

Just three working days into the new year we have been treated to set piece speeches from Prime Minister Rishi Sunak and Leader of the Opposition Keir Starmer on consecutive days. Both had similar objectives: seize control of the news agenda; establish their domestic policy priorities; and persuade the electorate they are the right choice to tackle the very significant challenges the UK now faces.

However, they were coming from two very different starting points. Sunak is rushing to catch up with events, having rapidly and unexpectedly secured the Premiership in the midst of a political and economic crisis which has quickly been succeeded by an NHS crisis. Starmer has been building towards this moment for the last three years and has a significant lead in the polls he is looking to protect.

So how did they do and what are the implications for businesses planning their political engagement in 2023?

Structure and delivery

Sunak

The unorthodox nature of Rishi Sunak’s rise to power left him with the tricky task of trying to set out the defining principles that will guide his premiership while simultaneously acknowledging the short term priorities required to address the crisis in the NHS. He also tacked on a series of specific promises that he is aiming to deliver around the economy, the NHS and the small boats issue. This resulted in a speech that jumped across a number of different topics but lacked a core theme and clear narrative. His delivery of the speech itself was a little wooden but he performed relatively well in the extensive Q&A that followed.

Starmer

Starmer’s core message was simple: Labour is a credible Government in waiting that will devolve power, working in partnership with local government and business to tackle the UK’s long term challenges. It was a relatively well crafted and delivered speech that served as an effective critique of ‘sticking plaster politics’ from the current government. Unlike Sunak, Starmer has had the benefit of three years to prepare for this moment and he was able to draw on a lot of principles and ideas that have already been previously set out.

Policy content

Sunak

The Prime Minister set out five ‘promises’ that will frame the Government’s immediate priorities in the coming months: halving inflation this year; grow the economy; falling national debt; falling NHS waiting lists; new laws to stop small boats carrying migrants across the channel. While some have noted that these are largely in line with what independent forecasters are already predicting, the promises on inflation and growth in particular risk being significant hostages to fortune given how little control Government has on external, often global, events that drive economic trends.

Beyond this, the headline pledge was for all students to study maths in some form until the age of 18, with the implementation details yet to follow. Other significant sections of the speech on innovation, law and order, education and the NHS all lacked any new policy announcements, though referenced measures detailed in last year’s Autumn Statement.

Starmer

Starmer’s speech had a major focus on how Labour would take a different approach to running the country based on devolution of power and partnership working with local government and business. However, there was only one significant new policy announcement: a ‘Take Back Control’ Bill that would form the centerpiece of his administration’s first King’s Speech. The Bill will devolve powers over employment support, transport, energy, climate change, housing, culture, childcare provision and council finances with a further ‘right to request’ power for local communities also built in.

In addition, he nodded towards a series of ‘national missions’ to be published in the coming weeks that will frame Labour’s policy platform in more detail. Also of note, there was a very clear message that Labour won’t fall back on a ‘big Government cheque book’ approach in an effort to assert fiscal credibility.

Impact and implications for engagement

Sunak

There was some criticism that Sunak did not focus more on the immediate challenges facing the NHS and the industrial relations issues that are crippling the UK’s rail system. However, the five promises he set out do provide a litmus test against which he can ask voters to judge him. If he can demonstrate progress in these areas in twelve months from now, then he can start to build narrative of delivery that serves as platform for an election campaign.

Ultimately, this speech underlined just how much the next election is starting to dictate the Government’s approach. Sunak set up a small number of simple, measurable goals and it is clear that anything that can’t be shown to contribute to meeting them between now and the election will be far less likely to receive time and attention from Government. There was also a reminder of his personal focus on innovation as a key to driving productivity and growth – companies that can demonstrate a positive story on innovation are more likely to have success attracting the attention of No 10.

Starmer

The short term headlines that Starmer’s team would have hoped for have largely been torpedoed by the leaks from Prince Harry’s book. However, expect the ‘Take Back Control’ slogan to feature heavily as a core theme in Labour’s narrative this year as they seek to demonstrate to the electorate that they have taken the lessons of Brexit on board. While this was a speech that demonstrates progress in his mission to become a credible Prime Minister in waiting, there is plenty of work still to do. Labour’s current comfortable poll lead comes on the back of a terrible few months for the Conservative Party and with the electorate facing extremely challenging economic circumstances. If the economy improves and Sunak is able to claim some credit, then Labour will need to show much more of a positive alternative agenda in order to maintain such a strong lead.

That places a lot of emphasis on the forthcoming ‘national missions’ to add further definition to Labour’s offer. Business should be prioritising its Opposition engagement on influencing how these missions are framed and the detailed policy ideas that will be needed to support them. Starmer boldly stated that he wanted to change the ‘old game of passionately identifying a problem’ without providing solutions. His biggest risk is falling into exactly this trap himself and his team will need the help and expertise from business to avoid it if he wants to build a truly robust alternative programme for Government.

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Is Labour Back?

There is a clear change of mood within the Labour Party. This year’s Conference didn’t feel like a party still riven with the internal battles of recent years. Keir Starmer has complete control of the National Executive Committee and party machine, the ‘grownups’ are running the show and the suited young men and women, and corporate sponsors are back in force.

Importantly, following the Conservatives’ disastrous fiscal event and consequential Sterling crisis at the end of last week, there is also genuine belief seeping back into the assembled activists, councillors, MPs, and shadow ministers, that their years of opposition could be coming to an end.

Some key take-outs included:

It’s still the economy stupid: Rachel Reeves is considered a class act and has carefully manoeuvred the Labour Party to be seen as a safe pair of hands with the economy, spending time wooing business and dramatically improving her media performances. Not quite believing the gift that was handed to her last Friday, she now needs to occupy the ground of economic competence that has been vacated and consolidate Labour’s poll boost.
Some meat on the policy bones: while caution remains the watchword of Labour this week, we have started to see a pattern emerging of what a Labour government could look like with some interesting announcements. A commitment to R&D spending to support innovation at the heart of a new industrial strategy; rail re-nationalisation (the populist nationalisation), helped enormously by the Herculean task it took to get Liverpool on a train; reinstating the top rate of tax; a National Wealth Fund, offering returns for taxpayers while targeting investment towards infrastructure; zero carbon energy by 2030; new powers to local and regional leaders; and a commitment to substantially increase the percentage of social housing as part of the UK’s housing stock. All solidly centre left policies that hark back to the days of Labour governments past.
Handed a poisoned chalice: Yet the legacy they would inherit if elected, will be nothing like the favourable conditions that Labour found in 1997. The room for manoeuvre for an incoming Labour administration is non-existent; for example, the £28 billion a year borrowing identified to tackle climate change no longer exists because of the spiralling cost of UK debt. As one leading light in the party said, “the problem with referring back to the 1972 Barber budget, is that it was a Labour government in 1976 that had to go to the IMF to repair the damage and then pay the price in 1979.”
Country first: Keir Starmer capped off an encouraging week for Labour with easily his best speech as leader. While he will never provide the soaring oratory of Blair or Brown, he has grown into the role, and he gleefully occupied the space that had been gifted him at the centre of British politics with the departure of Johnson and the tilt to the right under Truss. While the rhetoric of ‘country first’ has not been seen since the conference speeches of Tony Blair, he is probably the wrong comparison. Instead, Keir Starmer represents a Labour tradition closer to John Smith, Harold Wilson, and indeed Clement Atlee. The question that will be answered at the next election is, is the country ready once again for a re-pitch of classically social democratic policies packaged up for the challenges of the coming decade.

As things stand, and buoyed by commanding leads in all polls, Labour look set to form the next government. This comes with huge expectations and pressure. They need to be providing their answers to the overwhelming challenge facing the country, which are only set to get worse over the next 12-18 months.

For business, it’s no longer just about just ‘paying attention’ to Labour, it’s engaging with the people, priorities and policies that are looking increasingly likely to be those of the next government.

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Posts Tagged ‘Labour Party’

Regaining momentum: Labour’s double by-election win despite political difficulties

Tackling the £28bn question

The Labour Party and Carried Interest – why does it matter?

Starmer speech – On a mission for a decade of renewal

A guide to the challenges of 2023: A tell-all year

A tale of two speeches

Is Labour Back?

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