Election-focused Labour looking to bat for UK business

Shadow chancellor Rachel Reeves tells business leaders gathered at Kia Oval cricket ground that corporation tax will be capped at 25 per cent if Labour wins next general election

Shadow chancellor Rachel Reeves is interviewed on stage at the Labour Business Conference at The Oval in London. Getty Images

London's world-famous Kia Oval cricket ground was the unlikely setting for the leaders of Britain's left-leaning opposition Labour Party to meet some of the grandees of UK banking, finance and manufacturing.

Cue any number of metaphors uttered by those gathered about politicians "batting for business, not bowling against them".

Four hundred UK business leaders, from life sciences to FinTech and from insurance to investment banking, paid almost £1,000 ($1,273) a ticket to meet and ask questions of the people who could well be the next prime minister, chancellor or business and trade minister.

Indeed, Thursday's Labour Business Conference was vastly oversubscribed, to the extent that the venue had to be changed as demand for tickets rose.

Labour was very keen to present itself as the party of business.

"Be in no doubt, we will campaign as a pro-business party – and we will govern as a pro-business party," shadow chancellor Rachel Reeves said.

Judging from the reaction of the delegates, many of the attendees were impressed. One said that he'd liked the shadow chancellor's "professionalism", not only when she was giving her speech, but also in the upfront way she answered questions from the audience.

Delegates at the Kia Oval cricket ground, London, during the Labour Business Conference. Matthew Davies / The National

The warm applause and the fact very few of the gathered City grandees left the room during the Labour leadership's individual speeches and Q&A sessions suggested much of the audience perhaps felt this, possibly, was a party with which they could do business.

"Your presence here [at the Oval] is a testament to the changes we have made over the past four years," Labour leader Keir Starmer said.

Some were more cynical, voicing old concerns that politicians promise much but deliver little, and that many of the Labour pledges to provide "stability" so far seem merely to be extensions of existing Conservative policies, rather than anything new or radical.

Nonetheless, there is much appreciation of the effort the Labour leadership is putting in to woo British business.

"We welcome Labour’s recognition of financial services as a key economic strength for the UK and their commitment to work with the private sector to ensure our industry continues to be a key strength of the UK economy," Helen White, head of policy at the financial service trade body TheCityUK, told The National.

Business figures watch Labour leader Keir Starmer addressing the conference in London. Getty Images

Tax cap

Ms Reeves told the conference if her party were to win the next election, corporation tax would be capped at 25 per cent.

She added that full expensing, a tax break that companies use to offset the cost of capital equipment, will remain. The current Chancellor, Jeremy Hunt, had made it permanent in his last budget statement in autumn.

"We will cap the headline rate of corporation tax at its current rate of 25 per cent for the duration of the next parliament. And should our competitiveness come under threat, if necessary we will act," Ms Reeves said.

Britain's 25 per cent corporation tax rate is the lowest in the G7 group of industrialised nations.

Over the 10 years between 2007 and 2017, corporation tax fell from 30 per cent to 19 per cent. Then last April, the Conservative-led government raised it to 25 per cent in an attempt to cover spending during the Covid pandemic and subsidies for soaring energy prices following Russia's invasion of Ukraine.

The introduction of full expensing at the same time was a move to soften the blow of higher corporation tax.

Shadow chancellor Rachel Reeves promised to cap corporation tax during her address to business leaders at the Kia Oval, London. PA

But by promising that corporation tax would be capped at 25 per cent until at least the end of the decade, Ms Reeves said if in government, Labour would provide business with stability and thus the ability to plan for the future.

Ms Reeves, who worked as an economist at the Bank of England for almost 10 years, told assembled business leaders she knew of the "importance of financial and economic stability" and that together they are the most basic conditions of economic security.

"To get business investment firing on all cylinders we need holistic, long-term reform of the entire tax landscape to unlock its true potential and the UK’s competitive edge," said Rain Newton-Smith, chief executive at the Confederation of British Industry (CBI).

"Giving certainty that the headline corporation tax rate will not rise will also give businesses clarity and ensure the UK remains competitive."

Helen White, of TheCityUK, also welcomed Ms Reeves's commitments on corporation tax.

"We've been calling for political parties to set out a clear, stable and predictable tax regime for the UK over the next four to five years," she told The National.

"This is crucial to support UK economic growth, as it gives business and investors the clarity and confidence on tax treatment that helps make the UK an attractive place to do business and invest."

Labour deputy leader Angela Rayner told the conference that over the past 14 years of Conservative government, there has been "no reason for investors from overseas to come set up shop in our economy".

Meanwhile, the Conservatives poured scorn on the pledges.

"Keir Starmer's record of making promises and then dropping them when they become inconvenient shows Labour will not provide businesses with the stability and certainty they need to invest," said Laura Trott, Chief Secretary to the Treasury.

Len Hutton and Maurice Leyland star as England beat Australia at The Oval in London, 1938. A different kind of event was held there on Thursday, with the opposition Labour Party promoting its commitment to British businesses. Getty Images

Partnership

The word "partnership: was extensively bandied about throughout the day's speeches.

"We will work in partnership with business to kick down the barriers to growth, spur on investment and showcase Britain's standing as a world leader in the industry," Ms Reeves said.

The Kia Oval was certainly an apt place to talk of building partnerships.

In cricketing history, the last great English partnership forged at the ground was in 1938 when, between them, Len Hutton and Maurice Leyland put 382 runs on the board against Australia.

While there was nothing record-breaking on Thursday, there was definitely a feeling of acceptance within the audience.

Indeed, Labour has already won over the likes of supermarket chain Iceland's Richard Walker. The chairman was a Conservative backer and donor but this week switched his support to the opposition.

But while some at the conference audience were certainly bowled over by Labour's overtures, others took more defensive positions, choosing to carefully weigh up their options in the political field before picking their shots.