Rachel Reeves MP, Labour’s Shadow Chancellor of the Exchequer, speech at Labour’s Business Conference on 1st February 2024:
Thank you, Erin. And thank you to our sponsors HSBC Innovation Bank.
It is a pleasure to be here – and to see so many familiar faces. And it is testament to the progress this party has made under Keir’s leadership, to have all of you with us today.
At this conference, a little over a year ago, I was proud to launch the final report of Labour’s start-up review, headed by Lord Jim O’Neill.
That report set out a roadmap to make Britain the best place to start, and to grow, a business.
That review, like this conference, embodied the spirit of partnership with business that will guide the next Labour government.
Based on the recognition that, in a more unstable world, business and government must work together like never before.
And that, when they do work together, we can achieve remarkable things and rise to the most daunting of challenges.
Like developing in a matter of months a vaccine able to curb a globe-sweeping pandemic. Creating thriving markets in domestic wind power, by de-risking investment through Contracts for Difference. Or even as great a leap forward as the creation of the internet.
That spirit of partnership will be realised in government through an Industrial Strategy Council, revived and set on a statutory footing.
And through a new British Infrastructure Council, bringing together leading investors and government to help close the huge shortfall in investment in the infrastructure on which we rely.
This is all to make a simple point: that when we say we want to work with business, that there is no policy we can announce, no plan that can be drawn up in Whitehall, that will not rely on the engagement of business, we mean it.
That this Labour Party sees profit not as something to be disdained but as a mark of business succeeding.
I want to set out today what a pro-business Labour government will mean in practice.
I am an optimist about Britain. As Shadow Chancellor, the meetings I have had with many of you have been a real privilege. To visit brilliant, creative businesses all across the UK.
Even in challenging economic times, the work of entrepreneurs and engineers, investors, scientists and so many more, cannot fail to inspire. Giving a glimpse of a better future for Britain.
From Babcock in Rosyth, building ships for the Royal Navy, to IAAPS Advanced Propulsion in Gloucestershire, bringing academic expertise and engineering experience to the latest research and development in transport, to C-capture in my own, Leeds West constituency who are developing and trialling carbon and capture storage technology, at the frontier of the energy transition.
Business working together across industries propelled by the research excellence of our universities to harness new technologies in a fast-changing world.
But these are challenging economic times, and I know British business has felt that.
More than a decade of stagnant growth and anaemic investment and the economic impact of pandemic, war, and supply chain disruption.
All exacerbated by political instability, which in turn has fuelled economic instability.
Brexit without a plan, piling burdens onto businesses.
The mini budget sending our currency crashing and interest rates soaring.
And the constant churn within government: five Prime Ministers, seven Chancellors, 11 plans for growth, each announced to great fanfare, each achieving less than the last.
Almost every month, we hear about another business choosing not to locate or to list in the UK, investment that we have missed out on to the benefit of a competitor.
In August, we had the news that the chip designer Arm – a genuine British big tech champion – would be listing in New York not London.
In September, Community Wind Power – one of our largest onshore wind developers – called a halt to development of its biggest wind farm yet, in southern Scotland, due to rising costs.
Less than two weeks ago, the British nuclear start-up Newcleo dropped plans to build a plant in Cumbria, in favour of France. These are the symptoms of economic decline.
Britain needs change. Not just a change in government, but a new kind of leadership.
In place of instability and uncertainty, a government guided by clear purpose: working with business, universities and our public services to achieve ambitious goals for Britain.
Keir Starmer has set out five ambitious missions to that effect: to revive strong, sustained growth all across Britain, to decarbonise our electricity supply, to cut NHS waiting times and boost cancer survival rates, to tackle crime and antisocial behaviour, and to break down barriers to opportunity.
But of course, all of these missions are tied to that defining economic mission.
Because economic growth is essential for raising living standards and funding strong public services.
And growth in turn will rely on attracting business to invest and create jobs and prosperity here in Britain.
Economic success, economic growth, felt not just in lines on a graph but in a job that pays a wage to support a family on, stronger communities with thriving high streets, money in the pocket of ordinary people, pride in goods and services made in Britain, exported around the world.
But plans for growth in the decades to come cannot depend on the methods of the 1980s or the 1990s.
As our world has changed, so must the relationship between business and government.
Because while this Conservative government can only lurch further down the path of managed decline, in other countries – across Europe, Asia, North America, and Australasia – a new economic consensus is taking shape.
The US Treasury Secretary Janet Yellen calls it ‘modern supply side economics’. But I prefer the term ‘securonomics’.
‘Securonomics’ starts with the recognition that the world as it was before the 2008 financial crisis has passed. That the global economy is being reshaped in a new age of insecurity marked by pandemic, great power rivalries, new technologies and the climate crisis.
That to champion enterprise in the 2020s and 2030s cannot mean turning a blind eye to these challenges, clinging to economic dogmas of past generations.
In this world the first priority of government must be a country’s security including economic security.
That must mean economic security for ordinary families, underpinned by a New Deal for Working People. And it must also mean security for our national economy. Let me tell you what that will mean for business.
In the pandemic, we found ourselves dangerously over-reliant on China for PPE.
When Putin launched his war on Ukraine, we saw the perils of dependence for energy on countries which do not share our interests and values.
And as we pursue success in new industries, from electric vehicle manufacture to quantum computing, we must learn these lessons, to build resilience in our new age of insecurity.
When I talk about economic security, I don’t mean a retreat from the things that are fundamental to a dynamic, trading market economy.
A market economy thrives on risk, on daring, on leaps into the unknown.
But government’s task is to offer the security that means a would-be entrepreneur can take a risk.
That a new firm can make the leap and scale up. That a business can raise finance and invest with confidence. That calls for active government working alongside business, to extend security, navigate those challenges, and seize the opportunities presented by a changing world.
Pro-business and pro-worker, in the knowledge that each depends on the success of the other.
Investing alongside business, through a new National Wealth Fund.
Tearing down the barriers to industry and housebuilding, with a once-in-a-generation overhaul of our planning system because it is past time that government sided with the builders over the blockers.
Supporting small businesses by replacing our outdated system of business rates with a fair system fit for a modern economy.
Reforming our pension system to end the absurd situation in which pension savers in Canada are more likely to benefit from investment in British businesses and infrastructure than pension savers here at home.
And yes – putting aside the culture war dividing lines, to forge a closer relationship with our nearest neighbours and allies, to ease the bureaucratic burdens on business.
And it must also mean that our plans for economic success are built on the rock of stability.
I will never play fast and loose with the public finances, because when the prices of food, of housing and of energy soar, it is ordinary families who pay that price, and businesses too.
So, I will not waiver from iron-clad fiscal rules. I spent the best part of a decade as an economist at the Bank of England. I know the importance of financial and economic stability. And I know too the importance of strong economic institutions, the guarantors of our credibility in global financial markets.
So, we will respect the Treasury and the Bank of England – and we will strengthen the Office for Budget Responsibility through a new fiscal lock.
Economic and financial stability are the most basic preconditions of economic security. And Labour will guard them with iron discipline.
There is another dimension of stability, when it comes to business.
In Davos two weeks ago, I met with leading figures not just from the financial services sector but also tech leaders and companies powering the energy transition. They have huge ambition. And they want to know that Britain is a place they can confidently invest in.
But after 14 years of uncertainty under this Conservative government, investment has cratered. I have heard time and time again from businesses that what they want is stability – including when it comes to tax. And they are right.
If we expect business to invest in Britain, then tax rates cannot shoot up and down like a yo-yo, according to each political whim.
What Labour offers is a genuinely pro-business tax plan, founded on a fair contract between a pro-business government and great British business.
That contract will rest on the basic expectation that businesses pay the tax they owe, backed up by multilateral action for a fair tax system: a strong global minimum rate of corporation tax, a deal on the taxation of digital multinationals, and concerted action to tackle tax avoidance.
Alongside that, will come a commitment from government: to ensure stability and competitiveness throughout our business tax system.
At the Make UK conference last year, I announced that Labour would conduct a review into how we can lock in stability, and incentivise investment, within our business tax system.
Today I can announce the outcome of that review.
We have heard loud and clear the demand for clarity and certainty from business.
So, we will maintain full expensing and the annual investment allowance.
And within its first six months, an incoming Labour government will publish a roadmap for business taxation, setting out our plans on business tax over the duration of the parliament. But I want to go further.
There have been 26 changes to our corporation tax arrangements in this parliament alone. We can’t go on like this.
We reject the calls from those on the right wing of the Conservative Party to cut corporation tax. Our current rate is the lowest in the G7.
We believe that a 25 percent rate strikes the correct balance between the needs of our public finances, and the demands of a competitive global economy.
The next Labour government will make the pro-business choice and the pro-growth choice.
We will cap the headline rate of corporation tax at its current rate of 25 per cent for the next parliament.
And should our competitiveness come under threat, if necessary, we will act.
That means businesses can plan investment projects today, with the confidence of knowing how their returns will be taxed for the rest of this decade.
To those of you in this room who might be wondering – do we really mean what we say? Has Labour really changed? Will warm words today be matched by action in government?
Be in no doubt. We will campaign as a pro-business party – and we will govern as a pro-business party.
But in our new age of insecurity, it is not enough – if it ever was – for the state to simply get out of the way.
We need active government backing British business. That must mean backing the industries where we already are a world leader, to build on what we do best, to tear down the barriers to success, and to reach for new horizons. This can be no time to rest on our laurels.
Take our life sciences sector. It should be celebrated as the very model for successful partnership between government, industry, and higher education.
Making us a world leader in a sector worth trillions of dollars every single year, and a trailblazer in developing the covid vaccine. And yet it is the victim of government neglect.
In 2022, foreign direct investment in UK life sciences almost halved, to the benefit of Ireland, India, Singapore and Belgium.
This week we have published our plan for the future of that sector – a plan to boost investment, innovation, and jobs in a crucial industry of the future.
Where the last Labour government laid the foundations for its success over the previous decade, the next Labour government will go further.
Let me give you another example. No industry contributes more to growth and to the Exchequer than our financial services sector.
London is a global centre of international finance. Britain is the second largest exporter of services in the world.
Financial services accounted for 12 per cent of the UK’s economic output and providing £100 billion in tax revenues last year alone. It employs one million people, two-thirds of them outside London.
And yet, too often we treat it as a problem to be solved, not a national asset to be championed.
Before entering politics, I worked in finance. And when I meet with business leaders and investors in the sector, I hear real ambition not just for their businesses but for the country too.
A strong financial services sector drives growth and innovation, but it does so much more.
Every day, the sector gives the spark that lets new, homegrown business start-up and scale up, provides the financial security on which ordinary families rely, and drives investment into our energy transition.
At the end of last year, in Edinburgh, I announced the launch of Labour’s review into the future of our financial services sector.
Guided by the work of our Shadow City Minister, Tulip Siddiq, supported by an advisory panel including John Kingman, Shriti Vadera and Nigel Higgins, and informed by the experience of leading figures across the industry, that review sets out the framework for Labour’s approach to the sector. I want to thank them for all their work.
Yesterday, I was proud to launch Financing Growth: Labour’s Plan for Financial Services.
It includes detailed proposals to drive the industry’s growth not just in London but all across the UK, to maintain Britain’s global competitiveness, to reinvigorate Britain’s capital markets, to take advantage of the potential of artificial intelligence and new technologies, and to power ahead with our energy transition.
This report is a statement of intent. A strategy for success. And a proud commitment to the future of our financial services sector.
Britain’s history is as a great enterprising, innovating country. That can be our future too.
Together, we can achieve great things, stand tall in an age of insecurity, and power ahead in new and growing industries unimaginable just a generation or two ago.
It will rest on partnership, a contract between government and business.
Know that in Labour you will have a government that respects business.
A government that will never put Britain’s economic stability at risk.
A government proud to say: we understand British business. We are on the side of British business. We will back British business, every day, and every chance we get.
Let’s change Britain, together.