Business Chiefs Want More on Housing and Tax From UK Election

With less than three weeks to go until Britain’s general election, the Tories and Labour have put their policy cards on the table.

Author of the article:

Bloomberg News

Chloé Meley, Damian Shepherd and Jennifer Creery

Published Jun 15, 2024 • 5 minute read

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(Bloomberg) — With less than three weeks to go until Britain’s general election, the Tories and Labour have put their policy cards on the table.

Prime Minister Rishi Sunak’s manifesto, released on Tuesday, went all in on tax cuts and proposed the introduction of a binding, legal cap on migration, policies designed to fend off both Labour and Nigel Farage’s right-wing Reform UK party, respectively.

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Meanwhile, Labour leader Keir Starmer’s 133-page document emphasized economic growth as a “number one priority” and didn’t go beyond already announced tax hikes, including charging VAT on private school fees, abolishing the special tax status for so-called non-doms and extending the current windfall tax on oil and gas companies.

Housing, health and childcare were key components of both parties’ manifestos, with pledges to build new homes, reduce the strain on the National Health Service and alleviate the burden on working parents. Making the UK innovative and competitive was also top of mind, with talk of R&D investment, AI and data centers.

Some of these commitments are explicitly made to woo the world of business, but do British bosses feel heard? We spoke to eight leaders, from asset managers to housing developers, about which manifesto pledges are key for their industries — and where the parties are still falling short. Here’s what they had to say:

Ian Simm, Impax Asset Management

“Overall, the Labour manifesto contains a great deal more ambition and detail on real economy climate policy,” the founder and chief executive of the specialist asset manager told Bloomberg.

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Simm added that while both manifestos speak to the need to upgrade infrastructure to meet energy efficiency targets, neither party suggested a solution to close the skills gap in the building sector that is the other critical component of meeting low-carbon goals.

Helen Dickinson, British Retail Consortium

The Conservative manifesto “fails to take the bull by the horns” when it comes to business rates — a divisive property tax — according to the CEO of the retail trade association.

Retailers with the most presence in city and town centers have long argued that the system favors online rivals that lean more toward property in cheaper areas, particularly warehouses.

The Tories have pledged to ease business rates on high street stores by increasing the multiplier on distribution warehouses that support online shopping, while Labour is offering to replace business rates with a revenue-neutral system.

Dickinson said that, while the full details were needed, it’s hard to see the Conservative policy as a viable solution given the wide range of retailers that sell goods online as well as from stores.

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Rick de Blaby, Get Living

As head of a build-to-rent developer, it’s little surprise that De Blaby is encouraged by the parties’ plans to ramp up housebuilding. However, he said Britain needs a period of regulatory certainty to lure foreign investors.

A lot of global capital would be willing to build UK homes, he added, but was continually put off by “the non-stop moving of the goalposts,” from leasehold reforms to talk of rent controls.

De Blaby acknowledged the efforts of both parties in promising to fix the planning system, as well as Labour’s pledge to build new towns, but warned these plans would take a very long time to implement. He questioned some of the more short-term efforts to get Britons on the housing ladder, such as the Conservatives’ plan to bring back the Help to Buy scheme.

“It’s effectively a steroid for house prices,” De Blaby said. “We need to boost supply, but no one is going to put their head on a pillow in a new town for at least 10 years.”

Jason Clatworthy, Alvarez & Marsal

The end of the carried interest tax break is a “massive concern” to private equity and could lead to fund managers being “bag ready” if the reform comes into effect, the managing director of the consultancy’s tax division said.

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The Labour party plans to close the loophole that allows private equity fund managers to pay capital-gains tax on their investment returns, instead taxing them at a higher rate as income.

“At a time when private equity investments are already suffering from high interest rates and inflation, it could compound the impact and certainly unwind the really positive efforts over the last few years to make the UK a genuine alternative fund jurisdiction,” he said.

Rob Wood, Breedon Group

The CEO of the construction materials company is “pleased” that all the main parties are committed to the introduction of a Carbon Border Adjustment Mechanism – which would impose a levy on certain imported goods from countries without carbon pricing regimes in place – and the funding of carbon capture initiatives.

“These measures are vital to secure the future of the British cement industry and provide security of supply for domestic construction markets,” Wood said. “It is crucial that the new government follows through on these commitments as matters of priority rather than lip service.”

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Justin Young, Royal Institution of Chartered Surveyors

Red tape in housing and infrastructure is a “significant barrier to growth,” the association’s chief executive said, commending Labour for putting forward planning reforms.

Those reforms should speed up decision-making and boost smaller housebuilding companies, he added, as the number of small and medium-sized homebuilders has decreased by 80% over the last 30 years. “It becomes very apparent why we continue to face a housing crisis and fall short of our housing targets. A simplification of the planning system should help reverse this decline by delivering significant certainty,” he said.

Young also called for the creation of a cross-department skills task force to identify gaps in the workforce, which he pointed out Labour has set out to do with its proposed Skills England body.

Anne Fairweather, Hargreaves Lansdown

The head of public policy at the investment platform identified two priorities she would want from the next government: freeing up rules to allow for automatic enrollment into a savings pot and encouraging employers to match higher pension contributions from their employees.

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These ideas do not appear explicitly in either manifesto. Labour has pledged to undertake a review of the pensions landscape, while the Conservatives promised not to introduce any new taxes on pensions.

Fairweather also said that demand from retail investors for IPOs outstrips supply. “We need a regime which allows for retail investors to support companies listing in London,” she said.

Will Gardiner, Drax

The CEO of the renewable energy company welcomes Labour’s ambition to deliver a net zero electricity system, calling it a “once in a generation opportunity” to create jobs and tackle the climate crisis.

With support from the next government, he said Drax is ready to invest billions of pounds into carbon removal technologies in the UK.

“There is a global race for investment in these technologies and the UK needs to act fast, or it risks getting left behind.”

—With assistance from Joe Mayes, Ailbhe Rea and Isabella Ward.

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