What businesses can expect from the new UK Labour government

Mr Keir Starmer was elected Prime Minister of the United Kingdom following a landslide victory for the Labour Party in the general election General elections – reaching 326 seats at 4.50am on Friday.

For many businesses, the victory means the government is now stable and can prioritize economic development, hopefully bringing the significant business investment the country and economy so urgently need.

In recent weeks, Keir Starmer, 61, and his chancellor, Rachel Reeves, have focused on growth, with the leader arguing that it is the clear, single way to ensure the UK economy generates the resources it needs to tackle the many challenges we face.

Businesses across the country are now waiting for more detailed plans from the Prime Minister on how the new government will support British business.

Financial markets have been largely unchanged since the open this morning, with only modest gains as the election result was widely predicted.

In his victory speech, Keir Starmer said: “Our job is nothing less than to renew the ideas that hold this country together. National renew. Whoever you are, wherever you started in life, if you work hard, if you play by the rules, this country should give you a fair chance to get ahead. It should always respect your contribution and we need to get that back. The fight for trust is the battle that defines our age.”

WATCH KEIR STARMER’S SPEECH

Businesses can now look forward to a series of policy changes designed to support stability, growth and innovation across sectors. Here’s what they can expect…

Stability and certainty of business taxation

One of the key commitments of the new Labour government, according to its manifesto, is to provide greater stability and certainty in business taxation. They plan to cap corporation tax at 25% for the duration of the parliament. This measure aims to provide predictability for businesses, making it easier to plan and invest for the long term.

The government will introduce a new tax roadmap that includes a permanent system of full deduction of capital expenditure. This allows businesses to deduct the full cost of capital expenditure, encouraging reinvestment and modernisation. In addition, annual capital allowances will be increased, which will benefit small businesses in particular, making capital investment more financially viable.

Discover our upcoming show, “The Future of Investing”

Business rates reform

The Labour government is set to reform the business rates system to create a fairer environment between high street businesses and online giants. This long-awaited reform aims to support smaller retail businesses, helping them compete more effectively with the big e-commerce platforms. By levelling the playing field, it is hoped that this change will rejuvenate high street shopping areas and support local economies.

Infrastructure development and connectivity

Tackling the UK’s ageing infrastructure is a top priority for the new government. A comprehensive ten-year infrastructure strategy will align with industrial and regional development priorities, aiming to modernise the country’s transport, digital and housing infrastructure.

EXPLORE our upcoming programme, Digital Britain: Connecting the Nation

Key elements of this strategy include:

Full Gigabit and 5G coverage by 2030: The Government has committed to delivering nationwide gigabit broadband and 5G coverage by 2030, significantly increasing connectivity and supporting digital businesses.
National Authority for Infrastructure and Service Transformation: This new body will set strategic priorities and oversee the implementation of major projects, ensuring the efficient and effective development of roads, railways and water reservoirs.
Electric vehicle support: To facilitate the transition to electric vehicles, the government will increase the number of charging points and reform the rail system, returning it to public hands with the aim of providing reliable and affordable services.

Reversal of low investment levels

Another important commitment is to reverse the historically low levels of investment in the UK by using public investment to reduce risk and attract private investment. At the heart of this initiative is the creation of National Welfare Fundcapitalized at £7.3 billion.

This fund will support growth and clean energy missions aimed at transformative investments across the country. The fund will focus on key areas such as:

Port Improvements: Modernization and expansion of port facilities to facilitate trade and logistics.
New Gigafactories: Creating large-scale battery production plants to support the electric vehicle industry.
Modernizations in the steel industry: Investing in new technologies that will make the steel industry more efficient and environmentally friendly.
Carbon capture technology: Developing advanced carbon capture and storage systems.
Green hydrogen production: Promoting the production of hydrogen fuel using renewable energy sources.

Supporting employment and staff development

Employment reforms are at the forefront of Labour government policy. Key initiatives include:

Support for people with disabilities and health problems: Measures will be introduced to help these people find and retain employment.
Youth employment and skills development: The government will focus on creating jobs and developing the skills of young people, thereby ensuring a solid workforce for the future.
Improving working conditions: Legislation will be introduced to ban zero-hour contracts, extend parental leave and increase sickness benefits, improving the overall quality of employment.

Immigration and Skills Shortages

To address high levels of economic inactivity and reduce reliance on foreign workers, the Labour government plans to reform the points-based immigration system. This reform will focus on addressing skills shortages through local training programmes and improving working conditions to attract domestic talent.

Bibliography and further reading: