25 May 2024 - 10:44
The governing Conservative Party in the UK was long seen as the entrepreneurs’ natural ally and lobbyists’ most important target. With an election on the horizon, that’s changing and it may not be a bad thing for the UK's business environment.
Rishi Sunak's call for a general election in the UK on the 4th of July 2024 caught many off-guard. The announcement, done at 10 Downing Street, London, was made in the rain and unfortunately led to several social media memes that have not helped the governing party's image. But, what we find more significant is that nearly 80 Conservative Members of Parliament have decided not to seek re-election. This unprecedented number marks a post-war record, surpassing the previous high of 72 MPs who stepped down before Sir Tony Blair’s 1997 Labour landslide. If we can draw a parallel between 1997 and 2024 on the MP resignations then 2024 could be a landslide.
Among the notable figures not seeking re-election are former ministers Sir David Evennett, Greg Clark, Sir John Redwood, and Craig Mackinlay. Mr. Mackinlay, who recently returned to Parliament after a severe illness, cited health reasons for his departure, stating that the demands of a rigorous election campaign would be unsustainable for him.
Prime Minister Rishi Sunak’s unexpected decision to call a summer election, rather than the anticipated autumn poll, has sparked concern among some Conservative MPs, with reports indicating that even some Cabinet ministers have expressed apprehensions about this timing.
Mr. Mackinlay shared his decision on Facebook, reflecting on the difficulty of balancing his passion for his work with the physical demands it entails. Similarly, Sir John Redwood, a long-serving MP since 1987, has decided to step down to pursue other interests. Liberal Democrats leader Sir Ed Davey interpreted Sir John’s departure as a positive signal for his party’s prospects in Wokingham.
Greg Clark, MP for Tunbridge Wells for nearly two decades, announced his retirement from Parliament on social media, expressing gratitude for his time in service and highlighting the importance of passing the baton to a new candidate. Sir David Evennett, representing Bexleyheath and Crayford, praised the Conservative governments’ accomplishments over the past 14 years but acknowledged the need for fresh leadership.
Other notable departures include Matt Hancock and Bob Stewart, both of whom had the party whip restored recently. Mr. Hancock's decision follows his controversial appearance on a reality TV show, while Mr. Stewart’s departure comes after his successful appeal against a conviction. Additionally, former Prime Minister Theresa May and former Chancellor Nadhim Zahawi will not be standing for re-election.
As the campaign officially begins, transport minister Huw Merriman and work and pensions minister Jo Churchill also announced their departures, with Ms. Churchill citing family reasons and Mr. Merriman expressing gratitude towards his constituency and colleagues.
This wave of resignations and retirements, including figures like Deputy Commons Speaker Dame Eleanor Laing and former minister Sir Michael Ellis, indicates a significant shift in the political landscape. These changes may have implications for policy continuity and market stability in the near term.
Chris Hayward, a spokesperson on policy issues for the City of London, commented (at a Labour conference in 2023) on the shifting political landscape: “What we are experiencing is a party that, if elected, aims to be a business-friendly government, seeking to work in partnership with the private sector.”
Brexit was a source of strained relations between businesses and the governing Conservatives, which many large corporations opposed. Former Prime Minister Boris Johnson infamously dismissed business concerns over it. His successor, Liz Truss, caused market turmoil with her plans for unfunded tax cuts. Although Rishi Sunak restored some stability, his recent decisions to abruptly alter net-zero targets and cancel part of a high-speed rail project have frustrated many in the business community.
Many businesses are increasingly drawn to Labour due to the prospect of a more stable policy environment, bolstered by the party’s plans for a long-term industrial strategy—an approach that contrasts with Mr. Sunak’s free-market instincts.
Carl Ennis, head of Siemens in Britain and Ireland, attended the Labour conference in October 2023 for the first time, advocating for a comprehensive and long-term strategy, something he felt the Conservatives were failing to provide. “My job is to make the U.K. an attractive place for Siemens to invest its money in,” Ennis said, noting that Labour’s industrial strategy was particularly appealing.
In every meeting room, businesses had a consistent request: provide us with consistency. According to Shevaun Haviland, director general of the British Chambers of Commerce, Labour was receptive to these concerns. “We feel very positive that the party is listening to what we and our members have to say,” she stated.
Ben Wilson, vice president of public policy for Mastercard, echoed this sentiment, noting that his interactions with Labour were “indicative of how open Labour is to business.” He mentioned that he and other executives had opportunities to discuss potential policies that could become part of the next government’s platform.
This shift in Labour’s relationship with business has revived memories of the 1990s. Back then, before Tony Blair became prime minister, the party courted business leaders over lunches and dinners in what was dubbed the “prawn cocktail offensive.” Today, much of this engagement happens over breakfast meetings with Ms. Reeves, earning the nickname the “scrambled eggs and smoked salmon offensive.”
As always, our team is closely monitoring these developments to provide you with the best investment advice and strategies. We remain committed to navigating these changes effectively to safeguard and grow your investments.