HMT Ministers and Special Advisors
by H/Advisors Cicero
16 July 2024
The key figures expanding the Treasury’s influence
Rachel Reeves’ first major speech as Chancellor was notable not only for the announcements that were made, but for where they were being announced. A consultation on significant changes to national planning policy – an issue that traditionally would sit squarely with the Ministry of Housing, Communities and Local Government (MHCLG) – was unveiled in the Treasury by the Chancellor on 8 July, not MHCLG Secretary of State Angela Rayner.
The following day, details on how energy infrastructure would be funded came not from Energy Secretary Ed Miliband alone, but from Miliband and the Chancellor as they convened the first meeting of the National Wealth Fund Taskforce at No 11. Taking ownership of key announcements in the Government’s first week suggests a Chancellor who wants to have her hand on all the policy levers that can affect growth, regardless of whether there is a nexus in another Department or Cabinet colleague’s brief.
The incoming Government’s central mission is to grow the economy. The Chancellor’s Ministerial and Special Advisor appointments make it clear that mission is going to be driven and delivered by HM Treasury..
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17 June 2024
It has been widely reported that the China-founded, Singapore-based fast-fashion retail giant Shein is edging closer to listing on the London Stock Exchange (LSE).
Shein’s potential flotation has been billed as a much-needed “shot in the arm” for the City after a dearth of IPOs, and a slew of UK public companies either being taken private or re-listing in New York in search of higher valuations. Others, however, have warned that institutional investors will struggle to support a Shein listing over concerns about its ESG credentials and the associated risk of reputational damage for the London market.
It has been reported that the number of shares set to be sold by the fashion giant may yet fall short of the free float minimum of 25% required for inclusion on the FTSE 100, meaning that it won’t enter the top rank of listed companies, somewhat lowering the ‘temperature’ of scrutiny. But it nevertheless poses policymakers with a tricky question: while this could be an important contributor to an IPO revival that the City and Government have been desperate to encourage, it is accompanied with criticism that London could become a listing venue for companies who are not welcome in the US.
Background to Shein’s potential listing on the London Stock Exchange
Shein, which was launched in China in 2012, has rapidly become one of the world’s largest fashion retailers due to its low prices and high-volume sales. Its innovative model uses AI tools to monitor social media to spot fashion trends and reacts quickly to produce new lines across its factories, which ship direct to consumers. This has propelled Shein to the forefront of the fast-fashion world.
Shein has reportedly marked the first step in the initial public offering (IPO) process by filing a confidential prospectus with the Financial Conduct Authority (FCA). While not a guarantee that the company will float in the UK, it is a clear signal that Shein is seriously considering becoming the highest profile listing that the LSE has seen for some time. However, the interest of this behemoth, while a vote of confidence for London, also reflects its struggle to list in the US. In recent years, Shein has found itself stuck awkwardly in the middle of US-China tensions, and an initial effort to float in New York was derailed by pushback from lawmakers and regulatory hurdles.
Despite being headquartered in Singapore, most of Shein’s suppliers are based in China (although it does not sell products in the country) – and US policymakers remain unconvinced by assurances that Shein does not use cotton from Xinjiang, which accounts for most of China’s cotton production, but where Chinese authorities are accused of using forced labour in its repression of the Uyghurs.
For its part, Shein vigorously denies any connection with human rights abuses in its supply chain, saying it has “a zero-tolerance policy for forced labour and we are committed to respecting human rights. We take visibility across our entire supply chain seriously and we require our contract manufacturers to only source cotton from approved regions.”
Lawmakers in Washington DC remain watchful of developments in the UK. Senior Republican Senator Marco Rubio has reportedly raised his concerns with the Chancellor Jeremy Hunt and Nikhil Rathi of the FCA, in a letter that warns of “unethical and irresponsible business practices” and obeys “a duty of friendship to repeat these warnings and urge caution before the United Kingdom allows Shein to list in London”.
Frontbench support for Shein’s IPO
Senior politicians from the main UK parties, with a close eye on encouraging growth and investment, have been supportive.
Conservatives
Jeremy Hunt recently rejected claims of the demise of London’s stock market, hailing the Treasury’s overhaul of the UK’s listing regime, as well as plans to help Britain’s pension funds invest in fast-growing companies as part of the Mansion House reforms unveiled last summer.
Mr Hunt met Tang earlier this year to persuade him of the merits of London over New York.
He will be keen to push the message that a Shein listing has been encouraged by the Government’s proposed reforms to the UK’s listing regime, which aim to streamline the eligibility requirements applicable to IPO candidates and the obligations with which they will have to comply after listing. The expectation now is that the FCA’s final listing rules will be hammered out and made public soon after election day.
Labour
A Labour tag-team of Shadow Business Secretary Jonathan Reynolds and shadow ministers Sarah Jones and Chris Bryant reportedly offered their support for Shein’s listing at an in-person meeting.
It is understood that the party does not currently believe the IPO represents a threat. Labour has underlined that it expects “the highest regulatory standards and business practices” from firms active in the UK, and “the best way to ensure this is to have more companies operating from and regulated by UK law”.
Scepticism on the backbenches?
While there has been broad support from the frontbench, there has been more disquiet from the backbenches. A cross-party coalition has already registered its scepticism of Shein’s UK listing. The retailer has been accused of failing to make public disclosures about working conditions along its supply chains in accordance with the UK’s Modern Slavery Act.
Senior backbenchers from the recent Parliament, including Foreign Affairs Committee Chair Alicia Kearns, Business & Trade Committee Chair Liam Byrne, and International Development Committee Chair Sarah Champion, have each said a Shein listing should not be allowed to proceed while Parliament is dissolved. Reform UK leader Nigel Farage stepped into the debate, warning a Shein listing would be a “very bad idea” that “won’t change the IPO crisis”.
There has been a rise in the number of debates and backbench legislation driving greater scrutiny of firms’ supply chains. A Private Members’ Bill from Baroness Young won cross-party support as it sought to place a duty on commercial organisations to prevent human rights abuses and environmental harms in their value chains. In addition, some parliamentarians are supportive of recent developments in France, where lawmakers approved a fast-fashion bill that will impose hefty levies on low-cost garments sold by companies like Shein to curb the industry’s environmental impact.
Mixed views on Shein from the Square Mile
City investors are eager for the IPO market to be revitalised after what has been a lean time, with high-profile companies going private or leaving the UK for listings in the US. The owners of PaddyPower, Flutter, Tui and UK chip designer Arm opted to list on Wall Street.
But some fund managers have responded coldly to the prospect of a Shein listing. Rumours abound that the company would still prefer New York as a listing venue and may pursue a secondary US listing after its London IPO. The appetite among investors is for smaller high-growth tech start-ups, with the LSE’s upcoming addition, Raspberry Pi, often held up as the type of company fund managers would like to invest in.
Conclusion
The debate over the Shein listing mirrors the broader dilemma over the global competitiveness and status of the City of London. Labour in government wants – and needs – the London market to be an engine of growth and has been supportive broadly of the reforms by Rishi Sunak’s government to increase risk appetite in London. The health of the London listings is a totemic sign of health in the overall eco-system, building confidence in the UK market. However, in attracting new business, some are accusing the UK of prioritising growth over principles.
The ESG credentials of firms have never been under greater scrutiny. Shein is unlikely to be the last company where London’s desire to revitalise its market will run into opposition from backbenchers, campaigners, and some institutional investors. This maybe an enduring theme in the next Parliament.
31 May 2024
Before Rishi Sunak announced the General Election in the rain with “Things Can Only Get Better” playing in the background, the City gathered at Guildhall to call for optimism in London’s position as a global financial centre. It kicked off a week of financial services events that considered the wide-ranging reforms the Government and regulators have undertaken since the UK left the EU, as well as the areas left for the next administration to take forward.
Optimism and elephants in the room
In what was likely his last speech as City Minister Bim Afolami outlined the Government’s ambitious reform agenda, emphasising the need for adaptation to maintain the UK’s status as a global financial centre. Throughout the day panellists struck a positive tone on the changes implemented to date and called for London to embrace some American optimism when talking about the City, rather than predicting its decline.
The Private Intermittent Securities and Capital Exchange System (PISCES), a new crossover market aimed at enabling private companies to list shares, was welcomed by panellists across the day. The NatWest share sale, although now postponed due to the election, was raised as a possible catalyst for retail investment akin to the 1980s “Tell Sid” campaign. It was not universal praise, though. While initiatives to boost investment into UK assets via the Mansion House reforms remained welcome in the room, there was a backdrop of tension over the role of a public sector consolidator in the DB pensions sector.
The elephant in the room was the ongoing controversy over the FCA’s proposed “name and shame” approach to enforcement. The proposals have united the Government and Labour in opposition and the FCA faces a backlash from executives concerned about naming firms under investigation before misconduct is proven. Despite Sarah Pritchard stressing the FCA’s openness to engagement with industry over the proposals, the move has raised questions over how committed the FCA is to genuine implementation of its new International Competitiveness and Economic Growth Secondary Objective.
Moving on from Brexit
Aside from a few mentions, the UK’s relationship with the EU was notably absent from the conversation. Behind the scenes, relations have slowly started to warm and recent months have seen more formal cooperation through the UK-EU Financial Regulatory Forum. The latest meeting of the group took place last week and saw participants discuss a range of issues, including AML, T+1 and Basel III implementation. The growing warmth in the relationship, while welcome, should not be mistaken as an indication of improved financial services market access. Neither the UK nor financial services feature in the top ten issues for the EU. Under Labour, closer alignment on certain issues may be possible but the EU’s attention will be on advancing internal initiatives, including Capital Markets Union.
Preparing for Trump 2.0?
On the other side of the Atlantic, if polls are to be believed, America is preparing for a second Trump presidency. This time his team is understood to be more prepared, with a dedicated financial services transition team and expectation that key appointments, including Treasury Secretary, will come on Day One of the new administration. Rolling back ESG initiatives brought forward under the Biden administration is top of his agenda and the SEC is already facing numerous lawsuits in response to its climate disclosure proposals. Amidst the “America First” rhetoric, there is also growing discontent on Capitol Hill with the role of international standard-setting bodies.
Inbox for the next UK Government administration
Back in Westminster, the next inhabitant of Number 11 has a full inbox to look forward to. The divisions over the FCA’s enforcement proposals are not going anywhere. They will need to decide how to proceed with the CBAM consultation and after years of delays we may finally see a taxonomy consultation. As interest in digital assets continues to grow, a balance needs to be found between wholesale innovation with retail protection. Although interest rates are falling the economic outlook remains uncertain and tax rises may need to be considered. And with the UK’s two closet allies in the US and EU also facing a change of government, ensuring continued collaboration at the international level is key.
For more analysis from our team of UK Public Affairs consultants, subscribe to our monthly newsletter, and visit our elections hub, Cicero Elections ’24.
3 May 2024
The world of late seems on fire. Conflict around the world is increasing, people are polarised and markets are fragmenting. This was the underlying feeling at this year’s London Business School “World in Flux: Geopolitical Uncertainty and the Future of Business” conference.
Against a chaotic backdrop, business leaders and key thinkers discussed where opportunities lie for firms navigating a complex international landscape. Attendees were privy to discussions that explored the far-reaching implications of the super-election year of 2024, an evolving energy landscape, and AI and its impact on global order.
Through this mix of unpredictable external factors, understanding the interplay and impact between geopolitics and business has never been a greater driver on influencing corporate strategies.
Why does a year of elections actually matter to business?
The first session of the conference centred around this super-election year, focusing on why the elections of 2024 were important and why businesses should care. Answering that question the consensus was that these elections, across Asia, Europe and in the United States, were important not for the sheer number of people voting, nor domestic policy issues, but for their potential to influence great power rivalry and resultant disruptions to global markets.
Elections in Europe, taking place in June, are a worry to businesses as current polling shows a high probability for far-right parties to make gains. While founded on the principle of an open market amongst member states, businesses are anticipating they may no longer be able to take this moderate, consensus-led approach for granted. These parties may clash as well with national politics, driving a wedge between EU and member states and slowing action on global issues. Further, and dependant on elections in the US, the composition of EU leadership could further distance the bloc from the United States through protectionism and other trade-focused restrictions.
Much of the global punditry is closely watching the US elections. The choice in candidates is between one who has settled into a “protectionism-lite” view on international trade and the other who teeters on the brink of a trade war with allies and non-allies. Either way, US policy of isolationism risks allowing adversarial states more room to manoeuvre and set terms in a variety of critical regions and markets.
This threatens established business links as the possibility of a new “power” moves in and sets new regulatory, cultural or other standards for companies.
Can AI be governed for good?
As AI remains in the headlines, this conference also took aim at the topic. Speakers discussed AI in the context of the need for global governance. AI is being, or soon will be, regulated by national governments or the EU. However, will there soon be need for global governance? For example, International Atomic Energy Agency (IAEA) model would bring together stakeholders to find solutions on how to limit the weaponisation of AI, such as those used to enhance disinformation efforts and disrupt elections in democratic states.
Further, a global governance mechanism is necessary to bring governments and businesses together. Currently, a handful of businesses operate the largest and most influential AI tools and the infrastructure they run on. These few businesses can leverage their technology to influence other businesses and governments and dictate terms of operation within various markets. A global governance mechanism would treat these firms as global actors, bringing them to the table, which gives them a voice and increases accountability toward others.
Have firms still got the energy?
Energy security came to the forefront in a big way after the Russian invasion of Ukraine, as the EU and UK scrambled to secure new energy supply lines. A key consideration for energy security efforts is where they align with the net zero transition. Both aims are mutually inclusive, in that steps to achieve one will secure the other.
Countries are rushing both to reduce their emissions and also their reliance on foreign sources of energy. Taking these steps bolsters a country’s ‘power’ on the global stage as it reduces reliance on other countries and the potential to be “bullied” or “blackmailed” into going against their own interests. In effect, it allows countries to equalise power at the negotiating table when looking to secure or strengthen market access for their industries.
What does this all mean for business?
How can businesses navigate the geopolitical landscape, mitigating risks and ultimately thrive amidst such turbulence? Having the right people, with the right intel to hand, matters now more than ever.
At H/Advisors Cicero, we equip businesses to navigate the complex geopolitical landscape with expertise and strategic insight. Our consultants provide valuable perspectives on international dynamics, helping companies make well-informed decisions in an increasingly fragmented world. We support with:
- Strategic Insight: Our consultants analyse global political climates and deliver strategic advice, enabling businesses to anticipate and adapt to changes effectively.
- Scenario Planning: Our team excels in forecasting the impacts of geopolitical shifts, helping businesses develop proactive strategies for all potential future challenges.
- Effective Communication: We aid businesses in clearly articulating how geopolitical events impact their firms and their needs to policymakers and stakeholders, ensuring their voices are heard in critical policy discussions.
Despite global uncertainties, we encourage businesses to view these challenges as opportunities for innovation and leadership. By collaborating with H/Advisors Cicero, businesses can influence policy, enhance economic stability, and set new standards in their industries. Through effective communication, businesses can also demonstrate their and leadership to both policymakers and the public.
25 April 2024
On 2 May, voters across the country will head to the polls for the local elections, casting their ballots to shape the future of their communities. With a General Election anticipated later this year and so much at stake for political parties, we delve into the key factors that decide local elections, the impact of local campaigning, and how to win.
What factors decide local elections?
There are five key factors at play in the outcome of local elections:
- Governing party performance: The popularity (or lack thereof) of a Governing party significantly influences the outcome of local elections in England. Opposition parties can tend to do well as voters let out their frustrations at the ballot box. The Conservatives fell victim to this trend in 2023 when they lost over 1,000 seats and the Labour Party became the largest party in local government.
- Strength of the local campaign: Local elections are not just mini versions of national contests; they have unique dynamics and seats which can be won or lost by single figures. In a local campaign, the candidate’s visibility and engagement with the local community supported by a strong understanding of local issues, is essential to moving the needle.
- Visibility and engagement: Parties and candidates must be visible and active in the weeks and months leading up to the election. Knocking on doors, attending community events, and engaging with residents’ issues. Voters want to see their potential representatives actively participating in local life.
- Local issues: While national policies matter, local elections can be won or lost due to hyper-local issues. Is there a pothole-ridden road that irks residents? Or perhaps green belt land that needs protecting? Candidates who address these specific concerns resonate with voters and will be rewarded at the ballot box.
- Amount of Tactical Voting: The extent to which tactical voting takes place varies around the country. In the South West, local people who may prefer to vote Labour at the General Election often support the Liberal Democrats in local elections believing that they are more the most competitive “anti-Tory” party in the area. Independent or Resident Association candidates can also do well if they have a significant profile and are well-liked in the local community.
Read Alice Perry’s account of what happens when you win your local election
When can local campaigning make a difference?
“Can I move the needle in a local election campaign?” It’s a question every local election candidate asks themselves and sometimes the answer is “no”. Perhaps the incumbent has done great things for the ward, won hearts, and become the neighbourhood hero, leaving you with little room to compete. In another scenario, the incumbent political party might have campaigned relentlessly in the local area and left you without the time or the resources to change the narrative.
Sometimes, however, the stars align, and the right circumstances are in place for a local candidate to unseat an incumbent:
- Untouched issues: There are issues of consequence to the local electorate that haven’t been addressed by the incumbent.
- Party competitiveness: The political party you represent is competitive in the ward in which you’re standing in. This can be gauged from previous electoral results in the area.
- Local appetite: Local party members are up for the campaign and eager to work hard to see you elected.
- Polling acceptably: The political party you’re attached to is popular with the general public and riding high in national polls.
Under such circumstances running a good local campaign can get you elected (if you’ve got the stamina). But it’s important to remember that everything can change quickly in politics and so much depends on what the month before the election looks like from a national perspective. No matter how much planning or door-knocking you’ve done, a scandal in Westminster always has the potential to derail the best local election campaign.
2024 Local Elections: What are we anticipating?
The last time these council seats and mayoralties were last in contention was 2021, three Prime Ministers ago and at a time when the Conservatives were ahead in the polls. Now everything has changed. The Conservatives are trailing behind Labour by 20 points and have lost 10 Parliamentary by-elections. Smaller parties, like the Liberal Democrats, the Green Party and Reform are polling well and hoping to increase their share of local government seats.
Conservatives
The Conservatives are expecting to lose big, with Rishi Sunak’s allies regarding this as the most dangerous moment for the Prime Minister before the General Election. Chatter has turned to whether the results will be so bad, that a vote of no confidence or leadership challenge follows and leads to the removal of another Prime Minister.
Labour
Labour has a lot to gain. The local elections are another opportunity for the party to road test its campaigning and digital machine and pump-up activists to build momentum before the General Election. Labour is defending just under 1,000 council seats and there will be questions for the party to answer if this share doesn’t grow on 2 May.
Liberal Democrats
The Liberal Democrats will use the local elections to make inroads in 20 target seats for the General Election across the southeast and southwest. The party will try to capitalise on tactical voting emphasising that they are the best party to challenge the Conservatives in areas like Surrey and Somerset.
Reform
Reform poses a threat to the Conservatives for the mayoral elections and to a limited extent, for the local elections. New polling for the West Midlands shows Reform is polling in third place with 13%, Conservatives at 28% and Labour at 42%. The Conservatives risk losing votes across multiple races to Reform and will want to hammer home to voters: Vote Reform, Get Labour.
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24 April 2024
“Congratulations on winning your election,” the Leader of a neighbouring Council said to me the night I was first elected as a councillor. “Do you realise you have put your life through a shredder?” She wasn’t wrong. Winning an election for the first time is an intense experience. You quickly need to figure out what on earth is going on, what your role is going to be and how to balance all the demands on your time.
Part of my role as Chief Whip was to support the newly elected Councillors. Immediately following election, they will be “sworn-in”, have their photos taken for the website and posters advertising their ward surgeries, and get their security passes. Officers will also put on training to ensure they are aware of the legal and statutory responsibilities.
A backbench councillor would typically spend around 20 hours a week doing Council work. They would also be expected to attend local political party meetings and community meetings. Most councillors work full-time and, in addition to their Council work, will be expected to regularly campaign in their communities. The most successful councillors campaign all year round, regardless of where they are in the political cycle. Since 2024 is (most likely) a General Election year, there will be a clear expectation for councillors to campaign in their area, and nearby marginal parliamentary seats which could decide the outcome of the General Election.
As my colleague Emma alludes to in her blog, “How local are they?”; campaigning in local elections is slightly different to national elections. Obviously local issues are more relevant. As a councillor I learned a lot about potholes and tree subsidence, which along with dog poo, parking and bin collections come up regularly on the doorstep. Since turnout for local elections is lower than at general elections, a good local campaign can make the different between winning and losing a seat. I have a friend who won his seat in Kent by 3 votes and remembers persuading a group of 4 students to go and cast their votes just as the polling station was closing. That said, local results are often decided by national politics. With most polling done on a national level, this means local elections are some of the best indicators of what might happen in political bell-weather constituencies. Once a party wins or loses a Council, the local MP often follows suit.
A Council term is four years and the Councillor profile is different in different parties and in different parts of the UK. In London where I was a Councillor, our group included people of all ages and all walks of life. We had Councillors who had political or policy jobs, as well as teachers and teaching assistants, researchers, estate caretakers, health professionals, an architect who loved planning committee, a prison office who was passionate about law and order, and even a few playwrights. Ideally a Council should be made up of a diverse group of people who understand Council services and can set the political direction and hold officers (and each other) to account.
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