6 March 2024

Spring Budget 2024: The Blueprint for the Conservative Party Manifesto

Sonia Khan, Director and former Treasury Adviser

While the Spring Budget of 2024 won’t be winning awards for brevity, it does give us a peek inside the Conservative Party’s manifesto as it approaches a General Election.

Chancellor Jeremy Hunt delivered a comprehensive hour-long speech, unveiling a slew of measures aimed at appeasing Conservative MPs, enticing voters with pre-local election treats, and thwarting any potential leadership challenges. Among the headline announcements was a 2p reduction in National Insurance Contributions, coupled with an array of tax reliefs for theatres and orchestras, alongside plans to deploy drones to police emergency scenes.

Hunt’s address strategically catered to various audiences, opening with measures tailored for working individuals, including assistance on debt relief and an extension of pandemic loan packages for Small and Medium-sized Enterprises (SMEs). The Chancellor also outlined additional regional devolution plans and proposed reforms to child benefit, signalling a shift toward a household-based tax system by April 2026, potentially reshaping the tax landscape significantly.

Reflecting the government’s focus on technological innovation, the Budget emphasised policies such as reversing angel investor rules, injecting funds into the prestigious Turing Institute, and a substantial £360 million Research and Development (R&D) package. While education received scant attention, a nod to skills was made through the introduction of a £7.4 million AI upskilling fund aimed at SMEs.

However, the pièce de résistance of the Budget was the much-anticipated cut in national insurance contributions, complemented by a pledge to freeze fuel and alcohol duties — a boost for motorists and pub-goers alike. Despite the familiar tone for seasoned Budget observers, including to me as a former Treasury special adviser, the emphasis lay in maintaining stability amidst political turbulence. The joint appearance of the Chancellor and Prime Minister in pre-budget preparation photos underscored a concerted effort to present a unified front, vital for navigating the precarious political landscape.

While the Budget addressed several pressing issues, questions linger around plans for housing reform and escalating demands for increased defence spending amid geopolitical tensions. This may be tactical, as it’s widely believed that the “real” Budget, with potentially more impactful measures, will be reserved for closer to the speculated election date, later in the year. So, while the Spring Budget may not have drastically shifted the political landscape, its significance lies in setting the stage for the political manoeuvring yet to come.

The Labour response: Time for change

Alice Perry, Director – UK Public Affairs and former NEC Chair

Keir Starmer’s budget response highlighted some of Labour’s General Election attack lines. Starmer talked about the 8 million people on NHS waiting lists, the UK’s rivers and seas being full of sewage, crumbling schools and the UK being on a path of managed decline. Starmer wants to paint Rishi Sunak and the Government as “out of touch” and “out of ideas” with working people paying the price for the Government’s economic failure. The question for voters is whether after 14 years they feel better off or that it’s time for change.  

Starmer also used his response to showcase the different policy priorities between the Opposition and Government. Starmer noted the absence of a plan for housing building, investment in critical infrastructure, industrial strategy and a plan to address climate change. Expect these to feature in election material.  

The 2024 Budget takes place against a backdrop of intense speculation about the date of the next General Election. The earlier timing and tax giveaways further added to the rumours. Keir Starmer ramped up the pressure on Rishi Sunak to call the election for 2 May. Labour remembers how Gordon Brown was undermined by being labelled a “bottler” for not calling an early election and want to paint the Conservatives as desperately trying to cling onto power if they draw the parliament out further.   

The Government’s decision to adopt two of Labour’s key tax reforms leaves a hole in Labour’s fiscal plans. Labour will need to find alternative sources of income to fund their manifesto commitments and run the risk of being accused of having “secret plans to raise taxes”. Their proposed windfall tax on gas and oil had been heavily criticised at Labour’s recent Scottish business conference. By adopting this policy, the Conservatives risk losing support in Aberdeenshire to the SNP, which may prove helpful to Labour in the long-term.  

Investment in UK plc takes centre stage

Simon Fitzpatrick, Director – UK Public Affairs

The theme of productive finance and harnessing greater capital from pensions and savings funds into UK growth assets once again featured prominently in the Chancellor’s statement. As was trailed in advance, DC pension schemes will be required to publicly disclose the breakdown of their asset allocations, including in UK equities, a move designed to hold their feet to the fire and ensure UK investments increase. The FCA will consult further on this in the near future, with the Government dangling the threat of further action if the data does not show an improvement. The Treasury is also working with the Association of British Insurers to develop a monitoring framework for the Mansion House Compact as it approaches its first year anniversary. It is clear that, although investment in UK assets is not being mandated at this stage, Government wants to maintain a watchful eye on progress.

Two new savings opportunities were also announced for the retail market. First, a new “UK ISA”, which in practical terms is an extension of existing ISA allowances by £5k for investment in UK-focused assets. Second, a new British Savings Bond which will be offered up by National Savings & Investments, offering savers a guaranteed rate of return for three years. Retail investors can also look forward to potentially taking a stake in NatWest as the Treasury has committed to offloading its remaining shares by 2025-26, with an offering to the retail market potentially as soon as this summer depending on market conditions.

Today’s Budget also takes forward the previously announced commitment to establishing a new market to allow private companies to trade their securities on an intermittent basis and in a controlled environment. The new Private Intermittent Securities and Capital Exchange System – PISCES – is intended to boost the UK’s pipeline of IPOs and build on work such as the Listings Review led by Lord Hill. The Government is consulting on this with the move already warmly welcomed by the London Stock Exchange Group.

One policy on which momentum seems to have stalled a little is the “lifetime provider” model for DC pensions. While the Chancellor announced that he remains “committed to exploring” the lifetime provider proposal, the Red Book suggests that this is a “long term” aspiration, and that further analysis is required to ensure it would improve outcomes for savers and align with existing reforms such as the Value for Money framework (which is itself being strengthened with new powers for the regulators). This sounds rather like a policy being kicked into the long grass and the Government may have had second thoughts after receiving a lukewarm response in the initial consultation.

Get in touch with a member of the team to discuss further.

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26 February 2024

The Government faces a challenge with young voters. They aren’t voting for the Conservative party. A recent YouGov poll revealed that only 1% of 18-24 year olds intend to support the Conservative party in the upcoming election, with slightly higher but still low levels of support among 25–49 year-olds. Given that those under 34 make up over two thirds of the electorate, Sunak recognises that their support is crucial for electoral success. And addressing the issue of home ownership is imperative if he is to win over their support, as housing consistently ranks as the second most pressing concern for young voters, following only the economy. 

A package for first time buyers  

Against this backdrop, the Chancellor is likely to unveil a home ownership package in the upcoming Budget. Speculation suggests amendments could be announced to the Lifetime ISA (LISA) to make it more amenable for property purchases over £450,000, along with the introduction of Government-backed 99% mortgage schemes. 

Timing-wise, the Government’s strategy appears astute. With young voters potentially receiving up to eight Government bonuses in their LISA accounts before the General Election, mooted for November, the investment seems relatively low-cost for the Government which hopes this sustained support will win favour where needed. 

However, concerns linger about the potential impact of widespread 99% mortgages on financial stability. Regulators at the Prudential Regulation Authority (PRA) are cautious, mindful of the lessons from 2008, and will need convincing that Government guarantees suffice to mitigate risks.  

What is more, a significant omission could undermine the effectiveness and popularity of the package. While assisting first-time buyers with deposit savings is valuable, addressing mortgage affordability is essential to tackle the housing issue comprehensively. 

Labour’s proposed solution 

Rachel Reeves believes she has a solution to that problem. Labour has indicated that it would increase the availability of long-term fixed rate mortgage schemes which it anticipates would remove the requirement for mortgage affordability tests. These can often stress test applicants on their ability to repay at rates of up to 9% and shut many prospective buyers out of the market.  

Long-term fixed rate mortgages are by no means a silver bullet and come with drawbacks for mortgage holders who risk finding themselves unable to enjoy the advantage of falling interest rates in the future. But Labour’s recognition of the complexity of the problem on the demand side (it would most likely maintain the upkeep of the LISA to ensure that it remains fit for the future alongside addressing mortgage affordability) and its commitment to address challenges on the supply side has allowed it to make a convincing case for itself as the party of home ownership, a message which is now beginning to be reflected in the polling. A recent Opinium survey found that 34% of voters thought Labour would do a better job managing housing and house prices compared to just 16% who put their trust in the Conservatives. 

But what has been forgotten?  

Whilst both Labour and the Conservatives have now all but set out their electoral stalls as far as housing policy and first-time buyers are concerned, there remain additional challenges in the broader housing arena that have been left without solutions. Slow progress on the Leasehold Reform Bill and the Renters Reform Bill (the latter is understood to be facing the chop after rebel amendments threatened to water down the Bill beyond recognition) leaves the future landscape for tenants’ rights uncertain.  

Elsewhere, there remains no comprehensive answer to the question of how to open up access to the housing ladder for those on low incomes for whom the LISA does not provide a solution to the challenge of saving for a deposit. And on the supply side, whilst Labour has pledged to build 1.5m new homes, a question mark hangs over the training and recruitment of sufficient skilled workers to deliver on that ambition.  

If you work in the housing sector, we would be interested to hear from you to get your views on the housing landscape and to understand the challenges that you are seeing play out. Get in touch here. 

Cicero is monitoring speculation in the run up to the Budget and will be providing comprehensive coverage on the day. Please get in touch with a member of the team to discuss how we can support your business to navigate the process.  

15 February 2024

This month, H/Advisors Cicero was delighted to welcome Arooj Shah, Leader of Oldham Metropolitan Borough Council, to discuss the Labour Party’s plans for devolution and Levelling-Up.

In addition to her close involvement in Gordon Brown’s Commission on the UK’s Future report, Arooj has worked closely with Keir Starmer to develop Labour policy on:

• Fiscal devolution
• Investment zones
• Infrastructure investment
• Housing
• Business rates
• Planning reform
• Reforms to the Local Government Pension Scheme (LGPS)

We heard from Arooj about Labour’s local government policy platform, her journey into politics and what it’s like being a female leader in a high-profile public role.

Having witnessed how the toxic nature of politics can disengage much of the general public, Arooj discussed how local leaders have a difficult balance to strike in offering both hope and guidance to their communities.

With the timing of this year’s General Election still subject to speculation, Arooj explained how many in local government roles are hoping that it coincides with May’s local elections, noting the exhaustion that many councillors feel as they grapple with holes in council budgets and part-time salaries for what is often full-time work. She noted that some local government Labour reps are expecting a May polling date.

Arooj’s view of policymaking is guided by her strong belief that devolution can deliver better outcomes for people. While she lamented cuts to local government funding under the current Government, she praised the work of Levelling Up Secretary Michael Gove to keep the issue on the agenda. Arooj hopes that Labour’s devolution plans will go further, however, and expects to see a lot more engagement at a regional level and greater local control over planning reform, business rates and housing. On the latter, she noted Labour’s ambition to build 1.5m new houses, emphasising that local councils are well placed to support this project given their familiarity identifying land and brownfield sites for housebuilding.

On business rates, she stressed the need for engagement between central and local government to find the right balance, as well as a broader shift in the relationship from day one of a Labour government. Arooj cautioned that Labour cannot expect their local representatives to agree with them on every issue simply because they wear the same colour rosette, and suggested this will be most evident with mayors and devolved administrations that have separate mandates to the Government in Westminster.

Arooj also pointed out that the devolution settlement requires further development. She described how Greater Manchester’s set-up undermines the potential value of its local investment zone, because areas like Oldham, Bury and Rochdale lose out to already-developed areas in the same zone such as Manchester and Salford.

She also discussed pension provision for local councillors, highlighting that many local councillors are being forced out of their work by the lack of a pension and other benefits like maternity leave and statutory sick pay. As a result, many of those in local government are those that can afford to, meaning that local politics can suffer from the same lack of representation as national politics.

Find out more about Arooj’s work here: https://www.greatermanchester-ca.gov.uk/who-we-are/gmca-members/councillor-arooj-shah/

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12 October 2023

As Labour Party Conference drew to a close this week, Alice Perry, Cicero UK Director – Public Affairs and former Chair of Labour NEC, shares her insights on what unfolded in Liverpool and what this means for the Labour Party going forward.

This excerpt is part of the full analysis the H/Advisors Cicero team put together for our clients on Labour’s vision for the country and policy platform. For the full report get in touch.

From protest to power 

The contrast between the Labour Party Conference in the Corbyn years and the Labour Party Conference in 2023 is profound. Part of Labour’s electoral strategy will be to demonstrate to the country that it is “safe” to vote Labour. The Party used Conference as a platform to show how Labour has reconnected with the concerns of ordinary working people, is on their side and has moved from being a party of protest to a party ready for power. 

Showcasing General Election candidates 

The Conference was a forum to showcase Labour’s prospective parliamentary candidates (PPCs). Establishing the PPCs within their local constituencies is crucial to winning seats from incumbent Conservative MPs. PPCs made speeches from the platform addressing local concerns and priorities, which were clipped for social and regional media. PPCs also attended training and briefings to ensure that both MPs and PPCs stay disciplined and on message. 

5 Missions to 5 Pledges 

At the end of Keir Starmer’s speech, Labour staff were handing out leaflets outlining 5 pledges. These pledges were linked to Starmer’s 5 Missions but designed to appeal more directly to voters and signifies a new phase in the Party’s policy communications. Labour pledged to get Britain building, switch on Great British Energy, get the NHS back on its feet, restore law and order and break down barriers to opportunity. Conference also passed Labour’s National Policy Forum final documents, containing the narrative and broad direction of travel of a Keir Starmer Government. 

Pro-business, pro-worker 

This was one of Labour’s biggest-ever conferences in terms of commercial visitors, with Monday’s business day selling out in record time. Over the last year, Labour has been heavily investing in their business engagement and outreach as part of the strategy to rebuild credibility and public confidence and to build relationships across business and industry as part of preparations for a potential Labour Government. Alongside this, the shadow cabinet voiced their support for plans to put Labour reforms and improving workers’ rights at the heart of their pro-business, pro-worker agenda. 

Winning Scotland 

The mood within the secure zone was generally relaxed and focused rather than triumphant, but mentions of Rutherglen and Hamilton West were greeted with big cheers. Starmer’s team recognise that the smoothest route to a Labour Government runs through Scotland. It has taken Scottish Labour a long time to recover from the 2015 General Election wipeout, but belief is growing that Labour is turning a corner and can become the largest party in Scotland. 

Shadow City Minister Tulip Siddiq MP spoke to attendees at our Labour Conference drinks event

For our full analysis on Labour’s Conference, its policy proposals and what they mean for business, get in touch Alice.Perry@h-advisors.global.

11 January 2024

There are several knowns and unknowns in politics this year, and Cicero’s 2024 Look Ahead document will help you navigate what to expect in an election year in the UK. This short introduction gives you a snapshot of the sector-specific deep dives the full document makes into Financial Services, Tech, Health and Energy/Net Zero, and the international outlook.

To find out more and receive a copy of our full analysis, please email UKPublicAffairs@h-advisors.global

What do we know?

We know the 2024 General Election campaign will begin this year at the very least. In his New Year address on 4 January, Prime Minister Rishi Sunak said it’s his “working assumption” that the General Election will take place in the second half of 2024. So, there will be no avoiding the ‘E’ word in 2024.

Regardless of when the General Election takes place, local elections will be on 2 May. This includes Metro Mayoral elections and London Mayoral elections, alongside elections in 36 Metropolitan boroughs, 62 Unitary Authorities, 164 District Councils and the London Assembly. There’s that ‘E’ word again.

We know Parliament’s make-up will change dramatically whoever gets the keys to Number 10. 83 MPs have so far announced they will not stand again at the next General Election – 52 from the Conservatives, 14 from Labour, 9 from the SNP, and 8 others. This is lower than the number of MPs that stood down ahead of the 2015 General Election (90) but is likely to increase as we approach election day.

We know elections taking place across the world this year will have a profound effect on global politics. Over 40 countries will head to the polls in 2024 – including the US, Russia, Ukraine, and India – meaning 1.5 billion people will vote.

What’s still unknown?

The General Election could be held anytime until 28 January 2025, so the 2024 political calendar could be disrupted or remain business as usual. You’ll be pleased to hear the possibility of Party Conferences in September/October and another Autumn Statement remain on the cards.

The Government’s ability to control the legislative agenda remains in the balance. Following the introduction of the Safety of Rwanda (Asylum and Immigration) Bill in December 2023, Sunak avoided a major rebellion at Second Reading but will face tougher tests as the Bill progresses in 2024. Its controversial nature means the legislation could change the course of the General Election or further weaken Rishi’s premiership.

And finally, the polls still have time to go either way. Will Labour Leader Keir Starmer be able to keep his poll lead throughout the election campaign to secure an outright majority? Or will the polls narrow if Sunak can put more pennies in voters’ pockets, see flights take off for Rwanda, and cut NHS waiting lists?

These are all matters that businesses and public affairs professionals will need to be prepared to navigate in 2024. Cicero’s fantastic team of consultants will be on hand to do just that. We’ll shortly be launching our General Election website as part of this.

Request your copy of our full 2024 Look Ahead document UKPublicAffairs@h-advisors.global

9 January 2024

At the start of a new political year, Emma Turnbull looks at the state of health and social care policies from the Conservative Government and Labour Opposition. As well as marking what the parties’ current policies are, this document offers our own views of how the NHS, mental health, and other plans might evolve once General Election manifestos begin to solidify.

To discuss health and social care policy, please get in touch emma.turnbull@h-advisors.global

Read more of our Healthcare insights here. To request a downloadable version of the tracker document get in touch.