Business and trade secretary Jonathan Reynolds (right) and Chancellor of the Exchequer Rachel Reeves, sit and listen to Prime Minister Sir Keir Starmer speaking during the International Investment Summit in London, as the Government seeks to woo investors to the UK. Picture date: Monday October 14, 2024. PA Photo. See PA story POLITICS Investment. Photo credit should read: Jonathan Brady/PA Wire Photograph: Jonathan Brady/PA
Good morning, and a warm welcome back to myself: thanks to Nimo and Heather Stewart for bringing you First Edition while I was away.
The dread words were repeated in a number of news stories yesterday: “The summit was livestreamed on LinkedIn.” The event in question was Labour’s inaugural UK business summit, designed to encourage investment in the UK from international firms, but mainly getting headlines for chancellor Rachel Reeves’ hint that she is planning to raise employer national insurance contributions at the budget.
The bit with Elton John and the king was not streamed, alas. But even if the prospect of tuning in to leadership seminars on the worst person you know’s favourite social network did not entice you, there are plenty of reasons to be interested in how it went. After a long period of governmental chaos and instability under the Conservatives, many companies have found more attractive options elsewhere. And according to recent IPPR analysis, the UK has had the lowest rate of business investment of any G7 economy for 24 of the last 30 years.
That is why Labour is making the case that greater investment should not be seen as an inherently rightwing ambition. But there are plenty of critics on the left who worry that the £63bn announced yesterday will come at a cost to working people. Today’s newsletter, with the Guardian’s economics correspondent Richard Partington, is about what the summit achieved – and where Labour still has more to do. Here are the headlines.
Five big stories
Middle East | More than 20 people were killed in an Israeli airstrike on a Christian town in northern Lebanon, prompting Hezbollah to fire rockets at Tel Aviv, as Israel’s multifront war continues to escalate. Meanwhile on Monday, the UK, Italy France and Germany released a joint statement condemning Israel for repeatedly attacking UN peacekeepers.
Russia | The UK government believes that the Russian president, Vladimir Putin, personally authorised the Salisbury novichok poisonings, which could have killed thousands of people, an inquiry has been told.
UK news | The father of the 10-year-old schoolgirl Sara Sharif killed her before fleeing to Pakistan and calling police to say he “beat her up too much”, a court has heard. Sara’s body was discovered at the family home in Woking, Surrey, on 10 August last year alongside a handwritten note from her father.
Politics | The Tory leadership candidate Kemi Badenoch has been criticised for a campaign pamphlet that said autistic people received “better treatment” and “economic privileges and protections”.
Conkers | The World Conker Championships is investigating cheating allegations after the men’s winner was found to have a steel chestnut in his pocket. David Jakins, who has competed since 1977 and is also head judge or “King Conker”, was found to have a metal replica in his pocket when he was searched after his victory.
In depth: ‘Businesses feel they’ve been treated poorly, and can buy into Starmer’s project’
The buildup to the summit hasn’t been easy for Labour: there have been reports of disorganised preparations, and some chief executives thought to have been considering staying away. But on the phone from Guildhall in London yesterday, Richard Partington described a mood of cautious optimism. “There are just a lot of senior people here, CEOs of huge numbers of international companies – more than you might have expected,” Richard said. “They are ready to listen to what the new government has to say.”
There were plenty of morale-boosting announcements of new deals, from £6.3bn in UK datacentres to a £1.1bn plan to expand Stansted airport. In the same way that most diplomatic summits amount to signing ceremonies on deals that have been under way for months, not much of this was really the result of the summit itself – but, said Richard, “there are some live conversations happening as well as the choreographed stuff – the chair of GB Energy is here and meeting with people about offshore wind and solar”.
Meanwhile, the Stansted deal is also a marker of how ambivalent many progressive observers will be about the ambitions behind the summit, with climate campaigners pointing out aviation’s outsize contribution to carbon emissions. The row over P&O Ferries’ owner DP World, the announcement of £20bn from Australian investment bank Macquarie, which has been criticised for its role in the privatisation of the water industry, and protesters outside opposing the Sizewell C nuclear plant were other signs that the mood music is not quite as cheerful as Starmer might have hoped.
Here are some of the key factors working in the government’s favour on investment – and some of the reasons businesses may still be wary.
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What’s working for Labour
Political stability. In his speech to the summit, Starmer sought to emphasise the value of his thumping majority after years of instability under the conservatives. He called it a “golden opportunity” to “end … the sticking-plaster politics that makes it so hard for investors to assess the value of any proposition”. And he promised that the government would have “a mission-led mindset that thinks in years, not the days or hours of the news grid”.
“Voices of senior business figures and the data on business investment in the UK in recent years bear that out,” Richard said. “They hate political uncertainty. Businesses do feel that they’ve been treated poorly, and they can buy into Starmer’s promise of a five or 10-year project.”
Promises on regulation. Pledges to reduce red tape are so often repeated by politicians that they can come to sound a bit hollow. Still, Starmer repeated them yesterday, saying that he would “rip out the bureaucracy that blocks investment”. And while many will be worried that this might be code for reducing worker and consumer protections, it is certainly a popular argument with industry leaders.
“The biggest thing here is about planning reform,” Richard said. “There is a bit less detail on what else might be on the agenda in the long term. But Starmer was also talking about broader changes that aren’t so immediate but will be a priority over time, like having a regulatory innovation office that talks to businesses about their issues.”
“But there is a tension here,” Richard added. “Labour is trying to ride two horses – to say it will bulldoze regulation to help business, but also that it will prioritise workers.” One piece of evidence for that difficulty yesterday: the crowd of journalists following Louise Haigh, the minister whose criticisms of P&O over its sacking of 800 workers without notice were roundly disowned by No 10.
Government partnership. Through the creation of both GB Energy and a £7bn national wealth fund, Labour hopes to create a virtuous circle: using public money to leverage additional private sector investment, and then reaping the benefits for taxpayers. “They are keen to make the case that this is going to drive investment outside London and the south-east,” Richard said. “It was notable that they went to Merseyside a couple of weeks ago to announce £22bn for carbon capture storage projects.”
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What’s not
Timing. The sequencing of this summit and Labour’s first budget, which is due in two weeks’ time, is thought by many business leaders to be the wrong way round, Richard said. “People say that by doing it in this order, investors don’t know what the tax and spending policies of the new government will be. They want more answers on mooted changes to capital gains tax and the treatment of private equity profits before they make decisions.” Reeves’ hints over employer national insurance contributions didn’t really provide a lot of clarity either.
Protection for workers’ rights. If businesses are enthused by the idea of a bonfire of regulation, they have a more mixed view of Labour’s recent employment rights bill.
“Starmer addressed that in his conversation with [former Google CEO] Eric Schmidt,” said Richard. “He argued that these reforms are ultimately pro-growth, because a better paid, better protected workforce is more productive and efficient.”
What businesses think about this “depends on who you speak to”, he added. “Some highly skilled sectors have these kinds of protections already, but there is a big issue in hospitality and care, where pay is low and there’s been a rise in zero hours employment.” How Starmer resolves the tension between the claims made in these sectors and rights for ordinary working people may prove to be a signpost for the direction of his premiership.
Migration. Eric Schmidt told Starmer that “a pro-growth agenda would start with high-skilled immigration”. But in an industrial strategy consultation document published yesterday, migration was barely mentioned at all – and shortly after the election, Starmer said that “we won’t be content just to pull the easy lever of importing skills”, suggesting that it would actually be possible to reduce this kind of migration, not increase it.
He declined to give a timetable on those proposals. But the toxic tone of political discourse on migration will not be encouraging to those who think that the UK needs more of it to thrive – and Schmidt’s remarks could certainly be interpreted as a warning.
Brexit. The elephant in the room, and barely mentioned in Starmer’s speech, the UK’s exit from the European Union has left it at a competitive disadvantage, many business leaders believe. A research paper for the Economics Observatory thinktank last year concluded that UK business investment had been “subdued” by Brexit, with a shortfall of about 10% against where it might otherwise have stood in 2022. And the Bank of England found that investment was 23% lower than it would otherwise have been in 2020/21.
“There is no doubt Labour is in a better position to change its relationship with the EU than the Conservatives were,” Richard said. “But so far, they have only said very top level things about a closer relationship. Businesses are happy to hear that, but there is a reluctance from the government to entertain the idea of rejoining the common market, or for talks on closer regulatory alignment. Businesses are still waiting to see the substance.”
What else we’ve been reading
When Shaun Walker first met Pablo González (above) on a training course for journalists heading to war zones, he couldn’t have imagined that he would eventually be accused of spying for Russia – and welcomed to Moscow by Vladimir Putin. Shaun’s investigation of who González really was makes for a classic long long read. Archie
Tessa West challenges the idea that to be fulfilled in your work life, you have to be passionate and love your career. “Let’s try to have a healthy amount of psychological distance from work,” she writes in The big idea essay. “Relish parts of your job, but don’t expect to feel passionate about the whole thing.” Nimo
After Kemi Badenoch’s leaflet claimed that kids with autism receive “better treatment” and “economic privileges”, John Harris writes that for children like his son, the idea of “an expanded state delivering indulgence and mollycoddling … is a cruel fantasy”. Archie
A school in Cambridgeshire was heavily criticised for introducing a policy that meant any time off school for period pains would be categorised as an unauthorised absence if parents did not provide a doctor’s note. Rhiannon Lucy Cosslett brilliantly explains what this policy reveals about the minimisation of female pain and how early in life it starts. Nimo
In this New York Times interview (£), Republican vice-presidential candidate JD Vance tries to explain away some of his most controversial statements while defending the Maga political line. Nimo
Sport
Football | Harry Wilson’s penalty in the Nations League gave Wales a 1-0 victory against Montenegro in Cardiff and extended Craig Bellamy’s unbeaten start.
Cricket | Pakistan won the toss and batted first in the second test against England in Multan. A few minutes ago, they were 23-2 after Jack Leach struck twice on a spinning pitch that has been reused after the last match. Follow it live here.
Football | The Football Association has identified Pep Guardiola as its dream target for the England job but is not hopeful of persuading the Manchester City manager, with Lee Carsley no longer under consideration for the role. It is understood that the FA contacted Guardiola at the start of the season, but a deal would likely be difficult to close.
The front pages
“Reeves hints at budget increase in employer national insurance” says the Guardian’s splash headline this morning, while the i has “New NI hike warning for UK business from Reeves”. Top story in the Financial Times is “Reeves signals rise in business taxes as Starmer courts global investors” and the Times has “Reeves tells business to prepare for higher taxes”. “Weight-loss jabs will get Britain working” – that’s the Telegraph. “Alleged confession from Pakistan: I beat Sara up too much” – the Metro is among those leading on a truly horrific story about the alleged murder of Sara Sharif by her father. “Sara, 10, was ‘burned with an iron, tied to a heating pipe, bitten, and had her spine broken’” says the Daily Mail. “I legally punished her and she died” says the Daily Express. Meanwhile, “Mrs Brown’s racist ‘joke’ storm” gets page one in the Daily Mirror.
Today in Focus
The hurricanes shaking the US election
Will two massive hurricanes in the US be enough to put the climate crisis on the election agenda? Oliver Milman reports
Cartoon of the day | Ben Jennings
The Upside
A bit of good news to remind you that the world’s not all bad
Carol Douglas (pictured above) quit art school when she was 16 after her parents discouraged her from pursuing an arts-based career. Decades later, when she was working with children on their school arts projects, she realised how much she missed having a creative outlet. So when she retired, at 62, Douglas decided to make her own art.
Douglas enrolled in a York College art foundation course and soon found her style. After completing the course, she started experimenting with cheap acrylic paint and secondhand canvases bought at car boot sales and soon her art was being shown in small exhibitions and cafes. Now Douglas has opened her biggest exhibition to date, Actually I Can, at Yorkshire Sculpture Park, which features 51 of her paintings.
“The first time I saw the paintings in the gallery it was mind-boggling. Seeing your work in a really professional and beautiful space is quite something. I am unbelievably proud,” she says.
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Bored at work?
And finally, the Guardian’s puzzles are here to keep you entertained throughout the day. Until tomorrow.
