New UK government: it must walk two paths

UK General Election Podium

Can the new government drive change, maintain stability, and do it without blowing the budget? Vipul Sheth sets out a dual path that Keir Starmer should take. 

For all of new prime minister Keir Starmer’s talk of reform and public service during his first speech outside Number 10 Downing Street, the phrase that hit home with me was “…this will take a while”. 

The new Labour-dominated government is going to require a twin-policy and a twin-speed approach to driving reform among our public services while improving the economy. 

Opportunity among the challenges 

Firstly, it appears that the market has taken the news of a Labour landslide in its stride.  

There is no doubt that stability is going to be important after a chaotic few years of government. However, Starmer and his government have a fantastic opportunity to tell the rest of the world that it’s open for business: particularly where other markets such as France and the US are in political flux. 

A previous chancellor had called on Britain to operate a ‘Singapore-on-Thames’ model of deregulation and a business-friendly environment. I would certainly love multinational tech giants to base their operations in the UK. The Republic of Ireland has shown that tax incentives can generate tax revenues, and I would love this government to take this approach. 

What I’d like to see 

Let’s see entrepreneurs encouraged to base themselves here and drive forward their own ambitious plans. Increase the entrepreneur’s (business asset disposal) relief well beyond the current £1m limit. 

Let’s encourage lower rates of tax and further allowance reliefs for businesses looking to invest. Why can’t we sidle up to Apple and have their tax base over here? We have the resources and talent , we’re just missing the final piece. 

Let’s lower taxes for family businesses that are passed on through the generations – if we don’t then they will stop investing and shrivel – or simply sell it off outside the family. 

Mandate for change 

This is the twin-policy approach. Using the government’s mandate to drive through change without, hopefully, upsetting the applecart too much. There will be some that say such business-friendly talk doesn’t fit the ideology of Labour. But, a burdensome state requires revenues through the Exchequer to fund it. If this government is serious about rebuilding the NHS and the country’s infrastructure, it will require a mixture of quick decisions that encourage investment… allied with longer-term planning. 

And this is where the twin-speed approach comes into play. There’s only so much change that can be made in five years – if Starmer can grasp the communication nettle then he should be setting out a ten-year cycle; be clear about what the objectives are and the markers as we go along that path. If that isn’t clear, or achievements are made in the first term, then winning the next election will be very difficult. 

Grasp the nettle 

A twin-policy, twin-speed approach is required because they are opposing forces. Quick, sharp changes versus stability. Aggressive, business-friendly policies while managing the tax base (and keeping the electorate, and Labour Party, convinced that it’s a means to an end). 

I don’t envy our prime minister. But, after so much upheaval, I look forward to seeing a plan put into action. 

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