Michael Moore's Outlook after a sprint start by the new government
It’s a marathon, not a sprint, we are often told. Of course, in politics the phrase is usually trotted out a bit defensively when expectations are not being met in some major policy area.
In these early weeks of the new UK Parliament it would be wrong to be making judgements like that. In fact, right now it looks like we are seeing the government take part in a sprint and a marathon simultaneously (if figuratively). As opposed to witnessing them literally (and nearly simultaneously) at the Olympics across the Channel in Paris.
Certainly, the first weeks saw everything happen at a blistering pace. Now the sprint blends into a marathon. The new initiatives will be given structure and form. The different bits of legislation will be drafted and begin their long and meandering passage through Parliament. Meanwhile the Treasury is building up to the first Budget in the autumn, to be accompanied by a formal ‘Spending Review’ which will set out departmental spending frameworks for the foreseeable future.
The complexity of this process is hard to overstate. Any government taking office after a long period in opposition arrives with a packed programme and quickly releases the party’s pent up energy – think the Conservatives in 1979, Labour in 1997 and the coalition parties in 2010 as other landmark moments in (reasonably) recent times.
This time there’s an extra dimension, however. The Labour party framed its election pitch as a series of ‘missions’, including to boost UK growth to the top of the G7 league table and make the country a clean energy ‘superpower’. The first of those is objectively measurable, the second more subjective (though a binary assessment of ‘Are we now an energy superpower or aren’t we?’ will probably be pretty straightforward in a few years time).
Neither aspiration lacks ambition, for sure. And that ambition is something that is only to be expected when an election is won with the commanding majority the government now enjoys. But delivery now matters, which will depend on making sure that the mosaic of missions, legislation, tax and spending decisions, and countless other political initiatives, hang together coherently and get buy-in from voters and other stakeholders alike.
The way in which business, including private capital, is engaged will have a significant bearing on achieving the ambitions. So far, so good on that score, even with the caveat that these are early days. For our part, the industry was invited to the Chancellor’s scene-setting speech on growth. And with pensions reform a specific part of the growth programme, there was a quick second invitation, this time to a round table on the subject in Downing Street.
The Chancellor, joined by Emma Reynolds the new Treasury minister, who is also a minister in the Department for Work and Pensions, made it plain that greater investment of pension capital into the UK’s productive economy was her priority.
Some wish to place greater emphasis on infrastructure and real estate investment than private equity and venture capital. Being in the room allowed me to highlight the vital role of private capital in the UK economy at a time of energy and tech transition.
It’s not just the great new opportunities to grow venture-backed businesses in the race to net zero, or as AI develops, that need billions of investment. There is a pressing need to re-wire the mainstream economy to adapt it in the face of these mega-trends, too. This imperative is better recognised than it used to be, but we need to keep making the arguments.
Happily, there are solid foundations for that. It is pretty clear to me that the Investment Compact, with more than 100 of our industry firms signed up, and the wider Mansion House Compact, supported by 11 major financial institutions, many of whom were at the breakfast in No11, have cleared some of the ground ahead of the pension reforms Labour will now introduce. And will then drive forward the investment our industry is uniquely positioned to lead.
Working collaboratively with the pensions industry we have already made progress, and next month we will publish a shared analysis of how industry and government can move the agenda along in a way that matches the expectations of the new government and the appetite of our industry to invest more UK capital in transformational ideas and businesses across the whole of the country.
Can we do a marathon at a sprinter’s pace? We are about to find out.
Michael Moore
Chief Executive, BVCA
This article was originally published on 8 August 2024 on the Private Equity News website here.
