Michael Moore's Outlook on looking forward to greater political certainty
And now it’s our turn. Half the world is going to the polls this year and on Thursday 4th July the United Kingdom will take part as we elect MPs to the House of Commons.
Unexpected as the announcement was, we did know an election was due in the next 6 months or so. It’s a curiosity of the UK’s unwritten constitution that the Prime Minister chooses the date, but why July?
Well, why not? At least it gets it over and done with, I have heard people say. For those of a world weary disposition, to which politics contributes, I understand the feeling. But as a former (now completely recovered) politician, I love the campaign and the debates.
Actually, I must admit that, having fought 5 elections, nowadays I really love the fact I don’t have to deliver thousands of leaflets or knock on doors all day (and evening) to meet voters. And then have to explain every last policy or political position my party has had in living memory. Unsurprisingly, these conversations can be tough. As they should be.
Elections are key moments to provide accountability for what has gone before and for political parties to set out their plans for the future. They allow us to judge things in the round. And, without being too pompous (I hope…), to settle differences and adjudicate between competing interests peacefully. I would suggest elections should not be taken for granted, but accept this does not necessarily make them interesting.
There are over 45 million people eligible to vote in the election and about 2/3 will turn up to do so, if 2019 is a reliable guide. So, the new Parliament, and the government it underpins, will have about 30 million people who are more interested than most in what then happens.
Businesses don’t vote in elections, but those in business do. And it adds an extra filter to the decision about voting. This time around one encouraging feature of the political debates, even before the election was called, was about the need for growth in the UK economy.
That is private capital’s sweet spot. And why, when we launched our ‘Manifesto for Growth’ in Parliament in early May, both the Chancellor and Shadow City Minister were present. Along with stacks of other parliamentarians, a serious cross section of industry leaders and senior portfolio company executives.
The engagement was valuable all round. But for us it was another opportunity to land our ‘partners for growth’ message, highlighting key ways in which private capital develops new sectors of the economy and adapts the existing economy, using its long term, active ownership model to generate public value.
The platform at this event in Parliament allowed me to repeat the need for government to meet the ‘four investment tests’ – macro stability, world-class regulation, an internationally-competitive investment climate and predictable policy frameworks (for the sectors in which the capital is deployed). None of this was challenged and the cross party consensus was welcome.
Not far below the surface of these high level tests, however, is the need for the ‘internationally-competitive investment climate’ to include the right tax arrangements for the industry. Fundamentally, there has to be a recognition of the highly mobile international nature of the pool of talent we draw on, and the need for the UK to have internationally-competitive tax rates. In the speeches on the night, there was inevitably some coming and going about both non-dom tax and carried interest, which continued in the private conversations that followed.
In truth, these discussions followed well trailed lines. Over the past few years, as an industry, we have significantly scaled up our engagement with policymakers in government, Parliament and elsewhere. What we do, and how that benefits the country as a whole, is now much better understood.
From MP visits to businesses backed by private equity, to round table discussions with ministers and others, including the Shadow Chancellor and the Deputy Prime Minister, there has been strong engagement and now a better understanding of each others’ priorities.
In my column last month I set out the need to talk in plainer language about creating ‘shared equity’, rather than using the jargon of ‘carried interest’ when we talk with our stakeholders. That is all part of building the case for the active ownership model of the industry more clearly.
Keeping the concepts straightforward is one thing, but it has been our simultaneous priority to make sure the highly technical tax arrangements of the industry are properly understood, too. By Government ministers, officials, Opposition politicians and political advisers alike. That work is ongoing and won’t stop in early July.
Michael Moore
Chief Executive, BVCA
This article was originally published on 2 June 2024 on the Private Equity News website here.
