GUEST COLUMN: How brands can benefit from Labour’s active management of financial services

Kelly Edwards, Managing Partner at Instinctif Partners, explores the new government’s plans for financial services – and the opportunities for organisations to help shape them.

What do the UK’s first female Chancellor of the Exchequer and the CEO of the world’s largest investment manager have in common?

Larry Fink, CEO of Blackrock, spoke at the G7 Summit in June to an audience of Prime Ministers, Presidents, and assorted policymakers from the largest economies in the West. His remarks implored their governments to partner with the private sector to drive economic growth.

The sentiment has repeatedly surfaced in speeches made by Rachel Reeves, going back months before she became Britain’s first female Chancellor following Labour’s landslide election win and repeated at last month’s Labour conference.

The focus on a ‘partnership’ approach between government and the private sector is already evident in the commitment to a National Wealth Fund; using government investment to leverage private sector funding; and empowering the state-run British Business Bank to help SMEs access capital.

Public-private partnerships: Supporting economic growth 

Reeves’ agenda, which emphasises the value of public-private partnerships, creates alluring opportunities for business to engage with a more ‘active government’. These can be realised not only through legislation, but via the many reviews, consultations and other public bodies that will be shaping the new government’s policies.

One area that is currently front centre for the Chancellor is the role of UK pension funds in supporting wider economic growth. In August, the new Chancellor met with leaders of some of the largest Canadian pension funds, known as the Maple 8, to explore how consolidating UK pension funds could boost the economy.

While UK pension schemes typically invest mostly in assets such as equities and bonds, their Canadian counterparts diversify their investments more widely with a focus on private markets instead – and Reeves wants both public and private sector funds to “learn lessons from the Canadian model.”

We are already starting to see industry moves in this space, with Phoenix Group and Schroders teaming up to launch a private markets investment firm with the ambition of channelling £20bn over the next decade into a wider range of unlisted assets. This followed Legal & General’s own launch of a UK-leaning Private Markets Fund for Pension Plans to help turbocharge Britain’s economy, in line with the government’s national mission for growth.

The coming weeks and months will bring myriad opportunities for investors to engage further with Labour, including the Global Investment Summit on 14 October, where up to 300 industry leaders will hear from the Prime Minister, Chancellor, and Business and Trade Secretary to discuss plans to catalyse investment in the UK.

Labour’s partnership agenda creates a clear opportunity for organisations to get their voices heard – but the time to act is now.  Similarly, businesses will need to keep in mind that the commitment to partnerships comes with strings attached: Labour is equally likely to instil higher expectations on corporate conduct and a toughening of policy against firms who fall short of the standards it expects of British businesses.

Financial inclusion – can it be made a reality?

“A strong financial services sector isn’t just an engine for growth. It helps Britons reach their financial goals, save for their future, and support their families. We will champion financial inclusion to ensure all people have access to affordable products and services to support their financial wellbeing.”

Those were among the first words uttered by the new Chancellor after she assumed office in July. The Labour manifesto made several references to financial inclusion, including plans for a financial inclusion strategy which the government has been engaging with the sector on. Here, again, there is opportunity for organisations looking to shape the direction of policy.

The party’s six-point plan for the financial services sector[1] includes simplifying the Financial Conduct Authority (FCA) rule book. This streamlining of the rules will centre on the regulator’s Consumer Duty – introduced last year to improve outcomes for retail customers – while stripping out redundant detail to make the UK’s financial services sector even more internationally competitive. City Minister, Tulip Siddiq, has also raised the possibility of further reform to the listing regime.

Labour’s ambition to double the size of the mutuals and cooperative sector raised eyebrows in some quarters. Yet the questions it raises about how that can be achieved in practice open the door for organisations to step up to the plate, come forward with solutions, and partner with government to power-up Britain’s economy.

The overriding impression from the Labour conference is that many unanswered questions remain about what happens next, and when, to put plans such as this into action. One of the few tangibles so far is the inevitability that the buy now, pay later sector will see much stronger regulation.

Beyond that, from payments and pensions to insurance and inclusion, the opportunities for financial services firms to engage the new government are extensive. A key theme at Labour conference was that the new government wants business to share expertise and keep engaging, fuelled by recognition that government can’t achieve its aims alone. But to do so, firms must ensure that they are engaging in the right way to partner with Labour and help make its vision a reality.

This means talking the right language, coming to the table with solutions and aligning your business with the government’s wider growth ambitions. Tick these boxes, and communicate in a clear and compelling way, and you are likely to have far more success in engaging with the new government.

Kelly leads Instinctif Partners’ public policy offer in the UK. She served eight years as a Labour local authority councillor and committee chair, and has been a Labour Party General Election candidate, receiving 12,000 votes. She has also worked for two Parliamentary Private Secretaries in Labour’s Treasury team.

If you would like to speak with Kelly about how Instinctif can help your organisation build a positive reputation and relationships in the new political landscape, please email [email protected].

[1] Labour’s plan for financial services