Following the drama of a general election, financial services marketers must move quickly to capitalise on a change of government, as Charles Ansdell, Chief Strategy Officer of Cognito argues.
The campaigns are run. The balloons are down. The speeches over; the newspaper reams; the internet memes.
And after this tempest, calm. No more invective. No more polemic. No barrage of Farage.
Labour reigns
Barring a miracle, as you read this (caveat: this was written before the election result), Labour will form the new government. As the dust settles on 14 years of Conservative leadership, many financial services marketers and communicators will experience their first Labour government.
Normally a change of government is momentous. However, five prime ministers in 14 years, a pandemic, Brexit, war and financial crisis means financial services is attuned to change. Stasis is not the status quo.
But a Labour government marks a change in political direction. A chance for reset, but beset with risk. There’s no doubt that the City skews Conservative. But financial services has always been resilient and adaptable, and a new government means new opportunities.
Government interrupted
The process of forming a government is unsurprisingly archaic and anodyne. At first, it will be a “phoney war” as gears of government creak to life.
On this weekend (6-7 July), ministers will be appointed.
The House of Lords return on 8 July.
Next week, MPs will be sworn in (a process that can take a few days). MPs can’t participate in normal parliamentary business until they have taken the oath.
At the same time, the U.S. is hosting a NATO summit in Washington DC on 9-11 July, which the new prime minister will attend.
In this interregnum, nothing substantial is likely to happen.
Rubber hits the road
Things start to heat up the next week with select committees formed between the 12-25 July. Select committees are a vital part of government, checking and reporting on key areas of government. There is a select committee for each government department, monitoring spending, policies and administration.
The key date is 17 July, the King’s Speech. Here Labour will lay out its policy plans for the Parliament. This will contain the legislation the Government wishes to enact in the parliament and will give the strongest indication yet of what Labour aims to achieve, and what this means for financial services.
On 18 July the prime minister will host a European Political Community summit at Blenheim Palace, which will provide an interesting view into a reset of European relations (potentially in the context of a new, far-right French Government).
There are a couple of immediate actions the Government must deal with; public appointments, public sector pay decisions and compensation for the infected blood scandal.
After three weeks of activity, it’s time for a break. Parliament breaks for summer recess on 25 July.
The call of fall
Autumn is when things get interesting.
September marks the return of Parliament, followed by Party conference season (14-17 Liberal Democrats, 22-25 Labour, 29-2 Oct Conservative).
The Commons returns on 3 October.
Budget (autumn statement) will likely be soon after this. After the Liz Truss fiasco, Rachel Reeves will run it past the Office of Budget Responsibility (OBR) to evaluate its fiscal and economic impact. This will take 10 weeks, so the earliest theoretical date is mid-September.
Labour has said that it will only have one fiscal event (i.e. budget) a year.
Time to market?
In this period, financial services marketers can be opportunistic.
There are manifesto proposals that drive buyer decisions now. Until the budget, there is a window for clients to act.
Individuals worried about Capital Gains Tax increases (which Labour hasn’t ruled out) may wish to crystallise gains to make the most of current allowances and rates.
VAT on school fees is another issue. Some advocate paying future school fees now to avoid VAT (though there is a risk HMRC may apply VAT to fees that cover future years). Equally there is a financial planning opportunity to target those investing more to pay for higher school fees.
“Non-doms” may wish to change tax residency to avoid future windfall taxes.
Any marketing initiatives must accept the risk that proposals in manifesto may not happen.
Policy matters
Labour’s major policies provide a rich vein for marketers looking to get ahead of the competition.
Commitments to build 300,000 new homes and planning reform should bolster the City’s real-estate sector and financing.
Labour’s green initiatives require significant private financial sector investment and a supportive policy and fiscal environment. Great British Energy will be capitalised with £8.3bn over the Parliament.
The requirement for regulated financial institutions to implement climate transition plans may benefit top performers, who can capture a greater share of green market.
Asset management looks the potential winner of pension scheme consolidation to stimulate infrastructure and private markets investment.
Supportive policy for open banking and innovation will boost the Fintech sector.
In the lobby
There is plenty to play for on policy. While Labour’s top-level thinking is formulated in the manifesto, detail has not been agreed.
One target is Labour plans to raise £565m from taxing carried interest, which would impact private-equity earnings (against that, private equity may benefit from policies for a £7.3bn UK National Wealth Fund[1] and pension investment in UK private markets).
Labour will continue the British Infrastructure Council, where the largest UK financial services firms can articulate their agenda. Other financial services firms will be able to engage Labour as it builds support and alliances. A new government needs friends.
Meet the new boss
Marketers may be forgiven for waking this Friday to more of the same. Indeed, as the mechanisms of government slowly gear up, many may be tempted to wait and see.
For most, it marks change. After 14 years we have a new government.
For the brave, it is a remarkable opportunity to set a new agenda and steal a march.
[1] Investment over the Parliament.
