Apella Advisors public affairs analysis of the 2023 party conferences
13 October 2023 (London)
Apella Advisors public affairs analysis of the 2023 party conferences
Before the party conference season, we wrote about the things we expected to happen and the questions that would raise for public affairs professionals and businesses.
Here, we report back on our conversations at the Labour and Conservative conferences, raise some new questions, and make a little prediction. Do get in touch and let us know what you think.
Questions for business and public affairs:
1. Labour has revealed how it needs business for credibility and investment. Are you engaging confidently with the party to make the most of this opportunity?
2. Public-private partnership is going to be a key theme of the years ahead. Are you part of the conversation about how the right policies can support business investment?
3. Rachel Reeves’ control over Labour economic policy is striking, and arguably exceeds Keir Starmer’s. Are you engaging with the key decision-makers and clear on how your business can help drive investment and growth?
4. The Conservatives are exhausted but their campaign strategy mustn’t be ignored. Are you part of the status quo that a change-candidate PM might target next?
Labour needs business Yes, the CEOs were out in force and Labour politicians were enjoying being courted by the leaders of British business. This is what happens when you’re 20 points ahead in the polls. But beneath the surface, the party’s relationship with business is more complicated – and balanced – than it looks.
Naturally, many businesses are keen to ensure they have good relationships with and understanding of the people who might be running the government next year. But Labour needs to get things out of its relationships with business too: the party cannot take business support or co-operation for granted.
This is because of politics and government.
Politics: the general election campaign will turn in large part on Tory attempts to make Starmer’s Labour appear frightening, Left-wing and keen to punish wealth and aspiration. Hence the all-consuming Labour determination to say nothing that would help the Tory attack operation. And businesses raising doubts about Labour on economic issues would delight CCHQ. Hence the private messaging from Labour leaders even to sectors and companies that face public criticism from the party: we don’t always agree but we don’t hate you and we want to work with you – let’s talk.
Government: Labour will need business to deliver on many of its key pledges, whether it’s building new houses, insulating 19 million homes or – above all – raising investment levels and, eventually, growth rates. The proposed National Wealth Fund perfectly captures Labour’s approach, making a virtue out of fiscal necessity: for every £1 of public money it spends, Labour wants £3 of private investment.
People involved in Labour’s preparations for government say more such public-private arrangements will be needed if the party is to get close to meeting expectations it will restore the public realm. We think this is definitely an area where new thinking and good ideas could have significant impact. If you’d like to know more about what Apella is doing to drive this thinking forward, do get in touch.
And standby for more details from Labour about its proposed “framework for business taxation”, which is likely to offer new tax incentives to invest while deterring things like share buybacks. Don’t expect headline cuts in corporation tax, though there’ll be a promise to keep that headline rate stable, possibly for the entire Parliament, in order to offer certainty.
Rachel Rules Starmer sparkled but the brightest star on the Labour scene these days is Rachel Reeves. The Shadow Chancellor has attained huge power over Labour’s economic agenda – possibly more than the party leader.
Every informed source insists that the working relationship between Starmer and Reeves is amicable and professional, but the lack of tension can distract from the – arguably more important – fact that Reeves can call the shots on economic issues.
One Labour figure who talks frequently to Starmer and Reeves says he’s struck by how often and easily Starmer defers to Reeves on economic questions. In part, that’s because he trusts his Shadow Chancellor to lead on an area where he has limited experience and interest. “He was a barrister then a public sector manager – economics and business have never been part of his world,” says that Labour figure.
There’s also an organisational reason that Reeves ruling the roost on economics: Starmer doesn’t have an economic advisor of his own. That’s an unusual choice. Even Boris Johnson, who has an almost total lack of interest in economics, had some economic counsel of his own rather than relying only on the Treasury team. Don’t be surprised if Starmer hires some economic help before the election – and don’t be surprised if that sparks headlines about tensions with Reeves. (That doesn’t mean those tensions will actually exist, of course.)
For public affairs professionals, the lesson here is clear: the shadow Treasury team – and especially the people at the top of it – could well be your most important audience in the next 12 months.
Things can only get bitter Yes, Labour was happy and disciplined. Yes Keir Starmer’s speech was better than most people expected. Yes the party and the wider movement really is determined to win the next election. None of that is news.
The real question: what happens next? The common expectation among senior Labour people is a Labour-led government with a small or even negative majority. That government will face tight fiscal constraint but also have to manage very high expectations within the Labour movement.
This was one of the Labour stories that wasn’t on obvious display in Liverpool. Some of that message discipline among MPs, candidates and unions on the Left of the party is a short-term decision to accept Starmer’s “small target” election strategy and get the party into power. And in the words of one Labour veteran, “all that discipline disappears after the election when they expect to be paid back” with desired policies from the Starmer government.
The trades unions are key players to watch here. Labour-affiliated unions did a little performative grumbling about a lack of boldness before the conference, but they fundamentally supported Starmer in his determination to cast the Labour movement as united and disciplined. But politics also always transactional this raises a question: what do the unions expect to get in return? Some shadow ministers fear the unions will try to cash their cheques after the election, making big demands of a new Labour government.
Would Prime Minister Starmer be willing and able to resist that pressure to shift to the Left in office? Some of his senior colleagues would certainly work to bolster his resolve. But some Labour moderates worry that the new Starmer government would be highly susceptible to persuasion/coercion. “I sometimes think a hung Parliament would be better than a 20-seat majority,” one party figure told us. “I’d rather Keir had to negotiate with Ed Davey than John McDonnell.”
That points to an awkward fact for Starmer. Despite his expectations-beating speech, there remains uncertainty about his instincts and inclinations. He described a clear direction on some issues – housebuilding, for instance – but even supportive colleagues aren’t entirely sure if he’ll really bulldoze his agenda through in the face of serious opposition. Promises are easy to make in opposition and hard to deliver in government.
In other words, Labour’s happy unity is very much time-limited. “We should enjoy this while we can, because it’ll never be this good again,” said a cheery Shadow Cabinet minister. And public affairs professionals should gear up for that susceptible-Starmer scenario, because it could bring significant opportunities – and risks.
The Blob gets bigger Michael Gove and Dominic Cummings introduced British politics to the concept of the “Blob”, an ill-defined institutional elite with significant power. That concept now informs all Conservative strategy: Rishi Sunak is running against the Blob, into which handy container he places everything from Keir Starmer to his own government’s environmental policies. Is this intellectually coherent or politically effective? Readers will have their own views on those. Public affairs professionals should be asking different questions: how will Blob politics affect your business and the policies that matter to it? Are you part of the Blob?
If your business has a strong ESG stance, the Blobification of Tory politics should be on your risk map. If the Tories continue to follow the US Republican trajectory, “woke” corporations’ environmental and LGBT positions will come under more scrutiny from a governing party keen to depict itself as challenging the status quo.
Tired Tories The Conservatives are exhausted. Even the most optimistic Tory voices in Manchester couldn’t see a path to another majority government. “Biggest party in a hung parliament, if we’re very lucky” was the most optimistic prediction we heard from a minister. Meanwhile, even people whose job is getting the Tories re-elected are privately lining up new jobs after the defeat they expect.
Starmer is the cause of some of this despair. The Tories are keen to find policies areas where they can lure Labour into taking positions that can be depicted as Left-wing/high-tax/woke during the election campaign. Many worry that these tactics aren’t working because Starmer isn’t playing his part. The Net Zero retreat is a case in point – Starmer’s quick decision to accept most of the Government’s revised timetables on heat pumps, for instance, blunted the Tory attack. “We keep setting traps for him and he keeps refusing to step into them,” says a gloomy advisor.
Business leaders are also starting to see Tory policy shifts as immaterial. One CEO of a FTSE 100 firm describes Sunak’s Net Zero retreat as “almost irrelevant” because public opinion, industry and the Labour Party all remain committed to decarbonisation. Public affairs professionals should learn to take Tory policy pronouncements with a pinch of salt.
Faragification? Could Nigel Farage return to the Tory fold after an election defeat? It probably doesn’t matter whether he has a membership card, because either way, the politics he champions will be a major factor in the future of the Conservatism. In the event of a leadership contest after an election defeat, don’t be surprised if a Farage-backed candidate with no ministerial experience does very well against the current front-runner, Kemi Badenoch.
In the debate about the future of Conservativism, an issue that’s under-discussed is the future ownership of Telegraph Media Group: the new owner will get a significant voice in Tory debate. Privately, senior Tories who worry about their party’s slide into nativism are anxious that the Telegraph will go to Paul Marshall of Marshall Wace and Unherd. None are yet saying so publicly, but some are making their views known to the various bodies involved in the sale.
Small is beautiful Listen to some of the people who will shape the Conservative Party’s future and you do hear some talk about businesses – but only small ones. That’s partly reflective of the Tory membership, which will decide the next leader and which over-indexes on small business owners. And it’s partly because today’s Tory populists aren’t fond of big business. The Conservative Party that emerges from any election defeat next year is unlikely to be one keen to embrace a globalised economy and the international businesses that power it.
Two elections? Before the conference season, we predicted a Conservative offer on inheritance tax. That didn’t happen, but we were still pleased to see the Sunday Times reporting on the work being done in Whitehall on IHT to give Rishi Sunak the option of a big announcement. (That work is ongoing, incidentally, so we still think that announcement will happen before the next election.)
Flushed with that predictive success, here’s our next bit of crystal-ball gazing: a second general election soon after the first.
This is something we’ve heard both Conservative and Labour people pondering. The scenario goes something like this:
After the next election, Labour is in power but without a solid working majority. Starmer enjoys a modest honeymoon bounce in his standing while the Conservatives dump Sunak and launch a divisive internal battle over leadership and direction. Amid Tory squabbles and talk of that party shifting further to the Right, Starmer announces he needs a proper mandate to rebuild Britain and goes to the country 6-9 months after taking office, offering voters a choice between his stable, stolid Labour team and a divided, demoralised Conservative Party. At that election, he wins a solid working majority.
Our prediction isn’t so much that this second election scenario will definitely happen – that depends on some truly complicated permutations – but that the parties managers will plan for and talk about the possibility of it happening. So if you see headlines saying “Labour prepares for snap second election”, you read it here first.
Contact:
James Kirkup - jk@apellaadvisors.com
Liz Lynch - ll@apellaadvisors.com
www.apellaadvisors.com