UK general election 2024: what will a new government mean for business growth?

The UK's Labour Party appears to be poised for victory in the general election on 4 July, with a 20 point lead in pre-election opinion polling. Below we take a look at its business manifesto commitments, and what business can expect if it does form the next government. We also review the manifesto commitments of the UK's other main political party seeking to win the election, the Conservative and Unionist Party, which has been in government for the last 14 years.

Labour Party's 'five missions'

The first of Labour's five missions set out in its manifesto is to "kickstart economic growth". This clear focus on business is then elaborated on through specific policies. Running through all of these policies is the explicit expectation of government being a "strategic partner" with business and also providing a "stable policy environment".

Most of these policies have been trailed previously, most notably in Labour's Business Partnership for Growth that was published in February 2024. The convening work has also begun via its British Infrastructure Council which was launched in November 2023.

Industrial and infrastructure strategy

Labour's industrial strategy – aligned with procurement and trade policy - will be directed by a statutory Industrial Strategy Council with representatives from the nations, regions, business and trade unions. Sectors particularly highlighted for attention are financial services, artificial intelligence (AI), automotive, life sciences and creative industries. Read more about what the election means for the AI sector.

Labour will also develop a ten-year infrastructure strategy to guide investment plans and give the private sector certainty about project pipeline. This strategy will be overseen by a new National Infrastructure and Service Transformation Authority. Reform of the planning system is seen by Labour as a key way to deliver nationally significant infrastructure – new roads, railways (via a newly created Great British Railways), reservoirs, 5G and Royal Mail all getting a mention.   

National Wealth Fund

Labour will create a National Wealth Fund capitalised with £7.3 billion over the course of the next parliament. The fund will aim to attract triple that amount in private investment. The fund will allocate investments into ports and supply chains (£1.8 billion), gigafactories (£1.5 billion), steel industry (£2.5 billion), carbon capture (£1 billion) and green hydrogen (£500 million).

Labour also has plans to increase investment from pension funds into UK markets. Read more about the impact on pensions in our Insight.

Net zero

"Making Britain a clean energy superpower" gets a mission of its own. Labour's target is clean energy by 2030 and it has explicitly framed this as an economic, business and growth opportunity.

Labour has committed to double onshore wind, triple solar power and quadruple offshore wind by 2030. There is a commitment to nuclear power (both new nuclear power stations and small modular reactors), carbon capture and storage, hydrogen, marine energy as well as strategic gas power stations. There will be no new North Sea oil licences, coal licences or fracking. These investments will be paid for by an extension in the Energy Profits Levy.

As well as the investments by the National Wealth Fund, investments will be made via a new publicly-owned company, Great British Energy which will be capitalised with £8.3 billion over the next parliament. Great British Energy will co-invest in technologies, support capital-intensive projects and partner with local players to support local clean power projects.

Of interest to the wider economy, Labour supports the introduction of a UK carbon border adjustment mechanism (tariffs on imported carbon) – which will counteract the EU's CBAM that is already on the statute books. Labour will also mandate UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.

Business taxation

Labour has committed to capping corporation tax at 25 per cent and retaining full expensing. It will also only have one major fiscal event a year (in the autumn at least four months before the end of the tax year in April) and will publish a roadmap for business taxation for the next parliament which, it says, will allow businesses to plan investments with confidence. Read our Insight for more about Labour's tax policy.

Innovation, small business and regional business support

R&D will be funded on ten-year budget cycles to allow for "meaningful partnerships" with industry. There is a special mention for university spinouts and start ups, but little detail as to how what that support will look like, though the British Business Bank will have its mandate widened to include supporting growth in the regions and nations.

Regulatory delays (which Labour implies stifles innovation) will be addressed by the creation of a new Regulatory Innovation Office to help regulators "update regulation, speed up approval timelines and co-ordinate issues that span existing boundaries".

On AI specifically, Labour will be introducing AI regulations on "the handful of companies developing the most powerful AI models".

Trade policy

On trade with the EU, Labour rules out a return to the single market, the customs union or freedom of movement. However it does commit to improving the UK's trade relationship with the EU and removing unnecessary barriers to trade. These include specifically veterinary border checks, touring artists and mutual recognition for professional qualifications to open up markets for UK service exporters.

Skills and workforce

There is potentially significant change for employers. Read more about what the election means for the workforce in our Insight.

From a skills perspective, Labour will establish Skills England (education is a devolved area) to bring together business, training providers and unions to ensure that the workforce has the skills to deliver Labour's Industrial Strategy. The Apprenticeship Levy will be reformed into the more flexible Growth and Skills Levy. Labour also intends to link immigration and skills policy but there is no elaboration on how that will be achieved.  

How will the election affect business?

All of our expert analysis: sector by sector

Conservative Party's 'bold actions'

The Conservative Party manifesto consists of a series of bold actions, the first grouping of which aims to "support working people and secure a stronger economy" although nearly all of these are aimed at individuals rather than business.

The manifesto then sets out the Conservatives' plan for "a secure, dynamic and growing economy" which sets out the following policies.

Fiscal policy

Like the Labour Party, the Conservatives commit to not raising corporation tax. Their landmark tax cutting policy is to abolish national insurance for the self-employed.

Supporting small business

There is a particular focus on supporting small businesses with a "ten point plan" directed at them. This plan includes smoothing the VAT cliff edge, lifting the thresholds for financial reporting so more business are classified as small or medium-sized, enforcement of the Prompt Payment Code, improving access to public sector procurement contracts and encouraging female entrepreneurs.

Investing in infrastructure

As the current government, the Conservative Party re-commit to infrastructure policies which they have already announced such as the roll out of gigabit broadband, regional infrastructure projects, and rail and road projects. A new commitment is to speed up the sign of major infrastructure projects from four years to one by reforming the process including limiting the scope of judicial reviews.

Innovation

The Conservative Party's plans for innovation are largely to continue with existing plans such as the Advanced Manufacturing Plan (£4.5 billion commitment to strategic manufacturing sectors), specialist Catapults (a network of technology and innovation centres established by Innovate UK), and large-scale computer clusters.

New trade agreements

The Conservatives commit to building on the UK's free trade agreement with the EU without naming any specifics. However, the manifesto does commit not to agree to anything that would "infringe our legal sovereignty or involve submission to the CJEU [Court of Justice of the European Union] or dynamic alignment". The party also promises to complete new free trade agreements with India and the Gulf Cooperation Council.

Cutting bureaucracy

The Conservatives intend to "transform the UK regulatory landscape, making sure regulators deliver the best outcomes for business consumers and the environment", including the removal of EU laws which still remain on the UK statute book. The Conservatives also make a number of commitment to reduce civil service spending, including halving the amount spent on consultants and controlling spending on equality, diversity and inclusion initiatives.

Net zero

The Conservatives reiterate their commitment to net zero by 2050. Like Labour, they are committed to investments in offshore wind, carbon capture and storage and nuclear, as well as gas power as a back up to renewables and a UK CBAM (tariff on carbon imports). However, support for onshore wind is dependent on "democratic consent" and solar on agricultural land is restricted. There is an explicit commitment to continue with North Sea oil investment but the ban on fracking would be maintained. There is no mention of support for hydrogen.

In terms of funding, the Energy Profits Levy would continue as it currently operates, albeit it would be kept in place for longer. The Conservatives also rule out further "green levies", road pricing schemes or a frequent flyer levy.

Significantly, the Conservatives guarantee a vote in the next Parliament on "the next stage of our [net zero] pathway…to maintain democratic consent for the big decisions that net zero will mean for our country". It is not clear whether this is a commitment to a national referendum on net zero or something else, such as a vote in Parliament.

Osborne Clarke comment

Business can expect much government focus on growth whichever party wins – but the emphasis on how to get there is different. We wait to see what the next government's legislative priorities will be at the King's Speech on 17 July.

If you would like help navigating the issues raised in this Insight, please contact our experts.