Following the publication of the Conservatives’ and Lib Dems’ manifestos earlier this week, Labour published its own yesterday (13 June).
The plans inside the 136-page document include talk of improving the UK’s relationship with the EU, establishing an Industrial Strategy Council and offering more continuity in taxation and spending.
The IOE&IT Daily Update identified the five top takeaways for trade.
1. Rebuilding EU relationship
The manifesto pledges to keep the UK out of the EU, its customs union and its single market. It does, however, state that the Labour Party will “make Brexit work” by seeking to “improve the UK’s trade and investment relationship with the EU by tearing down unnecessary barriers to trade”.
Crucial to this changed relationship would be the negotiation of a veterinary agreement, which Labour says would “prevent unnecessary border checks and help tackle the cost of food”. The government recently introduced the second phase of the Border Target Operating Model (BTOM) post-Brexit border system, which particularly affects goods subject to sanitary and phytosanitary (SPS) checks.
Other measures on the EU relationship include a promise to “secure a mutual recognition agreement for professional qualifications”, which Labour says will “help open up markets for UK service exporters”. It also pledges to enable smoother movement in the EU for UK musicians.
2. Defence pledge
Also among the export priorities for Labour are trade opportunities in the defence sector. Making the most of these, it says, will require ensuring the resilience of supply chains. The manifesto states:
“We will ensure a strong defence sector and resilient supply chains, including steel, across the whole of the UK. We will establish long-term partnerships between business and government, promote innovation, and improve resilience."
Export is explicitly namechecked in the section on defence, with the caveat that it must be carried out in line with international law:
“We will prioritise UK businesses for defence investment and will reform procurement to reduce waste. Labour will support industry to benefit from export opportunities, in line with a robust arms export regime committed to upholding international law.”
3. Industrial strategy
The focus on supply chains extends to the manifesto’s pledges on industrial strategy, where Labour says it will establish an Industrial Strategy Council, which it argues will “end short-term economic policy making”. Trade policy, it adds, “will also be aligned with our industrial strategy priorities”.
The council would feature representation from across the UK - including Scotland, Wales and Northern Ireland - as well as from both business and trade unions.
A Labour government would, the party says, “take a sectoral approach”, identifying where the UK has “advantages over other countries”. These include “our excellent research institutions, professional services, advanced manufacturing and creative sectors”.
4. Investment injection?
Part of the party’s industrial strategy would also include the establishment of a ‘National Wealth Fund’, which would be created with the goal of supporting the party’s ambitions on economic growth and green energy development.
“Business has for too long been hampered by a government that does not work with it,” the manifesto argues. “As a result, investment in the UK is too low.”
Labour plans to use public investment to solve this problem, which the party says “can create good jobs across the country and would mean British taxpayers can reap the benefits of economic growth”.
The fund would be capitalised with £7.3bn over the course of the next Parliament should Labour win on 4 July, with a target “of attracting three pounds of private investment for every one pound of public investment” in a bid to “create jobs across the country”.
A total of £1.8bn is pledged for upgrading UK ports and building supply chains “across the UK”, while £1.5bn is offered for building “new gigafactories so our automotive industry leads the world” and £.25bn for the steel industry.
5. Business tax
Labour has said it will only have “one major fiscal event a year”, which it says would give “families and businesses due warning of tax and spending policies”.
The party pledges to cap corporation tax at its current rate of 25%, “the lowest in the G7”, for the entirety of the next Parliament. It also promises to “act if tax changes in other countries pose a risk to UK competitiveness”.
It also pledges a further windfall tax on oil and gas firms, which “have benefitted from enormous profits not because of their ingenuity or investment, but because of an energy shock which raised prices for British families”.
Also reiterated in the manifesto is Labour’s promise to establish a new, publicly-owned energy firm, Great British Energy.
IOE&IT perspective
Grace Thompson, Institute of Export & International Trade (IOE&IT) UK public affairs lead, said:
“We see in this manifesto some expansions on key business and trade policies that Labour has been drip-feeding for the past year or two. The confirmation that Labour will seek to negotiate an trade deal with India is noticeable.
"The manifesto refrains from giving an explicit promise on an agreement with the Gulf Cooperation Council (GCC), but indicates Labour wants deeper trade cooperation with partners across the Gulf.
"The promise of the publication of a trade strategy, which would promote greater access to international markets, and which would also link into a wider industrial strategy – is couched in broader language around the need for business engagement. This is particularly the case with the suggested formation of the Industrial Strategy Council to combat “short-term economic policy making” and to encourage 'expert advice'.”