Category Archives: Labour

Labour’s new era for agriculture: Can political stability drive agri-tech innovation?

GK Senior Adviser James Allan analyses the government’s agriculture policy plans and the opportunities that could arise for investors.

With the Labour government now in power, some may wonder if the food, farming and agriculture sectors are about to see a major shift – a shift from being an important constituent of the then Conservative administration of 14 years to lower down the political list of priorities within Labour’s “mission led” government.

The Autumn Budget on 30 October will partly address this concern and end the speculation about potential changes to agriculture property relief and Defra’s agricultural budget. But with a Party of a different political hue now occupying the corridors of power, it’s worth considering whether Labour’s pro-growth messaging of “political stability” to attract private sector investment extends to the food, farming and agriculture (FFA) sectors, and if so, to what extent.

Why Labour must harvest more than just political stability

To attract private investment, ‘political stability’ alone is not sufficient – it needs to be backed up by policy substance and public investment, and with long-term strategic thinking. From aquaculture to viticulture, solar farms to biodiversity, food pricing and standards to foods high in fat, salt and sugar, there are many agendas and issues at play. These will all be playing out against a political backdrop with a renewed sense of momentum, a government with a greater willingness to intervene in the name of public health, an entire mission focused on decarbonisation, and a tight fiscal environment impacting the potential for significant public investment.

The first 100 days for the new government have proved that governing isn’t easy. Political pinch points and missteps aside, a common thread in the criticisms levelled against Labour ministers has been the absence of a defining vision for the sector to provide the framework for policy thinking and development; not least for food security which is set to become one of the defining political issues of the parliament. Without this overarching vision for the sector, the ability for businesses to plan their own investment and growth strategies becomes much more difficult and limits the ability of government to ‘crowd in’ private capital to drive growth.

The sowing of early seeds positive for UK investors

There are a few positive and recent developments of note. First, the Farming Minister, Daniel Zeichner, has confirmed the government’s intention to introduce secondary legislation which will bring to reality the regulatory regime of the Genetic Technology (Precision Breeding) Act 2023.[1] This will help to simplify the authorisation process for bringing new products to market from 1o years to an estimated 12 months.[2] Investors should note the government’s familiar caveat of “as soon as parliamentary time allows” which means the introduction of secondary legislation is unlikely to be imminent and will compete with an already packed legislative calendar. Speeding up routes to market will be welcomed by investors backing early-stage or growth-stage companies involved in gene editing, crop efficiency technologies, or those innovating in climate-resistant crop varieties. The streamlined regulatory environment lowers barriers, creating the potential for significant returns more quickly. Zeichner has also confirmed 43,000 Seasonal Worker visas for the horticulture sector and 2,000 for the poultry sector for 2025. Accompanied by a few additional measures to simplify free-range labelling requirements, this signals that the Defra ministerial team is actively listening to the sector and willing to flex policy to meet operational challenges and remove barriers to growth.[3]

Secondly, the government has secured access to the US market for British beetroot farmers, boosting export opportunities and attributed to the efforts of DEFRA’s agri-food attaché in the US.[4] This establishes an interesting precedent for securing market access outside of more formal and comprehensive free trade agreements, and creates attractive investment opportunities in companies that produce export-ready, high-quality British agricultural goods. Crucially, produce by produce access deals averts the political tightrope of negotiating comprehensive trade deals, not least one with the US which has long been the envy of previous Conservative Prime Ministers. For investors and argi-businesses on the lookout for export opportunities, engaging with DEFRA’s eleven attaches located in British embassies and consulates in Canada, Mexico, Brazil, Kenya, The Gulf, India, Japan, China, Thailand and Vietnam will be important to replicate this success.

Thirdly, there is recognition in government of the long and fraught dissatisfaction among farmers concerning the future viability of the agricultural sector.[5] The Labour ministerial team perceives a lack of confidence among farmers as the rationale for needing to optimise Environmental Land Management schemes as part of a wider new deal for farmers. The precise details of this new deal have yet to be clarified but the government has signalled a focus on:

Trade deals undercutting low welfare and low standards
Maximising public sector purchasing power to back British produce
A land-use framework to balance nature recovery and long-term food security

A latter focus on food security will be important for investors seeking opportunities which align with Labour’s aim to make the UK more self-reliant in the food and energy sectors, but especially where technological innovation contributes to more efficient and resilient farming processes and produce. Defending their record in government and playing in safe political territory, this was a focus of a recent opposition day debate in Parliament where several Conservative MPs made the case for greater public investment in new farming technologies to safeguard the nation’s food supply.[6] However, as noted by DEFRA Secretary, Steve Reed, the government’s ability to do so is up for consideration in the upcoming Budget and next year’s Spending Review and therefore competes with other public spending priorities.

A wet start for the farming sector

This year’s harvest of the five key crops – wheat, winter and spring barley, oats and oilseed rape – saw a decrease of 15% compared to the 2023 harvest with an estimated loss of £600m in revenue for English farmers due to considerable wet weather.[7] The impact has extended beyond these core crops with a south Devonshire winemaker reporting a 70% decrease in expected volumes compared to 2023 and another winemaker noting heightened disease pressures due to constant rain. For the British viticulture industry, the wet weather year of 2024 follows a boom in capital investment and overseas wine producers buying into the UK as a hedge against climate change. Rural and farming communities might not be this government’s traditional supporter base but neglecting the sector – with its sub-sector growth gems like viticulture – risks undermining long-term food security and economic growth not just farmers but the broader economy and consumers alike.

[1] DEFRA, New legislation to support precision breeding and boost Britain’s food security (Sept-23 link)

[2] DEFRA, Impact Assessment – Impact Assessment – Genetic Technology (Precision Breeding) Bill (Mar-22 link)

[3] DEFRA, Government provides certainty to horticulture and poultry businesses (Oct-24 link)

[4] DEFRA, British beetroot growers to put down roots in US market (Sept-24 link)

[5] DEFRA, Government to restore stability for farmers as confidence amongst sector low (Aug-24 link)

[6] House of Commons, Opposition day debate on farming and food security (Oct-24 link)

[7] Energy & Climate Intelligence Unit, England has second worst harvest on record with fears mounting for 2025 (Oct-24 link)

Wales says BOGOF to unhealthy food & drink

GK Associate Director Thea Southwell Reeves analyses the Welsh government’s progress on regulating unhealthy food.

This week, the Welsh government took an important step towards tightening the regulatory environment around high fat, sugar and salt (HFSS) food. The measures include prohibiting retailers from offering promotions such as buy-one-get-one-free and three-for-two offers on unhealthy foods; a ban on free drink refills in restaurants; and preventing retailers from placing HFSS food in certain locations in stores. Worth noting, these regulations are also set to apply online so website entry pages, shopping basket and payment pages will all need to comply.

The consultation is open until midnight on 23 September and is seeking views from industry on the draft regulations and their proposed enforcement approach. If the proposals are approved by the Senedd, the legislation is likely to come into force in 2025.

These proposed changes form part of a broad range of approaches, both voluntary and regulatory, that the Welsh government is said to be considering to encourage the food and retail sector to produce, promote, and ultimately sell, healthier food and drink.

The increased regulation of HFSS foods has been on the table for years and is also being explored by Holyrood and Westminster. A consultation on Scotland’s ambitious HFSS regulations closed in May and the King’s Speech included measures to restrict the advertising of junk food to children, along with the sale of high-caffeine energy drinks to children. The cost-of-living crisis has derailed anything more ambitious in Westminster… for now.

Industry has, for the most part, been critical of moves to tighten legislation, arguing that they disproportionately impact the small food and drink producers and make selling food complex and costly. However, for businesses that are nimble, the rules represent an opportunity to gain advantage over non-compliant brands or big brands that are slow to adapt. In a similar vein, producers who can emphasise a healthier product range in marketing and brand positioning are set to attract consumers who are looking to reduce their HFSS intake.

GK Strategy is a political advisory firm. We help investors, business leaders and organisations to engage with policymakers and advise on the political, policy and regulatory aspects of M&A processes.

To discuss what the Welsh government’s consultation may mean for you and how you can engage with policy debates in the year ahead, please reach out to Thea@gkstrategy.com.

The GK Post-Election Breakfast Event

GK Strategy Adviser Rebecca McMahon reviews the GK Post-Election Breakfast Event.

The coming weeks and months will see the new Labour government pressing ahead with its agenda for government, and getting to grips with a number of difficult challenges facing the UK, from sluggish growth, to growing NHS waiting lists, to precarious local authority finances.

GK Strategy was delighted to host a panel discussion this week looking at how the government will tackle some of these issues, and how it will prioritise its time and resources to deliver on its ambitious policy pledges. GK was joined by former Minister and Health Select Committee Chair, Steve Brine, and Head of Research at Labour Together, Christabel Cooper, who shared their insights into the government’s approach, and some of the inevitable obstacles it will face in the coming months.

Both panelists agreed that while the list of public policy challenges inherited by Starmer and his team is by no means a short one, Labour ministers will now be deciding on areas where urgent action is most needed.

Reforming the UK’s planning system was identified as one of the priority areas for Starmer’s new administration. Our two panelists noted that the new Government’s ambition in this area has already been illustrated by repealing the de facto ban on onshore wind, re-introducing mandatory housing targets, and pledging to update the National Planning Policy Framework via consultation by the end of the Party’s first month in power.

As a policy area with implications for multiple sectors – including housebuilding, the green economy and major infrastructure– planning reform to unlock private investment will be at the core of the new Labour Government’s agenda. As Chancellor of the Exchequer Rachel Reeves set out in her first speech following her appointment, its ultimate success will rely on “unlocking private investment that we so desperately need”.

Healthcare and the future of the NHS was another policy area which featured prominently. Steve Brine pointed out that under current spending plans, funding for the health service is projected to rise at a lower rate than during the austerity years. Meanwhile, the NHS Workforce Plan continues to be underfunded and the outcome of the Health Secretary’s talks with the junior doctors uncertain. He noted that while the Government will soon have to make difficult spending decisions, there would be an emphasis on creating an investor-friendly NHS to support Labour’s ambitions to “crowd in” private investment to improve efficiency and health outcomes.

There was a consensus that Labour’s perspective on the use of the private sector in supporting the delivery of public services is a pragmatic one. Labour’s ‘wide but shallow’ majority – achieving 64% of parliamentary seats on roughly 34% of the vote – means that the Party will need to reassure voters that it is making headway on its policy programme. Our panelists agreed that working with the private sector will be key to successfully demonstrating this.

Please do get in touch via rebecca.mcmahon@gkstrategy.com if you are interested in attending future events or would like to set up a call to discuss the year ahead in politics.

GK Strategy – General Election Update

General Election Results Briefing

The GK team reacts to the 2024 General Election results, with GK’s Strategic Advisers sharing their insights on Labour’s historic victory, and the implications for Sir Keir Starmer’s new government.

To read our briefing please click here.

UK General Election

General Election Update

5th July 2024

Election Result

As widely anticipated by all major polling conducted during the election campaign, the Labour Party secured its second-best electoral performance after Tony Blair in 1997 with a projected majority of 170 seats. The Labour Party leader, Sir Keir Starmer, will be appointed as Prime Minister in an audience with the King this afternoon. Achieved on a share of almost 35% of the vote – a tally lower than that achieved by Jeremy Corbyn in 2017 – Labour has benefitted significantly from the increase in the Reform UK vote, which has had the effect of splitting the right-wing vote in many key constituencies.

The Conservative Party has seen its support collapse across many parts of the country. Its projected final tally of approximately 120 MPs is worse than when it previously lost office in 1997 – with over 200 Conservative MPs losing their seats, including many prominent Cabinet ministers, including Penny Mordaunt, Grant Shapps, Alex Chalk and Gillian Keegan. The party vote share also provides grim reading having gone from 43% of the vote share in 2019 to 23%

Reform UK has outperformed initial expectations, polling 14% nationally, with its leader and chairman, Nigel Farage and Richard Tice, both being elected to Parliament for the first time. The Liberal Democrats have significantly improved on their previous performance; returning over 70 MPs to the new House of Commons, having picked up a large number of seats off the Conservative across the south of England. Meanwhile, the Scottish National Party has collapsed across Scotland, losing its status as the third largest party in Parliament to the Liberal Democrats with a mere 9 seats.

Next Steps

It is expected that the new Prime Minister will appoint his cabinet later this afternoon, which will then meet for the first time tomorrow morning. Whilst most cabinet ministers are likely to take on the portfolios they shadowed in opposition, some changes will be necessary in order to fill gaps left by the two shadow ministers who lost their own seats – Jonathan Ashworth and Thangam Debbonaire. Junior ministerial appointments are expected to follow over the course of the weekend.

The new House of Commons will meet for the first time on Tuesday 9th July, where MPs will be sworn in and elect a Speaker. The State Opening of Parliament and King’s Speech are due to take place on 17th July, where the new Government’s legislative priorities for the coming year will be set out. The Labour Government’s first budget is not expected until at least September, with incoming Chancellor Rachel Reeves having previously stated that she would give the Office for Budget Responsibility the ten-weeks required it requires to conduct a forecast before delivering any fiscal event.

Analysis from GK Senior Advisers

David Laws, former coalition government minister

“It was expected to be brutal, and it was. On 4th July, the UK electorate handed to the Conservative Party a redundancy notice, delivering it its worst ever electoral defeat in its 200 year history. Amongst the final results to be announced was that of ex PM Liz Truss, who has been thrown out of Parliament. The constituencies of Boris Johnson, Theresa May and David Cameron are now all in Labour or Lib Dem hands”.

“Political parties that have been in power for long periods are always at risk of landslides, but this was more than a landslide – it was a political earthquake, sweeping away numerous ministers and around two thirds of Conservative MPs. The public wanted revenge for the low personal standards of Boris Johnson, the economic chaos unleashed by Truss, and a Parliament of declining living standards”.

“With a few seats left to declare, Labour looks set to end with over 400 seats, perhaps just short of Blair’s 1997 haul of 418. The Lib Dems are now expecting a massive boost to their numbers – with over 70 MPs, three times their expectation of a year ago. The Conservatives have dropped well below their previous 1906 low of 156 seats, and the SNP will lose around 80% of their seats. Reform UK currently have 4 seats – crucially including Nigel Farage”.

“Labour now has a huge majority and can get on with delivering its programme for government. The results are broadly as expected by the polls, but with a couple of important caveats. Many pollsters thought the Conservatives might do even worse – finishing with well below 100 seats. The Tories are still though (just about) in business, with over 120 seats . The Lib Dems have exceeded even their own very highest private expectations, while the SNP have suffered a much bigger blow than expected – on the scale of the Lib Dem 2015 wipeout. And while Labour will be over-joyed to be in government with a solid majority, their seat total was well below the 450-480 level that many pollsters forecast, while their vote share (around 35%) is mediocre at best given the Conservative meltdown, and well below their recent ratings of 42/43%”.

“What are the implications? Let’s start with the easy ones. The Lib Dems are back in business. The SNP is in a deep hole and an independent Scotland is a very distant prospect. Reform UK are going to remain a real influence, with Farage in Parliament. Labour interest in voting reform may wane given their predicament and that PR would largely benefit Reform UK at present”.

“The big implications? The Conservative Party is in a deep hole. In 1906, its 156 seats still resulted from a healthy 43% vote share. This time the Tories polled a miserable total of around 24%. They are now likely to split between those wanting to move back to the centre ground and others looking for a partnership with Farage to reunite the right-wing vote. There are nasty choices to be made which all have major risks”.

“Meanwhile Labour looks in a superficially very strong position, but sensible Labour MPs will realise that the party’s resilience beyond the next election is far from guaranteed. Their victory owes almost everything to Tory weakness and the impact of Reform rather than enthusiasm for Labour. Seats that come easily can go easily. Farage has already put Labour on notice that it is now aiming to suck away predominantly Labour voters and win seats in areas where Reform’s strong vote gives them a good future chance. Farage will now target Labour on issues such as immigration, net zero costs, the state of the NHS, higher living standards, and relations with the EU. If Labour doesn’t deliver rapidly in office, it could face a pincer movement in future elections from Reform to its right and Lib Dems/Greens/Nationalists to the left”.

“Starmer is right that he changed his party and helped them exploit the Conservative weakness. But the failure of most disillusioned Tories to switch to Labour, and their inclination to go instead to Reform or stay at home should worry Starmer greatly. He has done the easy bit. Governing well will be harder. The electorate has decided clearly that it wants the Conservatives gone. Whether it wants a Labour government for long is still an open question”.

—

Phil Hope, former Labour government minister

“Labour’s landslide victory carries profound political, social, and economic significance, marking a seismic shift from recent Tory dominance and a realignment of voter priorities. The nation has given Labour a mandate for progressive policies to address inequality, climate change, and improve public services. This victory symbolizes a cultural shift that rejects austerity, turmoil, and inward-looking attitudes; and endorses economic competence and stability, trust and good governance, humanity and social justice, decent public services, fairness at work and strong international relationships”.

“But the practical reality is very tough. In inheriting a grim economic situation and broken public services, Labour’s long-term mission will be to rebuild trust and prosperity over time. The focus will be on sustainable economic growth through attracting private investment, supporting public infrastructure, and more effective regulation of critical utilities and services. New approaches to green energy, technology and AI, rapid house building, economic devolution, and workforce skill upgrades will drive sustainable growth. Internationally, Labour will pursue closer economic ties with the European Union and adopt a multilateral approach to global challenges and conflicts”.

“Limited and targeted tax reforms on wealth will secure greater contributions from the affluent to address immediate challenges in public services such as the NHS, social care, and education, alongside better support for families on low-incomes. But substantial investment in public services and significant support for those in most need will only come from future economic growth”.

“The election will spark intense internal debate within the Conservative party regarding its direction, policies, and identity. The influence of Reform and its xenophobic populism will exacerbate internal divisions and trigger a bitter leadership struggle to redefine the party’s vision. The outcome could see a centrist shift to regain moderate voters or, more worryingly, a pronounced rightward shift to consolidate the base”.

“The 2024 election marks a pivotal moment for the nation and a turning of the page on the past. It will be very challenging with high expectations of change. But Labour’s huge majority enables them to confidently plan a phased decade of renewal, and to build the restoration of trust in our national and democratic institutions. It allows Labour, over time, to reshape the UK’s domestic landscape, and regain Britain’s position as a reliable partner in the global framework for sustainable growth, peace and security”.

What a Labour government means for UK immigration policy

Immigration will be a major point of contention in the upcoming General Election. Britain’s exit from the EU and the introduction of the Points-Based Immigration System was heralded as the end to free-movement and the beginning of the UK regaining control of its borders. However, with record high net-migration figures in recent years and significant numbers still crossing the Channel in small boats in the hope of successfully claiming asylum, politicians continue to grapple with potential solutions to this seemingly intractable challenge.

Labour remains well ahead in the polls and is increasingly likely to form a majority government. The Party has committed to reduce net migration and has pledged to reform the Points-Based Immigration System “so that it is fair and properly managed, with appropriate restrictions on visas, and by linking immigration and skills policy.”

Labour also plans to strengthen the role of the Migration Advisory Committee – the Government’s immigration adviser – and establish a framework for joint working with skills bodies across the UK, the Industrial Strategy Council and the Department for Work and Pensions. The Party hopes to end the UK’s “long-term reliance” on overseas workers in some parts of the economy by bringing in workforce and training plans for sectors such as health and social care, and construction.

All these measures point to a more strategic approach to immigration under an incoming Labour administration. The Party recognises that overseas workers and the skills they possess will play a key role in delivering the economic growth which is so central to Starmer’s agenda for change. However, the Party is likely to take a dim view of sectors deemed to have become too reliant on foreign workers without making sufficient investment in upskilling the UK’s domestic workforce. Labour is expected to support employers with this transition, although we anticipate repercussions those who fail to adhere to new workforce and training plans as the Party looks to present itself as tough on immigration.

Starmer is also likely to benefit from rapidly falling net migration which he can present as a quick win in his efforts to reduce the UK’s reliance on overseas workers. Over the past 18 months, successive Home Secretaries have implemented reforms to visa rules affecting international students, skilled workers and care workers to reduce arrivals to the UK. Chair of the Migration Advisory Committee, Professor Brian Bell, has said that these measures are having a far bigger impact than originally anticipated and could see net migration fall to between 150,000 and 200,000 by September 2024. This would represent a considerable drop from the high of 745,000 in 2022.

However, it is unlikely that a significant fall in net migration will enable a Starmer-led government to materially relax the UK’s visa rules. The likely election of Nigel Farage for Reform UK will see a continued focus on immigration in the next Parliament and Labour will be keen to dispel any suggestion of being the party in favour of open-door immigration.

Businesses operating in sectors which rely on overseas workers should be actively engaging with a likely new Labour government to help shape the finer details of the Party’s policy proposals. New ministers will need support to understand what is possible in relation to the proposed workforce and training plans, and what support businesses need to enable the recruitment of domestic workers in these roles.

Please get in touch via email at hugo@gkstrategy.com if you would like to discuss Labour’s approach to immigration policy and what it will mean for your business.