Evolution not revolution?: Labour’s plans for financial services

Last week, Labour set out its stall on financial services, launching a charm offensivewith the City ahead of the upcoming General Election. The Shadow Chancellor called for a ‘secure policy platform for growth, one which builds on celebrated strengths of the sector’ and presented a vision that will have consumer protection, competitiveness and stability at its heart.

Initial pledges put forward aim to deliver inclusive growth, enhance the UK’s position on the international stage, reinforce financial inclusion, make the UK a leader in green finance and unleash the potential of fintech. Labour has also committed to draw up new policy plans to reinvigorate capital markets, including by reviewing pensions and savings. Elsewhere, the Party is considering measures to get more women working in finance and will be on the lookout for ways to deepen cooperation with the EU on financial services.

So what’s new? Well, actually, not all that much. As time passes, it’s becoming increasingly clear that the Shadow Treasury team’s pre-election mission is centred on championing continuity over change, stability over wholesale reform, until industry tells it otherwise. Introducing a modernised ‘Tell Sid’ campaign for retail ownership, delivering the next phase of Open Banking and advancing work to establish a new digital pound are just some of the Conservative legacies that Labour will take forward.

Against a backdrop of economic challenges and growing concern over companies choosing to list on the New York Stock Exchange over London, Labour has become acutely aware of the steep path which lies ahead. The Party has been explicit in its ambition to rely on pension capital and private investment to support growth and has acknowledged the importance of maintaining the UK’s position an attractive place todo business. As a result, we can expect to see an agenda that shares a marked number of similarities with the current administration. That’s also been reflected in Labour’s communications in recent weeks, with Sir Keir doubling down on buzzwords like growth, regulatory competitiveness and stability, which lay clear how business-focused this Party has become.

At the same time, a new mindset can be seen as the Party takes a more active role in engaging with business in order to remove barriers to progress in the sector. Labour is showing itself to be the party of business, working hand in glove with industry to deliver on core policies, such as creating a national financial inclusion strategy, which would coordinate work across the public and private sectors. Its underlying approach is to tread carefully and develop policy gradually, in conversation with the sector, and not cause disruption to positive work that’s already underway.

On fintech specifically, Reeves will work with regulators and industry to develop a roadmap for Open Finance, something which the current government has dipped its toe in via measures in the Data Protection and Digital Information Bill. Labour will also advance initial progress to introduce financial market infrastructure regulatory sandboxes to reduce regulatory bottlenecks for tokenisation, the digital representation of financial assets using distributed ledger technology.

Labour’s ambition is clear: demonstrate the Party’s willingness to listen to business and protect the UK’s position as a world-leader in financial services, in order to cement the corporate vote.

But this is nothing new. In fact, for a long time, Labour has been seeking to win overCity executives and prove it can be trusted with the UK economy. It has sought to overturn the traditional view that the Conservatives are the party of economic competence by mirroring well regarded policies and speaking to business over and over, and over again. This can be seen in the thousands of conversations Labour has held with financial services firms, consumer groups and other sector stakeholders since 2021, and in its commitment to continue the dialogue in the months ahead asReeves’ team fleshes out their policy platform for the sector. This was also evidenced during the passage of the Financial Services and Markets Bill, which saw the Shadow Economic Secretary, Tulip Siddiq, working closely with her former counterpart AndrewGriffith and largely showing support for the legislation, rather than using it as apolitical battleground.

Despite lots of work still to be done on the fine detail of Labour’s plans for the City, so far, the mood music among industry experts is positive.

In the coming months, businesses must continue to engage key Labour stakeholders on the technicalities of policy as plans come to fruition. At the same time, it’ll be crucial to start preparing for potential regulation coming down the track. Moreover, with afresh crop of MPs ready to descend on Parliament following the election, there is a unique window of opportunity to influence policymakers and capitalise on Labour’s willingness to engage.