The view from Labour Conference: A partnership approach to financial services

Labour met this week with a spring in their step after the Rutherglen and Hamilton West by-election, and there was certainly a clear confidence in the air at Liverpool that this time next year the Party could well be in government.

The overarching message to the conference was one of ‘national renewal’, with a heavy emphasis on bringing stability and confidence to the country and competence and professionalism to government. Specifically on financial services, much of the discussion was behind the scenes in private meetings and discussions, rather than public meetings in the fringe.

The conference was heavy on aspirations, but there was not a huge amount of new policy or indeed policy detail. There was a continued message – through Rachel Reeves’ speech for example – about the need for a ‘partnership’ approach between government and industry. This included recommitting to a National Wealth Fund, using government investment to leverage private sector funding and GB Energy (announced at last year’s conference) which will coordinate state-led investment in critical infrastructure.

There was a clear message about bringing stability and certainty to business, and on financial services that translated into reassurances that the current regulatory system would not be substantially changed in the short to medium term.

It was reiterated that the Party supported the measures within the Financial Services and Markets Act and the Mansion House reforms – indeed there was a commitment to deliver them faster – as the settled statutory/regulatory framework for the sector under a Labour Government. There is no appetite to reopen this framework and the Government’s Future Regulatory Framework will continue to be the overarching strategy.

There was explicit support for the international competitiveness and growth objective for the regulators, reiterating the position expressed during the passage of the legislation. There were also perspectives from senior figures within the Party, including Lord Mandelson, that Labour needed to continue to focus on international competitiveness as it would be crucial to the Party delivering on its Mission regarding economic growth and to pull in the necessary investment to support its wider economic agenda.

There was also a recognition that there needed to be regulatory accountability, although there was a sense that Labour Ministers would not be driving what that accountability framework should be, but instead leaving it more to the regulators. It was felt that regulators and Labour Shadow Ministers were in agreement as to the kind of accountability that was required.

Where change is likely is that there is a serious desire to see financial services contribute to the reduction in regional inequalities. Shadow Ministers referenced that investment is disproportionately made in London compared to the rest of the UK and that this needed to be rectified. This sentiment was reflected in a number of Shadow Cabinet speeches.

Shadow Ministers also set out that they would reconsider the regulators’ duties around financial inclusion – there was a view that there needed to be greater emphasis from the regulators on this particular issue, continuing the approach Labour has taken to financial services legislation.

Underpinning all of this it felt like much of Labour’s focus on financial services is about what the sector could do to unlock other priorities – whether that be Net Zero priorities, infrastructure, housing etc. It will be interesting to see, as the party develops its plan for the City and financial services, whether there is a plan to help the sector grow and cement its place as a major contributor to the country’s economy. Without the support of the financial services sector it’s difficult to see how Labour will deliver on many of its aspirations.

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