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Breaking down the U.K. election
On this week's episode of What's at Stake, host and head of Penta's D.C. office, Bryan DeAngelis, is joined by U.K. Penta colleagues and political experts Mark MacGregor and Andy Williams to dive into yesterday's U.K. election results.
They discuss the priorities of Labour's parliamentary candidates, highlighting differences between grassroots candidates and Labour leadership on issues like industrial action and net-zero targets. The discussion also includes details of Labour's strategies for the housing crisis and northern regions, and the newfound unity among Labour MPs — what Penta calls a "House United" in our recent deep dive on Labour's priorities this year.
Finally, they explore the implications of the election results for the business community, especially US investors. No matter where you live, you'll want to tune in for this expert examination of U.K. politics and what's at stake.
Welcome to this week's episode of what's at Stake.
Speaker 1:I'm your host, brian DeAngelis, and I'm here today, virtually traveling across the Atlantic Ocean, to break down the results of the UK general elections, which just took place on July the 4th. I'm joined by two of my colleagues who are based in our London office and have a long track record of working in politics in the United Kingdom Mark McGregor, managing Director of Public Affairs, and Andy Williams, managing Director of Corporate Affairs Two different sides of the quote-unquote political aisle although maybe that's a US term, you guys can correct me if I'm wrong. Andy, mark, I appreciate you guys being here. Good to be here, brian. Thank you, let's jump in. Maybe, mark, I'll start with you. Before we get into the actual results and what got us here, I'd love to hear a little bit more just about your experience in UK politics and you know how that informs our conversation today and as well as the kind of work you do and the research you've done over the last few months, as the kind of work you do and the research you've done over the last few months.
Speaker 2:Well, jumping right in, I mean I've been involved in politics. In fact. My first vote was in 1979 when I voted for Margaret Thatcher in what was then a change election then. And I've been involved in politics for 40 years and most of that time I've helped other people run campaigns. I stood three times myself for an election. I've helped other people run campaigns. I stood three times myself for an election and I was chief executive of the Conservative Party in the early 2000s and then I've run a number of think tanks here.
Speaker 1:So a lot of my time has been spent trying to help companies and organizations decode politics, understand how they make their kind of pitch to politicians, officials and what we call here the Westminster village. And, andy, you've had a similar experience on the on the labor side of things. I don't. I don't know if you were old enough to vote for Margaret Thatcher, but tell us a little bit about your background.
Speaker 3:Yeah, sure.
Speaker 3:So I began my career in Westminster-focused public affairs in 2012.
Speaker 3:So, although that's only 12 years ago, I think what we've seen in that time in UK politics is an almost unprecedented period of political turbulence, of change and of upheaval.
Speaker 3:You know, at that time we had a very rare in UK politics coalition government, a coalition between the Conservative Party and the sort of centrist Liberal Democrat Party. That was really unusual and posed its own challenges for clients and for those looking to influence the political process own challenges for clients and for those looking to influence the political process. We then had a really seismic event in Brexit, in the UK's decision to leave the European Union, which again for businesses, particularly businesses with a strong foothold in the UK and in Europe, was a major, major moment and actually caused a huge amount of turbulence in our politics. We've seen an unprecedented turnover of prime ministers in recent times, and I suppose that's what brings us to this moment in recent days where we just had the general election off the back of a period where the UK ran through a series of prime ministers in a very, very short period of time of prime ministers in a very, very short period of time.
Speaker 1:Let's dive into that a little bit more. So, as you said, it's been 14 years of conservative party rule. It's had its you know, I guess turbulence, both externally with Brexit, and internally, with a number of prime ministers Different from the US. The prime minister gets to choose when the election is going to be held within a certain window, and I guess it was what six or so weeks ago, ritchie Sunak announced that you all were going to have your elections on July 4th. What led us to this point, to doing the elections this week and, mark, maybe I'll start with you. Elections this week and Mark, maybe I'll start with you. Yeah, I think.
Speaker 2:I mean, look, the election had to be held at the latest, essentially at the end of, before the end of 2024. So there were only really a number of windows to hold the election. You can't hold it in the summer. So I think what led him to decide to have the election now is the sense of making a decision, making a positive decision to choose the election day rather than going to the last minute. And there have been previous elections for prime ministers where they've chosen a decision date based on them being forced to do so. Both John Major and Gordon Brown, both of them went pretty much to the last minute and there was definitely a sense of I mean, I remember those elections a sense that they were hanging on and that wasn't a good look for the electorate. So I think Rishi Sunak decided I'll seize the initiative, I'll hold it at the time of my choosing, I've got my plans in place.
Speaker 2:I want to surprise the opposition, but whether he did so is, of course, another matter, and I think that was pretty much the most important factor. One secondary factor is I think there had been some good economic news, but it didn't. I think it looked as if there probably wasn't going to be any more significant good economic news Interest rates might fall once, perhaps before the end of the year. The capacity to have another budget, which was certainly one of the options with tax giveaways, probably wasn't going to be able to happen, so it felt like the room for manoeuvre was pretty limited. The Conservatives obviously were in a difficult place. They're very, very far behind in the polls. The polls have obviously turned into reality a few days ago, and so I think he just decided let's go for this date. At least I'd be seen to have taken a kind of positive action.
Speaker 3:Labour on the hop was a significant driver.
Speaker 3:So there was a feeling in Conservative circles that while Labour kept going out there and saying we're ready for this, bring it on, everything's in place, that actually maybe they wouldn't be quite so set to start running a campaign straight away.
Speaker 3:In fact, what we saw during the campaign from Labour and this has been borne out in a significant victory for them from Labour, and this has been borne out in a significant victory for them is a very disciplined campaign, one where the messaging was extremely controlled, extremely tight. You had almost complete party unity. You saw virtually no gaffes. There were some slightly rockier moments during the campaign, but by and large you had a leader in Pia Starmer, now the Prime Minister, and Rachel Reeves, the new Chancellor, who are completely united, completely on message and ran a very small-c conservative, a very small C conservative, a very guarded, a quite a sort of sort of a low key, no mistakes campaign, but one that one that paid off from projected confidence that I think. I think the conservatives in Rishi Sinek maybe underestimated how prepared and how in charge they would be during the campaign.
Speaker 1:Let's talk a little bit more about that messaging and sort of the political climate heading into this election. You know, similar to what I think we're experiencing in the US from where I sit in DC. The economy seemed to be number one issue, immigration, you know, maybe in a slightly different sense, but another huge issue, I think health care was also a huge issue for the UK. Are those the right? Is that what drove folks? And you know how did each side do on that? And maybe I'll start with Andy first.
Speaker 3:Yes, I think there's two dimensions here. I mean one is there's a great political commentator in the UK called Danny Finkelstein, who is a member of the House of Lords up here, and he says that you can basically only run a couple of campaigns in politics full stop. And that applies to the US context. It applies to the UK context. One is we're on the right track to turn back. So that was one option, for Rishi Sunak was to say look, I have an economic plan that's working. Inflation is coming down. Yes, we had an economic shock a couple of years ago when Liz Truss was prime minister for 49 days, an unprecedentedly short period of time but actually I've got things back under control is what Rishi Sunak was trying to say.
Speaker 3:What Labour was trying to say and this is the sort of inverse of that campaign is it's time for a change.
Speaker 3:Right, it's a classic campaign tactic and campaign message, but Labour's big theme throughout this campaign was you've got 14 years of the Conservatives and on a number of measures, things are worse, not better, than they were in 2010. And before I hand to Mark, obviously, the economy end of the economic scale. But the middle classes in particular are squeezed, are suffering with inflation in recent years, with higher bills, with wages not keeping up with inflation, and that actually life is just a bit tougher, in fact, some cases a lot tougher than it was for people a while ago, and that was a significant theme, and you know, labour really ran a campaign that was big on turning the tide, on driving economic growth and really driving more investment into the economy as well, which, post-brexit, has been a challenge and an area where we've needed a bit of recovery state and public finances on the back of 300 billion spent on support for businesses and individuals during COVID, 100 billion spent on support for energy prices for business and households.
Speaker 2:Since Russia's invasion of Ukraine, the economy is not at a good place low rates of growth, We've had hikes in energy prices, food prices. So people are feeling pretty grumpy. But it's important to understand it isn't just a phenomenon in the UK. Most countries that have had elections in the last couple of years had seen whoever happened to be in power turfed out and replaced by the main opposition party. We just had elections in France where the president Macron was defeated by the opposition Front National. So you've seen right across Europe and in other countries around the world, unpopular governments facing elections end up losing, and sometimes losing big, as has happened in the UK.
Speaker 1:So we've, or you guys in particular have, seen this coming and it seems like this week's results kind of largely stuck to what most people were expected. And to get ahead of it, you all did a report earlier this spring from Penta taking a look at, you know, the views expressed and the commitments made by Labor's prospective parliamentary candidates in about 150 seats. It did a deep dive. I found it very helpful and the issues they're likely to prioritize now that the election's over and they, you know, enter the House of Commons. So maybe to take, you know, the next segment into that a little bit deeper, what were some of those major policy areas that you saw from the Labour Party that they'll be focused on? And I'm particularly interested in how that might impact the business community which all of us serve.
Speaker 2:But let me start by thinking about the background to the report. So we decided to look at what Labour selected parliamentary candidates were saying over a 12-month period and to examine the issues they were prioritising. The comments that they were making publicly during their own local campaigns and most of those 150 candidates are now sitting in Parliament. The comments that they were making publicly during their own local campaigns and most of those 150 candidates are now sitting in Parliament. And we decided to do that for two reasons One, to try and understand something about the people that were very likely to end up in Parliament forming this new Labour majority, and the second, to see whether what they were saying locally in their own campaigns might then become a guide to what they might do and say when they're elected. And so, in a way, the title of the report A House United sums up what actually, you know, this class of 2024 represent. They're very united, they were determined to win. They've been out of power for 14 years, as you said before, so their priority was actually focusing on doing things that would help them get elected. But I think what we found interesting was, of course, when you're the local representative, a bit like in the States, where, if you're the senatorial candidate or congressional candidate, your job is mostly to support what the kind of party line is. But what's always interesting is the areas of divergence. And there were two particular areas of divergence between what they were saying locally and what the kind of the Starmer leadership and then Shadow Cabinet were saying. And the first is around industrial action, in that they were much, much more supportive of striking workers and industrial action on the side of the strikers than the party leadership, and the simple reason for that is that a lot of them have connections through trade unions and other organisations to those people on strike. And, of course, whereas the Labour leadership their job, they already were anticipating being in power and so they were going to be people who are going to have to negotiate with, whether it's trained workers, whether it's healthcare workers or workers in other sectors. So they were anticipating we don't want to appear to be simply giving in to wage demands before we actually have the reins of power. So that was one area of very significant difference. So our view is that that will give an indication to what those now Labour MPs are likely to do in office. They are likely to be a pressure point to say to the Labour leadership now the Prime Minister, chancellor and others to say to them look, you know, actually the demands for higher wages are actually quite legitimate, for higher wages are actually quite legitimate. We as a Labour government should now try to play our part in helping those people at least achieve part of what they're asking for in their wage science.
Speaker 2:Some of the strokes were not just about wages, they were about conditions, but in essence that was the key difference. There were some other areas, particularly around the Labour now Labour governments and at that point the Labour manifesto and other commitments around energy, so around what the Labour Party was then saying it would do to transition to net zero. And again there was a tension there between a Labour Party that was quite cautious in its commitments and Labour candidates, who seem to take a much, were trying to take often a much bolder position. We should try to get to our net zero targets more quickly. We take climate change seriously. We need to make sure we've got policies that match up with our climate change ambitions.
Speaker 1:Yeah, this is one of the first lessons I learned in politics and it's certainly global, but it's. I'm looking at these results. You know where labor has picked up some wins in some otherwise normally conservative parts of the country. So, andy, let me bring you in here for your thoughts and how labor kind of managed this as well as well.
Speaker 3:Yeah, I mean firstly on that particular point. I think one of the major areas of progress and reform that Labour are hoping to enact over the next few years is, on your local point is around housing. I mean, in Britain there is a housing crisis in terms of supply. It has pushed house prices up to eye-watering levels. It's pushed rental prices up to eye-watering levels, particularly in London and in the cities, and that has spread out to the suburbs. And so a lot of Labour's plans for growing the economy, but also, to use a sort of conservative buzz phrase of the last five years for levelling up Britain, for improving economic conditions outside of London and particularly in the north, is to build more houses, improve housing supply and give people an opportunity to get on the housing ladder.
Speaker 3:I think, going back to our report, one of the most interesting things to reflect is the extent to which the new cohort of Labour MPs you know significant increases on the 2019 election result is the extent to which they are incredibly united versus the division we saw in the Jeremy Corbyn years.
Speaker 3:So for listeners who aren't familiar, keir Starmer's predecessor as leader of the Labour Party, jeremy Corbyn, was a hard left figure, essentially a very left-wing figure, certainly at least the joint, most, if not the most left-wing person ever to lead the Labour Party and completely atypical among almost all political party leaders in the United Kingdom over the last 100, 150 years, and as a result of that, he suffered an enormous election defeat in 2019.
Speaker 3:And his years in charge of the Labour Party saw the party beset by division, and not just by small policy differences, but by fundamental differences in terms of how do you run the economy. I mean, jeremy Corbyn was, if not a Marxist, not far off it, so not somebody you would expect to be a candidate to become prime minister of a Western country. And so the reason I say all of this is because to go from that point in December 2019, where Labour suffered a historic defeat and the conventional wisdom was that they would be out of power for another generation, to go to a point four and a half years later where you have Keir Starmer in Downing Street commanding a significant majority, I mean that is a significant, a huge and seismic shift in a relatively short period of time.
Speaker 1:One more thought from you, and then we can take a quick break.
Speaker 2:Yeah, you asked a question about the impact for businesses, and Andy's right that Labour's focused on growth, and I think if I were a US business that had interest in the UK already or was thinking about investing here, the two areas I'd look at are one anything to do with environment climate change.
Speaker 2:They are clearly going to invest significantly. There's already been a lot of investment or change here, but I think Labour want to move that to the next level and the second is anything around infrastructure. So Andy touched on housing, but I think you can assume that we're going to get very significant additional opportunities for private investment into infrastructure, whether that's roads or power stations or whatever and one of the reasons why there's an opportunity is because, as I mentioned before, public finances are in a dire state. The government will not have the money by itself, so therefore it is going to be looking to the private sector to provide that, and Labour are already both in the areas I've touched on, but in other areas like health and education, they've already indicated that they were open to private partnerships where a private company or investor from abroad will come and be willing to invest in facilities here.
Speaker 2:And so I think those are the two particular areas where, if I were a US investor looking at the UK as a potential target, I think these are two areas where I'd absolutely focused my efforts.
Speaker 1:I think these are two areas where I absolutely focused my efforts.
Speaker 4:That's great. Let's take a quick break there and then, when we come back for our second half, I want to jump into that some more. So you, to assess a company's reputation and make decisions that improve their positioning as executives in the C-suite, must account for a growing set of engaged stakeholders, all with distinct, fast-changing demands. Penta provides real-time intelligence and strategy solutions. We work with clients solving complex global challenges across a variety of industries. We work with clients solving complex global challenges across a variety of industries. Our clients span technology, financial services, energy, healthcare and more. To learn more about how Penta can support your company, check out our website at pentagroupco, our Twitter at PentaGRP or find us on LinkedIn at Penta Group.
Speaker 1:Welcome back to what's at Stake. I'm here with Mark and Andy from our London office breaking down the recent UK elections. Mark, we started to talk about some of the business environment and what we'll see in the next year or so there. But the other major issue that I wanted to get your take on before we go much deeper in the business community, because it affects them too is migration, and that has been a major issue for labor PPCs and for the UK in general, as it has here in the United States, and it's a top priority for a lot of businesses policy agendas here in the US. How does that debate, you know, start to shape the next couple of years? And, if you're following the US debate, how does those two compare?
Speaker 2:It's very similar to the debate you're having there. There have been significant concerns about both legal and particularly illegal migration into the UK. So last year, just to understand the stats, there was net migration into the UK of more than three quarters of a million people. Now that's a very significant size of a single city that has come to the UK in a single year. Now, partly that's because of external factors. For example, britain opened its arms to welcome those from Ukraine. Similarly, we had a scheme to encourage people who wanted to come to the UK from Hong Kong. So those are kind of what you might call one-off factors, but regardless it's still a very significant number of people that are coming here. That does include students, for example, and includes people coming to work and work visas, and I think a lot of it is not so much about the numbers there certainly are some people that think that those numbers are too high it's also about a sense of fairness and that's why a lot of the focus here has not so much been on the legal migration but on the illegal migration, where people seem to be coming to the UK. They're kind of getting around the rules to get here and then they apply for asylum and then in many cases they are granted that asylum, and I think there's a there's a sense that people are going to jump the queue, if you like, ahead actually, of other migrants.
Speaker 2:But one of the driving factors and here's where I think the tension is likely to have an impact on the Labour government is that the industries that many of these people are coming to work in are the industry where there's skill shortages or just shortages of staff, so health and what we call social care.
Speaker 2:Those are the huge numbers of people who have arrived, been come to the UK, work for a period and then return, because there simply haven't been the numbers of people willing to work in those sorts of industries. And so, although politicians often say tough words about having limits on migration and making sure we have control of who comes here limits on migration and making sure we have control of who comes here the truth is that Britain needs migration in order for large parts of the economy to work. If those people simply didn't come, or were banned completely from coming to the UK, large parts certainly of our health service here would simply grind to a halt, and so I think that's going to be a tension. It's certainly true that it was a big issue in the election and it has been an election. It was certainly one of the factors behind the Brexit vote in 2016. But there's also this tension that Britain needs migrants in order to some of our basic industries to work, and without it they would be in very serious difficulty.
Speaker 1:It sounds all too familiar to what we're dealing with right now and have been for years, and certainly it'll pick up over the next few months, and that puts a lot of pressure on candidates and members. And so, andy, I'm curious, you know, as we pivot in how businesses should prepare for and engage with, should manage maybe some of the differing priorities between Labour and the party leadership and what's best to help advance their agenda?
Speaker 3:It's interesting because a lot of people in our world, in our industry and in businesses have just become used to engaging with Conservative and Conservative-led government and therefore Conservative ministers. It's been, as we keep saying, it's 14 years. That's a very long time where you get used to the way in which a particular party operates, and I think it's important to say that engaging with Labour, the way the Labour Party thinks about things and the way that a Labour government will respond to requests and to arguments and to the concerns of business, is quite different. Firstly and this is not a criticism, it's just a fact Conservative governments tend to be quite a bit more transactional. They look at things from an economic growth perspective, from a sort of brass tax numbers perspective. I think a Labour government is going to be more interested in yes, investment, yes, money. That's important, but how can you invest in projects and in developments, et cetera, that help to improve communities and drive growth in an equitable way, and what's the sort of dimension from a green economy perspective? So those are all factors to consider.
Speaker 3:I think it's very important that businesses looking to engage with a Labour government really get to grips with and understand their agenda. It's no good going in with a narrow focus and sharing your narrow concerns as one business, but understanding how those concerns, or how what you're looking to achieve, fits into the bigger picture. You know Labour has these six first steps, as they call them, for growth. There's sort of one each on the economy, on housing, on immigration, on education, etc. And that will be an important focus for the first year or so. But looking at Labour's longer term agenda, a lot of it is about making Britain one of the leading green economies in the world, for example.
Speaker 3:How can you fit into that agenda? How can you fit into an economic growth agenda? Technology is going to be a big focus, so where does your organization fit into a vision that puts technology at the heart of of growth and of jobs, for example? Um, all of these things, I think, are incredibly important. So it's understanding what drives the labour party, this labour government, and particularly the people at the top. Keir Starmer is an interesting and in some ways, quite unusual prime minister in the sense that he's only been in politics for a decade. He actually only entered Parliament in 2015. He had a very significant job running Britain's Crown Prosecution Service beforehand. He's a human rights lawyer by background and he does have a sort of, I think, a moral drive, you know, a moral vision for what Britain should look like, and understanding that and everything that flows from it is something that's really worth bearing in mind.
Speaker 1:You know that's probably a great place to end, and I'd love to get both of your final thoughts. I know we're only a couple hours and days out of the election, but the new government should have about a five-year term, which sounds delightful, by the way, compared to our every year elections, every year elections but if we're back on this show in four years or so, what would labor? You know, what would they have to have done for this to be considered a?
Speaker 2:success going into that next election, mark. Why don't I start with you? I think it comes back to growth. Have they managed to achieve their ambitions on growth? We all know that you can have all the plans you'd like in opposition, you can have the best intentions, but the world doesn't always work in a simple way and we've seen some huge disruption from COVID, a war in Ukraine, and almost certainly there's going to be some of those disruptions in the years to come. But fundamentally, if they were sitting here in five years' time, I think they would want to say you know, we have delivered the growth that we promised and that's led to better jobs. That's led to better, you know, pay for people across the economy. I think that would be the fundamental thing.
Speaker 2:And the second is, I think fundamentally, this point about housing and infrastructure. They've made a pledge to get the government itself here does not build houses to get 1.5 million houses built. That's 300,000 a year. That's a very, very steep target. We're going to have something like 200 000 this year. So I think they want to be in a position in four or five years to have gone a very long way to getting that delivered, because, of course, that is the one thing that would be then enable them to say we're on a good track if we get more houses. You know it's? It's as Andy said before it allows more people to get on the housing ladder earlier, to have a greater choice of whether you're renting or buying. So I think that housing target is something they'd like to have made very significant progress on in 2029 or 2030.
Speaker 3:Yeah, yeah, I mean Labour's number one pledge of their six first steps that I mentioned is deliver economic stability and that is absolutely the top priority. You know we've had anemic growth in Britain pretty much since the financial crisis, and that's not just down to governments, but it is a fact that we've barely grown in 15, 16 years.
Speaker 4:The other thing.
Speaker 3:I'd say is there is a huge overriding sense in Britain that public services just aren't working. And that's the NHS, which is an enormous, a hugely complex organisation. I think I'm right in saying it's still the second largest employer in the world after the Chinese army. It's a massive, massive organization, a very complex one, and it hemorrhages money and people don't feel like it's working. And the other thing is really kicking off that program of the transition to net zero in the green economy. Labour has made a series of pledges. Its centrepiece on that is setting up an organisation called GV Energy, which would be a vehicle that invests in the green technologies of the future. Frankly, there's a lot of scepticism around whether or not that's going to be effective, but it is a big pledge and I think if that works it really could pay off. But let's see. So kickstarting the green economy and sort of hastening the transition to net zero I think will be another area where you know there's lots at stake.
Speaker 1:That's great. Well, let's leave it there, and maybe what I can do is I'll offer to switch the chairs around sometime soon and attempt to explain our elections to you all. I'm getting jealous the more I talk to you guys about how sane all of this sounds in the UK compared to what I watch every day over here, but really appreciate you guys coming on and breaking down this election for us. Thank you, thanks, brian, and to all our listeners, remember to like and subscribe wherever you listen to your podcasts. You can follow us on X, at PentaGRP or on our website, pentagroupco. I'm your host, brian DeAngelreas, and, as always, thanks for listening to what's at State.