In the penultimate answer at Wednesday’s PMQs, Sir Keir Starmer retorted: “I have full confidence in the Chancellor, thank you.” Most Labour MPs we spoke to after Rachel Reeves’ Spring Statement agreed, although, as we report below, some still have deep doubts.

Immediately following yesterday’s Spring Statement, Hawthorn spoke to a dozen Labour MPs to gauge their reaction. This is what we learned.

Many Labour MPs who talked to Hawthorn expected a dismal outlook but, on reflection, this Statement comfortably surpassed their expectations.

There is optimism from Labour’s progressives

For a great number of Labour MPs, the Statement was far more positive than anticipated. A Labour Parliamentary Private Secretary said: “I don’t know how she managed it, but that was radically better than expected.” Others praised the difficult political choices made by the Chancellor to restore her fiscal headroom.

Many MPs viewed the Statement as a necessary evil to maintain financial discipline. “It was necessary. It was painful, and it’ll go down badly on the doorstep, but someone had to be the adults,” said a Labour Growth Group MP. A junior minister added a more cynical take, noting: “That’s why Cameron’s ministers were in and out of Labour HQ pre-election. They were giving us the blueprint to austerity.”

A smattering of other views:

• A Labour MP from the 2024 intake said: “Good news on growth in the years ahead. Shows planning reform essential and can get us growing whilst helping people get the homes, hospitals, and roads they need. Strong performance from the Chancellor.”

• A member of the Labour Growth Group of MPs said: “Build stuff – get growth.”

• A Labour Select Committee member said: “Better than anticipated – a strong statement continuing the work of the Budget. Getting the economy back on stable footing and supporting broken public services.”

• A Labour Select Committee member said: “Loved Rachel calling the opposition parties the anti-growth coalition.”

Predictable criticism from the Left

However, not all Labour MPs were satisfied. One from the Socialist Campaign Group voiced sharp opposition to the welfare cuts, stating: “We’ve just plunged 50,000 kids into poverty unnecessarily.” A senior Labour think-tanker echoed concerns, saying: “Growth forecasts are very depressing. The planning stuff is a chink of light, but perhaps we should go further and faster.”

For some, the long-term strategy provided reassurance, despite the pain. A Labour MP from a marginal northern seat admitted: “It’s going to get harder before it gets better. What’s important is that we have a whole Parliament to get things back on track.”

Conservative and outside reactions

Opposition MPs were quick to respond. A former Tory Cabinet Minister was sceptical: “If Reeves wants to give business real hope for the future, her statement must now be backed up by policies which demonstrate the government actually understands how business works.” Meanwhile, a senior right-wing think-tanker conceded: “I thought she did really well. Very reliant on planning reform for growth though, and they’re already behind on that.”

What’s Next?

While the Spring Statement delivered a short-term fiscal fix-up job, the real test will come in the Summer Spending Review and the Autumn Budget. Labour MPs—whether cautiously optimistic or deeply sceptical—will be watching closely as Reeves navigates the next phase of fiscal juggling.

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LOVELESS LABOUR’S LOST

There is real exasperation amongst more experienced Labour MPs on the way proposed welfare changes – and the apparent half-U-turn – has been handled. Following a tense Cabinet meeting last week and a public backlash against the mooted plans, the Work and Pensions Secretary Liz Kendall was forced to backtrack on her aim to freeze disability benefits in her sweeping welfare reforms.

Some are saying it feels like Winter Fuel Payments all over again, with lessons apparently not learnt from that debacle.

There are complaints that a handling strategy is ‘non-existent’; there’s been no ‘rolling of the pitch’; and Parliamentarians’ concerns are only being managed in retrospect rather than in advance of policies being announced. We hear that MPs had only just got their heads around the proposed cuts before Liz Kendall, the Secretary of State for Work and Pensions, supposedly announced a climbdown. Yet many MPs don’t understand the climbdown – and none of them know what to say to concerned constituents when policy positions seem to have a lifespan of under 48 hours.

Government Whips are reportedly none the wiser when being asked by their flocks to explain the policy, because they have no idea either. Discussing how this issue has unfolded, the word “s**t-show” was employed liberally and repeatedly.

Many seasoned Labour staffers, too, are not feeling the love. Many of them have been relegated to casework and policy emails, after Labour MPs have been subject to a flurry of angry constituent emails about recent policy announcements.

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FROM THATCHER, WITH LOVE

Hawthorn joined yesterday’s Margaret Thatcher conference by the Centre for Policy Studies.

“Boredom and contempt.” Those are the two words that were used to describe the current state of the Conservative Party during the CPS’ annual conference at Guildhall. Attended by some of the Tories’ most loyal supporters – including donors, financiers, and past and present Conservative MPs – the mood was honest to say the least.

Unsurprisingly, economic growth remained front and centre of debate, along with clean energy and an acknowledgement of the division it has caused amongst different factions of the party. When pressed for her views, 2024-intake and rising star Tory MP Katie Lam appeared eager to stress that net zero policy in its current state was a “misguided piece of legislation” without more comprehensive plans for its roll-out and costing.

Prior to her own speech at the event, there was a grudging acknowledgement of Kemi Badenoch’s poor performance in her first few months as Conservative leader. Mark Littlewood, the former director general of the IEA, said that the (Conservative) Party at the moment “oozes stupidity”.

George Osborne, the former Chancellor of the Exchequer, said “The Conservative Party has a big mountain to climb”.

Interestingly, he advised the party to focus on their strategy for countering the Liberal Democrats, as well as for the Reform UK party.

While delegates may come away from the event re-energised, their enthusiasm might be short-lived.

Hawthorn hears that  some former Conservative MPs are now resorting to applying to graduate schemes and entry-level public affairs roles, as they seek their next gig.

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TIDYING RED TAPE

On Monday morning, the Treasury released its new policy paper on reforming the regulatory system. While many of the proposals are ambitious – and have been lauded by growth-minded MPs – one phrase tickled this particular writer.

The paper says “Today, we take steps to: Remove complexity and tidy red tape across environmental permitting”. Tidying red tape hardly seems like the limit of the UK’s ambition, does it?

In any case, the paper was accompanied by an opinion piece in CityAM by Sir Keir Starmer, where he argued his Government will “bring back the animal spirits of the private sector”.

THE CONTEXT: This policy paper is just the latest salvo in the Government’s drive to make regulation more aligned with its growth agenda:

• In November at her Mansion House speech, Rachel Reeves claimed that regulatory changes after the financial crisis had “gone too far” and that watchdogs now needed to focus on “supporting economic growth”

• On January 16th, Reeves hauled a number of regulators into No 11 to interrogate their plans for growth – including Ofcom, Ofwat, Ofgem, The Office of Rail and Road, the Environment Agency and the Civil Aviation Authority

• On January 21st, Reeves jettisoned the chair of the CMA, installing Doug Gurr as interim chair

THE REACTION: Hawthorn understands that the release of the paper came as a surprise even to members of the influential Labour Growth Group. However, one prominent member said the development was “very good”, and a senior leader at the Labour Together pressure group agreed, though saying there was “more needed”. Reeves will meet eight regulators again at No 11 this morning.

THE SUMMARY: The paper highlights 3 actions the Government will be taking, which we summarise below:

Tackle complexity and the burden of regulation

Reduce uncertainty across our regulatory system

Challenge and shift excessive risk aversion in the system

1. Tackle complexity and the burden of regulation

As part of this action, the paper commits to cutting administrative costs for business by 25% by the end of the current Parliament. It consolidates a number of different regulators – consolidating the Payment Systems Regulator into the FCA, and consolidating three different employment bodies into the Fair Work Agency. It also states that ministers will consider the consolidation or merging of regulators as part of the upcoming Spending Review, suggesting there will be more streamlining of regulators to come.

The paper specifically calls out environmental and planning regulation as ripe for reform, promising to ease environmental permit requirements in particular for high-priority sectors. It also highlights a new process to appoint a single lead regulator in major projects, a move which will impact the progress of the Lower Thames Crossing and the mooted Heathrow expansion.

2. Reduce uncertainty across our regulatory system

With this action, the Government is working with regulators to seek a better understanding of their roles, in order to gain better transparency and improve performance. The CMA will also be on the hook to deliver a new “Growth-focused Strategic Steer”. The financial services sector comes under the spotlight, with a few announcements to enhance the attractiveness of the UK as a FS destination, and to support early-stage firms in the sector – though these remain light on specifics.

3. Challenge and shift excessive risk aversion in the system

The final action promises performance reviews of all regulators by their sponsoring Government departments, to hold regulators to account and monitor their performance.

It goes on to state that the newly-established Regulatory Innovation Office will work on a number of innovation priorities, including:

• Supporting the UK space industry

• Accelerating trials on drone and autonomous delivery

• Building a pathway for engineering biology innovations such as precision fermented foods

• Establishing a forum for regulators on the quantum industry

Finally, the paper is accompanied by an Annex which lists 60 “Key regulator pledges” from some of the biggest regulators called in to No 11 earlier this year. It states that these pledges will both 1) have a tangible effect on driving growth and investment, and 2) are implementable within 12 months.

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It was to nobody’s surprise that Kemi Badenoch kept rather quiet on her ‘First 100 Days’ anniversary this Monday.

The Tory Leader’s resounding win over Robert Jenrick last Autumn was greeted with cautious optimism by many in the Conservative Party. Badenoch was viewed as a breath of fresh air, promising a new direction and a return to ‘real Conservative values’. But on Monday, 100 days on from her leadership election victory, Hawthorn found almost no Tory sources willing to say she is taking the party in the right direction.

“Dressing antagonism up as principles only works if people know what you stand for,” remarked one former special adviser. A senior Tory source told us that Badenoch has “done little to stop the rot… with the polls moving in one direction, people are already wondering who’s next.” Morale in the party is at rock bottom – and donations have all but dried up.

Senior Conservative sources tell Hawthorn that even the most loyal donors – those who stuck by the party through the chaotic Brexit stalemate, even the partygate scandal – are keeping their cash on ice for now. “The only question left is whether she goes in 2025 or 2026”, explained a former cabinet minister.

What everyone we spoke to agreed on is that the threat from Reform now feels truly existential for the Conservatives. Emboldened by Trump’s victory and popular discontent with the Labour government, Farage is consistently outmanoeuvring Badenoch on her right flank. Established debates within right-wing politics – the size and role of the state, the rate of immigration, and ‘culture wars’ – are now dominated by the insurgent newcomers, with the Tories trailing in their wake.

The scale of Labour’s 2024 election victory meant that political commentators always expected something of a Tory retreat into the wilderness. Rebuilding takes time, and Badenoch’s senior team made it known early on that policy development would not be rushed. Hawthorn hears that following an exodus of policy specialists from CCHQ, loosely-structured ‘commissions’ have been set up. “The job of rebuilding the party will take much longer than 100 days,” a senior insider told us; “we must re-earn the right to be heard.”

But the commentariat – and the voting public – is rarely so patient. To the bemusement of many, a ‘crackdown’ on the rights of legal immigrants to the UK remains Badenoch’s only significant policy intervention to date. Meanwhile, opportunities to challenge the government on Chagos, illegal immigration and taxes have largely been left for Reform to capitalise on. Hawthorn also understands there is disquiet among the Tory faithful about their leader’s absence in the assisted dying debate.

So, what next for the Leader of His Majesty’s Most Loyal Opposition?

Badenoch has all the raw ingredients for true-blue pedigree. Even her detractors see her as a no-nonsense straight-talker who’s pulled herself up by her bootstraps. An experienced minister, on paper she was ‘the candidate Labour feared the most’, with concerns in Downing Street last autumn that her aggressive style could be very tricky indeed for the Prime Minister. In the event, her floundering media performances and occasionally bizarre comments to journalists have left Starmer’s team cock-a-hoop.

By any measure, Badenoch has fallen short of expectations in her first 100 days. While it’s difficult to say what ‘success’ could have looked like at this stage, one thing is certain: it has so far eluded her.

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Gunning for growth

Fresh from her promotional tour in the Swiss Alps, Rachel Reeves has returned from Davos with a newly-invigorated growth mission.  This focus on growth as the Government’s central mission will continue to have a strong gravitational pull in the next few months in particular, as Reeves seeks short-term wins to complement longer-term growth strategies. She is also preparing a Spending Review which is expected to insist that funding for new priorities will only be unlocked if government departments also find cost savings equal to five per cent of their budgets,

As well as short-term wins, Reeves is also seeking to show she means business by pursuing bold and controversial courses of action. This was evident last week as she fired the chairman of the Competition and Markets Authority (CMA), hired ex-Amazon chief Doug Gurr to head up the body, and confirms a third runway at Heathrow.

As we at Hawthorn outlined last week, former colleagues of his suggest that Doug Gurr’s appointment will bring with him the much-vaunted Amazon culture to the CMA, and that he will be very pro-tech. While his straight-batted, evidence and data-driven approach may be exactly what’s needed for Reeves’ growth mission, former colleagues do caution that his mindset is much more civil servant and public-service-minded than his Amazon gig alone would suggest.

In an opinion piece for the Financial Times this week, Gurr frames the role of the CMA as creating a regulatory environment “that encourages the greatest possible level of business investment,” and delivers a full-throated embrace of the Government’s growth agenda.

What do Labour MPs make of this renewed push for growth? Hawthorn hears that the Labour Growth Group – an alliance of MPs who have led the charge for more radical pro-growth measures – is thrilled. A senior Labour Growth Group MP said: “We have got practically everything we wanted.” The only element missing is a rollout of Small Modular Reactors (SMRs), the implementation of which is more complicated than it first appeared to members of the Group.

There is also new optimism regarding Labour’s 1.5m new homes target, which was branded ‘not feasible’ by the chief executive of Barratt Redrow only last December. A Labour MP who is close to the progress on housebuilding and planning reform suggested that while there are a great number of barriers to reform, the Government is crashing through those barriers at some pace. Expect more noise on this front in the coming months.

No doubt this upbeat and positive new direction will give Labour MPs some much-needed respite. Those MPs who are out knocking on doors after a post-election hiatus tell us that the public anger about WASPI women and the Winter Fuel Allowance has been brutal. On top of that, the country is divided on the issue of grooming gangs, an issue which YouGov suggests the public are following closely. Some better news might be just what is needed.

According to another Labour MP, ‘green shoots’ are on the horizon, as the downbeat mood within the party in the past few months gives way to some cautious optimism that the economy may begin to materially improve as the Government’s growth plans start being put into action.

A Reform state of mind

2025 has already been a rollercoaster for Reform UK. It found fame in Elon Musk’s embrace of the party, and its membership overtook the Tories. Yet Musk’s support of Tommy Robinson, and his subsequent attacks on Nigel Farage, had some in the party suffering from buyer’s remorse.

Reform is playing a calculated game as the Tories and Labour stare down the barrel of upcoming Local Elections, and then the 2026 Senedd and Scottish Parliament elections.

In terms of ideology and political messaging in recent weeks, Reform has succeeded in pitching itself as an antidote to the ‘uni-party’, highlighting the failures of previous Tory governments as well as the current Labour one in tackling issues such as immigration and grooming gangs. Perhaps more tellingly, Nigel Farage has stuck to his guns in disavowing Tommy Robinson – a sign that he is serious about pitching Reform as a genuine mainstream alternative to Labour and the Tories.

In terms of strategy, a senior source in Reform and GB News says: “They will be a fully established machine within months,” and is bullish about their chances in the upcoming local elections. The much-trailed potential donations from Trump donors would go a long way to vault the party to the highest echelons of British politics.

Hawthorn also understands that at least two GB News presenters have been approached to run as candidates for Reform UK in future elections – and that one prominent presenter is meeting with a top donor this week to discuss the possibility.

The communication discipline, rigorous pre-election preparation, and leveraging sympathetic media voices, are all strong reasons not to underestimate Reform.

Trouble in Scotland, thinktank land, and the Palace of Westminster

Let’s look to the north of the border. You would be forgiven for thinking that the resurgence of the Labour Party in last year’s election, gaining 37 seats from a base of only 1, would seal the deal for the Scottish Parliament elections in 2026.

Yet a senior SNP insider tells Hawthorn that internal SNP polling shows the nationalist party 9 points ahead of the Labour Party. While they are not counting their chickens before they hatch, the SNP is feeling confident – though almost two decades of SNP rule might lead voters to opt for a breath of fresh air come 2026.

The expected Tory downfall in Scotland in 2026 is likely to make kingmakers of the Greens and the Liberal Democrats, according to one MSP. If the Tories fall from their current 31 MSPs to around 14-15 as currently expected, and if the Greens and Liberal Democrats take a total of 7-8 seats apiece, expect some real horse-trading in the days after the election.

This all comes as Labour gear up for the Scottish Labour Conference. Dispiritingly for the party, Starmer and Reeves are considered very unpopular north of the border, raising the likelihood that Angela Rayner will be the designated top Cabinet guest at Conference.

Over in thinktank land, Hawthorn understands that Labour Together – the Labour thinktank helmed by former MP Jonathan Ashworth – seems to be dying a slow death, with one MP describing it as “imploding”.

While the group has strong links with the Starmer Project, many MPs believe it has lost an organising purpose since the General Election, and is acting as a polling outfit rather than a policy house.

As always, there is a new contender waiting in the wings.

Progressive Britain, formerly known as Progress, is coming to the fore. This weekend its Political Weekend – the annual centre-left / Blairite congregation – boasts three Secretaries of State as speakers, as well as a host of Ministers and MPs. Hawthorn will be in attendance, ready to report back on any and all developments from this influential grouping of Labour activists and politicians.

Finally, Hawthorn has picked up reports that many new MPs are finding it taxing managing their new Parliamentary office, alongside their duties in the House and constituencies.

Adding to the stress of navigating Parliament and the many demands of an MP, some Labour MPs have privately to Hawthorn decried the lack of fundraising infrastructure available to them since the election. This has left many high-and-dry when it comes to cementing the coalition of voters that swept them to power in 2024 – and some worry that they will lose local support as a result.

Who would want to be Leader of the Opposition after such a crushing General Election defeat? Just five years ago, people were asking that question of Keir Starmer before he turned the tables and secured a whopping majority. It is now Kemi Badenoch’s turn to attempt the same miracle. The appointment of her Shadow Cabinet is the first insight into how she plans to navigate the challenge.

In a show of magnanimity, she has given leadership rivals Mel Stride and Priti Patel the roles of Shadow Chancellor and Shadow Home Secretary respectively. However, there have been big promotions for Badenoch loyalists, who make up the vast bulk of the more junior Secretary of State positions. Just six backed anyone other than Badenoch, raising concerns that there will be a swell of disaffected Jenrick supporters causing trouble from the backbenches. The absence of both James Cleverly and Tom Tugendhat from the frontbench is another sign that the new Leader of the Opposition may not be in for an easy ride.

During her leadership campaign, Badenoch avoided setting out policy positions, espousing her values and committing to wide ranging and fundamental review of the Conservative’s offering over the next few years. As the party embarks on a period of deep soul searching, there will be an opportunity for businesses to inform their thinking.

Read below for a summary of some of the key positions and players in the new Shadow Cabinet.

Who’s Who – The Highlights

Shadow Chancellor – Mel Stride MP

Dubbed as Minister for Broadcast because of his frequent media round appearances during the election, Stride was Rishi Sunak’s reliable DWP Secretary. Having previously served both as a treasury minister and as Chair of the Treasury Select Committee, Stride will be a knowledgeable challenger to Rachel Reeves. His campaign to be leader was supported by a small core of general older party moderates, who Badenoch will be hoping to keep onside.

Shadow Home Secretary – Chris Philp

Following his stint as Minister of State in the Home Office, Philp has received the largest promotion of the reshuffle. A former Chairman of the Bow Group think tank, he sits on the right of the party. Philp’s tenacious and combative style meant he has often been picked for challenging media rounds, and Badenoch will hope he can be a strong challenger to Labour’s record on law and order, an area that Conservatives typically do well on when in opposition.

Shadow Secretary of State for Business and Trade – Andrew Griffith MP

One of the more experienced appointments, Griffith will play a prominent role in this position. Griffith had been tipped as Shadow Chancellor and was seen to be a dead cert among media circles.

Griffith has a senior business background, rising to become Sky’s chief financial officer, joining the board of directors, and at the time of his appointment was the youngest financial director amongst the FTSE 100.

Shadow Secretary of State for Energy Security and Net Zero and Shadow Minister for Equalities – Claire Coutinho MP

A trusted ally of Badenoch, Coutinho continues to shadow the role she held from August 2023 until the election. With Great British Energy being one of the Government’s most significant projects, Coutinho will be tasked highlighting its shortcomings. A skepticism of net zero has been one of the areas Badenoch has been most vocal on, and it will be Coutinho’s task to shift the Conservatives position towards a greater emphasis on what they would argue is a more practical approach to net zero. Attacks on GBE as an albatross, the winding down of North Sea oil, and difficulties building grid infrastructure will all be features of the coming months.

Shadow Secretary of State for Science, Innovation and Technology: Alan Mak MP

Mak is another who has been rewarded for his initial backing of Badenoch. He has a longstanding interest in science and technology and was the founding Chairman of the All-Party Parliamentary Group (APPG) on the Fourth Industrial Revolution. The Fourth Industrial Revolution (4IR) explores advancements in areas such as artificial intelligence, robotics, the Internet of Things (IoT), biotechnology, and quantum computing. He authored a report exploring how new technology can improve our NHS in 2019.

Shadow Secretary of State for Education – Laura Trott MP

Another early backer of Badenoch, Trott has been widely seen as a rising star. As a party moderate, her early backing of Badenoch was crucial to the campaign’s success, enabling Badenoch to win over the left wing of the party. Trott first came into politics as a Special Advisor during the Cameron era, earning an MBE for her success in the role. The impact of the NICs tax changes on nursery fees and increase in university fees means Trott has been given plenty of ammunition for the coming months.

Get in touch with Mark Burr, head of our Public Affairs team if you have any questions or comments, at m.burr@hawthornadvisors.com

This afternoon Chancellor Rachel Reeves delivered the first Labour budget for 14 years. The top line is that spending on public services will increase by £55 billion and capital investment by £23 billion, paid for in the most part by the largest increases in taxes for a generation.

Reeves’ speech was littered with references to difficult choices and the tough road ahead, echoing the last Budget delivered by a Labour chancellor in March 2010. In that Budget, Alistair Darling was battling to stabilise the UK economy following the 2008 crash. Darling didn’t have the luxury of being able to blame the previous Chancellor, who was of course sat next to him. Reeves took full advantage of being able to blame her predecessors, but being the new kid on the block comes with other burdens, chiefly the burden of expectation.

Labour ran on a promise to change politics and improve public services, and to govern as pro-business and pro-worker. Balancing these expectations will be key to this government’s success and chances of victory at the next election. Budgets always unravel in the days and weeks following, and with so many changes there will be plenty to keep hacks occupied.

Key takeaways

1. Working people have been defined: payslip workers

It may not be ready for the Oxford English Dictionary, but we can be clear after today who Labour’s ‘working people’ are. Reeves’ pledge not to increase the Income Tax, National Insurance or VAT paid by workers has been honoured, and possibly the only rabbit in today’s budget was that Labour will unfreeze tax thresholds beyond 2028, meaning an end to fiscal drag. Extending the freeze on fuel duty and cutting tax on pints are two other decisions that have been made with this group of lower and middle earners in mind.

2. A budget for the NHS

The NHS consistently polls as the number one public concern. So perhaps unsurprisingly almost half of the additional public spending announced today is for the NHS, and it receives 68 mentions in the Budget document. The vast majority of funding for day-to-day spending is to help meet the pledge to cut waiting times – a key metric that the government will be judged on by the public. Not insignificant is a real terms increase for local governments to deliver essential services – with increasing numbers of councils on the brink of bankruptcy, Reeves will be hoping this can ease the burden.

3. The City has lobbied effectively, with more battles to come

There will be relief in the City that the increases to Capital Gains Tax are not as high as expected, and that there is only a 4% increase to carried interest, symbolising a big win for City lobbyists. The war isn’t over though, with another battle on the horizon hidden away on Page 49 of the budget document:  “From April 2026, carried interest will be taxed fully within the Income Tax framework, with bespoke rules to reflect its unique characteristics”. What these ‘bespoke rules’ look like will be subject to intense lobbying between now and the next Autumn budget.

4. Growth still the big test

Everyone expects a Labour government to invest in public services. The big test for this government is to generate growth and, on that measure, the jury is still out. The government seems at risk of missing its target to be the fastest growing economy in the G7 by 2029, with the OBR now predicting the average growth will slow from 2026. Labour will be hoping its infrastructure investment, modern industrial strategy and National Wealth Fund will generate major investments, but without more concrete proposals it seems unlikely that this pre-election pledge will be met.

Announcements by sector

Business and industry

• An increase in employers NI by 1.2% to 15% from April 2025, and lowering the threshold that firms start paying NI on workers earning from £9,100 to £5,000.
• Increasing the employment allowance from £5,000 to £10,500.
• From 2026-27 permanently lower tax rates will be introduced for retail, hospitality & leisure (RHL) properties. Plus, for 2025-26, 250,000 RHL properties will receive 40% relief on their bills, up to a cash cap of £110,000 per business.
• A Corporate Tax Roadmap will be published which confirms the cap of corporation tax at 25% and maintaining full expensing.
• The Small Business Tax multiplier will be frozen next year.
• Cutting draft duty by 1.7%
• Increase the soft drinks industry levy to account for inflation and increasing the duty in line with CPI.
• Maintaining asset disposal relief at £1 million, and will remain at 10% this year and rising to £14% next year and 18% from 2026/27.
• Introducing a single adult wage rate phased in over time by initially raising the national minimum wage for 18–24-year-olds by 16.3%.
• Increase the national living wage by 6.7% to £12.21 an hour.
• VAT, income tax and NI will not increase for working people.
• Will capitalise the National Wealth Fund to invest in “industries of the future”.
• Confirmed multi-year funding commitments for high growth potential sectors including £1 billion for aerospace sector to fund R&D, £2 billion for the automotive sector and up to £520 million for life sciences innovative fund.

Financial services

• The fiscal rules will be reformed to use a public sector net liability debt (PSNL) measure, deducting financial state assets from public sector debt.
• Like the fiscal stability rule, PSNL will be required to be falling over a three-year horizon.
• Adopting PSNL will increase the Exchequer’s fiscal headroom to £15.7 billion by 2027/28.

Energy and environment   

• £3.9 billion in 2025/26 for Carbon Capture, Usage and Storage Track 1 projects to decarbonise industry and contracts with 11 green hydrogen producers
• £3.4 billion over three years for the Warm Homes Plan
• Increase in the Energy Profits Levy to 38%
• £25 million to the Welsh Government for the maintenance of coal tips

Tech and digital  

• Government investment in R&D will be protected, with more than £20 billion of funding.
• The Innovation Accelerator Programme in Glasgow, Manchester, and the West Midlands will be extended.
• With over £500 million for next year, Tech Secretary Peter Kyle will continue to drive progress in improving reliable, fast broadband and mobile coverage across the country, including in rural areas.

Defence

• Total increase to the Ministry of Defence budget of 2.9 billion next year to ensure the UK exceeds its NATO commitments.
• Guaranteed military support to Ukraine of £3 billion a year for “as long as it takes”.

Transport  

• Freezing of fuel duty and maintaining of the 5p cut
• Increase to Air Passenger Duty, especially for private jets.
• £3 bus fare cap and £650 million for local transport.
• Delivery of HS2 from Birmingham to Euston.
• £500 million for road maintenance and potholes.

Health and social care   

• Pledged up to £520 million for a new Life Sciences Innovative Manufacturing Fund.
• Protect investment in R&D with more than £20 billion worth of funding, including £6.1 billion to protect core research funding for areas like engineering, biotechnology and medical science.
• £22.6 billion increase in the day-to-day health budget, and a £3.1 billion increase in the capital budget, over this year and next year.
• Committed £1 billion of health capital investment to address the backlog of NHS repairs and upgrades.
• Committed a further £1.5 billion for new beds in hospitals, new capacity for over a million additional diagnostic tests and new surgical hubs and diagnostic centres.
• Renew the tobacco duty escalator for the remained of this Parliament at RPI plus 2%, increase duty by a further 10% on hand-rolling tobacco this year, and introduce a flat rate duty on all vaping liquid from October 2026 alongside an additional one-off increase in tobacco duty.
• Delivery of a real terms funding increase for local governments next year, including £1.3 billion in additional funding to deliver essential services with at least £600 million in grants funding for social care

Education   

• From 1 Jan 2025, VAT will apply to all education, training and boarding services provided by private schools.
• Tripling in investment for school breakfast clubs.
• Increase the core schools budget by £2.3 billion next year to hire more teachers.
• An additional £300 million of funding for further education.
• £1 billion for SEND education, which represents a 6% uplift in real terms compared with this SEND funding for this year.
• £6.7 billion in capital investment for the Department for Education – a 19% real terms increase.
• This includes £1.4 billion to rebuild 500 school in the greatest need of rebuilding.
• £2.1 billion to improve school maintenance, £300 million more than this year.

Employment and welfare   

• Accept the Low Pay Commission recommendations to increase the National Living Wage by 6.7% to £12.21.
• Increase the Carer’s Allowance weekly earnings limit to 16 hours at the National Living Wage, hence carers can earn over £10,000 per year.
• Deliver £1 billion to extend the Household Support Fund.
• Reduce the debt repayments that can be taken from Universal Credit each month from 25% to 15% of the standard allowance. 1.2 million of poorest households will keep more of their award each month, with those who benefit gaining an average of £420 per year.
• Raise the state pension by up to £470 in line with the Triple Lock.

Housing   

• Residential capital gains tax will be unchanged.
• Increasing the rate of Stamp Duty Land Tax for second homes by 2% to 5%.
• £5 billion for housing investment, including £3.4 billion for the AHP next year
• Reduced right to buy discounts and 100% retention of right to buy receipts for local authorities.
• A social housing rent settlement of CPI + 1% for the next five years.
• The hiring of “hundreds” of new planning officers
• £1 billion of investment to remove dangerous cladding next year.
• Deliver £230 million to tackle homelessness and rough sleeping.

Local government   

• A real-term funding increase for local government, including a £1.3 billion increase in grant funding.
• Greater Manchester and the West Midlands would receive integrated settlements from next year.
• The largest real-terms funding settlements for the devolved Administrations since devolution and city and growth deals in Northern Ireland.

Conference season is almost upon us and there is huge anticipation this year as these are likely to be the final annual conferences before the next general election.

For Labour, that means it is the last formal opportunity for party members to contribute to the manifesto, which is why there is some excitement about the publication of the National Policy Forum (NPF) final documents. 

Here are the five things you need to know.

1. The NPF is elected to shape Labour policy

For those of you who aren’t Labour nerds, you might be wondering what this is and why it matters. Briefly, the NPF is an elected group of Labour members, trade union members and the Shadow Cabinet who debate and shape policy submissions. They last met for a long weekend in July and agreed a wide-ranging policy programme which is being circulated today. It matters because, as a democratic socialist party, Labour members expect to be able to shape policy.

2. Don’t believe the hype – this is not the manifesto

Despite all the noise, we are a long way from the Labour manifesto. First, this document needs to be endorsed by delegates at Labour party conference in October – where it can still be amended. Then Starmer and his team will spend the next year listening to businesses, unions, trade bodies, and of course the public, before the manifesto is finalised at the Clause V meeting just before the General Election.

3. It’s the economy, stupid

This may not be the manifesto, but it’s still important. And the 50 most important words in this document are found on Page 7 and are worth repeating:

Labour’s fiscal rules, as set out by Shadow Chancellor Rachel Reeves, are non-negotiable. They will apply to every decision taken by a Labour government, with no exceptions. That means that Labour will not borrow to fund day-to-day spending, and we will reduce national debt as a share of the economy.”

Confirmation, if it were needed, that Labour believes the path to No.10 lies in demonstrating that it is they, not the Conservatives, who can be trusted with the economy. This will mean battles with their own supporters about how much change Labour can promise, but Starmer and Reeves have made the calculation that it is the public who determine election results, not Labour members.  

4. Labour is walking a tightrope with the Unions

Thirteen years of Conservative government have left most Unions focused on getting Labour over the line at the next election. But relations could be seriously tested if Labour wins. The NPF document contains many policies that Unions will like in the ‘A New Deal for Working People’ section (page 35), such as commitments to repeal anti-union legislation. Unions will expect action on those in the first 100 days of a Labour government – and Starmer will be criticised, as Blair was, if he doesn’t repeal Conservative Trade Union legislation. Greater pressure still may come from elsewhere – re-read the Reeves 50 words on the economy, then consider that some public sector unions have been asking for 18% pay rises. Tough negotiations lie ahead for Labour and the Unions.

5. Labour still has plenty of decisions to make

The NPF document and the Five Missions tell us Labour’s priorities, the direction they want to take the country in, and some of the policies they want to enact in government. But they can’t do much of it without the private sector. Starmer has been in listening mode with businesses since day one of becoming leader. He wants to present Labour as the party of business at the next election so that voters will believe his targets on growth and the economy. If you have something to contribute to that conversation, Labour will want to hear from you.

If there was ever a time to engage with the Labour Party, the time is now.

By Grace Skelton, Associate Director