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End of Year Review

It has been a year of Events and the term “news anxiety” entered the lexicon. A swathe of global elections formed floating icebergs round the great glaciers of superpowers.

I have just come back from Antarctica so excuse the metaphor. By the way, a wonder of Antarctica, thanks to the treaty, is that nobody owns this massive continent, and all are pledged to protect it environmentally. What a model for peace on earth.

The world order has been tested by the Russian invasion of Ukraine in 2022 and then the war in the Middle East following the Hamas led attack on Israel in October 2023. The media has predicted third world wars. And yet the year ends, with the leader of the free world, widely reported to be crazy, but apparently a catalyst for ending the two wars for which there seemed to be no solution.

The phrase “sane washing” is used by some who are coming to terms with President Trump. For those of us who have made their careers in the media, it is a year in which we should humbly concede that we know nothing.

The election in the UK was both expected and unexpected. The timing of it caught some of us on the hop, including those of organising the Braemar Summit. It was as predicted a Labour landslide, but the results were also turbulent. In my rural constituency in South West Norfolk, the sitting MP, Liz Truss, got 11,217 votes. The Labour MP won 11,847 votes. Reform 9,958 votes and the Independent 6,282 votes. It was like watching a mad game of marbles.

When the farmers revolted against Labour’s budget, some of those Tory MPs who lost their safe rural seats shrugged that it was Brexit all over again and that the farming communities reaped what they voted for. And at the end of the year, Reform is still a destabilising force, boosted from its support by the personality of the year – Elon Musk.

Tuesday 5th November the world changed. The US West Coast elite were reported to be heading for the Cotswolds as a safe haven. Steve Bannon, voice of Trump’s America responded in the Sunday Times: “They’re not resilient. They had every advantage of state power. They had the high ground. And guess what, we broke them and now they’re whining like little children.”

Free speech got a little rougher and conventions of political discourse also changed. Again, as Bannon put it, “Somebody’s got to break the system.” Musk started a running commentary on the UK as a woke basket case. He defended The Telegraph journalist Allison Pearson after the police visited her home following an anonymous complaint about one of her tweets.

In the new world, in a smashing up of the system, one of the most powerful figures in the world, with more that 200 million followers, can get engaged in a scuffle on a dot on the map.

It is somehow significant that Elon Musk is now in a race to control space. It is apt that the Booker Prize winner, Samantha Harvey’s Orbital, is about the view from the space station of this utterly beautiful planet, somehow obscured by politics of conflict.

The year of news anxiety has been accompanied by a sense of fragility. The announcement in February that King Charles was suffering from cancer, was followed in March by a personal message from Catherine, Princess of Wales that she too was being treated for cancer. It has been a year for compassion and resilience. Mortality also came to parliament with Kim Leadbeater’s private members bill on assisted dying.

Meanwhile, low-level malaise continued to afflict the nation with more than four million people of working age on sickness benefits. Achieving growth without productivity is a headache for business leaders and politicians.

But hope springs eternal. Business conditions may be hard but at Hawthorn we are seeing green shoots everywhere and, particularly in science and technology, huge leaps of innovation and scale.

This year, at Braemar in London, we celebrated the extraordinary advances in medicine under the heading The Age of the Cure.

It was a year when celebrities publicly lost weight thanks to one drug. On a bigger stage energy is undergoing a massive transformation.

And a purpose-driven young workforce looks to improve conditions as well as to generate wealth. I have been personally thankful to Tilly Roylance and Bella Streule from Hawthorn for their foundational work in creating a network of support for the women of Afghanistan FAWN and many other causes have been aided thanks to the volunteering spirit of this company.

The restoration of Notre Dame is somehow a metaphor for the robustness of the human spirit. A group of us who visited Kering headquarters earlier this year took a detour to glimpse the progress and I reckon we need to return to appreciate the full glory.

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What I Did On My Holidays- Graham Kelly

“I am on a lonely road and I am travelling, travelling, travelling, travelling”

When I began working at Hawthorn, Theresa May was the prime minister, Donald Trump had yet to face his midterms, and Keir Starmer (presumably) bought his own clothes. While this is all very well in a Have I Got News for You kind of way, it might be more relevant to say that when I started working at Hawthorn, the company was five years old, our current Analysts and Consultants were still at school, and I was thought of as somebody who was quiet and wouldn’t pipe up on the shop floor. So, not much has changed, you’ll agree. 

All of which is to say that I’ve been here a long time, meaning I was able this year to take advantage of an even older facet of Hawthorn life: the famous sabbatical. That’s why I’m writing this on my fifth visit to Melbourne Tullamarine airport this month, one final Victoria Bitter in hand, after a journey which took me from the Camberwell vibes of Fitzroy, Melbourne, to the Clapham/LA crossover that is much of Sydney, via the Scandinavian capital of Tasmania and the furry heat of the world’s largest sand island. 

Boarding at Heathrow I felt like the hero of a heist movie, unable to believe that I was about to get away with such a scam. A month! Fully paid! Surely some mistake! But as we took off and I left Hounslow clouds to somewhere become rain, not even the five year old child sitting next to me could dampen my spirits.

I had a tremendous time – genuinely, not in that arch, ironic, unable-to-feel-joy way I usually engage with and remark upon things – and have nothing but praise for Hawthorn for providing such an opportunity. Don’t worry, I didn’t “find myself;” enough of you have found me over the years to be able to advise me that it’s not worth the effort. But I did have a month (more, actually!) of experiences that I simply wouldn’t be able to have in a standard two-week holiday. Now it’s time to make like Rutger Hauer at the end of Blade Runner and tell you: I’ve seen things you people wouldn’t believe:

  • I watched ducks waddle across lily pads in the Melbourne botanic gardens on my first, exhausted morning.
  • I looked out from the top of Mount Washington, Tasmania and saw the harbour bridge I’d run across that morning recede into nothing, with nothing but clear blue sea between me and Antarctica.
  • I encountered a Victoria Street in the Hawthorn neighbourhoods of both Melbourne and Sydney. Australian place names often have the feeling of a child playing with a jigsaw of the UK, slamming down the names of grim mining towns of Scotland into hilariously inapposite settings, but sometimes the stars align.
  • I hiked for hours into the interior of Fraser Island on my own, which I was later informed is an exceedingly dangerous thing to do, given the dingo population, although the ones I met seemed friendly enough.
  • I walked across the Sydney Harbour Bridge, toured the MCG, and saw kangaroos and wallabies amongst the hundreds of miles of bush on the train from Sydney to Brisbane.
  • I saw more of one of my best friends in the past month than I had in the previous five years.
  • I, somebody for whom going on holiday is so uncharacteristic that whenever I do go away it becomes a sort of meme for colleagues and clients alike, managed to do some of that famous “switching off” you hear so much about. 

Years of discussion with my friends at other (worse) companies and industries have convinced me that the extra month off for five years’ service is a genuinely unusual offer, even before considering the fact that it is fully paid. There are few sweeter feelings than sitting on the beach staring into the Pacific as a paycheque hits your account in return for doing literally zero work that month, believe me.

On my last day I took advantage of a delayed flight to revisit the Botanic Gardens and reflect on what I’d thought when first there, and how things had turned out, but when I got to the same bench, somebody else was sitting there.

Not everything has a perfect ending. Fortunately it’s not too long till my next sabbatical. 

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Hawthorn Advisors: Empowering Future Talent at Fulham Cross Academy

As young people face an increasingly competitive job market, supporting their career development has never been more crucial. In celebration of Career Development Month, we are proud to highlight our ongoing partnership with Fulham Cross Academy. Over the past two years, we’ve had the privilege of working with bright and motivated students as they explore career paths in communications and other sectors.

Many of the students we work with at the Academy come from a diverse range of backgrounds, including those from Afghan and Ukrainian communities, families eligible for free school meals and students with Special Educational Needs and Disabilities. Our commitment is to ensure that every student has access to career development opportunities from Year 10 through their job applications.

Aligned with the academy’s emphasis on STEM and empowerment, we are proud to support initiatives that offer valuable industry insights, help students develop critical skills and prepare them for a broad range of future career paths.

Here are a few of the initiatives we collaborate on:

Mentoring Programme

Our mentoring program pairs Hawthorn professionals with Year 13 students for monthly guidance on career planning, goal setting, and soft skill development.

‘Working with Hawthorn has been a great asset for me as my mentor has helped me with what I could potentially do for my future and has given me useful advice also in how to manage the stress I have when it comes to my exams which has worked. I have really enjoyed my time being mentored by them and very grateful for the opportunity.’

Cadi, student at Fulham Cross Academy

University Applications Workshop

Through a mix of workshops and group discussions, our team helps guide students through the university application process, offering insights on university selection, crafting personal statements and meeting application criteria.

‘Hawthorn’s mentoring scheme has acted as a great support tool for my journey into university. For instance, discussing university options and CV improvement. The personal statement support has been the most helpful as I was provided with a clear framework and an amazing starting point. I was also provided with a range of examples of successful personal statements from Hawthorn employees themselves which was quite informative.’

Tabasom, student at Fulham Cross Academy

Empower Breakfasts

Hawthorn joins the students for breakfast or presents in an assembly to have a discussion with the students (ages 11-18) about career paths. Sharing personal stories, overcoming challenges and answering students’ questions.

One-Week Placement

Hawthorn offers students hands-on experience, where they join the team to shadow various roles and departments across the business. To give them comprehensive overview of career opportunities in communications.

‘During my work experience at Hawthorn, I improved on many valuable essential skills such as an increased confidence when presenting to a group as well as my research skills. I am more educated on how to research specific topics and relevant sites. Furthermore, Hawthorn helped me build my presentation creating skills. For instance, focus more on simplistic slides and expand while presenting rather than having an overload of information.’

Tabasom, student at Fulham Cross Academy

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Multilateralism staggers forward at COP 29, but businesses must be ready to take increasing responsibility and blame for sustainability impacts

Weak outcomes from international environmental summits in 2024 and a shifting political reality will put greater pressure on individual corporate responsibility

It’s not our fault, it’s the system that is broken. As an excuse for poor environmental practices, it is both an entirely fair position for corporate leaders to take, yet broadly unacceptable to a wide range of stakeholders. Companies should get ready for a new wave of scrutiny from their own employees, customers, NGOs, activist citizens and the media.

Both the recently concluded COP 29 climate talks, and COP 16 nature talks in October, resulted in weak outcomes. Few are holding out more hope of meaningful progress on an international treaty on plastics, with ongoing talks on this taking place in South Korea this week with little fanfare. Election results around the world seem to be taking us away from an era of greater cooperation and bold policymaking on urgent sustainability issues.

Ten years have passed since the landmark Paris Agreement in 2015 inspired optimism in the possibilities of collective action. Since then, a decade of delay and disappointments has shaken faith in the potential for multilateral solutions. Recent research from UNDP and the University of Oxford of 73,000 people across 77 countries, found that four in five globally want governments to take stronger action to tackle the climate crisis. And more than half are now thinking about climate issues regularly.

Those seeking to make a difference may increasingly start targeting individual companies, targeting their role in contributing to the environmental breakdown that is becoming increasing apparent. If a top-down approach isn’t working, you may well try bottom-up instead. Alongside pressure from informed stakeholders such as investors and regulators, it will be necessary to have a narrative suited to a broader audience.

Businesses typically have little choice but to operate within the boundaries of the economic reality in which they find themselves. In a system which fails to price in the true costs of pollution, and where destructive behaviours can result in financial rewards, it is hard to succeed by doing no harm.

Many companies have set ambitious targets and put significant resources into enhancing sustainability over recent years, recognising the reality of global challenges and making genuine progress. But they are now finding that while scientific predictions of climate change and biodiversity loss were broadly accurate, the political and economic system has been far less sensitive in responding to these impacts than they expected.

As a result, there has been a wave of companies quietly rolling back or readjusting the timeframes for their previous commitments. And as much as they might like to keep this out of the spotlight, it is not going entirely unnoticed. Individual businesses could become the focal point for feelings of frustration, upset and anger at environmental degradation, which could impact corporate reputation and brand value, or even affect a company’s license to operate.

In response to this, companies can adopt three complementary strategies that will help them to become more resilient to increasing reputational risks in these areas.

Embrace transparency to better own your narrative: there is a rising tide of information available on corporate sustainability, thanks to voluntary and mandatory reporting, sectoral analysis and ranking reports, along with commentary across media and social media. When you combine this with increasingly sophisticated AI and large language models, it will be far harder to hide your impacts and relative performance. What was once buried on page 176 of a PDF report can now easily be surfaced in response to a simple search query, and readily compared to competitors. If you aren’t disclosing your own activity and explaining the context, then your detractors could become primary sources for what stakeholders will find in their due diligence.

Early advocacy ahead of difficult decisions: where stretching targets and sustainable transformation is not possible without specific policy interventions, be honest about what is required and help provide governments with the mandate to make tough choices. Having a public track record of calling for accelerated change will ease criticism when you have been unable to deliver on long-term goals.

Don’t be afraid to pull away from the pack: a shift to a more sustainable economy will create winners and losers, and within every industry there are leaders and laggards. If you stand together as a sector on particular positions, which are favourable to the slowest movers, then you will share in collective responsibility for negative impacts. Businesses that see long-term value in being leaders (or fast followers) should position themselves clearly ahead of poorer performers, so they can make the most of the opportunities in competitive sustainability.

These strategies will not completely insulate businesses from reputational risks related to their sustainability performance, nor will they necessarily make a big difference to the economic barriers that are holding back progress. But they will help to keep important stakeholders on side and provide a stronger platform for future success, at the same time as potentially mitigating the high long-term costs of inaction on key sustainability issues.


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Reform, Stability, and Investment: Chancellor Reeves’ Vision for the UK’s Financial Future

Last night, Chancellor Rachel Reeves delivered her first Mansion House speech to financial services leaders. After a turbulent start to government and a short honeymoon period, Reeves will hope this speech can help calm the nerves of business leaders. Much of Labour’s pre-election message was based on the bullish commitment to make the UK the fastest-growing economy in the G7. Whether the government can deliver on this ambition will be in no small part determined by the implementation of the reforms she announced.

The Chancellor criticised post-financial crash regulation, saying it has “gone too far” – setting a course for cutting red tape and arguing “The UK has been regulating for risk, but not regulating for growth.” Reeves also announced the “biggest pension reform in decades,” a plan to merge the UK’s 86 council pension schemes into a handful of pension megafunds. Alongside this the government plans to set a minimum size limit on defined contribution schemes in the private sector, which manage around £800bn of investments, to encourage the consolidation of the around 60 different multi-employer schemes.

Speaking alongside Reeves, Bank of England Governor Andrew Bailey hinted that Brexit had negatively impacted UK growth and welcomed a stronger relationship with Europe, as well as warning about the pressures of an ageing population.

In the coming year, the Government will publish a number of major consultations following this speech, which we have summarised below with some additional key points.

Reform to unlock innovation and growth

  • The Chancellor has written to the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee and Payment Systems Regulator to ensure a greater focus on supporting economic growth.
  • The Government has committed to “reinvigorate the UK’s capital markets” by legislating to establish PISCES by May 2025 – a world-first regulated market for trading private company shares where transfers will be exempted from stamp duty taxes on shares.
  • The Financial Ombudsman Service framework will also be modernised so that it continues to play a vital role for consumers to get redress while giving clearer expectations around its decisions for consumers and for financial services firms. The consumer credit industry will be looking to see whether claims management companies are charged for bringing claims.
  • The government will also consult on replacing the current Certification Regime, which applies to staff below senior management level.
  • Further action is being taken to drive innovation in payments with the publication of a National Payments Vision. This was called for by Joe Garner’s payments review and widely anticipated.

Stability – confidence to invest

  • The government will publish the first-ever Financial Services Growth and Competitiveness Strategy in the Spring.
  • The government will propose focusing on five priority growth opportunities in financial services to take advantage of the UK’s existing strengths and maximise the potential for growth – FinTech, sustainable finance, asset management and wholesale services, insurance and reinsurance, and capital markets. A Call for Evidence will be published alongside the announcement.

Investment through financial services

  • Two consultations will be published ahead of the Pension Schemes Bill in the Spring to merge defined contribution pension schemes and the Local Government Pension Scheme in England and Wales into megafunds.
  • The Treasury will publish draft legislation to boost investor confidence in sustainable companies by regulating ESG ratings providers, publish a consultation on the value case for a UK Green Taxonomy, commit to consult on economically significant companies disclosing information using future UK Sustainability Reporting Standards and launch a set of integrity principles for voluntary carbon and nature markets ahead of a consultation in the new year.
  • The government is delivering one of the key recommendations of the Transition Finance Market Review by co-launching the Transition Finance Council with the City of London Corporation. The government will also consult in the first half of next year on how best to take forward the manifesto commitment on transition plans in support of its ambition to become the global hub for transition finance –  ensuring the UK’s regulatory framework is growth-focused, internationally competitive and maintains the UK’s status as a global financial hub.
  • A call for evidence on reform to credit union common bonds in Great Britain.
  • The Chancellor will announce an upcoming Financial Conduct Authority consultation to help households make better-informed decisions about their finances, as part of the government and regulator’s joint Advice Guidance Boundary Review.

If you’d like to speak to Hawthorn about our Political Advisory or Financial Services offerings, please email Mark Burr at m.burr@hawthornadvisors.com.

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Tory Rebuild: New Opposition Leader Assembles Shadow Cabinet

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

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In a new Trump administration, will momentum or uncertainty reign?

With the election of Donald Trump to a second term as President, all eyes turn to what’s next in the U.S. and global economy.

For businesses and executives, there are clear signs of potential positive momentum, tinged with questions for the longer run, especially for multinational and non-U.S. based companies.

A momentum moment

For the U.S. economy, Trump’s reelection moment may catalyze a period of momentum that propels markets higher.  That potential for momentum was reflected in initial investor sentiment, with the S&P 500 pushing upward approximately 2% in the opening moments of trading the morning after the election.

If the Federal Reserve continues its push to lower interest rates, and businesses seize on the likelihood of reduced regulation, lower taxes, and the removal of election season uncertainty, then we may see a wave of corporate investment, hiring and consumer confidence that will buoy profits, share prices and valuations.

On the regulatory front, it seems clear that appointees like Lina Khan at the Federal Trade Commission will be replaced by smaller government, anti-regulation nominees.  In the financial sector, bank M&A has been slowed by prolonged regulatory reviews of pending deals, which will undoubtedly be reversed in a second Trump Administration.  And, the Justice Department’s increasingly active pursuit of antitrust cases should abate. 

This will likely mean an uptick in transaction activity across sectors, but particularly in tech and financial services.  Such an uptick in corporate deal activity can create a flywheel economic effect that is beneficial to investors, though the effect on employment must be monitored carefully.

What of tariffs and trade?

For non-U.S. companies, and those that trade across borders, the picture is more uncertain.

The first Trump Administration was marked with significant, and sometimes surprising, trade disputes, often with traditional economic and geopolitical allies.  There was a fight with Canada over lumber, tariffs on French wine, and a burgeoning trade war with China that continued into the Biden Administration. 

Over the course of the 2024 campaign, Trump ramped up his rhetoric on tariffs, proposing 60% duties on goods from China, a 20% tax on goods imported from any other country, and punitive tariffs on companies like John Deere that move manufacturing out of the United States. 

While Conservative economic orthodoxy would oppose such moves, Trump will have the opportunity to pressure his party to support him on trade, especially with a Republican Senate, and a seemingly likely Republican House of Representatives.  Global corporates will need to watch closely – and engage heavily – to shape the potential compromises in this area, as the few remaining moderate Republicans may be open to pushing for toned down versions of Trump’s proposals.

If Trump is successful on tariffs, it could blunt economic momentum, despite the overall eased regulatory approach he’s likely to take.

Broader uncertainty

The animating feature of the first Trump Administration for businesses and executives was uncertainty.  With a President prone to governing by Tweet, corporates had to watch minute-by-minute lest their firms or industries come under rhetorical or policy pressure unexpectedly.

Much has been made of Trump’s campaign trail focus on retribution – both on policy matters, as with tariffs, and politically.

While some might take comfort in Trump’s election night statement about his intention to “heal our country,” it behooves corporate leaders to watch carefully for signals about how a second Trump Administration might affect their companies and sectors in unanticipated ways.  Monitoring and contingency planning should start immediately.

If you’d like to speak to Hawthorn about our offering in the U.S., please email Andrew Wilson at a.wilson@hawthornadvisors.com

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Taxes, Duties and Investment: The Much Anticipated Labour Budget

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.

  1. 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.

  1. 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.

  1. 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.

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Braemar in London 2024 – Science for Good

Science for Good: Anita Anand; Hayaatun Sillem, CEO Royal Academy of Engineering; Dorothy Chou, Public Policy Leader at DeepMind; Professor Irene Tracey, Vice Chancellor of the University of Oxford

For the past four years, I have sat down with my friend Roger Highfield, who is the Science Director of the Science Museum Group and is also working, in a personal capacity, as my collaborator on the Braemar Summit, to discuss themes.

The first year, 2021, was straightforward. It was the year that the world looked to science to save it from an epidemic. In some places Covid deniers were offering lemon and ginger as a solution. Meanwhile, a group of scientists in Oxford were working on a vaccine. Roger and I discussed how the collaboration of scientists, academics, policy makers and investors had cracked a global issue and wondered if there was a way of continuing this intellectual exchange outside the laboratory. We continued the discussion in September 2021 as the Oxford scientists, including Dame Sarah Gilbert, stepped off the coach in Braemar and headed towards the Fife Arms to the sound of pipers. The Braemar Summit was born. The theme that year was the New Enlightenment.

Each year, we have tried to match the theme to the direction of science and global politics. In 2023 we called it the Great Acceleration, to take account of the super computers and the impact of AI. In 2024 we went for a warmer theme, Science for Good.

Despite wars, superstition, misinformation and incivility in the public sphere, we were witnessing beacons of science. We quoted Marie Curie; “Now is the time to understand more, so that we may fear less.”

In medicine for instance, there have been landmark breakthroughs in treating some of the worst diseases and conditions, through drugs, or genetic interventions.

There is evidence that a bold and determined course on tackling climate change, including investment, will benefit the economy as well as human existence. And robotics, which has advanced enormously, is now looking for design. Hardware will be a new source of delight. So creativity, the collaboration between art and science has been another theme for this year.

We were in Braemar in spirit rather than in actual location, holding the summit this year in the second week of September at the studio of the inventor and designer Thomas Heatherwick, in King’s Cross, with a dinner at the Francis Crick Institute. Also in the spirit, we found an international concert pianist, Stefania Passamonte, to play Chopin and Liszt on a grand piano in the great hall of the Crick, with hologram screens on either side of her.

Performance by the Royal College of Music string quartet

We were in the heart of the Knowledge Quarter and were delighted to welcome collaboration with DeepMind, based down the road, and our friends from Aria, Advanced Research and Invention Agency, housed within The British Library. Thomas Heatherwick spoke eloquently about his mission to humanise public space and humanity was at the heart of subsequent discussions.

We began with Professor Sir John Bell, on the title of science and ambition. As the new President of The Ellison Institute of Technology (EIT) in Oxford, which aims to tackle health, food security, clean energy government policy Sir John has set himself a task.

Science and Ambition: Professor Sir John Bell, immunologist and geneticist

In the same altitude, we continued with a discussion entitled, The Age of the Cure followed by The Future of the NHS from Richard Meddings, Chair of NHS England. The sessions and speakers on stage were exhilarating but it was perhaps the conversations in between, over coffee or dinner which were most memorable. Many guests who come to Braemar mention the intellectual stimulation but also the geniality. It is an open-minded, good-natured event where you can discuss anything. Computer scientists debate with philosophers, economists and business leaders listen to dreamers. Even physicists talk to biologists. It is not transactional; it is genuinely conversational. It is the joy of serendipity.

Sarah Sands, Partner, Hawthorn Advisors and Braemar Co-creator

For further information on the Braemar Summit please visit www.braemarsummit.com.

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Lessons from the #labourdoorstep

This summer, I moved to Yorkshire for five weeks to work on Labour’s general election campaign. There have been hundreds of articles written about how Labour won, but I thought it’s worth sharing a few reflections from my “on the ground” experience.

The consultancy vs doorstep mismatch

While we spend a lot of our time thinking about client policy areas such as AI, energy transition and business taxation, it won’t be a surprise to hear that on the doorsteps of Britain, the conversations are a little different. Cost of living, immigration, crime and the NHS (and potholes of course!) dominated and are the issues that will fill the inboxes of MPs.

That doesn’t mean that we should advise our clients to start advocating in policy spaces that mean little to their business, but it’s useful to think about the many directions MPs are being pulled in on a single day. It’s likely they are already thinking about the next election, so your email needs to persuade an MP to take 5, 30 or 45 minutes away from the issues that their voters care about. Keep it short, focused and relevant. 

Don’t lobby candidates during the short campaign

Campaigns are relentless and even the most seasoned politician will occasionally suffer from ‘candidatitus’ – thinking they’re going to lose because of one bad conversation or becoming utterly convinced that a minor local council issue from eight years ago will lose them 3,000 votes.  

Within that context, I was surprised to see attempts to ask candidates for help during the campaign. I saw one candidate cold approached for views for the intel slide on a pitch deck. It went down really badly, and for the person sending it gave the impression that they haven’t the first clue about politics – not great for a public affairs pro!

Candidates are incredibly busy speaking to voters, making videos, finalising print copy, meeting community stakeholders and everything else in between. There’s only one way to demonstrate your ‘ins’ with a particular party during a short campaign, and that’s by making yourself useful and knocking on some doors.

A smart campaign won it for Labour
Labour was undoubtedly helped by the collapse of the Conservative and SNP vote, the late entry of a Farage-led reform and the Liberal Democrats targeting Conservative seats. But to be the beneficiary of others misfortune, you need to be in a position from which you can capitalise.

Labour’s campaign strategy accounted for other party’s pressure points. The headline policies had been consistent for two years and the message discipline observed almost without fault. They resisted traps laid by others and stuck to the plan. Labour’s well-documented courting of business had served the primary purpose of reassuring voters that Labour could be trusted with the economy – an issue that has lost Labour many elections.

What now?
Campaigning and governing are different skills, and it will be much more difficult for Starmer and his team to retain the kind of discipline that won them the election – though he will certainly try.

Labour is clear on what it wants to achieve in government – it’s all in the manifesto – and has wasted no time in getting started. Our task is to position our clients as critical enablers to achieving these missions and to help facilitate strong, trusted relationships.

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The day after the night before

Rishi Sunak called the election in the pouring rain and it looks like Keir Starmer will walk up Downing Street in similar sodden conditions later this afternoon. But make no mistake, the political weather has been transformed. 

Labour’s victory is nothing short of staggering, securing a majority of more than 170 while redrawing the political map across the UK. Addressing jubilant supporters this morning, the man who will become Britain’s fourth Prime Minister in two years spoke of “the sunlight of hope… shining once again.” He shall meet the King later today before heading to No 10 from where he will address the nation and, crucially, start putting together his government. 

After 14 years in power, the Conservatives have crumbled to just 119 MPs, suffering around 250 losses including such senior figures as Liz Truss, Grant Shapps and Jacob Rees-Mogg. Rishi Sunak managed to hold his Yorkshire seat, but he says he takes responsibility for his party’s calamitous defeat. He will almost certainly announce his resignation as leader of the Tory party later today, but he may in fact stay in the role for weeks or even months as senior Conservatives plot the process and timings by which they will search for a new leader. They may not have suffered the wipeout some polls predicted (there was talk yesterday of the party falling to fewer than 70 MPs) but it’s not much of a silver lining. The battle for the future of the Conservative party – and of the political right in Britain – is just beginning. 

A dramatic night at the polls also saw a surge in Liberal Democrat MPs, with Sir Ed Davey picking up at least 63 new colleagues. They will become a substantial political presence in Westminster once again, comfortably the third largest party. The SNP has lost nearly 40 MPs and Nigel Farage will take up a seat in Parliament, flanked by three other Reform UK MPs. There will also be a larger than usual number of independent MPs, including Jeremy Corbyn who managed to hold off the Labour tide in Islington North. 

But the story of the night – and the story of the months ahead – is all about Labour. Starmer has taken his party from the depths of defeat in 2019 to the giddy heights of total victory in just five years. It’s true that he benefited hugely from the collapse in support for the Conservatives, and from the fracturing of the Tory vote, but his achievement should be recognised for what it is; a political tsunami. 

Cabinet positions may become clear towards the end of the day while a host of ministerial appointments will take place over the weekend. The new Parliament – full of new faces – will meet for the first time on Tuesday, with the formal State Opening set for July 17, when the new government’s legislative agenda for the year ahead will be outlined. 

The Labour campaign has been criticised by many for being light on detail, but as of today, there’s nowhere to hide. This is now Starmer’s Britain; let’s see what he makes of it.

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The dawn of a new era

The intensity of the snap election campaign risked masking the significance of what was about to happen. With the polls close to accurate, the night belonged to Labour. 

The UK has had a Conservative Prime Minister since 2010 and a majority Conservative government since 2015. The Labour Party hasn’t won a general election since 2005, under Tony Blair. In that context, the change that last night’s results could yield are set to be truly seismic. 

It’s now certain that everything will change. The government, Parliament, the House of Lords and our wider constitutional settlement will now change. One way or another, our economy will also change – as will our relationships abroad and the political priorities at home. 

A consequence of Labour’s impressively disciplined campaign was the surprising lack of detail about how they intend to govern and what exactly they intend to do beyond the “first steps” they announced. For businesses of all sizes and across all sectors, there will be an urgent necessity to understand the scale and impact of the change that will result from last night’s results. 


At Hawthorn Advisors, our experts are ready to help you navigate the consequences, risks, and opportunities of this change. 


What we offer:

UK will have a new Government and a new Parliament, and Hawthorn’s political advisory team is ready to help you engage with this new world:

  • Engagement strategy with new MPs
  • Hawthorn political check-in
  • Hawthorn’s new Parliament guide
  • Parliamentary and government messaging
  • Party conference concierge package
  • Political risk, audit and opportunity report –
    the Hawthorn ‘sense check’
  • Sector-specific policy development
  • Select committee training
  • Read more

Meet the Political Advisory Team

Mark Burr
Partner
Grace Skelton
Director
Dan Patten
Director
James Cowling
Senior Consultant
Holly Highfield
Consultant
Alice Jones
Senior Analyst

The Hawthorn Headliner is our fortnightly public affairs bulletin, where our experts bring you insights and analysis on politics and policy.


If you’d like to speak to Hawthorn Advisors about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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They think it’s all over

With just over a week until the country votes, it’s worth reflecting on what – if anything – we’ve learned from the past few weeks of campaigning. The polls have hardly altered since the Prime Minister called the election, despite confident predictions that they would narrow as the campaign wore on. This forecast, a staple among commentators and not unvoiced even at Hawthorn, was based on the normally safe assumption that the electorate starts to pay attention and the parties run effective, smart campaigns. With regards to the former, it’s now clear the electorate made up its mind long ago and as for the latter, the campaigns have been notable only for the absurdities dogging the Conservatives and the timidity (or rigid discipline) of Labour’s efforts.

Future generations of politicians can look back on this period and conclude that you shouldn’t launch a campaign in the pouring rain; that Prime Ministers shouldn’t skip out early from international commemorations; that candidates shouldn’t bet on elections; that struggling campaigns shouldn’t hold photo calls in front of the Titanic; and that it’s tough to pose as tax-cutters-in-waiting having spent years hiking the levies to record highs. They might also conclude from close observations of the Labour campaign that, while saying as little as possible is a smart way for an opposition to get over the line against an unpopular incumbent, it surely stores up trouble for life in government.

Labour’s central (and winning) argument is that it’s time for change. From what to what? From chaos to… less chaos? To be fair, from Corbyn to not Corbyn is also a large part of Labour’s pitch. Nowhere has this transformation in attitude and approach been more apparent than in Labour’s new relationship with business. The party is now, we’re told, the natural home of wealth creators; the party of business. Shadow Chancellor Rachel Reeves and others have been singing this tune for months, just slightly louder in recent weeks. The business community has largely welcomed the reassurance from a party almost certain to form the next government, but the lack of detail hangs over this courtship.

Addressing business leaders at a Bloomberg event earlier this week, Shadow Business Secretary Jonathan Reynolds opened his pitch to the room by saying “I can think of no reason why the Conservatives deserve another five years in office.” Many in the room would have agreed with the sentiment, but he was remarkably light on detail when it came to questions about how exactly a Labour government would run the economy and manage relationships with employers. The spectre of tax rises does not disappear just because Labour says they have “no plans” to raise them.

His opponent in that debate was Business Secretary Kemi Badenoch, one of several Tory MPs already being talked about as a potential Leader of the Opposition. In last week’s Headliner we looked at what life might be like for the Conservatives post-defeat, and this week we can report that the latest internal Tory party polling shows fewer than 100 of their MPs being returned. While Labour can hit the ground running with their “missions” and “first steps” well trailed, the Conservatives will spend months trying to figure out who they are, who they’re for, who should lead them and, crucially, what should be done about Nigel Farage?

It seems certain that next week’s vote will bring down the curtain on 14 years of Conservative government, but there the certainty ends. What exactly will a Labour government look like? We’re about to find out.


If you’d like to speak to Hawthorn about our Political Advisory offering please email Mark Burr at m.burr@hawthornadvisors.com.

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War party

As Defence Secretary, Grant Shapps could be expected to know a thing or two about military realities. Perhaps this is why he appeared to concede defeat in the General Election, describing a Tory victory as “unlikely.” As rallying cries go, it wasn’t exactly “we shall fight them on the beaches” from General Shapps.

The Conservative campaign is now saying publicly what they’ve long known privately; that Labour is on course to win – and win big. Defeat is one thing, but to have a once mighty army reduced to just a handful of troops while a victorious enemy parades through conquered territory would be the ultimate humiliation. Indeed, the Conservatives may have so few MPs left that His Majesty’s Loyal Opposition might resemble more a scrapy band of resistance fighters.

But who would lead such an outfit? Mr Doom and Gloom himself, Grant Shapps, is apparently positioning himself as an “energetic unifier” but the polls suggest he’ll be a casualty of Labour’s ground war. Robert Jenrick, one of the less subtle MPs on maneuvers, is facing a similar battle in his seat – as is the toast of the Navy’s officer class, Penny Mordaunt. That leaves James Cleverly, Tom Tugendhat, Kemi Badenoch, and Priti Patel free to plan their next moves, relatively safe in the knowledge that their voter base should hold off Labour’s advance. But a huge amount remains uncertain, and unknowable.

Tory MPs jostling for the leadership don’t even know which of their current colleagues will still be standing after July 4th, and the party membership – that body of activists that backed Boris Johnson and Liz Truss – is an unpredictable lot. Will they seek a right-wing figure, someone who could do business with Nigel Farage? Or might they succumb to one of their occasional bursts of pragmatism, as was on display when they picked the fresh-faced ‘change’ candidate of David Cameron? In other words, might we see a hitherto unacknowledged or underappreciated candidate rise from the ashes? And will they lead a band of 150 MPs, or 80?

The nature of the opposition matters, as does its calibre and effectiveness. If Keir Starmer stands up as Prime Minister with a majority north of 200, he will have achieved a kind of parliamentary imperium. Against such odds, the vital work of challenge and scrutiny will be difficult and thankless. At the same time, any new Tory leader will have to start out on a long road to recovery, devoid of hundreds of councilors, wary of Farge, battered by defeat and exhausted after 14 years of government – with the latter years characterised by civil war and strife.

The travails of the Tory party would be merely an entertaining sideshow as far as Labour is concerned. There’s no reason to disbelieve Starmer when he says he wants to change the country, and if the polls are correct, he’ll have not just the mandate but the muscle to do so.

One of the most senior political journalists in the country tells us that “the Tories really are facing an absolute catastrophe,” adding, for good measure “they’re f**ked.” If that turns out to be true, one of the few Conservatives left standing will have to pick up the fallen banners, gather the surviving troops and march them into one of the most frustrating, thankless, and dispiriting voids of British politics: the Opposition trenches.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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Manifestly unconvincing

The Conservatives have unveiled a “Jeremy Corbyn style” manifesto, according to the Labour leader Sir Keir Starmer.  That’s a sentence that sums up the unusual state of British politics, just three weeks out from polling day.

Starmer didn’t make the comparison as a compliment, despite having campaigned for his predecessor’s agenda just a few short years ago. Instead, he knows all too well that the public considered Corbyn’s pledges unbelievable, in the literal sense, and he’s keen to paint the latest Tory promises with the same brush.

Rishi Sunak maintains that yesterday’s commitments on future tax cuts are fully costed and eminently achievable, but it isn’t just a question of credibility. When a party that’s been in power for 14 years unveils a catalogue of great new ideas, the public is entitled to question why they haven’t done any of them already. Immigration controls? The figures are at a record high. Tax cuts? The burden is at a record high. House building? NHS reform? Higher defence spending? The same natural reaction greets all such pledges; you’ve had your chance.

For the Conservatives, there’s another problem in the mix. The measures contained in the manifesto are individually popular but there’s no evidence of them resuscitating the party’s dire poll rating. Why? Because the party is unpopular, as is its leader. This is where Starmer’s Corbyn comparison makes sense. His predecessor’s policies were popular. Remember the promise of free broadband for everyone? But when taken together and considered alongside the man making the promises and the party poised to deliver them, the voters recoiled.

Manifestos can be funny things. Michael Foot’s 1983 Labour manifesto was dubbed “the longest suicide note in history” – while in 2010 the Conservatives launched “an invitation to join the government of Great Britain” – but the RSVPs were sufficiently lukewarm to result in a hung parliament and a coalition government. Theresa May’s 2017 manifesto for the Conservatives was too clever by half, or too honest, and derailed her campaign once voters got spooked by the reality of her social care plan. As for the Boris Johnson manifesto of 2019, it was blown up by Covid then dumped by his successors in No 10.

So why bother with them at all? Do they change minds? Do parties regret being held to account? Why do they campaign in poetry if they know they’ll have to govern in prose?

The truth is that these set-piece campaign moments do at least allow parties to command attention for a day (one senior Tory campaign source tells us that they need the manifesto to help “move on” from Rishi Sunak’s disastrous D-Day debacle) and we should concede that it’s probably sensible for politicians to set out in detail what they’d do in office.

Labour will reveal their manifesto tomorrow, building on the various “missions” and “steps” they’ve already announced. The document is unlikely to contain many fireworks and will probably be more about offering detail on the pledges they’ve already made. Labour’s approach to the election has been described as a Ming vase strategy; tread carefully, don’t break it. One party insider tells us that “people are taking ‘change’ as the instruction and inspiration” adding that “the ‘don’t knows’ are breaking for Labour.” In this context, they don’t want a manifesto that spooks the very voters they’re trying to lure with promises of competence and stability.

In truth, what’s left out of the Labour manifesto will be just as interesting as what makes it in. There is a growing expectation that a Starmer government would set about raising a variety of taxes – including Capital Gains Tax – once in office, and that isn’t a policy you’d expect to see written down.

It would be too cynical to describe party manifestos as merely decorative, but it would be a stretch to consider them a binding contract.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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‘Made with AI’… but what if it’s not?

In February 2024 Meta announced that it would be rolling out a suite of AI detection tools. As Meta explained in its newsroom, as AI-powered content generation tools get more sophisticated, it’s becoming harder for consumers of content to tell the difference between what’s been generated by AI and what has not. By clearly and correctly labelling content which is created using AI, Meta hopes to build user trust.

Since AI tools became cheap, user friendly and easily accessible, there has been a well-documented rise in public scepticism and mistrust. Fake news and deepfakes making their way into public consciousness. Research published in August 2023 suggested that 30% of the global population was aware of the concept of deepfakes. The same research conducted a year earlier found only 13% knew what the word meant. As this interesting thought-piece from the European Parliament suggests “Simply knowing that deepfakes exist can be enough to undermine our confidence in all media representations, and make us doubt the authenticity of everything we see and hear online.” 

Undermined Confidence

It’s this ‘undermined confidence’ in platforms which Meta is trying to address with its AI detection labels. But getting the labelling right is harder than Meta imagined. It’s easy for Meta to detect AI generated content created using its own software, but now there are thousands of different AI tools out there used either to create images and videos from scratch or manipulate existing visuals. In the last few weeks content creators on Instagram and Facebook have noticed many of their photographs and videos had been mislabelled by Meta as ‘Made with AI’, when they weren’t. Expectedly, there’s been an uproar, with some influencers going so far as to boycott Instagram.

Here’s why Meta’s probably struggling to get the label right. To properly detect if an image has been created by AI, detection programmes can’t rely on the “look” of an image. Detection relies on programs to be able to read metadata or invisible markers which are embedded within the file. What we hope, is that software like Dall-E, Midjourney and others all embed some metadata into AI generated content to mark it as such. However, there is no government legislation or industry standard – thus far – which makes the embedding of this metadata or AI markers mandatory.

Dangerous Assumptions

Regulation is being spoken about. The EU AI Act, for example, prescribes some stringent record keeping and logging of materials produced by high-risk AI applications. But how these regulations are adopted and enforced is still to be seen. For now, tech companies seem to be moving quicker than regulation is and doing their own thing.

Meta claims to be developing its AI detection standards alongside other industry players like Google, OpenAI, Microsoft, Adobe, Midjourney, and Shutterstock. What Meta assumes, and needs, for its detection programme to be successful is that other industry players will comply. It also assumes tech companies will act in good faith, and all agree on the ethics of disclosure. Which is a big, and dangerous assumption to make.

Meta’s mislabelling of content seems to have exposed the problem. As a Meta spokesperson explained “We rely on industry-standard indicators that other companies include in content from their tools, so we’re actively working with these companies to improve the process so our labeling approach matches our intent.”

Blurring lines

Meta’s mislabelling also exposed another problem with AI – one of blurring lines between what is and isn’t AI. Many photographers noticed that Meta was ascribing the ‘Made by AI’ label to images edited using some of Adobe’s tools like Photoshop. Photoshop is used to remove a bit of garbage on the lawn in an otherwise flawless frame of a bride and groom, or to make a sunset look more dramatic than it was. But it can also be used to make waistlines look slimmer, lips fuller and skin smoother – which brings a range of other ethical issues and mental health concerns.

But increasingly, tools like Photoshop have AI integrations. Here’s an example: instead of manually scrubbing out the garbage, you can use a text prompt to “tell” Photoshop how you want the image edited, and it will interpret your verbal prompt to remove garbage for you. So, you might end up with the same output as if you had scrubbed out the garbage yourself, but your image now has a tiny bit of code which says to Meta’s AI detector that it has been ‘Made with AI’.

Tiny Artificial Intelligence integrations are making their way into tools we use day to day. This is not new. Microsoft Word, on which I am currently penning my thoughts, launched its ‘Editor’ function way back in 2016. This is an AI-powered service which performs spell checks and recommends grammar corrections. Even though this article is a product of my very human brain, I’ve relied on Word to correct a few typos for me. So, is it ‘Made with AI?’ All in the eyes of the beholder or in the eyes of the AI detector.

Some notes:

  • Meta has acknowledged it is trying to resolve the mislabelling of images.
  • The ‘Made with AI’ label is currently only visible on the mobile app; not desktop.
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How to stop a problem turning into a crisis

When it comes to crisis communications, every situation is different. There are, however, certain skills and approaches that expert advisors can pick up and hone over the years, in order to guide a business and its leadership to the safest possible territory. Christian May talks to Hawthorn partner Jon Wynne-Jones about the art of crisis communications.

By definition, a crisis is unexpected if not entirely unforeseen. Is it possible to be totally prepared?
The companies who fare best in a crisis, or are able to skillfully prevent an issue developing into a crisis, are those who have taken time to review  and understand all their potential reputational threats. Nothing beats preparation, and when you’re faced with a serious problem it’s often too late to start from scratch. The protocols and procedures for an initial response should already have been agreed and understood, so leaders can act with forethought rather than trying to make snap decisions when facing a myriad of competing demands. As one example, we prepared an Issues Book for adidas ahead of the 2018 World Cup with a section on the unlikely scenario of the match ball bursting. Rather unbelievably, it happened in the first match, and we were able to respond within minutes, preventing the issue from unravelling on social media.

What’s the threshold for a crisis? How does it differ from a challenge, issue, problem, mistake or a bad day at the office?
A crisis is often the result of an issue or mistake being mismanaged. The significant difference between them is the level of negative attention a crisis creates for the organisation, and ultimately the impact it has on the reputation and the bottom line. Veteran Labour spin doctor Alastair Campbell used to measure crises by the length of time the story would last on the front pages, but whereas political crises can end with a resignation, a company can find that they take months to recover from. Recent examples that highlight the contrast between an issue and a crisis would be the debacle over the Co-Op Live arena cancellations and the Post Office scandal, which were – – respectively a short-lived embarrassment and an all engulfing, era-defining nadir.

What are some of the main mistakes that a business could make in the initial response to a crisis?
There is a fine balancing act to be managed in responding to a crisis. On the one hand, there is immediate pressure to comment, to provide clarity on the situation, but any engagement risks fueling the fire unless it is part of a comprehensive crisis comms plan. This tension can too often lead to businesses providing a statement before all the facts have been established or providing reassurances that prove to be unrealistic. In a worst-case scenario, this can see a business making a denial that later proves to be untrue. These types of errors can result in trust being shattered, sometimes permanently.

In the other extreme, some organisations refrain from commenting when it is clear that they are at fault, and the longer they remain silent, the more the outrage grows as they lose control of the narrative. For businesses with a large customer base or consumer-facing brand, effective communication is particularly vital in order to reassure, explain, and retain trust.

Can you give us an example of a business that has responded to a crisis well?
It depends on the nature of the crisis and the measure of success. Each crisis is different, for different reasons. Some may last a matter of days or weeks while others threaten much longer term ramifications. Anyone who really studies crisis communications is familiar with the Tylenol crisis at pharmaceutical giant Johnson and Johnson. Tylenol was American’s market-leading painkiller, but in 1982 someone tampered with a batch during production and the poisoning caused seven deaths in the Chicago area. It was horrific, but the response of Johnson and Johnson’s Chairman James Burke would become a model in effective crisis communications. An immediate policy of total openness combined with a national product recall and long-running media campaign was seen by some as a risky overreaction, but the company ultimately won plaudits for its constant and unvarnished communication. Burke basically said: “Do not take this product until I tell you it is safe to do.” And the public trusted him. The company’s market share and performance recovered within around 12 months, when it could so easily have collapsed if the crisis wasn’t handled and managed with such authority and clarity.

And less well?
RedBird’s recent attempt to acquire the Telegraph with the UAE-based IMI emphasised the importance of communications, and how mismanaged corporate affairs can snowball into geopolitical complications. As the groundswell of opposition to the proposed takeover gained an increasingly broad coalition, the ferocity of the criticism directed towards the Gulf state led to strained diplomatic relations. In believing that they could do a deal directly with the Barclays, they ignored the need to build an alliance of advocates to support the benefits of the move and completely underestimated the level of hostility that a UAE-backed acquisition would provoke amongst Telegraph and Spectator staff. Their complacency meant that they were never in control of a story that spiraled out of their control and has run prominently for much of this year.

Depending on the nature of the crisis, presumably there could be a different emphasis on internal and external communications?
While there tends to be a greater focus on external communications during a crisis, internal communications is hugely important, not only for keeping staff informed and motivated, but also for preventing the issue being exacerbated by the negative reaction of employees. For example, during the investigation into allegations of misconduct by DJ Tim Westwood, staff at broadcasting giant Global revealed that they had been told not to report the claims and some of the presenters went public on social media in voicing their disquiet, compounding the crisis. Internal communications should be aligned with what is expressed externally as anything that is inconsistent risks making the organisation look disingenuous. All audiences need to be considered; whether that’s suppliers and customers or stakeholders, staff and the media.

How has the impact of a crisis changed over recent years? Has it become harder to contain or respond to?
The inexorable growth of social media and 24-hour news have changed the immediacy of a crisis, and increased the pressure to respond quicker. With the level of scrutiny now more forensic than ever, one misstep has the potential to cause significant damage: an unguarded comment to a reporter or an ill-judged tweet can deepen a crisis. The power of lobby groups and influencers online can inflame and distort an issue, leaving an organisation at risk of losing control. If a crisis used to be measured by the level of coverage in the papers, the amount of engagement the issue receives online is now a determining factor. However, engaging with critics online is rarely advisable or beneficial because the conversations tend to be so febrile and partisan.

Although social media and 24-hour news may have changed the impact and spread of a crisis, the rules behind managing them remain largely the same. The best way to control widespread attacks is to demonstrate contrition where appropriate, control of the situation with clear communications and an honest commitment to addressing it.

Quite often a company’s systems and protocols are revealed by a crisis; either found to be up to scratch or found wanting. How should businesses put their crisis playbook into the best possible shape?
The best way to test their crisis playbook is through practice. Crisis simulation sessions, which involve realistic scenarios played out online and mock interviews of the leadership team, gauge how clearly the organisation has defined their processes and whether the messaging sounds authentic and persuasive. Playbooks need to be constantly reviewed and updated to ensure they remain relevant. There might be occasions when a crisis has emerged that hasn’t been foreseen, but the central principles of how to handle the response remain the same.

In a lot of cases, there ends up being a tension between the advice of lawyers and the advice of communications professionals. How should this dynamic be managed?
An organisation’s lawyers are understandably, and rightly, circumspect in the wake of a crisis, as they are wary about any comments, internally or externally, that could undermine their position. This can cause a tension with the comms advisors who have similar concerns that by saying nothing, a business can worsen the crisis by creating the wrong impression. Silence can seem arrogant and aloof, not in control of a situation or in denial as well as ceding the narrative to the media and critics. Best practice sees the legal and PR teams working collaboratively, sacrificing any self-interests to put the client first. The legal ramifications need to take precedence, but when the teams work efficiently together, the organisation is allowed to provide comment when relevant, with the content having been agreed with the lawyers. On occasions when it is mystifying that an organisation has not commented on a crisis, it will often be due to restraints from the legal team, in which case other forms of communication need to be considered. When Thomas Cook was accused of negligence following the deaths of two children at one of their package hotels, their months of silence became unbearable and ultimately contributed to a catastrophic reputational hit.

It probably isn’t desirable but is it possible to have a good crisis?
While nobody welcomes a crisis, handled well they present an opportunity for a company to demonstrate its values. Those companies who express genuine remorse where they’ve made a mistake, clearly take care of their customers and articulate how they have addressed the issue, can find their brand enhanced with people clearer about their identity. One of the best managed crises of recent years remains when KFC ran out of chicken, which could have been a deeply embarrassing episode. Instead, by responding quickly and intelligently on social media, they gained widespread acclaim for how they engaged with their customers. demonstrating the values of a company that understands its customers. The way they used humour, rearranging the letters to spell FCK on a chicken bucket, and kept their customers informed through each stage of correcting the issue, was a perfect example of how a failure can be transformed into a win.

Described as “unmatched in shaping the news agenda” by the British Press Awards, Jon Wynne-Jones oversees our work supporting clients facing issues and crises, with extensive experience of helping global companies and federations to navigate reputational challenges.

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No body blows in leaders’ head to head

The thing to remember about last night’s TV debate is that the two leaders were pitching squarely at an audience who were probably paying attention to the campaign for the first time. That’s their hope, anyway.

Political obsessives (which includes almost all journalists and most people on Twitter) may have followed the twists and turns of every Multilevel Regression and Poststratification opinion poll since the election was called, but most people haven’t. TV debates, still a novelty in this country, represent a fresh chance for the parties to hammer their key messages, deluge social media with clips, make an impression and dominate the headlines and airwaves. So, if it seemed to you as if Starmer and Sunak were robotic in their repetition of simplistic messages (change with Labour or a bold plan with the Conservatives), it’s because they fully intended to. A political slogan isn’t doing its job until the public becomes fed up with hearing it, and the 4.8 million people who watched the debate were probably close to this point by the end of it.

In that context, it’s no surprise we didn’t get a gladiatorial clash of intellects and philosophies. The format didn’t help, either, with ITV’s Julie Etchingham determined to cover as much ground as possible. Thus, mere moments were spent eliciting soundbites on such weighty topics as the future of the economy, global security, climate change, and immigration.

As for the leaders’ performances, there was a marked difference between the two.

Starmer had turned up expecting a rules-based regency duel, only to find Sunak putting on some knuckle dusters. The PM might have delivered his opening statement as if he were reading it off the back of a cereal box, but as soon as the questions started, he showed some fighting spirit. Another way to put it would be “rude and abrasive” – constantly interrupting Starmer and disregarding the agreed rules regarding who speaks when and for how long. The Labour leader routinely muttered “desperate” in the face of Sunak’s barrage of jibes, perhaps forgetting that the Tory leader was indeed in a desperate situation. Polls this week have shown he’s on course to lead his party into oblivion.

Tories needing a boost could cling to the notion that their guy did better than expected. One Tory advisor who watched the debate at party HQ told Hawthorn it was “the best evening of the campaign so far” and said there was plenty of cheering and table banging among staffers. Of course, if the PM couldn’t raise a cheer from his staff, he would be in trouble.

Snap polling of the viewing public by YouGov found that Sunak ‘won’ – by a single percentage point, but as a Labour source told us: “the debate polling has aged better overnight with Starmer leading on substance and all aspects including NHS, economy, immigration, the economy and cost of living as well as overall with a much wider poll.”

As for the different styles the two leaders took, Labour insiders are confident that Starmer’s calmer, more measured tone will ultimately prevail over Sunak’s “what have I got to lose?” aggression.

The Tories can chalk up ‘not crashing and burning’ as a modest victory, but turning their campaign around will take more than that. Indeed, there are signs that the PM’s performance is unravelling. He made much of “Treasury analysis” claiming that Labour’s spending plans will amount to a £2,000 tax bill for every family in the UK, but this morning the Treasury’s top civil servant has said the claims shouldn’t have been used and certainly shouldn’t have been attributed to independent officials.

Labour will be pleased that the debate seems to have allowed Starmer to reassert his more statesman-like qualities, while the Tories have yet to even digest the impact of Nigel Farage’s return to frontline politics, the consequences of which are likely to silence any further cheers from inside Conservative Campaign Headquarters.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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Hawthorn joins UK trade mission in the Middle East

Recently, Hawthorn Advisors joined a UK trade mission to Riyadh to mark a flourishing relationship. Among the fin tech, ed tech, med tech, media tech, everything tech, entrepreneurs, were leaders of the great cultural institutions; our museums, opera houses, concert halls.

Political leaders are begging our cultural sector to be “a bit more French” in promoting ourselves. Our architects and designers already know the opportunities in a kingdom unfurling the wonders of its history and cultural identity, too long hidden from the rest of the world. Tourism will follow.

Standing in the sandstone evening sunlight of Diriyah, our delegation mused on how we might be a bit showier about our own cultural excellence. One suggested a national day. We really liked the logo of Great next to the Union flag. One of the guests had masterminded the opening ceremony of the London Olympics, and suggested playfulness was a national quality which was under rated.

Which other country would simulate the Queen sky diving in a James Bond sketch? 

We might also celebrate a tradition of craft, which King Charles champions tirelessly. It was this that Walpole, the official sector body for UK luxury, was cheerleading in Riyadh.

Interviewed on stage was the chair of Walpole, Michael Ward, who is the Managing Director of Harrods. He has described luxury retailing as a state of mind, an aura of uncompromising quality, innovative, lasting. Since Michael has been in the job for 20 years, he seems to have become a luxury item himself.

One of his first acts was to move Harrods away from being defined by its seasonal sales. Flogging a mass of stuff brought in for the purpose, is not luxury.

Helen Brocklebank, CEO of Walpole, welcomes membership on the following criteria: “You should be outstanding in your own particular field and exemplify the highest standards in terms of quality, style, design, craftsmanship, creativity, service, innovation and sustainability.”

Where once luxury might be equated simply with wealth, it is now imbued with values of excellence and sustainability. It is rarer. And the expense is not arbitrary. If a bag is made from natural materials and designed with skill and if the environment and community which produces this bag is valued, it takes time, and you are paying for that. Luxury is patient.

The backlash against fast fashion, which debased creativity and trashed the environment has led to a greater respect for luxury brands. The big challenge for luxury is how far its customers will embrace recycling materials. A friend of mine who designs high end fabrics says she has been initially disheartened by her attempts to entice the American market to accept more sustainable or recycled materials. For some customers, new linen or cashmere is non-negotiable.

Luxury brands have, unsurprisingly, being less hit by the cost of living than other brands, and have a chance to plough profits into innovative, sustainable materials, supply chains and skills.

A resurgence of skills and craftsmanship would be a wonderful thing for the UK and its place in the world.

I have been reading The Radical Potter, by Tristram Hunt, the director of the V and A museum, which was created in order inspire a nation of craft and design.

The full title of the book is The Radical Potter: Josiah Wedgwood and the Transformation of Britain.

It is not an empty claim. When Wedgwood created the famous Frog Service, for Catherine the Great, crowds came to view it.  The happy client, in turn, praised Britain as “that island of wisdom, courage and virtue.”

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Labour’s banking on a stability dividend

For Labour, this election campaign marks the culmination of a process that’s been underway since Keir Starmer became leader; to reassure the business community by burying his predecessor Jeremy Corbyn’s far-left agenda. Earning the trust of the business community has been a central part of this plan, and it has worked. We can tell it’s worked because nobody laughed when Shadow Chancellor Rachel Reeves declared yesterday that the Labour party “is now the natural party of business” and that she plans to run the “most pro growth, pro business Treasury in the history of our country.”

What does this mean in practice?

According to Reeves, it means going for growth with all the enthusiasm of Liz Truss but without the unfunded market-spooking radicalism. In her speech at Rolls Royce in Derby, Reeves reiterated her pledge to abide by robust fiscal rules as well as her commitment to getting debt falling by the end of the parliament. She also recommitted to a new “Business Tax Roadmap”, first announced at the Labour Business conference in February, to be published within six months of an election win, providing certainty over taxation for the life of the parliament – including a pledge to cap Corporation Tax at its current rate. Labour has also rowed back on some of the more controversial elements of a new “workers’ rights” package, promising that nothing will be imposed without a thorough consultation and input from employers. Labour’s plan to replace the unpopular Apprenticeship Levy with a new approach to skills training will have also caught the attention of bosses.

But woven through these specific pledges runs a more nebulous idea: partnership. Reeves dismissed the “free market dogma of the past” in favour of “a new spirit of partnership” with British business. “Our plans for growth,” she said, “are built on partnership with business.”

The party has made much of its newly minted links with business leaders, not least in financial services and in the formation of an industrial strategy, but one of the most eye-catching expressions of what a partnership could look like comes in the form of Labour’s planned National Wealth Fund.

The policy is being worked on as we speak by The Green Finance Institute and members of this early-stage commission include Legal and General, Aviva, NatWest, USS and other pension funds plus some green campaign groups. The plan is to kickstart the fund with around £7bn of public money before, as Reeves puts it, “crowding in tens of billions from the private sector.” The subsequent investments will be targeted at national infrastructure projects, with an emphasis on the green transition and low carbon energy generation. While we await details of how exactly this will work, it’s worth noting that the terminology is misleading. A “Wealth Fund” puts one in mind of countries like Norway, whose Sovereign Wealth Fund is valued at north of £1 trillion and includes stakes in over 9,000 companies globally. Labour’s plan appears to be more of a Development Fund, financing shared public-private infrastructure schemes.

The legal, regulatory, governance, risk and compliance elements of such a scheme are myriad and complex, and while they don’t amount to a reason not to try it, they should certainly serve to dampen the spirits of anyone who envisages a rapidly established, well capitalised and agile investment vehicle.

The likelihood is that a Fund such as this, however muscular, will not on its own be able to deliver anything like the kind of economic growth on which Starmer and Reeves are so clearly basing their future plans. With further surprise tax rises ruled out and a pledge not to borrow to fund day-to-day expenditure, only rapid and sustained GDP growth will allow Labour to deliver on its ambitions.

And here we come full circle. Back in 2010 a young David Cameron and his then Shadow Chancellor, George Osborne, talked of “sharing the proceeds of growth.” Future reductions in the tax burden and uplifts in public spending would only come, they said, from growing the economy. This is almost word for word Labour’s policy today.

Until the full manifesto is published, the central offering from Starmer and Reeves – to the country as much as to the business community in particular – is that “stability and certainty” will be restored to British policy making. As Reeves said yesterday in one of the less catchy soundbites of the campaign, “stability is change.” It may well be the case that a sense of competence and a less volatile political environment yields an uptick in business sentiment and investor activity, but on its own it’s unlikely to improve the intransigent rates of sluggish GDP growth that have characterised so many developed economies in recent years.

Labour is banking on a stability dividend, and there’s no shortage of businesses or individuals ready to cash one in after years of political and economic shocks, but a large part of Labour’s promised stability actually takes the form of continuity; on spending plans, headline tax rates and fiscal rules. These are political calculations designed in large part to reassure an electorate and head off political attacks, but they leave Labour with a set of policies that risk falling short of their own rhetoric.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

Posted in Uncategorised

Labour’s banking on a stability dividend

For Labour, this election campaign marks the culmination of a process that’s been underway since Keir Starmer became leader; to reassure the business community by burying his predecessor Jeremy Corbyn’s far-left agenda. Earning the trust of the business community has been a central part of this plan, and it has worked. We can tell it’s worked because nobody laughed when Shadow Chancellor Rachel Reeves declared yesterday that the Labour party “is now the natural party of business” and that she plans to run the “most pro growth, pro business Treasury in the history of our country.”

What does this mean in practice?

According to Reeves, it means going for growth with all the enthusiasm of Liz Truss but without the unfunded market-spooking radicalism. In her speech at Rolls Royce in Derby, Reeves reiterated her pledge to abide by robust fiscal rules as well as her commitment to getting debt falling by the end of the parliament. She also recommitted to a new “Business Tax Roadmap”, first announced at the Labour Business conference in February, to be published within six months of an election win, providing certainty over taxation for the life of the parliament – including a pledge to cap Corporation Tax at its current rate. Labour has also rowed back on some of the more controversial elements of a new “workers’ rights” package, promising that nothing will be imposed without a thorough consultation and input from employers. Labour’s plan to replace the unpopular Apprenticeship Levy with a new approach to skills training will have also caught the attention of bosses.

But woven through these specific pledges runs a more nebulous idea: partnership. Reeves dismissed the “free market dogma of the past” in favour of “a new spirit of partnership” with British business. “Our plans for growth,” she said, “are built on partnership with business.”

The party has made much of its newly minted links with business leaders, not least in financial services and in the formation of an industrial strategy, but one of the most eye-catching expressions of what a partnership could look like comes in the form of Labour’s planned National Wealth Fund.

The policy is being worked on as we speak by The Green Finance Institute and members of this early-stage commission include Legal and General, Aviva, NatWest, USS and other pension funds plus some green campaign groups. The plan is to kickstart the fund with around £7bn of public money before, as Reeves puts it, “crowding in tens of billions from the private sector.” The subsequent investments will be targeted at national infrastructure projects, with an emphasis on the green transition and low carbon energy generation. While we await details of how exactly this will work, it’s worth noting that the terminology is misleading. A “Wealth Fund” puts one in mind of countries like Norway, whose Sovereign Wealth Fund is valued at north of £1 trillion and includes stakes in over 9,000 companies globally. Labour’s plan appears to be more of a Development Fund, financing shared public-private infrastructure schemes.

The legal, regulatory, governance, risk and compliance elements of such a scheme are myriad and complex, and while they don’t amount to a reason not to try it, they should certainly serve to dampen the spirits of anyone who envisages a rapidly established, well capitalised and agile investment vehicle.

The likelihood is that a Fund such as this, however muscular, will not on its own be able to deliver anything like the kind of economic growth on which Starmer and Reeves are so clearly basing their future plans. With further surprise tax rises ruled out and a pledge not to borrow to fund day-to-day expenditure, only rapid and sustained GDP growth will allow Labour to deliver on its ambitions.

And here we come full circle. Back in 2010 a young David Cameron and his then Shadow Chancellor, George Osborne, talked of “sharing the proceeds of growth.” Future reductions in the tax burden and uplifts in public spending would only come, they said, from growing the economy. This is almost word for word Labour’s policy today.

Until the full manifesto is published, the central offering from Starmer and Reeves – to the country as much as to the business community in particular – is that “stability and certainty” will be restored to British policy making. As Reeves said yesterday in one of the less catchy soundbites of the campaign, “stability is change.” It may well be the case that a sense of competence and a less volatile political environment yields an uptick in business sentiment and investor activity, but on its own it’s unlikely to improve the intransigent rates of sluggish GDP growth that have characterised so many developed economies in recent years.

Labour is banking on a stability dividend, and there’s no shortage of businesses or individuals ready to cash one in after years of political and economic shocks, but a large part of Labour’s promised stability actually takes the form of continuity; on spending plans, headline tax rates and fiscal rules. These are political calculations designed in large part to reassure an electorate and head off political attacks, but they leave Labour with a set of policies that risk falling short of their own rhetoric.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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Hawthorn hosts AI briefing for City leaders

The financial and professional services industry has been using various forms of AI and automation for decades, but just like the rest of us they’ve also been swept up in the huge advances in machine learning and generative AI that have exploded in recent years, even recent months. Goldman Sachs forecast that $200bn will be commercially invested in AI by 2025, up from around $130bn last year. Gartner, meanwhile, claims it will be $300bn by 2027. Bloomberg Intelligence forecast this week that the figure will be $1.3trillion by 2032 and Skyquest analytics say the figure will reach $170bn of AI investment in financial and professional services alone by 2031. Whether these forecasts will prove accurate or not the level of expectation today tells us how seriously the sector is being taken. But to what end? Why? And what does this investment actually look like?

On Wednesday morning Hawthorn Advisors gathered an expert panel to discuss this and to explore how AI is changing the financial services industry – and how it might continue to change as the various forms of AI get smarter, more accessible and more bespoke. 

City Minister Bim Afolami joined Lisa Quest of consultancy Oliver Wyman, Megan Bulford of the CBI’s financial services policy team and Dr Lewis Liu, CEO and co-founder of Eigen Technologies which uses advanced AI to turn mountains of documents into dynamic, meaningful data for banks, insurance companies and the healthcare industry. Between them the discussion took in a huge range of topics from AI’s limitations to the global regulatory landscape, legal risks, transformative potential and impact on jobs and the wider economy. 

One of the main themes sparking discussion between the panellists and among the invited audience was whether businesses (and the UK more broadly) have access to the sufficient level of skills to exploit the advantages AI can bring to a business. “AI knowhow cannot be confined to the tech team,” was how one panellist put it, while others noted that upskilling and training has to be part of all our lives in the years ahead. The emerging regulatory environment also proved to be a hot topic, with a consensus emerging that the UK stands to benefit from its light-touch approach, perhaps in contrast to the stringent regime imposed across the EU. 

When it comes to the application of AI in the financial services industry, panellists explored the many business functions already being replaced or enhanced by AI technology, not least in risk management and in mobilising a company’s institutional memory through the AI-powered analysis of existing data, documents and precedent. This speaks to the immense productivity gains that AI enables, and panellists felt that the economic benefits of this transformation will be felt nationally – not least given the prevalence (or dominance) of the financial and professional services sector within the UK economy. There was a general sense of optimism and excitement as the use cases and practical benefits of AI continue to reveal themselves, but several cautious notes were sounded by our expert speakers. These tended to relate to questions of risk and barriers to adoption – be they cultural, technological or financial. Some panellists expressed serious concern that regulators, be they global or local, will continue to be outmanoeuvred by large AI firms – not least in areas such as copyright protection, which remains a live issue before the courts in many jurisdictions.

In a sector where the technology is moving so fast, but with no genuinely settled regulatory framework in place, many firms will find themselves trapped between a fear of missing out and a cautious wait-and-see approach. What’s abundantly clear is that any discussion on AI, particularly one involving such informed experts, inevitably touches on grand philosophical questions as much as it does on the mechanics of large language models. Lewis Liu, who holds a rare joint honours from Harvard in fine art and physics, was particularly strong on the social, cultural and political debates sparked by AI’s rapid development. 

Hawthorn’s guests in the audience, drawn from across the banking, fintech, legal and investor community, benefited from an extremely wide-ranging, stimulating and lively debate, as evidenced by the range of questions posed from the floor. There is a huge appetite for informed, open discussion on this topic, whether from those who are far advanced in their AI deployment or those still searching for the right path to take. 

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The Hawthorn Headliner – General Election briefing

At 5pm on 22nd May 2024, Prime Minister Rishi Sunak announced his intention to call a General Election for 4th July. His decision confounded the expectations of the many pundits and politicians who had predicted an autumn election.

There will be a rush of activity over the coming weeks, with the race starting immediately. Read below for Hawthorn Advisors’ analysis on what to expect and what this means for businesses.

Analysis

In the end, Rishi Sunak took almost everyone by surprise. Just days ago, he laughed when he told the presenters of ITV’s Loose Women that their “summer was safe” – when pushed on a date for the General Election. Looking back on that exchange, he clearly meant “from July 5th onwards…”

The surprise announcement set Westminster abuzz, not least because political journalists live for elections. But what of the reaction elsewhere? Tory MPs, many of whom were banking on an October or November poll, now face the prospect of having their careers and livelihoods cut short by several months, to put it bluntly. The mood among some is said to be mutinous. “This is madness,” says one. Others may be more resigned, while some seem more up for the fight. “Bring it on,” said Rupert Harrison, one of a new breed of Conservative candidates facing an uphill fight in a new parliamentary constituency in Oxfordshire.

As election announcements go, it was inauspicious. Sunak stood at the lectern outside Number 10 and the rain fell. He was almost drowned out by that great New Labour anthem – Things Can Only Get Better, blasted at the gates of Downing Street by one of the resident protestors. And the bible of Conservative politics, The Spectator, had just sent its latest edition to print with a stark leading article concluding: “calling a summer election would be madness for the Tories.” MPs can read it in the coming days as they gear up for the fight of their lives.

As for the speech, Sunak started with what sounded like a long list of excuses, just to remind us: we’ve been through a pandemic, war in Europe, and energy shocks. The subtext was clear—”this mess isn’t my fault.” While his case for the defence was trotted out without any energy or enthusiasm into the microphone: our economy is turning a corner, the world is dangerous, Labour doesn’t have a plan, don’t risk your vote on them.

The Labour leader won’t need to feign his enthusiasm for an election, starting as he is a whopping 20 points ahead in the polls. Those polls may narrow, and the coming six weeks will serve up all the usual daily twists and dramas of election campaigns, but even something in Sunak’s tone of voice – never the most natural – suggested the PM knows the mountain is high and the odds of success are painfully small. It’s a sense you can get in person from cabinet ministers. They will tell you how hard they intend to fight. They are less keen to say that they think they can win. The image of a drenched Prime Minister sloping back into Number 10 may well resonate with voters watching the evening news.

Doubtless, the weather will improve, and doubtless, the long evenings ahead informed the decision to go to the country early, in contrast to the prospects of campaigning for votes in the cold and dark days of Autumn. But the Conservatives will need more than a break in the weather to put a spring in their step. The last time an election was held in July was 1945. The country was emerging from hardship and war, and the country returned a Labour government by a landslide.

What happens now?

There is a 25-day gap between Parliament being dissolved and the date of the election. This is formally the election period, when MPs standing in the election become candidates once again, and government business concludes. For an election to be held on 4th July, Parliament must dissolve on 30 May. For this to happen, the short May recess will be cancelled so that Parliament can wrap up its remaining business.

Before Parliament is dissolved, there will be a legislative ‘wash-up’ period, during which the fate of the remaining Bills that have not yet achieved Royal Assent will be decided. In a departure from the usual process, Bills are expedited through all their remaining stages in a matter of hours. It’s a rare moment when the Opposition has extreme power to agree on what legislation gets nodded through and what gets struck down.

There are 16 Government Bills, 2 Hybrid Bills (a mix of public and private bills), and 10 Commons Private Members’ Bills that have not yet received Royal Assent. The most contentious of which may not be passed, or Labour may negotiate changes to Bills over areas they disagree with. Those with popular crossbench support, such as the Tobacco and Vapes Bill, may yet survive, which Sunak nodded to in his speech.

What can businesses expect?

With just six weeks until polling day, the parties will enter a dash to finalise their manifestos and prepare for the campaign. Regardless of whether a Labour majority is the forgone conclusion that most pollsters predict, Parliament’s makeup will look vastly different in two months’ time. For businesses, now is the time to focus on what a new government of either colour might mean for your industry, and to consider the figures who will be influential in the future of your sector.

We will be posting regular updates during the campaign on policy and politics and how that might affect your business. If you’d like to speak to us about Hawthorn’s Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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Economic reality risks ruining the party games

Inflation down (3.2 per cent), wage growth up (6 per cent) and economic growth restored (0.6 per cent GDP growth over Q1) – so are champagne corks popping in Downing Street? Put the bubbly back on ice. Firstly, “we’re no longer in recession” isn’t the rallying cry some people think it is, and the rapid pace of wage growth – while undoubtedly good news for workers – is actually ringing alarm bells in some quarters given the impact it might have on inflation and, therefore, interest rates. The UK unemployment rate is also ticking steadily up, with the hundreds of thousands of long-term sick now almost certain to become Labour’s problem. The government’s message is understandable; stick with us, the plan is working, don’t risk it by letting Labour back in. The problem is, this approach is akin to standing in the middle of a biblical flood and telling everyone that you think the sun is beginning to burn through the cloud. They might be pleased to see it, but they have more immediate concerns. 

In 1997 the opinion polls were clear that John Major was facing electoral defeat, with Tony Blair’s New Labour poised for power. The fact that Major could point to an economic rising tide made no difference to his fortunes and he ultimately bequeathed one of the best economic legacies to his successor. The data might have painted a decent picture but the public were in no mood to reward the Tories. They’d been in power for too long, they were riddled with internal divisions, their Prime Minister (despite electoral success in 1992) was gravely weakened, the party’s reputation for economic competence had been undermined by events and the mood of the country had shifted. Is history about to repeat itself? 

It’s even possible that a narrative of economic revival benefits the opposition more than the government, adding to a sense of renewal and a change of direction rather than shoring up the incumbents. But other than some modest GDP growth and a more temperate inflationary environment, what kind of economy would a Labour government inherit?

That the Conservatives have made some economic missteps is not in doubt, but none have been as consequential as the cost of the pandemic. We don’t like to talk about it these days, but the government’s pandemic response came with a price tag approaching £400bn. In 2020/21 the state spent £200bn more than it had budget for. This is to say nothing of the cost to the Treasury from the wider economic collapse, the loss of growth and the deep economic scarring, and it doesn’t take into account the many tens of billions then spent in response to the global energy price shock. This is real money and the consequences of such unprecedented expenditure will be felt for decades, most immediately in the form of higher taxes – regardless of who wins the election. 

So, while the Tories can forget about voters rewarding them for a modest uptick in public finances, so too can Labour dismiss the idea that they’ll be able to turn on the spending taps the moment they take office. After the 2010 general election the outgoing Chief Secretary to the Treasury left a note for his Conservative successor; “sorry there’s no money left.” The current occupant of that office might very well end up reaching for the same sentiment.

Given that Labour has ruled out any hikes to income tax, the smart money says they’ll be looking at raising revenue through relatively less politically sensitive reforms in areas such as wealth, property, inheritance, dividends and capital gains. All governments sneak in stealth taxes. Gordon Brown was famous for it and the current government has allowed fiscal drag to do the heavy lifting. If Labour do target wealth, capital and dividends for tax increases will they do it without fanfare or instead seek to benefit from the political dividing line that such moves would open up? 

As the election approaches the Conservatives will continue to treat the economic recovery like a Ming vase – “don’t let anyone else touch it” – but we also know they’d like to make a big retail offer on tax cuts, whether ahead of the election or as a future aspiration. Chancellor Jeremy Hunt dipped his toe in these waters with hints about a potential abolition of National Insurance at some point in the future, but the idea has allowed Labour to warn about the “black hole” such a move would produce in the public finances. In short, we’re starting to see the coming economic debate take shape, but we should all keep a close eye on the details and take any pre-election promise with a pinch of salt. The parties may feel liberated by the rush of political battle but they will be constrained by economic reality.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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All politics is local

You might not plan on staying up through the small hours of Friday morning to watch the local election results trickle in, but Thursday’s set of polls are nevertheless set to be revealing and consequential. Over a hundred local authorities in England are electing councillors while ten Mayoralties are up for grabs, including in the capital where residents will also be voting for members of the London Assembly.

Once the votes are counted there will be plenty to pore over, right down to individual council wards as party strategists seek to identify their strongholds, their opponents’ weak spots and the gaping holes in their own defences. Taken together, Thursday’s elections will offer a substantial if incomplete glimpse into the state of the nation. While it may feel as if the political narrative is well established (Rishi on the ropes, Starmer on the up) the results of this week’s ballots will refine and sharpen that narrative and may even change it – not least when it comes to the mood within the Tory party.

And while for many people the votes will be about local planning issues and bin collections, the results will also matter for businesses with an eye on the future political and economic direction of the country. So, what should we be looking out for, and what might be we discussing as the dust settles over the weekend?

What would be a good night for Labour?

The first thing to look for will be the size of the anticipated Labour gains. Political parties that are about to move from opposition to government invariably make large council gains in the local elections closest to the general election. This was true in 1979, 1997 and 2010 – three elections that saw a transfer of power at Westminster. If Labour’s share of the vote hits north of 45 per cent, it will point to a sizeable majority at the general election. As for the Tories, they’re already rolling the pitch with talk of “a tough night ahead” but even while they anticipate a drubbing in council elections, they’re holding out for two key mayoral wins; retaining the leadership of the West Midlands and Tees Valley. In the former, Andy Street has become more of a CEO of the West Midlands, while in the Northeast Ben Houchen has become a poster boy for so-called Red Wall conservatism and tangible levelling-up gains. To lose one of them would be unfortunate; to lose both would be careless. One Tory source tells us they’re “hopeful we can hang on to Houchen and Street” – suggesting that good news is likely to be thin on the ground come Friday morning, while a Labour source says both contests are on a knife edge and “MPs and candidates have been mandated to hit the phones and call voters in these areas to press for the win.”

A tale of two cities

The other big vote is of course for the Mayor of London. The polls suggest Sadiq Khan is on course to win a third term, but the Conservative Candidate Susan Hall insists she’s in with a chance, and while the conventional wisdom is that she won’t make it over the line, she does have her supporters. Nevertheless, there are plenty of Conservatives who think their chances would have been increased with a different candidate. One plugged-in former Tory advisor admits there are plenty of people in the party – and in Number Ten – who “can’t quite believe they allowed themselves to end up with Hall as their choice”, confident that Khan could have been defeated by a stronger Conservative candidate, perhaps in the style of Andy Street. That said, Hall is extremely popular among London-based members of the Conservative party and she has a large activist base. She also has a clear message for the large block of outer-London voters when it comes to the Mayor’s controversial ULEZ expansion (she’d reverse it) so don’t be surprised if she puts in a good showing. The change to the voting system (it’s now a clear first-past-the-post system) also gives her a boost.

It’s not just Red vs. Blue

And what of the other parties? If the Liberal Democrats are to take advantage of Conservative woes in the southern heartlands at the general election, then they will need to show progress in Rochford, Eastleigh and outer London boroughs such as Sutton and Merton if they are to convince voters to switch. Tory strategists are likely to be more concerned about bleeding votes to the right, with Reform polling at around 12% and already costing them thousands of votes at recent by-elections – a trend Sunak can’t afford to see repeated at the election. Labour strategists will also be keeping one eye on Bristol City Council, where the Greens are already the largest party (by one) and are hoping to pose a serious challenge in the new Bristol Central seat at the general election.

When the dust settles

In the wake of widespread Tory losses – especially if those losses include their crown jewel mayors in the West Midlands and Tees Valley – then the weekend papers will be even more full than usual of plots and briefings against Rishi Sunak. One Conservative adviser we spoke to concedes that “if it’s really bad on Thursday there will be lots of questions and it’ll be difficult for Number 10,” but adds that “the cabinet is full square behind Rishi and there’s just no appetite for a leadership election.” That final point might not be shared with Tory backbenchers, many of whom face losing their seat in a general election and may feel they have nothing to lose by rolling the dice on a new leader.

While the Tories will doubtless indulge in another round of infighting, however far it gets them, Labour’s messaging over the weekend will almost certainly be based on momentum, breakthroughs, the regaining of trust among voters and their readiness to fight a general election. The contrast with the Tories will be stark, something that won’t be lost on the public. Thursday’s votes constitute the last ‘live’ test of public opinion before the general election. The results and the picture they paint will feed into strategy and messaging for the months ahead, and the national campaign will be underway.


If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.

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Hawthorn budget analysis: May election unlikely, but traps set for Labour

With tetchy exchanges and party tribalism on full display, the spring budget was an insight into the year to come. Set against a gloomy economic backdrop, the Chancellor tried to draw a clear line between the Conservatives and Labour ahead of the looming election.

Beset by pressures from within his own party, Hunt was obliged to find tax cuts. With forecasts from the Office for Budget Responsibility (OBR) giving less fiscal headroom than hoped, rumoured plans for a 1-2p cut to income tax were shelved in favour of a 2p national insurance.

He argued that tax cuts have only been affordable because of the government’s approach to tackling inflation. Inflation is now predicted to fall back to the 2% target by Q2 2024, a full year earlier than predicted. Now that wage growth is outstripping inflation, the Conservatives will want to wait until autumn to call an election. This will buy time for voters to start feeling better off.

High Growth Sectors

Hunt focused on reforms in areas he has described as high-growth industries of the future – financial services, life sciences, technology and the creative industries. These areas will be a significant focus of the government over the coming months, with consultations and proposals to be outlined in more detail. He announced several pro-investment reforms, including changes to pension investment and the next stages of the LIFTS initiative. He also launched a consultation on a new platform to allow private companies to trade their securities, known as PISCES. Continuing the successful policies of providing tax cuts for the filming industry first introduced by George Osborne, Hunt announced a further £1 billion of new tax reliefs for the UK’s world-leading creative industries.

The Economic Outlook

The bigger picture challenge for the Chancellor is whether these tax cuts are realistic. The OBR has warned that current spending plans carried a level of “uncertainty”, as much of the new spending is funded by assumed departmental savings to the tune of £19 billion for unprotected public services, a figure the Resolution Foundation has described as a “fiscal fiction”. This will cause challenges for the next government, whatever its colour, as departments find their already tight budgets stretched even more thinly. More big tax cuts or spending increases in the coming years are now off the table. In stark contrast to Labour’s inheritance in 1997, where they could increase National Insurance specifically to fund NHS pledges, a prospective Labour government in 2024 would not have ample fiscal headroom to spend on public services without significant tax hikes – an argument Labour doesn’t appear to want to have.  

Hunt’s changes to the non-dom tax relief and extension of the windfall tax are an attempt to make up this shortfall whilst laying dangerous traps for Labour. By stealing two of the Shadow Chancellor’s tax-raising ideas, Labour’s room to call for increased spending has been snatched away. Labour is extremely cautious about making spending commitments, with the most notable example being the recent U-turn on a commitment to spend £28bn a year on a green prosperity plan. This was swiftly followed by an announcement to increase the windfall tax, much to the dismay of the oil and gas industry.

In this context, the Chancellor’s plan hasn’t been without risk, he was immediately criticised by Energy Minister Andrew Bowie after extending the windfall tax on oil and gas. This blue-on-blue is a flavour of what may be to come as Conservative party discipline continues to break down under the pressure of poor polling results.

What does this mean for Labour?

Labour’s ‘Ming Vase’ strategy – placing caution over passionate campaigning – is now ingrained in the Opposition’s strategy, and Starmer’s pitch at the election will reflect this. Whilst some consider it dispassionate, it may help to carefully maintain Labour’s significant polling lead as the election grows closer. The Conservative’s best chance of holding on to power would be to win back public confidence in the economy, so the Labour front bench is cautious to avoid commitments that the Tories could use to paint them as the party of unfunded spending.

Keir Starmer has responded to the budget by calling for a general election on May 2nd. He used his relatively short response to attack the government for 14 years of low growth, falling living standards and, despite the Chancellor’s claims to the contrary, the highest tax burden in 70 years.

An Autumn Election?

Labour will feel relieved that there was no income tax rabbit, but they know they have a difficult task ahead to communicate any new policy announcements and how they will raise the money without raising taxes. In the next few weeks, they will pile on the pressure for a May election; but the mood music from the budget signals the Tories are playing for time. The challenge for the Government is whether this budget will reverse their precarious footing.

To find out more about how to prepare for the general election and what this pivotal year could mean for your business, please contact our political advisory team, led by Mark Burr, Partner at Hawthorn.

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Hawthorn Advisors strengthens senior team with four new partner appointments

Hawthorn Advisors is pleased to announce the senior appointments of Victoria Wallin and Richard Suchet to support the growth of the consultancy.

Both Wallin and Suchet join Hawthorn as Partners, after co-leading the Corporate Communications practice at Portland.

In addition to Wallin and Suchet, existing Hawthorn consultants, Jon Wynne-Jones, formerly Head of External Communications at dmg media, and Mark Burr, previously Deputy Director of European Policy at News Corp, have both been promoted to Partner.

They join the existing board of Partners; co-founders, John Evans and Sir Ben Elliot; former editor of the Today programme, Sarah Sands; former BBC political correspondent, Ross Hawkins; Steve Atkinson, ex Group Corporate Affairs Director at Standard Chartered Bank; and previous COO of King’s College, Anna Maria Clarke. 

Wallin joins with over 20 years’ experience advising clients – from international corporates to disruptive start-ups, membership bodies and campaign groups – such as Wimbledon, Pfizer, Heathrow and the NSPCC.

Suchet joins Hawthorn after almost seven years at Portland where he advised a range of international and regional brands and businesses including Netflix, Universal Music, KPMG and Snapchat. A former journalist and broadcaster, Suchet was previously correspondent for Sky News and LBC.

Both Wallin and Suchet will report to Hawthorn co-founder & CEO, John Evans who commented: “Victoria and Richard bring invaluable experience. They both have huge energy and ambition and will be a terrific cultural fit at Hawthorn. We have ended our 10th year with double digit growth and an expanding team of over 70 consultants. This ongoing success is contingent on hiring the best talent and Victoria and Richard, together with a number of other hires we’ve made recently, will allow us to continue to scale.”

Wallin said: “As one of London’s fastest growing, independent strategic communications consultancies and with a presence across the UK and US, I’m thrilled to be joining Hawthorn and look forward to working with the team in delivering impactful communication strategies for our clients.”

Suchet added: “With its international client base – from private and public companies, multi-nationals and governments to fast-growth businesses – and impressive team of consultants, this is an incredibly exciting time to be joining Hawthorn and I’m very much looking forward to supporting and delivering the next stage of growth.”

Evans continued: “It’s also great to be promoting Jon Wynne-Jones and Mark Burr to Partner. Both Jon and Mark have been instrumental in driving growth over recent years and their promotions reflect their ongoing contribution to the business.”


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Luxury communication in a changing world

Last summer, The Economist posed a straightforward question with a nuanced answer: is the luxury sector recession-proof?  Unsurprisingly, the answer was a resounding “no.” However, Europe’s luxury sector has continually defied expectations, demonstrating impressive resilience even during economic slowdowns. 

Yet as we look ahead to 2024, caution prevails among some of the European luxury market’s key players. Why is this?   

Flashpoint 1: Re-imagining luxury for a new generation  

After a dazzling few years of growth, Europe’s luxury sector appeared to be losing its sparkle at the end of 2023. This carried through into the new year, with 18 of the 20 largest luxury stocks reporting year-to-date declines in January. 

This dip in demand can be attributed, in part, to the volatile economic landscape, particularly in the US and China (more on that below). But, it also stems from the changing habits of wealthy millennials and Gen Z. These seemingly unlikely growth drivers now wield significant influence.  

Bain & Company estimates that younger generations—Generations Y, Z, and Alpha—will emerge as the dominant luxury buyers, accounting for a whopping 80% of global luxury purchases by 2030. These younger luxury customers have a very different view of the world – and are far less recession-proof than the more established luxury shopper (more on that below too). 

A recent Deloitte report reveals that 62% of European luxury consumers are willing to invest in pre-owned luxury goods in the future, compared to just 40% in 2019. This shift reflects a growing interest in the circular economy and sustainability within the luxury shopping sphere – a high-cost, lower-margin, part of the market.  

Younger luxury customers have a very different view of the world – and are far less recession proof than the more established luxury shopper.

Flashpoint 2: Uncertainty (and opportunity) on the global stage  

While Europeans played their part in the post-pandemic luxury boom, it’s the economic engines of China and the US that have fuelled much of the industry’s growth.  

Any sustained slowdown in these markets, therefore, spells trouble for the prospects of Europe’s luxury sector. Analysts predict that we may see this unfold in 2024, as both economic superpowers grapple with socio-economic and foreign policy challenges. 

However, beyond the dimming growth engines, glimmers of hope emerge from unexpected corners of the globe. McKinsey, in collaboration with the Business of Fashion, identifies a constellation of promising new luxury hubs

  • The Middle East, where opulence meets innovation. 
  • India, a vibrant tapestry of tradition and modernity. 
  • Thailand, Indonesia, Malaysia, and the Philippines, where cultural richness intertwines with economic dynamism. 
  • South Korea, a powerhouse of technology and style. 

Meanwhile, Bain & Co. sheds light on the emergence of luxury markets in Africa, where a rising upper middle class fuels aspirations and reshapes the industry’s map. 

Flashpoint 3: A renewed focus on the elite customers 

As the wallets of aspirational luxury shoppers tightened in 2023, brands shifted their gaze to the apex of their clientele—the top earners. These inflation-resistant patrons wield robust budgets (and in some cases grew them!).  

Take, for instance, Gucci’s exclusive by-appointment store, aptly named the “Gucci Salon,” nestled in Los Angeles. Here, the brand caters exclusively to its most esteemed clients. 

But it’s not just about money; it’s about access. Brands orchestrate experiences that transcend mere transactions: 

  • Intimate dinners at designers’ private residences. 
  • Starry, insider-only shows and parties that blur the lines between exclusivity and artistry. 

According to Bain, the top 2 percent of luxury customers drive a staggering 40 percent of luxury sales. Engaging and retaining these ‘very important customers’ has always been critical to brands, but now, in an era of heightened competition, the challenge intensifies. 

Engaging and retaining these ‘very important customers’ has always been critical to brands, but now, in an era of heightened competition, the challenge intensifies. 

Flashpoint 4: the next frontier for technology  

The pandemic catalysed the sector’s digital transformation. Consumers, out of necessity, shifted to online channels, and companies offering digital luxury thrived and expanded. Now, four years later, we are witnessing signs of a digital deceleration, with customers yearning for tactile, in-person luxury experiences. 

Yet, technology remains a vital piece of the puzzle. While the vision of blinged up avatars never materialised, luxury brands continue to experiment with technology designed to change the way we shop.  

Apple’s mixed-reality headsets are a great example of this, offering a familiar interface for luxury shoppers to explore and visualize products from the cozy confines of their homes. 

As communications professionals, our role is to guide leaders through this intricate landscape and an ever-changing industry. Looks like we’re heading for a very interesting year ahead!

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Elections 2024: Will AI wars replace data wars?  

In 2024, two billion people across 50 countries will be heading to the polls. Among these 50 are three of the world’s biggest democracies, India, the United States, and the United Kingdom. This makes it the biggest election year in history. It is also the first big election year since AI tools have made their way from the safety of labs, and into the hands of the public. Digital political campaigning is about to get even more interesting.

Image of people and robots queuing up to vote in the UK General Elections 2024, created on DALL-E #AIGenerated

A decade of data wars.

It’s hard to remember a time when social media didn’t have on-platform advertising. In 2007 Facebook introduced its ad platform, but it wasn’t until after the 2016 US election that the platform took steps towards transparency. This cornerstone US election played out on social media and sparked some important ethical debates about digital campaigning, data privacy and transparency. For a whole 10 years, from 2007 to 2017, there were very few ways to tell if something was an ad, and who was running the ad.

Then, in 2018, the Cambridge Analytica scandal came to light, and the world became very aware of three things. Firstly, that Facebook was holding more data on users than the public realised; data which these users unknowingly gave away. Secondly, that algorithms fed on using data to polarise communities, urging the left to lean more left, and the right to lean more right. And thirdly, that there were ways in which this Facebook data could be extracted off platform, to be used by third parties.

A new era of responsible advertising

Post Cambridge Analytica, the rules began to tighten further. With public pressure and suspicion mounting, Facebook, Twitter, and other platforms began to restrict ad targeting and started becoming more transparent. You now need a government authorised ID to run any ads associated with political parties or government affiliated organisations. These are flagged on most platforms, with ads marked as ‘sponsored’. In addition, as per Facebook’s rules, political ads cannot target people based on their gender, ethnicity, race, household income or spending habits; with ad targeting restricted to basic geographic and language criteria.

There’s even a handy library of every single ad being run on Facebook; launched by the platform in 2018 in a bid to increase transparency. Anyone with a Facebook account can access this library and see just what ads are being run by whom. So if you are curious about the latest ads run by the Tory party, all you have to do is head over to Facebook’s extensive Ad Library to have a browse. If you look closely, you can even see how much was spent on each ad. Digital marketers everywhere, including at Hawthorn, absolutely love this tool. It levels the playing field for all competitors involved in a race.

It’s important to note that many of these restrictions and transparency protocols were not in place the last time the UK held general elections. We might now have more rules around who ads can target, but what about the content of the ads themselves?

A new agent of chaos

Generative AI tools like ChatGPT and Midjourney have ushered in an era of content creation that blurs the lines between human and machine-generated material. These tools can generate text, images, and even videos, and voice clones that are increasingly difficult to distinguish from authentic content. While bringing with them great creative potential, these tools come with an extraordinary power to manipulate and misinform. Just last week, the World Economic Forum put out its annual Global Risk Report which listed AI-generated misinformation and disinformation as the biggest threat of the year.

Firstly, we’re seeing a lot more deepfakes – remember that fake audio clip of Kier Starmer yelling at a staffer? And consequently, knowledge of their circulation makes the public ever more sceptical. So even authentic content is treated by the public with suspicion.  

These technologies aren’t just being used to subvert democracy. In a case that hit the headlines last year, Pakistani political party Pakistan Tehreek-e-Insaf (PTI) used AI to clone the voice of former party leader Imran Khan. While Khan was locked up in prison unable to campaign for PTI, his AI-generated voice rallied the troops anyway, encouraging them to head out and vote for PTI, reaching 4.5 million people on social media. Many knew it wasn’t him speaking, the tech isn’t that good just yet, but his voice managed to deliver a message and found a clever loophole around a government issued gag order.

Governments and international bodies have begun to address the threat that AI-driven disinformation and misinformation can pose; but things are moving slowly. The European Union has reached a deal on AI regulation, albeit with implementation scheduled for 2025. The UK Government has been cautious about stifling AI innovation but has acknowledged the need for regulation of AI, and, as of now, there are no rules in place about flagging or restricting machine generated content. President Biden unveiled proposals in October 2023, including mandatory watermarking of AI-generated content.

Clearly regulation hasn’t quite caught with the new agent of chaos. But tech companies have been quicker to act this time around. Both Google and Facebook unveiled new platform rules that will require political ads to carry a label when they have been generated using an AI tool.

Who really wins?  

In 2019, it was estimated that just under £9 million was spent by political parties in the UK on Google and Facebook, with just over £6 million on Facebook alone. Despite ad targeting being more regulated this time around, we can expect spending to be even higher. Last time, national party spending was capped at £30,000 per constituency during the short campaign i.e., if a party was contesting a seat in all 230 constituencies, they had £6.9 million to spend. This has now been increased to £54,010. For context, total campaign spending could go from £19 million to £34 million – a 78% increase.

If the same percentage was spent on digital advertising, Facebook and Google could come away with a cool £15 million from the UK alone – making them the real election winners, along with the many AI tools that might be used to produce this year’s ads.

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Five things you need to know about Labour’s NPF document

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

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