Kindly hosted by: General Election 2019 What’s at Stake for the Financial Services Sector? #FSFEvents @TheFSForum The Financial Services Forum C ORPORATE P ARTNERS :
1. Introductions 2. Financial Services macro- policy issues ontent. 3. GE 2019: One week to go 4. Conservative manifesto 5. Labour manifesto 6. Issue by issue 7. Scenarios 8. Meeting the political challenges 2
Introductions. CHARLIE ANSDELL SIMON GENTRY GARETH JONES Managing Partner Managing Partner Associate Partner Financial and Professional Services Public affairs Public affairs MATTHEW CONWAY Director Government and regulatory affairs
Financial Services: Current macro-policy environment . Key sectors. Capital Asset Banking Insurance Markets Management Common issues & challenges. 10 years of post-crisis Rapid advances in technology Macro-economic - low growth regulation. & digitalisation. & low interest rates 4
GE 2019: One week to go …. Latest poll tracker. (Source: Britain Elects) Conservatives: Labour Get Brexit Done: Unleash Britain’s It’s time for real change potential Liberal Democrats SNP Stop Brexit: Build a brighter future Stronger for Scotland 5
Conservative Manifesto. Top-line measures What it says: A commitment to ‘get Brexit done’ by 31 st January 2020 and not • extend the transition period beyond December 2020 • Australian-style points based immigration system • Commitment for no rises in income tax, NI or VAT • “Retail offers” on public services – more doctors/nurses, police and triple lock on pensions • Targeted spending on infrastructure – new rail and funding for towns (largely in the Midlands and northern England) • Modest reforms to pensions, corporate governance, housing and the environment What it doesn’t say/do: • Lacks a lot of detail about how the party intends to govern for the next five years • Outline a desired trading relationship with EU post-Brexit • A number of important policy implications post-Brexit (eg future regulatory alignment). The ‘state aid’ regime was announced subsequently
Labour Manifesto. Top-line measures What it says: • Negotiate a ‘sensible’ Brexit deal with EU and put it to a referendum (vs ‘remain’) within six months. Even under a ‘leave’ victory, Labour would likely implement a softer Brexit than the Conservatives, especially on migration • Ambitious spending pledges - more money for the NHS, for schools and public services and social housing • Revenue-raising plans – rises in corporation tax (to 26%) and capital gains tax, as well as income tax for those earning over £80,000 and introduction of financial transaction tax • A radical programme of economic reform – nationalising utilities including water, rail, energy and broadband. Mandatory employee ownership of large companies through Inclusive Ownership Funds. Extensive corporate governance reform • Radical action on climate change - 90% of electricity and 50% of heat from renewable and low-carbon sources by 2030. £250 billion Green Transformation Fund What it doesn’t say/do: • It doesn’t prioritise its long list of radical pledges – or take into account any potential political/economic difficulties in implementing them • Its revenue raising plans, while ambitious, do not match its spending plans • How they may govern with other parties, particularly the SNP
Manifestos: Issue by issue. Savings, investments & pensions Retail & business banking Conservatives • Conservatives Expand start-up loans via the British Business Bank • Bring back legislation to protect workplace pensions and introduce pension dashboards Labour • Create new publicly owned Post Bank, a National Investment Labour Bank and Regional Development Banks • Establish new Pensions Commission for workplace • Provide £250 billion of lending pensions • Stop bank branch closures & ban ATM charges • Expand auto enrolment for low income and self-employed • Address discrimination in access to finance and stop ‘rip off’ schemes • Full transparency on costs and charges for savings and pensions (via the pensions dashboard) Lib Dems • Create new local banking sector for SMEs Lib Dems • Expand the British Business Bank • Help those in ‘gig economy’ save for pension
Manifestos: Issue by issue. Corporate Governance Climate Change Conservatives • Strengthening corporate governance regime, reform insolvency rules and audit regime Conservatives • Improve incentives to tackle excessive executive pay • Net Zero by 2050 Labour Labour • Change Companies Act, in order to “require companies to prioritise long- term growth” • Net zero by 2030s • Introduce a public interest test to prevent hostile takeovers • Create a cross-government and stakeholder Sustainable and asset-stripping Investment Board • Allow companies to go into protective administration • Change the criteria needed for companies to be listed on the • Workers on boards London Stock Exchange • Tougher rules on gender equality and pay-gap reporting • Give regulators new powers to manage environment risks to financial stability Lib Dems • Give employees rights to request shares, employee Lib Dems representative on their boards • New regulation to encourage pension funds to make green • Extend scope of existing ‘public interest’ test for M&As investments
The general election outcome potential scenarios. 10
Scenario 1 …… Conservative majority government • Relative political stability • Legislative programme and domestic policy reforms can be put in place • Post-Brexit relationship with EU likely to take centre stage – especially with December 2020 deadline
Scenario 2 …… Labour-led government • Most likely that Labour would need to govern with other parties – the SNP and/or Lib Dems • Likely to be unstable – but potentially held together in short term by a common commitment to 2 nd EU Referendum • SNP’s push for a 2 nd independence referendum likely to be a key factor in their parliamentary support • Implementing their radical manifesto and agreeing a budget will require consent of other parties
Scenario 3 …… No viable government • If the Conservatives cannot achieve a working majority (even with DUP support) – and Labour cannot put together a coalition – then it is unlikely that a government can command the support of parliament • Most likely this will result in another general election in 2020 • Without a functioning government, the EU may agree to extend the Brexit deadline beyond January 2020
Meeting the challenge. How can UK banking and finance remain globally competitive under these scenarios?
Thank you. CONTACT Simon Gentry I Managing Partner simon.gentry@newgatecomms.com + 44 (0)20 3757 6842 + 44 (0)7884 496 251
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