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General Election 2019

What’s at Stake for the Financial Services Sector?

• ntent.

2

• 1. Introductions
• 2. Financial Services macro-

policy issues

• 3. GE 2019: One week to go
• 4. Conservative manifesto
• 5. Labour manifesto
• 6. Issue by issue
• 7. Scenarios
• 8. Meeting the political

challenges

CHARLIE ANSDELL Managing Partner Financial and Professional Services SIMON GENTRY Managing Partner Public affairs

Introductions.

GARETH JONES Associate Partner Public affairs MATTHEW CONWAY Director Government and regulatory affairs

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Banking

Capital Markets

Asset Management

Insurance

Financial Services: Current macro-policy environment.

Key sectors.

10 years of post-crisis regulation. Rapid advances in technology & digitalisation. Macro-economic - low growth & low interest rates

Common issues & challenges.

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Labour

It’s time for real change

Conservatives:

Get Brexit Done: Unleash Britain’s potential

SNP

Stronger for Scotland

Liberal Democrats

Stop Brexit: Build a brighter future

GE 2019: One week to go….

Latest poll tracker.

(Source: Britain Elects)

Conservative Manifesto.

What it says:

• A commitment to ‘get Brexit done’ by 31st 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

Top-line measures

Labour Manifesto.

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

Top-line measures

Manifestos: Issue by issue.

Retail & business banking

Conservatives

• Expand start-up loans via the British Business Bank

Labour

• Create new publicly owned Post Bank, a National Investment

Bank and Regional Development Banks

• Provide £250 billion of lending
• Stop bank branch closures & ban ATM charges
• Address discrimination in access to finance

Lib Dems

• Create new local banking sector for SMEs
• Expand the British Business Bank

Savings, investments & pensions

Conservatives

• Bring back legislation to protect workplace pensions and

introduce pension dashboards Labour

• Establish new Pensions Commission for workplace

pensions

• Expand auto enrolment for low income and self-employed

and stop ‘rip off’ schemes

• Full transparency on costs and charges for savings and

pensions (via the pensions dashboard) Lib Dems

• Help those in ‘gig economy’ save for pension

Manifestos: Issue by issue.

Corporate Governance

Conservatives

• Strengthening corporate governance regime, reform

insolvency rules and audit regime

• Improve incentives to tackle excessive executive pay

Labour

• Change Companies Act, in order to “require companies to

prioritise long-term growth”

• Introduce a public interest test to prevent hostile takeovers

and asset-stripping

• Allow companies to go into protective administration
• Workers on boards
• Tougher rules on gender equality and pay-gap reporting

Lib Dems

• Give employees rights to request shares, employee

representative on their boards

• Extend scope of existing ‘public interest’ test for M&As

Climate Change

Conservatives

• Net Zero by 2050

Labour

• Net zero by 2030s
• Create a cross-government and stakeholder Sustainable

Investment Board

• Change the criteria needed for companies to be listed on the

London Stock Exchange

• Give regulators new powers to manage environment risks to

financial stability Lib Dems

• New regulation to encourage pension funds to make green

investments

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The general election outcome potential scenarios.

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 2nd EU Referendum

• SNP’s push for a 2nd 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