The Labour Party has won the General Election and party leader Keir Starmer will very shortly become Prime Minister. At the time of writing, Labour has won 412 seats, a rise of 211 on the General Election in 2019, making the party likely to have a huge majority of around 170. The Conservatives are on 121 seats, down 250, and have been wiped out in Wales, winning no seats there at all. The Liberal Democrats have taken a record number of seats, 71 so far, up 63, becoming the third largest party in the House of Commons again. Reform UK has won 4 seats currently, including the Clacton constituency, where party leader Nigel Farage is the new MP with a majority in excess of 8,000. The SNP has suffered significant defeats in Scotland, mostly to Labour, losing 38 seats so far, returning only 9 MPs to Westminster.

Despite their thumping majority, Labour’s vote share has barely changed since the last General Election. Overall, they have won only around 34% of the popular vote, just 1.5% higher than when Jeremy Corbyn was leader in 2019, meaning their landslide victory is in fact disguising one of the lowest votes shares for any governing party since the Second World War. In Keir Starmer’s own Holborn and St Pancras seat, his majority has been slashed by some 60%, as the number of people voting for him dropped by almost 18,000 on 2019 following a challenge from a pro-Palestine independent candidate. Starmer has also lost two members of his top team, Jonathan Ashworth, his shadow paymaster general, and Thangham Debbonaire, shadow culture secretary, to pro-Gaza independent and Green Party candidates respectively.

Numerous Conservatives who were Cabinet ministers until yesterday have lost their seats, among them Leader of the House Penny Mordant, Defence Secretary Grant Shapps, Science and Tech Secretary Michelle Donelan, Lord Chancellor Alex Chalk, and Education Secretary Gillian Keegan. Former Prime Minister Liz Truss also lost her seat to Labour, who beat her by just 630 votes. Former Business Secretary Jacob Rees-Mogg and former Justice Secretary Sir Robert Buckland also lost their seats, but former Chancellor Jeremy Hunt managed to cling on in his Godalming and Ash constituency, albeit with a majority of just 891, the Lib Dems having run a close campaign. Other notable results include victory for former Labour leader Jeremy Corbyn in Islington; Corbyn was expelled from the Labour party but stood as a pro-Gaza Independent. In total, five seats so far – Corbyn’s Islington, Blackburn, Dewsbury and Batley, Birmingham Perry Barr, and Leicester South - have been won by pro-Gaza Independents. However, the pro-Palestine MP George Galloway, who won the Rochdale seat in a by-election just four months ago, has been ousted by Labour’s Paul Waugh.

What does Labour’s victory mean for the businesses? Although the first Labour budget isn’t expected until the Autumn, Labour has made no secret of the fact it intends to put VAT on private school fees and increase windfall taxes on oil and gas producers, as well as ban new exploration in the North Sea and remove tax avoidance ‘loopholes’ for so-called non-doms. Although the party has committed to what it calls a ‘Triple Lock’ guarantee it will not raise Income Tax, National Insurance or VAT, it has also made huge spending pledges without making any commitment to slash Government spending, meaning money will be tight, and that other taxes are highly likely to be hiked. In particular, Labour has refused to rule out changes to Capital Gains Tax, Inheritance Tax, or Pension Tax Relief, and neither has it said it will increase personal allowances, meaning yet more people could be dragged into either paying tax for the first time, or into a high tax bracket, through the ‘stealth tax’ of fiscal drag. Business are also likely to feel the impact of Labour’s pledge to give basic working rights for workers from day one of their employment; ban “exploitative” zero hours contracts; and end “fire and rehire” practices. The Labour Party manifesto also pledged too: -

·       Cap Corporation tax at 25%

·       Replace the Business Rates system in England [1]

·       Take action on late payments to ensure small businesses and the self-employed are paid on time

·       Levy an additional 1% on stamp duty for foreign home buyers 

·       Invest in upgrades to ports; build new gigafactories to support the automotive industry; rebuild the steel industry; accelerate the deployment of carbon capture; and support the manufacturing of green hydrogen

·       Commit to legislation introduced by Prime Minister Rishi Sunak to “ensure the next generation can never legally buy cigarettes”. 

In other news…

British Gas has filed a record number of winding-up petitions against small businesses, the Telegraph reports. British Gas Trading sought winding-up orders against 111 companies in 2023 and a further 60 were filed so far this year, marking a significant increase on previous years, with just 38 filed in 2022 and 13 in 2021. The newspaper says many of the companies that have faced legal threats from British Gas are small businesses struggling to pay energy bills, including restaurants, construction companies and care homes.

The Slug and Lettuce pub chain swung to a loss last year amid growing debt pressures at its parent company, which is racing to refinance £2.2bn worth of borrowings. The bar chain, which is owned by Stonegate, fell from a £2.2m profit in 2022 to a £3.1m pre-tax loss in the 12 months to September 2023, new accounts reported by The Telegraph show. Bosses blamed “the impact of the macroeconomic environment” for revenues falling narrowly from £48.6m to £48.5m.

Kingswood CEO David Lawrence has quit the AIM-listed wealth and investment management firm with immediate effect. No reason has been given for his resignation. Chartered accountant Peter Coleman has been appointed to the board as interim CEO.

[1] The manifesto did not specify how, saying only that the change will “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.

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