BCF Blog: The New UK Government: outlook for business and the coatings sector

By David Park, BCF Public Affairs Manager

Three weeks have passed since the UK General Election. It delivered a stonking majority for Keir Starmer’s Labour Party and a record low number of seats for Rishi Sunak’s outgoing Conservative Party. It was one of those election results that the UK’s first-past-the-post election system delivers every generation or so – truly decisive and enabling of change. But what might that change look like, at least from a business and coatings sector point of view?

Despite the size of the majority – 181 once you take account of the non-voting speaker and deputies and the Sinn Fein members who will not take their seats – the watchwords of the new Government are ‘caution’ and ‘stability.’ Starmer was careful to be moderate in opposition, to clamp down hard, indeed to be ruthless, on backbenchers and candidates who strayed from what the public might deem to be moderate (look at Corbyn’s expulsion from the Party), and produced a manifesto delivered largely in a whisper, lest any proposals offend. The message that emerged from last week’s King’s Speech, was that Starmer would govern in the same cautious manner, looking to provide stability and certainty, especially for business, over the coming years.

Yes – there are likely to be some radical measures. The new programme for Government raises its voice from a whisper to a shout about how this Government will introduce the biggest upgrade of workers rights in a generation, together with increases to the National Minimum Wage; it boasts that the UK rail network will be slowly nationalised as franchises come to an end; and the press has been briefed that the constitutional settlement will change with hereditary Peers finally being ejected from the House of Lords, more devolved powers given to regional ‘Metro’ Mayors and, probably, at some point, in the fullness of time, votes for 16 year olds. All red meat to Labour party members and a large portion of the backbenches.

And that is, perhaps, needed to offset the more moderate agenda across the rest of Government. There is little money available to spend for the Chancellor, Rachel Reeves. It is inevitable taxes will have to rise (as the surely would have had to if the Conservatives had won too) but Labour ruled out a whole range of ways of doing this during the election: Incomes Tax, National Insurance, VAT, Corporation Tax – all were said to be left alone. If they stick to those pledges – resisting the temptation to say that ‘the books are in a much worse state’ now they have seen them, that means other streams will have to be explored – Capital Gains? Various duties? The Treasury are probably revising on the Gordon Brown playbook of the late 90’s and early 2000’s when the then Chancellor fiddled with lots of smaller measures to raise relatively large sums of money. A lot of these are likely to affect businesses. (Incidentally, there are over 500 PFI contracts from the Brown era due to end next year: what will the new Government do about them?). 

Anyway, let’s focus in on what it looks like the new Government means for the coatings sector. At the end of 2023 we published a short manifesto for the sector which contained a list of 5 broad policy asks. 

1. A proportionate, clear, and consistent regulatory environment for chemicals.
2. An industrial strategy to support manufacturing.
3. Support for businesses to make the transition to a more sustainable UK.
4. Long-term focus on skills and training.
5. Improving post-Brexit trade.

How does the new Government’s approach stack up against those asks?

The previous Government’s consultation on a new proposal for UK REACH was allowed to continue over the election period. However, during the election, Rachel Reeves, in particular, was vocal in saying that Labour would seek to align the UK more closely with the EU in this area, indeed, to seek a ‘bespoke deal’ on chemicals. This implies that the work done to-date to develop a UK REACH system may be discarded. This may not necessarily be a bad thing – as long as we still end up with a model that is proportionate and workable. However, it will likely mean yet more delays and uncertainty for the near future. Clarifying and shaping what is going to happen in this area is key over the coming months.

Labour had committed to an industrial strategy in Opposition and the King’s Speech included reference to setting up an Industrial Strategy Council. BCF broadly welcomes this move – we felt that the last Government’s Advanced Manufacturing Plan was too narrowly drawn and not truly strategy in terms of addressing key issues affecting the sector. There is little detail as to how the Council and Strategy will work, however, and we will want to feed in as much as possible to the development process. We all know coatings are essential to the UK economy and manufacturing and we need to ensure that any Strategy recognises that.

Helping business transition to a more sustainable UK is likely to be linked to Government proposals for pump-priming private investment into green infrastructure. It’s new ‘National Wealth Fund’ and nationally run ‘Great British Energy’ company will be at the heart of this. It would be good to see more specific grants and support, especially for SMEs, for things like carbon emission reporting, and we shall have to see whether this kind of direct financial support becomes available. Likewise, the Government’s plans for a new body, Skills England, need to be fleshed out. We know the much-complained-about Apprenticeship Levy will be reformed into something more flexible – something we specifically asked for – but will, again, need to work with Government to develop a more sustainable successor.

Finally, on improving trade, the Government has made clear it wants to create an improved trading relationship with the EU. How much exactly will be on offer we cannot be sure, but we know, as per the Chancellor’s comments above, that it is planned to try to weave in greater alignment on chemical regulations. We need to be careful not to throw the baby out with the bathwater, though, where new trade deals outside the EU are being finalised or already implemented.

Alongside policies, personnel make all the difference. What do the PM’s new Ministerial appointments mean for us? We have continuity in the key Secretaries of State at Defra, Steve Reed, and at Business and Trade, Jonathan Reynolds. Both are good political operators who know their briefs. The Shadow Business Minister for Industry, which included chemicals, Sarah Jones, has also kept her job, which again is good in terms of stability. Frustratingly, Ruth Jones, the former Shadow Defra Minister who had responsibility for Chemicals, Waste and Recycling etc, did not get given a job in Government. So, we lose a fair bit of institutional memory on those key issues. Instead, Emma Hardy MP will take on the brief in addition to her other duties on e.g. sewage, flooding etc. We shall also be dealing with her Defra colleague, Mary Creagh MP, on recycling and waste issues like EPR: she is a former Shadow Secretary for State for Environment and Chair of the Commons Environmental Audit Committee, and so has a wealth of experience: we look forward to getting to know her. Stephen Timms is Employment Minister at DWP who will have responsibility for HSE and other parts of chemical regulation. He has experience in Government from the Blair/Brown era and is another good appointment.

So, next steps for BCF? We need to hit the ground running to engage with and brief the various new Ministers and to feed into consultations, formally and informally, on the various key policy areas, some of which are highlighted about. It will also be important for us to broaden knowledge of BCF and the coatings sector amongst the new intake of MPs. Across the 244 BCF members sites and offices, 174 now have a new MP. It would be great for as many members as possible to meet with them to explain just how important their businesses are to the local constituency and how essential the coatings sector is to the UK economy and wider society. BCF can help you do that if needed. There is a good opportunity for us, as a sector, to see some of the policy changes we need are made but also, once they are implemented, for a period of calm stability to properly adapt after a sustained period of fluidity and uncertainty for nearly a decade.