Labour is aiming to seize ground abandoned by the Conservatives on economic growth with plans for a shake-up of business funding to help fast-growing startups secure billions of pounds in fresh investment.
Rachel Reeves, the shadow chancellor, will use a speech to 350 business leaders in Canary Wharf, east London, on Thursday to announce the findings of the party’s review into startup funding led by Jim O’Neill, the former Tory Treasury minister and Goldman Sachs economist.
She will say that a Labour government would give the British Business Bank greater independence to invest in fast-growing companies, while also learning from a French scheme to unite the power of the state with large private sector investors.
Reeves is expected to say: “We are at a post-Brexit crossroads. We can continue down the road of managed decline, falling behind our competitors, or we can draw on bold thinking to propel us forward.
“That is why Labour today welcomes this radical plan to make Britain the high-growth startup hub of the world.”
It comes amid concerted efforts by Labour to seize the status of the most trusted party of business after the financial market implosion triggered by Liz Truss’s catastrophic September mini-budget. Keir Starmer and his senior shadow ministers have been on a blitz to win over business leaders in recent months in a plan known as the “prawn cocktail offensive 2.0”, after the nickname for Tony Blair’s attempts to win the support of executives before the 1997 election.
Business leaders, including the chair of NatWest, Howard Davies, have said the mini-budget disaster “scarred” Britain’s reputation on the global stage. The CBI lobby group has also warned that Rishi Sunak lacks a coherent plan for economic growth as the country slides into recession amid the highest rates of inflation seen since the 1980s.
The split between the Conservatives and the business community is also having an impact on the party’s funding. Data released by the Electoral Commission earlier this week showed donations to the Tories were 40% lower from July to September than they had been in the previous three months.
Gareth Quarry, a former Tory donor who has since defected to Labour, said this week he believed the opposition party was now “the viable party of business”.
Announcing the findings of the O’Neill review, Reeves will say its recommendations are the first step in closing a £16bn investment gap for high-growth firms that the UK is missing out on.
The report’s conclusions include suggestions for Britain to draw on the experience of France’s “Tibi” investment scheme, which uses the convening power of government to bring together private sector investors to support high-growth firms.
The programme used by Emmanuel Macron’s government has so far raised €18bn (£15.5bn) of institutional investment for French startups.
Labour would also hand greater independence to the state-owned British Business Bank, which offers loans to UK companies, to invest over a longer time horizon. At present it has its plans subjected to an annual review and approval process by the government. The report recommends extending this period to encourage the bank to pursue longer-term objectives.
Labour’s conference for business is expected to be attended by high-profile industry leaders, including the chief executives of Aviva, SSE and HSBC, as well as the chair of Tesco, Sir John Allan, at a sold-out event.
