After the Labour landslide, retail expects Keir Starmer to deliver

Change. It’s the one-word message that helped power Labour and Keir Starmer to a landslide general election victory. 

The mood at Labour Party HQ will undoubtedly be jubilant this morning. But the honeymoon period will be short.

Starmer and his team will be acutely aware of the challenges they and the country face: decimated public services, sluggish growth, a flatlining economy and crippled consumer confidence.

Given the mountain he now must climb, Starmer has been cautious about not overpromising. There is no wand to wave that will magically make the country’s myriad problems disappear overnight.

This pragmatic approach has, at least in part, helped propel him to power. He has certainly shown himself adept at broadening the Labour church and making it more palatable for disaffected voters who would consider themselves in the political centre.

The retail industry has been the wider electorate in microcosm. A sector traditionally helmed by moderate Conservatives, the election campaign was marked by several notable, public interventions for Starmer and Labour from well-known retailers.

So now Labour is back in 10 Downing Street after 14 years, what will that mean for retail?

What retailers want

Retail has been clamouring for the next government to act on four key areas: business rates reform, overhauling the apprenticeship levy, providing some much-needed economic stability and acting on retail crime.

More broadly, there is concern among grocers about UK food security, fashion and luxury retailers would love to see VAT-free shopping return, and just about every business that imports and exports into the EU would like to see the current blizzard of bureaucracy streamlined.

It’s a crowded in-tray for Starmer and his team, and solutions to many issues will be the work of at least one full term, if not longer.

There are steps Labour could take in its first 100 days that would go a long way to reassuring many in retail that it will be good for them. One such step would be on business rates.

In its manifesto, Labour pledged to replace the reviled business rates system with a revenue-neutral approach that levels the playing field between online and bricks and mortar.

Speaking just two days before the election, Sainsbury’s boss Simon Roberts spoke for the industry when he said business rates at present are a “hugely unfair and damaging tax that is causing a lot of physical retailers to have real challenges”.

While the devil will be in the details, setting out its stall on meaningful reform of retail’s biggest political bugbear would be a massive first step for a new Labour government to show it will deliver for the industry.

“If they do nothing else, fixing business rates would almost make it all worthwhile,” one retailer texted this morning. “We’ve been waiting for this for what feels like forever.”

Labour has also pledged to create a new specific offence for assaults on shopworkers, protecting them from threats and violence from customers.

While the initial heavy lifting on that legislation was started under the previous Tory government, enshrining the new offence in law would be a relatively easy win for a Labour government in the short term.

It would represent a huge win for retailers such as Matalan boss Jo Whitfield and the British Retail Consortium (BRC), who have campaigned tirelessly for the law’s introduction.

It’s the economy, stupid

The UK economy has been languishing on life-support and returning it to ruder health will be no easy feat. However, that is the task Starmer now faces and retailers want to see growth.

“Retailers are looking for stability, of course, but also for government to provide the conditions for growth through better skills, infrastructure and planning,” Currys boss Alex Baldock said today.

“Historic night of politics,” Iceland executive chair Richard Walker tweeted. “Now it’s time to focus on the hard-working people of this country and the growth we need to get us back on track.”

“We are a proud island of shopkeepers and we want to drive growth, create new jobs and breathe new life into our high streets, but we can’t do that without support from Westminster,” said Majestic chief executive John Colley.

In an encouraging early sign, the markets have reacted positively this morning. The FTSE 100 is up 34 points and the FTSE 250 up 36 – a sign that Labour at least hasn’t spooked the City, as such a result may have done in years past.

It’s very early days, though.

For his part, Starmer went to great lengths during the campaign to paint himself as the leader of a party dedicated to wealth creation.

“We are pro-business and pro-worker,” Starmer insisted. “This changed Labour Party has a plan for growth.”

But retailers have long memories and shifting the historical narrative around Labour’s track record on issues of economic performance will take more than words.

Labour has promised no increases on existing income tax rates, National Insurance or VAT and to cap corporation tax at its current 25% level.

However, sources have privately expressed concern at Labour’s broader economic plans – particularly around the minimum wage.

Starmer has said he will change the Low Pay Commission’s remit to make the minimum wage better reflect the inflation seen during the cost-of-living crisis.

Wages are already the largest cost base for any retailer and many leaders argue that they have taken their own steps to ensure staff pay has kept pace with inflation.

“We don’t need the government or unions to tell us what to do with our colleagues,” one senior retailer said.

“They’re the lifeblood of any business. We already do the right thing by them, and we’ll continue to do the right thing for them.”

“The current minimum wage is already generous. How much more can retailers afford to pay someone stacking shelves?” one source mused more bluntly.

Hope?

People don’t tend to like change, until they do. While the ‘loveless landslide’ rhetoric being adopted by some media outlets this morning may not fully reflect the national mood, it’s a pretty apt description of how many in the retail sector will be feeling.

However, while the overwhelming emotion in retail boardrooms this morning will be caution, it will also be tinged with optimism.

If Starmer can deliver on the sober, sensible and economically literate image Labour has painted, then many in retail will be satisfied.

Looking forward to the all-important golden quarter, one senior industry source was optimistic and said: “I think the election will be a gamechanger. It will show a country that wants a different future. It’s a big change that should bring a sense of being together.”

He believes that bodes well, combined with an improving inflation trend.

After 14 years of often shambolic Conservative government, winning for the Labour Party will be the easy thing. The hard part will be governing.

As the BRC’s chief executive Helen Dickinson said, now is the time for Labour to “get to work”.

Retail will be watching.