Mark Kleinman: If Britain is open for business, prove it
Mark Kleinman is Sky News’ City Editor and is the man who gets the City talking in his weekly City PM column. This week he tackles business investment, shares in NatWest Group and Guy Hands’ pursuit of Amber Taverns
If Britain is open for business, prove it
So that’s one election campaign commitment broken. Labour said during the run-up to July 4 that it would hold a major investment summit within 100 days of coming to power.
Its October 14 jamboree will, therefore, just miss the cut. That’s a triviality, of course, if Sir Keir Starmer’s administration manages to cobble together a credible narrative for international investors to make long-term commitments to the UK economy.
#The omens aren’t promising. The gathering will take place two weeks before Rachel Reeves’ inaugural Budget as chancellor, when many of those invited to the International Investment Summit will learn far more about the corporate and personal tax policies of the first Labour government since the immediate aftermath of the global financial crisis.
According to the Department for Business and Trade’s announcement of the summit date, it will “make clear that the UK is ‘open for business’”.
In fact, what it will rather do is amalgamate a series of previously planned deals and attempt to trump the Conservatives’ dubious claim to have attracted £29.5bn of investment in new projects and capital at its last such event in November 2023
“The chaos of the last 14 years is no more. Britain is open for business, and we are the investment destination of choice,” Jonathan Reynolds, the business secretary, said.
Sadly, this is the same hyperbolic nonsense typically spouted by politicians of all parties. How could Britain have suddenly become “the investment destination of choice” within a few weeks of the country being in “chaos”?
The answer: it hasn’t. The only way to make such a statement a reality is through years of hard graft; of sustained engagement with investors and business leaders; of coherent tax policy which eschews the kind of point-scoring aimed at alienating wealth creators; and of reforming red tape in ways which would mean delivering the conditions in which innovators can thrive.
It’s far too early to judge whether Reeves and Reynolds can produce an inward investment environment which acts as a magnet to those it wishes to trumpet as attendees on October 14. Claiming, though, that it has already arrived at that destination is a disappointing portent.
Reeves’ NatWest plan has logic for taxpayers
If you see Jacob, tell him. According to Jacob Rees-Mogg, the former Brexit opportunities minister, the chancellor’s decision to scrap a mass-market offering of shares in NatWest Group, the taxpayer-backed lender, represents an “anti-capitalist” decision which proves Labour “does not want to see the spread of wealth or to support London’s capital markets”.
That’s quite a stretch, even for a bruised opposition politician who’s unlikely to serve in government again. Treasury figures released last week suggested that a retail offer would have cost the public purse up to £450m, depending upon the level of discount applied to the stock being sold.
Put another way, that sum would fund a quarter of the £1.7bn bill that the new government says it will apply to private school fees in order to recruit 6,500 teachers into the state education sector.
Reeves’ antipathy to the NatWest retail sale, first flagged in this column last month, is certainly disappointing to those who hoped it would galvanise enthusiasm for share ownership. Yet since a Tory government began selling down its stake in NatWest (at the time Royal Bank of Scotland) in 2015, none of Reeves’ legion of predecessors as chancellor seemed much enthused about a retail offer.
Nevertheless, the plan hatched by Jeremy Hunt and Bim Afolami, former City minister, was well thought through, both politically given that it was designed to provide a pre-election giveaway; and in terms of its broader mission.
Reeves now has to decide whether reviving London’s capital markets is a primary objective for her chancellorship, and if so, how she can achieve that in the absence of the NatWest retail offer. Not splurging taxpayers’ money unnecessarily does not make her an anti-capitalist; this autumn’s Mansion House set-piece will be her opportunity to demonstrate that.
Last orders for Hands’ bid to get green light for Amber
Back to where it all began? Guy Hands’ pursuit of Amber Taverns, the pubs operator, contains neat symmetry for close watchers of the private equity tycoon’s career.
Hands, remember, orchestrated hugely profitable deals involving the Unique and Voyager pub chains while at Nomura more than a decade ago.
In recent weeks he has been participating in an auction of Amber Taverns, which comprises more than 150 pubs, principally located across the north-west, Midlands and Wales. He isn’t having it all his own way. People close to the process say that Epiris, the mid-market buyout firm, has now secured a period of exclusivity.
Hands, for his part, is said to have been willing to contribute roughly £20m to the purchase price, which is expected to be over £200m. Sources say Terra Firma had been seeking co-investors to back a potential deal, although it looks likely that Epiris will make that quest academic.
With Stonegate Group, Britain’s biggest pubs operator and owner of chains including Slug & Lettuce and Be At One, having secured a substantial refinancing last week which dispels doubts about its future, sentiment towards the industry may finally be improving among credit investors.
Even if he doesn’t get the green light for an Amber takeover, expect to see Hands pursuing other assets in the sector.