Despite our familiarity with the two candidates, the uncertainty which will remain until September 5th is leaving businesses in a state of limbo that has become all too familiar in recent years.
But exactly where do Sunak and Truss sit on the policy areas which have defined this Government so far, and what could their approach mean for businesses looking to engage.
Where Boris Johnson has held business at arms-length, we can expect the incoming Prime Minister to take a much more pro-business approach with the aim of driving economic growth in the UK.
Sunak’s general economic approach has been based on attracting private sector investment to stimulate growth. During his time in Government, Sunak has rolled out freeports to provide low tax areas for companies to develop products in the UK and introduced the super-deduction, which offered significant tax incentives for companies making capital investments.
He was, however, the first Chancellor in 47 years to increase corporation tax, which is due to increase from 19 per cent to 25 per cent from 2023.
Truss has also stuck a pro-business stake in the ground, directly criticising the tax rises she associates with her rival, Sunak. She plans to “liberate” the UK’s freeports to maximise the opportunities available for a post-Brexit Britain and will scrap the planned corporation tax “to show that Britain remains open for business”.
It is vital business takes the opportunity to engage with a new, pro-business Prime Minister and Government by clearly defining their proposition. Government will look to business as a partner – to not only help deliver on priorities but also provide them with the solutions to the key challenges of the day.
In the same way David Cameron and George Osborne’s Northern Powerhouse project became ‘levelling-up’ under Johnson, we are likely to see Rishi Sunak and Liz Truss morph the policy which has so far defined this Government in order to make it their own.
Backers of Truss accuse Sunak of being defined by ‘Treasury orthodoxy’. His approach is likely to ensure the Government is promoting regional growth by partnering with private finance rather than deploying Government funds.
Truss, however, is likely to pursue levelling-up through the targeting of Government contracts, providing institutional support to regional firms and more devolution.
As both candidates continue to align with the policy, so should businesses. While we can expect that the policy will be packaged up differently, if businesses engage with levelling-up in a meaningful way there remains the opportunity to improve their business environment by positioning themselves as a potential partner to Government. The opportunity will also remain for businesses to build brand capital, where they are undertaking purpose-led action outside of London and the South-East.
This centrepiece policy will remain after Johnson departs Downing Street. Businesses should respond accordingly by showcasing their impact outside of London and the South-East. Doing so will help to build relationships with the new Government.
As Tory members have made clear, net zero is not a policy area which they prioritise, and accordingly, so far at least, both candidates have spent a limited amount of time of the campaign discussing their approach.
As Chancellor, Sunak outlined plans to make the UK the ‘world’s first net-zero financial centre’ and more recently introduced a ‘windfall tax’ on fossil fuel giants. Sunak has committed to banning further onshore wind farms and has outlined plans to introduce a legal mandate and policy framework so the UK can be “energy independent” by 2045, as well as plans for new energy efficiency schemes for housing.
Describing herself as a “teenage eco-warrior” in the BBC’s debate earlier this week, during her time as Environment Secretary, Truss introduced controversial cuts to subsidies for solar farms, and her overall approach to net zero is tentative. She emphasised the need to find ways to achieve net zero while protecting households and businesses, including placing a temporary freeze on the green energy levy – comments which drew a rebuke from US Climate Envoy John Kerry.
With both candidates failing to show enthusiasm for the policy area, and as fears mount that the next Government may row back on climate change commitments, businesses have an opportunity to demonstrate real leadership in this area. This issue isn’t going away, and businesses should consider their wider reputation among clients, customers, employees and media. Businesses who effectively communicate their climate commitments will be able to leverage it to position themselves as a leading voice in the debate, helping to define the conversation, and more importantly directing what the Government should be prioritising.
Both Sunak and Truss will be very conscious that they’re effectively on countdown to the next general election and will have to deliver economic growth and job creation quickly. Ahead of that, the winning candidate will also have the not inconsiderable task of rebuilding trust with both the public and the business community. Businesses who can show that tax and investment policies are driving real value, will be vital partners as the next Prime Minister seeks to break away from the past and recover any trust lost amongst voters.