After a decade of instability, Labour swept into office with a mandate to rebuild trust, foster innovation, and kickstart growth. One year later, the story is one of cautious progress – but still few signs that genuine reform is underway.

In the run up to last year’s general election, Labour’s message to British businesses was crystal clear: trust us, we’ve changed. Its Partnership for Growth committed to giving businesses a “formal voice in economic policymaking,” and creating a “competitive national environment” for our leading sectors. Underpinning this vision was a five-point plan, which started with perhaps Labour’s most compelling selling point to British businesses: economic stability.

And while there’s broad support for Labour’s intentions, business leaders are still waiting to see those early positive signs translated into system-wide change.

Stability in an unstable environment

There’s no doubt that Labour has been dealt an incredibly difficult set of cards since it came to power. The combination of tariffs, geo-political conflict, and spiralling costs are a perfect storm for uncertainty and a lack of investment.

Fostering stability in an unstable environment is a tough task for any government, but in some areas the foundations are being laid – such as R&D tax reform – Labour has taken positive steps. In contrast to the rushed and reactive policymaking of recent years, the government has promised stability to the UK’s R&D tax relief scheme offering certainty after a period of near constant flux.

For businesses planning multi-year innovation projects, stability in R&D tax relief is essential. Predictable rules provide the confidence to invest, hire, and scale without fear of shifting goalposts – particularly when returns on R&D often take years to materialise.

Policy needs pace and co-ordination

Despite positive intentions, the government’s reluctance to move quickly – coupled with over-cautious fiscal constraints – is creating drag at precisely the moment acceleration is needed.

Labour has moved painfully slowly in turning its ambitions into action. Since taking office, many funding streams for innovation have been left in limbo. Without confirmation of budgets or timelines, businesses have faced months of uncertainty, making it difficult to plan or commit to long-term projects. For instance, the pause and then termination of the Industrial Energy Transformation Fund has hindered investments in ambitious decarbonisation measures. Only now, with the publication of the Spending Review and Industrial Strategy almost a year into Labour’s tenure, is some of that clarity beginning to emerge – but the delay has already forced many to pause or shelve critical investment decisions.

Reports suggesting a lack of co-ordination between government departments’ efforts to deliver Labour’s Industrial Strategy are also concerning. Like many of Labour’s plans, the Strategy is smart and sensible, prioritising high-growth sectors like life sciences and advanced manufacturing where the UK already has a competitive edge, to unlock growth.

Yet the government will only achieve this mission by ensuring consistent policy direction – not just across Whitehall departments, but also between national and regional governments. Local leaders are often best placed to understand the specific needs of their economies, and aligning efforts at every level will be key to ensuring the Strategy has a real and lasting impact.

Putting skills and education first

Growth doesn’t just need capital – it needs capability too. And that starts with making sure our workforce has the skills and facilities to deliver sector strategies.

The UK continues to lag behind its European peers on this front, where technical and vocational training are embedded into national growth strategies. We have a poor track record of scrapping schemes only to admire them abroad years later. The much-lauded German apprenticeship model, for example, was originally based on a system the UK itself once had – and abandoned.

At a time when businesses are struggling to find the skills they need to grow, the government must incentivise technical education and upskilling in areas that align with the Industrial Strategy’s priority sectors. Without this, the UK risks becoming a hub for IP development while the real-world execution – and the jobs that come with it – take place elsewhere in Europe.

Moving from rhetoric to real life impact

One year into Labour’s term, and the ambition is there. In certain areas like R&D tax relief, progress is tangible and demonstrates a welcome commitment to innovation. But if Labour wants to win the hearts and minds of the business community, the intention must now give way to implementation. Having spent 14 years in opposition, there was ample time to prepare for these responsibilities, and now is the moment to show that planning in action.

As we set out in our own Manifesto for Innovation, that means moving faster to deliver funding where it’s needed most, removing bureaucratic roadblocks, and coordinating more effectively across departments and regions. It also means recognising that innovation doesn’t just happen in policy papers – it happens in workshops and factories, supported by a skilled workforce.

Labour has a real opportunity to make the UK a productive, dynamic economy – but only if the Party can match its vision with timely, targeted action.

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