Labour Taps HSBC, BlackRock for Policies on UK Housing, Energy

(Bloomberg) -- Banks and asset managers including HSBC Holdings Plc and BlackRock Inc. are helping finalize proposals for UK housing and energy policy that could form key planks of the Labour Party’s growth agenda if it wins next month’s general election.

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Ideas discussed Monday in a breakfast meeting between Labour’s shadow chancellor, Rachel Reeves, and executives who sit on the party’s British Infrastructure Council include investing in skills to retrofit thousands of homes with insulation, double glazing and other energy-saving measures as well as ways to make affordable housing viable for developers across the country, people familiar with the matter said.

With Labour leading national polls by a wide margin and just 17 days to go until election day, Reeves wants to enter the Treasury with detailed ideas that can be put to officials immediately for costings and viability, with the aim for getting several projects off the ground quickly, according to the people, who spoke on condition of anonymity about a private meeting.

“I am determined that a Labour government will hit the ground running to show that Britain is open for business and to begin to attract the investment we need to make working people better off,” Reeves said in a statement before the meeting.

Separately, Reeves told workers and reporters in Southampton on Monday that Labour would look at incentivizing local authorities to act quickly.

“Where a place hosts infrastructure they should get something back from that — whether it’s discounts on their energy bills or better local infrastructure,” she said. “We really have to focus on wealth creation and that means reforming the planning system so we can actually get stuff built again.”

The council was created by Labour in November to help form policy that could secure the buy-in of business while helping the party toward its key aim of stimulating growth. As well as HSBC and BlackRock, members include other banks and asset managers such as Lloyds Banking Group, Santander, Phoenix Group, CPP Investments and CDPQ. They are operating in an independent capacity, but several members acknowledged that it looked increasingly likely that Labour would be in power in a few weeks.

Key to the success of Labour’s ambitions for growth is whether it can attract private capital alongside public funds. Executives at the breakfast discussed ways in which the UK Infrastructure Bank and the British Business Bank, both taxpayer-owned, could be liable for the first loss on complex and long-running projects, while also earning a rate of return that would be seen to be good value for the public, one of the people said.

Private sector money is likely to mainly come from big UK banks through syndicated loans, insurers and pension funds, the people said. There would be only limited involvement in these sorts of projects from private equity because the rate of return may be too low, they said.

However, Labour has also engaged with private equity firms and acknowledged their role in growing the economy. Labour late on Sunday said it would hold a global investment summit in its first 100 days of government. A spokesman for Blackstone Inc., which played a major part in investment summits held by the current Conservative government, said: “As one of the largest investors in the UK, we really appreciate this strong focus on global investment to drive economic growth.”

Labour has pledged to target tax perks enjoyed by private equity, saying it will treat carried interest as income rather than as a capital gain — a policy that implies a higher tax rate, though the party has yet to provide full details.

One idea raised at Monday’s meeting was a potential new entity to make it easier for overseas investors to engage with the government. However a person familiar with the matter said Labour is not actively entertaining that idea. That’s despite foreign investors frequently complaining that dealing with multiple government departments is confusing, and pointing to other countries with a more streamlined system.

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