Starmer’s nuanced approach to jobs and immigration still needs details | Nils Pratley

IIt would be easy, based on the main soundbites of Keir Starmer’s speech at the CBI conference on Tuesday, to conclude that Labour, in a cynical vote-hunting strategy, has decided to copy the crowd-pleasing Tory lines on immigration and labor shortages. The UK needs to end its reliance on ‘immigration addiction’ and businesses need to ‘start investing more in training workers who are already here’, Starmer said, as if they embraced the popular sport of business bashing.

Dig a little into Labour’s emerging immigration discourse and policy and it was possible to glimpse something more adult and nuanced: a pragmatic stance that recognizes that some labor pressures are real, current migration rules are too rigid and the UK economy is being restrained as a result.

In the actual policy passage of the speech, Starmer said he wanted “a points-based system that benefits workers and businesses” — one that looks at skills shortages and immigration in the policy cycle. As CBI Chairman Brian McBride has pointed out, that is exactly what the business lobby group is calling for.

It would be hard, however, to say that Labor has hammered out the details of its new Australian thinking. The bargain, as Starmer put it, is that “any movement on our points-based system – whether through the skilled occupation route or the labor shortage route – will come with new conditions for business”. Companies must come up with “a clear plan for higher skills and more training, for better wages and conditions, for investing in new technologies”.

What does this mean in practice? How would supply – assistance to businesses to fill short-term labor shortages in return for longer-term investment in local labor – be controlled? Labour’s response is that a new body, Skills England, would assess gaps and make recommendations and “after a while sectors cannot expect migration support without action on skills”.

That, to say the least, is vague. What is the evaluation methodology? And does the expression “a certain period of time” mean months, a year or several years? Ultimately, smart post-Brexit immigration policy comes down to answering these practical questions. Starmer deserves credit for trying to move the debate forward; he may have upgraded his “unapologetically pro-corporate” credentials in the process. But the detail needs work.

Steals private equity?

A hint that the private equity boom might be reaching its peak came in September last year when Goldman Sachs created one of the strangest beasts to list on the London Stock Exchange.

Petershill Partners takes minority stakes in private equity managers (and a few hedge funds) and was Goldman’s internal vehicle for such activity. With the Wall Street firm’s asset management division retaining a 75% stake, outside investors have been invited to join the journey – or gain exposure to a diverse asset class, as usual.

This trip has not been profitable so far. Floated at 350p, the £2.1bn Petershill is now at 180p, a far cry from the net asset value published at the end of June of 349p. Tuesday’s trade update referred to “moderate” conditions for partner business performance income – the rewards of profitable sale of investments – and did not improve the mood.

Exhibit B is Bridgepoint – a true private equity firm, as opposed to one that takes stakes in such managers. It also floated at 350p in 2021 in what turned out to be splendid timing from the perspective of insiders taking a few pounds off the table. Current price: 209p.

Yes, changes in the broader investment climate explain the declines. Interest rates have gone up and most things related to private equity are down. But you can also say that an old rule has proven itself: if private equity sells, think twice before you buy.

The great ending begins

New in the UK government borrowing figures for October was an inflow of £800m to cover losses from the Bank of England’s quantitative easing programme. The Treasury has compensated the Bank for any shortfall in its 13-year adventure of buying government gilts to stimulate the economy. Now that the program is running, the counts have started.

It should be noted that the Treasury has received £120 billion over the years in the form of coupon (or interest) payments on purchased gilts. But the flow of cash in the other direction via quantitative tightening won’t be small either: expect £133 billion over six years, the Office for Budget Responsibility said last week. It’s a hard number to ignore.