Labour manifesto: Opposition maps out plans for ‘UK success story’ finance sector

Keir Starmer, Labour Party
Credit: Martin Suker / Shutterstock

Technology is on the Labour Party’s mind as it prepares for the UK electoral showdown in just under a month’s time, with the party’s manifesto outlining several finance, banking and fintech-related policies.

Under Rishi Sunak’s Conservative government, AI has been a keen area of focus regarding business and financial development. In the Conservative manifesto published earlier this week, the party stated that its funding for AI development would continue.

Keir Starmer, Labour Party Leader
Credit: Rupert Rivett, Shutterstock

AI is also on the agenda of Keir Starmer’s Labour Party, although the party seems to be approaching the technology with two mindsets. The opposition appears to share the Conservatives’ ambitions for AI as a growth driver, but is also wary of the tech’s potential implications.

“We will ensure our industrial strategy supports the development of the Artificial Intelligence (AI) sector, removing planning barriers to new data centres,” the manifesto explains.

To facilitate AI development, Labour pledges to create a National Data Library to bring together research programmes and deliver data-driven public services. It also aims to replace short funding cycles for research and development (R&D) with 10-year budgets.

“We will work with universities to support spinouts; and work with industry to ensure start-ups have the access to finance they need to grow,” the manifesto continues.

“We will also simplify the procurement process to support innovation and reduce micromanagement with a mission-driven approach.”

However, the party is concerned about AI’s possible impact on traditional industries and sectors. Given the party’s long-standing ties to the trade union movement, these concerns are not all that surprising.

In addition, the party has highlighted the phenomenon of deep fakes; AI generated images which can be used for impersonation, and have been noted as a rising challenge in the fraud prevention space.

At a glance, Labour’s plans for AI regulation to not focus on fraud, with the party instead aiming to ban “the creation of sexually explicit deepfakes” in its manifesto. 

However, its regulatory ambitions, should it be elected, will still be of great significance to finance, fintech, and payments stakeholders. The policy of creating a ‘Regulatory Innovation Office’, which would combine existing government functions, is particularly important.

“This office will help regulators update regulation, speed up approval timelines, and co-ordinate issues that span existing boundaries,” the party explains.

This has already earned some positive feedback from industry, with a Clearpay statement sent to Payment Expert reading: ““The scale of innovation in UK FinTech has long been one of its greatest strengths, and the industry’s rapid growth is testament to this. Millions of UK consumers and businesses use FinTechs every day to manage their money. 

“The continued success of UK FinTech will be dependent on the Government and regulators working together to support the industry’s growth – and deliver a regulatory landscape that can keep pace with innovation.”

Although the Conservatives want to promote AI as a growth driver, the government has also had safety on its mind. This can be seen in the creation of the AI Safety Institute, for example.

Labour’s plans go a step further than this, with the party hoping to enact “binding regulation on the handful of companies developing the most powerful AI models”. Although not explicitly stated, this legislation could go up against the Big Tech companies which have been playing a major role in AI acceleration.

From the outset, when it comes to approaching the finance industry and accompanying sectors, payments and fintech for example, the Labour and Conservative manifestos are broadly similar.

Both parties recognise the role that the financial services sector plays in Britain’s modern economy – with the industry generating over £170bn a year in GDP, according to the House of Commons Library, it is hard to ignore.

“Financial services are one of Britain’s greatest success stories,” Labour’s manifesto reads, a sentiment which has often been shared by its Conservative rivals. Open Banking and Open Finance, likewise, are supported by both parties, although some division has occurred regarding the government-backed Data Protection and Digital Innovation (DPDI) Bill.

One unique policy in Labour’s manifesto relates to retail banking. The party pledges to support the development of “new products, services and business models, such as banking hubs”. 

Rachel Reeves. Source: UK Parliament

The Post Office network would play a key role in this, although it is important to note that this policy is nothing new – Labour announced it several months ago, criticising the Conservatives at the same time for the shrinking of the UK retail banking sector over recent years.

Ahead of the 4 July vote, both sides are attempting to present themselves as the party of business. Labour’s Shadow Chancellor of the Exchequer, Rachel Reeves, stating that her party would be as such in a speech last month. 

Similarly, Sunak and Chancellor Jeremy Hunt have repeatedly stated that the Conservatives are the party of growth, finding inspiration in a 0.6% uptick in Britain’s GDP,  the country’s highest economic growth rate in three years.

Based on party manifestos, Payment Expert believes the sector can expect things to more or less remain the same should Labour claim victory next month, with the main difference being regulatory approaches to AI development – but again, both parties seem committed to the tech’s growth.