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

It would be easy, on the basis of the main soundbites from Keir Starmer’s speech to the CBI conference on Tuesday, to conclude that Labour, in a cynical vote-chasing strategy, has decided to copy Tory crowd-pleasing lines on immigration and labour shortages. The UK must end its reliance on “immigration dependency” and companies must “start investing more in training workers who are already here”, said Starmer, as if embracing the popular sport of bashing business.

Dig a little into the speech and Labour’s emerging policy on immigration and it was possible to glimpse something more grown-up and nuanced: a pragmatic position that recognises some labour pressures are genuine, the current migration rules are too inflexible and that the UK economy is being held back as a result.

In the actual policy passage of the speech, Starmer said he wants “a points-based system that delivers for workers and business” – one that looks at skills shortages and immigration in the strategic round. As the CBI president Brian McBride pointed out, that is exactly what the business lobby group has been calling for.

It would be hard, though, to say that Labour has hammered down the details of its new Australian-style thinking. The bargain, as Starmer presented it, is that “any movement on our points-based system – whether via the skilled occupation route or the worker shortage route – will come with new conditions for business”. Companies must offer “a clear plan for higher skills and more training, for better pay and conditions, for investment in new technology”.

What does that mean in practice? How would the offer – relief for business to fill short-term labour gaps in exchange for longer-term investment in the home-grown workforce – be policed? Labour’s answer is that a new body, Skills England, would assess gaps and make recommendations and “after a certain amount of time, sectors cannot expect support with migration without taking action on skills”.

That, to put it mildly, is vague. What is the assessment methodology? And does the phrase “a certain amount of time”, mean months, a year or many years? In the end, an intelligent post-Brexit immigration policy comes down to answers to such practical issues. Starmer deserves credit for trying to move the debate on; he may have enhanced his “unashamedly pro-business” credentials in the process. But the detail needs work.

Pique private equity?

A clue that the private equity boom might be peaking came in September last year when Goldman Sachs spun off one of the stranger beasts to list on the London stock market.

Petershill Partners takes minority stakes in private equity managers (and a few hedge funds) and was Goldman’s in-house vehicle for such activity. Since the Wall Street firm’s asset management division retains a 75% stake, outside investors were being invited to come along for the ride – or obtain exposure to a diversifying asset class, in the usual lingo.

It has not been a profitable trip so far. Floated at 350p, the £2.1bn Petershill is now 180p, a long way adrift of the end-June published net asset value of 349p. Tuesday’s trading update referenced “subdued” conditions for partners firms’ performance revenues – the rewards from selling investments profitably – and did not improve the mood.

Exhibit B is Bridgepoint – an actual private equity firm, as opposed to one that takes stakes in such managers. It, too, floated at 350p in 2021 in what turned out to be splendid timing from the point of view of insiders taking a few quid off the table. Price now: 209p.

Yes, changes in the wider investment climate explain the declines. Interest rates have risen and most things related to private equity are down. But one can also say that an old rule has proved its worth: if private equity is selling, think very carefully before buying.

The great unwinding begins

The novelty in the UK public borrowing figures for October was an £800m entry to cover losses from the Bank of England’s quantitative easing programme. The Treasury indemnified the Bank for any shortfalls on its 13-year adventure in buying government gilts to stimulate the economy. Now that the programme is being unwound, the reckoning has begun.

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