Keir Starmer’s goal of turning Britain around with a surge in economic growth has suffered a major blow amid reports a £1 billion investment has been pulled because of a blunder by Angela Rayner.
On the eve of Sir Keir’s much-hyped investment summit – which he and chancellor Rachel Reeves have pinned their hopes of kickstarting a new era of growth – Dubai-based DP World has pulled out of a £1bn planned investment in its London Gateway container port.
It is understood that the major port and logistics firm has scrapped its investment in the key London shipping facility after Angela Rayner and transport secretary Louise Haigh were critical of the company when the deputy prime minister introduced her new workers rights package.
Senior ministers have privately admitted to The Independent that Starmer’s government “will stand and fall” on whether it creates economic growth.
One member of the cabinet emphasised: “It is growth or nothing. If we don’t deliver economic growth we are done.”
The prime minister and chancellor have made it clear that their hopes of investing in public services going forward is dependent on ending the stagnation in the British economy which has dogged it since the banking crisis in 2008. Issues like Brexit, the covid pandemic and then the war in Ukraine have also strangled any opportunity to create significant growth since.
But the mistake by Sir Keir’s deputy prime minister appears to have exacerbated a series of separate problems which have raised serious questions over whether they can deliver the growth needed.
The row comes less than 24 hours after serious warnings to Ms Reeves over the impact of raising capital gains tax to 39 per cent in her Budget on 30 October. Economists told her the plan to help plug a £25 billion black hole in Labour’s spending plans will endanger growth.
Meanwhile, attempts to plug another £22 billion black hole in current spending left by the last Tory government has seen other measures which put economic growth in peril including the cancelllation of a project at Edinburgh University which would have helped the UK lead the world in artificial intelligence.
The DP World announcement had been timed to be a centrepiece of Monday’s event, a crucial part of the government’s plans to demonstrate their credentials on economic growth.
But, after comments made by transport secretary Louise Haigh and deputy PM Angela Rayner about its subsidiary P&O Ferries, DP World is now reviewing its plans.
DP World chairman and chief executive Sultan Ahmed bin Sulayem is also no longer planning to attend the investment summit in a blow to Sir Keir, according to reports.
It comes days after Ms Haigh used an announcement about Labour’s workers’ rights legislation to highlight the plight of 800 British P&O Ferries staff who were sacked and replaced with cheaper, mostly foreign workers.
She described P&O as a “cowboy operator” and called for a boycott of the company.
She added: “The mass sacking by P&O Ferries was a national scandal which can never be allowed to happen again. These measures will make sure it doesn’t.
“Make no mistake – this is good for workers and good for business. Cowboy operators like P&O Ferries will no longer be able to act with impunity – undercutting good employers in the process.”
In the same press release, Ms Rayner said: “What we saw with P&O Ferries was an outrageous example of manipulation by an employer and exactly why we’re taking bold action to improve job security in the UK.”
DP World’s decision to pull its investment in the UK over the comments, first reported by Sky News, is a major embarrassment for the government as Labour seeks to portray itself as more able to drum up investment than the Conservatives.
P&O Ferries escaped criminal prosecution over the mass sacking in 2022 of 786 workers with no warning via a recorded video message.
P&O, which claimed it had to act quickly because it was losing £1m a day, brought in cheaper agency workers to replace the employees.
DP World declined to comment.