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Keir Starmer’s goal of turning Britain around with a surge in economic growth has suffered a major blow after a £1bn investment was pulled because of a ministerial blunder.
On the eve of Sir Keir’s much-hyped investment summit – which he and chancellor Rachel Reeves have pinned their hopes on kickstarting a new era of growth – Dubai-based DP World has pulled out of a £1bn planned investment in its London Gateway container port.
The major port and logistics firm has scrapped its investment in the key London shipping facility after deputy prime minister Angela Rayner and transport secretary Louise Haigh were critical of the company when the deputy prime minister introduced her new workers’ rights package.
In particular, it is understood that DP World objected to Ms Haigh calling them a “cowboy operator” and using an interview with ITV to threaten a boycott of the company.
However, as a blame game erupted, it is being claimed that Downing Street signed off the offending press release, while friends of Ms Haigh have pointed out that almost every member of the cabinet has attacked P&O over the last two years for firing and rehiring 800 employees. The issue became a major cause in the trade union drive to bring in new workers’ rights and protections which were announced this week.
There have been suggestions that Downing Street might be trying to “scapegoat” Ms Haigh to save Ms Rayner and distract from its own mistakes.
But the decision by DP World is a major setback for Labour’s growth strategy which was already struggling to get off the ground.
Senior ministers privately admitted to The Independent that Sir Keir’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 their hopes of investing in public services are dependent on ending the stagnation in the British economy which has dogged the country since the banking crisis of 2008. Issues like Brexit, the Covid pandemic and then the war in Ukraine have also strangled any opportunity to create significant growth since.
However, the comments by Sir Keir’s transport secretary and deputy prime minister appear 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 £25bn black hole in Labour’s spending plans will endanger growth.
Meanwhile, attempts to plug the £22bn black hole in current spending left by the last Tory government saw other measures which put economic growth in peril, including the cancellation 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 its credentials for economic growth.
However, after the comments made by Ms Haigh and Ms 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.
The firm, which claimed it had to act quickly because it was losing £1m a day, brought in cheaper agency workers to replace the employees.
A government spokesperson said: “We welcome P&O Ferries’ commitment to comply with our new seafarer’s legislation. We continue to work closely with DP World, which has already delivered significant investment in the London Gateway and Southampton ports, to help deliver for the UK economy.
“Next week’s International Investment Summit will bring together hundreds of global firms to show Britain is open for business.”
DP World declined to comment.
