So will it be a good day at the office?

As Tony Blair takes power, we look at the sectors most likely to be affected by Labour's business policies
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The Independent Online
In common with the rest of the nation, the business and financial communities will have to take the new government on trust, as little is known about specific policies. So, which sectors are most likely to be influenced by new industrial, economic and regulatory policies?

The utilities

The windfall tax on "excess profits" of the privatised utilities is one of Labour's clearest commitments. Estimates of its size, based on comments by party officials, range from pounds 3bn to pounds 10bn.

At its broadest the tax could be levied on the electricity and water distributors, power generators, BT, BAA, Railtrack and former British Gas's two offspring, Centrica and BG. At its narrowest it will cover water and electricity utilities and the power generators.

Credit Lyonnais Laing has estimated that if the tax is pounds 5bn and it is levied on the basis of returns above the market average, United Utilities, a water and electricity utility, would pay pounds 380m, National Power pounds 721m, and BAA pounds 409m. BT and the gas companies would pay nothing.

Labour probably won't make significant changes to the regulatory regime beyond supporting a growing consensus that gas and electricity regulation should be merged.

Telecommunications

Labour reached an "understanding" with BT and the UK's cable companies last year for schools, colleges, libraries, hospitals and Citizens Advice Bureaux to be linked to the Internet. BT agreed to invest pounds 15bn to lay fibre optic high-capacity links to people's homes from its backbone network and provide free connections to schools and colleges with flat-rate call charges. In return, BT wants a government ban prohibiting it from running entertainment services over its network to be lifted.

Labour will extend the role of the telecommunications regulator, Oftel, to cover all delivery mechanisms for electronic information. The new regulator will be called Ofcom.

Defence

Labour has promised a review of the armed forces which industry executives fear will delay contracts in process, and fuel uncertainty. The most important change may be in Labour's more pro-European stance, which could smooth the way for a regional defence policy and cross-border mergers.

Labour favours defence co-ordination through the Western European Union, a body now administering a key armoured vehicle procurement in Germany and France that Vickers and GKN are bidding for.

Leisure

Labour's victory may prompt some anxious moments for casino companies, which had been on course for deregulation. The UK recently boosted the number of slot machines per casino to six from three, extended drinking hours until 2am and cut the waiting period for new members to 24 hours from 48 hours.

Still up in the air are proposals to boost the number of slots to three per gaming table, allow gamblers to use debit cards, ease advertising restrictions and extend the list of areas permitted to have casinos. Companies are optimistic Labour will enact the changes, which they claim are the key to lifting the casino industry out of a long slump.

The National Lottery will also face changes. Labour has pledged to seek a non-profit operator when Camelot reaches the end of its contract in November 2001. It will also set up a pounds 1bn fund from lottery proceeds to pay for additional health and education programmes.

Beer

The new trade secretary has to decide on Bass's proposed takeover of the Carlsberg-Tetley brewing venture. If approved, the takeover would make Bass the UK's largest brewer, giving it a market share of 35 per cent. Reducing capacity in the brewing business would help brewers raise prices. Analysts had expected the Tories to require Bass to sell about 1,000 pubs and pare its market share. The job losses the takeover would entail, however, may make it politically unpalatable for Labour.

The sector will also be affected by the introduction of the minimum wage. That could put a squeeze on pub and restaurant companies. Labour has said it will adopt a "sensibly set" national minimum wage as part of its agreement to sign the EU's social chapter. Analysts say a minimum wage would be about pounds 4 per hour.

Transport

Having once used the harshest rhetoric to condemn the break-up of British Rail, Labour now accepts a private network. The party's election manifesto pledges only one change: a new rail authority to ensure through-ticketing on a system divided among 25 operators. Analysts say it could help companies work together to maximise profits.

One Tory policy that won't advance is plans for a privatisation of London Underground's 14 inter-crossing lines. Labour is unlikely to crowd an already busy agenda with a plan that's raised much controversy.

Labour must grapple with the proposed alliance between British Airways and American Airlines. Conditions in lieu of a reference to the Monopolies and Mergers Commission have to be agreed. However, the government could refer the deal to the MMC to defuse opposition. That may strengthen its hand in negotiations with the US over a new 'open skies' agreement which the Clinton administration has made a condition of clearing the BA/American deal.

Retailing

Retailers are concerned that the new government will raise interest rates, cutting into consumers' discretionary income, and will introduce a minimum wage that would push up costs. A rise in rates would have an impact on credit sales, with furniture and carpet retailers hit hard, according to Robert Clark, director of consultants Corporate Intelligence on Retailing.

Retailers could be hit by the introduction of a minimum wage. Retail workers are among the lowest paid in industry, and increased wages would increase costs. The current average retail wage is about pounds 3.50 an hour. Smaller retailers, who do not have the financial clout to absorb higher costs, could be among the worst hit.

Financial services

Labour's victory could portend the biggest shake-up in how the City of London is regulated since the "Big Bang" of 1986.

Labour has pledged to combine the self-regulatory organisations of different industries into one super regulator with central control. The new regulator would be an enlarged version of the current Securities and Investments Board. It would include the Investment Management Regulatory Organisation, the Securities and Futures Authority and the Personal Investment Authority. Labour argues that one regulator will reduce bureaucracy and make it easier for investors to understand who is guarding the markets.

Aside from changes in regulation, the City is fearful that Labour will scrap the tax credit on dividends for institutions like pension funds.

Media

Although the Labour position on media ownership remains vague, the companies most restrained under the regulations hope for a level playing field. The Tories set audience share thresholds to limit cross-ownership of television, radio and newspapers on both the regional and the national level. In particular, newspaper companies with more than a 20 per cent national audience share can't buy terrestrial television franchises.

Labour said acquisitions among media companies should be addressed more on a case-by-case basis and judged against tests of the public interest. Yet change is unlikely to be top of the new government's agenda.

Construction

Labour is committed to honouring infrastructure contracts under the private finance initiative, while house builders should benefit from spending on social housing and from the release of capital receipts held by local authorities. Councils are not allowed to spend more than 25 per cent of capital receipts gained from property sales on investment in housing. Labour has said it will increase that to 100 per cent, although there is confusion about how much the existing receipts are worth and how quickly the funds can be disbursed.

Property

House prices are likely to continue to rise for the rest of this year, even though interest rates will probably go up. The Halifax estimates house prices will rise 7 per cent this year. Labour may introduce legislation that would make lenders prove they are giving borrowers the best advice. That could increase the paperwork involved in taking out a mortgage and slow down the process.

Industry

Labour's industrial policy is focused on encouraging investment in manufacturing and creating an educated workforce. Some old Labour-oriented industries figure they might be in for a blessing. RJB Mining believes Labour may be more keen to subsidise a clean coal power plant it is planning with Texaco and PowerGen.

Labour has pledged to look at the possibility of a tax on electricity that would support energy forms that are more environmentally friendly.

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