BCC: Ed Miliband’s speech
Commenting on the speech by the Labour Party leader, the Rt Hon Ed Miliband MP, John Longworth, Director General of the British Chambers of Commerce (BCC) said:
“Ed Miliband is right to say that Britain should be in a ‘race to the top’. While it was refreshing to hear a leader speak about major economic issues, he did not set out a clear vision to move Britain’s economy from good to great. What’s more, his speech contained more sticks than carrots for business.
“The way to have a high wage, high value economy is to encourage business investment and to build an enterprise-friendly environment. While some of his proposals pass this test, many others do not. What’s more, he has made significant spending commitments, but it is not clear how the country will create the wealth required to pay for them.
“The number one priority for all political leaders must be wealth creation and economic growth. Everything else – including the NHS – depends on this. Britain won’t win a race to the top by slicing an ever-shrinking cake more thinly. Only growth can guarantee a secure future for generations to come.”
On business rates and corporation tax:
“We support a freeze on business rates, but Labour must realise that you can’t rob Peter to pay Paul.
“Business rates are an iniquitous tax and a drag on business – hitting companies of all sizes long before they make profits. Ed Miliband is right to look for ways to ease the business rates burden, as the BCC has urged the Treasury to do for years now.
“Yet we question why a freeze or cut in business rates for smaller firms should be offset by a delayed reduction in corporation tax. Mr Miliband’s proposals hit the investment potential of our crucial medium-sized companies, who are the backbone of the real economy. Labour’s plan will be paid for by any firm with profits of over £300,000 – not exactly ‘large’.
“To create an environment where companies can thrive, both business rates and corporation tax rates have to be contained, and the broken business rates system fundamentally reformed. The notion that you can offset cuts in one tax with changes to another doesn’t deal with the real problem – the fact that the business rates system is bust and in need of reform. Ultimately, companies of all sizes need to be clear on taxes and rates bills, so that they can generate jobs and wealth with certainty.”
“A massive increase in house-building is a much better way to boost the economy than flooding the market with cheap mortgage credit. Labour is right to focus its attention on delivering a radical increase in the number of houses built in this country, where chronic shortages are a real brake on prosperity and growth.
“However, Labour need to set out a convincing delivery plan – and may need to be even more ambitious. Building 200,000 houses a year will only get us back to where we were before the financial crisis. Streamlined planning powers, the creation of New Towns, and incentives for development will need to be used to the full.”
On energy prices:
“Price freezes will be attractive for consumers and small businesses, but we are concerned about the impact that Ed Miliband’s proposal would have on investment in Britain’s ramshackle energy infrastructure. Keeping the lights on and our businesses working is absolutely critical. Short-term price controls and green energy commitments could have a negative effect on Britain’s energy security.”
“Ed Miliband’s commitment to ‘strengthen the minimum wage’ will lead to uncertainty for many businesses, who will wonder what will happen to their wage bills if Labour form the next government.
“A high-wage economy requires investment first. You can’t raise wage rates in a low-investment, low-productivity environment, and win a race to the top.”