BCC to ministers: a positive start, but much more to do
The UK government has taken a number of positive steps to support British business in the first parliamentary session since the election – but there are some areas of serious concern that remain unaddressed, says the British Chambers of Commerce (BCC), one of the UK’s largest and most influential business groups.
As Parliament rises for the summer recess, the BCC has today published a review of the government’s progress in meeting business priorities during the 75 days since it was elected.
Before the General Election, the BCC published its ‘Business Manifesto’, setting out seven core areas where businesses wanted to see government action to help boost their growth and the UK economy as a whole.
The BCC has reviewed the government’s progress against each priority area for business – and while it has found a strong commitment to keeping Britain open for business, its review found that there is much more ministers must do to address Britain’s ailing infrastructure and its global trade position.
Commenting on the government’s first 75 days, John Longworth, Director General of the British Chambers of Commerce, said:
“There is no question that this government has a strong commitment to business growth. It has started to take a number of practical steps that businesses will welcome, such as stronger support for companies seeking to invest. However, to be remembered as the government that turbo-charged great growth it must do much more, particularly to boost exports, further improve access to finance and to ensure that the right infrastructure is in place.
“Ministers must maintain their momentum, and take more tough and radical decisions — including on airport capacity — over the coming weeks and months. They’ve made a positive start, but there’s much more to do to secure Britain’s growth and prosperity for the long term.”
Assessing progress against the seven priority areas for business, John Longworth said:
Develop the talents of our next generation: Good progress
“For business, there have been four key steps taken to develop the talents of the next generation. First, the newly announced National Infrastructure Plan for Skills, which is a very promising idea. A genuine long-term strategy and vision for skills would allow businesses to better plan and invest in their workforce, and would help to tackle persistent skills shortages.
“Second, is the important change that, from September, Ofsted will consider outcomes for pupils and the links between schools and businesses when making its assessments – something we have long called for.
“Third, is the government’s focus on apprenticeships over the course of this Parliament. Apprenticeships can be a great tool to help training and launch careers. But the focus should be on quality, not quantity. The emphasis ought to be on improving apprenticeships to make them more attractive to employers. We are also disappointed that businesses were not consulted on the move to fund these apprenticeships through a levy on larger firms. Government has to work with business if such initiatives are to be effective.
“Fourth, freeing up our universities to compete will make them stronger, and better at addressing some of the skills gaps businesses face.”
Support long-term business investment: Good progress
“It is great that the government has accepted our case for a permanent Annual Investment Allowance to give businesses the certainty to invest. We called for it to be higher than the £200,000 announced, but this is certainly a step in the right direction.
“More needs to be done to support and promote investment. The next step must be to get the British Business Bank — and the Prime Minister’s excellent Help to Grow scheme — in a position to support more and more growing companies. Access to finance, including non equity loan finance, must be a priority area for action for the whole of this parliament and beyond.”
Grow Britain’s global trade potential: Serious concerns
“It is widely accepted that the UK has to rebalance its economy away from a reliance on consumer spend and towards trading with the rest of the world. The government acknowledged as much when it set a target of securing exports worth £1 trillion by 2020. However, since setting that ambitious target, we have seen precious little progress toward meeting that crucial goal, with the gap still standing at nearly £400 billion.
“Until we see a radical shift in approach we will not see a change in our performance. The new Business Secretary is spearheading a drive to make boosting exports a key responsibility for all government departments, not just UKTI. And the new Minister for Trade and Investment is looking for radical ways to change and improve the system. Business will think we have the right ministers with real motivation to tackle the issues, but we need to see progress and quickly and the proof of the pudding is in the eating.”
Place business at the heart of local growth: Variable progress
“Businesses don’t support devolution for devolution’s sake. But they do welcome greater local decision-making if it means greater efficiency, greater accountability and better results. To help secure those better results, businesses have to be much more involved in devolution discussions, and feel that they are not simply part of a tick-box consultation exercise.
“Our proposal for a ratepayers’ vote on local economic development strategy would ensure that plans for an area’s future have the support and input of the whole business community. We also need to see evidence of local public sector procurement supporting local businesses.”
Drive down business costs and taxes: Variable progress
“The government has made some bold changes to the tax regime, such as the further reduction of corporation tax and the increased Employment Allowance, which are clearly pro-business commitments.
“However, there are other areas of business costs where we have heard encouraging statements but are yet to see to see any positive changes, for example, on the review of business rates and the commitment to cut £10bn of regulation red tape. In both areas there has, so far, been more rhetoric than action. Businesses will also want assurances that, in introducing the National Living Wage, measures will be in place to minimise the impact on smaller firms, for whom adjustment will be harder.”
Rebuild Britain’s business infrastructure: Serious concerns
“On infrastructure, the government has talked a good game, however businesses make judgements on actions, not warm words. Air, rail, digital and energy infrastructure, require big decisions and these have been sidestepped or delayed. Whether it be the lack of certainty in implementing the Airports Commission recommendations, paused railway upgrades, or completing the legal framework for HS2, business patience has run out.
“A world-class economy needs a world class infrastructure. At present, we have nothing of the sort. Britain currently lags behind other developed countries for the quality of its infrastructure, ranking only 27th in the World Economic Forum’s measure of infrastructure.
“To remove one possible excuse for inaction, the government should take investment that boosts economic growth out of the national debt target – like many of our key competitors – enabling it to maintain a credible commitment to sound public finances while increasing investment in infrastructure.”
Develop a new settlement for Britain in Europe: Variable progress
“The Prime Minister has set out some aspects of his reform and renegotiation agenda with the EU – but not with enough clarity. We would like to see much more focus on business concerns, such as regulatory burdens imposed by the EU, the completion and proper operation of the common market for services and goods respectively, cast-iron safeguards for non-eurozone countries on decision making/integration and a balanced approach to immigration.
“Events last week, when the UK was forced to support an emergency loan to Greece, demonstrate the need to do more to guarantee a firewall between the eurozone and other members of the EU. Businesses will want to see a strong and credible package of reforms that demonstrably protect the national interest.”