Lex Event: Business Wants More Focus on Growth
British business is expectant, but nervous. Although the stability provided by the Coalition and its five-year programme is reassuring, companies worry that, as Mark Field MP pointed out at last night’s Conservative Home discussion, many of the longer term problems with the UK economy have been parked while the Government puts all its energies into deficit reduction.
Business needs successful and stable governments of whatever colour or colours. But they also need to feel that there is a broader strategy for enterprise.
In a pre-meeting poll of the audience, over half said that the Government did not have a credible strategy for growth. That may be a presentational problem. As Matt Hancock pointed out, it is difficult to explain growth while the focus is inevitably on cutting the deficit.
But business’ worries about growth are also about the substance. The Government (and the Conservatives in particular) rely on the economic bet paying off, but are almost entirely reliant on the private sector to achieve its goal. Yet the Government’s approach to the private sector isn’t entirely consistent.
These mixed signals are increasing nervousness. ‘Rebalancing the economy’ is a fine objective and the Government needs to be more supportive of manufacturing. but not at the expense of other successful sectors.
Financial services companies in the audience worried that banking regulation could end up as a bargaining chip in Coalition negotiations, which may lead to the UK gold plating already tough regulations coming out of Europe.
New immigration rules are frustrating global companies. Highly skilled individuals have to struggle with difficult and time consuming bureaucracy before they are allowed to locate to their UK offices. Many just give up.
And in response to external pressures the Government is in danger of developing sectoral blind spots. Aviation and retail, which could create thousands of jobs across the country, are sidelined because some worry that they fit uncomfortably with other agendas.
As all the speakers pointed out, many of the difficulties are within the parties, not between them. So on issues such as carbon targets and immigration, Vince Cable and George Osborne have supported the business case while ministers of both parties opposed them.
But maybe the problems for business are more fundamental than day to day policy squabbles within Government? For 30 years under both parties, the UK had governments which were largely in favour of enterprise, free and open markets, low taxation and liberalisation. The financial collapse caused all three parties to rethink as voters became more hostile to what they saw as the perils of the ‘unfettered’ market.
David Cameron has been wary of being seen to be ‘too close’ to big business, reflecting no doubt the polling evidence that the party is seen by swing voters as not for ‘people like me’. But have the Tories got the balance right between detoxifying the brand and creating the conditions for growth? As the deficit begins to come down and the economy starts to recover, the Government will need to re-build the case for economic growth based on free and open markets and will need a broad package of policy measures to underpin it.
Also see Mark Field MPs’ article on Conservative Home