Give business a voice to get back to growth
The energy, ambition and innovative new ideas we need to turn Britain around is out there, it just needs to make itself heard, says Emma Revell
Last year I wrote – on these very pages – that “[o]ne of the biggest hurdles we face as a country is a fundamental misunderstanding between the people who make the money and the people who make the rules.”
I wrote those words before the general election had been called, back when Labour were bending over backwards to make friends in the City and big business was sufficiently fed up with successive Conservative governments that its members were persuaded to hear Keir Starmer out. Growth, we were told, was the primary mission and would underpin all policy decisions across the board.
It didn’t last.
Upon coming to power, Rachel Reeves pronounced herself shocked to discover a £22bn ‘black hole’ in the public finances – even though a large proportion of that supposed deficit was made up of public service pay rises that she herself signed off. She then spent the summer issuing so many alarming messages about the scale of tax hikes that might be needed that business confidence started to fall long before the hikes materialised.
At the Budget, in order to keep her promises not to raise tax on ‘working people’, Reeves decided to thump their employers instead – via National Insurance rises and inheritance tax and business relief reforms. All while other bits of the Government ploughed on with minimum wage rises and new employment rights that made employers even more reluctant to hire.
Since then, things haven’t improved.
Last week, the Institute of Chartered Accountants in England and Wales (ICAEW)’s Business Confidence Monitor fell for the quarter consecutive quarter, sitting at the level it last saw after Liz Truss’ mini budget. The Institute of Directors warned that businesses were finding “economic conditions increasingly challenging”. Their Directors’ Economic Confidence Index, which measures business leaders’ optimism about the prospects of the UK economy, fell 18 points in June.
Changing the narrative at Mansion House
Reeves will be desperately trying to regain control of the narrative this evening with her Mansion House speech. According to some media reports, she’s promising a Thatcher-style ‘Big Bang’ of business deregulation. But if the first year of this government has shown us anything, it is that the rhetoric rarely matches the reality.
Yes, if she announces a ‘Tell Sid’ style campaign to turn Britain into a national of shareholders or introduces a ‘concierge service’ to help international investors and businesses navigate the UK markets – both of which the Centre for Policy Studies, the think tank I work at, have called for – they would be very welcome. But Labour politicians invoking the spirit of Mrs T rarely have the determination or the foresight to implement the kind of radical reforms that actually drive us towards the growth the economy needs.
And yet I have hope that the energy and innovative thinking Britain is too often missing does in fact exist.
When I wrote that opening sentence last year, it was in a piece marking the launch of a new Thatcher Fellowship programme by the CPS. To celebrate our 50th anniversary, we started a scheme designed to help the brightest and keenest minds in the business world better understand and navigate the world of Westminster.
I was lucky enough to spend last weekend in Cambridge with the first cohort, some of whom applied after reading about the programme on these pages. The fellows come from a range of different backgrounds and industries. But they share both a frustration with the way politics and business interact, and a determination to change that.
Many of the barriers to economic growth come about because too many policymakers have never worked in, never mind run, a private business
Many of the barriers to economic growth come about because too many policymakers have never worked in, never mind run, a private business. They don’t understand the implications of the rules, regulations and taxes they vote into law. Meanwhile, the business leaders who do, don’t have the knowledge of how to make their voices heard – or, in many cases, the confidence to do it (especially if they have shareholders to answer to).
That is what our programme tries to equip our fellows with. It combines sessions on practical policymaking, hearing from business leaders who have successfully navigated the corridors of power, and deep dives into some of the most complex policy debates like immigration and housing.
What gave me most hope, and reminded me how critical it is that we succeed in finding a route back to growth, is that the cohort are on the kind of career paths which could easily lead them away from Britain.
Based mostly in London and the South-East, they’re on track to become high earners and significant net contributors to the public finances, yet they’re trying to establish careers and families against sky-high housing and childcare costs. The temptation to transfer to their organisation’s Singapore office or grow their start-up in Frankfurt must be strong – in fact, we heard how many young graduates being signed up by big London firms are already asking how quickly in their careers they can transfer to Asia or the Middle East, and slash their tax bills in the process.
But there’s also a strong desire, at least among those I speak to, to get Britain back in a position where things work and the economy grows.
Ideally, the Labour government will turn a corner and start implementing policies to help Britain grow, But even if not, a generation is emerging in business who can’t wait any longer.
Emma Revell is external affairs director for the Centre for Policy Studies
