Comment: The Budget must match rhetoric on growth with radical action
Businesses are not seeking handouts, but need the government to create the climate in which they can grow.
By David Frost
With the Budget only six days away, we wait in anticipation to see if George Osborne steps up and delivers a Budget for growth, with radical policies to support the growth of the private sector over the months and years to come. The British Chamber of Commerce (BCC) believes that the government’s rhetoric on growth to date has not been matched by the significant policy and cultural changes needed to deliver business confidence and growth. This Budget provides the government with a crucial opportunity to set out firm policies to support businesses across the UK.
Firstly, we need to make it easier for companies to recruit new staff as they are currently being strangled by red tape – with a raft of new employment laws set to kick in later this year. BCC research shows that businesses will be hit with a £22 billion bill over the next four years just to implement new employment laws. With unemployment increasing and the legislative burden on employers growing, Britain could find itself at risk of a jobless recovery. We want to see all new employment legislation delayed or scrapped and a moratorium on additional employment regulation introduced for the remainder of this parliament. Youth unemployment needs to be incentivised by suspending or lowering the youth and development rates of the national minimum wage, or by providing employers with a national insurance incentive to take on young people.
Businesses must be able to expand and extend their premises without falling foul of lengthy bureaucratic planning decisions. We welcome the government’s plans to create enterprise zones to encourage business growth in specific areas across the country, but they must focus on job creation. We believe regions such as the Midlands and the north where there are low levels of private sector growth and entrepreneurial activity should be targeted. Not only will these zones help reinvent the spirit of enterprise, but low planning and regulatory barriers, alongside well-targeted tax incentives or credits, will help boost growing firms and encourage inward investment.
With a recent BCC survey showing that more than two-thirds of companies are not exporting, next week’s Budget is a prime opportunity for the government to remove competitive disadvantages faced by British firms. Many firms say they do not export because they can’t break into new markets or access the trade finance they need. We believe that a stronger UK export credit agency and better trade promotion would be a step in the right direction to correcting these problems. Our exporters must have the same scale of overseas presence as our rivals.
If 2011 is to be a year for growth, the government must help companies to invest in people, premises and new ideas. Beyond lending targets, banks must be transparent with clear lending processes, and offer local, professional support to businesses. Smaller firms may miss out on the reduction of the headline rate of corporation tax. We believe that businesses should be able to carry forward unused reliefs, thereby helping them to make the choice to invest in new machinery and grow their operations.
The government’s rhetoric on growth has not yet been matched with real action to deliver a strong environment for the private sector to flourish. Businesses are not seeking handouts, but need the government to create the climate in which they can grow. That means less, not more, employment legislation, a greater focus on boosting British exports and keeping pressure on the banks to ensure that businesses can access finance when they need it. A Budget for growth will be judged by whether it boosts business confidence, encourages investment and rekindles the spirit of enterprise.
David Frost is the director general of the British Chambers of Commerce.
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