It’s growth, stupid
Civitas, 8 April 2011
Yesterday I was fortunate enough to attend the British Chambers of Commerce annual conference. It provided an opportunity to hear the views of the business community and what the Government is doing to stimulate and facilitate economic growth. It also provided an opportunity to hear from the opposition, courtesy of Ed Miliband MP, about Labour’s proposals for economic growth.
Over the course of the day, in six hours of discussion, a variety of different issues affecting Britain’s business community were raised. It was interesting to compare the concerns voiced by businesses and the responses of the politicians. Fittingly, as the event was held in London’s Church House, in the vast majority of areas the two groups seemed to be singing from the same hymn sheet. David Frost CBE Director General of the BCC mentioned the difficulties facing businesses, especially smaller firms, as a result of onerous regulation, cue Vince Cable who dedicated his thirty minute speech to the need to ‘attack massive regulation’. Ken McMeikan, Chief Executive of Greggs raised the issue of Britain’s byzantine planning system, cue Eric Pickles who outlined how the system would be reformed to favour developers rather than obstructionist local authorities, and planning applications would (under normal circumstances) take no longer than a year to process. The issue of finance and credit access was raised and George Osborne argued that the Government had attempted to address such concerns by increasing the tax relief on investments made through the Enterprise Investment Scheme, and Ed Miliband argued that the banks needed to refocus on relationship banking. Elizabeth Fothergill, Chief Executive of Pennine Healthcare raised the issue of skills and apprenticeships, heard loud and clear by George Osborne who reiterated the Government’s decision to increase spending on apprenticeships.
All this would appear positive for Britain’s businesses, and it would be harsh to suggest that the politicians, even supposedly ‘Red’ Ed was just telling their audience what it wanted to hear. There does seem real intent, across the political spectrum, to put business concerns at the heart of Government policy. It could perhaps be argued that such a wedding of business and political interests is one of convenience; without strong growth Britain’s chances of emerging from the current economic quagmire are slim. However, whatever the impulse, the concern for business does seem genuine.
Yet, as many of the business people present clearly recognised, good intentions are one thing, real change is always more difficult to produce. It is perhaps indicative of this that the two issues which kept cropping up were planning regulations and Britain’s skill and education base. In different ways both emphasise the great difficulties which face the current Government in really improving the long-term prospects for British businesses. In terms of planning, aside from the fact that regulation seems to grow hydra-like despite any attempt to hack away at it, the government’s localism agenda may tie its hands regarding the reform of the system. The BCC clearly envisions a conflict in this area and made it clear in its conference publication ‘2011: a year for growth’ where it feared that the ‘tenets of localism could take power from small council planners and give it to a small minority, effectively creating a NIMBY charter’. Eric Pickles did not dispel this fear, and rather fudged his answer to a question on the subject. Some in the business community are clearly not convinced that the Government will achieve real progress in this area. Lord Wolfson, Chief Executive of Next, who made an entertaining and thought-provoking speech, replied with just ‘no’ when asked if he believed the Government would make good on its promise to restrict the planning application process to under a year.
Whereas regulatory issues require, in many cases, the Government to remove impediments for businesses, in terms of Britain’s skill base the Government needs to do more. George Osborne recognised the problem when he stated that while he can reduce taxes with a signing of his pen, solving Britain’s education inadequacies is far more complex. Apprenticeships were a hot topic, and an interesting suggestion by Elizabeth Fothergill to devolve apprenticeship funding decisions to local chambers of commerce and fund apprenticeships through direct grants to businesses, indicates that the current system is not responsive enough to the real needs of companies. However, a more important issue is the fact that not enough sixteen and eighteen year-olds emerge from education with the right skills for an apprenticeship. Britain has slipped from 17th, 24th and 14th respectively, for reading, maths and science in 2006 to 25th, 28th and 16th in 2010 according to the OECD, and this is just indicative of a greater long-term decline. One delegate pointed out that apprentices are often twenty to twenty four years of age or older, retraining rather than initially training for a career as a younger person would. Increasing the supply and quality of apprenticeship schemes is important, but will achieve little lasting impact if the deeper dysfunctions of Britain’s education system are not dealt with.
A lot of food for thought, the Government has correctly identified that businesses in the UK are the key to the country’s prosperity. The evidence though is that previous British Governments did not strike the right balance between action and inaction, let’s hope the (relatively) new one can.