Cutting the jobs tax will help UK Plc
WHEN Grant Shapps was appointed Conservative party chairman last autumn, one of his first acts was to install a giant clock counting down to the 2015 general election. He wanted to focus party workers on the challenge ahead and now – with polling stations opening in just 18 months’ time – the man tasked with devising the Conservatives’ electoral strategy wants to focus the public’s minds on just one issue: the economy.
Or, as Shapps puts it, selling a vision of “capitalism for everybody”.
“What we are trying to do is make Britain into the best place in Europe to do business,” the MP for Welwyn Hatfield explains. “We should be the entrepreneurial capital of Europe. It should be the preferred place to come to do business.”
To this end the government will today introduce a bill to parliament – first announced in the Budget – to scrap the first £2,000 of employers’ national insurance contributions for every company. “450,000 small businesses will pay no jobs tax at all”, he says.
Some believe the reform to be fiddly and say that it makes the system more complex. Shapps disagrees. “The beauty of this change is its simplicity. It will apply to everybody. There is no need for a new layer of bureaucracy. It’s a very straightforward way to make sure people benefit.”
There are practical things the government is changing to boost competitiveness, Shapps says, but it also wants to shift attitudes. The cuts to corporation tax and the employers’ national insurance tax break fall into the first category, and there will now be a renewed push to introduce supply-side reforms.
“The Prime Minister is also leading the charge on a new growth and enterprise committee. He has taken the issue under his personal control as a single cabinet committee led and chaired by him, holding feet to fire.”
As to attitudinal changes, Shapps points to Royal Mail’s hugely over-subscribed privatisation last week.
“It reminded people of the spirit of the share owning democracy. There must be tens of thousands of new shareholders who for the first time are experiencing people’s capitalism.”
“This is a revival of the idea that it’s a good thing to make profits, a good thing to own shares, a good thing to believe in the success of British business, that everybody can be a part of that. It’s a key element of making us the entrepreneurial capital of Europe.”
Some believe the shares were sold too cheaply; many larger investors are upset they were frozen out. Shapps insists it is “a good deal for the taxpayer.” “The first day of a share launch isn’t the best time to judge whether it was the right price. Royal Mail has lots of challenges ahead of it as it focuses on internet delivery. That requires lots of investment.”
As to distribution, “we wanted to get these shares in as many hands as possible. We made sure lots of small investors got their hands on the shares.”
Shapps even sets out his desire to take Germany’s position as Europe’s powerhouse: “We ought to aim also to be the strongest economy in Europe and the biggest over a period of time.”
Unlike many MPs, Shapps has experience of the business world and was just 22 when he set up a successful print and design business that he continues to own, employing 40 people. But he fears that the generation that followed him lacked the same enthusiasm for branching out on their own.
“[Starting a company] felt completely natural to me at the time as we lived in an entrepreneurial country,” he explains. “If you wanted to get on in life, one way was to set up your own business; it was the most natural thing going. What disturbs me is that to some extent, during the Labour years, that choice wouldn’t have felt as natural.”
But Ed Miliband is attempting a fightback, pitching himself as a friend of the small firm facing down the large corporation with pledges to freeze business rates and energy bills. How do the Tories convince entrepreneurs they offer the best solution?
“If you are paying over the odds, and consumer groups say most people are, then shop around,” Shapps argues, “the way to make this work is to have a properly competitive energy market.”
Even though SEE Energy (and many analysts) blamed last week’s price hike by the firm on green policies, Shapps’ answer is consumer power: “Many people will wonder whether they want to remain with a company that has just stuck an eight per cent rise on”, he says. He also tears into Labour: “Miliband’s warnings might be tempting companies to act preemptively.”
And with the battle lines drawn for the election, Shapps says Miliband must stop pretending that higher wages and better quality jobs can be provided without first tackling economic growth.
“The successful privatisation of Royal Mail will help remind the public of the link between success of British business and the number of people employed in good jobs,” he insists. “These are not just two sides of the same coin, they are the same side of the same coin.”
CV GRANT SHAPPS
BORN: Watford, 1968
1989: Graduates from Manchester Polytechnic with an HND qualification in business and finance.
1990: Founds PrintHouse Corporation, a successful printing firm that is based on Park Royal industrial estate in Ealing.
2000: Founds internet marketing firm HowToCorp and uses alias “Michael Green”.
2005: Elected as MP for Welwyn Hatfield.
2010: Becomes housing minister.
2012: Promoted to cabinet as minister without portfolio and Tory chairman.
Allister Heath, James Waterson