Not since Edward Heath in the 1970s has a Conservative Prime Minister’s approach to business so dismayed the great and the good of the private sector – clearly, the anti-capitalist elements within the Liberal Democrats, led by business secretary Vince Cable, hold huge sway over the coalition, while the intellectual framework put in place by Labour remains the dominant influence on policy-makers. The government and the faces at the top have changed – but on a broad range of issues, the policies haven’t. They are all about heaping costs and restraints on private firms, with no understanding that making it more risky or expensive to take on staff will cut the demand for labour.
Lambert’s list is a good reflection of the feedback I’ve been getting at my own meetings with executives. There is the immigration cap, still a source of concern for companies; the extra uncertainty thrown into planning applications by new local rules; what Lambert describes as the “poorly-handled introduction of the new Local Enterprise Partnerships”; the abolition of the default retirement age which will trigger an explosion of litigation when staff cease to perform due to old-age. The CBI chief’s list of failings is embarrassingly long: the carbon reduction commitment, akin to “an additional tax running to more than £1bn”; a rabidly anti-airport aviation policy; the incompetently-drafted anti-bribery legislation, which threatens to criminalise innocuous activity while handing excessive powers to the courts. Then there is the mortgage market review, which will make mortgages harder to obtain – in Lambert’s mind, at the worst possible time.
It’s not all bad: corporation tax will fall over the next few years. But it makes no sense to do this for companies and not for individuals. As Lambert points out, the take-home pay of a UK executive now ranks way below that of someone receiving similar compensation in just about all competitor jurisdictions.
What is most depressing is that Lambert’s list is incomplete. The City is under massive attack. There has been a large increase in the EU’s reach. Other business leaders and entrepreneurs I speak to are angry about the increase in paternity leave, other unintended consequences of the equality bill, the latest looming hike in national insurance, last year’s increase in capital gains tax and the quietly increasing top tax rate (it will reach 52 per cent from April, including national insurance). Virtually all these business people back the planned spending cuts, most support market incentives in higher education and the NHS, as well as welfare reform. But when it comes to business policies, the lack of support and downright hostility for the coalition’s agenda is astonishing. David Cameron must urgently start listening to Britain’s wealth-creators – and reconnect with those producing the growth and jobs he so desperately needs.
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