DURING his speech to the Liberal Democrats in Birmingham, business secretary Vince Cable warned that we are facing a crisis “the economic equivalent of war”. While that might be an overstatement, we can’t argue with the facts. Unemployment stands at 2.51m, inflation is at 4.5 per cent, and a Eurozone crisis threatens the confidence of our businesses. The British Chambers of Commerce’s latest forecast predicts that UK growth will remain positive, but weak at 1.1 per cent in 2011, and 2.1 per cent in 2012.
All the good things we want to see in society depend on business and wealth creation, but what comfort can owners of businesses across the country take from the actions of the business secretary and coalition government?
Firms want and need stability, and to see the government hold fast on the plans to reduce the deficit. Both are absolutely fundamental to business confidence and our growth prospects. The UK has the potential to recover and thrive, but that depends on creating the right conditions for businesses to grow. That means: reducing the regulation that businesses tell us deters them from creating new jobs; improving access to capital; forging ahead with reforms to our planning system so businesses can expand; and more support for existing and potential exporters.
The government has so far talked a good game on cutting red tape and improving businesses’ access to finance, but the reality is different for businesses. Too many firms tell us that for all the talk of change, and promises to encourage enterprise, there is little difference to be felt on the ground.
With this in mind, what concerns me most about Vince Cable’s speech is his lambasting of the banks, and his plans to tackle executive pay. We support the broad aims of ring-fencing banks’ operations, though there are concerns about how this could affect lending to business. So too, we believe that pay should be based on performance in every business.
But as businesses look to the government for stability and confidence, I can’t help but feel that Vince Cable, alongside all ministers, should be more focused on radical measures that will create wealth, growth and jobs. For example: following through on proposed changes to the planning system; reforming our employment tribunal system which is currently weighted in favour of the employee; reforming the national insurance holiday so it benefits employers wanting to take on staff; and moving infrastructure projects forward.
Politicians must remember that their performance is tied to that of business. For that reason, now is the time for them to focus on the core issues, rather than hobbyhorse projects.
We have to get the economy onto a more sustainable long-term footing, and it is business that will help us achieve that. Once the huff and puff of conference season is over, we will go back to business as usual. For government, that has to mean ensuring promises to encourage growth and stimulate enterprise translate into real changes for businesses on the ground.
John Longworth is the new director general of the British Chambers of Commerce.