With the election campaign now in full swing, the familiar ideological battle lines are being drawn: the size of the state, the NHS, and, of course, Brexit.
The impact of Brexit uncertainty on enterprise has been discussed ad nauseam — but sadly, this hasn’t made it any less real. Numerous missed Brexit “deadlines” and ongoing political turmoil have toyed with business leaders’ time horizons, meaning delays to projects, cancelled product launches, and postponed investments.
With this in mind, it might be tempting to put all your eggs in the Brexit basket — whichever way you lean — and assume that once your desired result in this area is achieved, firms’ spending will simply bounce back again. But this is wishful thinking.
The UK has a lot of missed activity to catch up on, with business investment falling in every quarter last year, and the challenges that directors face do not begin and end with our departure from the EU. Without domestic action to upgrade our business environment, British companies risk falling behind the global curve whichever way we turn on Brexit.
So however they aim to resolve Brexit, the next government can and should come forward with a raft of measures to get Britain investing again, and start fixing our dismal record on productivity.
Certainly, the sizable pledges on infrastructure spending from both Labour and the Conservatives should help, and will be welcomed by many businesses. But the effects of these promised plans won’t percolate across the economy for years, and firms know better than to put absolute faith in government projects being completed on schedule. Businesses need incentives for the here and now.
So top of the wishlist from the Institute of Directors (IoD) in our first business manifesto paper, published today, is a new “Productivity Allowance” for SMEs. This would comprise a tax incentive allowing smaller firms to offset more of the costs of investing in technology, training, and advice, to kickstart business growth in the new year.
Right now, the tax system is far too byzantine for many of these time-poor businesses to navigate, and the tax breaks on offer aren’t attractive enough to push investment decisions over the line. A streamlined, signposted allowance would be a simple but effective step for any party to take.
If productivity is the biggest challenge facing the UK, our record on scaling up businesses isn’t far behind. While the number of startups we boast is testament to the country’s innovative potential, investors have remained cautious and founders frustrated by the barriers to growth.
To oil the gears, we should make reliefs like Enterprise Investment Schemes, which give investors a tax break for funding new and growing businesses, more generous, accessible, and simple for both sides of the equation — firms and investors.
Businesses’ domestic concerns aren’t restricted to sagging investment, however.
There’s our skills landscape, where the apprenticeship levy ties up firms’ money but often can’t be used on the type of training they want to offer to their staff.
There’s the business rates system, which just about everyone agrees is outdated, and which places a heavy burden on small firms.
There’s our regional business support architecture, which leaves companies in many areas feeling left out in the cold.
We need to put businesses back on the front foot, so they can do what they do best: create, develop, and innovate. Our reputation as a place to do business remains strong, but this strength will dissipate if we rest on our laurels, and for too long our eye has been taken off the ball.
The Brexit impasse may have brought about this election, but that doesn’t mean it should engulf it.
Main image credit: Getty