A group representing UK manufacturers has urged the Chancellor to include a clear message in the forthcoming Budget that the Government has a strategy to address barriers to business growth.
The EEF said the Government needs to come up with a growth mandate to match its fiscal mandate, spend-cutting mandate.
While fiscal retrenchment is important, the Government must show it is serious about promoting growth specific measures in four key areas: tax, regulation, access to finance and skills, the EEF argued.
Terry Scuoler, the EEF’s chief executive, said: “The fiscal mandate has reassured business about the stability of the public finances. Government must now send the same signal that it is serious about enhancing the competitiveness of our business environment by matching this with a robust growth mandate.
“This should demonstrate that all parts of government are working together to deliver the kind of growth our economy needs and, that it will focus on this task relentlessly over this Parliament.”
In practice, the EEF wants the Government to set out priority areas for growth that can be measured annually for their effectiveness.
Each Budget, the EEF continued, should report on the following measures: the change in total tax costs faced by businesses; estimates of the net change in bank and non-bank external finance; the change in total climate and environment policy costs faced by businesses; all new and withdrawn regulations, and the change in the total cost of all regulation; the change in the proportion of companies facing skills shortage and hard-to-fill vacancies; and the change in apprenticeship starts.
In addition, the EEF put forward a series of recommendations on tax and employment policies.
The R&D tax credit system should be reformed to take into account development costs; the capital allowances regime should be modernised so that it recognises the actual cost of re-investment; the burden of environmental taxes needs to be minimised; and the remit of the Office of Tax Simplification should be made more wide-ranging.
On business access to finance, the EFF argued the case for introducing independent monitoring of how banks stick to their lending principles; for increasing competition among banks; and for developing alternative sources of finance, such as non-bank debt and venture capital.
On improving skills, the EEF said that the future funding and demand for 14-19 diplomas must be reviewed with the aim of increasing support and improving delivery. Meanwhile, the Growth and Innovation Fund should implement a pilot scheme designed to support SME collaboration on industry placements.
Regulation is another area where the EEF would like action to be taken.
EU legislation should come under either a system of ‘one in, one out’ or regulatory budgets, and, since the scope for the simplification of individual regulations has largely been exhausted, the Government should pledge itself to a structural reform of the entire regulatory domain.
Mr Scuoler added: “Whilst our economy might have entered this year in reasonable health, sustaining this and generating the right type of growth will be challenging. Rebalancing our economy requires growth that is driven by innovation, investment and trade.
“Manufacturing can deliver this growth but firms can choose from a wide a range of locations and will only invest in the UK if we develop a business environment that can compete with the best in the world. The Budget and Growth Review must be the start of a Parliament-long project to put this in place.”
