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CBI: Some policies deserve '3 cheers', but others far wide of mark – Response to Labour Manifesto
The business response to the Labour manifesto
Carolyn Fairbairn, CBI Director-General, said:
“Labour’s proposals taken as a whole prioritise state intervention over enterprise, and fail to offer the pro-growth and competitiveness agenda the country so badly needs.
“While employers will welcome new commitments on skills and infrastructure, living standards will only rise if open markets remain the mainstay of the UK economy, rather than stifling new rules, regulations and burdens on firms.
“Some of the Labour policies deserve ‘three cheers’ and show what business and government can achieve together in partnership, for example on apprenticeships and innovation. Others, such as the future of the UK’s digital infrastructure, pose important questions yet need real collaboration with business to make them work. But too many - from renationalisation to new rules that potentially undermine the UK’s flexible labour market - are far wide of the mark.
“Business has been calling for the next government to place a joint public and private spending target on raising UK R&D expenditure to 3% of GDP, so Labour’s commitment to this will help the UK wrestle with the open-ended issue of low productivity.
“Evolving innovations, new technologies and developing expertise can help tackle many of today’s greatest challenges, while delivering more jobs and prosperity across the UK.
“Improving the UK’s infrastructure is absolutely crucial to driving productivity and prosperity right across the country. Following important progress on major projects such as Hinkley, HS2 and Heathrow, it is crucial that we maintain momentum and step up the pace in the next Parliament.
“Business welcomes the party’s focus on quality apprenticeships and on growing apprenticeships at higher levels, but a target may not necessarily be the right approach.
“Employers will welcome proposals that evolve the apprenticeship levy towards a more flexible skills levy – something the CBI has called for - that meets business needs by broadening the variety of high quality training accessible to young people and adults.
“With well over 600 billion euros worth of trade every year between the UK and EU, the economic case for making rapid progress in the negotiations is not in doubt. “Discussions around the new trading relationship should begin as soon as possible to deliver certainty and clarity for businesses on both sides.
“Business equally wants to secure agreement on the rights of EU citizens in the UK and vice-versa. Labour’s commitment to interim arrangements up-front should negotiations not be fully concluded within two years, is welcome.
On creating a future migration system that recognises business need
“The vast majority of people moving to the UK come to work, which benefits our economy through investment, job creation and taxes to fund our public services.
“The UK will rightly need an evidence-based migration system that allows businesses to access the skills and labour they need to succeed and the confidence to continue investing.
On market intervention
“Employers will be shocked at the proposed level of intervention in markets at a time when the UK must do all it can to be a great place to do business, create jobs and economic growth in the years ahead. The world is watching.
“Major interventions or structural changes to open markets could have unintended consequences, hitting investor confidence and dampening consumer willingness to shop around for the best deal, in the case of the energy market.
“British companies provide four in every five jobs in the UK and have created two million new jobs since 2012. UK-based firms paid £205 billion in tax last year, a quarter more than five years ago and enough to more than cover public spending on the NHS and education combined. Business is very much playing its part.
“A new surcharge for firms paying high salaries, a hike in corporation tax and reducing the threshold for the top rate of income tax will work against the UK’s ability to attract and retain talent or set the conditions for businesses to thrive and create jobs.
“Financial services are the glue of our economy, supporting investment and jobs around the UK. With unanswered questions from Brexit creating uncertainty for these firms, now is not the time to introduce a Robin Hood tax that has the potential to harm the UK's competitiveness.
“Increases in financial transactions tax could also ultimately reduce the benefits of savings for households and the returns on people’s pensions.
“Increasing insurance premium tax on private health insurance would increase pressure on the NHS by raising policy costs for employees and employers alike.
“Firms will welcome the manifesto’s commitments on reform to business rates – particularly exempting new investment in plant and machinery from future revaluations. The current business rates system is outdated and needs reform to enhance companies’ competitiveness.
On raising the minimum wage to £10 p/hour and banning zero hour contracts
“Businesses across the UK are committed to raising prosperity and the UK’s flexible labour market has helped in creating new jobs and keeping people in work over the last decade, compared to many other economies.
“Zero hours contracts are a small proportion of the UK labour market, with the most important aspect being that they benefit both the individual and their employer.
“While it is right that businesses should seek to raise pay as far as possible, to be sustainable, any increases must go hand-in-hand with increases in productivity. Such an increase in the minimum wage by 2020 will be tough for many hard-pressed businesses and likely affect job creation.
“That’s why the role of the Low Pay Commission is so important. Their independent, evidence-based assessment of the prevailing economic conditions means pay is set as high as possible without damaging employment prospects.
On public finances
“It’s vital that whoever forms the next government recognises just how important it is to balance the books over the next economic cycle and tackle the UK’s significant public debt, as investors look on during a period of uncertainty as Brexit talks get underway. The approach taken by the new government remains an important determinant of the UK’s future prosperity.
On digital infrastructure improvements
“Fast and reliable broadband is increasingly critical for business across the country, no matter what the sector, urban or rural. While Labour’s ideas pinpoint the right areas for action, the question of how we achieve this and who is responsible for delivering it will require close consultation with business.
“Solving the UK’s housing shortage is absolutely critical to businesses across the country. A step-change in the way business and the next Government think about, provide and deliver housing is necessary if we are to reach the levels of new homes that our country needs.”
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