In the run-up to the general election George Osborne scored a big propaganda coup by enlisting the names of scores of business leaders in a letter criticising Gordon Brown’s planned rise in National Insurance.
(No matter that in Osborne’s subsequent Budget VAT went up by a similar amount to help plug the fiscal hole).
For Labour that stung; not least because some of the figures had sat at various times on its own advisory boards. David Miliband has since said, on several occasions, that he never wants Labour to enter a general election campaign with no business support.
Osborne’s first Budget included a welcome cut in corporation tax, from 28 per cent to 24 per cent over four years, although the business world simultaneously lost several capital allowances. As a result of this – and the general pro-business stance of the coalition – the 100 days annniversary was met with a broad thumbs-up from the major corporates. There is also widespread agreement with Osborne’s determination to tackle the deficit.
David Cameron has still failed to find a trade minister from the private sector, which is a striking setback. FT columnist Mark Kleinman revealed yesterday that Stephen Green (executive chairman of HSBC) is the latest executive approached for the job. It’s not clear whether Green is tempted or not. It would be easy to see Cameron’s failure to find anyone for the role as a snub; he’s been rejected so far by the likes of Sir Stuart Rose of M&S and Sir John Rose of Rolls-Royce (although not Axl Rose). In actual fact the vacuum may just reflect the fact that senior execs don’t want to give up their salaries and directorships to carry out an unpaid role.
Yet when you dig below the surface there are some serious concerns bubbling up where industry is seriously unhappy about some of the coalition’s policies. Here, as a reminder, are just four.
1] Regional Development Agencies
As I revealed in yesterday’s FT, business is getting increasing worried about the scrapping of the regional development agencies. Richard Lambert, director-general of the CBI, told me it was not an issue the group would “die in the ditch” for. But CBI members believe the new local enterprise partnerships could be flakey. As Lambert said:
Although the government says they are to be business led, it is not clear where the real power will lie and nor do we know how many LEPs there will be or how they will be funded. Some business leaders fear they will turn out to be no more than council-dominated talking shops with no sense of strategic priorities and little economic impact.”
2] Infrastructure Planning Commission
The IPC has been widely mocked for its slow progress. The Bristol-based quango is supposed to be “fast-tracking” scores of major energy, waste and transport projects which are otherwise at risk of death by nimby.
But as I recently wrote, the CBI and others are worried that the coalition’s decision to scrap it could delay things even more.
The commission is being replaced next year by a Major Infrastructure Unit, with ministers taking the final decision on big projects; but will they push through nuclear power stations and wind farms in marginal seats? This issue has the potential to alienate the energy industry, the waste industry and the property industry to name just three.
3] Immigration
Big business is concerned that the coalition’s plans for an immigration cap on non-EU residents which could make it harder to recruit skilled staff from outside the EU. Vince Cable is fighting their corner within Whitehall, as this FT article from Friday makes clear. But some executives are privately seething about what they see as an unnecessary restriction on their ability to recruit from far and wide.
4] Property industry
Personally I have a great deal of sympathy for Grant Shapps’ housing policy, which has involved the dismantling of “Stalinist” regional targets set under Labour. The sentiment of wanting communities to be more closely involved in building is an admirable one.
Yet the housebuilding industry is greatly concerned, however, by the tightening of the system – which has already let to tens of thousands of new homes being shelved since the general election. They want more certainty over the new system which will take its place.
And it’s not just developers who are sceptical. I revealed a few weeks ago that Eric Pickles has received a letter critical of his planning policy and signed by various industrial groups, transport bodies and even charities (WWF and Friends of the Earth).
Jim Pickard
Kiran Stacey