George Osborne spelled out Tory plans for economic recovery with manufacturing as a key component at EEF’s bi-annual dinner last night.
The Shadow Chancellor reiterated the Conservative’s three benchmarks for economic recovery at an industry dinner last night.
Building on his speech to business leaders on Tuesday, he focused on exports, growth, more business investment, full employment and a secure sovereign credit rating to help wean Britain off its culture of debt-addiction, reduce the budget deficit and improve prosperity in the regions.
The speech demonstrated the Tories conviction in a recovery based on business growth and trade, and Mr Osborne spoke of a more competitive corporation tax structure. But he failed to address the cash-centric tax instruments so important to the manufacturing business cycle, capital allowances and tax credits on R&D and investment.
The speech was made to nearly 500 industry leaders, business people, ministers and journalists at the bi-annual dinner hosted by EEF, the manufacturers’ organisation, in London.
The first recovery benchmark is to provide macro-economic stability by safeguarding the credit rating, achieved through a coherent plan to fix the UK’s record budget deficit of £175bn. He spoke of European countries with similar large deficits like Spain, Portugal and Poland rushing out deficit reduction plans, while the Government has not provided its own adequate plan, according to the Institute of Fiscal Studies. He claimed the Tories would produce such a plan in coordination with the Bank of England which would remain independent, but where “monetary and fiscal policy would go hand-in hand.”
A murmur of approval greeted the second benchmark, to create a more balanced economy. Mr Osborne spoke of the collapse in household savings and the dependence of the economy on debt. Recovery would come from, he said, higher exports, higher business investment, higher investment as a proportion of VAT, and growth no longer driven by public and private debt.
To achieve this he pledged to create the most competitive corporation tax environment in the G20. Headline corporation tax rates would be cut to 25%, while the small company rate would be capped at 20%. A simpler taxation system, he proposed, with a “one-in-one-out rule” – for every new tax rule brought out, another one would have to go.
He said employer’s National Insurance would be abolished for the first 10 employees in start-up companies. He said the Conservatives would help companies like Rolls-Royce to set up factories in the UK not just in Singapore and Germany, which would support their domestic supply chains.
Bridge the regions
The final benchmark was a commitment to bridge regional economic divides by “reaching out to employers in the Midlands, North West and North East, to create less regional bias in economic activity.” But he qualified this by saying manufacturing growth was required in all the regions. This would be helped by building Britain’s first north-south high speed railway network, connecting London to Leeds and to Scotland much more quickly. No mention was made of the cost of this infrastructure.
A “superfast” 100MB internet network would be installed nationwide, to keep the country in line with global competitors. Other measures included new regional academies to lift school standards in the regions and a “combined stick and carrot” approach to get many of the 2.3 million unemployed back to work. Details were not provided.
Osborne also proposed a green investment bank to provide a single source of finance for green companies and start-ups, and more support for the UK’s growing new nuclear industry.
More details of George Osborne’s Benchmarks for Britain can be found here:
A speech from explorer and uber-motivator Sir Ranulph Fiennes was a fitting way to end a dinner that celebrated private enterprise and surviving tough economic times. He captivated the audience with a stream of entertaining anecdotes of derring-do and perseverance, recounting 97-day trans-Antarctic marches and fighting off polar bears, in characteristic dead-pan style. While the theme of overcoming adversity was a given, he frequently brought up the lessons learned from his adventures, including the power of teamwork and to “be flexible most of the time, but remember that one option is to be inflexible some of the time.”
Sir Ranulph sensibly avoided talking about manufacturing but focused on his extraordinary achievements, signing off with a simple message to a sympathetic audience: “If you want to achieve something in life, don’t hesitate, focus and get on with it.”
Chairman of EEF Martin Temple CBE opened the gala evening with a short speech that focused on rebalancing the economy that emphasised that Britain cannot afford to return to “business as usual.” Manufacturing needs to get better at congratulating itself, he said, pointing to the work of the new agency Manufacturing Insight to help improve the sector’s public image.
Among other messages, he said restoring a stronger manufacturing base is not a zero sum game, where the UK needs both manufacturing and the financial sector to grow together and to better understand one another.