Government today released a new report setting out what action it is taking to tackle barriers to growth for UK business and invited firms to join a review for holding individual state departments to account.
Presented by Chancellor George Osborne and Business Minister Vince Cable today, The Path to Strong Sustainable and Balanced Growth report outlines the work government is carrying out around four key commitments:
• Providing the stability business needs to plan and invest;
• Making markets more dynamic by removing barriers to growth wherever possible;
• Focusing the Government’s own activities on providing the conditions for private sector growth and investment; and
• Ensuring that strong growth is fairly shared and sustainable in the long-term.
The pair are calling on businesses to contribute to the review – ‘an intensive programme of work’ – from which the criteria will be set for Action Plans which every government department will have to file to a Ministerial Ad hoc Group, chaired by Osborne and Cable, by the 2011 budget.
The action plans will be based on what contributions each department will make to removing structural barriers in planning, competition, trade and investment, regulation, access to finance and corporate governance as well as what action they will take to aid the areas that government has determined to be the most prespectively profitable for the UK. They include construction; retail; health and life sciences; professional and business services; manufacturing; and digital and creative industries.
One measure designed to aid growth, released alongside the growth report today, is corporate tax reforms including new Controlled Foreign Company (CFC) rules which should entail more intellectual property and tax remaining on British shores and a commitment to the introduction of a Patent Box which will see only 10 per cent corporate tax payable on profits from UK patents.
What’s more, UK companies will not be liable to pay corporate tax at home on money earned from foreign branches through an opt-in scheme which will commence next year.
Chancellor of the Exchequer, George Osborne, said: “Alongside the corporate tax reforms announced today, the growth review contributes to the Government’s drive to remove the barriers to growth and improve British competitiveness.
“We have been clear that growth will be driven by the private sector. By working closely with business and industry in this intensive programme of work, Government can make sure that Britain is open for business.”
Business Secretary Vince Cable added: “Growth is the primary focus of the Government, but this will not happen overnight. That’s why we’ve set out a long-term vision to create the right conditions for future economic prosperity.
“We cannot lay out plans for how the economy will grow – growth is delivered by the private sector. What we can do is provide the conditions to promote a new economic dynamism, harnessing our strengths, removing the barriers and putting the private sector first when it comes to decisions on tax, regulation and spending.
The growth paper and review has been welcomed by industry, with trade body EEF, the manuafcturers’ organisation applauding a joint approach between government and the private sector in tackling barriers to growth.
“Our economy doesn’t just need stronger growth, it needs a different type of it,” said EEF chief executive Terry Scuoler. “We need a new approach from government to deliver growth that will last and is driven by innovation, investment and exports. To achieve this, we need a government which acts and thinks differently as a partner with the private sector.
“Industry has shown over the last year that it can deliver this growth but rebalancing our economy is a massive challenge. It is vital that government now works closely with business to put together a plan to meet it.”
The Path to Strong Sustainable and Balanced Growth report, as well as further details of the corporate tax reforms, can be accessed at www.hm-treasury.gov.uk.
On December 6, the Department for Business Innovation & Skills is due to release a Manufacturing Framework which will identify individual areas where UK industry can prosper. As a former member of the now disbanded Ministerial Advisory Group for Manufacturing, Andrew Churchill, managing director of JJ Churchill Engineering, says that having been “nervous” at earlier stages of the framework’s formulation he is now “a lot more positive and really rather impressed.”
“There is an awful lot of detail to come, but I can now see the fundamentals in place for the first time,” he said. “Traditionally we haven’t had a view that extended beyond a Parliamentary term. If the economy is working beyond, as it is, then we need policy which matches it. The document is going to lengthen it for a period of ten years, which is a change — a gutsy one, at that. It’s not yet a strategy at this stage, but what’s really positive is that there’s an understanding that in business we expect our progress to be measured from a baseline, which now appears to be the case with Westminster.”
Manufacturers now need to step up and find their voices, he says, and help to shape policy. “We can’t whinge that we haven’t influenced policy or that Whitehall doesn’t ‘get’ us if, when the opportunity to influence comes around, we wait to be invited in,” he says. “We should be battering down their doors.”
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