While Boris Johnson has ridden the Olympic wave and made the front pages with his comical demeanour, which included getting stuck on a zip wire, Chancellor George Osborne has been caught with his trousers down in recent statements, becoming the Tory’s calamity kid with his granny and pasty taxes.
So will Gideon go from zero to hero? To avoid being clobbered by the mainstream media and overshadow and policies and fiscal changes he should start by avoiding embarrassing taxes and focus on the task in hand: fixing the economy.
So who wants what and what are the chances they will get it?
Juergen Maier, managing director of Siemens UK and Ireland Industry Sector, tweeted me earlier to say that he wanted to see “Growth measures rather than more cuts to balance debt, and more joining up between Treasury and BIS on Industrial Strategy.” (You can follow Juergen or I on @Juergen_Maier or @thomasmoore88)
The holy grail for many manufacturers, especially smaller companies, and which has long been avoided by governments, is capital allowances.
Manufacturers would benefit the most from a higher capital allowances scheme, which is supported by all the business groups, due to the large capital expenditure required for plants and machines.
It has rallied to incentivise businesses to commit to major capital investments, saying that the Government should introduce a new £1bn ‘when it’s gone, it’s gone’ capital allowance scheme for the financial years 2013/14 and 2014/15.
Although this would help bring forward large business investment projects, and benefit companies in investors’ supply chains by rewarding companies that invest with tax deductions on its profits, encouraging it to fund further growth, the sums required to make any impact are probably to big at a time when the Government is looking to make cuts and balance the books.
It has been passed up several times and Cable said that there isn’t an appetite for it. However, if the Government wants growth, this is the way to go. We should think more about how to make money to go into the purse in the long-term rather than how to spend, what, quite frankly, the country doesn’t have.
Appearing before the Public Accounts Committee, PoliticsHome reported that Lord Heseltine doesn’t think the Government is being effective in its push for growth.
“The government strategy was very heavily orientated towards the Treasury and BIS, whereas in my analysis, there are many other potential players that would have to be involved if you were going to have a growth strategy that was coherent and comprehensive,” he said.
“Unless the Prime Minister has a determination to drive Whitehall in a particular direction, the forces of inertia are so deeply entrenched and so explicable that insufficient action will follow […] Take the 20 or so departments, how many of them would actually think that their department’s responsibility involves a growth agenda?”
Although the Treasury has indicated that it will provide £70m in a new drive to support UK exports, the British Chambers of Commerce believe the government could do more to promote growth through targeted export measures. It has recommended implementing a ‘Growth Voucher’ scheme to give businesses with clear growth plans up to £5,000 to get support to negotiate the planning system, advice on accessing finance, or help growing their staff.
It also supports re-allocating any underspends from the Regional Growth Fund with prior rounds underspent by £108m.
“Ministers must be bold and take some unpopular decisions, including a shift of resources from welfare spending towards crucial growth measures. It won’t be easy, but the interests of the nation must be put first,” said John Longworth, director general of the British Chambers of Commerce.
It has always struck me as odd that Europeans believe they have the right to all kinds of things, such as parents earning £40,000 each receiving child benefits. It is time to put the focus back on the individual and make this a government for business and the working.
On tax and investment, EEF has previously argued that the strongest signal government could send to would-be investors is a time-limited 100% first year capital allowance for two years.
EEF is chasing better access to finance and argues that “the focus of government policy should be on increasing competition.” It claims that multiple strands of action are needed, pinpointing a review on the feasibility of a bank or network of regional banks capitalised by the public sector as the way out of the recession.
The manufacturers’ organisation also recommends re-directing funding for apprenticeships from providers to employers by reductions in National Insurance Contributions (NICs).
The Confederation of British Industry (CBI) has called for an ‘Industrial Olympics’ of infrastructure projects, director-general John Cridland said that it should focus on three or four key infrastructure projects that would provide much-needed economic stimulus for the UK.
He identified the Thames Tideway “super sewer” tunnel in London, the Northern hub rail network and the Hinkley Point nuclear power station in Somerset as gold medals in the infrastructure race.
Mr Cridland argued that uptake of existing schemes, such as UK Export Finance, the Enterprise Finance Guarantee and the Regional Growth Fund, has been low and that businesses would be encouraged by a one-stop-shop.
The Federation of Small Businesses (FSB) sent a letter to the Chancellor stating that the tax system required greater simplicity, which would increase compliance and deregulation on a major scale.
Thinking along the same lines as EEF, the FSB advocates a wider NICs holiday for small firms. Its economic modelling work with Centre for Economics and Business Research shows this has the potential to create 45,000 new jobs and add £1.3bn to GDP.
George Osborne, wear your snow boots, the weather metaphors for the economic headwinds after the storm of the recession will continue to blow strong from north, south, east and west.
Fingers will be crossed everywhere that the rays of sunshine shooting through the London Eye onto the House of Commons continue from 12.30 pm.
