On November 7th, the day that the US election results dominated the front pages of every major newspaper, another milestone – the half-way point of Britain’s first fixed-term parliament – passed relatively unnoticed. Yet November 7th is a date that deserves our attention in the business community. It is the mid-term watershed for the Coalition government, and an important opportunity to evaluate the government’s progress on key issues of concern to companies across the land. So what has this government done well to date?
First and foremost, it has maintained the UK’s market credibility in the midst of a global economic storm through its commitment to deficit reduction. From the Prime Minister on down, the Cabinet has committed more time and attention to international trade, the key priority of the Chamber Network, than any Government preceding it. Ministers have also recognised the need to focus on improving our business infrastructure, even if it’s not happening anywhere near fast enough.
What’s more, the government is also delivering smaller measures that generate business confidence: reductions in the volume of regulation, reform of the employment tribunal system and changes to dismissal rules, simplification of health and safety and reduced inspections, and more. Ministers have however made a range of poor decisions. Here, I’m referring not to highly-visible but inconsequential U-turns on pasties, but to big and strategic issues that could damage the UK’s business competitiveness. The government has persevered doggedly in implementing some unfortunate policies, including a populist but damaging array of immigration restrictions that stop or put off companies that need specialist staff, a wrong-headed approach to aviation expansion, chaotic energy policies that hurt both business customers and investors, and the introduction of the eighth change to parental leave in a decade.
Finally there’s unfinished business. The government’s mid-term performance is characterised, above all, by what I’d call a capability-expectations gap. Businesses expect prompt action following announcements, on issues like access to finance, infrastructure, and reductions in regulation. Yet so often, that action is slow in coming – if it arrives at all. So my midterm message to ministers is this: if you make a promise, follow through before you even think about making another. Deliver key infrastructure projects, deliver a Business Bank, and cancel poorly-thought-out regulatory proposals that actually just add more red tape. Business will only derive confidence from your actions when we see real things happening on the ground. Everything else is just hot air.
