AN ASSESSMENT by the British Chambers of Commerce (BCC) of the new Tory government’s first 75 days in office has been published. Not surprisingly for a business lobby group, the judgment largely boils down to a fair bit done, much still to do. That’s the norm at the always ticklish corporate/political interface.
It is predictable that the BCC says it is convinced David Cameron’s Liberal Democrat-unshackled, pure Conservative administration has a clear commitment to business. It has always tended to be the Tory party’s natural heartland, just as Labour is trusted more on the health services and welfare.
Corporation tax is low, and set to go lower in this parliament, leading fellow business lobby group, the CBI, to say Christmas had come early in George Osborne’s recent Budget. The business world also welcomed the Chancellor’s sharp reduction in the banking levy over the coming years.
But there is no getting away from the fact that Osborne has a tightrope to walk in balancing conflicting areas of interest, and that business was shocked by a new statutory national living wage of a vertiginous £9 by the end of this parliament and an 8 per cent surcharge on business profits from next year. The BCC makes no bones that it thinks the government must do much more to promote growth before it can earn unalloyed plaudits from business.
This includes doing more to support exports – although the government is not master of its own destiny in this area, subject to exogenous factors such as demand from the eurozone for British products in its current travails.
Other areas the BCC has to be convinced about at this admittedly early stage are the new government’s efforts on improving business access to finance and the pace of infrastructure overhaul from road and rail to air travel, broadband excellence and energy policy.
Businesses have to transport staff and goods; are selling more and more online; and need a coherent energy policy to keep the factories running at decent costs.
Regarding the latter, another survey out yesterday claimed that about 50 per cent of small businesses do not understand their energy contracts, and 1.3 million businesses do not know how to terminate them.
All these issues will need more than 75 days to assess whether this government can deliver more than rhetoric. The BCC is not alone in the business world in being particularly pleased that in future Ofsted will consider the links between schools and businesses when making its assessments of schools.
It is also pleased about the annual investment allowance. But, on the negative side, the BCC says it still harbours serious concerns that Britain is not meeting its global trade potential.
The government wants to rebalance the economy away from consumer spending junkies living on tick to keep GDP ticking over to an economy based more broadly on exports. But we are still £400 billion short of meeting the government target for exports of £1 trillion by the end of this parliament.
That is a lot of ground to make up whatever export-friendly “initiatives” Whitehall comes up with. The BCC also makes clear red tape and business rates remain vexed issues (even though the latter is subject to a government review).
In short, the government has surprised on the upside in some ways, but business judgment will be reserved until further tangible progress is felt.