CBI chief warns of threat from ‘short-term’ politics game

The head of the CBI today warned that a “cumulative burden” on business, including a new apprenticeship levy and national living wage, risks costing jobs and hitting economic growth.

Carolyn Fairbairn said the government had imposed 'extra strains' on UK firms

Delivering her New Year message, Carolyn Fairbairn, the business lobby group’s director-general, pointed to the danger of “short-term” politics.

She highlighted a number of UK government policies which will affect firms during 2016, including the new £7.20-an-hour national living wage for adults from April.

“The government has placed a number of extra strains on UK businesses that are adding up – the national living wage, the apprenticeship levy, pension auto-enrolment,” noted Fairbairn, who replaced John Cridland earlier this year.

“Businesses want to reward their staff fairly but, as the burdens and costs accumulate, particularly in the retail sector, growth risks being cut off and jobs lost.”

The CBI leader, a former non-executive director of Lloyds Banking Group, said businesses struggled to invest when rules “repeatedly change”. She said the UK economy had performed well and 2016 started out with “an enviable inheritance and plenty of promise”.

Fairbairn highlighted a robust growth rate, low or no inflation and the highest rate of UK employment since records began in 1971.

“In the last year alone, British-based businesses created more than 400,000 jobs, despite heavy global headwinds and a rising pound,” she said.

“The government has held fast to challenging and much-needed deficit reduction plans. These are extraordinary achievements and a great springboard from which to start the new year.”

However, Fairbairn warned that the chances of a prosperous future could be undermined by the short-termism of politics.

A top priority was skills, but the CBI boss said the planned apprenticeship levy – 0.5 per cent on all firms with a payroll over £3 million – risked failure through poor design, while the UK’s “wrong-headed” visa policies were making skills shortages worse.

She said: “Urgent skills shortages exist across many industries. The government understands this challenge well and is seeking to address it through a new apprenticeship levy.

“Though the ambition is welcome, the scheme doesn’t yet have a clear delivery system and risks failure due to chasing blunt targets.”

On the UK’s future in Europe, she said the public deserved to hear informed arguments from both sides ahead of an expected referendum in 2016.

“We will provide clear evidence, share case studies from businesses of all size and sectors, host debate and discussion, evaluate reforms as they are achieved and faithfully report the views of our members,” added Fairbairn.