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making the voice of business count

Dr Adam Marshall, director of policy and external affairs for the British Chambers of Commerce, looks at post election priorities

As Westminster politicos and hacks emerged bleary-eyed into daylight following the election count, the talk was of minority governments, coalitions, and political horse-trading. And during the week of negotiations that resulted in the new Tory-Lib Dem coalition, the parties’ talked of the ‘national interest’, though it seemed their own tribal interests were really front and centre.

Watching the results unfold, two questions stuck in my mind: what about business? Will the new coalition be able to recognise and deal with business concerns about prolonged uncertainty? As the example of Greece shows only too well, a protracted political crisis can have a direct and serious impact.

Britain, fortunately, is not in such a dire position as Greece. But markets at home and abroad are sensitive to politics these days – and as the BCC Quarterly Economic Survey has shown, our economic recovery remains fragile. The voters’ choice of a hung Parliament will have an impact on the markets and on our companies.

More than ever before, business needs a clear message – so that collectively, we can hold Britain’s new coalition Government to account for its actions over the coming weeks and months. It is our duty to remind Messrs Cameron and Clegg that there are two priorities that matter to this country’s economic future: cutting the deficit and creating an environment that lets businesses deliver jobs, profits, and tax revenues.

In many countries with a tradition of coalition government, plans to pare back public spending are one of the first victims of an inter-party pact. Given the UK’s unprecedented budget deficit and rocketing levels of debt, we in the business world must not allow this to happen. Business must be clear: there can be no back-room deals to protect large swathes of public spending, whether we’re talking about health, benefits, or the annual allocation to particular countries or regions.

This is no time to shirk from the tough decisions. The BCC wants a clear plan for public spending cuts within 90 days, with an immediate freeze in the public sector wage bill complemented by targeted cuts across Government beginning in 2011. The Coalition’s early priorities – an Emergency Budget in 50 days, with moves toward £6bn in spending cuts in 2010 and more from 2011 – seem to recognise this. Yet business must remain vigilant, to ensure that serious deficit-reduction measures are real rather than just the stuff of early headlines.

There’s another set of tough decisions that need to be taken alongside deficit reduction – decisions that result in a better environment for business growth. The biggest single statement that the Government could make to business early on is a complete and comprehensive roll-back of the 1% rise in employers’ National Insurance scheduled for next April. The BCC has proposed a VAT rise to replace the revenue – and continues to make the argument that a tax on jobs, rather than consumption or profits, cannot be good for economic recovery. The Coalition’s promise to implement Tory NI plans, which include a partial roll-back, are a step forward. But they are not enough. We need to secure a complete roll-back so that business can create jobs and re-start the economy.

There’s more the new coalition Government could do to help business. Speedy announcements to freeze new employment regulation, stabilise the planning system, and guarantees for vital infrastructure projects will give companies the confidence to drive growth and higher productivity.

It’s going to be an exciting, if unpredictable, summer. Britain has not seen a coalition in over sixty years. From my perspective, it’s the perfect time for businesses up and down the country to speak with one voice – and set the agenda for the politicians, rather than the other way round.

For more information visit:

www.britishchambers.org.uk