Government and business must work together to deliver growth

CBI President Sir Mike Rake will today argue that recent rhetoric suggesting that business is the enemy couldn’t be further from the truth, warning that only the private sector can deliver jobs, growth and rising living standards.

Calling on the Government and businesses to work together to deliver prosperity, Sir Mike will tell the CBI’s annual conference in London that the coalition deserves credit for sticking to its deficit reduction plan and cutting corporation tax. But Sir Mike will also highlight the other vital ingredients for growth: certainty on energy policy, world-class infrastructure, a highly-skilled workforce, and a reinvigorated relationship with a reformed Europe.

On energy Sir Mike will say that playing to public opinion will not address the complex problems that need to be resolved and is likely to have the opposite effect:

Politicians have a duty to help create an environment which attracts investment and encourages and rewards success. Business will then get on and do it.

The UK energy market is going through its biggest transformation since privatisation, and is doing so in order to keep the lights on and achieve our green objectives by 2050.

There’s no doubt that this transformation will be costly – but there are advantages. Progress at Hinkley Point is the latest welcome example of where investment facilitates security of energy supply and brings new jobs to the UK.

The obvious issue here is how to balance this long-term investment with the short-term pressures on household budgets.

People are, of course, concerned about rising prices; they feel, rightly or wrongly, that they’re being unfairly treated.

There are no easy answers here, but the public deserves better than politicians playing the blame game.

The public wants energy companies to explain why prices are going up, with greater transparency about operations and profits, more help on making bills easier to understand, switches easier to make, and energy use easier to manage.”

On infrastructure, Sir Mike will say the delivery of new projects needs to be speeded up:

Vision and implementation are the answers to many of the UK’s perennial challenges on transport: road, rail and air, and energy. A coordinated plan for making this happen is essential.

A lot has been achieved in the last year and firms are ready to invest. We’re encouraged by government announcements but on the ground, in some areas, the all-important delivery of new projects is just not yet happening.

Political indecision is commercially harmful – delivery has got to be ramped up. And quick wins, like cross-party manifesto commitments to accept the Davies Commission recommendations on aviation would lay the groundwork for future strategic decisions.

We cannot have every major infrastructure decision continuously re-debated at every turn – as we’re seeing with HS2. Undoubtedly, a better effort should be made to communicate the benefits of high speed rail, and this must be positioned within an overall, long-term strategy of what the country needs across all modes of transport.

Decisions have to be made, and once they have been made then we should stick to them.

On education and skills Sir Mike will say the UK needs a reformed skills system:

We know investing in people is the most effective way of distributing the benefits of growth more fairly. And across the country businesses are doing ever more with schools to help young people find their way in the world. Government can help too, by holding schools to account on the things that really matter – not just teaching to the test or league tables.

Our system is simply not providing the younger generation with the preparation they need to fill the jobs available and keep Britain competitive. Looking ahead to a future economy that will demand ever-higher levels of skill, it becomes alarming.

In the short term, where the right skills are not available at home, we need an immigration and visa system which says we’re open for business. Some of the factually incorrect, emotive debates around immigration are unhelpful and damaging.”

On Europe Sir Mike will say the UK must remain in a reformed EU:

The world around us continues to change rapidly; Britain must keep up. For UK businesses that is best achieved by remaining in the EU but arguing strongly for reform.

CBI-LogoFar from holding us back in the world, being in the EU is emphatically in the UK’s interests. A recent CBI survey showed that 78% of businesses, including 77% of SMEs, want to stay in a reformed EU.

There are costs to our membership – particularly in terms of the burden of some regulation which needs to be tackled. Yet businesses tell us that the advantages far outweigh the disadvantages. After all, a common market needs some common principles.

It is just unrealistic to think that there are alternative options available to us. There aren’t. Being one step removed like Norway, or two steps removed like Switzerland, would leave us marginalised; no MEPs, no votes, no influence over the rules we’d still need to follow in return for market access.

And just being in a customs union with the EU, like Turkey, would not give us the levels of access for our service exports which we need for our complex open economy.

The EU is far from perfect. And we need to use our influence to set in motion a reform agenda:

First, we need an EU which is: open, completing the Single Market; competitive, reducing unnecessary regulations; and outward-looking, focused on breaking down barriers around the globe that stand in the way of all European business.

We have to focus on delivering the principles of the Lisbon agenda, which, in 2000, laid out a roadmap for competitiveness which is still incomplete, rather than unpicking the detail of the Lisbon treaty.

Second, we need to get the EU to better respect the limits of its authority given to it by member states, and to ensure that it only legislates for those things at the European level which are essential.

On shared ambitions for growth and prosperity Sir Mike will say:

“'Aspiring to One Nation’; ‘Striving for a Stronger Economy and Fairer Society’; and ‘Help for Hard-working People’ – this is how each of the three main political parties describes their ambitions for the country. Business has the same ambitions.

We want the economy to grow and to keep growing, we want there to be investment, job creation and prosperity, we want the standard of living to rise, for youth unemployment to reduce dramatically, and we want strong economies in the regions and devolved nations with healthy backstreets and resilient high streets. These are in all of our interests.”

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