By Marcus Leach
In his first Annual Dinner speech as Director General of the Institute of Directors (IoD), Simon Walker will tonight (Thursday) call on the Government to continue down the politically difficult but economically correct path towards recovery.
Simon Walker will argue that over recent decades politicians have become cavalier about the UK’s competitiveness. He will point out that while many in government have realised that times have changed, others are continuing the indulgent policies of a past age of affluence.
The speech coincides with a new survey of over 1,000 IoD members, which reveals that 46% have found that the burden of employment law has resulted in them making a decision not to expand their workforce at some point.
In his speech tonight, Simon Walker will say:
“Before the crisis, we had 15 straight years of economic growth. We lived in an age of affluence, but our leaders frittered it away. No-one in government thought to calculate the total of the new burdens put on business.
“By 2007, according to the World Economic Forum, there were 81 countries that had less burdensome regulations, and 80 countries with tax systems that did less damage to incentives to work and invest. This wasn’t even second division performance.
“It’s up to us as business leaders to create a more sustainable prosperity. What we all need is for government to help create a world-class business environment in the UK. It’s not just about reducing government spending to a more sustainable level and removing damaging tax rates. It’s also about expanding free schools, so that in the longer term we can benefit from better educated young people. It’s about making the right choices on energy policy, so we can keep the lights on in a cleaner, cheaper way. And it’s about freeing up blockages in the planning system so that we can build more houses and build the better infrastructure that we need.
“It’s a tough, uncertain and risky world out there, but together we can make the UK once again one of the best places in the world to do business.”
The IoD’s Autumn Statement report, also published today, sets out 10 compelling reasons why the Government should stick to Plan A on the deficit. The key points from the report include:
- Many in government have realised that the age of affluence is long gone, but in other areas the indulgent policies are still with us.
- The UK is unique in having a binding target to reduce CO2 emissions by 50 per cent, relative to 1990s levels, by the mid 2020s. Policies to implement the CO2 target, together with the target to increase the uptake of renewable generation, are already having a major impact on energy prices and bills.
- The cap on skilled migrants from outside Europe, and the potential lowering of this cap, risks making it harder for businesses to find the right people.
- The Government’s revised public sector pension offer to the unions, made earlier this month, was a major mistake.
- The IoD strongly supports the Spending Review and deficit reduction plan. There are 10 compelling reasons why the Chancellor must stick with Plan A and avoid any thoughts of a Plan B. The case against a traditional Keynesian stimulus is very strong.
- A smaller state will raise the long-term potential growth rate of the economy. This is why the IoD is calling for a fiscal target to reduce the size of the state to 35 per cent of GDP by 2020.
- The Government should announce an intention to reduce the main rate of Corporation Tax to 15 per cent by 2020. A 15 per cent Corporation Tax rate would act like a magnet, boosting domestic business and attracting global capital into the UK.
- The current Income Tax system includes a crazy 62 per cent marginal rate as income rises above £100,000 — due to the manner in which the personal allowance is withdrawn. The allowance should be made available to everyone, eliminating this spike in the rate.
- The 50 per cent income tax rate marks out the UK as a high-tax country. It could be abolished at no cost to the Exchequer. Polling shows that if it were coupled with a modest increase in the personal allowance, opinion would be in favour of the whole package.
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