By Max Clarke
A prominent business organisation has written to the Chancellor of the Exchequer outlining their revised plan for the UK economy.
In a response to Shadow Chancellor Ed Balls’ 5-point plan for recovery, delivered yesterday (Monday) at the Labour Party Conference in Liverpool, the British Chambers of Commerce have formulated their own 5-point plan.
The Coalition have frequently stated that there is ‘no Plan B’ when it comes to their economic strategy- an angle that the Chambers support. They do, however, suggest amendments; calling instead for a ‘Plan A+’.
“We do not believe that there is a need for a Plan B,” wrote John Longworth, Director General of the British Chambers of Commerce. “The deficit reduction programme is vital to stabilising public finances, and so boosting business confidence.
“However, we urge the government to look to a Plan A+, which would see more growth-enhancing policies introduced in the Autumn Statement. It must also consider the potential of more radical measures within the spending envelope, should the situation worsen. The coalition has yet to display enough urgency on tackling those issues facing businesses. While the government has identified many of the right policies, they must be delivered as a matter of priority.”
The BCC’s own 5-point plan is as follows:
1. Immediate and real action on existing pledges to reduce regulation
Despite promises by ministers to roll back the burden of red tape, firms have yet to see a real difference on the ground. The Autumn Statement should include a comprehensive deregulation plan Business needs to see a clear and unequivocal list of major regulations that will be pared back or renegotiated in Brussels between now and the end of the current Parliament in 2015. In addition, the government must introduce a complete moratorium on new domestic regulation that would have a negative impact on growth and business confidence.
2. The Bank of England should instigate a further round of Quantitative Easing
The MPC should consider an additional £50bn of QE, provided that this additional funding is primarily used to purchase securitised SME loans, loans made for infrastructure projects, and other private assets. In addition, the imposition of negative interest rates on deposits held by commercial banks at the BoE could also help to boost credit availability.
3. Re-prioritisation within the existing spending envelope to promote investment and exports
The government should introduce a small number of pragmatic, pro-growth fiscal proposals that have the potential to trigger stronger business investment. These include extending the National Insurance Contributions holiday, providing additional trade finance support for SMEs, doubling the Annual Investment Allowance, and a commitment to restore the UKTI budget. These measures could be implemented at the time of the Autumn Statement or at the latest by Budget 2012.
4. If economic growth worsens, a major reprioritisation of spending will be necessary
If conditions have not improved significantly by Budget 2012, there may be a need for radical action. Dismantling the political ‘ring-fences’ around health and overseas aid spending may be necessary to ensure that the Government is delivering maximum support for growth and jobs. Subsequent measures should include: a 1p reduction in employer National Insurance Contributions; the abolition of the 50p income tax rate; extending the Enterprise Finance Guarantee; and enhanced capital and investment allowances to bring forward investment.
5. Additional accelerated infrastructure spending based on a National Infrastructure Plan.
The UK’s transport, energy and digital infrastructure is critical to business competitiveness. We support accelerated spending on infrastructure as part of a detailed National Infrastructure Plan. This would give private investors the confidence to create additional activity and jobs in this area.
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