By Claire West
The CBI today published the letter it has written to George Osborne, the Chancellor of the Exchequer, and Vince Cable, Secretary of State for Business, Innovation and Skills ahead of the publication of the Government’s growth white paper.
In it the business group sets out policy measures in four areas designed to promote growth, and specifically do so in a relatively short timeframe, because of the economic environment and the need for private-sector growth.
Mr Lambert writes in the letter that as well as support for the foundations of growth (macro-economic stability, the right regulatory climate, the right taxation regime, skills, labour market flexibility), other measures are needed.
“Beyond support for the foundations of growth, there is a need for a policy focus on those measures that can have the greatest impact on growth performance in a relatively short timeframe,” he writes.
The four policy areas where action is particularly needed are:
Vibrant and growing small and medium-sized enterprises (SMEs), especially in innovative sectors
Among other measures, the Government should extend the Enterprise Finance Guarantee, making sure it fits the needs of IP-intensive businesses where banks find it hard to extend loans in the absence of physical collateral. There should also be encouragement of more SME financing options, especially non-bank and equity financing. Business support services should be refocused.
Exports to rapidly-growing regions of the world
The Government should play a central role in helping businesses to export by providing information, contacts and financial/risk backing. In particular, the Export Credit Guarantee Department’s (ECGD’s) product range should be more accessible and suited to the financing needs of SME exporters. The Government, should also reduce constraints to trade: cumbersome customs procedures, ineffective IP legislation and protectionism in public procurement systems. The CBI supports the ministerial involvement in export promotion.
Exploiting pent-up demand for domestic projects (eg energy, waste and flood management)
To facilitate investment in these areas, decisions are needed in the regulatory and policy framework to reduce uncertainty and encourage investment. The Electricity Market Review must provide incentives that align policy and investment cycles, reforms of the planning system must be completed quickly, and clarity is needed quickly about measures to encourage private-sector investment.
Reform of public service delivery
There must be reforms that encourage competition to deliver public services, including transparency on costs and performance, and improvements in shared services, procurement and outsourcing. Barriers to outsourcing such as differential treatment of tax and pensions must be removed.