The UK's largest business lobby group has today (Wednesday) urged the government not to allow short-term politics triumph over the opportunity to create a more prosperous nation.
Outlining the CBI's top four priorities for the year ahead, director general Carolyn Fairbairn called for a long-term prosperity agenda, raising productivity; successful devolution and contributing to an informed debate on the UK’s membership of the European Union.
Highlighting the optimism heading into 2016, she said: “2016 starts out with an enviable inheritance and plenty of promise. The UK economy has delivered a 2.8% growth rate, almost no inflation and, best of all, the highest rate of employment since records began in 1971."
The top priority is raising building that 'long-term prosperity agenda'. Ms Fairbairn warned that despite the CBI backing the government's plans to create more apprenticeships, the new Apprenticeships Levy risks failure through poor design and that the UK's "wrong-headed visa policies" are exacerbating skills shortages.
“Business and government will need to collaborate closely to make it [Apprenticeships Levy] work for our young people and for firms – the CBI stands ready to do so. This will be particularly important for smaller scale-up firms, which have been such an important driver of UK growth and have a pressing need for skilled people," the CBI director general said.
Also key to the long-term nature of the CBI's priorities is improving infrastructure. Ms Fairbairn said: “We must take the big decisions on infrastructure, especially in aviation and energy, and get building roads, rail and more homes. Good business needs good infrastructure – yet the UK currently ranks 24th in the world, according to the World Economic Forum. We have fallen badly behind over many decades – we must catch up and then pull away. The Government’s recently postponed decision on aviation capacity in the South East was an abject failure of leadership. In 2016 the Government needs to demonstrate for real that ‘we are the builders’ – its creation of a National Infrastructure Commission is a good step forward, as is the encouraging progress on Crossrail.”
Ms Fairbairn also highlights the cumulutive burden on business of a number of recent government policies, including the National Living Wage:
"The government has placed a number of extra strains on UK businesses that are adding up - the National Living Wage, the Apprenticeship Levy, pension auto-enrolment. Businesses want to reward their staff fairly, but as the burdens and costs accumulate, particularly in the retail sector, growth risks being cut off and jobs list.
“Overall, UK policymakers need to deliver regulatory stability and predictability. Businesses struggle to invest when the rules repeatedly change – as we have seen in the energy sector where policy shifts have chilled investment."
The CBI highlights the best practice that exists in many parts of the UK economy, arguing that 2016 also needs to be the year when we get to grips with the UK’s chronically weak productivity performance, which is 30% lower than in the US and 28% lower than in Germany.
Ms Fairbairn said: “Many of the levers for productivity growth lie in the hands of businesses themselves. Best practice exists in many parts of the UK economy – in automotive, in creative industries, in advanced manufacturing, and in technology. One medium sized manufacturer I met a few weeks ago had quadrupled its productivity over the past three years through relentless benchmarking against a Chinese factory, involving every employee. But too many of our firms have low productivity and are not aware of global benchmarks. We can be slower to digitise and innovate than global peers.
“The Government also has a role to play in closing the productivity gap. The Chancellor and Business Secretary have together launched a Productivity Plan that focuses on the right issues, and spending on innovation, R&D and science was protected in the recent Spending Review. These are welcome steps."
“Devolution has released extraordinary energy and optimism across the UK. We are seeing its benefits in places like Greater Manchester, where the tramline to Trafford Park is in its final stages of planning just months after the devolution deal was agreed," the CBI director general, who recently became the organisation's first female boss, said.
“2016 must now be about using the new devolution settlements to unlock growth across the UK. Big budgets and big powers are being handed down. Local authorities need business voices at the table to help hammer out these proposals. Firms need to be active partners, providing clarity on issues from planning and procurement to transport and skills.
“It will be equally vital to avoid added complexity and chaos for business. Business doesn’t want – and can ill afford – fragmentation of tax and regulation. National frameworks are often there because they work, providing continuity and predictability for businesses across the UK’s single market."
Ms Fairbairn said: "Equally careful consideration is needed on the UK's relationship with Europe. It is looking increasingly like that 2016 will bring a referendum on this vital question.
"Though the 45 million people eligible to vote in this country will be considering a wide range of factors in their decision, the impact of the UK's relationship with the EU on jobs and growth is one of the most important. Only business can provide this perspective, and it must do so with evidence, clarity and a good dose of humility."