Business chief sets out roadmap to growth

The head of the UK’s largest business organisation fears Rishi Sunak's government is avoiding the necessary, radical measures to "transform" the nation's flagging economy because of a general election looming in the next 12 months.

CBI director general Tony Danker

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In a far-reaching speech at the University College London on Monday, Tony Danker, director-general of the Confederation of British Industry (CBI), set out his vision for a "roadmap" required immediately to boost the economy. He warned the nation risked being left behind on green growth amid mounting global opposition and reiterated criticism of the government for failing to relax visa restrictions to enable increased immigration, which would help solve a chronic skills shortage.
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More proactive measures to deliver growth

Although he praised Mr Sunak for stabilising the economy after the financial disasters caused by the autumn 'mini budget' of Liz Truss's short-lived government, he said the current regime now needed to be much more proactive to encourage economic growth.Mr Danker said there existed a “denial of where our economy is right now compared to our international competitors” and said there were grave concerns that the government could “shy away from the hard decisions that can reverse the UK’s trajectory" because there was a general election on the horizon.He was particularly damning on policies over green growth, saying that "while our competitors across Europe, Asia and the US are making their move and going hell for leather", the UK seemed to be second-guessing itself and just hoping for the best. “We’re behind the Germans on heat pumps, insulation and building retrofits; the French on EV charging infrastructure; and the US on operational carbon capture and storage projects – despite the UK’s North Sea advantage. We’re lagging all three on hydrogen funding.“We are leaving huge amounts of money on the table here. In the last two years alone, the UK has lost market share in green tech, equivalent to the potential value of £4.3 billion by 2030."

'Fast and substantive labour market interventions' needed

On people and skills, Mr Danker said that "everyone in politics agrees, the UK’s labour market is struggling" with tens of thousands of older people leaving the workforce and with more than a million job vacancies currently existing.“While automation is increasing in some sectors, it’s harder to do in others," he added. "And the post-Brexit immigration system is very expensive for higher-skilled roles and doesn’t offer a solution at all for where some of the most acute shortages exist today.“I share the politicians’ ambition for a high-wage, high-skill economy. But it’s currently an empty promise. Because we aren’t paying anywhere close to what it takes for higher skills. And we’re not letting immigrants help do the lower-skilled, lower-wage jobs every economy has. There are high-wage, high-skill economies who’ve all made different choices to UK political parties. Serious and honest choices. I worry our politicians are just trying to change the conversation.“Economic migration to improve labour supply has been rejected by the government. If that remains their choice – and I disagree with it - then other labour market interventions must be fast and substantive to try to compensate for that choice.”

Changes to the tax regime in the spring budget

Mr Danker also said the Conservative Party should stop in-fighting over widespread cuts to personal taxes that some believed would boost the economy and, instead, concentrate on specific incentives in the spring Budget that could encourage investment and growth.He called for the corporation tax 'super-deduction' on business investment, which is due to expire at the end of March, to be replaced by a similar scheme. “With it, the UK had the fifth most competitive tax system in the OECD for capital investment. Without it, we’re back to 30th out of 38,” Mr Danker said.He proposed the government used the tax system in a “smarter way”, adding: "The spring Budget needs to be the moment to see a significant uplift to capital allowances, to at least 50 per cent, before moving to 100 per cent within three years by allowing full expensing for capital investment.“The government have said they believe in this policy but can’t afford it. That’s because they don’t want the hit to their annual accounts. I don’t think that’s good enough and nor do Britain’s investors."The Guardian newspaper commented: "The comments, while carefully worded and pitched by the CBI as a positive set of ideas rather than direct criticism, will nonetheless be widely seen as a rebuke to No 10 and the Treasury."

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