As we await the delivery of the Chancellor’s Autumn Statement, the British Chambers of Commerce has set out its list of targeted measures to boost business growth in the UK. Following the downgrade of its growth forecasts for the next two years, the business organisation believes it is more important than ever for the government to pull out all the stops to enable British businesses to access new markets, invest and create jobs.
The BCC is calling for the following:
Measures to boost business and infrastructure investment
Incentivise businesses to commit to major capital investments. The government should introduce a new £1bn ‘when it’s gone, it’s gone’ capital allowance scheme for the financial years 2013/14 and 2014/15 for investment in capital. This would help bring forward large business investment projects, and benefit companies in investors' supply chains.
Incentivise private-sector investment in public infrastructure. Infrastructure is the lifeblood of British business, but it faces an alarming investment challenge over the next decade. Government must de-risk private investment in infrastructure by providing the certainty of returns that investors require.
Consider mechanisms to support infrastructure investment over the long-term. This could include establishing a government-backed Infrastructure Investment Bank or ‘Reverse Sovereign Wealth Fund’ that allows institutional investors to invest in projects indirectly and at a guaranteed rate of return.
Measures to promote business growth and exports
Although the Treasury has indicated that it will provide £70m in a new drive to support UK exports, we still believe there is more the government could do to promote growth through targeted export measures, such as:
Implementation of a ‘Growth Voucher’ scheme. The £100m scheme could give 20,000 businesses with clear growth plans up to £5,000 each to get support to negotiate the planning system, advice on accessing finance, or help growing their staff. Businesses applying for the scheme would need a demonstrable business growth plan.
Implementation of an ‘Export Voucher’ scheme. Together with Growth Vouchers, targeted Export Vouchers would build confidence and help kick-start the rebalancing of the UK economy. Export Vouchers would encourage businesses on the cusp of exporting, or looking to expand into new markets to seek out and access the support they need, from public or private-sector sources, with minimum bureaucracy.
Greater support for UK exporters in overseas markets. The BCC proposes the government invests a further £100m per annum in in-market support for UK exporters in 18 key global markets, linking businesses to new opportunities by adding in-country trade advisers, embedding them with British Chambers overseas, and implementing a quality accreditation scheme.
Measures to support construction and house building
In our initial submission to the Chancellor last month, the BCC called for a new fund to unblock stalled developments. Since then, the government has announced that it will provide £225m for this purpose, which was a welcome step in the right direction. Although addressing this shortfall is essential for growth, we are challenging the government to be more ambitious and increase the Homes and Communities Agency (HCA) target by a further 100,000 homes by 2015. Not only would this stimulate employment in the construction sector, but it would also benefit a wide range of UK-based firms and suppliers.
Paying for measures to promote growth
The BCC supports the government’s aim to reduce the fiscal deficit. Our proposed measures would have exchequer costs of approximately £3.8bn. The BCC believes that these measures must be paid for via cuts elsewhere in the government's spending plans - rather than through additional borrowing. The BCC's Autumn Statement submission lays out a number of options for offsetting a package of pro-growth measures, including:
Re-allocating any underspends from the Regional Growth Fund (prior rounds were underspent by £108m, for example)
Reform Employee National Insurance Contributions for people who stay in work beyond state pension age. The Institute for Fiscal Studies (IFS) has said this would raise £400m a year.
Reform child benefit. Rolling child benefit into the tax credits system, and from 2014, the Universal Credit, could save the government up to £2.4bn a year, according to the Social Market Foundation (SMF)
Means tested winter fuel allowances, which the SMF has calculated could save the government £1.7bn a year
Postpone up-rating of working-age tax credits and benefits, which would save the taxpayer around £2bn a year, according to the IFS.
Commenting, John Longworth, Director General of the BCC, said:
"The Chancellor's Autumn Statement must include tough decisions to prioritise growth, without adverse effects on the government's deficit reduction programme. We believe that resources need to be re-prioritised to support business growth, international commerce, and the building of houses and infrastructure here at home.
“Our message to the Chancellor is clear. Business will lead Britain's economic recovery, but needs targeted support and a confidence boost from government. Ministers must be bold and take some unpopular decisions, including a shift of resources from welfare spending towards crucial growth measures. It won’t be easy, but the interests of the nation must be put first so we can ensure a bright future for our children and grandchildren for years to come.
“Firms up and down the country have been looking for ways to grow, export to new markets, and take on more staff in the face of weak growth and continued problems in the eurozone. While recent GDP data will give many businesses a confidence boost, the government still has work to do to ensure that our economic recovery is sustainable over the long-term."