Business hopes for UK government action are at rock bottom

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The UK’s main growth industry at the moment appears to be government consultations and reviews that yield disappointing results.

The UK economy may have shrunk in April, with output falling across services, manufacturing and construction. But the business of churning out lengthy consultation papers or commissioning weighty, independent reports before largely ignoring the results has rarely been more buoyant.

That in turn supports a thriving network of lobby groups and in-house departments, reading, digesting and responding to the latest ambitious overhaul that will come to little, while wondering what it might mean for a business if the government were actually to see out the rhetoric this time.

It probably won’t. Only half the recommendations from a landmark review of England’s food system will be taken up after a change in “narrative” from Downing Street. It took four years, three reports and one consultation for the audit and corporate governance reform to be watered down and delayed. An energy strategy that held much promise was insipid on delivery. A much-discussed stronger internet regulator is AWOL, along with the tougher consumer protection and competition framework of which it formed part.

The 2017 Industrial Strategy, which was imperfect but valued by business, was killed, relaunched as a Plan for Growth, ignored and could now be relaunched again. A seven-year promise for a “radical” overhaul of business rates ended in minor changes, snubbing calls for fundamental reform and kicking the idea of an online sales tax into, yes, another consultation.

The various post-Brexit reviews around financial services are — genuinely — too numerous to mention and do at least seem to be generating some results. Whatever might happen on the back of Matthew Taylor’s independent review of the UK jobs market and modern employment practices remains a mystery five years after the fact. I could go on.

Of course, every diluted proposal and shelved reform has winners as well as losers: the food and drink sector may be cheering seeing off salt and sugar taxes. But, overall, the endless cycle of consultation and review, of launch and relaunch, reflects a lack of coherence and conviction around economic thinking and about business.

“There is a failure to create consistent strategies or the confidence that they will be followed through on,” says Giles Wilkes, at the Institute for Government, who is researching this issue. “That damages business incentives to invest at the microeconomic level, even as the macroeconomic picture deteriorates.”

The CBI is starting to sound desperate. Tony Danker, director-general of the business group, has issued a plea to focus on the economy, rather than throwing political red meat to parts of the Conservative backbenches. That includes stepping back from confrontation over the Northern Ireland protocol.

However, much of the CBI’s emergency to-do list to sustain business investment, which it argues is keeping the UK out of recession, is pretty modest. Rather than urging a change of tack, it largely amounts to pleading for the government to do things it has already indicated it will: cutting the approval time for wind farms from four years to one was in the energy strategy; a successor to the chancellor’s super-deduction on business investment has been promised this autumn; a replacement for the Covid-19 recovery loan scheme is reportedly well under way.

Not everything is that simple: the call to “get real” on labour shortages would involve rowing back on last October’s ill-advised comments that this is all part of the plan for a high-wage, high-skills economy (amid what looks set to be the tightest squeeze on living standards since the 1950s).

But the CBI is basically asking the government to make good on its own policies — perhaps even in the speedy and nimble manner we’ve been told should be a winning feature of our post-Brexit government. This is deliberate: behind the scenes, I’m told, the business community has been talking to departments about several dozen other changes that ostensibly have government support but seem stranded in policy limbo.

The question is how to break that political or logistical logjam. I can feel another review coming on.

[email protected]
@helentbiz



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