Did Theresa May’s “pro business” CBI speech do enough to reassure British companies?
Simon Walker, director general of the Institute of Directors, says Yes.
Businesses were feeling a bit unsure of how the Prime Minister viewed them after her speech to Conservative Party Conference last month, but she struck exactly the right tone yesterday, emphasising her support for entrepreneurs, innovators and free markets.
Mrs May has been keen to highlight a change in approach on industrial strategy compared to the previous administration, and this had led to fears of much greater state intervention. She has now put most of these fears to bed by stating explicitly that her policy isn’t about picking winners or propping up failing industries.
The technology sectors she has identified will welcome the extra research and development funding, but innovation can come from anywhere. At the Autumn Statement, we would also like to see the chancellor raise the Annual Investment Allowance from £200,000 to £1m, to encourage smaller companies from all sectors to invest in productivity-boosting new equipment and machinery.
David Green, director of Civitas, says No.
There was little in Mrs May’s speech for firms that are looking forward to the new opportunities that independence will bring.
There was silence about the most harmful of the government’s actions: job-destroying decarbonisation policies that make electricity 50 per cent more expensive than in Germany. This self-inflicted wound has already wiped out most of our aluminium industry and continues to endanger the steel sector.
The lack of “patient capital” was criticised but no immediate action promised. America’s Small Business Administration is one successful model and Germany’s KfW another, but instead of a decision, a review panel has been announced.
Many firms have cash reserves and could be induced to invest by scrapping capital allowances – so capital investment would be deductible from tax just like any other business expense. It’s the norm in enterprise zones, so why not extend it to the whole country?
The government got lucky when the pound fell in value in June, but now businesses need clear decisions to create the best conditions for enterprise.