All three parties are failing UK business: Digby Jones lays out his policy challenge
NOW that all the nonsense of party conference season is over, as Westminster heads back to work and the rest of us continue to try and earn an honest living, what did we hear from the mouths of our political masters? Did any of the three main parties show the UK business community that they “get it”?
For it is only business that ultimately creates jobs and generates taxation. When business makes a profit, it can only do one of three things with it: reward the shareholders who took the risk by way of dividend or capital gain – and they’ll pay tax on it. Or, keep it in the business as retained profit – and then pay tax on it. Or employ more people and pay them (bonuses and all) – and they’ll pay tax on it.
That tax goes in part to pay good hard-working people in the public sector (the nurses, the teachers, the doctors, the prison officers, the policemen, the soldiers) and they’ll pay tax on it too. But if it wasn’t for the wealth that business generates, there would be no tax revenues in this country of ours. There would be no employment, no schools, no hospitals, no trains, no roads, no airports. I don’t think most trade unionists, environmentalists, educationalists, politicians and (dare I say it?) journalists get that fact and if they do, they treat it like an inconvenient truth, to be ignored as much as possible.
But here we are, in dire need of the private sector to come to the rescue of the UK economy, and the man who wishes to be the next Prime Minister spent his conference speech playing to the union gallery and the anti-business party activists, administering a kick in the teeth to the businesses of the country.
Of course, there are good and bad businesses, but then there are good and bad policemen, good and bad teachers, good and bad doctors – and good and bad politicians. So Ed Miliband chooses to wage war on business, describing a business ethic that 99 per cent of risk-taking business women and men across the land just would not recognise. People who put their houses, their reputations, their livelihoods on the line every day and employ people and create wealth that generates tax. Miliband will say he didn’t mean all the good ones; but he sets a mood music, a tone. He creates a feeling that smacking business is OK because they’re all at it.
Then there was dear old professorial Vince Cable. A business secretary who clearly holds his nose every time he has to mention wealth creation or discuss the profit motive. So there’s to be a mansion tax, is there? It may seem easy to identify those mansion-owners that wouldn’t miss a few million in tax as they buy yet another house in Kensington. But what do you do about the hard-working, mortgaged-to-the-hilt couple living in that different country called the south-east, commuting to the City every day (probably reading these words on the crowded train), working every hour and living in a house that would be caught by this tax but who could not in any way afford to pay it?
If it’s not the big houses he attacks, it’s the big banks. Those enormous generators of tax revenue for UK plc. “Smack a Banker” may be a favourite Lib Dem conference party game, but can Cable please tell me what he intends to do for jobs and tax when the banks have all left town?
Finally it was George Osborne’s turn. Well, at least he says he wants to give small business some support. But there were three big things he could have done at a stroke. No need to wait for a budget or a bad set of local election results. Do these and business stands a chance of doing its bit to help old Blighty:
First, abolish national insurance contributions for employers. This is a tax on jobs, pure and simple. No other tax in the country is levied when you have made no money at all, just employed someone. Plug the resulting revenue hole with an increase in corporation tax; at least let business pay its fair share out of money it earns, not just the jobs it creates.
Second, insist on an immediate shift in the UK government rules on procurement so that it is best value and not best price that matters. Take into account the retention of skilled labour in a local community, of building a competitive, productive base for future export and suddenly we’re buying our trains with our taxes from Derby not Dusseldorf.
Third, remove from income tax every recipient of the national minimum wage (which went up again on 1 October; not very helpful at a time of trying to get UK business to take on people at a cost it can afford). Hypothecate the tax raised from the 50 per cent payers to pay for it. That would stop the appeals to reduce the top rate (an honourable contribution to the low paid keeping more of their low income) and put more disposable income in the hands of (mainly) young people, who would then go out and spend it – and create another job down the road.
All three parties had the chance to get behind UK business; and by and large they blew it. But, chancellor, you could still stand out from the crowd. If you don’t take bolder steps, while you may not talk down business like the others, you show by your actions (or, rather, inactions) that you too believe wealth (and tax) just grows on trees.
Lord Digby Jones was director-general of the CBI from 2000-2006 and minister of state for UK trade and investment 2007-2008.