Richard Tunnicliffe, CBI East of England Director, writes:
Official data suggests around £900bn of pent-up corporate cash reserves is waiting to be invested as global economies reawaken from their Covid-enforced slumbers. This staggering wall of investment has the potential to change lives, communities, and whole economies – but it has to be won. It is not ours by right.
Indeed, the UK is not the only nation which is eyeing the prize. Competitors around the globe have already begun reforming industry and regulation, future-proofing their economies to capitalise upon new opportunities and ambitions in technology and sustainability.
British businesses – East of England businesses – are as capable as any of thriving in this post-pandemic world. They’re rich in expertise and ambition, capable of driving the growth in innovation, skills and decarbonisation which will shape levelling-up efforts in the years ahead. But they need Government to start the ball rolling.
That is why the CBI wants ministers to be bold in the upcoming Comprehensive Spending Review and Budget. We have urged Government to take a long-term view; we know the economic costs of Covid must be covered, and business is ready to play its part. But business can do more than help foot the bill for past crises – thriving enterprise can also spearhead long-term growth, creating new opportunities, evolving communities and raising living standards.
It is time for Government to bet big on UK industry. And that begins by establishing an environment which encourages business investment, rather than stifles it.
Reform to business taxes is a vital first step. Fiscal rewards for firms investing in research, innovation and green technologies can stimulate ambition and momentum. Maintaining more generous capital allowances beyond 2023 – building on the success of the super deduction – and front-loading the commitment to pump £22bn into domestic R&D initiatives can pave the way for longer-term business investment.
Urgent action on skills is essential for both short and long-term success. Converting the apprenticeship levy to a lifelong learning levy, individual training accounts for unemployed people and reinvention of job centres as skills hubs can all help equip individuals and companies with the skills they need to thrive.
Smart spending on infrastructure – both physical and digital – will further enhance business prospects, while accelerating decarbonisation and sharing prosperity more evenly throughout the country. For the East of England this includes accelerating improvements to east-west connectivity including East-West Rail, East Anglia rail improvements and upgrades to roads including the A47.
And genuine focus on regional prosperity can ignite fresh opportunities in all corners of the country. Putting homes, workplaces, schools and hospitals at the heart of the green recovery, and using the long-awaited Levelling-up White Paper to commission the CBI to write the playbook on economic clusters can be transformational.
Reforms like these can enable the UK to use the private sector’s financial muscle to do much of the heavy lifting on levelling up and wider economic growth.
But there is no time to waste. Other countries understand the need for haste, and the pivotal importance of acting right now.
We too must act now to define the UK’s future trajectory. When we look back on this decade, it’s crucial we see a Government that took decisive action and unlocked investment. A Government that went for growth and left no stone unturned in seeking ways to help the UK forge ahead of international competition. A Government that resisted the easy, play-it-safe option, and showed the ambition needed to target the big wins. This should also be seen through the development of the vision and Spatial Framework of the Oxford-Cambridge Arc. There is great potential for the Arc to drive economic growth within and outside of its formal geography, if the conditions are right.
Failure to act will impact the UK’s recovery and ability to level-up. It risks seeing the UK fall behind competitors, lose international investment, and miss our global commitments on net zero.
The opportunity – and need – to forge a more dynamic, competitive, and future-focused economy has never been greater. Business has the power to bring all of these ambitions to life… if Government is bold enough to pave the way.