CBI chair Rupert Soames will tonight call on the UK and Scottish governments to “walk on the same road to growth” and not let the “hurly-burly of an election destroy the close collaboration needed to attract investment.”
Addressing the group’s annual Scottish dinner in Glasgow, Mr Soames will argue that Scotland can be a “catalyst for UK growth”, but warns that excessive politicking risks squandering Scotland’s enormous economic potential – including “natural energy resources that make our competitors green with envy.”
Ahead of the forthcoming UK Budget, he will praise the UK Government for making growth a central mission, burnishing the country’s reputation for trade and defence, and tackling “over-complex and inefficient regulation.”
But he will also outline business concerns over “missteps” on changes to employer National Insurance Contributions and employment rights.
On growth as a central mission of government, he will tell guests: “We need to get the economy growing again. It is growth that will make people more prosperous; growth that will make our public services affordable; and growth that will enable us to pay down some of the debt we incurred during Covid – rather than leaving it as an obligation for our children and grandchildren.
“The UK Government gets that – their whole election campaign and economic model was based on getting the economy growing again.
“The UK Government has established the UK as a skilful and respected player on the world stage in defence and trade. And who would have guessed that the UK would be the first country which came to a trade deal with the US, and did that ahead of the EU?
“It has also set out to tackle that bane of all our lives: over-complex and inefficient regulation. We may argue with the pace, with the effectiveness of some of these actions, but I do not question for a moment the intent, and the willingness to make, and even to force, change.”
On concerns around changes to employer National Insurance Contributions, Mr Soames will say: “There are around nine million people of working age who are not in employment – the majority of whom are on some sort of benefit. The UK Government has, rightly, a mission to get at least a million of these people back into work.
“At the time of the November budget, we warned the Chancellor that the changes to National Insurance she announced would have a serious impact on companies’ willingness to hire people, would harm growth, and would be in direct conflict with the government’s policy to get people off benefits and into employment.
“It gives me no pleasure to say that we have been proved right. All the surveys and figures we see, all we hear from members, says that the NICs changes are having a serious impact on employment: vacancies are down, unemployment is up, and job creation has slowed.”
His comments come as the Chancellor today announces plans to make business rates south of the border fairer. Ms Reeves will explore fixing sudden jumps in business rates – known as “cliff edges” – that can discourage small business investment and growth. This is one option in the business rates interim report.
On forthcoming employment legislation, Soames will say: “The CBI has devoted a huge amount of time to working through the detail of this legislation.
“We recognise that it was a central manifesto commitment. But it was not a manifesto commitment to significantly increase the risk to businesses of employing people, which we believe the legislation – as drafted – will do. We have not given up hope of persuading government that some of its terms should be amended.
“It is employers who make the offers of jobs and training that will get a million people off benefits and into work. If employing people – particularly those who are inexperienced or who have spotty CVs – becomes more likely to result in claims against a company in the first few months of employment, they will simply reduce the number of people they employ.
“There is still some way to run on this legislation. Some details of how it will be implemented are still to be settled. You can be sure that the CBI, on your behalf, will be doing its job of speaking truth unto power.”
Referring to Scotland’s economy ahead of the Scottish Parliament election, he says: “In the words of the song, whether we take the high road, or the low road, the road to growth for the United Kingdom runs through Scotland.
“Throughout history Scotland has been a catalyst of the United Kingdom’s fortunes, whether it was the Scottish Enlightenment, the Industrial Revolution, or the prosperity brought by the North Sea. And now with BAE Systems’ £10bn deal to build frigates – evidence, if any was needed, that world-class shipbuilding is not a tale of the past, but a promise of the future.
“Looking ahead, Scotland can be that catalyst for the UK’s growth again. Natural energy resources to make our competitors green with envy. World-class universities pushing the boundaries of knowledge and research. The best-educated workforce in the UK.
“But these advantages need good government to turn them into increasing growth and prosperity. To go down that road will take trust and collaboration between politicians and institutions; between Holyrood and Westminster; and between governments and business.
“These are serious times. And as we look ahead to the Scottish Parliament elections next year, the message from business is clear: please do not let the hurly-burly of an election destroy the close collaboration between the two governments that is needed to deliver investment.
“Politics is the art of the possible. But it is the task of great politicians, grown-up politicians, politicians of consequence, to make the necessary, possible. But it will need a fierce sense of urgency, an unwavering focus on getting infrastructure built and investment deployed.
“Governments north and south of the border can disagree on many things, but they must make, and keep, common cause when it comes to building out the critical national infrastructure which will drive growth and increase prosperity for Scotland and for the United Kingdom.”
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