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Cath Everett

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Job creation plan: time to get real

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The coalition government must act quickly to flesh out its National Infrastructure Plan to boost job creation and stimulate economic growth as it currently lacks the necessary specifics to generate business confidence, employers have warned.
 

At business lobby group the CBI’s annual conference yesterday Prime Minister David Cameron outlined his “strategy for growth” for the UK’s private sector, which he hopes will fill the gap left by public sector budget cuts of £83 billion that will result in the loss of 660,000 jobs between 2010-2011 and 2015-2016, according to the Office for Budget Responsibility.
 
“British business should have no more vocal a champion that the British government and that’s why I have put the promotion of British commerce and trade at the heart of our foreign and economic policy,” Cameron said as he attempted to introduce a “good news narrative” following fears that last week’s Comprehensive Spending Review could lead to a double dip recession.
 
The Plan comprises three elements – creating the right framework for enterprise and business investment; directing resources towards areas such as wind technology where the UK currently has a competitive advantage, and making it easier for new companies and ideas to flourish.
 
As a result, the Prime Minister outlined a series of initiatives to back up his aims. A proposed permanent cap on non-EU immigration, to be introduced from next April, will be designed with the aim of ensuring that employers are not prevented from recruiting highly skilled staff.
 
The first ever UK national plan to “update and modernise” the UK’s transport infrastructure will likewise be introduced in a bid to unlock £200 billion of public and private investment in projects such as the high-speed rail link from London to Birmingham. Cameron told delegates that the Chancellor George Osborne had announced an additional £8.5 billion in capital spending over the next four years to this end.
 
A further £200 million will also be spent on a network of German Fraunhofer Institute-style “technology and innovation centres”, while a £69 million package will be made available to encourage private sector investment in offshore wind projects.
 
The competition functions of the Office of Fair Trading and the Competition Commission will likewise be merged in an attempt to create a “much tougher and streamlined competition regime”.
 
While the Department for Business, Innovation and Skills, helped by the Chancellor, is currently drawing up a “growth white paper”, it is believed that its publication, originally expected to be in the next few weeks, could be postponed until the New Year, leading to speculation that the government is struggling to develop a strategy.
 
But business leaders were lukewarm about yesterday’s proposals. Alistair Tebbit, a spokesman at membership body the Institute of Directors, said: “It’s easy for the government to talk up its pro-enterprise credentials, but what matters is delivery.”
 
While he was pleased that infrastructure spending was not being cut as much as the last government had planned, Tebbit said that this government’s claim to have stopped the rise in red tape “lacks credibility”.
 
If anything, the red tape burden on enterprise was increasing, he attested. Ministers had gold-plated the Agency Workers Directive, the Default Retirement Age was to be abolished, flexible working rights were to be extended, parental leave was to be increased and the extension of the right to request time off for training to small firms had still to be ruled out
 
“If the government wants the private sector to create new jobs, it needs to make it easier for firms to employ people, not harder. Ditching these proposals would be a first step,” Tebbit said.
 
David Frost, the director general of the British Chambers of Commerce, was equally sceptical. “The government has not yet articulated a full growth strategy,” he said. “Businesses want to know exactly how the government will prioritise resources, remove barriers and incentivise public sector growth. In the coming weeks, further action will be required for a rebalanced UK economy to emerge.”
 
Members wanted to see more action to support exporters, beginning with “real help” on trade credit insurance and trade finance, which was currently stopping thousands of businesses from selling goods and services overseas.
 
They were likewise counting on action to reduce the burden created by employment regulation, which was preventing many small and medium-sized businesses from taking on staff as the economy recovers.
 
“The BCC also calls on the government to create further incentives for those parts of the UK where the private sector is especially weak. We believe that a new generation of ‘Opportunity Zones’ – with ultra-low regulation and tax incentives – should be created to encourage inward investment and the growth of existing companies,” Frost said.
 

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