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CBI calls on government to take action

28 Oct 2022, 3 min read

These are challenging times, with firms facing labour shortages, supply chain freezes, a war in Europe, an energy crisis, stagflation, and more. We hear from members daily about the pressures they’re facing. We also hear from members about the human cost too - with families forced to choose between heating and eating, and entire communities throughout the UK struggling. The past few weeks have only added to this distress. Turbulence in the markets, turmoil in Westminster, U-turns, the sudden departure of another Prime Minister and the introduction of a new government. It has undermined the confidence of people, businesses, markets, and global investors.

To turn things around, the government needs to restore economic stability and then deliver a plan for a stronger and more productive economy. It’s the only way we’ll create good jobs with good wages, strong public services and thriving communities. Making sure we’re ready and prepared to weather any future storms.

What does this mean for the UK?

The UK is operating in a challenging economic environment. The reality is difficult decisions will need to be made. The government will need to raise certain taxes and reduce spending.

But it’s also essential this isn’t done at the expense of those who most need help. That’s vulnerable households, and businesses who are normally healthy but facing unprecedented challenges. Challenges like huge energy costs, at the same time as universal energy support ends and dramatic rises in business rates come in. So, while we must balance the books, austerity isn’t the answer. The only option now, is a growing economy and supporting the drivers of growth.

What is the CBI’s plan?

With a new Prime Minister and Chancellor, all eyes are now on the 17 November, when the Chancellor is due to set out how the government intends to balance the books with new fiscal rules and an OBR forecast.

Ahead of this, the CBI has been proactive in speaking to officials and ministers across government – including the new Prime Minister and Chancellor - highlighting the serious problems businesses are facing and how firms believe market confidence and a stable and growing economy can be achieved.

We’ve discussed the importance of targeting government spending and making sure government debt is balanced with GDP; alongside the continued need for struggling firms to have support with their immediate energy costs. For example, we’ve been making the case for how we can break the cycle of government energy bailouts through large-scale insulation and retrofitting programmes to reduce energy use and waste, particularly for vulnerable households and energy-intensive businesses.

We’ve also highlighted actions the government can take now which don’t require additional costs. Like making regulation better, planning easier, and delivering better transport networks and digital connectivity across our nations and regions. Moreover, we’ve also been having important conversations on how the government can help firms to fill labour vacancies, including through proportionate immigration, adequate childcare provision, and supporting more employees to undertake training through a more flexible skills system.

Some of our recommendations have included a call on government to:


Stop business rates tipping firms into closure

  1. Next April, businesses will see their business rates increase by over 10% from inflation alone. That’s without taking into account the rates revaluation which could see rates rise even further, just as the universal energy support package comes to an end. Together, the end of energy support for all business, business rates increasing and continued high levels of inflation, have the potential to tip many firms into closure.

How government can help: this October, the government can give firms the confidence to continue operating by freezing business rates from rising with inflation (or at a minimum ensuring the increase is well below inflation).  And making sure that if a firms property value has come down, their rates come down immediately too.

Help businesses to invest with an investment allowance

With pressure on public money, government alone can’t deliver all of the services and infrastructure the country needs. But there’s lots of private investment that can.

How government can help: by introducing full expensing (100% first year allowance for plant and machinery) across all of the UK, business can help. This would lead to an extra £50bn of business investment by 2030/31 to help give communities the services they need – like better digital connectivity.

Let businesses spend their skills budgets on the training they need

  1. For too long, the rules of Apprenticeship Levy have stopped firms being able to invest in the skills they need and prevented their employees from undertaking the training courses they wanted. Training isn’t a one size, fits all. Which is why Apprenticeships don’t suit all types of training requirements. Billions of pounds have been left unspent and trapped in the Apprenticeship Levy system. All while the country continues to have huge skills gaps.

How government can help: turn the Apprenticeship Levy into a flexible Skills Challenge Fund. This would give businesses full flexibility to spend their levy money on all types of high quality and accredited training. This includes shorter courses, specific apprenticeship modules. Allow firms to tailor training to their needs and their employees.

Stop preventing people from working when they want to due to child care costs

The UK has the third most expensive childcare in OECD. And 1.7m women are stopped from working the extra hours they want to because of not being able to afford childcare. All while people face a cost-of-living crisis and the country has ongoing labour shortages.

How government can help: Commission an independent review of the UK’s childcare system. This can then look at how we make the most of existing support – like the tax-free childcare offer – and help us fix the gaps – like provision for 1–2-year-olds, and the cost of provision for suppliers.

Better regulation, not mass deregulation to unlock investment

Brexit offers the UK an opportunity to develop the best regulation to support innovation, investment, consumer protection and grow the economy. Keeping the best bits of EU regulation and developing new regulation where divergence will give us a competitive edge is a great opportunity to help get the economy growing. But currently, regulation – like planning – is putting the brakes on investment, like slow and inconsistent planning. For example, three of four prisons procured by the government were refused planning permission, putting a 12-month hole in contractors’ pipelines at short notice.

How government can help: Create an Office for Future Regulation (OFR) to end the duplication and waste of multiple regulatory advisory bodies, address sector specific regulatory issues, update the National Planning Policy Framework (NPPF) and speed up the decision-making process.