Business ready to partner with governments to deliver growth and lower living costs - CBI Chief Executive

Speaking to business and political leaders in Glasgow, CBI Chief Executive Rain Newton-Smith will call on the Scottish and UK governments to work with business to unlock investment, create jobs and raise living standards in communities across Scotland and the rest of the UK. 

At the CBI Scotland Annual Dinner, Newton-Smith will highlight the significant common ground between both governments’ ambitions for growth rooted in the strengths of local economies – arguing that “growth rooted in place” is “an idea business can get behind.”  

She will say business stands ready to be a key delivery partner, but that turning political ambition into higher investment, productivity and wages requires firms to have the confidence and financial headroom to grow. 

Newton-Smith will point to lowering barriers to UK-EU trade, speeding up planning, reforming the business rates system and providing certainty on major energy and infrastructure projects as practical opportunities to unlock investment, boost productivity and support growth across the UK.  

She will also argue that easing pressures on businesses is critical to deliver higher living standards and place-based growth, warning that when firms have less room to invest, hire or raise wages, those pressures ultimately feed through to households and communities. 

And while acknowledging the difficult fiscal choices facing government ahead of next month’s Budget, Newton-Smith will urge ministers to prioritise decisions that strengthen the economy’s capacity to invest and grow and avoid further increases in the costs of hiring and investment. 

On the link between business and living costs, Newton-Smith will say: 

“This is a cost-of-living crisis. But it is also a cost-of-doing-business crisis. And the two are inseparable. There is no lasting answer to the cost of living that ignores the cost of doing business. 

“Across the UK, the story is the same. There are two costs that have risen to eye-watering levels - energy and hiring. More than nine out of 10 businesses have seen their energy costs rise and four out of 10 say they’re cutting investment directly because of it. Meanwhile, the changes to National Insurance have pushed the business tax burden to the highest on record. Today, the profitability of UK business is the lowest since the 2008 financial crash. 

“For a business in the UK today – when your margins are that low, and another cost lands, where does it go? In every sector, we’ve heard the same: you have just two choices. Either pass it on to consumers through higher prices – if demand is strong enough - or absorb it yourself, reducing your room for hiring. For investment. For wage rises. For growth. In a word, costs don’t disappear – they travel.” 

On the UK and Scottish governments' focus on placed-based growth and power to the regions, Newton-Smith will say: 

“In Westminster today, we have a new administration, led by Andy Burnham, talking about using the opportunities in local places – to drive growth. Here in Scotland, the First Minister has spoken about empowering regions to make more of their economic strengths. 

“Just last week, he spoke about making Scotland the best place to do business. Different governments and different politics – but a similar idea: growth rooted in place. That’s an idea business can get behind. Across the UK, business has been driving growth in every postcode – since long before there even were postcodes.” 

On not imposing further costs on business in the UK Budget, Newton-Smith will say: 

“We are heading towards a Budget of hard choices next month. The defence deficit, the higher cost of government borrowing make that inevitable. In Andy Burnham we have a new Prime Minister with goodwill towards business who listened to us and set the Budget early to reduce speculation. In John Healey we have a Chancellor who has said he wants to drive profit in British business. And business has goodwill towards them. But what’s in the Budget will be the real test. 

“The October Budget must draw a red line under more rises in the cost of hiring, investing and doing business.” 

On creating more opportunities for young people, Newton-Smith will say: 

“The rise in employer National Insurance has proven a step too far. For many, costs are now too high to hire. To create more jobs for young people, to ease the pressure – we need a targeted rise in the threshold.” 

On the Scottish food price cap, Newton-Smith will say: 

“The proposal of a food price cap here in Scotland won’t work. While a cap can hold down a price, it cannot bring down the cost behind it - the cost of farming, production, refrigeration, labour, energy. It can change the number printed on the shelf. But it does not bring down the costs running through the supply chain. 

“Divert the policy energy and resources that will be wasted there – into something positive. Work with business to ease the pressure where you can and let competition do its job.” 

On the UK and Scottish governments working together, Newton-Smith will say: 

“This is a moment when we must focus on wealth creation just as much as wealth division - in Westminster and Holyrood. Business does not experience reserved or devolved powers. That’s policy language. They experience one business environment, and right now it is being squeezed from all sides. To drive growth, to create prosperity, to ease the pressure on people in all postcodes, business urgently needs breathing space too. And we need governments [on] both sides of the border to work together to provide it.” 

On Brexit, Newton-Smith will say: 

“There is one place where Holyrood and Westminster can forge real change together. We can say it now; Brexit was bad for business. Bad for our economy, reducing our GDP by as much as 8 per cent. Business leaders I speak to do not want to relitigate the politics of it. Nor do they want to rejoin at any cost or on any terms. But they do want both sides to get on and reduce the barriers, because the status quo won’t cut it for growth. Nor will retreating into isolationist bunkers. The friction now is hitting Scottish business, hitting British business. The reset must be bold and ambitious. Our governments must be ready to spend political capital, to make political sacrifices – in the national economic interest.” 

On the Jackdaw oil field in the North Sea, Newton-Smith will say: 

“In Scotland we need certainty so businesses can get on and invest. Like Jackdaw. Given the go-ahead in 2022, it’s been stalled for too long. And the workforce – which we need for the transition too – left in limbo. Decisions delayed mean investment down the drain. We need a decision now.” 

Following the speech, the CBI Chief Executive will be joined in conversation by the Secretary of State for Scotland, the Rt Hon Douglas Alexander MP. The Annual Dinner is supported by strategic partner, SSE, and corporate partner, Cisco.