Rachel Reeves once vowed that if Labour won they “would be the most pro-business government this country has ever seen”.
With just two days to go until the Budget, that pre-election pledge appears to be in the gutter.
Reassuring the business community was an essential part of Labour’s pitch for power, but almost everything they’ve said and done since winning the election has stoked fears that their definition of being pro-business is unorthodox, to put it mildly.
From day one, their doom-mongering talk of a dire fiscal inheritance started to sap confidence while their earliest decisions in office – including the inflation-busting pay rises handed out to large parts of the public sector – revealed their priorities.
A stage-managed Investment Summit took place against a backdrop of increasingly desperate calls from the UK’s start-up founders and entrepreneurs, warning that tax hikes will dramatically undermine the country’s attractiveness as a place to start and scale a business. Those warnings appear to have fallen on deaf ears.
Next came details of the government’s employment rights reform agenda, which will hit employers with costly new regulation and deter hiring or pay rises – especially at smaller businesses.
And as the Budget draws closer, the details that emerge do nothing to reassure employers that the Chancellor isn’t about to hammer them again with hikes to employers national insurance and changes to the earnings threshold – a move which the Federation of Small Businesses says would increase the cost of hiring a new employee on the average salary by £600.
It seems as if ministers view businesses simply as something to tax, whereas in fact they’re the vital and precious source of growth and job creation. If the Chancellor has a few spare minutes before Wednesday, she would do well to sit and read a new report by the Jobs Foundation, a new group that seeks to champion the role of business as a force for good.
Their pre-Budget publication, Two Million Jobs, shows what businesses actually need if they’re to create new jobs. The report’s authors spoke to employers form every corner of the country, and their message is clear: firms must have a policy environment that allows them to thrive, with improved transport links, better access to domestic capital and workers’ rights regulations that are not a barrier to growth. Some of what’s needed is in a government’s gift, but poorly designed regulations will hamper ministers’ efforts to grow the economy.
The prize on offer for getting this right is enormous: the report shows that bringing two million
additional people into employment would raise £20 billion in tax revenue for the Exchequer.
The Jobs Foundation has appeared on the scene not a moment too soon but with this government, they’ve got their work cut out.