Businesses should have a stronger voice in setting economic growth policies, the boss of an influential business lobby group has urged, including a shift from “consultation to co-design”.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), told attendees at the group’s annual conference that the government and firms share a “vision of growth, the real, sustainable growth that we so badly need” but needed to “co-design” policies.
The “only force”, she argued, that “can bridge that gap” and turn the vision into a reality, is the “people in this room, it’s the ideas, the ingenuity, the investment of business”.
Newton-Smith, a former CBI chief economist, who has led the lobby group since it was hit by a sexual misconduct crisis 18 months ago, lauded the new Labour government’s “dullness dividend of stability” – but stressed it was a “precondition, not a movement for growth”.
She said: “What really defines growth is the decisions made in boardrooms up and down the country. It’s CFOs asking, can we afford to invest? To expand? Take a chance on people?”
After Chancellor Rachel Reeves’s first Budget, which sparked a month-long backlash from business Newton-Smith cautioned “the answer we’re hearing from so many firms is not yet”.
‘Consultation to co-design’
She said the rise in employer national insurance contributions (NICs), alongside the living wage expansion and “potential cost of the employment rights bill” were a “heavy burden” on firms, with some in “crisis containment”, “damage control”, and “with heavy hearts”.
And she added: “I know we are all dead set on getting our economy moving again.
“My message today to the government and to all parties is to work with us to get there. From now on, we need to shift from consultation to co-design. Tax rises like this must never again be simply done to business. That’s the road to unintended consequences.”
Newton-Smith argued for an “elevated partnership for a higher purpose”, stressing that the CBI “stands ready… to be that partner, to be a critical friend, to be able to speak truth to power, but ultimately recognize that elected governments are the ones who must decide”.
She outlined three pillars which she said could help set the country on the course for growth, including relieving pressure on firms via “fixing our broken business rates system” and helping to get people into work by making it easier to offer occupational health support, and offering “immediate flexibility” in the apprenticeship levy.
“The budget just made it harder for our firms to take a chance on people. Our survey showed that half are now looking to reduce head count,” she stressed.
Competitiveness and the everyday economy
While the CBI is “launching its own blueprint for competitiveness”, as part of its “contribution to the industrial strategy debate”.
The policy framework, which business secretary Jonathan Reynolds has asked firms and groups like the CBI to weigh in on ahead of publication, must back “the everyday economy”, the CBI boss stressed, including large employers like Asda, manufacturers and tech firms.
She added: “Because with industrial strategy, you start global and you implement local.”
And “enablers of growth on regulation” should be supported in growing their risk appetite, Newton-Smith argued, in the wake of Reeves’ Mansion House speech commitments.
She said: “We need to go simple. We need to go digital to save time for business.
“Let’s get to it and fast, because growth isn’t just an ambition. It’s not just a nice dream… this is existential.”
The CBI’s conference in Westminster today will also see speeches from Conservative leader Kemi Badenoch, and a fireside chat with the Chancellor.