Growth is impossible if we continue on as we are but the Spring Budget is a chance for change, writes Steve Rigby. Here’s seven ways the Chancellor could make an immediate impact
The government’s growth mission will receive its sternest test next month when the Office for Budget Responsibility (OBR) publishes its forecasts alongside the Chancellor’s Spring Budget.
While positive noises around deregulation, planning reform and investment in massive infrastructure projects such as Heathrow expansion could well secure long-term growth, they will have little impact in the short or medium term. The OBR will confirm what everyone in business already knows: in this environment, growth is almost impossible.
The signs are all around us. The latest labour market survey from the Chartered Institute of Personnel and Development (CIPD), published on Monday, found that a quarter of firms are planning to lay off workers or recruit fewer new staff following the increased employment taxes levied in the budget. More than a third of companies plan to increase their prices. These are not indicators that we are in for a rapid surge in growth.
Yet in a world where Donald Trump is moving at lightning speed with a radical agenda, it is evidently possible to affect short-term change – and it does not require the brutal, chaotic approach we are seeing in the US.
We do, however, require a plan. There is endless talk in policy circles of “inclusive growth” and “supply side economics”. These are nice words, but we need less rhetoric and more action in the Spring Budget. Here are seven growth ideas that could make an immediate impact.
1. Reconsider the Employment Rights Bill
First, the Employment Rights Bill is set to cost businesses up to £5bn a year, according to the government’s own analysis. While some of the proposals are welcome, the changes to laws on probation and the likelihood of increased union influence will have an impact on growth. These measures should be reconsidered.
2. Reform business rates
Next, we need to look at business rates, which are “complex, unpredictable and inequitable”, according to the CBI – and my firsthand experience. While the rates office is independent of the Treasury and has no growth mandate, the decisions made cannot be a brake on the economy. Some reform is underway, but it must be expedited and expanded.
3. Banks must start lending
Third, the flow of funds and debt is the lifeblood of the economy. Our big four banks play a critical role in building confidence and providing liquidity. If they are fighting spurious issues such as mis-selling of car finance, they create provisions rather than lending. It is estimated that £1bn in provision is equivalent to £6.5bn in new lending. The government has already tried to intervene on car finance mis-selling and must keep on this course. A decision is due in April. It is then down to the banks to stop making excuses and start lending.
4. Invest our pension funds
Fourth, regulate our pension funds to invest in the economy. I attended the Mansion House speech last year and progress was made, but we must go further. The resources are huge at £2.4 trillion, roughly equivalent to our annual GDP. I support an Australian-style intervention that mandates investment in our country. At present, just six per cent of funds are allocated to UK equities. An increase to 15 per cent unleashes £200bn.
5. Let the government invest too!
Fifth, a Keynesian economic boost from government spending. Departments, like business, lack long-term confidence to make investment decisions. We need to give our key public services a clear roadmap to spend. The comprehensive spending review pencilled in for June can’t come fast enough.
6. More growth capital for business
Sixth, reform the thresholds for the Enterprise Investment Scheme (EIS) so it applies to fast-growing companies that seek growth capital, not just early-stage funding. This is a guaranteed lever for growth and innovation, without costing more. The Private Business Commission I chaired in 2024 made this as one of a series of recommendations.
7. Cut taxes for businesses
Finally, unleash the spending power of private businesses. Private companies sit on huge cash reserves, estimated by the data provider Beauhurst to be roughly £63bn. A one-off lower tax rate to allow for the extraction of this wealth into the economy would drive up tax receipts and flood money into the economy. The Chancellor could announce this next month with the Spring Budget.
These are not all the answers, but could provide some solutions to our anaemic growth – and at the very least help us move from endless talk into some meaningful action.
Steve Rigby is the co-chief executive of Rigby Group, a technology-focused family business and a board member of Family Business UK