The general view from the business community in the lead up to today's general election was one of deep frustration about a lack of clarity and factual inconsistency as to how the government can achieve meaningful economic recovery.
If there is a plan, exactly what is it?
One fact which sadly is now abundantly clear is that there is no money.
This is a stark and daunting picture for many of us in business who expect to look to Whitehall for positive growth policies, not just being collectors of taxes and regulation policemen.
In the absence of a meaningful business plan, I have therefore attempted to write one of my own. The trick I have also tried to pull off with this is that it will require no new money.
One of the central outcomes upon which this is based is that if, after 20 years, we are really going to tackle our lagging productivity outcomes then innovation should be encouraged at every stage.
A series of barriers are stifling progress.
Problem 1 - planning
There are only a very few who would not recognise that this is a broken system which has all but ground to a halt.
It is currently the case that projects take longer to get consent than the time taken to build from start to finish.
Numerous examples could be provided but perhaps one tells the story - it now takes 13 years on average to get planning consent to build a new high voltage power line. In China (a command economy of course) it takes 3.5 years from the start to project completion.
I pick this example because we, in Northern Devon, can benefit hugely from renewable energy but all to no avail unless the power lines have the capacity to get the new supply onto the grid.
Solutions
Limit the ability for planning applications to be blocked at anytime and any stage by third parties. A simple start-to-finish six weeks consultation period would allow all interested parties to express their views.
Properly staff planning departments - many applicants would pay for an efficient delivery service as long as timescales could be guaranteed. Remove unnecessary red tape and bureaucracy - I encountered a case recently where an authority had required a report on green sustainability to be printed in hard copy because, at 1,500 pages, it was too big to email.
Problem 2 - skills and training
Despite many initiatives there are still huge skills gaps and growing concerns that the next generation lacks core financial and digital literacy. Current estimates are that UK investment in training per employee is about half that of European Countries.
It is also clear that the gap between the world of work and education has grown wider.
Solutions
Tackle the problem by improving, not upending, the current initiatives.
Good apprenticeships are making a difference, they are a great opportunity to crack this problem, but numbers have dropped by one third and those achieving a result have reduced by 50%. Businesses can resolve this if government would listen regarding apprenticeship levy payments.
If more flexibility was built into the system, perhaps with levy payers being allowed to use some of their contribution to fund training through routes other than apprenticeship, then much better outcomes could be achieved. Better forward planning on emerging demand would also help.
Problem 3 - trade with the EU
Since Brexit huge efforts have been made to build world trade agreements. Success has been claimed with the Government asserting that the UK is now the fourth largest exporter of goods and services.
Several renowned economic consultancies have calculated that we are actually the only advanced economy doing less export trade than pre-Covid. They assess our current ranking as ninth.
It is the case that 20,000 small and medium sized businesses (including many across Northern Devon) have stopped exporting largely because of new red tape introduced post Brexit by Whitehall.
Generally the Brexit impact has resulted in a reduction of 4% of GDP and a 15% reduction in trade.
Solutions
There is a simple answer which is to review and make a bonfire of all but the most essential regulations - particularly around food and drink. Also eat a bit of humble pie and go and talk to the EU about our current trading agreement.
Problem 4 - A lack of efficient and productive public services
This might not be the only reason but if you are looking for evidence of what could be going wrong then look no further than the empty desks and car parks of many public services offices.
Solution
Get tough on allowing working from home.
Problem 5 - levelling up
Despite warm words from government, over-centralised control from Whitehall is stifling growth and resulting in under-investment in many of our regional cities, even traditional powerhouses such as Birmingham and Manchester.
The result is that our regional cities are on average 9% lower in productivity than their European Counterparts.
Solution
Local financial autonomy can produce exceptional results. Compare Birmingham and Manchester with Lyon and Frankfurt. Lyon is a great example. It has high degrees of local control including freedom to make its own investment decisions. As a result it has one of the highest GDPs in Europe and a trade surplus.
This is achieved by combining businesses, training centres and research. The outcomes are spectacular with eight competitive clusters, three hot spots, over 10,000 businesses created each year and 500 laboratories with 13,000 research personnel.
Problem 6 - net zero
No-one in business denies that climate change is an existential threat. Government and many regulators are happy to set arbitrary target dates by which this must be achieved.
Someone, however, has to pay for this.
The latest analysis is that to get to the 2050 target will require total private and public sector investment of £70bn per year for the next 20 years. The assumption that businesses have the ability to spend these sums has never been tested.
Solution
Sit down with business and work out a delivery plan which is affordable in a realistic timescale.
Problem 7 - consistency and stability
Businesses need the ability to plan ahead. For a number of years this has proved to be virtually impossible.
Solution
Sit down with businesses and work out a commercial strategy which is the agreed framework for the next five years.
This list could be longer but the basic message I hope is clear that we need a proper plan if businesses are going to be the only solution to restoring the UK’s balance sheet.
