We’re a little more than four months into the new term, and already, business is being asked to shoulder the majority of the financial burden for failing public services.
The increase in employer NI contributions, sizeable increases in the National Minimum Wage, changes to inheritance tax for family-run businesses and cancellations to some infrastructure projects, are just a few. However, the trade-off, we’re told, is the prospect of future growth funded through increased private and foreign investment, political stability, and a reassertion of Britain’s standing in the world.
On the face of it, that sounds like a plausible deal. Short-term pain for long-term gain – not a unique proposition by any means and one that requires a huge amount of trust on the part of the business community. It is, therefore, absolutely critical that government messaging is on point to provide reassurance, comfort and optimism. And all this whilst delivering a timetable of action to back up the words.
Unfortunately, things don’t appear to be going that well. We’ve seen confusion and uproar at the perceived impact of the inheritance tax changes; deferred decisions around key infrastructure projects; an absence of any trade policy to increase exports, which I might add is what drives growth; and a draft industrial strategy that ignores many of the key sectors in Kent. To top it all, I listened to an education secretary being interviewed this morning on the BBC, saying that a business that earns 23% profit is excessive and it should be more like 8.8% and that they will be clamping down on this.
Wow! Not so much “bread today and jam tomorrow” but “bread today and crumbs tomorrow”. This is not a promising start and certainly not the messaging that wins the hearts and minds of businesses.
Surely, a profitable company creates the tax receipts that the Public Sector so desperately needs. If the government wants to release the investment potential of UK pensions, the businesses that the pension funds will seek to invest in must be profitable to show a return. The greater the return, the more the investment. This is economics 101.
I hope that this is just the faltering first steps of an inexperienced executive who doesn’t have a grip on their messaging and that there really will be “jam tomorrow”. The New Year needs to bring some new messages of hope.
