Member Article

Firms will need incentives to invest in growth after the crisis say business leaders

Business leaders in Coventry and Warwickshire have echoed national calls to provide incentives for firms to invest in growth as a way of rebuilding the economy in the aftermath of the Coronavirus crisis.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the British Chambers of Commerce’s (BCC) plea to Government for further support for businesses on the back of the Chancellor’s Spending Review would be welcomed by companies in the region.

She said: “The Spending Review underlined much immediate economic damage the Covid-19 crisis has caused but, also the lasting effect it will have on our economy for many years to come.

“This Chamber and others up and down the country have given credit to the Government for the unprecedent support measures it has introduced over the past eight months but we’ve also ensured that gaps in help have been highlighted to decision makers.

“The BCC is quite rightly pointing out that businesses will have been in survival mode for a year when we get through to the spring and they are going to need incentives and support to be able to invest in future growth, which will also lead to an economic uplift too.”

BCC Director General Adam Marshall said:

“This spending review comes at a critical time as business communities are fighting for survival in the midst of the coronavirus pandemic.

“The launch of the National Infrastructure Strategy is an important step in overcoming the longstanding infrastructure deficit. We’ve spent long enough discussing infrastructure projects - it’s now time to focus on delivery.

“Measures to help people return to work at this challenging time will help limit long-term unemployment but Government must waste no time in putting these plans into action. Government and business will need to work together to re-train and re-skill the UK workforce. Investment in the Kickstart Scheme, in which Chambers are playing a leading role, and the launch of the Restart scheme, will be critical in helping to achieve that.

“With an uncertain winter ahead, the government will need to maintain an open mind on providing further support to businesses struggling to survive. As we look to rebuild and renew local and national economies, businesses will also need further significant incentives for investment in people, productivity and the planet.”

Detailed response from policy experts:

Commenting on the launch of the National Infrastructure Strategy, James Martin, Director of Policy at the BCC, said: “The launch of a national strategy is an important step in overcoming the longstanding infrastructure deficit. The transition to net zero and levelling up across the UK will require ambitious and sustained action to transform our transport, energy and digital networks. 

“The introduction of a UK infrastructure bank may significantly aid the transition to net zero if it has the necessary capital base to leverage the private sector finance needed to deliver transformational levels of infrastructure investment.

“The renewed commitment to some major projects, will be warmly welcomed by business communities because they can see the tangible business, economic and reputational benefits that will come from these investments. We’ve spent long enough discussing about infrastructure projects - it’s now time to focus on delivery.”

Commenting on the changes to the Green Book, Suren Thiru, Head of Economics at the BCC, said: “We are pleased that the chancellor listened to our call to amend the Green Book approach to appraisal of public investments which in its current form can be a roadblock to important local and regional infrastructure programmes. Businesses will want to see these changes implements as soon as possible to ensure that urgently needed infrastructure investment is delivered across all parts of the UK.”

Commenting on the launch of the UK Shared Prosperity Fund, Suren Thiru, Head of Economics at the BCC, said: “The launch of UK Shared Prosperity Fund is long-overdue and significant unanswered questions remain. Business communities will now require more detail on how the scheme will operate and how the new fund will avoid damaging cliff edges in existing local economic development and business support schemes.

“The government must work closely with business on the determining key features of the new fund, including a commitment to maximise local autonomy, business voice and economic growth. Chambers of Commerce across the UK stand ready to support the pilot schemes and help develop proposals further once published.” 

Commenting on the launch of the Levelling-Up Fund, Hannah Essex, Co-Executive Director at the BCC, said: “Concerted Government action will be needed to tackle the long-standing gaps in infrastructure, skills and access to finance which have stopped growth in many areas of the country.

“The launch of Levelling Up Fund is a welcome start, but with such an acute infrastructure deficit in many areas of the country further steps are likely to be needed to ensure that funding meets the needs of communities throughout the UK.

“Government will need to provide clarity about the criteria for the fund and how it will be allocated, avoiding unnecessary bidding wars between communities. The views of local businesses must form a key part of the decision-making process.”

Commenting on the latest forecasts by the Office for Budget Responsibility, Suren Thiru, Head of Economics at the BCC, said:

“The OBR’s latest outlook underscores the devastating impact of coronavirus on the UK economy with output not expected to return to pre-pandemic levels until the end of 2022. The downgrade to the OBR’s forecast for business investment is a particular concern, as weak investment levels significantly limit the UK’s productivity and growth trajectory.

“Even with a mass vaccine rollout, the deep economic scarring from the pandemic, including high unemployment, rising debt levels & weak investment, may mean that the road back to pre-crisis output levels is longer than the OBR currently predicts.

“The OBR’s latest forecast highlights significant fiscal challenges facing the UK and the need for the Chancellor to remain flexible to business need in the difficult months ahead. However, the temptation to start fiscal consolidation too early must be resisted to avoid extending the economic pain from Covid. Instead, the focus must be on boosting economic activity to sustainably grow the UK’s tax base.”

Commenting on changes to apprenticeships, Hannah Essex, Co-Executive Director at the BCC, said: “Chamber businesses have long campaigned to ensure the skills system, including apprenticeships, has the flexibility and ambition to deliver the skilled workforce our economy so desperately needs. Small and medium sized businesses, in particular, often feel like their needs are not met. Innovative solutions that bring business and training closer together will help bridge some of the gap that currently exists.

“Some of the flexibilities introduced to apprenticeships are a welcome first step. Front-loading apprenticeship training makes sense in the current climate and creating Apprenticeship Training Agencies will mean that many more firms can participate in apprenticeship schemes.

“However, there are still other areas where the Government should go further, including flexibility around the use of the levy and the arbitrary 24-month expiration date for the fund.”

Commenting on those who have fallen through gaps in government support, Hannah Essex, Co-Executive Director at the BCC, said: “Despite the Chancellor’s announcement, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic and will require support if we are to avoid significant increases in unemployment and business failures.”

This was posted in Bdaily's Members' News section by Matt Joyce .