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Category: Economics

Two visions for British business on display at CBI conference

Theresa May and Jeremy Corbyn both spoke at this year’s CBI conference, advocating different interpretations of business in Britain today. Howev...

6 November 2017

Alex Matchett

Theresa May and Jeremy Corbyn both spoke at this year’s CBI conference, advocating different interpretations of business in Britain today. However, both speeches remained hostage to the outcomes of Brexit

At a major industry forum dominated by Brexit, the prime minister and the leader of the opposition both took to the stage to define their vision for business in Britain. Speaking at the Confederation of British Industry’s (CBI) annual conference, Theresa May outlined the government’s proposals for the UK economy, calling for business leaders to look ahead to the next ten years as “rational optimists”. Conversely, opposition leader Jeremy Corbyn told the audience they needed to be conscious that “for too many people the economic system simply isn’t working – It’s a system in which large numbers of people have lost confidence.”

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Envisioning cooperation between state and business, May identified public spending, home building, education, innovation and industry as avenues through which she believes the government could aid the UK’s free market economy, suggesting nuanced interventionism. Her speech also focused on the ability of government to compliment business with “effective and evolving regulation”, while strongly championing the free market, saying she would not “attempt to shield the economy from market forces”.

Whether she is able to extend that shield to deflect political forces remains to be seen as she heeded a business community clearly concerned about the outcome of Brexit. While the prime minister was adamant she wanted the best deal that respected EU partnerships as well as the will of the British people, simply acknowledging that businesses were wary of a Brexit “cliff-edge” will have done little to allay commercial concerns.

As leader of the opposition, and so not at the negotiating table in Brussels, Labour’s Jeremy Corbyn could afford to be more candid. “The government’s sluggish response, has already created uncertainty in business – Indeed, many of you probably feel the situation is more precarious and uncertain than ever.” Corbyn highlighted his party’s discussions with business forums and the dangers of a no-deal Brexit, specifically tariffs on food imported, port queues and a hard border with Ireland. “The fact that some in the cabinet want a no-deal to relaunch Britain as a deregulated tax haven on the shores of Europe, only adds to the risk.”

Seeking a royal pardon

Predictably, tax was an issue addressed by both leaders following the release over the weekend of the ‘Paradise Papers’: documents detailing the disingenuous financial holdings of many high-net-worth individuals, including the Queen. Asked on the subject, May said the government was continuing to work with overseas dependencies, and had secured an extra £160 billion in revenue since 2010,  adding “we want people to pay the tax that is due”. Corbyn made clear he believed business leaders had to be alert as well as responsible, while suggesting, in an answer to a question, that the Queen should “not just apologise for it, [but] recognise what it does to our society”.  Expanding on that point in his speech he said: “Please understand this. The public anger on the scale of tax avoidance. We’re talking about tens of billions that are effectively being leeched off our public services by a super-rich elite that holds the taxation system, and the rest of us, in contempt.”

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In defining his larger state position, Corbyn questioned the role of private ownership in providing public services, calling for an end to Public Finance Initiatives. Although business sentiment was unlikely to support the proposal, he argued that to not do so was detrimental “because PFI contracts have over-charged the public to the tune of billions. You wouldn’t put up with it and neither will we.” “[This isn’t] about being anti-business, anti-enterprise, or about closing ourselves off to the rest of the world,” he added. “This isn’t a throwback to a bygone era – It’s time for Britain to catch up.”

Such calls to action punctuated both speeches. May asked businesses to increase R&D spend, saying that while £1.70 is spent by commerce for every £1 the state spends, German business spends £2.40, and American firms £2.70. Corbyn advocated significant government investment in the form of a National Transformation Fund to upgrade the UK’s infrastructure, a National Investment Bank to finance innovation, and a National Education Service to help supply businesses with skilled labour.

How these respective visions for business in Britain are rendered remains to be seen, not least because the shape of Brexit remains unknown – Corbyn and May calling for “common ground” and an “ambitious economic partnership” respectively.

The party leaders were separated on the schedule by Gavin Patterson, CEO of BT, who said he believed that without Brexit deal details by the beginning of 2018, businesses would start planning for the “worst possible scenario”. “That’s not a political decision, that’s just practical.”

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