The Coalition’s plan for Jobs and Growth.

Economic
Monday, August 8, 2011

This weekend Justine Greening has been seen and heard across the airwaves defending the Government’s economic policy as share prices across the world continue to fall.In an interview with the Bow Group, Justine lays out the Coaltion Governments plan for jobs and growth.Ben Harris-Quinney, Political Officer and member of the Bow Group's Economics Committee commented:"I have great confidence that the Coalition's programme of cuts, have not only stabilised the UK economy and retained our AAA credit rating, but have led the world in responsible fiscal policy. What the UK needs now is is an equally dynamic and innovative policy for growth and job creation. I welcome the "Plan for Growth" and the governments focus on four key pillars to promote growth and job creation, the process will necessarily be long, however this now needs to be the focus of our economic debate, and the priorty for government.The Coalition’s plan for Jobs and Growth.  By Justine Greening MP, Economic Secretary to the Treasury & former Political Officer at the Bow Group. When we took office, our priorities centred on getting the nation’s credit card under control and creating the conditions for sustainable growth. Businesses simply will not invest in the UK unless they have the confidence that long-term interest rates will remain stable, and that finance will be available, on reasonable terms, when they need it. We needed to be clear that Britain was open for business. At the Emergency Budget in June last year, the Government set out a plan to tackle the fiscal deficit and restore debt as a percentage of GDP to a sustainable downward path. The Spending Review in October 2010 set out a detailed programme to deliver this and initiated a major programme of reforms of the school, university, welfare and pension systems to make them fi t for the long-term. These plans have received international backing from leading economic analysts such as the IMF and OECD, top business groups including the British Chamber of Commerce and the Institute of Directors and the financial markets, with interest rates similar to Germany despite the UK having a bigger budget deficit than Portugal, Greece and Spain. However, the UK was ranked 4th in the World Economic Forum’s Global Competitiveness Index in 1998, but 12th in 2010 having been overtaken by countries including Germany, Japan, Finland, the Netherlands and Denmark. Rising levels of tax and regulation, inadequate skills in the UK’s workforce and unnecessary red tape hampered the ability of UK firms to win business, invest for the future and create jobs. It’s time for the UK to flourish again.  We need to inspire people to do business  here again and help us fight our way back up those competitive performance tables. For sustainable growth to be driven by private sector investment and enterprise, the Government needs to act in a way that supports growth rather than hampers it. We know that rebuilding business and investor confidence following the financial crisis and recession will only be achieved with real, tangible measures. That’s why, at the Budget in March, we set out four economic ambitions for the UK and started to put in place the measures that will once again allow British business to thrive.   The first ambition is that we should have the most competitive tax system in the G20. A competitive tax system is crucial for private sector investment and growth – it provides businesses with the confidence they need to invest and expand. The UK had lost its tax competitiveness; in the late 1990s, we had the third lowest corporate tax rate in Europe. By last year, we had the seventh highest. This is not pro-business and acts as a disincentive to investment – so at both the June 2010 and 2011 Budgets we’ve taken action to reverse this. In April the UK’s headline corporation tax rate came down from 28% to 26%. It will keep reducing each year to reach 23% in 2014 – the lowest rate ever and lowest in the G7. As well as a reduction in corporation tax, a raft of other measures such as a cut tax for smaller companies, reform of the UK’s outdated Controlled Foreign Company rules, the introduction of a patent box, and a simplification of the tax system are all markers in the sand to meet this ambition.   Our second ambition is for the UK to be the best place in Europe to start, finance and grow a business. According to the World Bank, the UK currently ranks 17th for ease of starting a business – significantly behind Australia (2nd) and the United States (9th). We know that the UK has huge potential, so to allow businesses to plan, grow and prosper in the UK, we have removed £350m of costly business regulation, introduced a moratorium on new domestic regulations for the smallest businesses, are radically streamlining planning guidance, reached agreement with the banks to lend more, committed to pushing the EU to reduce its regulatory burdens, increased tax credits for research and development and these are just the start – The Plan for Growth published alongside the Budget expands on these in detail.   The Government’s third ambition is for Britain to become a more balanced economy,  by encouraging exports and investment. Sustainable growth requires a rebalancing of the UK economy away from a reliance on a narrow range of sectors and regions, to one  built on investment and exports. We need to see strong growth more fairly shared across the UK and a shift away from an overreliance on jobs funded by public spending. The Government acted swiftly to address the barriers hindering investment in certain areas at the June Budget by supporting the creation of Local Enterprise Partnerships and established a £1.4 billion Regional Growth Fund, and at the Budget in 2011 introduced 21 new Enterprise Zones that will benefit  from business rate discounts, simplified planning regulations and guaranteed superfast broadband. This drive for balanced growth doesn’t stop here; the next phase of the Growth Review will be published at the time of the Autumn Statement, looking at new issues and new sectors.   Our final ambition is for the UK to have a more educated workforce that is the most flexible in Europe. We cannot expect to see economic success without having the bedrock of an educated and skilful population. Recent research by the Department for Business, Innovation and Skills showed that the UK working age population have lower skills than the workforces in France, Germany and the States. So, not only are we undertaking radical reforms to education by opening up schools, supporting poorer pupils and reforming the curriculum, we are also now addressing the long-standing issue of vocational training. By providing £180 million for up to 50,000 additional apprentice places and creating up to 100,000 work experience placements, we will be providing young people with the skills they need to move into the labour market and ensure that we have the educated workforce we need for the long-term.  More competitive taxes, more support for business, more balanced growth and a better educated workforce. Those are our pillars for growth. Yet while we are optimistic, we have to recognise that, as the Chancellor and the Governor of the Bank of England have suggested, the recovery will be choppy; we’ve seen the impact that severe weather can have on our economy and how commodity prices across the globe can push up inflation and the cost of living for families and businesses. But here too, we have done what we can to help; for example, a litre of fuel is 6p cheaper today than it would have been under Labour’s fuel escalator plans. Difficult, far-reaching changes are needed to make our economy more competitive, education more effective, and government spending more productive. We have to tear down the barriers to enterprise and economic development. The Spending Review and two Budgets that I have now worked through have not been easy, but our priority, in this year and every remaining year of this Parliament, is straightforward – to provide the necessary conditions to support the UK’s long-term economic potential and help to create new jobs.