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Philip Hammond insisted on Wednesday that his Budget was about “much more than Brexit”. But the slim pickings the chancellor provided for business in yesterday’s announcement were overshadowed by just that.
Far more important than the — welcome — announcement of investment in improving the UK’s maths skills, or changes in the frequency with which business rates will be calculated, was the downgrading of growth forecasts by the Office for Budget Responsibility.
These changes were based on the OBR’s gloom about the challenges the British economy faces, a gloom only partially dispelled by Mr Hammond’s allocation of a £3bn pot to offset the effects of the UK’s exit from the EU.
In this context, extensions to research and development tax credits or the abolition of the “staircase tax” were mere sideshows. They also speak to a greater flaw in Mr Hammond’s speech: the lack of a sustained vision to address the country’s long-term challenges around productivity and skills.
Admittedly, to say more would have been to steal the thunder from business secretary Greg Clark, who is set to announce the government’s industrial strategy. But the lack of vision is not just a failing on Mr Hammond’s part. It also reflects the failure of the UK’s business community to deliver a coherent and unified message about what it needs to drive growth and employment.
It is difficult to imagine a better moment for business to shape the agenda not just in designing domestic policies, such as the industrial strategy, but also for the next stage of Brexit negotiations which — assuming the current stalemate is broken — will move in the new year to detailed discussion of future trading relationships.
A recent meeting between prime minister Theresa May, leading cabinet ministers including Brexit secretary David Davis, and the main continental European lobby groups, provided a salutary example. The 12 business representatives at No 10 last week, from France, Germany, the Netherlands, Spain and elsewhere, put a clear and forceful message to the UK government: that it was down to the British to break the logjam in Brexit negotiations and make the progress that is so crucial not just to the future of the UK economy, but to its trading partners.
Sadly, unanimity of purpose and clarity of expression are rare. While continental business lobbyists allied themselves behind a straightforward message, those from the UK struggle to represent employers’ views convincingly not just to government but to the wider public, which too often fails to understand why the needs of business matter.
In the group convened by the chancellor, Mr Davis and Mr Clark, five UK bodies represent business at the highest-level of Brexit discussions: the CBI, the Institute of Directors, the British Chambers of Commerce, the EEF and the Federation of Small Businesses. These, in turn, represent a plethora of other organisations and companies.
Their membership structures and processes, though, are too often opaque and undemocratic, skewed towards larger companies and accounting for perhaps a fifth of the UK’s business community. A lack of transparency compounds the problem. The CBI, for one, has faced persistent questions over the number and make-up of its members, most effectively from the Leave campaign in the run-up to last year’s referendum, whose barbs about the organisation speaking only for tarnished bankers and City of London grandees hit home precisely because it refused to be more open.
The diplomatic courtesy of the high-level discussions between the business lobby groups and government obscures the wrangling between the groups about which tactics to pursue, and the degree of anxiety and frustration that I hear on a daily basis from companies up and down the country: that the Brexit negotiations so far seem to take little account of employers’ genuine needs; that the industrial strategy will be yet another iteration of ineffectual policy interventions with little relation to the day-to-day realities for many businesses; that companies’ desire to get on with the job will be hijacked by political infighting. And frustration that these important and legitimate worries are simply not registering in Westminster.
Consolidation and greater transparency is required from the groups that represent business. Without it, they will continue to lack the credibility to deliver their priorities to policymakers. Tinkering at the edges of their challenges — as Mr Hammond served up in Wednesday’s Budget — will then be no more than they deserve.