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It might be tempting, if you are sitting in Downing Street, to dismiss the current pre-budget howls from big business beasts as standard stuff from usual suspects.
Archie Norman, the Marks & Spencer chair who told the Telegraph the government’s workers’ rights proposals were “a political indulgence that the country cannot afford”, is a former Tory MP. Stuart Rose, who told the Times that he believed “we’re genuinely at the edge of a crisis”, is a Tory peer.
Rain Newton-Smith, the boss of the CBI, is the country’s top business lobbyist. It should not be remotely surprising that she’s pleading for business to be spared more taxes in the budget, even if her argument in the Guardian also carried the provocative advice to the chancellor, Rachel Reeves, to rethink Labour’s manifesto pledges on tax.
The problem, though, is that these grumbles plainly go deeper – well beyond the employment rights package. Talk privately to FTSE 100 and 250 executives and you’ll hear consistent themes: that ministers, despite their pre-election schmoozing to woo the business vote, don’t “get” business; that the government has stopped listening; and that key decisions are fluffed, or take too long.
Exhibit A on the last front was the collapse in January of AstraZeneca’s intended £450m investment in a vaccine factory in Speke near Liverpool. “Several factors have influenced this decision, including the timing and reduction of the final offer compared to the previous government’s proposal,” said the company at the time.
The Treasury may dispute the account, but the business world (not just a pharmaceutical industry in the middle of a separate quarrel over the prices the NHS pays for prescription medicines) was amazed that a flagship deal could fall apart at the stage of haggling over details. The government, remember, is still aiming to make the UK a “life sciences superpower”.
Over in retail-land, a specific grumble is not simply that reform of business rates is taking ages (it always does) but that a simple-sounding proposal to shift some receipts from bricks-and-mortar shops to online premises has morphed into a complicated scrap over the size of premises to be captured by a higher rate. “We still haven’t got a clue where the government is going to end up,” says one executive who met officials in the last month.
The “not listening” accusation is echoed even among those with longstanding government contacts. Here’s the chair of one FTSE 100 company: “It feels like they are not even talking to anyone. They’re in a bunker. What you need for growth is some level of confidence in what is about to happen.”
The danger, says another executive, is that the government is flying blind: “In the government’s shoes, you’ve got to know which policy ideas on tax will be genuinely damaging and which will cause a fuss but would be stomached.” An increase in levies on banks would fall in the latter category, he suggests, if Reeves is compelled to change some corporate taxes.
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The government gets praise from business on some fronts, it should be said. The overseas trade deals, Reeves’s Mansion House compact, the Treasury’s intervention in the car finance row and the pressure on regulators to be “pro-growth” have gone down well – as you’d expect. Jonathan Reynolds, the business minister until last week, also tended to be viewed positively; so, too, Varun Chandra, Keir Starmer’s business adviser.
Yet lack of urgency and lack of coordination across government is a consistent message. “We’ve had the ‘five missions’, the ‘plan for change’ and the ‘three priorities’. It’s just confusing,” says one executive.
The turning point in the business mood was, of course, last November’s £40bn tax-raising budget and its increase in employers’ national insurance. That was never going to win applause in boardrooms, as Reeves surely knew at the time. But it is also true that efforts to repair relations with business afterwards have dribbled into the sand. Some level of tension between government and business is normal (and too much cosiness is worse), but the current level of distrust feels genuinely unhealthy for investment.
Now comes No 10’s creation of a “budget board”, seemingly intended to avoid another bust-up with business in November. That’s a start, even if nobody pretends there are easy answers when economic forecasts are deteriorating. But a shift in the vibes with business has become urgent. Come 2029, it would be useful to have a few big business figures calling out Reform UK’s fantasy economics.
