With the general election just weeks away, the IoD’s policy team charts a path for UK economic success and pinpoints what the next government must do in order to ensure that British companies flourish
As polling day approaches, many business leaders are wondering what the next government – regardless of political stripe – will do to tackle anti-business sentiment and help their companies grow.
The IoD believes it is critical for the new government to create a stable environment for business and deliver the necessary conditions and infrastructure for entrepreneurship to flourish and established firms to thrive.
“It is very clear that the only way the UK will be able to remain successful and fiscally sound is by creating the right environment for business and for foreign direct investment to continue at, and beyond, its existing rates,” says IoD chief economist James Sproule. “Without sufficient business growth there is a bleak future for our country, but there is no reason why such growth cannot be delivered if the authentic needs of business are recognised and delivered.”
Tax reform is one issue that the IoD will continue to lobby on, says the IoD’s head of taxation, Stephen Herring: “We are disappointed that the political compromises necessitated by a coalition have slowed the pace of tax reform, and the incoming government should adopt a much more radical agenda, which incentivises companies, especially medium-sized businesses, and reduces the burden of tax on businesses and individuals across all income bands.
“Trading companies should be allowed to opt out of corporation tax by electing for a tax transparent treatment – on a similar basis to firms in the US. The next government should also abolish the 45 per cent additional rate of income tax and reform business rates in order to ensure that they don’t fetter the growth of entrepreneurial businesses.”
The IoD believes that further trade liberalisation within the European Union (EU) should also be a priority. “There needs to be a focus on streamlining regulation and fostering growth – and more attention needs to be given to creating a single market for services as well as goods,” says Allie Renison, the IoD’s head of Europe and trade policy.
“Service liberalisation in the EU is imperative and should be a significant priority to give scope for growth across the EU. New government legislation should also be introduced to allow individuals and businesses to challenge the UK government in the courts where there has been ‘gold plating’ of EU policies.”
Dr Roger Barker, the IoD’s director of corporate governance and professional standards, wants to see the government shine a light on boardroom appointments.
“As well as the promotion of director training, the government needs to highlight how the boardroom appointment process is a way of improving board performance and diversity. There must be an emphasis on greater transparency, public advertising of board-level positions, and a formal approach to director recruitment.”
With the UK’s population projected to reach 70 million by 2027, the IoD believes that infrastructure is vital to the country’s prosperity – but not at any cost.
“We believe that all infrastructure projects need to be rigorously measured so that they provide maximum beneficial business impact and best value for money,” says Dan Lewis, the IoD’s senior adviser on infrastructure policy.
“Quite often, greater value for money can be found in shifting emphasis from large-scale new projects to optimising existing infrastructure assets. The incoming government should establish an independent index to create a scoring mechanism that assesses the project’s value for money.”
The next government must also lead by example when it comes to diversity in the workplace, says Lisa Buckingham, the IoD’s senior adviser on diversity.
“Research needs to be commissioned to identify the economic opportunity that could be gained if firms were more open to women returning to the workforce after a prolonged career break. The Equal Pay Act needs to be implemented without resorting to bureaucratic gender pay audits for SMEs – and, importantly, the next government must meet its own diversity targets.”
In the run-up to polling day, the IoD is hosting a series of events around the UK to discuss and review all the action as it unfolds. Either director general Simon Walker or Christian May, the IoD’s head of communications and campaigns, will address the following events – and will offer insights into what the outcome could mean for British business:
•27 April, Bristol
•29 April, Manchester
Tickets to the roadshow events are free for members. Booking is on a first-come-first-served basis. There will also be a special event on election night (7 May) at 116 Pall Mall. Walker, IoD chief economist James Sproule, and senior business leaders and politicians will discuss the possible post-election landscape for British companies. Tickets to the event, which includes light refreshments, and is taking place from 8pm, cost £35 (plus VAT) for members. For more information on IoD policy in the lead-up to the general election or to book a place at an event, visit iod.com/electionroadshow
The IoD believes the next government needs to prioritise the creation of a robust business environment. It has highlighted areas that should be addressed during the next parliament:
Tax Reforms should be considered and the 45 per cent additional rate of income tax abolished
EU There must be a focus on creating a single market for services as well as goods
Corporate governance A light needs to be shone on the boardroom appointment process in order to best highlight how this can improve board performance and increase diversity
Infrastructure An independent index should be created which can measure the cost and value of large-scale projects
Diversity The new government must lead by example and meet its own diversity targets