While Britain waits for the Chancellor’s Spring Statement, we continue to talk about how we are entering a period of significant change and uncertainty. This is because there has been a failure on the part of government that, faced with the momentous decision to leave the European Union (EU) 18 months ago, we are no closer to knowing what our future economic relationship with the EU will be like.
The uncertainty delays investment and spending which in turn impacts our economic prosperity. Whether we remain within the Customs Union or not, no solution will be perfect. The urgency for business is for the Government to make a decision and provide clarity.
There is a need for a significant shift in the way that our governments look at running the country. Successive governments make decisions based on political ideology rather than what is the right thing to do for the long term. It does not have to be a choice between looking after business interests or looking after the interests of the more vulnerable in our society. Successful businesses do not have a conflict between making profit and looking after the people who are instrumental in allowing it to achieve that profit.
The perfect example at present is the perceived conflict between maintaining fiscal prudence, or austerity as it seems to have come to be known, and the need to provide for our future growth. If a business was faced with this challenge it would first look at all its big cost centres and make sure it was getting value for money. This may involve cutting back in certain areas or looking at the business pricing structure to see if this allowed it to deliver a good service but also was enough to allow it to invest back in the business.
Why do we not take a serious non-partisan review of the NHS, the biggest budget item for us? This should include whether money is being spent on service delivery rather than layers of management.
We also should not be afraid to say that with the changing population make up there may be certain areas or certain categories of people who would have to pay something for receiving such services. Or, be bold and say that those who subscribe for private cover can get a tax break, making such cover more affordable and reducing the pressure and cost of the NHS thereby focusing more on providing a service to those who really need it and have no alternatives.
We also keep hearing of how there is big shortfall in productivity without really understanding what this means and the impact it has. Simply put this is the gap between developed countries when measuring the value of output per worker or output per hour. Education and skills training is clearly central to closing this gap.
Philip Hammond commented last September that improving the productivity gap in the north of the country was at the very heart of the government’s economic policy as we prepare for Brexit. Yet we continue to tinker at the edges with our education system rather than fully addressing the skills needed by our future workforce. In order to stop falling even further behind other countries, we must undertake a review of the education system that is not driven by politics or ideology. Another area where one could argue we need to spend a lot more money but this needs to be combined with a full review of the system.
There is then taxation, the other part of the Chancellor’s equation. The answer to questions of improving services is not always to increase spending. Government, like a well-run business, needs to drive efficiency and be ruthless in measuring value for money. This certainly does not mean making the vulnerable in society even worse off but actually making sure that they in particular receive the help they need in a well targeted manner rather than grandiose projects that do not achieve anything but provide a good sound bite.
It is well documented that lower taxes provide motivation to business and individuals to work harder and invest more and also reduces the temptation to avoid tax. A growing economy makes it much easier to incur expenditure without increasing taxes. The government needs to make some tough but quick decisions around Brexit and start focusing on what the economy needs for the new environment it finds itself in.
Nilesh Shah is CEO of Blick Rothenberg.
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