Business minister Matt Hancock opened discussions by citing the slowdown in China and the Eurozone as a key challenge for the UK economy. However he said he remained optimistic, citing the two million jobs created, that the UK could become the best place to start and run a business.
John Cridland, CBI director general, also felt there was now an economic opportunity the country had fought hard to secure, emphasising the importance of stability for business.
It was necessary to “bank the successes of this Parliament” Cridland stated before noting that there remained particular work to do in regards to education, ensuring the recovery was felt by all of society, as well as affirming the UK’s place in the world, via a reformed Europe.
Simon Collins, senior partner at KPMG, echoed these concerns around education, saying it was feasible to either lose or capture the millennial generation who he felt were increasingly looking for purpose in their working lives.
He then spoke broadly about the need for businesses to review their pact with wider society, and he felt addressing the challenges with the young generation could be a platform from which to do this. Whilst government had a role, he concluded it was imperative businesses secure a more trusted cycle between tax, regulation and business.
Chairing the panel, Larry Elliot, economics editor at the Guardian, asked for their views on George Osborne’s statement on securing the required tax from multi-national organisations. Collins said it was certainly a fair point but noted that there were competing governments offering tax incentives. It was key any proposals were seen through from a global perspective, he said.
Cridland said he was a fan of tax transparency for businesses suggesting that often problems around tax arose from the lack of clear explanation to the public, and commending Starbucks’ efforts in this regard.
The message around tax also had a particular impact coming from a Conservative chancellor, suggested Hancock who reiterated it was best done at an international level. He felt the restoration of trust could also be facilitated through government actions around areas like wage levels.
Responding to Elliot’s question on living standards, Hancock explained how he felt often the debate was misinformed by how things were measured. He said there were a range of measurement issues to be considered including how the increase in new jobs ultimately reduces the average earnings figures for a period – the jobs recovery had been quicker than GDP, delegates heard. However, Hancock was keen for the range of figures not to distract from the long term aims of securing sustainable drivers of the economy.
Collins said it required some kind of private business bravery to invest ahead of consumer demand growth, but felt this was within sight. He added that whilst business to business confidence had increased, this was not reflected in business to consumer confidence, a situation which was not sustainable.
Cridland echoed this, adding that they needed wages to rise off the back of genuine business investment. Whilst this had been delayed, he reminded delegates that they were already seeing wage growth in new appointments.
Asked by Elliot what could be done to rebalance the economy, Hancock noted the improvements to UKTI and trade prospects but reiterated the challenges of the economic backdrop in Europe. Cridland said the old measures were no longer working to clearly give a picture of the economy, as they no longer quite captured how exporting worked.
He added that more targeted export was needed, increasing the links with the industrial strategies. It was also important to focus on medium sized businesses, he said.
Collins echoed these points including the funding gap for medium sized businesses. He felt more could be done to develop the ecosystem of businesses, including their supply chains.
Question and answer session
Derek Browne, chief executive of Entrepreneurs in Action, rose to talk about school leavers and skills, saying often employers were only relying on those who had demonstrated clear academic success and were recruiting by numbers of qualifications. Another delegate suggested that none of the skills employers rated were part of the skillset measured by Ofsted and suggested the need for a standalone vocational institution, that 14 year olds could attend away from school.
In response, Hancock talked enthusiastically about the key role of apprenticeships in the UK economy and Collins spoke from a KPMG perspective, outlining the measures the company had taken to avoid their own recruitment process from becoming too homogenous.
Cridland made an impassioned reply, stating that he felt Ofsted was “getting in the way of education of the whole person”. He felt in an ideal world he would abolish GCSEs, ensure vocational preparation started at age 14 and provide a world class careers service.
A female solicitor spoke from the floor to ask about regulating diversity in the business sector, noting Collins himself had described senior managers in accountancy as “white, pale and stale”. Collins said he still stood by this quote. Whilst commending the campaigns that had been done, he felt progress had been slow but would stop short legislating from above. He felt more could be achieved through peer and institutional pressure.
Dinah Caine from Creative Skillset, who sits on the Creative Industries Council, asked whether joined up working across government was required to meet the key needs of some sectors. In response, Cridland felt that any barriers across department could be worked around, saying the CBI had never experienced any issues in working across government like this.
The non-executive chairman of Fujitsu, Simon Blagden, asked the panel about the key challenges of the European question, particularly if the UK left. Cridland reiterated the desire for a reformed Europe, noting the CBI had calculated the net benefit of being part of the union at £3000 per person for every household. Collins also echoed this stating business sentiment was very much pro-Europe though were not blind to the arguments for reform. The uncertainty was the most damaging element, he suggested.
Concluding, Hancock felt the announcement about the referendum had not exacerbated risk or uncertainty, something he felt already existed about the public’s opinion on Europe. The commitment just brought the question around the relationship with Europe to a head, the audience heard.