Speaking in a Labour conference fringe meeting hosted by the CBI and
KPMG, the Shadow Business, Innovation and Skills Secretary emphasised the importance of having a strong and “granular” industrial strategy in place. But he stressed that this is not just a BIS issue; it needs to be cross-government.
If elected in 2015, a Labour government would implement a “proper, credible” investment bank, Umunna said, and increase apprenticeships “substantially” without sacrificing quality; they would be at a level three standard and last at least two years.
The “persistent” balance of trade deficit needed to be tackled, he said, adding that leaving Europe is not the way to do this:
“My view is that the EU unlocks the door to these emerging market economies.”
Shadow Chief Secretary to the Treasury Rachel Reeves noted the Resolution Foundation’s recent figures showing one in five people in Britain are currently paid less than the living wage. This is not good for economic recovery, she said, as people would not become drivers in the economy.
CBI Director General John Cridland said the UK’s main mission is to rebalance the economy to a model of more investment and exports.
There are two really big things that must happen to enable this, he said:
Firstly, business has to “get out there” and export in markets that they have previously ignored.
Secondly, government’s main role is to rebuild Britain’s infrastructure. However, Cridland feared that energy investment had become stuck.
“We need a supercharger” he stated:
In the short term, a new 21st century approach to industrial strategy should be implemented, something Cridland did not believe the various political parties had major policy disagreements on. “Getting behind” winning technologies is crucial, he said, whether these be automotive or creative.
In the long term, he believed education “is absolutely key”. Sustainable living standards and employment in this country will only be achieved through decent education, he stated.
Simon Collins, UK chairman and senior partner at
KPMG, emphasised the need to improve trust in the industry, adding that businesses across the Eurozone are frustrated at the lack of confidence.
He rejected the premise that a choice existed between funding being channelled into either large businesses or SMEs, citing Jaguar Landrover as an example of how small businesses and large businesses “working together” is the way forward.
Question and answer session
The issue of access to finance for business was raised, with Cridland emphasising that whilst small businesses not being able to secure loans is important, it is only one of the current problems.
What businesses really want is for banks to get back into relationship banking, with bank managers who are empowered to take loan decisions themselves rather than simply using a computer scoring criterion. Changes are being made in this area, he believed, but warned that it takes time.
Reeves echoed this point, noting how inexperienced many banking staff involved in making decisions on business loans are. Umunna agreed, saying this was a cultural issue that needed to be addressed.
He said he saw nothing wrong with having a sectoral focus in any industrial strategy, as it made complete sense to play to the country’s strengths.
Many SMEs misunderstand the risks inherit in debt and equity, Collins argued, and unless this “societal mis-mash” is conquered the bank bashing would continue.
Rob McIvor from London First asked what kind of message was being sent to investors across the world with Labour’s policy uncertainty around projects like HS2.
Reeves insisted she is in favour of HS2, but added that the costs had to be kept under control:
“No project should have a blank cheque” she stated. “We want HS2 to go ahead, but not at any cost.”
A representative from the Institution of Civil Engineers raised the point of energy investment, and Cridland explained that his nervousness on the subject stemmed from the fact that commercial skills “of a very high order” were being demanded of the civil service.
The Shadow BIS Minister agreed that there is no single solution on energy industries, adding that “we do have to lead in the development of sustainable technologies” to ensure the UK uses the right technologies in the future
“If we need policy certainty anywhere, we need it on energy policy” he stated.
An audience member from Newcastle Airport suggested Labour commit to implement the recommendations of the Davies Commission on airport capacity.
Cridland said all parties should commit to doing so; “if they are not going to, why did they bother setting it up?”
Umunna said Labour had been clear that it was a huge step backwards to kick the Commission into the long grass.
He looked toward the interim report due later this year, saying the decision on whether a hub is needed would determine the direction of travel.
A representative from Transparency International raised the issue of the UK being “the money laundering capital of the world”.
Collins argued that the job of tracking down organised crime is one for government, not for business. Umunna referenced his time working for the compliance department for a major investment bank, saying things were very different. Progress had been made on the matter, but as ever, it was “a constant battle”.
He added that one of the reasons that people like to do business in the City is because it is seen as a gold standard.