The coalition is still failing business

The government's enterprise bill provides no evidence of a clear strategic direction.

Today the Enterprise and Regulatory Reform Bill receives its second reading in the House of Commons.  It was trailed in the days before the Queen’s Speech as the centrepiece of a legislative programme by the government built on “growth, justice and constitutional reform”.  In reality, it is anything but.

The bill is a good illustration of the weaknesses and divisions at the heart of the government. The most pressing issue facing Britain is the fact that the economy has gone into reverse. The Prime Minister and Chancellor may wish to hide behind the fact that there is a eurozone crisis, or that we had too many days off because of the Queen’s diamond jubilee, or that the weather is slightly too cold or too hot, or – at the moment – too much rain. But everyone else seems to realise, with the exception of the occupants of 10 and 11 Downing Street, that their insistence on cutting spending and raising taxes too far and too fast, and thereby choking off demand in the domestic economy, has plunged this country back into a recession made in Downing Street. What we need is a proper plan for jobs and growth to get the economy going again – like Labour’s five-point plan.

Only in the last few days, President Obama has implicitly criticised the government’s stance, noting that it is a lot harder to rein in deficits and debt if your economy is not growing.  Tellingly, he singled out Angela Merkel and François Hollande for “working to put in place a growth agenda alongside responsible fiscal plans”. No such praise for David Cameron or George Osborne.

There is no magic piece of legislation that would conjure up growth. But the case for a British Investment Bank needs to be examined, as Labour is doing.  Reforms to allow firms to better plan for the long-term, invest in new plant and skills and ensuring that there are more, better paid jobs so the economy works for more people, more of the time would also improve Britain’s competitiveness and allow us to get back into growth much more quickly.

In the longer-term, the bill provides no evidence of a clear strategic direction.  Business is crying out for a stable policy environment to allow them to invest and plan for the long-term; a proper industrial strategy, based on the long-term to encourage sustainable growth, but this bill has failed to provide this.

We have in the bill the establishment of the Green Investment Bank, a welcome initiative that Labour announced back in 2010, but it won’t have powers to lever in private money to boost green investment until 2016. 

There are reforms designed to make executive pay more accountable and transparent, but ministers are refusing to implement all of the sensible recommendations from the High Pay Commission such as putting an employee representative on remuneration committees – and now it appears that Vince Cable is seeking to water down provisions for annual shareholder votes on executive pay.

The bill includes reforms to employment legislation. There are some changes on tribunals which are worth exploring but, in a nod and a wink to the Tory right, the government is hinting that it could bring forward amendments during the bill’s passage to put Beecroft’s fire at will manifesto on the statute book, alongside other proposals within the bill to water down the rights we enjoy at work.

Cable lamented in his leaked letter to the Prime Minister that the government has lacked a compelling vision on where it wants to take the country’s economy by 2020.  With this bill had an opportunity to rectify this and provide the strategic vision which British business is crying out for, leaving a lasting legacy that would boost economic recovery and secure Britain’s competitiveness in the next decade. Faced with the roadblocks to reform in Downing Street, it is a great shame this opportunity has been missed.

The Chancellor continues to "hide behind the fact that there is a eurozone crisis". Photograph: Getty Images.

Iain Wright is the shadow minister for competitiveness and enterprise.

Photo: Getty
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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.