The coalition still lacks a compelling vision for growth

Vince Cable's Enterprise Bill is incoherent and insufficient.

Britain and its businesses are crying out for a government that values enterprise and can spur jobs and growth.  We are in the longest double dip recession since the Second World War. Even if the one-off boost from the Olympics finally brings us out recession, and growth was one per cent in the third quarter, as some are predicting, our economy will simply be the same size as a year ago. We desperately need a government firing on all cylinders to help businesses drive the recovery.

In this context, the Enterprise and Regulatory Reform Bill, which returns to the House of Commons this week, could have been a great opportunity to put in place the measures necessary for business to plan ahead with long-term certainty. 

While there are elements in the Bill with which we agree - we support the creation of a Green Investment Bank, which was set in motion under Labour in government, and want to see improvements to the competition regime - like many business groups, we don’t believe it meets the challenges facing our economy.

It will not provide the crucial boost to demand to get us out of recession and into recovery, but it is also a rag tag of a Bill: incoherent, insufficient and sadly reflective of Vince Cable’s own concerns, articulated in his letter to the Prime Minister earlier this year, that the government lacks a compelling vision for the economy.  If you want to find a compelling vision from the government, the Business Secretary's Enterprise and Regulatory Reform Bill is not the place to look.

Take copyright as an example. Britain leads the world in creative and cultural industries.  One of the reasons for this is the strong, robust and clearly-understood legal framework that this country has in place.  But the Bill threatened to undermine this with an unnecessary and unnerving measure which had not been worked through with the sector and which risked undermining growth and investment opportunities, giving the Secretary of State wide-ranging and far-reaching powers to amend, remove or introduce exceptions to copyright without appropriate or adequate Parliamentary scrutiny.  Thankfully, last week, finally, the government saw sense and heeded the concerns we and the creative industries sector had raised, and has performed a welcome U-turn on these proposals.

However, it should use this opportunity to follow this up with U-turns on a whole host of other unwelcome measures within the Bill. Employment rights are a particular concern: ministers seem to believe that protections for people at work are the reason we are in recession, while in reality we already have the third most liberalised labour market in the developed world. According to a recent survey by BIS itself, only five per cent of small firms cited regulation as the main barrier to success, while 37% identified the economy as their primary obstacle.

The government has brought forward no evidence that making it easier to sack people produces economic growth. Indeed, when Adrian Beecroft, author of the No 10-commissioned report on employment law reform, came before MPs to give evidence, he admitted that his views “were based on conversations with a sample of people, which is not statistically valid”. Ever had a conversation with a bloke down the pub? Well that’s how government policy on employees’ rights is being devised.

Ministers’ stance on equality legislation is equally concerning. Quite what measures to water down the Equality and Human Rights Commission have to do with an Enterprise Bill needs questioning. This would seem to be further confirmation, if this were needed, of the return of the nasty party, aided and abetted by the Lib Dems.

It is disingenuous of Cable to suggest that these changes are merely “legislative tidying up”. The Liberal Democrat founder of the BAME Councillors Association, Cllr Lester Holloway, wrote in the Guardian in August that he was “deeply ashamed” at what Vince Cable was doing to the Commission, while Issan Ghazni, Chair of Ethnic Minority Liberal Democrats, has warned Lib Dem ministers that the changes in the Bill “amount to effectively abolishing the EHRC by stealth, which could potentially reverse progress made on equalities over the past decades.”   

The measures in the Bill, together with new amendments tabled last week by the government which weaken protections against third party harassment of employees, in direct contradiction to what Cable said to my Labour colleague Kate Green at the Second Reading of the Bill, will make life even harder for thousands of staff who run the risk of prejudice, abuse and harassment whilst doing their work.

We all want to see the economy grow and businesses thrive. As Chuka Umunna said in a letter to Cable last month, we would be keen to work with the government on a cross party basis to address the issues that matter to firms, to boost recovery and pull this country out of recession. But the rag bag of measures in the Enterprise and Regulatory Reform Bill fails to meet this challenge and, rather than helping business, makes the job of recovering from the recession made in Downing Street that bit more difficult.

The coalition has failed to answer Business Secretary Vince Cable's call for a "compelling vision" for the economy. Photograph: Getty Images.

Iain Wright is the shadow minister for competitiveness and enterprise.

Getty Images.
Show Hide image

Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.