Politicos and business groups give their verdicts
Prime minister David Cameron and deputy prime minister Nick Clegg’s £950m promise to “safeguard and create” 200,000 jobs across the country is making headlines everywhere. It will help fund initiatives from 114 businesses, enabling them to expand and create jobs. Two power plants in Yorkshire and BT’s roll-out of superfast broadband are among the benefactors of the scheme.
The £950m is in fact the second round of the government’s Regional Growth Fund, a previously-announced initiative. (Chuka Umunna MP, Labour’s shadow business secretary, sniped that “no investment is actually being brought forward” and that the “regional growth fund is actually a two-thirds cut on what went before.”)
But will the investment really stimulate our ailing economy? Is the amount enough, or targeted correctly? We asked political bigwigs for their verdicts.
Stephen Canning, chairman of Braintree Conservative Future, told LondonlovesBusiness.com: “The prime minister’s plans should not to be sniffed at”
“David Cameron has inherited a difficult scenario in government, with ever-restricted funds to spend on projects and an uphill task to balance our nation’s books. Combined with the European crisis, he is walking a tightrope and must be careful with every penny of the taxpayers British pound he pledges.
“The prime minister has made it clear he is on an “all-out mission” to kick-start industry and revive the British economy. The package will offer 35,000 jobs, definitely something not to be sniffed at. It shows not only his commitment to rebalancing the economy away from the financial sector, but also his pledge to invest in the infrastructure needed for growth in the future when times are better.
“Investments in the broadband infrastructure and power plants will ensure that when a global recovery comes, Britain will be ready to ride it and enter a new age of a rebalanced and fairer economy.”
Political blogger Guido Fawkes told LondonlovesBusiness.com: “Politicians ignore the jobs lost due to high taxes”
“It appears Keynes has been resurrected and has been put in charge of the Treasury. If you look at most small business bankruptcies the largest creditor is HMRC [HM Revenue & Customs].
“High taxes undermine the viability of businesses. Politicians point to the concentrated jobs created for their shiny new project and ignore the greater number of jobs lost as businesses go under from higher taxes. I thought we learnt this lesson in the 70s. Sadly, it seems not.”
Tom Clougherty, the Adam Smith Institute’s executive director, told LondonlovesBusiness.com: “Governement funded infrastructure projects are usually wasteful”
“I’m always sceptical about government-funded infrastructure projects – they are usually wasteful, and rarely do anything to promote growth.
“Instead of seeking our headline-grabbing initiatives, the government would do better to focus its attention on removing the barriers to private sector investment, and reducing the tax and regulatory burdens on business.”
Richard Wellings, deputy editorial director at the Institute of Economic Affairs, said earlier today: “Deregulation is the key”
“Applauding investment by the private sector in these difficult economic times is all very well, but the government needs to do much more to remove the barriers to growth. Less restricted labour markets, simpler tax rules and fewer planning controls should be at the heart of the government’s agenda.
“The prime minister’s rhetoric stressing the importance of confronting our debts and promoting trade liberalisation is welcome. However, we desperately need radical action. Deregulation is the key to a robust economic recovery.”
Dr Neil Bentley, CBI deputy director-general, said earlier today: “This fund does not have the capacity to plug the finance gap”
“Medium-sized businesses have the greatest growth potential, but are often held back by difficulties accessing long-term finance for investment, so this funding will help them to grow and create jobs. Crucially it will help rebalance the UK economy, boosting areas that have been dependent on public sector funding.
“But despite its size, this fund does not have the capacity to plug the finance gap, so the Government needs to look at other funding options to help these firms grow, such as opening up bond markets to medium-sized businesses. We also want to see large companies encouraged to invest in medium ones by making equity investments tax deductible so that they are on a par with debt investments.”