Chancellor’s Spending Review: National business reaction

November 25, 2020

Business groups have welcomed the investment in infrastructure and jobs in Chancellor Rishi Sunak’s Spending Review but said many firms still needed more help from the government.

The CBI praised the Chancellor for making “some bold autumn decisions” to power a spring recovery even as the stark forecasts pointed to tough times ahead.

But while welcoming Rishi Sunak’s ambition, it needs to be matched by action, it added.

CBI chief economist Rain Newton-Smith said: “The Spending Review lays the foundations for a brighter economic future.

“A new National Infrastructure Bank, long-term funding for innovation and a comprehensive plan for creating jobs and renewing skills are just some of the building blocks needed to deliver on this vision.

“It’s right to take this opportunity to plan for tomorrow. But ambition must be matched by action on the ground.

“The government’s commitment to build, build, build must be delivered now. This means a clear strategy to upgrade the UK’s infrastructure and publishing the Energy White Paper. 

“And there can be no let-up in the support for firms facing new Covid restrictions. Firms need help to survive, then thrive. Business investment and confidence can be the engine of UK growth, creating jobs around the UK.”

Ms Newton-Smith, pictured, said it was vital that the UK’s ageing infrastructure was “refreshed” to repower the economy, connect more people and create job opportunities across the UK.

“Putting money into roads, broadband and clean energy will help do just that,” she said.

“Most importantly of all, the government has set out its stall for the long-term by creating a National Infrastructure Bank. With the right remit, the bank has the potential, to crowd in the private finance that will be crucial to delivering these new projects.”

The British Chambers of Commerce (BCC) welcomed the Chancellor’s measures to help people return to work as a way of helping limit long-term unemployment but warned that the government must waste no time in putting these plans into action. 

Director general Adam Marshall, pictured, said: “This spending review comes at a critical time as business communities are fighting for survival in the midst of the coronavirus pandemic.

“The launch of the National Infrastructure Strategy is an important step in overcoming the longstanding infrastructure deficit. We’ve spent long enough discussing infrastructure projects – it’s now time to focus on delivery.”

He also said the government and business would need to work together to re-train and re-skill the UK workforce.

“Investment in the Kickstart Scheme, in which chambers of commerce are playing a leading role, and the launch of the Restart scheme, will be critical in helping to achieve that.

“With an uncertain winter ahead, the government will need to maintain an open mind on providing further support to businesses struggling to survive.

“As we look to rebuild and renew local and national economies, businesses will also need further significant incentives for investment in people, productivity and the planet.” 

The Institute of Directors (IoD) praised the emphasis on infrastructure bank and the Restart Scheme.

And it said business leaders would  be relieved that the Treasury was resisting the temptation to hike taxes on enterprise for now.

However, it also said they would be concerned that Brexit did not merit a mention.

Director general Jonathan Geldart, pictured, said: “IoD members see infrastructure investment as the top priority for our economic recovery.

“A long-term plan for upgrading broadband and transport, backed by a new national Infrastructure Bank, will provide a significant boost for business confidence.

“With widespread uncertainty at the moment, clear government strategy and commitments are crucial encouragement for directors’ plans for their own organisations.

“As ever, the acid test will be how quickly and effectively this funding reaches the ground. Transparency, good governance and a focus on the Net Zero target will be key for both the new bank and the Levelling Up Fund.”

While the Restart Scheme was “undoubtedly a welcome measure”, said Mr Geldart, it only addressed one half of the challenge.

“To counter the rise in unemployment, the Treasury also needs to boost job creation, and it missed a trick by not combining the Scheme with a cut to Employers’ National Insurance Contributions.

“While the economy will receive a boost when vaccines materialise, the Chancellor should be wary of relying on this completely. Directors look to make their hiring plans in advance, so improved prospects might not immediately translate to the jobs market, particularly as many companies will have to deal with a debt hangover before looking to expand.”

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