Government promises plans for growth

The government has outlined plans for £200 billion of investment in infrastructure projects in the UK as part of a strategy for economic growth and recovery.

Addressing the CBI conference, the Prime Minister, David Cameron said that the national Infrastructure Plan would see a combined public and private sector fund of £200 billion going into improving the UK's transport, energy and communication network.

The coalition government has already committed £30 billion to new transport projects. It is hoped that the remainder of the money will come from private sector investors.

The government will put £200 million into a series of technology and innovation centres over the next four years in an effort to create a bridge between scientific developments in UK universities and businesses able to bring such advances to the commercial market.

The government is also to provide up to £60 million to pay for offshore wind infrastructure to help boost the UK's role in the industry.

The Prime Minister used the speech to balance the cuts announced in the comprehensive spending review with a strategy for growth.

The growth strategy came in three parts: creating the conditions for enterprise investment; supporting industries where the UK already holds a competitive edge; and enabling new, innovative firms to start and flourish.

Mr Cameron said: "In the weeks and months ahead, ministers will be developing detailed plans to turn this strategy into action.

"Everything - from bank lending to skills, green tech to high tech, competition to innovation, international trade to local growth - will be put under the microscope. That forensic, relentless focus on growth is what you will get from this government.

"What I need in return from you is a commitment to create and innovate, to invest and grow, to develop and break boundaries. The new jobs, the new products, the new ideas that will lift us up will be born in the factories and offices you own - not in the corridors of Whitehall."

The Prime Minister continued: "To build that new dynamism in our economy, to create the growth, jobs and opportunities Britain needs we've got to back the big businesses of tomorrow, not just the big businesses of today.

"That means opening up access to finance, creating an attractive environment for venture capital funding, getting banks lending to small businesses again and insisting that a far greater proportion of government procurement budgets are spent with small and medium-sized firms.

"In the days and months ahead we will be setting out our plans in all these areas."

Of the technology and innovation centres, Mr Cameron said: "These centres will sit between universities and businesses, bringing the two together.

"They won't just carry out their own in-house research, they will spread knowledge too, connecting businesses - large and small, new and old - to potential new technologies, making them aware of funding streams and providing access to skills and equipment.

"These centres will be great for research, great for business - and they're going to put Britain back at the top table for innovation."

Mr Cameron said the government wanted to help increase competition and remove barriers to enterprise.

He reminded his audience of the tax cuts - large company corporation tax is to drop from 28 per cent to 24 per cent over the course of the current Parliament - and the changes to the regulatory regime - the one-in, one-out policy for new business rules - that have been designed to boost business development.

The Prime Minister added: "Where there was neglect about maintaining a basic framework for business, we are bringing a pro-enterprise attitude - dealing with the deficit, cutting business taxes, investing in infrastructure.

"Where there was complacency about our competitive advantages, we are bringing a hands-on attitude - consolidating those strengths, getting behind key industries in every region of our country.

"And where there was a backward-looking, unhelpful approach to innovation and start-ups we are bringing an optimistic attitude, backing the young insurgent companies, pulling down the barriers that are holding them back."

Business groups applauded the focus on growth in the Prime Minister’s speech but some expressed concerns over the delivery of the plans and their detail.

Richard Lambert, the CBI’s director general, said: “The Prime Minister demonstrated a real passion for business and an understanding that only business will create growth.

“There was a welcome emphasis on the need to re-boot the country’s infrastructure, with a coherent vision of what needs to be done over the next five years to secure economic growth.
“It was encouraging that he encompassed all parts of the economy, from broadband to ports and from transport to energy. He also made clear that access to finance and immigration would not be barriers to future growth.”

A spokesman for the Institute of Directors, Alistair Tebbit commented: “It’s easy for the government to talk up its pro-enterprise credentials, but what matters is delivery. Getting the public finances in order will certainly improve economic stability, and we are pleased that infrastructure spending is not being cut as much as the last government planned.

“However, the government’s claim to have stopped the rise in red tape lacks credibility. If anything the red tape burden on enterprise is increasing – ministers have gold-plated the Agency Workers Directive, the Default Retirement Age is to be abolished, flexible working rights are to be extended, parental leave is to be increased, and the extension of the right to request time off for training to small firms has still to be ruled out. If the Government wants the private sector to create new jobs it needs to make it easier for firms to employ people, not harder. Ditching these proposals would be a first step.”

David Frost, director general of the British Chambers of Commerce, welcomed the emphasis on a strong narrative in favour of growth.

But he went on to say that the government has not yet articulated a full growth strategy.

Mr Frost added: “Businesses want to know exactly how government will prioritise resources, remove barriers, and incentivise private-sector growth. In the coming weeks, further action will be required for a rebalanced UK economy to emerge.

“Our member businesses say they need to see more action to support exporters – beginning with real help on trade credit insurance and trade finance, which are still stopping thousands of businesses from selling goods and services overseas.

“Businesses are also counting on action to reduce the burdens created by employment regulation, which is preventing many small- and medium-sized companies from taking on staff as the economy recovers. And without action to reform the UK’s sclerotic planning system, the billions of pounds of private sector investment needed to improve Britain’s infrastructure will not materialise.”