Big business backs big government
Businesses are calling on the next government to roll up its sleeves and take a much more proactive stance to help firms adjust to ongoing changes in the global economy.
With the UK facing a range of major challenges, both domestically and internationally, businesses are demanding that legislators step in to provide regulatory clarity and offer support where necessary.
Jordan Cummins, UK competitiveness director at the Confederation of British Industry (CBI), said the global nature of the challenges facing the next government meant it would have to be more proactive in giving businesses a clear direction of travel.
He cited the regulation of artificial intelligence (AI), which is currently in development . “Businesses are overwhelmingly telling us they are waiting for the government to deliver a clear regulatory framework,” Cummins told City A.M.
“This is the opposite of the traditional free-market framework in which businesses move first and then wait for the regulation to follow,” he added.
Among a range of measures included in its manifesto, the CBI have called on the government to ensure that firms have access to a targeted subsidies programme to help them adopt new technologies.
Similarly the British Chambers of Commerce (BCC) has called on the government to appoint an AI champion to spearhead uptake of new technologies among SMEs.
Pointing to uncertainties around skills, green innovation and trade, Alex Veitch, director of policy at the British Chamber of Commerce (BCC), said solutions required “long-term buy-in from our politicians”.
Looking beyond AI, a number of firms are clear that the government needs to be clear about its plans for the Net Zero transition.
The BCC wants the government to introduce a ‘green industrial strategy’ while the CBI said the government needed to deliver a net zero investment plan, with a competitive incentive regime.
Miles Roberts, chief executive at FTSE 100 firm DS Smith, said that this was particularly important given the progress made by other jurisdictions on a green economic plan.
“Everyone seems to agree that the UK needs a successful long term green industrial strategy, yet while other countries implement theirs, we continue to shy away from clarity and long-term commitment to it,” he told City A.M.
Roberts’ comments reflect a frustration that the UK has been slow to react to major policy interventions in both the US and EU.
In 2021 the Biden administration launched the Inflation Reduction Act, a monumental set of subsidies for green investment, while the EU launched its own Green Industrial Plan, which supports the bloc’s own transition to net zero.
“We need a long-term plan with specific measures for energy intensive industries, and to reduce carbon emissions we simply must have clarity on what the low and no carbon energy sources are going to be in the UK,” Roberts said.
The government is also likely to have to take more specific steps to help businesses transition to Net Zero. James Gibson, chief executive of VOID Technologies, said that intervention would likely be necessary to mitigate the risks big firms face when transitioning to more sustainable options.
“Everyone wants sustainability, but not at increased cost,” he told City PM. “Incumbent supply chains are typically optimised down to the penny, making it very difficult for sustainable challengers to compete.”
Gibson said that the short-term risks for big firms investing in sustainability are significant. He suggested that either consumers need to be willing to pay more, or government intervention needs to create ecosystems that support development costs and execution risks.
“There needs to be something in place to encourage companies to invest more in R&D to accelerate sustainability initiatives,” he added.
While businesses have a lot to gain from government support, the relationship is not all one way. On many of the government’s economic targets, such as the Net Zero transition, Cummins pointed out that the government would have to rely on businesses.
“The government cannot do it alone because they don’t have enough fiscal headroom,” Cummins at the CBI said. “To reach Net Zero the government will have to crowd in private sector investment”.
Businesses were clear that a successful partnership with business would be crucial for spurring growth. “I have seen countless plans for growth from successive governments – the next one needs to make them a reality,” Roberts said.