Issuing its own proposals for change ahead of the final debate, EEF, the manufacturers’ organisation believes the debate on the economy to date has been sterile and superficial.
In the light of the tough economic choices on creating balanced growth and repairing the public finances, all three parties need to show that, whatever the outcome of the election, they will have the political maturity and courage to implement a bold economic strategy.
This includes a radical rethink of government and public sector spending, creating a competitive and modern tax system and ensuring a greater role for an agile and dynamic manufacturing base.
Commenting, EEF Director of Policy, Steve Radley, said:
“The economy is now at a crossroads and we have a unique opportunity to look again at what sort of economy we want in the future and how we get there. Coming out of the recession, there has been a lot of noise about the importance of manufacturing to our economy.
“But so far, the election has only superficially focused on the public finances half of the economic equation. Economic growth and the role of manufacturing have unfortunately taken a back seat.
“Rather than spending ninety minutes exaggerating fairly minor differences on narrow policy issues, business wants to hear the party leaders discussing their visions for building a better balanced economy.
“In particular, it wants to hear real details on how they intend to repair the public finances and to see them debate their plans for tax reforms that generate investment, jobs and growth in the UK. With a week left before the general election, the political parties need to refocus on how they will do this or risk repeating the follies of the past 30 years.”
In response, EEF has published its own set of principles and a clear economic strategy that it believes the next government should pursue:
- More effective government. Reduce the cost of government by addressing public sector pay and pensions and working better with the private sector. Send clear signals to the market of its long term needs and priorities in areas such as energy and transport infrastructure and its requirements as a customer.
- Work with business, not in isolation, to provide a competitive, predictable tax system in which the direction of travel is clear.
- Cut the headline rate of corporation tax to 25 over the next 5 years
- Raise VAT to 20%
- Return the top rate of tax to 40%
- Reform the antiquated capital allowances regime
- Improve the R&D tax credit
- Create a more sustainable capital gains tax regime
- Set out strategies and priorities to help grow key technologies and take advantage of growing markets. In particular low-carbon vehicles, aerospace and defence, healthcare technologies and construction and building products.
- Drive a cultural and organisational change across government. Changes to the machinery of government and chopping and changing of Ministers has led to complex and unpredictable systems in tax and skills for example. This process has to end and policies be given time to bed in.
- Enhance our labour market flexibility. Priorities include maintaining a default retirement age and retaining the individual opt-out from the Working Time Directive.
- Tackle long-standing weaknesses in our skills system. Resources for STEM subjects should be prioritised and the complex skills landscape must be simplified to deliver a demand-led approach.
- Address urgent energy and waste infrastructure needs. Government must keep planning independent and take a balanced approach to energy supply and storage.
- Invest in innovation. Create one source of finance to support ambitious, growing companies and enable businesses to collaborate with universities.
- Deliver valuable business support schemes. Prioritise funding for programmes that deliver the greatest benefits.