In the final part of an article aimed at stimulating debate, Carl Richardson continues a response to a challenge from the Prime Minister. Click here to read Part I of the article
• Philosophically review our approach to ‘red tape’ - It feels far too obvious and a well-trodden path for a business person to simply call for the cutting of red tape in order to help boost the country’s economic output, although it is undoubtedly fair to say that business people who are simply trying to ‘get things done’ can often feel as though they are stuck in a maze of unnecessary process and regulation.
Instead, why not consider a fundamental review of our philosophical approach to the proper administration of our economy? Could we reappraise exactly what it is that government is aiming to achieve with various regulations set against the context of our economic plan and aims, and then set the legislative rules accordingly?
In the private sector, businesses - and the individuals working within them - are judged by results rather than intentions, and what matters are outputs not inputs, with such a goal orientated approach being essential in ensuring that good businesses deliver results. Why not consider a similar approach for the framework of regulations within which businesses have to operate?
Why not decide which specific metrics we wish to focus on to drive the country’s economic growth in the coming years? For example, this could be around how much we wish to export or specific carbon neutrality targets.
Then let's make sure that all of the regulations in place are designed to help those goals being achieved, rather than promulgating ill-fitting barriers that can dampen the enthusiasm of even the most ardent entrepreneur. At present this too often results in businesses chasing their tail, switching their time and energy elsewhere and away from the productive activity that would have been achieved had fit for purpose regulations been enforced.
There are indications of positive steps in the right direction. There are recent reports that the Culture Secretary is looking to streamline rules around data regulation in order to boost the UKs digital economy. More broadly, the government has also “launched a consultation as an initial response to the report by the independent Taskforce on Innovation, Growth and Regulatory Reform (TIGRR) commissioned by the Prime Minister, exploring a number of recommendations on the UK’s regulatory framework”.
While this is all very much welcome, there remains much to be done in the field of regulation and one can but hope and encourage those leading the consultation to be bold in their approach.
One suggestion to help track progress and deliver greater transparency might be to instigate a monthly one-page bullet point report. Could this report be made public and highlight the number of regulations that have been amended and made fit for today’s post-Brexit economy over that period?
After all, as business people well know, what gets measured gets done.
• Tax incentives – A fundamental principle of our society is that businesses create wealth and generate tax income for the government, which is then used to pay towards public services, such as health, social care, schools and our armed forces. How to generate more tax while not losing votes is a challenge that all governments wrestle with.
From a business perspective we propose that a clear and ambitious programme of focused tax incentives to take on board the potential risk of failure would help to fuel growth of British businesses and create jobs in the years ahead. The ensuing economic expansion would thereby generate additional tax revenue to pay for public services while avoiding the need for wholesale tax rises.
Levels of private sector investment in the UK have been low in comparison with other developed economies for some time, dating back to the global financial crisis of 2008. As we emerge from the pandemic in a post-Brexit world that business is still adjusting to, it feels more important than ever that the shackles holding back business investment, and in turn growth are released.
A June 2020 report for The Centre for Policy Studies, that was led by former Chancellor Sajid Javid, recommended that the government should ‘commission a system-wide review of the UK tax system…with a view to delivering a moderate increase in revenue over the medium-term through improved incentives and higher growth’.
He went on to suggest a number of initiatives, including an unlimited Annual Investment Allowance (AIA) that allows firms and sole traders to write-off investment on machinery each year. Currently capped at £1 million per year, this allowance will revert back to £200,000 per year from 1st January 2022, which is surely a move in the wrong direction, and a step which will just discourage investment by businesses in the future.
A full review of the tax system makes sense if done with a firm eye on driving business growth and creating jobs. Smart decisions can then be made on the likes of Entrepreneurs’ Relief and Capital Gains Tax which actually incentivise business owners, to tip the risk-reward balance in favour of ‘having a go’, with the resultant likely higher tax revenue to be to the ultimate benefit of the entire UK.
• Celebrating business - Finally, can we get better – and quicker – at celebrating business champions and successes? The traditional method of doing so in this country is of course via the honours system. Whilst this does have great merit, surely we can find better ways to recognise more specifically and celebrate publicly our brilliant entrepreneurs and wealth creators earlier in their careers?
Take Ben Francis, the founder and now CEO of West Midlands-based Gymshark, for example. He is only 29, but less than ten years after founding the company now sees it employing over 550 people, valued at over $1 billion, and regarded as a Unicorn business.
What a great example for other aspiring entrepreneurs to follow and this is clearly somebody to be celebrated now while his is in the midst of building the business rather than in years to come. After all, a good coach doesn’t encourage and motivate his team after the game has ended.
The world is indeed moving faster than ever, and we absolutely agree with the Prime Minister’s assessment that the country therefore also needs to move faster if we are to keep up with it.
More than that, and as we have hopefully made clear in this series of articles containing a number of ideas to help stimulate debate, we feel an imperative to be increasingly nimble and agile in our thinking and practices. That way, rather than being smothered, surely the ‘Invisible Hand’ of enterprise remains appropriately unshackled to continue playing its part in our society as a whole?
For more information, please contact Paul Faulkner at paul.faulkner@rclpartners.co.uk