IoD Week in Policy 18th–22nd October
This week in policy
We’ve moved very swiftly through October, and Winter is very well on the way. We’ve already started having arguments about the heating here in our office on Pall Mall. But of course, in the face of the Net Zero strategy, we’re committed to just putting on an extra jumper. Or two. We also feel that the strategy itself could layer up slightly. While we welcome the actions already taken, there is always more to be done.
In good news, for the first time in what seems like ages we have managed to get through the whole week without any mention of Northern Ireland! It seems the EU is a little preoccupied with Poland, which has decided it also doesn’t like EU law. Pexit doesn’t have quite the same ring as Brexit, but it’s nice to know we’re not the only ones in the firing line at the moment.
In better news, and speaking of firing lines, Donald Trump has announced he will be launching a new social media app to rival Twitter, since he was kicked off last year. It will be called Truth, which isn’t an acronym for ‘The Roadmap to Understanding Trump’s Head’, or a clever joke, or realistic expectations. How disappointing. But we are very much looking forward to the return of the babble.
Anyway, back to policy…
A Kiwik for trade
- On Wednesday, the UK secured an Agreement In Principle (AIP) with New Zealand, in what is to be one of hopefully many new Free Trade Agreements (FTA) signed in the coming few years.
- The agreement covers ambitious commitments that will reduce barriers to trade, both tariff and non-tariff, facilitate cross-border service trade, support business travel, increase digital opportunities, and promote good regulatory practices and transparency. Throughout, the agreement will ensure respectful local confidentiality requirements and data protection – good news for most, not such good news for hakas.
- Oh and of course we can’t forget that it will ‘cut red tape’. 5 points for each time someone mentions cutting red tape.
- It even has an entire chapter dedicated to SMEs, which business organisations have been Ardern-tly calling for since negotiations began. The chapter includes provisions that commit each party to promote SME participation in international trade, establishing and maintaining information that is easily accessible to small businesses when taking advantage of the agreement.
- The deal is also being praised for being a steppingstone to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Now try saying that 5 times faster.
- UK admission into the CPTPP would then be the next notch on our belt on the way to a deal with the US. But they’re still Biden their time.
- However, it’s not All-Blacks and white. Similar criticisms are being made about this deal as the Australia deal, especially on agriculture.
- Since New Zealand is more sheep than people, it is understandable that they may want to get rid of some. But here in the UK, we take great pride in our local prod-ewes, particularly from Scotland and Wales, and there are concerns that importing livestock will threaten our own farming industry by introducing competition and driving down prices.
- To mitigate harm to our local industry, the removal of tariffs on beef will occur after a period of 10 years, and sheep after 15. It will probably take almost that amount of time for them all to get here anyway.
- The AIP is not legally binding yet. So the next steps will be turning it into a fully ratified, legal document that has been signed by both parties.
Build Back Greener
- Talk about recycling, that slogan looks a little familiar.
- This week, the government announced its Net Zero Strategy. This is a 368 page document that sets out our goal of being a global leader in ending the contribution to climate change. Let’s hope they didn’t print out any copies.
- According to the analysis, the key opportunities lie in off-shore wind, where the UK is already full steam ahead; electric vehicles, which we are taking charge of, and carbon capture and storage, which we’re beginning to take hold of.
- The government has said they are approaching Net Zero under four key principles:
- 1. Working with the grain of consumer choice; 2. Ensuring the biggest polluters pay the most for the transition; 3. Ensuring the most vulnerable are protected through government support; 4. Working with business to continue delivering deep cost reductions in low carbon tech.
- At the IoD, we welcome this as a first step. It goes some way to providing clarity on a range of initiatives. But there is still more to be done. The government must work further with businesses on how they can meet the challenge.
- Good news, inflation has fallen for the month of September, ONS data has shown… from 3.2% to 3.1%. Well, that fell a little flat.
- This figure is based on data from this time last year, when prices were still low from ‘Eat Out to Help Out’.
- Pressures have also come from last month’s fuel fiasco, which saw prices of liquid fuel rocket.
- However, though the figure is only a slight decline, it will bring some relief to businesses who were concerned it was going to accelerate.
- The Bank of England is still saying that as a result of rising energy prices, inflation will rise to 5% by early next year.
All is going to plan, but which one?
- Oh how the tables have turned. The government is adamantly sticking to their original strategy, while the population calls for Plan B. Things really have gone topsy turvey.
- With over 50,000 new cases being reported across the UK, people feel that more restrictions are essential to battling coronavirus over the winter period. But Boris is just asking people to go and get their booster jabs, saying that things are much better now than they were a year ago, which is why they have so much confidence in Plan A.
- Boris is even muting the urges of doctors, who are telling him that now is a good time to implement Plan B.
- Plan B would reinforce measures such as mandatory face coverings, COVID certification, and working from home requirements. We’re getting a slight sense of déjà vu. All over again.
- The other downside is that guidance has said the notice period for triggering Plan B is seven days. It may be the case that businesses will only need to dust the cobwebs off their one-way-system signs, and reinstate their mask policy, but is one week’s notice long enough?
A taxing review
- Since the government decided to go ahead and increase National Insurance contributions without committing to a thorough impact assessment, we took matters into our own hands.
- We are very pleased to have been able to part fund and 100% support the National Institute of Economic and Social Research (NIESR) report analysing the impact of the UK Government’s planned increase to National Insurance Contributions.
- As we expected, and have informed the government on many occasions, the report finds that the increases to National Insurance contributions is very harmful to the economy.
- Specifically, the tax increase adds needless complexity to the tax system, encourages self-employment rather than employment, and hits hardest the labour-intensive sectors that suffered most from Covid. It also encourages a shift away from labour-intensive sectors and reduces the UK’s international competitiveness.
Week ahead in Policy
Things may be cooling off into the winter months, but things are heating up in policy. Our Director of Policy Dr Roger Barker has a busy week of telling the government how to do their job properly. Having already spoken with Lord Shinkwin in the House of Lords on Wednesday of this week, he will be appearing in the Commons twice in one day next Tuesday. He really is a Common visitor.
We also have the budget to be excited about. It seems that we have more coins in our pocket than we expected, so we will have to cheque what will change, and account for how he shares things out.
Tuesday 26th October
- BEIS Committee oral evidence on post-pandemic economic growth, focusing on state aid and post-Brexit competition policy.
- The European Affairs Committee oral evidence on the UK-EU relationship, with an address from Lord Frost.
- Roger will be speaking at the APPG for Corporate Responsibility Group on how the UK Government and responsible British companies should navigate the global corporate landscape post-Brexit.
- The APPG on Business in a Pandemic World will be taking a look into the supply shortages and the affect that COVID-19 has on them.
- Roger will also be giving evidence to the Public Bill Committee in the House of Commons on the Subsidy Control Bill, which is a subsidy regime alternative to the EU State Aid scheme.
Wednesday 27th October
- Chancellor Rishi Sunak will be announcing the Budget. It is expected he will look to returning the economy back to a pre-pandemic normal, and given that the economy has bounced back a little faster than previously predicted, he has a bit more money to spend. We look forward to seeing where.
- International Trade Committee oral evidence on trade and COP26.