The week in policy
Words like shambles, and sleaze, and chaos have been floating around the Downing Street ether this week. More than usual. Something to do with a certain Prime Minister’s driving skills we think... why else would he have admitted he crashed his car into a ditch? On a dizzying journey of U-turns, it appears Boris is driving his own party round the bend. Talk about booster jobs, or jabs, or whatever it’s supposed to be, we think he’s more in need of a booster seat.
Speaking of being derailed, the new East Midlands to Leeds and Manchester to Leeds via Bradford branches of the HS2 have been re-track-ted. This must be a part of the government’s levelling-down agenda. We’re really not happy with how this has been handled.
In better news, for those worrying about empty shelves this winter due to the supply chain crisis and the added threat of the EU-UK trade war, apparently Christmas won’t be ruined after all. The ghost of Christmas Last Year poked his head into the negotiations, and tensions have thawed.
New strategy or already knew strategy?
On Wednesday, the government released its new Export Strategy, outlining the ways in which they hope to turn the UK into a global trading powerhouse.
When we say new, it’s almost entirely based on the 2018 strategy. We thought they were supposed to be recycling paper, not old policies...
The strategy is a 12-point plan with 4 key principles: encourage, inform, connect, and finance.
The plan is this: we are retreating from the EU with our tails just slightly between our legs, into the Indo-Pacific where, the government claims, there will be growing demand for our services.
To do this, the government will exploit their networks to connect businesses globally; put on tradeshows; promote the Export Support Service helpline; offer training programmes such as the Export Academy; provide funding through the Internationalisation Fund and UK Export Finance, and make use of DIT’s network of experts.
Of course Point 2 of the 12 point plan relates to Levelling-Up. We would have been disappointed if that didn’t make the cut. DIT have opened offices in Scotland, Wales, Northern Ireland, and Darlington. Darlington is home to the world’s first passenger steam train. We think it will take a bit too long to send goods to the Pacific by train, but at least some of the Levelling-Up agenda is still full steam ahead.
Speaking of empty slogans, the strategy has given us another to add to the collection. Point 8 has introduced us to ‘Made in the UK, Sold to the World’. It’s a very literal campaign. We suggested some options but for some reason they didn’t get picked up: ‘UK Specific, made for the Pacific.’ ‘Good plan, trade with Japan.’
We do think the Export Strategy is a good first step in boosting UK exports, and encouraging smaller businesses to find opportunities internationally.
However it is important to remember that the EU is still our biggest and closest trading partner, and should not be overlooked in our future trade policy. Trading with the Pacific is all very well, but it’s a very long way away.
On Tuesday, ONS data showed that unemployment is continuing to fall, down to 4.3% from its 5.2% peak in 2020.
The data also tells us that the number of employees who are temporarily away from work is back to the long-term trend, suggesting that anyone still receiving furlough payments are either abroad or working elsewhere. In other words, they’ve taken the money and run.
The Bank of England are still tracking to see if the end of furlough has had an impact on the labour market at all. Data for October, the month after furlough ended, will be released next month, but predictions are that there won’t be a huge impact on the downward trend.
Meanwhile the inflation data for the year to October, published on Wednesday, at 4.2% was higher than expected and now makes the Bank of England’s forecast of a rate of 4.5% by the end of November look a little optimistic.
All in all, we think this shows that the Bank needs to move on interest rates if it wants to get inflation expectations under control.
While no business likes the cost of debt to rise, with interest rates at historic lows, at the moment firms are more worried about inflation expectations becoming entrenched.
Not enough of a nanny state
Having spent the last two years stuck inside with family, home-schooling, putting up with children causing havoc in the background of a Teams call in the home office, many company directors are beginning to feel very Maria von trapped.
But, business leaders are finding that the cost and availability of childcare is just too expensive. At the moment, the Nanny McFees are just too high.
In our October Policy Voice survey, 57% of directors responded that the cost and availability of childcare restricts the capacity of women to take on senior business positions.
72% are in favour of the government providing more generous support for childcare costs.
We are calling the government to:
Appoint a Childcare Tsar, a specific leadership role to drive this agenda forwards. As long as he’s not like Ivan the Terrible, we’re sure the children won’t mind.
A proper debate around nursery top-up fees and the employment and tax status of nannies/child carers.
As Dr Suzy Walton, a Non-Executive Director on the IoD’s own Board commented, “childcare for under 5s in the UK is more expensive than almost anywhere in the world. This is unquestionably a barrier for parents and forces particularly, but not exclusively, mothers out of the workplace.”
On Monday, Channel 4 Dispatches aired a documentary entitled ‘Did Brexit Work for Business?’. They took most of their evidence from our September Policy Voice Survey, which was really vital in setting the scene.
The presenter, Harry Wallop, took us on a journey of 4 case studies: a lobster supplier, a gin distillery, a gadget company, and a supermarket supplier.
Each of them had their own challenges to share on exporting to the EU, challenges that are shared by hundreds of other companies across the country.
These include accumulating costs from paperwork, dwindling profits, VAT increases, logistics difficulties, being unable to send certain goods tariff-free due to rules of origin requirements. The list goes on.
For example the EU is very strict on goods of animal origin entering the single market. The supermarket supplier Harry visited is now unable to send cheese and onion crisps to the EU because he is unable to prove exactly where the cheese in the cheese powder that coats each crisp comes from. Definitely a cow, but the question is which one?
This was a very real documentary that showed so far, Brexit hasn’t really worked for so many different businesses. Companies are facing dwindling profits, huge added costs, and a whole host of hassles.
Harry Wallop did a great job of presenting this documentary. He really smashed it, with a bang!
Next week is looking a little light on the parliamentary activity. Don’t they know there is still a lot to be getting on with? Well, with the lack of meetings in the calendar, we expect them to have found a solution to the Northern Ireland conundrum, fixed the economy, eradicated coronavirus, and reached Net Zero by the end of the week. Or at the very least give Boris some driving lessons.
International Trade Committee oral evidence on the Free Trade Agreement with New Zealand.
Our Chief Economist Kitty Ussher will be speaking alongside gold medallist Hannah Stodel, and Bank of England agent Phil Eckersley at the IoD Essex Christmas Breakfast Event on 24th November at Braxted Park, Witham. Tickets can be booked here: https://www.linkedin.com/in/ACoAAAzZAd0Bg9ZGeER-vxBtu3B3Ih74j59uHI8