Ruthless pragmatism begins at home Resetting the UK’s relationship with the EU
The Prime Minister’s moves to reset the UK’s relationship with the EU are to be welcomed – but he should also take the opportunity to rethink the domestic policies that continue to spook business.
February began with the release of another set of torrid data from the IoD’s Policy Voice survey. Business leaders’ net confidence stands at -59, up just two points from last month.
The downbeat outlook was echoed at this week’s IoD Ambassadors’ meeting. Business taxation and planned employment law reforms top the list of directors’ concerns, while members from rural areas are also concerned about inheritance tax changes.
The meeting took place hot on the heels of Keir Starmer’s trip to Brussels and his promise of “ruthless pragmatism” to reset the UK’s relationship with the EU. A sensible, non-ideological approach to improving trade rules is much to be welcomed. But is the government applying that same pragmatism at home?
Consider the three biggest policy priorities identified by our Policy Voice survey.
- Reverse course on business taxation. While it’s clear that the Chancellor isn’t going to unpick her October Budget, the government should recognise its impact on business confidence. Alleviating some of the most unpopular measures would go a long way to reviving confidence.
- Scale back employment law reforms. 41% of the leaders we surveyed want to see adjustments to the planned changes to workers’ rights. The IoD is calling for four key changes, starting with the proposed additional protections against unfair dismissal. Introducing these rights after six months, not on day one, would immediately shift the dial on business confidence.
- Other sticking points include changes to the reference point for guaranteed hours, and plans to give trade unions bargaining rights if just 2% of the workforce are union members. Plans to allow employees to claim statutory sick pay from the first day of absence also loads costs onto employers: we’re calling for a one-day waiting period. Pragmatic compromise seems possible.
- Secure a better relationship with the EU. Business’s third priority chimes with the Prime Minister’s ambition to reset the UK-EU relationship. The EU remains the UK’s biggest trading partner: while the Brexit deal is not going to be revisited, sensible, small-scale deals would be welcomed, such as a veterinary agreement and professional skills recognition. Individually, such deals may not be transformative – yet collectively, they could provide a meaningful boost to trade.
A UK-EU reset should also address skills and worker mobility. If Labour succeeds in freeing up the planning system and turns on the taps for infrastructure and housing investment, it may find that business is hamstrung by skills shortages. Agreeing new solutions with the EU could be key.
Pragmatism should not only be the government’s motto for EU negotiations – it should also be the watchword for domestic policy. It is within government’s gift to adjust its policy in the areas that concern employers most. Sensible, pragmatic steps could do much to give business the lift it badly needs.
About the author
Dr. Roger Barker is Director of Policy and Governance at the Institute of Directors, and a member of the Management Board. Dr. Barker is the author of numerous books and articles on corporate governance and board effectiveness, including the recent volume: ‘The Law and Governance of Decentralised Business Models: Between Hierarchies and Markets’ (Routledge, 2020). He is a former member of the European Economic and Social Committee and the founder of a successful corporate governance advisory company. A former investment banker, Dr. Barker spent almost 15 years in a variety of equity research and senior management roles at UBS and Bank Vontobel, both in the UK and Switzerland. He has a doctorate from Oxford University and taught politics at Merton College, Oxford (2005-2008).
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