Brown attempts to build bridges with business

2005

The government wants to "build a new trust between business and government" with "government focusing only on what is essential", Gordon Brown told the CBI yesterday. But judging by the raft of legislation in the Queen's speech, his definition of 'essential' is a broad one.

Speaking at the CBI's annual dinner, the Chancellor promised "more humble" government and "a new relationship with business which recognises your role as wealth creators in your communities".

He was responding to the broadside from CBI President, John Sunderland, who yesterday warned that excessive regulation, high taxation, public sector inefficiency and crumbling infrastructure threatened to destroy the economic progress Britain has made over the past 25 years.

Tackling the issue of regulation head-on, Brown admitted that there had been "so many false starts" and pledged "a new approach to regulation" characterised by "not just a light touch, but a limited touch".

He also promised to push ahead with public sector reform and maintain a stable economic base.

"There will be no relaxation of public sector reform. Throughout, stability is our watchword ¬ stability first and foremost, stability yesterday, today and tomorrow."

Earlier in the day, however, the raft of new legislation introduced in the Queen's speech had received a mixed reaction from employers.

Proposals to cut red tape set out in the Regulatory Reform Bill were broadly welcomed. But the British Chambers of Commerce (BCC) stressed:

"We want to see a Bill introduced sooner rather than later. Employers want a NET reduction in the cost of complying with regulation."

The Federation of Small Businesses (FSB) agreed: "We are concerned that the record number of bills will make it tough for government to achieve its impressive goals on tackling red tape. 40 major new pieces of legislation in the next 18 months make a 25 per cent cut in regulations a mighty tall order," the FSB said.

Meanwhile the long-awaited reform of incapacity benefit and company law were overshadowed by the extension of paid maternity leave to nine months and increase in flexible working rights, legislation that will hit smaller firms particularly hard.

"While we support a sensible work/life balance, the rate of change is simply too much too soon," said the BCC's Director-General, David Frost.

"The government is failing to listen to business. The consultation on these proposals has not even concluded yet but it is clear the government is determined to press ahead and add this extra burden.

"We have damaging work/life balance proposals coming forward while still waiting for real action on regulatory reform."

As the FSB pointed out, although the government has said it will meet the direct costs of extending paid maternity leave, employers will be left footing the bill for recruiting and training temporary cover as well as with the headache of losing a key member of staff.

"All absence from work comes at a cost and the proposal to extend paid maternity leave could devastate some small firms," the FSB added.

Pointing to the raft of pessimistic economic figures released over the past few weeks, David Frost said that the UK economy was facing a number of serious threats.

"Our businesses need flexibility not more burdens. We need to promote enterprise and growth, not restrict our firms as they compete in the global market."