Budget misses opportunity to tackle UK's competitiveness gap

Mar 23 2006 by Nic Paton Print This Article

Businesses have criticised British Chancellor Gordon Brown's budget yesterday for failing to do enough to address how firms can improve their competitiveness and productivity on a global stage.

The Confederation of British Industry said that, while elements of the Budget were welcome and business-friendly, it "fell short of the boost for UK competitiveness that business was seeking".

In his Budget, Brown outlined measures including "summer schools" for entrepreneurs, extra spending on education, including vocational training, more research and development tax credits and an increased focus on rapidly emerging economies, such as China and India.

But CBI director-general, Sir Digby Jones said the Budget "did little to give a helping hand to those hard-pressed businesses who are currently under the cosh".

He added: "Business will be disappointed that the opportunity truly to improve UK competitiveness has been lost.

"UK firms have watched while other countries have reduced business taxes to help their companies compete in this era of globalisation. Yet the UK continues to do the opposite," he said.

The Chartered Institute for Personnel and Development warned the Budget was unlikely to bring a "productivity breakthrough".

CIPD chief economist John Philpott said: "The specific Budget measures targeted at increasing productivity are much the same as the Chancellor has introduced since 1997. There is nothing to indicate that they will be more successful."

The Treasury continued to overlook the importance of people management and development in improving productivity.

"Welcome new initiatives on work-related training, particularly those aimed at women, are relatively small in scale," said Philpott.

The Chancellor's plan to reform UK Trade & Investment, the government body that supports companies to do business overseas, was welcome, said the British Chambers of Commerce, but too narrow in its outlook.

"We are very concerned that the government's focus is heavily weighted towards inward investment and provides little support for exporters," it said.

Plans to cut the number of business support services from more than 3,000 to 100 by 2010 were also welcome, said the BCC.

And the Forum of Private Business said the Budget was "lacklustre" and "did little to address the urgent needs of smaller businesses".

FPB's chief executive Nick Goulding said: "Survey after survey has revealed that the greatest barriers to small business growth are tax and regulation. And while Gordon Brown was predictably upbeat about the economy, he failed to point out that since 2000, any growth in employment has been fuelled entirely by the growth in the public sector as private sector jobs have been squeezed out and the red tape burden has spiralled."