David Prosser: Two measures that raise doubts about Coalition's 'business-friendly' pledge


Outlook There was something of a love-in at the Confederation of British Industry (CBI) conference, with a bevy of ministers down to say how much they loved business and some sweeties to share in the form of big speeches and big announcements. No wonder. Business leaders are being courted because they are desperately needed to help to fill the gap created by George Osborne's 500,000 job cuts.

But, amid all the honeyed words and recycled announcements (wonder where they learnt that from), shall we look at the actual record of a government that says it wants to support business and rebalance the economy away from the current over-reliance on financial services, given all the trouble that business has caused us?

One notable omission from the Comprehensive Spending Review was a decision on what's happening to a measure called the "patent box". This offers a 10 per cent tax rate on profits from any successful product launch if said product is from a patent registered (then manufactured) in the UK. It is aimed at industries which are big on research and development, such as drugs groups and the hi-tech sector. GlaxoSmithKline has already said such a move would transform the way it views Britain as an investment destination. The Government worries, however, that the measure does not represent value for money and is little more than a subsidy for big companies. Big companies which employ lots of taxpayers, employees that would otherwise be hired in the Netherlands or in Sweden, where similar tax breaks exist.

Then there is the computer games industry, which the previous government was going to offer the same sort of concessions as those enjoyed by the film industry. Abandoning the plan might have raised a few cheers from colonels in the shires, because only unwashed geeks play computer games (and devise them), and they should bally well be spending their time running around outside. Except that the creation of a computer game is a huge undertaking involving a cast of thousands. and it's an area in which Britain is a world leader. Not for long, though. The Canadians, who offer the sort of deal canned by Mr Osborne, are, naturally, only too happy to see several thousand jobs migrating over there.

Everyone is well aware of the financial situation in this country. But it is hardly going to be helped by allowing thousands of jobs to drift away from industries that a diverse, hi-tech, modern economy ought to be encouraging. Yet that is what is being allowed to happen in the latter case, and there is a real danger it will happen in the former. All this from a "business-friendly" Coaition which claims to be bent on encouraging growth.

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