Britain's growth plan has hit buffers, says industry

Engineers' leaders attack muddled policy and mixed messages from ministers
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The Independent Online

Britain's manufacturers are stepping up the pressure on the Government to do more to help the economy, saying that current plans have "hit the buffers".

The EEF trade body wants ministers to end their inconsistent approach to growth, by outlining a clearer plan for the future. It has drawn up its own industrial strategy that it says will enable more companies to bring products to market, a lower cost of doing business, more globally focused firms expanding in Britain and a more flexible workforce.

The manufacturers' organisation is frustrated by mixed messages from the Government that have confused its members, many of whom are foreign-owned. It hit out at the way in which some welcome measures were undermined by decisions elsewhere in government. For example, the EEF, which stands for Engineers' Employers Federation, calculates that 50,000 companies have benefited from falling corporation tax, but at the expense of lower capital allowances for 900,000 small and medium-sized firms.

"We all know that we need stronger growth built on firmer foundations, but the economy and rebalancing have hit the buffers," said Terry Scuoler, the EEF's chief executive.

"We will only get back on track if the Government demonstrates the same clarity and singlemindedness on growth that it has done on reducing the deficit. Business is seeking certainty to invest, but too often it is left with the impression that government is responding to events, rather than leading on growth."

The Coalition is desperately trying to convince business that it is doing all it can to drag the country out of recession. Last week it launched a new growth implementation committee, to be chaired by the Chancellor, George Osborne, and attended by political big hitters including Ken Clarke. Tomorrow, Vince Cable, the Business Secretary, will detail a new industrial strategy.

The EEF is calling for a clearer route for financial help for businesses, lifting the capital allowance rate to encourage investment, electricity prices that are consistently below the European Union average and reducing the red-tape burden, for example by speeding up the reform of employment tribunals.

Mr Scuoler added: "This shouldn't be a plan for picking winners; it should be about creating the right environment for any company seeking to grow through investment and exports."

The EEF isn't alone in setting out its vision for generating economic growth. The science foundation Nesta has come up with its innovation-led plan whose measures include "sinking the proceeds from the upcoming auction of analogue TV spectrum to mobile phone operators into technology, channelling £1bn of government procurement through innovative businesses and changing the immigration cap to welcome skilled foreign graduates and entrepreneurs".

A survey by Nesta – the National Endowment for Science, Technology and the Arts – found that two-thirds of business leaders believe the Government is doing too little to encourage innovation investment, and ranked broadband and smart energy grids as the most important area for infrastructure investment.

"Economic theory has struggled to understand the world of software and new materials, computing and design, and the continuing debate between Plan A and Plan B has so far said almost nothing about the critical sources of future growth," said Geoff Mulgan, the chief executive of Nesta.