The Conservative-led government is making the wrong choices both now and for the future of Britain’s economy, Labour's Shadow Business Secretary Chuka Umunna MP will say in a speech at Bloomberg on Monday.
In his first major speech since being appointed to this post, Mr Umunna will contrast Labour’s five point plan for jobs and growth with the Tory-led Government’s austerity programme which is making it harder to get the deficit down.
Find out more about Labour's five-point plan here.
Chuka Umunna MP will say:
“Our domestic economy has faltered. In a marked change of tone, the government is now predicting the worst and seeking to attribute blame, wholesale, to the Eurozone crisis. But our economy was faltering long before the crisis became such an issue, with stagnant growth for over 12 months.
“The challenge is more than restoring the economy to growth in the next year – as vital as that is. We also need to confront head-on some of the longer-term issues exposed by the global financial crisis if we are to take full advantage of the opportunities of tomorrow.”
“What is the Government doing? It has adopted precisely the wrong approach. It is making the wrong choices for our economy in the short term, choking off the recovery. But it is also making the wrong choices for Britain in the long term too.”
He will cite four examples which show how the Government is out of touch with business and is making the wrong decisions for Britain’s future: investment in science and technology, the green economy, incentives for firms to invest, and procurement.
In these areas, the government has failed to use the tools and levers at its disposal to support business or reward the best of British business practice, but has instead rigged the system against firms investing in the long term.
He will say:
“We need more firms in more sectors at the leading edge in growing markets. This way we will see better outcomes being delivered at home and more competitiveness abroad.
“We need a different approach. We must reshape our economy for new demands and to create new opportunities. We must build a new economy. It is framing the rules of the game so that business which is most productive and most socially valuable is also most profitable.”
Investment in science and technology is being cut and the government’s approach to science and innovation is damaging our long-term economic future and prosperity.
He will say:
“Leadership in science will be critical to our nation’s future. Scientific advance is a route to product innovation which helps us compete. New analysis by the House of Commons Library that we have published today undermines Government claims to be protecting science funding – it shows the total science and research budget is being cut by 15 per cent over the spending review period. How will this help ensure we innovate? Above all, the Government is cutting investment in the very people we are looking to grow our economy in the future.”
“We said the tripling of tuition fees would put off students from applying to university and saddle them with excessive debts - early figures already show applications down by 12 per cent across the board.”
The Government’s mixed messages on the green economy and renewables have been chaotic and confused, reducing investment in a crucial new sector at a time when our economy needs it more than ever.
- Wrecking the Feed-in-Tariff system for solar power for which it was rightly been criticised by the CBI last week.
- Delaying the Green Investment Bank – promised in Labour's manifesto, but hobbled by this Government which means it will not leverage the private capital needed.
- Undermining Carbon Capture and Storage. The cancellation of the scheme at Longannet and the continued absence of an agreed funding mechanism for projects means overall delivery of this commitment is delayed.
Mr Umunna will say:
“Take the green economy – critical to our future growth. Where other countries are powering ahead, our Government’s lack of ambition and mixed messages are deterring investment.
“Last year, the UK slumped from being third in the world in terms of investment in green growth, to only 13th place. The respected US Pew Environment Group blamed this on the uncertainty surrounding government policy.
“For example, it has wrecked the Feed-in-Tariff system Labour established, leading to cancelled solar panel orders, threatening the viability of the solar industry. It has undermined developments in carbon capture and storage technology by cancelling the UK’s first carbon capture project at Longannet. What message does this send to potential investors?”
On incentives for firms, the government is already rigging the system against investment for the long term by cutting capital allowances. Mr Umunna will say:
“Government can provide incentives for long-term investment through the tax system or they can turn a blind eye to whether or not firms choose to invest.
“This is why we said it was a step in the wrong direction for this government to bring down capital allowances.”
On procurement, Mr Umunna is calling for the government to make better use of its buying power as the UK’s biggest consumer to boost enterprise and jobs:
“Procurement strategies can be narrow in their focus on cost, or broad in their understanding of value. They can encourage firms to train apprentices as we did with Olympic contracts, or ignore this as the Government has done. They can offer markets for innovative products and services as we did when we introduced the Small Business Research Initiative, or they can reinforce the status quo.
“This is why I have called on the Government to start using its procurement power strategically – to get more apprentices trained; to expand the value of contracts going to high-growth potential, innovative companies; to take account of the impact on employment when awarding contracts; and to signal future intentions so that business can plan ahead, develop the capabilities, build the capacity and nurture the supply chains that are needed. We don’t need to have another fiasco like Bombardier.”