ICAEW-hosted Labour Business Network analyses Spring Budget

Labour MP Jonathan Reynolds, Shadow Secretary of State for Business and Industrial Strategy, criticised last week’s Budget for failing to adequately address issues facing small business when he took part in a Q&A among Labour Party business network members held at Chartered Accountants’ Hall.

The event, hosted by ICAEW last week, welcomed 75 members of the Labour Business Network, who quizzed Reynolds on Labour’s response to the Spring Budget 2023 and heard the MP for Stalybridge and Hyde outline the Labour Party’s business priorities.

Asked what support is needed for business at this current time, Reynolds highlighted the need to tackle late payments, an overhaul of government procurement rules and business rates as policy priorities that he said would be “pretty easy” to provide.

“We think of attacking late payments for small business by making sure audit committees and big public companies report on payment practices in terms of what they’re actually doing, not just what the aspirations are,” Reynolds said. “We also think there’s a scope of work around government procurement – we’d have rules that would have at least one SME on the shortlist for government procurement contracts.”

Reynolds described the business rates system as profoundly flawed, warning that in its current guise it discriminates against regions including the North and the Midlands. He said the Labour Party had an overhaul of business rates in its sights. “Fundamentally, we want to reduce the overall burden of business rates. And we’d do that by taking the revenue from the income global corporation tax agreement.”

Labour’s Industrial Strategy outlines the party’s belief that targeted tax measures that support investment are far more important and a more cost-effective way of stimulating investment than changes to the headline rate of corporation tax. “Labour will replace business rates with a new system of business taxation that would better balance the burden between our high streets and the biggest online and digital firms, and would not penalise entrepreneurship and investment as the current system does,” the Industrial Strategy pledges.

Reynolds opened the event with his response to announcements made in the Spring Budget. “There was pretty much no mention of small business in the Budget at all, which was very surprising,” he said. Earlier this month, Shadow Chancellor Rachel Reeves announced that Labour is to review the UK business tax regime as part of efforts to make Britain the fastest-growing economy in the G7.

Fixing planning time to speed up race for net zero

The topic of net zero and renewable energy also came up in the Q&A as speakers expressed how the UK has been extremely competitive with renewables, with a huge amount of onshore solar and the second largest offshore wind output. But what are the party’s plans to deal with huge systemic problems with planning and investment to speed up processes and achieve net zero by 2030?

“When things like floating offshore wind is becoming such a big and exciting area, if you’re in the UK there’s an obvious strength there – but also with carbon capture and the future of the North Sea,” Reynolds said.

“It’s both fortunate and unfortunate that it’s one of the relatively few stable green policy areas, in the sense that there has been a framework established where the state division doesn’t have to handle everything, but instead the framework has provided a policy environment that has allowed the private sector to come in and compete against each other in a way that’s delivered some incredible results,” he added.

Reynolds reaffirmed that the success experienced with the offshore wind framework is one to capitalise on and use as an example template for other green initiatives. However, it’s not perfect and there are still planning issues to overcome.

He said planning issues were thwarting attempts to boost green energy: “On average, it’s still 13 years between licensing an offshore wind farm and getting it built. When it comes to onshore wind farms, you can’t really get licensing, which poses a huge problem.”

He said he was confident that Labour’s energy policies would address those issues: “We did at one point build offshore wind farms in five years, not particularly quickly, but certainly better than 13 years of planning. You can expect a great deal of pretty radical and meaty stuff on this.”

More events to come

Michael Izza, ICAEW’s Chief Executive, said ICAEW welcomed the opportunity to hear the shadow business secretary’s analysis of the Spring 2023 Budget. “It was also good to welcome 75 other senior business representatives to Chartered Accountants’ Hall to an event that forms part of our ongoing cross-party political engagement,” he said.

The event was exclusive for Labour Party business network members and was designed to allow direct conversations between UK businesses and political parties. Teddy Ryan, Regional Director of the Labour Party, said the event would be the first of many.