Business cool on Government economy promises

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The Lord Chancellor Ken Clarke, (centre) carries the Queen's Speech during the State Opening of Parliament. Photo: Stefan Rousseau/PA Wire

The government says it’s putting the economy right at the heart of its agenda for the next year.

It must be true: the Queen said so in her speech to open parliament this morning.

But while I wouldn’t risk treason by suggesting Her Majesty got it wrong, the government (which, of course, writes the speech) may be exaggerating.

There are three particularly relevant bills among the 19 announced by the Queen: on regulatory reform (covering competition and employment legislation), the banking bill, and energy.

In sum the proposed legislation looks too little to make much difference to the economy and has already received a less-than-lukewarm reception from the engine room of Britain: business.

The Confederation for British Business’ Director General, John Cridland, says “the jury’s out” on regulatory reforms – designed to help cut red tape.

The problem is that red tape continues to grow under this government, despite promises for a one-in-one-out rule.

Shopkeepers are complaining, too; the head of the British Retailers’ Consortium, Stephen Robertson, says the government doesn’t appear to be cutting anything in return for new rules: “… major retailers faced a total bill of nearly £16 million to implement the tobacco display ban; we’re still waiting for a piece of regulation to be scrapped in return,” he says.

It’s a similar message from Colin Brown, Director of Engineering at the Institution of Mechanical Engineers, who complains:

The warm words about rebalancing the economy in the introduction to the Queen’s Speech are not matched by any significant legislation to help UK manufacturing.

Our manufacturers and engineers are crying out for an industrial strategy backed by strong legislation that can support their efforts to drive the economy back towards growth. This speech has not delivered it.

So what did companies like? Here’s Dr Brown of the IME again:

Electricity Market Reform is welcome and long overdue.

With the UK’s nuclear programme in disarray, wind power under increasing pressure and uncertainty over Feed-In Tariffs squeezing the UK solar industry, Electricity Market Reform is the Government’s best chance to ensure a secure, clean and affordable energy supply for decades to come.

They need to get it right and they need to get it done.

Easier to hire and fire

Also, legislation to make it easier to hire-and-fire staff is welcomed although – hard though it may sound if you’re not a boss – some complain it doesn't go far enough.

Their argument is that if you make it easier to fire employees, companies are happier to take a punt on people to hire them. The bill is likely to encourage conciliation rather than tribunals when things go wrong.

Banking regulation

Finally the banking sector, source of much of the instability in the economy, will be subject to new laws on regulation, although much of this was already in train.

The verdict: a lot for the Queen to wade through but with too little impact to change the course of an economy back in a double-dip recession and with a crisis raging amongst its closest neighbours.