'We haven't seen any growth': Badenoch criticises promises from last budget

Key Concepts

• Economic Stasis: A state of no growth or significant change in the economy.
• Regulatory Burden/Drag: The negative impact of excessive or complex regulations on businesses, hindering their operations and competitiveness.
• Red Tape: Bureaucratic procedures and regulations that are considered excessive and time-consuming.
• UKCA Certification: A product certification scheme for goods sold in Great Britain, intended to replace CE marking after Brexit.
• Business Rates: A tax paid by businesses based on the value of their property.
• High Street Revitalization: Efforts to improve the economic health and appeal of traditional shopping streets.
• Industrial Strategy: A government plan to promote the development and growth of specific industries.
• Cheap Power Plan: A policy aimed at reducing energy costs for businesses and households.
• Duty-Free VAT (Tourist Tax): The removal of Value Added Tax (VAT) on goods purchased by tourists, intended to boost retail sales.

Economic Landscape and Opposition Strategy

The speaker acknowledges that it takes time to become proficient in any role, including their current one. They observe that the country is in a state of "stasis," with a lack of growth and unfulfilled planning measures. This makes it difficult for the opposition to effectively challenge the current direction. A significant concern highlighted is the departure of business leaders, with one in eight business leaders reportedly leaving the country, which is described as "appalling." The strategy moving forward is to position the party as the "party of growth" and the "party of business," ensuring their message resonates with the public. The speaker also admits to past mistakes made while in government and states that they are now actively rectifying "silly things" and implementing "good stuff."

Deregulation and Regulatory Burden

A question is raised regarding deregulation and the perceived "pipe dream" of cutting red tape, especially in light of the divergence between UK and EU regulations. The speaker agrees that the intended benefit of divergence post-Brexit, which was to enhance UK competitiveness, has not materialized. Instead, due to lobbying from environmental and other pressure groups, the UK has adopted more stringent regulations than necessary. The UKCA certification, meant to simplify processes, is seen as requiring more effort. Beyond red tape, other burdens on businesses include the "employment rights bill" and excessively high energy costs, which are four times higher than in the US. The speaker expresses concern about the decline of the UK's oil and gas industry and the need for a serious approach to energy policy. The core principles for improving the business environment are identified as:

• Tax flexibility
• Removing red tape
• Ensuring competitiveness
• Attracting the right businesses

There is a particular worry about the manufacturing sector, with a concern that the UK is "forgetting how to make things" and that China is dominating the global market. The speaker emphasizes their seriousness about deregulation, citing their own background in the private sector and the personal experience of being a "de facto compliance officer" due to excessive regulation. They believe that current regulations are hindering economic growth and that a business-like approach is urgently needed.

Business Rates and High Street Revitalization

A significant portion of the discussion focuses on business rates. The speaker expresses disappointment that their party's proposals on business rates have not been widely heard, despite announcements at their conference. They reiterate their commitment to saving high streets and supporting struggling businesses, particularly in the retail, hospitality, and leisure sectors. The proposed policy is to abolish business rates entirely for businesses with a rateable value of £110,000 or less. This measure is intended to revitalize high streets and alleviate the burden on businesses that are already facing challenges from increased minimum wages and other taxes. The speaker criticizes recent changes to business rates, such as the reduction of discounts, which have caused businesses to "give up" and made it "makes sense not to work." The goal is to "get Britain working again."

Industrial Strategy and Cheap Power

The question of an overarching national industrial strategy is addressed. The speaker criticizes the previous government's approach, where industrial strategy changed frequently, leading to a lack of certainty for businesses. They believe that the "best industrial strategy is keeping things simple." The primary focus of their proposed industrial strategy is the "cheap power plan," aimed at driving down energy costs. This is seen as the single most impactful measure to ease burdens for everyone. The speaker rejects the idea of government "picking winners" and instead advocates for creating an environment where businesses can succeed. They argue that the current situation is setting businesses up to "lose." The cheap power plan is expected to benefit households and bring industrial energy prices down to more sensible levels, thereby stimulating growth and manufacturing. The speaker dismisses the idea of businesses scrabbling for small pots of money as a viable industrial strategy, emphasizing the need for a clear and understandable approach.

Duty-Free VAT and High Street Competitiveness

The final question concerns the removal of duty-free VAT after Brexit and its impact on the high street, particularly in the luxury sector. The speaker recalls being a junior minister when this policy was implemented and argues that officials failed to model the "dynamic effects." They believed that allowing tax-free shopping would attract more tourists and shoppers, ultimately generating more revenue. However, this argument was lost, and the UK has since lost business to countries like France and Italy. The speaker notes that businesses on London's high streets, such as Oxford Street, have closed, with some becoming mere "shop windows." They express a strong belief that this needs to be fixed and that the removal of duty-free VAT has been "bad for the high street." The speaker, along with their shadow business secretary, is looking into this issue, and they are against the concept of a "tourist tax" as it has not generated significant revenue and has harmed competitiveness. They have previously worked with industry bodies to address this problem.

Synthesis/Conclusion

The transcript highlights a critical assessment of the current economic situation in the UK, characterized by stasis, high energy costs, and a burdensome regulatory environment. The opposition's proposed solutions center on a pro-growth, pro-business agenda. Key policy proposals include the abolition of business rates for small businesses to revitalize high streets, a focus on reducing energy costs through a "cheap power plan" as a core industrial strategy, and a commitment to significant deregulation. The removal of duty-free VAT is identified as a specific, actionable measure to boost the high street and luxury retail sectors, which has been detrimental to UK competitiveness. The overarching theme is a call for a return to fundamental economic principles, business-friendly policies, and a clear, consistent strategy to foster growth and attract investment.