CBI Conference in brief: overegulation, losers and economic policy

UK companies should take the chance to expand their ownership of European businesses, which at current exchange rates presented attractive deals.

European institutions may have taken a battering at the CBI, but one company at least which seemed to have made a go of integration on the Continent is automotive supplier Wagon.

Nick Brayshaw, chief executive, told delegates how the company had switched its focus over the past three years by buying a string of engineering companies in France and Germany.

He said UK companies should take the chance to expand their ownership of European businesses, which at current exchange rates presented attractive deals. ‘Let’s export product, by all means, but let’s export capital too,’ Brayshaw said. He urged the government to review its taxation regime that makes it more expensive for UK companies to buy and own firms abroad than for European companies to buy assets in the UK. ‘There are too many examples of the government hindering our international plans and our competitiveness relative to our major competitors,’ he said.

By losers for losers….

Archie Norman wasted no opportunity to show where the Tories stand on state handouts for industry. The shadow secretary of state for the environment, transport and the regions said: ‘Government support for business is dispensed by losers, for losers,’ in a debate with trade and industry secretary Stephen Byers. He went on to assert that ‘cars and coal’ currently consumed more state handouts than any other sectors. Byers said the Tories had poured millions into the UK car industry, but sidestepped the issue of the government’s current spending on the coal industry, and its support package to Rover. He said agriculture received the most state support.

Over regulation…

CBI director general Digby Jones said over-regulation was harming employment growth, with some companies reluctant to take on extra workers because of the red tape involved. And he urged the government to reassess its plans for the ‘flawed’ climate change levy or risk hurting already vulnerable manufacturers.

Jones told the CBI conference the tax was just one of a range of costly and time-consuming measures which threaten to damage industry. He claimed 15 new UK and EU employment rights would cost British business up to £12.3bn between 1998 and the end of next year.

‘This government has been over-willing to pursue its social policy ends by imposing burdens on the private sector,’ he said. But the CBI chief praised the current government for taking a ‘long-term view’ on investment for transport, and said he was disappointed none of the other parties had made a commitment to honour its 10-year programme.

No change in economic policy…

Chancellor Gordon Brown told the CBI there would be no change in government economic policy which he said had delivered low inflation, low long-term interest rates, and low public debt. Speaking two days before his pre-budget statement he said overall levels of productivity in the UK remained too low, and that the government’s target was for UK’s productivity growth to outpace its main rivals over the next 10 years.

No win, no fee…

A steep rise in industrial tribunals over the past year could be the increase in ‘no-win, no-fee’ legal services for claimants, the conference heard. CBI director general Digby Jones cited a hypothetical example of a firm where an employee leaves, and then, five months later files a claim against the former employer for constructive dismissal: ‘The firm’s legal adviser knows the firm would win the case, but the legal bill to the company (which does not get legal aid) could run into £10,000. For a firm of just 50 people, the alternative route is attractive: offer the claimant a couple of thousand pounds to drop the case.’