Our submission, sent to HM Treasury in February, has member priorities at its core
Time for action
Before the Spring Statement, the CBI presents its Spending Review submission, providing clear recommendations on how the government can hardwire growth into departmental priorities.
With spending cuts likely needed to meet the Chancellor's non-negotiable fiscal rules, the government must deliver actions that help business deliver the shared Growth Mission.
The changes to the Employment Rights Bill have created uncertainty and risk severely damaging companies' willingness to invest and grow. They add to a growing sense that the government is not recognising the vital role business plays in raising living standards across the UK. The government is not alone in wanting to boost growth and must do more to support business to unleash investment, innovation, and employment opportunities.
The Spending Review provides the next opportunity for the government to back up its ambition with meaningful action. Our submission, developed in partnership with our members and mapped against the Growth Mission's pillars, presents clear actions the government must take to gain the business backing needed to kickstart economic growth.
CBI submission in brief
We consulted over 100 CBI members and trade associations when developing our submission and are continuing to engage members to shape how we put key priorities to government. Our submission has member priorities at its core.
We sent our submission to HM Treasury in February, and it presents a bold and ambitious agenda that makes clear the four goals business will judge the Spending Review's success against:
- Providing Long-Term Certainty
- Driving Efficiencies
- Delivering Meaningful Partnership
- Building on Successes
The CBI's submission presents recommendations for both smaller scale interventions for business confidence in the short-term, alongside larger scale systemic changes and funding required to support business kickstart economic growth over the long-term.
The actions departments can take to deliver on these short-term and long-term objectives are clearly mapped to the seven pillars that sit beneath the government's central Growth Mission:
- Investment, Infrastructure and Planning
- People
- Innovation
- Industrial Strategy and Trade
- Net Zero
- Place
- Economic and Fiscal Stability
Our recommendations, mapped against the pillars, are summarised below.
If you would like to discuss our Spending Review submission, please get in touch with Charlie Courtney.
The CBI's recommendations
1. Investment, infrastructure and planning
Building on the positive commitments to deliver a ten-year infrastructure strategy, Industrial Strategy, and boost capital investment by over £100 billion over the next five years, the government should use the Spending Review to set out further long-term commitments to growth enhancing strategies. Overcoming today's challenges requires the collective effort and strength of businesses, civil society, and institutions but also local industry ecosystems across our four nations.
You said...
Burdensome regulations, constrained funding and limited planning capacity are holding back the ability to deliver much needed investment and infrastructure projects. More needs to be done to connect labour, supply chains, and operations across the UK.
So we recommended...
Delivering the announced audit of regulatory costs and providing additional funding and support for regulators.
Audit outcomes should be used to guide planned regulatory reform from the centre of government, allowing the UK's pitch to the world on 'proportionality' in economic regulation to be more empirically rooted.
Crystallisation of what effective public-private partnership involves.
This should include setting a scale of ambition on facilitating private investment for public good, through a suite of modern financing models for public-private partnerships. By unlocking the power of private investment, substantial private capital could be attracted to large-scale projects to drive innovation, improve service delivery, and share risks.
Setting out the role of NISTA and funding it over the long-term.
Making NISTA's role clearer, and ensuring it receives a long-term funding settlement will ensure it can identify the best value for money projects, and give industry confidence, clarity and certainty over future pipelines - all to support the ten-year infrastructure strategy.
2. People
The UK labour market has traditionally been a strength of the economy, but recent policy changes have, in conjunction with Employment Rights Bill concerns, made it harder for firms to find, hire and upskill talent in their organisations. Ensuring the UK has a flexible and competitive labour market which is able to identify and build the pipelines for talent we need will be critical in ensuring the success of the Industrial Strategy and UK's Growth Mission.
You said…
Vocational skills and post-16 training are critical drivers of growth. The Apprenticeship Levy has posed perennial challenges for firms both large and small, and while members welcome the introduction of the Growth and Skills Levy, short-term issues persist and are in need of urgent flexibility.
So we recommended…
Ensuring the Growth and Skills Levy allows investment in the workforce of the future.
The Growth and Skills Levy should allow businesses to flexibly invest 100% of their contributions instantly on both apprenticeship and non-apprenticeship training options as determined by Skills England. This should include fully funding apprenticeship training and assessment costs for SMEs. In the interim, immediate flexibility should be afforded to the Apprenticeship Levy.
Establishing, and ensuring adequate funding for, Skills England.
Skills England should coordinate business engagement with government on skills and ensure the investment critical to tackling the UK's productivity problem materialises.
Speeding up the resolution of workplace disputes.
By reducing the claims backlog and increasing resources for Acas, the resolution of cases would be expedited. This would allow businesses to redirect funds away from potential legal disputes and towards investment in growth and development, and mitigate against the forthcoming changes in the Employment Rights Bill which will add pressure to the Employment Tribunal system.
3. Innovation
The government has made positive steps with the AI Opportunities Action Plan and the Cross-Government Review of Technology Adoption, but more can be done to improve our global standing of R&D intensive nations. In combination with wider levers including regulation, technology adoption and procurement, we will cement innovation at the heart of the UK's new growth story.
You said…
Currently, too many businesses (particularly SMEs) face barriers to investing in research, development, innovation, and technology adoption - despite their willingness.
So we recommended…
Setting an ambitious and competitive goal for UK R&D spending.
A target of UK R&D spending to be 3.4% of GDP by 2030 would put the UK in the top three of G7 nations based on current spending and send a strong signal to attract domestic and foreign investment.
Presenting a coherent national technology adoption plan.
Supporting tech adoption across the economy would address sector specific and UK-wide barriers. This should include actions from the Cross-Government Review of Technology Adoption alongside the SME Digital Adoption Taskforce and wider programmes and incentives across infrastructure, skills, and relevant public sector transformation.
Expanding the Made Smarter programme to all sectors of the economy.
The programme should be expanded to all sectors of the economy to give firms the advice, funding, and support they need to adopt technologies, including AI. This would enable businesses to drive innovation and boost productivity.
4. Industrial Strategy and Trade
An Industrial Strategy focused on UK competitiveness; a Trade Strategy which balances economic security alongside trade and investment; and a Spending Review which places equal weight on the importance and interplay between them, will help the UK to secure growth in an increasingly protectionist world.
You said…
Barriers to trade, including regulatory, mobility, and tariff-related barriers, are holding business back from taking advantage of new markets. Business also lacks sight of future government plans, making it more difficult to secure domestic or global investment in infrastructure.
So we recommended…
Establishing a long-term pipeline of government-funded projects.
A transparent, long-term pipeline would provide businesses with certainty and strategic planning opportunities, and incentivise them to maintain their assets between projects to sustain capability.
Providing support for businesses to benefit from stronger trading relationships, including through a new trade promotion programme.
A stronger trade promotion programme, alongside focused export support, would enable businesses to take advantage of opportunities in new markets.
5. Net Zero
The government's Clean Energy Mission will drive growth across many areas of the UK by building on the fast-growing net zero economy and investor confidence in its investment and export opportunities. By mitigating volatility of high-exposure to international energy markets, and securing a cross-economy upswing in decarbonisation, the government could accelerate us towards net zero and grow clean energy markets.
You said...
Industrial decarbonisation is key to meeting the UK's net zero ambitions. Business has welcomed progress on renewable energy projects, but high energy costs are diminishing competitiveness. We must ensure the National Wealth Fund and GB Energy provide the green incentives needed.
So we recommended...
Supporting industrial decarbonisation by linking UK and EU carbon pricing and extending the IETF (Industrial Energy Transformation Fund).
As UK industry decarbonises, effective carbon pricing mechanisms are crucial for supporting investment and creating new markets in green technologies. Linking the UK and EU ETS (Emissions Trading Scheme) would improve carbon price stability, increase market liquidity and reduce carbon leakage. Further funding is required through the IETF if it is to continue supporting high-energy-use businesses to transition to a low-carbon future.
Backing home-grown energy by modernising the Contracts for Difference scheme, setting auction targets to AR10 and ensuring sufficient funding levels for the next two allocation rounds.
The Contracts for Difference scheme has been hugely successful in supporting the expansion of clean, cheap, homegrown low-carbon power in the UK. AR7 and AR8 are critically timed to deliver for 2030 Clean Power targets, with sufficient funding vital to build investor confidence and the supply chain.
Setting a clear timeline for subsequent CCUS (Carbon, Capture, Usage, and Storage) deployment opportunities.
It is crucial to progress track one, track two and track one expansion projects to final investment decision within the Spending Review period, and ensure subsequent allocation rounds are supported. This would underpin investor confidence and supply chain development, and support the creation of low-carbon products.
6. Place
Positive progress has been made in going deeper and further with devolution. It is essential that we move past the historical patchwork devolution picture that has complicated businesses' understanding of their operating environments if we are to allow regions to effectively leverage local insights, avoid duplication, and build national cases for investment while promoting regional advantages.
You said…
Local Growth Plans represent a positive step to translating national priorities into local action. However, regulatory, capacity and engagement inconsistencies remain across regions. This patchwork picture has reduced business competitiveness, particularly in securing domestic and global investment.
So we recommended…
Confirming multi-year devolution settlements as per the English Devolution Bill.
Multi-year devolution settlements would ensure Established Mayoral Strategic Authorities can deliver Local Growth Plans that unlock economic growth.
Ringfencing packages for planning services.
Delivering multi-year local authority funding agreements with ringfenced packages for planning services would support increased capacity and resource to process planning applications - critical to achieving the government's housing ambitions.
7. Economic and Fiscal Stability
The government sending a strong signal that it champions stability would boost business confidence and attract investment.
You said…
Since the Autumn Budget, businesses have reduced output and hiring, with many passing price increases onto customers. This is contributing to the uncertainty and financial burden caused by working to comply with a cumbersome tax system.
So we recommended…
Streamlining HMRC's systems and processes through digital transformation to enhance customer service levels.
This should include creating a business rates system for the 21st Century, ensuring that the Valuation Office Agency is adequately resourced; delaying the implementation of mandatory payrolling of benefits-in-kind; and utilising HMRC's new 5,000 compliance officers' resource to provide proactive business support to close the tax gap.
