CBI: Spending Review must hardwire growth ambition into the heart of government

With the Spring Forecast just a week away, the CBI is today (Wednesday 19) urging the government to use the Spending Review in June as a 'catalytic moment for hardwiring the Growth Mission into the heart of Whitehall'. Following extensive and close consultation with hundreds of members and over 20 trade associations, operating across every sector of the economy, the CBI's submission presents a bold and ambitious suite of policy priorities, including large scale systemic changes and funding, designed to turbocharge the UK's current growth trajectory.

Within the submission, the CBI is calling on the government to effectively deliver against the Growth Mission's seven pillars to kickstart economic growth by delivering on long-term commitments through meaningful partnership, including:

• Set an ambitious and world leading goal for UK R&D spending, sending a strong signal to attract domestic and foreign investment.
• Deliver on the ten-year infrastructure and industrial strategy and commitment to boost capital investment by over £100 billion in the next 5 years.
• Strengthen public-private partnerships through a suite of modern financing models to support growth across the four nations.

The government can go further and faster by unlocking growth enablers and building on successes, including:

• Help businesses meet today's urgent skill needs by making the Apprenticeship Levy more flexible, ensuring the Growth & Skills Levy is well-resourced, and making a new commitment to fully funding apprenticeship training and assessment costs for SMEs.
• Provide additional funding and support for regulators' capacity, resource and expertise alongside the recently-announced audit of regulatory costs in high growth sectors.
• Confidently build on existing successes by extending the Industrial Energy Transformation Fund, supporting high-energy-use businesses to drive forward industrial decarbonisation, expanding Made Smarter to support wider tech adoption, and backing the British Business Bank to expand its Growth Guarantee Scheme.

The CBI and its members know the Chancellor and the government are working within a tight fiscal environment but believe the Spending Review provides a catalyst to consider long overdue decisions where public services can be brought into the 21st century. By taking advantage of developments in technology to drive efficiencies, streamlining processes alongside reducing burdensome regulations, the Spending Review can drive better outcomes for businesses and individuals. This will help to deliver a programme for government that hardwires growth into the priorities of all departments.

Louise Hellem, Chief Economist, CBI says:

"The UK stands at a pivotal moment. To unlock sustainable growth we must move beyond discussions to accelerate investment through targeted innovation as well as policy and regulatory reforms.

"Notwithstanding the significant strides government has made so far in achieving its Growth Mission, including significant commitments to reform the planning system, decisions made at the Autumn Budget and upcoming changes outlined in the Employment Rights Bill have knocked business confidence. Our economic analysis shows that firms are set to reduce output and hiring and are having to pass on cost increases to customers. The broader economic outlook remains subdued with the OBR expecting downgrades in 2025.

"With the right actions, the Spending Review can serve as a catalytic moment for hardwiring the Growth Mission into the heart of Whitehall. But for that Growth Mission to succeed government must inject business with a serious confidence boost. As an immediate priority the government should re-commit to not raising the business tax burden further over the course of this Parliament. Setting an ambitious goal for R&D spending, making it easier to invest in skills and taking measures to reduce the regulatory burden on business would be encouraging moves that would show the government understood what business needs to see from them.

"The CBI looks forward to engaging with HM Treasury and relevant departments ahead of the Spending Review to ensure the government's Growth Mission translates into real, impactful action, unleashing the UK's investment and growth potential."

The CBI calls on government to:

Establish the UK as a world leader in innovation and tech adoption

The UK's lagging R&D investment compared to G7 counterparts is limiting its ability to drive economic transformation. The CBI supports the government's recent efforts to accelerate AI adoption and innovation-driven policies but stresses that bolder action is needed.

• Set an ambitious goal to lead the G7 in R&D intensity, with a target for UK R&D spending to be 3.4% of GDP by 2030.
• Set out a national technology adoption plan to accelerate productivity growth.
• Expand funding for high-impact innovation initiatives, like the UK's Catapult Network.

Equip businesses with the flexibility to train workforces to meet current and future needs

The UK's labour market has long been a strength of its economy, yet businesses continue to face hiring and skills development challenges. With economic inactivity rising and the need for a future-ready workforce growing, the CBI urges the government to enhance flexibility in skills funding and employment policies.

• Allow businesses to invest 100% of their contributions to the Growth & Skills Levy in both apprenticeship and non-apprenticeship training.
• Provide immediate flexibility in the Apprenticeship Levy to support a broader range of training solutions now.
• Make a new commitment to fully fund apprenticeship training for SMEs to ensure equitable access to skills development.

Boost infrastructure, investment and growth by removing regulatory and funding barriers

CBI members acknowledge the government's recent steps to remove barriers to growth, such as revising the National Planning Policy Framework and prioritizing key growth sectors in the Industrial Strategy. However, further efforts to remove overburdensome regulations are required to attract long-term investment.

• Carry out a targeted audit of regulatory costs in high growth or enabling sectors, to act as a new baseline, to enhance the UK's investment appeal.
• Provide additional funding to shape pro-growth regulations that unlock investment and innovation.
• Provide greater clarity of available financial incentives for infrastructure projects and facilitate a suite of modern financing models to attract domestic and foreign investment.

Make the UK a clean energy superpower to drive growth across the UK

The UK's ambition to become a clean energy superpower presents a major economic opportunity. Businesses are eager to advance green technologies, yet high energy costs and regulatory uncertainty continue to hinder progress and investor confidence.

• Support industrial decarbonization by linking UK and EU carbon pricing and extending the Industrial Energy Transformation Fund.
• Back home-grown energy by modernizing the Contracts for Difference scheme, setting auction targets to AR10 and ensuring sufficient funding levels for the next two allocation rounds.
• Provide clear timelines and funding within this spending review period for Carbon, Capture, Usage and Storage (CCUS) projects to which the government has already committed.

Grow foreign and domestic investment with a competitive industrial and trade strategy

A clear and competitive industrial and trade strategy is essential to positioning the UK as a leader in high-growth sectors such as life sciences, financial services, and clean energy. The UK must also work to supercharge trade intensity in the global market amid an increasingly protectionist environment and tensions from major blocs, the US, the EU and China.

• Align industrial and trade strategies to attract and retain global investment.
• Expand trade promotion initiatives to support businesses in accessing new markets.
• Strengthen export support to encourage business growth beyond domestic markets.