Business Confidence

Helen Grant Excerpts

Tuesday 15th October 2024 Westminster Hall

[Mims Davies (East Grinstead and Uckfield) (Con)]

I beg to move,

That this House has considered business confidence.

It is a pleasure Mrs Harris, to serve under your chairmanship today.

“Sustained economic growth is the only route to improving the prosperity of our country, and the living standards of working people”—

so intoned the Labour manifesto published over 114 days ago, ahead of the general election. I am sure that most, if not all, of us across the House accept the basic and fundamental premise that such growth is what ultimately funds our vital public services, which are crucial to all our communities.

Reducing inflation, giving business confidence to invest and delivering growth was a hallmark of the outgoing Conservative Government. After a difficult few years affected by the pandemic, it remains important for all Members of Parliament to be business champions for our communities. I thank every business, in all our communities, for what they do every day—every business on our high streets, in industrial estates and in the rural economy. I am thinking of the self-employed: those taking a chance so that others can be employed, sectors can grow and families are supported.

Many businesses in the Mid Sussex, Wealden and Lewes districts are hidden—family businesses, start-ups in back bedrooms, future dreams and more opportunities. They are, above all, a way to connect our communities to a thriving local economy and an investment in our future. They are giving, truly, an opportunity to all. Very shortly, I will be hosting my “Taste of East Grinstead and Uckfield constituency” event in the House of Commons, a follow-up to my most recent business breakfast at the Highlands Inn in Uckfield. I am sure that many other MPs will be showcasing businesses in their constituencies and working with them in this way.

Despite lingering covid shocks and the devastating war in Ukraine, inflation reached 2% by May and economic growth rebounded strongly, reaching 0.5% in quarter 2. Our dominant services sector grew by 1.5% in the same quarter. Key to delivering economic growth is, of course, inspiring confidence—the so-called “animal spirits” in the oft remembered words of John Maynard Keynes. They are a vital pre-requisite. Indicators suggest that confidence was growing in the first half of this year.

Like many things, the new Labour Government have failed to live up to their own hype, let alone the aspirations of millions of working people or businesses who create those jobs and opportunities all across our land. I welcome the international investment summit and the £63 billion it raised, but I remind the House that almost half that investment had already been previously announced by the Conservative Government; I warn the Minister of the danger of double counting.

In a little over 100 days, the Institute of Directors economic confidence index has fallen to minus 38—the lowest since December 2022. The same index points out business investment intentions, showing the sharpest drop since the onset of the pandemic: it was plus 24 in July and minus six come September—the lowest since September 2020. CBI survey trends have shown that manufacturers thought that output would fall over the next year: minus seven compared with plus nine in August 2024. The latest purchasing managers index for the services sector is also, I am afraid, heading in the wrong direction, showing that our economic recovery is somewhat running out of steam under the new Government.

What is the cause of this reversal? Institute of Directors members cite ongoing concerns over tax changes and the cost of new Labour reforms. The British Chambers of Commerce stated:

“On the domestic front, many businesses are increasingly anxious about the direction of economic

policy, and taxation has now become their primary concern”.

Now, the biggest single concern for business leaders is tax. A survey undertaken by the Institute of Chartered Accountants in England and Wales cites tax as the chief concern—the highest ranking on the survey ever. Given the mood music emanating from the top of Government, how can that be a surprise? Both the Chancellor and the Prime Minister have repeatedly warned that further taxes are coming, but have repeatedly refused to tell us where—a hard winter, not just for pensioners but for business. We heard that clearly at the Dispatch Box, just last week. This is the result of a single structural decision to delay the Budget until October, which has simply allowed rumours in.

Already, the situation is changing the behaviour of businesses. A survey by Evelyn Partners shows that 29% of business owners are looking to sell, while hard data shows the Treasury pocketing the highest level of capital gains tax in 15 years as investors head to the exit door. That is hardly a recipe for the growth—let alone stability, which the Labour Party promised our constituents. Just last week in Prime Minister’s questions, and recently in the media, the Prime Minister refused to rule out a rise in employer national insurance. I remind hon. Members that the Labour manifesto was clear, stating that:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance”.

The situation has created a falling away of job vacancies. I remind the Minister and his Government that local small business owners are clearly working people. This is a pure jobs tax. Labour’s position now seems to be that taxing working people is bad but taxing their jobs is good. It is no wonder that businesses are confused and concerned.

One agricultural business in my constituency recently wrote to me:

“I hear dark stories about the forthcoming budget and the possibility that the financial support for the agricultural sector of the economy is likely to be reduced or even slashed. If this were to happen the viability of my family’s enterprise would be at risk and the livelihoods of between 20 and 30 families would be threatened. Our business is focussed on producing milk, grain and timber for the nation and on caring for the environment in which we live and operate.”

I am sure that other hon. Members here will be bringing similar concerns from their own constituencies and reporting similar things.

[Helen Grant (Maidstone and Malling) (Con)]

I thank my hon. Friend for giving way and congratulate her on bringing this important and timely debate. Many farmers in my constituency of Maidstone and Malling are having a very tough, wet time, like the farmers in her own constituency. I believe that, for many, business confidence is pretty much at an all-time low. Does she agree that reducing red tape, regulation, bureaucracy and endless reporting, and having a slightly more light-touch approach in terms of planning and the re-diversification of farms, could boost business confidence and inspire and motivate farmers?

[Mims Davies]

I thank my hon. Friend. She is absolutely right: I have had conversations in my own district of Mid Sussex about supporting diversification in the rural economy. If things were changing on the high street, they would be supported; if they are in a rural business, they are blocked. I absolutely agree with my hon. Friend. I hope that the Minister is listening, although it seems that his party is not here to listen. I thank hon. Members here from the other parties, who are keenly supporting their own constituents too.

As I said, this is hardly a recipe for growth, let alone stability. A farming conference is coming up shortly at the South of England showground in Ardingly in my constituency, and that will be vital to business. Sponsorship in support of that has been absolutely key. I take this opportunity to wish good luck to Fallow Meadow, a new event space in West Hoathly in my constituency—another rural business taking a chance to diversify in order to support the family farm.