In a letter to chancellor George Osborne and Vince Cable, the business secretary, Richard Lambert sets out policy measures in four areas designed to promote growth.
The measures proposed by Richard Lambert are interesting in that they are meant to increase growth in a relatively short timeframe. As well as supporting the foundations of growth (macro-economic stability, the right regulatory climate, the right taxation regime, skills, labour market and flexibility), Richard Lambert wants to see other measures.
“There is a need for a policy focus on those measures that can have the greatest impact on growth performance in a relatively short timeframe,” he writes.
The four policy areas where action is particularly needed are:
Vibrant and growing SMEs, especially in innovative sectors
“Among other measures, the government should extend the Enterprise Finance Guarantee, making sure it fits the needs of IP-intensive businesses where banks find it hard to extend loans in the absence of physical collateral. There should also be encouragement of more SME financing options, especially non-bank and equity financing. Business support services should be refocused.”
Exports to rapidly-growing regions of the world
“The government should play a central role in helping businesses to export by providing information, contacts and financial/risk backing. In particular, the Export Credit Guarantee Department’s product range should be more accessible and suited to the financing needs of SME exporters. The government should also reduce constraints to trade: cumbersome customs procedures, ineffective IP legislation and protectionism in public procurement systems. The CBI supports the ministerial involvement in export promotion.”
Exploiting pent-up demand for domestic projects (eg energy, waste)
“To facilitate investment in these areas, decisions are needed in the regulatory and policy framework to reduce uncertainty and encourage investment. The Electricity Market Review must provide incentives that align policy and investment cycles, reforms of the planning system must be completed quickly, and clarity is needed quickly about measures to encourage private-sector investment.”
Reform of public service delivery
“There must be reforms that encourage competition to deliver public services, including transparency on costs and performance, and improvements in shared services, procurement and outsourcing. Barriers to outsourcing such as differential treatment of tax and pensions must be removed.”
What do you think of Richard Lambert’s proposals? Do you agree? What other measures should the government introduce to stimulate growth?
You can download Richard Lambert’s full letter to Osborne and Cable below.
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