As the UK gears up for the Labour Government’s first Budget, a survey commissioned by ForrestBrown has highlighted the key policy priorities for business.
Data from 500 senior business leaders across the country found widespread support for targeted policy changes in three key areas: closer ties with the European Union (EU), tax stability, and increased R&D funding.
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Here are the headline results from the survey.
The results make interesting reading, painting a picture of UK businesses desperate for stability and a policy environment which enables them to play their part in the government’s growth agenda.
Removing barriers to trade
While the government ruled out joining the EU’s single market and customs union, it has promised to tear down ‘unnecessary barriers to trade’ – which the survey suggests would be welcomed by many business leaders. According to the survey data, 22% of business leaders thought improving the UK’s relations with the EU should be the government’s top priority. This figure rises to 32% for business leaders in the finance sector.
Seeking stability in taxation
Another key issue that emerged was the desire for stability in taxation, with 16% rating this as the most important policy commitment for their business. This was followed closely by reforming business rates with a new business property taxation system (16%).
The transition to a net-zero economy also ranks high on the agenda, with 13% of business leaders highlighting the necessity of increased investment in clean energy as the focus for the government.
Labour policy commitments most valued by UK Business Leaders
| Policy commitment | Proportion of business leaders (%) |
|---|---|
| Making the UK’s relationship with the EU work better for business | 22% |
| Stability and certainty in taxation | 16% |
| Reforming business rates with a new system of business property taxation | 16% |
| Increasing investment in clean energy | 13% |
| Workforce development e.g. working conditions, youth unemployment | 13% |
| Addressing the skills shortage by reforming the immigration points system | 9% |
| Addressing the UK’s ageing infrastructure | 7% |
R&D investment a top priority
Against the backdrop of a much reported ‘black hole’ in the public finances and an agenda to deliver economic growth, nearly three-quarters (70%) of business leaders are calling for an increase in public spending on R&D. Additionally, one in five UK businesses (20%) plan to invest in R&D in Europe, highlighting the urgent need for a more innovation-friendly tax regime to ensure private sector investment does not shift abroad.
Over a third (37%) are advocating for reduced business rates for R&D facilities, and a further third (33%) support the implementation of lower Corporation Tax rates for profits related to R&D. ForrestBrown’s research also found that 17% of business leaders think the 25% cap on Corporation Tax is the most important policy for their business. Running counter to recent concerns regarding the effectiveness of R&D tax relief in encouraging genuine innovation, 58% of businesses plan to increase their investment in R&D over the next year, and 14% of business leaders emphasise the importance of retaining this incentive.
Reflecting on the findings, Sara Brigden, ForrestBrown’s Managing Director, said:
“Private sector innovation has a vital role to play in kickstarting economic growth. It’s important that the government balances addressing the ‘black hole’ in the public finances with investment that supports an environment in which businesses can facilitate its growth agenda.
Our research shows that business leaders put a premium on stability when it comes to taxation. It’s positive that the Government is making a concerted effort to position the UK as an attractive destination for foreign direct investment, but UK businesses still need the reassurance of a stable tax and policy regime when making their own financial decisions.
This is especially critical for innovative firms, as R&D is inherently risky. Setting out a clear, consistent framework in this month’s Budget would allow businesses to look to the future with confidence, unlocking private-sector innovation and driving economic growth.”