The 海角视频 Government’s mantra of seeking to “level up” the economy needs measurable targets to assess the effectiveness of policy interventions while historic low interest rates meant now was the ideal time to invest in infrastructure, R&D and skills to boost productivity, says Lord Bilimoria.
The founder and chairman of Cobra Beer and recently appointed new president of employers’ body the CBI said he is confident a trade deal will be struck with the European Union, from which other aspects of closer collaboration could be built on, while saying Wales also needs to see to investment in infrastructure to ensure that the levelling-up agenda applies not just to northern English regions, but to the devolved nations of the 海角视频 as well.
He said: "London is the greatest city in the world and is disproportionately very powerful economically in this country.
"That is good for the whole country, but it also means that we should try and have the rest of the 海角视频 getting more benefits from economic growth."
Lord Bilimoria added: "We are the second-largest recipient of inward investment in the world, as we are an open economy and have so many strengths, yet half of that comes into London and the south east of England."
So, how can we get more of that inward investment going into the rest of the 海角视频?
He said, like the 2050 target on achieving net zero-carbon emissions and increasing R&D total expenditure as a proportion of GDP from the current 1.7% to 2.4%, the same was needed on levelling up, which some have labelled as being no more than a Tory vote-winning electioneering soundbite that currently lacks any coherent detail.
He added: "What gets measured gets done.
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"So absolutely you have to have targets and also it has to be sector wise.
"We have the green agenda, which is absolutely important in terms of the 2050 net carbon-neutral target, and already shown world leadership in wind power.
"However, a third of greenhouse gases comes from heat and the vast majority of that comes from buildings and of the 29 million houses in the 海角视频 only one million are up to standard at the moment.
"For the other 28 million, if we are ever to get to net zero by 2050, they have got to upgrade to heat pumps, hydrogen boilers and new technologies.
“This has to be done and it will mean new jobs, re-skilling and investment and that has to take place across the 海角视频.
“We [CBI] have said you need an Olympic-style delivery authority, which delivered the London Olympics so successfully in 2012, that works with all parts of the 海角视频 and sets the targets to make sure it is done.”
Free flow of goods, capital and people
On the Internal Market Bill, which will create a new trading regime between the nations of the 海角视频 with the repatriation of powers from the EU at the end of the transition period, concerns have been raised as to whether the 海角视频 Government could use new powers to push through an M4 Relief Road project in south Wales, which as a devolved matter was rejected by First Minister Mark Drakeford on cost and environment grounds last year.
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This has not stopped Prime Minister Boris Johnson on a number of occasions saying his government will deliver the project, without explaining exactly how.
Lord Bilimoria said: “The Internal Market Bill is really the glue that binds the United Kingdom.
“It is meant to bring things together and not to divide things, and that is why I think it is very important as in leaving the EU we need to make sure we have the free flow of goods, capital and people and there is no friction involved anywhere.”
He added: “On devolved and infrastructure-related matters I don’t want to get into the details of specific projects [M4 Relief Road], but what I can say it is really important that we upgrade our infrastructure.
“The levelling-up agenda is for the whole of the 海角视频 and not just the regions of England.
“So if infrastructure improvements are required in Wales then we have got to make sure we invest in that. So, I am in total agreement in making infrastructure investment in Wales, whether it is in roads, rail and every aspect to make us more productive and competitive.
“That has to be done collaboratively with the devolved nations.”
With the national debt now exceeding two trillion pounds at just over 100% of GDP, as the 海角视频 Government has been forced to borrow billions, and which could reach £370bn at year end to fund its response to the economic fallout from the pandemic, some have called for the brakes to be applied as well as consideration at some point of tax rises.
Lord Bilimoria said: “We have got interest rates now at 0.1%, which is the lowest since the Bank of England was founded in 1694.
“At the end of WW2 our debt was 250% of GDP after a time of crisis. We have got some headroom to invest in our infrastructure, in our recovery and in making ourselves more productive and competitive. It will pay off.
“Of course we have got to balance the books, but at this time it is a question of surviving and preserving jobs and employment.”
The productivity challenge
Despite strategies and focus of government, at a Westminster and devolved level, over recent years, the 海角视频 still lags behind competitor nations, including France and Germany, in terms of productivity.
Lord Bilimoria said: “The productivity challenge has existed for a while, but what we must not forget is that the top 10% of our companies in the 海角视频 in productivity terms are world class.
“It is the 90% long tail that needs addressing. And it is that challenge that is very much down to investment in R&D and innovation.
“If we are just to get up to a level with a country like Germany that required 1% extra needed equates to £20bn more a year.
“So, if we could spend £20bn a year from now onwards, it would make such a difference with an immediate effect on our productivity.
“And that means our universities, which are some of the best in the world along with America.
“Our R&D capabilities are phenomenal, but translating that research into commercialisation is another big issue, which we need to be working on.”
On the prospect of a trade deal with the EU, he said he is confident there will be one.
He added: “Michael Gove has said in just the last few days that he thinks the chances of a deal are 66%, when to think we had been talking about fears of a no deal just a few weeks ago.
“I am very confident that we will get a deal. The size of the prize is huge from many points of view, and conversely if we don’t there will be huge difficulties for us here and the EU and we don’t want that.”
On the scope of a deal, Lord Bilimoria said: “Even if we have a basic deal to do with goods and having the frictionless movement of goods between the 海角视频 and EU that we have at the moment, and we are being told that climate change is also being added, then you have something to build on like the security aspect, the movement of people, financial services and services.
“The issues around fishing and state aid need to be resolved and the Northern Ireland protocol.
“Then you have the basis to go forward, if there is no deal then you don’t have anything to build on.”
On the tax system, with increasing calls for global arrangements to help tackle climate change and to address the tax jurisdiction fleet of foot of some tech firms, he said: “Our tax system is very complex and has to evolve and keep up with the times.
“I think we have got to do that, whether it is dealing with technology or climate change.
“So, we have to have a tax system that can evolve and ideally becomes more simplified and less complex.”
A strong Union
With polls seeing a rise in support for independence in Wales, although still a minority, and the SNP pressing for a second referendum on independence in Scotland, which would become even stronger if they win an overall majority in next year’s Holyrood elections, he said: “The last thing we need to be doing at this stage is talking about anything to do with the break-up of the 海角视频. I think the Union is something that is so strong.
“England and Wales are set as one and I am a chartered accountant of the Institute of Chartered Accountants in England and Wales.
“This is a strength and not something in any way that should be broken up.
“We have got to keep the Union together and to persuade people that we are stronger united.”
On the 海角视频 Government’s economic response to the pandemic, he said it had proved to be adaptable and in listening mode.
He added: “The furlough scheme was huge, with nine million jobs saved and 2.5 million self-employed too.
“We at the CBI worked very closely with government and kept telling them there was going to be a cliff edge in May, then one in June and we couldn’t have these rolling cliff edges.
“They listened and it [furlough] was extended to the end of October. We thought the economy was back up and running and growing, but now we have got a second wave.
“So they listened and now we have the Job Support Scheme.
“Then we have seen a scheme where two-thirds [wages] will be paid if you are closed for at least one week.
“So they are listening and trying their best in a very difficult and fast- moving situation.”
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However, he said that 海角视频 Government, despite repeated promises, had yet to deliver on mass testing. He added: “There is one way in which the government could really get on top of the situation and that is by implementing the mass testing which we have been crying out for.
“The Prime Minister himself has talked of ten million tests a day.
“However, that has still not been implemented, while other countries like America have this $5 rapid test with a 15-minute result where they produced 10 million last month and 15 million from this month onward.
“Greece has already ordered them, so why haven’t we implemented when it is available and FDA approved?
“It is mass testing on a regular and affordable basis that will allow us to stay on top of this disease and identify the people who are positive and then isolate them. And what is the cost of that?
“Even if everyone in this country is tested twice a week, it is £2bn a month.
“What is £2bn a month for the next six months compared to the £200bn we have already spent, let alone the £300bn of quantitative easing?
“With the economy having gone down 20% in the second quarter, if we get it firing on all cylinders it is a drop in the ocean compared to what we have spent so far.”
He also said 海角视频 industry should be encouraged to provide much- needed Covid lab testing machines. He added: “We had the ventilator challenge and British industry rose to that and we didn’t have a single shortage.
“We should now have a challenge to produce these lab machines and with the rapid tests that would make a huge difference.”