At the Labour Party Conference in Manchester, I took part in a panel debate on Labour’s approach to manufacturing and business more generally. The panel included Chris Leslie, Shadow Chief Secretary to the Treasury who talked about Britain’s weak productivity and the need to find ways to increase it in order to see broad-based rises in living standards. It was greatly encouraging to listen to a politician talk about this crucial issue. Nevertheless, his responses to my queries about the impact of Labour’s policies on productivity were rather underwhelming. Here are eight questions I wish he had been able to answer:
Labour has rightfully talked about the benefits of apprenticeships. Improving the training and qualifications of young people is essential, although the target that Ed Miliband set out of having as many apprentices as graduates seems a little arbitrary. However, much of the academic literature points to the fact that life chances are decided at a much younger age. So if Labour doesn’t want to continue with free schools and the educational innovation which they are driving, how does the party intend to drive up standards in schools and what does it mean by “parent-led academies”?
2. & 3. Tax and jobs
Labour’s proposal to cut business rates are certainly welcome but as we have shown in our recent report, The Cost of Labour, the party’s plans are to increase the tax burden with obvious consequences for jobs. For example, Labour wants to increase corporation tax from 20% to 21% but as we pointed out, Ed Balls has actually given himself leeway to increase it to 26%. So will Labour pledge not to increase it further than the 21% it has already announced? Moreover, what are its plans on capital allowances, R+D tax reliefs and the patent box?
4. & 5. Innovation
The discussion of innovation on the panel was largely orientated around private sector access to capital. Whilst everyone is agreed on the need to increase liquidity especially for SMEs, there have got to be some concerns over whether the new bank taxes that Labour proposes will harm access to capital. So will Labour conduct any research on the impact on liquidity that its proposed reforms will have? As an aside, what is Labour’s position on future pro-innovation reform of intellectual property rights?
It was obvious to everyone at the panel that Labour was not yet agreed on a position regarding the Davies Commission. Leslie was at pains to point out that Labour would like to agree with Davies but when I probed him further he was really non-committal. So in what circumstances would Labour not agree with the recommendations of the Davies Commission?
7. & 8. Exports
Lastly on exports, Leslie was unable to give any clear indication on how Labour wants to reform UKTI and perhaps more importantly, what it means by EU reform. The party accepts that the UK’s relationship with the EU is not perfect so are its calls for reform merely platitudes or are there actually any substantive ideas as to what reform means? Furthermore, will Labour fully commit to TTIP, the EU-USA free trade deal and reject the nonsensical criticisims of it coming from parts of the Left and UKIP?